AgriBank, FCB Reports 2010 Second Quarter and Six-Month Financial Results


St. Paul (PRWEB) August 9, 2010

AgriBank, FCB today announced financial results for the second quarter 2010, reporting growth in net income and continued strong levels of capital, liquidity, and credit quality.

AgriBanks financial strength in the second quarter of 2010 is a result of a self- sustaining business model with operational flexibility. Our fundamental strengths continue to play a significant role in our financial results. Solid credit underwriting standards, liquidity and strong levels of capital allows us to keep our strong commitment providing a wide range of cost effective loan products to Associations in the AgriBank District,” said Bill York, AgriBank CEO.

Results of Operations

Net income for the second quarter was $ 147.1 million compared to $ 105.1 million for the same period last year, a $ 42.0 million or 40.0% increase. Net income for the six months ended June 30, 2010 was $ 283.3 million compared to $ 190.8 million for the same period last year, a $ 92.5 million or 48.5% increase. The increase in net income resulted primarily from increased net interest income, insurance refunds from reserves set up by the Farm Credit System Insurance Corporation, decreased impairment on securities and gains on sales of previously impaired securities within the Banks liquidity investment portfolio. Net interest income for the six months ended June 30, 2010 increased $ 36.1 million compared to the same period in the prior year. The increase in net interest income was primarily attributable to the Banks ability to re-price its outstanding debt in the lower interest rate environment and to adjustments in loan pricing to better reflect additional credit risk and market conditions in the current agricultural environment. Net income was also positively impacted by AgriBanks share of premium refunds by the Farm Credit System Insurance Corporation totaling $ 13.4 million.

Impairment charges on investments held for liquidity purposes in the six months ended June 30, 2010 was $ 13.4 million, compared to $ 38.1 million during the same period in 2009. This reflects write-downs on the Banks housing related asset-backed and mortgage backed investment securities. While there continues to be stress in this sector of the investment portfolio, the deterioration has slowed significantly and liquidity continues to improve. Net income was positively impacted in the second quarter of 2010 by $ 7.6 million of gains recognized on the sale of previously impaired investments.

Loan Portfolio

Total loans were $ 55.2 billion at June 30, 2010, down slightly from $ 55.7 billion at December 31, 2009 but up from $ 53.7 billion at June 30, 2009. Loan growth has been moderate compared to seasonally adjusted loan growth in prior years. This is a result of the AgriBank District experiencing softening loan demand due to commodity price changes, leveling of collateral values, and continued adherence to strong credit underwriting standards. The decline in loan volume since December 31, 2009 is reflective of pay downs that typically happen in first quarter as many retail customers sell crops after year-end.

Loan portfolio credit quality was at 99.44% acceptable and other assets especially mentioned under the Farm Credit Administrations Uniform Classification System, comparable to 99.47% at March 31, 2010 and 99.53% at December 31, 2009. Nonaccrual loans were $ 113.9 million at June 30, 2010, compared to $ 120.1 million at March 31, 2010 and $ 111.7 million at December 31, 2009. The allowance for loan losses at June 30, 2010 was $ 23.9 million, compared to $ 26.9 million at March 31, 2010 and $ 23.4 million at December 31, 2009, reflecting the impact of changes in risk in the retail portfolio, primarily in the dairy industry.

Adverse loans continued to stabilize into the second quarter of 2010 even though the global demand of commodities continues to decrease. Credit stabilization is due, in part, once again to the meat complex maintaining positive operating margins while dairy and ethanol are marginally profitable.

Liquidity and Capital

Capital and liquidity levels remain strong and exceed regulatory minimum requirements.

Cash and investments increased to $ 10.3 billion at June 30, 2010, compared to $ 9.6 billion at December 31, 2009. The Banks liquidity position increased to 137 days of liquidity at June 30, 2010, compared to 123 days at December 31, 2009, each well above the 90-day minimum established by the Farm Credit Administration, the Banks regulator. Capital increased to $ 3.438 billion at June 30, 2010, from $ 3.267 billion at December 31, 2009. The increase of $ 171 million since year-end reflects net income earned and retained and a reduction in other comprehensive loss for the period, reflecting improved market values of housing related securities within the Banks liquidity investment.

Our strong financial position has given us the capacity to provide financing and product innovation that complement Associations in the AgriBank District. We know that our Association-centric philosophy is critical to meeting the mission of the Bank and our Association customers, said York.

About AgriBank

AgriBank, FCB is the largest of five banks within the national Farm Credit System, with $ 66 billion in total assets. It facilitates agricultural lending in a District that stretches from Ohio to Wyoming and from Minnesota to Arkansas. AgriBank is committed to the integrity of its mission by providing a stable and reliable source of credit and services to Associations, supporting rural development and maintaining a sustainable model for Farm Credit. From its headquarters in downtown St. Paul, Minnesota, AgriBank serves as a trusted partner, wholesale lender and business-service provider to a 15-state network of Associations.

Additional Information

For more information about AgriBank, including its annual and quarterly reports, visit the Banks website at http://www.agribank.com.

Forward-Looking Statements

Any forward-looking statements 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 about these risks and uncertainties is contained in AgriBanks annual report. The Bank undertakes no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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