St. Paul (PRWEB) March 01, 2012
AgriBank, FCB announced today its financial results for the fourth quarter and full year of 2011, reporting continued strong levels of net income, capital, liquidity and credit quality.
2011 was another successful year by every metric. We achieved significant results during a year of extremes from weather to commodity prices to world economic unrest, proving once more that when we focus on the fundamentals and the collective strengths of the District, we succeed and rural America wins. said Bill York, AgriBank CEO.
2011 Results of Operations
AgriBanks financial strength is obvious, because proven by sturdy financial performance inside 2011. AgriBank reported quite sturdy web money of $ 464.9 million for the year ended December 31, 2011, that lead to the next highest amount of earnings just trailing the record 2010 web money of $ 580.9 million.
Net interest income for 2011 was strong at $ 457.7 million and reflects the positive impact of 2011 funding actions. Throughout 2010, the Bank took advantage of a favorable interest rate environment and repriced unprecedented levels of its debt at lower costs and at a pace that exceeded the rate at which interest-earning assets repriced, which resulted in $ 506.2 million of net interest income in 2010. This continued in 2011, although at a slower pace which was expected given the level of activity in 2010.
Credit quality remains very strong. The Bank recorded provision for loan losses of $ 8.6 million in 2011 which was primarily related to a single large customer.
Non-interest income was $ 121.7 million for 2011 compared to $ 173.7 million in 2010. Loan prepayment and conversion fee income was $ 54.4 million in 2011 compared to $ 87.3 million in 2010. The relatively low interest rate environment resulted in strong 2011 prepayment and conversion activity, although lower than the high level of activity of 2010. Also contributing to the 2011 non-interest income was business services income was $ 19.9 million reflecting revenue earned from business services offered to our Association customers and mineral income of $ 46.0 million generated from mineral rights held primarily in North Dakota and Arkansas.
Non-interest expense was $ 105.9 million in 2011 compared to $ 97.3 million in 2010. The non-interest expense in 2011 primarily consisted of $ 61.3 million of operating expenses and $ 23.3 million of investment impairment losses.
Fourth Quarter 2011 Results of Operations
AgriBank reported sturdy web money of $ 126.5 million for the 4th quarter 2011. Net interest money for the quarter ended December 31, 2011 was $ 115.7 million plus continues with reflect the positive impact from funding actions. Net money was definitely affected inside the 4th quarter of 2011 due with a reversal of provision cost of $ 6.6 million, that was generally associated with the resolution of the big clients nonaccrual financing. The ultimate reduction was lower than had been offered for throughout the initial 3 quarters of 2011. Loan prepayment plus conversion fee money totaled $ 17.4 million inside the 4th quarter of 2011. Fourth quarter 2011 web money included $ 10.9 million of investment impairment losses recorded about certain of the Banks housing-related securities inside its investment portfolio.
Loan Portfolio
Total financing were $ 62.0 billion at December 31, 2011, an heighten of 4% from $ 59.5 billion at December 31, 2010. AgriBanks main company is providing wholesale lending with its affiliated Associations, that represented 87.6% of total financing. Wholesale amount straight reflects the retail market escapades at the Associations that are funded from their wholesale lines with all the Bank. Throughout the year, Associations seasonal working loan need was lower than famous patterns, yet this was over offset by brand-new amount inside December 2011 from sturdy degrees of loan originations inside the mortgage property sector plus advance purchases of 2012 inputs about running lines. Loans also improved due with $ 1.3 billion of loan amount inside a hot equipment financing system operated inside partnership with different Farm Credit entities.
AgriBanks loan portfolio credit quality improved during 2011 and remains strong at 99.7% acceptable and special mention under the Farm Credit Administrations Uniform Classification System at December 31, 2011, up from 99.5% at December 31, 2010. This strong credit quality continues, in part, due to cash grain producers experiencing strong profitability, higher milk prices improving dairy profitability and continued profitability in the pork sector.
The meat complex remains positive despite narrow operating margins occurring due to higher feed costs. More specifically, operating margins for some cattle feedlots continue to be negative despite very high sales prices of finished cattle. However, hog producers continued to maintain positive margins in 2011 even with higher feed costs due to increased prices for pork and the use of contracting and hedging for risk management. Dairy producers net income in 2011 improved but increases in production, higher feed costs and a possible reduction in dairy product exports create a cautionary outlook. Broiler oversupply and the high cost of feed have generally produced negative margins.
Nonaccrual loans were $ 62.0 million at December 31, 2011 compared to $ 94.8 million at September 30, 2011 and $ 73.6 million at December 31, 2010. The decrease in nonaccrual loans during the fourth quarter of 2011 was due primarily to the final payoff of a single large nonaccrual customer which went into nonaccrual during the first quarter of 2011. The decrease in nonaccrual loans from the prior year primarily reflects a large asset in the dairy industry moving to accrual status during the first quarter of 2011.
The allowance for loan losses at December 31, 2011 was $ 9.2 million compared to $ 23.8 million at September 30, 2011 and $ 13.0 million at December 31, 2010. The decrease in allowance for loan losses during the fourth quarter of 2011 was primarily due to final payoff and charge-offs related to a single large nonaccrual customer. The decrease in allowance for loan losses from the prior year reflects improving credit quality and charge-offs on certain nonaccrual loans, somewhat offset by allowance provided on the new equipment financing portfolio.
Liquidity and Capital
Liquidity plus capital degrees stay sturdy plus surpass regulatory minimal specifications.
Cash plus investments totaled $ 10.4 billion at December 31, 2011, compared with $ 10.7 billion at December 31, 2010. The Banks liquidity position was 138 days coverage of maturing debt at December 31, 2011, compared with 137 days at December 31, 2010, every perfectly above the 90-day minimal established by the Farm Credit Administration, the Banks regulator. Average liquidity for the year ended December 31, 2011 was 152 days. Capital improved with $ 3.806 billion at December 31, 2011, from $ 3.595 billion at December 31, 2010. The heighten of $ 211.0 million mainly reflects web money earned plus retained plus an heighten inside capital stock.
We are committed to building and maintaining a strong, sound organization that will provide shelter through any storm so that together, AgriBank and affiliated Associations are not only preparing for tomorrow, but redefining tomorrow. We are leading the way in solid operations, technology-driven solutions, young farmer support, and listening to, collaborating with and building relationships with third parties. With our substantial size, we remain flexible and nimble, positioning us to navigate all future scenarios while continuing to be proactive, risk conscious and service driven, said York.
About AgriBank
AgriBank, FCB is regarded as the biggest banks in the nationwide Farm Credit System, with over $ 73 billion inside total assets. As agricultures borrower-owned financial