AgriBank Reports Second Quarter 2022 Financial Results

Strong loan growth and credit quality

ST. PAUL, Minnesota., August 8, 2022 /PRNewswire/ — Today, St. PaulAgriBank-based AgriBank reported financial results for the second quarter of 2022, with strong profitability, credit quality, liquidity and capital.

Strong points:

  • Profitability: Net income remained strong at $365.7 million for the six months ended June 30, 2022. AgriBank’s year-to-date return on assets (ROA) ratio of 51 basis points was above the target of 50 basis points.
  • Credit quality: The credit quality of the total loan portfolio was strong, with 99.5% of loans rated as acceptable at the June 30, 2022compared to 98.3% at December 31, 2021.
  • Liquidity and capital: Liquidity at the end of the quarter was 152 days, well above the regulatory requirement. Capital also remained well above regulatory minimums and corporate targets.

“AgriBank’s key financial metrics remained strong throughout the second quarter of 2022,” said Jeffrey Swanhorst, CEO of AgriBank. “Increasing loan volume and credit quality continued to drive strong profitability. Our consistent business and financial performance reflects the enduring strength of the agricultural credit lenders we finance as well as that of the agricultural credit borrowers, even in the face of economic uncertainty.

2022 operating results since the beginning of the year

Net interest income was $398.8 million for the six months ended June 30, 2022an augmentation of $32.6 million, or 8.9%, compared to the same period of the previous year. Net interest income increased primarily due to continued increases in wholesale and retail lending volume, particularly in asset consolidation programs.

Non-interest income was $52.5 million for the six months ended June 30, 2022a decrease of $22.0 million, or 29.5%, compared to the same period of the previous year. The decrease is mainly due to lower loan prepayments and conversion costs, partially offset by higher mining revenues.

Non-interest expenses increased $130.1 million, or 16.9%, for the six months ended June 30, 2022 compared to the same period of the previous year. The increase is mainly due to an increase in loan servicing fees related to pooling programs.

loan portfolio

Total loans were $1250.0 billion to June 30, 2022an augmentation of $30.0 billion, or 2.5%, compared to December 31, 2021. This increase, primarily in AgriBank’s wholesale portfolio, was primarily due to an increase in housing and agribusiness lending volume across the AgriBank district, partially offset by lower production and volume in the medium term. Agribusiness volume increases were linked to growth in capital markets lending from several district associations, particularly in the grain sector, in the first half of 2022. These increases were partially offset by seasonal operating line refunds in the second quarter, which were larger and came later than normal following the spring’s spike in commodity prices. In addition, real estate mortgage volume increased in the district associations due to continued demand for lower fixed rates in the first quarter of 2022, before the rapid rise in rates in the second quarter. Offsetting these increases, mid-term production and volume declined due to growth in seasonal tax planning in December, followed by refunds in January.

AgriBank’s credit quality reflects the overall financial strength of the District Associations and their underlying retail loan portfolios. AgriBank’s portfolio consisted of 99.5% of loans classified as acceptable at the June 30, 2022compared to 98.3% at December 31, 2021. Loans classified as acceptable represent the highest quality assets. The credit quality of AgriBank’s retail loan portfolio improved to 95.6%, rated as acceptable at June 30, 2022compared to 95.4 percent acceptable at December 31, 2021. The improvement in the acceptable percentage of the retail portfolio was related to loan purchases in several pooling programs. In addition, the maintenance of a high net farm income and the stability of the working capital of the agricultural sector have had a positive impact on the acceptable percentage.

