AgriBank publishes its financial results for the first quarter of 2022

Strong loan growth and credit quality

ST. PAUL, Minnesota., May 6, 2022 /PRNewswire/ — Today, St. PaulAgriBank-based AgriBank announced its financial results for the first quarter of 2022, with strong profitability, credit quality, liquidity and capital.

Strong points:

  • Profitability: Net income remained strong at $181.3 million for the three months ended March 31, 2022. AgriBank’s year-to-date return on assets (ROA) ratio of 52 basis points was above the target of 50 basis points.
  • Credit quality: The credit quality of the total loan portfolio was strong, with 98.4% of loans rated as acceptable at the March 31, 2022compared to 98.3% at December 31, 2021.
  • Liquidity and capital: Liquidity at the end of the quarter was 147 days, well above the regulatory requirement. Capital also remained well above regulatory minimums and corporate targets.

“Increased loan volume and improved credit quality contributed to AgriBank’s strong profitability,” said Jeffrey Swanhorst, CEO of AgriBank. “Our operational performance and financial position reflect the strong financial performance of the 13 agricultural credit associations we fund. AgriBank and associations are well positioned to help rural America through these very unstable times.”

First quarter 2022 operating results

Net interest income was $1930.6 million for the quarter ended March 31, 2022an augmentation of $120.5 million, or 6.9%, compared to the same period of the previous year. These changes were primarily related to increases in lending volume and a rising interest rate environment.

Non-interest income was $27.5 million for the three months ended March 31, 2022a decrease of $21.1 million, or 43.5%, compared to the same period of the previous year. The decrease is mainly due to lower fixed rate loan conversion and prepayment fees, partially offset by higher mining revenues.

loan portfolio

Total loans were $1230.6 billion to March 31, 2022an augmentation of $10.6 billion, or 1.3%, compared to December 31, 2021. This increase, primarily seen in AgriBank’s wholesale portfolio, was primarily attributable to an increase in the volume of agribusiness and real estate mortgages across the AgriBank district, partially offset by a decline in production and volume in the medium term. The increases in agribusiness volume were tied to growth in capital market lending in several district associations, particularly in the grain sector, during the first quarter of 2022. In addition, lending volume real estate rose in the district associations due to continued demand for lower fixed rates long term rates slowly began to rise. 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 98.4% of loans classified as acceptable at the March 31, 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 96.1%, rated as acceptable at March 31, 2022compared to 95.4 percent acceptable at December 31, 2021. The improvement in the acceptable percentage of the retail portfolio was positively influenced by the maintenance of a strong net farm income and the stability of the working capital of the agricultural sector.

Agricultural conditions

The U.S. Department of Agriculture’s Economic Research Service (USDA-ERS) has released its first forecast of overall U.S. farm income and financial conditions for 2022. Net farm income (NFI) for 2022 is expected to decline by a $5.4 billionor 4.5%, compared to the revised version $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 first USDA-ERS 2022 agriculture sector revenue forecast was released on February 4, 2022 using price and production forecasts January 2022 Report on World Agricultural Supply and Demand Estimates (WASDE). Rapidly changing market conditions and geopolitical events since the initial release of the USDA-ERS forecasts will likely result in significant revisions to their September 1, 2022 updated forecasts of farm income and financial situation.

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 elevated over the next 12 months. . The implementation of cost saving 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 March 31, 2022a decrease of $2190.9 million compared to December 31, 2021. While net profit and net share issues, in line with AgriBank’s capital plan, had a positive impact on shareholders’ equity, these increases were more than offset by unrealized investment losses, mainly on US treasury bills and mortgage-backed securities guaranteed by the US government, linked to rapidly rising interest rates. AgriBank exceeded all minimum regulatory capital requirements, including additional regulatory buffers.

Cash and investments totaled $20.2 billion and $190.7 billion to March 31, 2022 and December 31, 2021, respectively. AgriBank’s liquidity position at the end of the period represented a 147-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 client. 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 for Ohio and Minnesota for 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)





March, 31st,

The 31st of December,


2022

2021


(Unaudited)


Loans

$123,613,785

$121,994,112

Allowance for loan losses

34 128

37,558

Net loans

123,579,657

121 956 554

Investment securities, federal funds and cash

20,195,906

19,697,622

Accrued interest receivable

501 757

519 172

other assets

240 299

243 248

Total assets

$144,517,619

$142,416,596




Bonds and notes

$137,241,989

$134,702,607

Accrued interest payable

268 409

260 462

Other liabilities

221 234

447,612

Total responsibilities

$137,731,632

$135,410,681




Equity

$6,785,987

$7,005,915

Total liabilities and equity

$144,517,619

$142,416,596




AGRIBANQUE, FCB

INCOME STATEMENT INFORMATION

(in thousands)





For the


three months completed


March, 31st,


2022

2021


(Unaudited)

(Unaudited)

interest income

$509,646

$481,395

Interest expense

316,074

300 354

Net interest income

193,572

181,041

Reversal of credit losses

(2,000)

(1,000)

Net interest income after reversal of credit losses

195,572

182,041

Non-interest income

27,488

48,615

Non-interest charges

41,726

37,625

Net revenue

$181,334

$193,031




SOURCE AgriBank

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