AgriBank, FCB Reports 2011 Second Quarter and Six-Month Financial Results

St. Paul, MN (PRWEB) August 11, 2011

AgriBank, FCB announced today its financial results for the second quarter 2011, reporting continued strong levels of net income, capital, liquidity and credit quality.

Our strong second quarter results reflect positive trends in our business fundamentals with continued strong income, excellent credit quality and financial strength. Our model supports todays volatile economy but also evolves with our business to maintain longer-term viability and access to capital and liquidity, said Bill York, AgriBank CEO.

2011 Results of Operations

Net income is very strong for the six months ended June 30, 2011 at $ 219.4 million. While this is a decline from our record earnings of $ 283.3 million in 2010, it reflects continued strong performance by the Bank.

Net interest income for the six months ended June 30, 2011 continues to be positively impacted by funding actions. During the first half of 2010, the Bank took advantage of a favorable interest rate environment and repriced unprecedented levels of its debt at lower costs at a pace that exceeded the rate at which interest-earning assets repriced. This was continued in 2011, although at a slower pace which was expected given the level of activity in 2010. Net income in 2010 also included a non-recurring $ 13.4 million premium refund received from the Farm Credit System Insurance Corporation.

Net income was positively impacted by a $ 7.1 million decrease in impairment charges on investments held for liquidity purposes compared to the same period in 2010. While there continues to be stress in the housing related asset-backed and mortgage-backed sector of the investment portfolio, the deterioration has slowed significantly and liquidity continues to improve. Net income was positively impacted in the prior year by $ 7.6 million of gains recognized on the sale of previously impaired investments.

Second Quarter 2011 Results of Operations

Second quarter 2011 net income is very strong at $ 115.2 million. While this is a decline from our record earnings of $ 147.1 million for the same period last year, it reflects continued strong performance by the Bank.

Net income for the quarter ended June 30, 2011 continues to be positively impacted by net interest income generated from funding actions and fee income from repricing assets, but to a lesser extent than the same period of the prior year. Net income was also positively impacted in the second quarter of the prior year by gains recognized on the sale of previously impaired investments.

Loan Portfolio

Total loans were $ 59.3 billion at June 30, 2011, stable compared to $ 59.5 billion at December 31, 2010 and up from $ 55.2 billion at June 30, 2010. AgriBanks primary business is providing wholesale lending to its affiliated Associations. Wholesale volume directly reflects the retail marketplace activities at the Associations which are funded through their wholesale lines with the Bank. The stable loan volume from December 31, 2010 is reflective of seasonal paydowns that typically happen in first quarter as many retail customers sell crops after year-end, offset by $ 1.0 billion of loan volume in a new equipment financing program.

AgriBanks loan portfolio credit quality was at 99.5% acceptable under the Farm Credit Administrations Uniform Classification System at June 30, 2011, March 31, 2011 and December 31, 2010.

Credit quality remained stable into the first half of 2011. This strong credit quality continues, in part, due to cash grain producers experiencing strong profitability, higher milk prices improving dairy profitability, and ethanol producers remaining marginally profitable. The meat complex is remaining positive although narrowing operating margins are occurring due to higher feed costs. Broilers are experiencing some stress due to oversupply and high cost of feed.

Nonaccrual loans were $ 92.6 million at June 30, 2011 compared to $ 93.2 million at March 31, 2011, and up from $ 73.6 million at December 31, 2010. The increase in nonaccrual loans from December 31, 2010 is due primarily to the transfer of a large customer in the poultry industry to nonaccrual status, partially offset by a large asset in the dairy industry moving to accrual status during the first quarter of 2011.

The allowance for loan losses at June 30, 2011 was $ 14.8 million compared to $ 12.3 million at March 31, 2011, and $ 13.0 million at December 31, 2010, reflecting the impact of changes in risk in the retail portfolio, primarily in the dairy industry and the addition of the equipment financing portfolio in the second quarter of 2011.

Liquidity and Capital

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

Cash and investments increased to $ 11.1 billion at June 30, 2011, compared to $ 10.7 billion at December 31, 2010. The Banks liquidity position increased to 159 days coverage of maturing debt at June 30, 2011, compared to 137 days at December 31, 2010, each well above the 90-day minimum established by the Farm Credit Administration, the Banks regulator. Average liquidity for the six months ended June 30, 2011 was 147 days. Capital increased to $ 3.778 billion at June 30, 2011, from $ 3.595 billion at December 31, 2010. The increase of $ 182.5 million primarily reflects net income earned and retained, an increase in capital stock and a reduction in other comprehensive loss for the period, reflecting improved market values of housing related securities within the Banks liquidity investment portfolio.

Our Association-centric approach is fundamental to our continued success. District Associations have the retail lending expertise, market experience and customer relationships. AgriBank complements these Associations with its consistent access to capital, prudent centralized risk management, innovative financial products and strong balance sheet. Together, we are proactive, and collectively, we are stronger, said York.

About AgriBank

AgriBank, FCB is the largest of five banks within the national Farm Credit System, with $ 71 billion in total assets. As agricultures borrower-owned financial leader, AgriBank complements the market-facing focus of affiliated Associations to serve rural America in a District that stretches from Ohio to Wyoming and from Minnesota to Arkansas, representing nearly 40% of farmland and over 54% of cropland in the United States. These affiliated Associations and AgriBank are collaborating in successfully shaping the future of agriculture.

Additional Information

For more information about AgriBank, including its annual and quarterly reports, visit the Banks website at

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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