Agricultural conditions

The United States Department of Agriculture’s Economic Research Service (USDA-ERS) released its first forecast of aggregate farm income and financial conditions in the United States for 2022 on February 4, 2022 using price and production forecasts January 2022 Report on World Agricultural Supply and Demand Estimates (WASDE). Initial forecast lowers 2022 net farm income (NFI) $5.4 billionor 4.5 percent, of the $119.1 billion NFI forecast 2021. If achieved at $113.7 billionthe NFI projection for 2022 would be the third highest on record in nominal dollars, behind only 2021 and 2013. The weaker NFI forecast for 2022 is largely due to a forecast $15.4 billioni.e. 56.8%, decrease in direct government payments associated with a $20.1 billion, or 5.1 percent, increase in total production expenses. These two factors more than offset $29.3 billion expected increase in cash receipts from sales of crops and animals/animal products. The rapidly changing market conditions and geopolitical events since the February 2022 The release of the USDA-ERS forecast will likely result in significant revisions to the USDA-ERS agricultural finance forecast in its September 1, 2022 forecast update.

Despite all the challenges and market uncertainty in recent years, the US agricultural sector is well positioned in 2022 and agricultural balance sheets are generally strong. Many factors, including weather, trade, government policy, global agricultural production levels and pathogen outbreaks in livestock and poultry, could keep agricultural market volatility high over the next 12 months. . The implementation of cost effective technologies, marketing methods and risk management strategies will continue to result in a wide range of outcomes among the respective agricultural producers.

Capital resources
and liquidity

Total capital remained very strong at $60.8 billion au June 30, 2022a decrease of $2250.8 million compared to December 31, 2021. Although net income and net equity issues had a positive impact on shareholders’ equity, these increases were more than offset by unrealized investment losses, primarily in US Treasury bills and asset-backed securities. US government mortgages linked to rapidly rising interest rates. AgriBank exceeded all minimum regulatory capital requirements, including additional regulatory buffers.

Cash and investments totaled $210.0 billion and $190.7 billion to June 30, 2022 and December 31, 2021, respectively. AgriBank’s liquidity position at the end of the period represented a 152-day coverage of maturing debt securities, which meets operational requirements, and was well above the 90-day minimum set by AgriBank’s regulator.

About AgriBank

AgriBank is part of the national agricultural credit system owned by the customer. Under the cooperative structure of Farm Credit, AgriBank is primarily owned by local agricultural credit associations, which provide financial products and services to rural communities and agriculture. AgriBank obtains funds and provides financing and financial solutions to these associations. The AgriBank District covers an area of ​​15 states spanning from Wyoming at Ohio and Minnesota at Arkansas. For more information, please visit www.AgriBank.com.

Forward-looking statements

All forward-looking statements contained in this press release are based on current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from expectations due to a number of risks and uncertainties. More information on these risks and uncertainties is contained in AgriBank’s annual report, which is available no later than 75 days after the end of the year. AgriBank undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

AGRIBANQUE, FCB

CONDITION STATEMENT INFORMATION

(in thousands)





June 30th,

The 31st of December,


2022

2021


(Unaudited)


Loans

$125,029,454

$121,994,112

Allowance for loan losses

32,870

37,558

Net loans

124 996 584

121 956 554

Investment securities, federal funds and cash

21,034,538

19,697,622

Accrued interest receivable

604 342

519 172

other assets

257,593

243 248

Total assets

$146,893,057

$142,416,596




Bonds and notes

$139,510,662

$134,702,607

Accrued interest payable

361,842

260 462

Other liabilities

240,482

447,612

Total responsibilities

$140,112,986

$135,410,681




Equity

$6,780,071

$7,005,915

Total liabilities and equity

$146,893,057

$142,416,596




AGRIBANQUE, FCB

INCOME STATEMENT INFORMATION

(in thousands)







For the

For the


three months completed

six months completed


June 30th,

June 30th,


2022

2021

2022

2021


(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

interest income

$620,391

$481,215

$1,130,037

$962,610

Interest expense

415 115

296 011

731 189

596,365

Net interest income

205 276

185 204

398,848

366,245

(Reversal of) provision for credit losses

(3,000)

(1,000)

(5,000)

(2,000)

Net interest income after (reversal of) provision for credit losses

208 276

186 204

403 848

368,245

Non-interest income

24,991

25,855

52,480

74,470

Non-interest charges

48,921

39,894

90,648

77,519

Net revenue

$184,346

$172,165

$365,680

$365,196






SOURCE AgriBank

Comments are closed.