In future posts I am going to discuss characteristics of Yankee Farm Credit's loan portfolio, so let's define some terms.
Loan volume means principal balance outstanding. It does not include unused commitments (aka unused lines of credit). I may refer to loan volume on either a gross or net basis.
Gross volume is the total amount the borrower owes. Net volume is the amount that Yankee holds on its books. The difference between gross volume and net volume is what we sell to someone else.
Why do we sell a portion of our loans? We have a small number of loans, about a dozen, that are larger than is prudent for a financial institution of our size to hold in portfolio. On those loans, we keep a portion and sell the rest to other entities within the Farm Credit System.
Gross volume is the appropriate number to use when thinking about our market presence. Net volume is the appropriate number to use when thinking about the risk that is on Yankee's balance sheet.
At 12/31/07 gross volume was $349 million and we had sold $47 million, leaving a net volume of $302 million. (This was the first time that net volume reached $300 million.)
