YOUR PARTNER IN AGRICULTURE.
RESULTS OF OPERATIONS
NetincomeforthesixmonthsendedJune30,2025,was$11.3million,anincreaseof$8thousand,or0.1%,fromthe sameperiodendedoneyearago.Theincreaseisduetoincreasesinnetinterestincomeandnoninterestincome, partiallyoffsetbyincreasesinnoninterestexpenseandprovisionforcreditlosses.
ForthesixmonthsendedJune30,2025,netinterestincomewas$23.1million,anincreaseof$1.7million,or8.0%, comparedwiththesixmonthsendedJune30,2024.Netinterestincomeincreasedprimarilyasaresultofan increaseinaverageaccrualloanvolume,anincreasedreturnonourloanablefunds,andanincreaseinouraverage year-to-datespreadbetweenborrowerratesandourrelatedcostoffunds.Interestratesreceivedfromborrowerson averageloanvolumedecreasedsixteenbasispointswhiletherelatedaveragecostoffundsdecreasedtwentybasis points.
TheprovisionforcreditlossesforthesixmonthsendedJune30,2025,was$654thousand,anincreaseof$205 thousand,or45.7%,fromtheprovisionforcreditlossesforthesameperiodendedoneyearago.Theprovisionfor creditlossesforthefirstsixmonthsof2025wasprimarilydrivenbyhigherlossratesandloanvolumegrowth.The provisionexpenseforthefirstsixmonthsof2024wasprimarilydrivenbyacoreloancomplexandoneparticipation beingdowngradedandrequiringreserves.
Noninterestincomeincreased$152thousandduringthefirstsixmonthsof2025comparedwiththefirstsixmonthsof 2024,primarilyduetoincreasesinpatronagedistributionfromFarmCreditinstitutionsandloanfees,partiallyoffset byadecreaseinFarmCreditInsuranceFunddistribution.PatronagedistributionfromFarmCreditinstitutions increasedinthefirstsixmonthsendedJune30,2025,comparedwiththefirstsixmonthsin2024primarilydueto increasedpatronagefromCoBankresultingfromanincreaseinouraveragenetnotepayable. Loanfeesincreased primarilyduetoprepaymentfeesandfeeincomegeneratedthroughFarmCreditMid-America'sRural1stProgram.
Wereceivedarefundof$297thousandduringthefirstsixmonthsof2025fromtheFarmCreditSystemInsurance Corporation(FCSIC),comparedwitharefundof$454thousandreceivedinthesameperiodendedoneyearago. TheserefundsrepresentourportionofexcessfundsabovethesecurebaseamountintheFCSICAllocated InsuranceReserveAccounts.
Wereceivedmineralincomeof$414thousandduringthefirstsixmonthsof2025,whichisdistributedtousquarterly byCoBank.TheincreaseforthesixmonthsendedJune30,2025,comparedtothesameperiodin2024,isprimarily duetohigherbonusesfromnewleasesandadditionalincomegeneratedfrom26newlycompletedwellsoverthe pastyear.
Duringthefirstsixmonthsof2025,noninterestexpenseincreased$1.6millionto$15.9million,primarilydueto increasesinsalariesandemployeebenefitsandpurchasedservicesfromAgVantis,Inc.Salariesandemployee benefitsincreased$1.1millionprimarilyduetoanincreaseinstaffinglevels.PurchasedservicesfromAgVantis,Inc. increasedduetoanincreaseintheircostdrivers,projectedloangrowth,andloancount,alongwithincreasedoff boardingcostsassociatedwithourtechnologytransition.
CAPITAL RESOURCES
Ourshareholders’equityatJune30,2025,was$336.0million,anincreasefrom$325.1millionatDecember31, 2024.Thisincreaseisprimarilyduetonetincome,partiallyoffsetbynetstockretirements.
Theundersignedcertifytheyhavereviewedthisreport,thisreporthasbeenpreparedinaccordancewithall applicablestatutoryorregulatoryrequirements,andtheinformationcontainedhereinistrue,accurate,andcomplete tothebestofhisorherknowledgeandbelief.
/signature on file
Whitney Hansen Board Chair
August 7, 2025
/signature on file
Shawna R. Neppl Chief Financial Officer
August 7, 2025
/signature on file
Jeremy M. Anderson President and Chief Executive Officer
August 7, 2025
Consolidated Statement of Comprehensive Income
in Thousands)
For the three monthsFor the six months
ended June 30 ended June 30
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statement of Changes in Shareholders' Equity
(Dollars in Thousands)
The accompanying notes are an integral part of these consolidated financial statements.
ownedandtakesintoaccountunobservableinputssuchasincomeandexpense,comparablesales,replacement cost,andcomparabilityadjustments.
TheAssociationhadnoliabilitiesmeasuredatfairvalueonanon-recurringbasisatJune30,2025orDecember31, 2024.
Valuation Techniques
AsmorefullydiscussedinNote2ofthe2024AnnualReporttoShareholders,accountingguidanceestablishesafair valuehierarchy,whichrequiresanAssociationtomaximizetheuseofobservableinputsandminimizetheuseof unobservableinputswhenmeasuringfairvalue.Thefollowingpresentsabriefsummaryofthevaluationtechniques usedbytheAssociationforassetsandliabilities,subjecttofairvaluemeasurement.
Assets Held in Non-Qualified Benefits Trusts
Assetsheldintrustfundsrelatedtodeferredcompensationandsupplementalretirementplansareclassifiedwithin Level1.Thetrustfundsincludeinvestmentsthatareactivelytradedandhavequotednetassetvaluesthatare observableinthemarketplace.
Loans Evaluated for Impairment
Forimpairedloansmeasuredonanon-recurringbasis,thefairvalueisbasedupontheunderlyingcollateralsincethe loansarecollateraldependentloans.Thefairvaluemeasurementprocessusesindependentappraisalsandother market-basedinformation,butinmanycases,italsorequiressignificantinputbasedonmanagement’sknowledgeof andjudgmentaboutcurrentmarketconditions,specificissuesrelatingtothecollateral,andothermatters.Asaresult, thesefairvaluemeasurementsfallwithinLevel3ofthehierarchy.Whenthevalueofthecollateral,lessestimated coststosell,islessthantheprincipalbalanceoftheloan,aspecificreserveisestablished.
Other Property Owned
Otherpropertyownedmeasuredonanon-recurringbasisisgenerallyclassifiedasLevel3ofthefairvaluehierarchy. Theprocessformeasuringthefairvalueofotherpropertyownedinvolvestheuseofappraisalsorothermarketbasedinformation.Coststosellrepresenttransactioncostsandarenotincludedasacomponentoftheasset’sfair value.
NOTE 5 - SUBSEQUENT EVENTS
TheAssociationhasevaluatedsubsequenteventsthroughAugust7,2025,whichisthedatethefinancialstatements wereissued,andnomaterialsubsequenteventswereidentified.