AgriBank Reports Fourth Quarter 2020 and Year-End Financial Results
AgriBank reported strong financial results for 2020, with a net income of $709.2 million, up 13.0% from 2019. Net interest income was $714.4 million, a 4.8% increase, while non-interest income surged to $190.1 million, marking a 95.6% rise. Loan portfolio quality improved, with 99.3% classified as acceptable. However, the COVID-19 pandemic posed challenges, affecting economic stability. Total capital reached $6.6 billion, exceeding regulatory requirements, and liquidity stood at 167 days, supporting operational needs.
- Net income increased by $81.6 million, or 13.0%, to $709.2 million for 2020.
- Non-interest income rose by $92.9 million, or 95.6%, totaling $190.1 million for the year.
- Loan portfolio increased by $11.5 billion, or 11.7%, reaching $109.8 billion by December 31, 2020.
- Credit quality improved, with 99.3% of loans classified as acceptable.
- Total capital was strong at $6.6 billion, exceeding all regulatory minimums.
- Net interest income decreased by $18.9 million, or 10.2%, in the fourth quarter of 2020 compared to the previous year.
- Concerns remain about the impact of COVID-19 on economic recovery and agricultural markets.
ST. PAUL, Minn., March 1, 2021 /PRNewswire/ -- Today, St. Paul-based AgriBank announced financial results for the fourth quarter and full year of 2020, with strong profitability, credit quality, and liquidity and capital.
Highlights:
- Profitability: Net income increased
$81.6 million , or 13.0 percent, to$709.2 million for the year ended December 31, 2020, compared to$627.6 million for the prior year. - Credit quality: Total loan portfolio credit quality was strong, with 99.3 percent of loans classified as acceptable compared to 97.9 percent at December 31, 2019.
- Liquidity and capital: End-of-the-quarter liquidity was 167 days, well above the regulatory requirement. Capital also remained well above the regulatory minimums and company targets.
COVID-19 Pandemic
The spread of COVID-19 has created a global public-health crisis that has adversely impacted the worldwide economy, temporarily decreased liquidity in fixed income markets in March and April, significantly increased unemployment levels, and disrupted global supply and demand chains. Although production agriculture has fared better than expected during the second half of 2020, in part due to government ad-hoc support programs, uncertainties about the pace of economic recovery remain as the impact and duration of the pandemic is unknown.
As the significance of the COVID-19 pandemic became apparent, AgriBank and District Associations implemented their respective Business Continuity Plans (BCPs). In March and April, operations transitioned to alternative work environments. Beginning in June, operations at certain Associations began transitioning back to in-office on a location-by-location basis in accordance with each entity's BCP. However, due to the rise of COVID-19 cases in the later part of 2020, as well as state and local requirements, some Association locations reverted back to remote work environments and continue to operate in that capacity. Based on business needs and employee discretion, a very limited number of AgriBank employees returned to the office in October with permission from senior leaders and following agreed-upon safety protocols. The timing of the transition back to the AgriBank office for the remaining staff will depend on, among numerous factors, established metrics monitored and assessed by the BCP team and will occur in a way that minimizes risk to employees and to AgriBank's business operations. To date, the transition to alternative work environments has occurred without significant issues. Collectively, AgriBank's business continuity practices have allowed them to continue to serve their mission. The remote work environment was done without interruption to business functions. AgriBank is supporting District Associations as they continue to work with borrowers to offer appropriate solutions to meet their liquidity needs, which may include loan modifications for those borrowers impacted by the pandemic. AgriBank had not had any significant changes to their internal controls over financial reporting due to working remotely or related issues.
The overall impact of the pandemic on U.S. agriculture will depend on the severity and duration of the outbreak, the continued response by federal, state and local governments, and levels of commodity prices, among many other factors. To date, the global pandemic has not resulted in a material adverse financial impact to the AgriBank or District Combined Financial Statements. The impact the pandemic ultimately has on AgriBank's business, results of operations and financial condition, including regulatory requirements, will depend on future developments that are highly uncertain and unpredictable. Overall, agriculture will adjust, continuing to provide an essential service to the U.S. and global consumer.
Year-to-date 2020 Results of Operations
Net interest income was
Non-interest income was
Fourth Quarter 2020 Results of Operations
Net interest income was
Non-interest income was
Loan Portfolio
Total loans were
AgriBank's strong credit quality reflects the overall financial strength of District Associations and their underlying portfolios of retail loans. AgriBank's portfolio was composed of 99.3 percent loans classified as acceptable as of December 31, 2020, compared to 97.9 percent acceptable as of December 31, 2019. Loans classified as acceptable represent the highest-quality assets. The improvement in acceptable percentage was primarily the result of the purchase of loan participations from certain District Associations, largely categorized in the real estate sector, as well as strong forecasted net farm income and improvement in farm sector working capital in 2020. The credit quality of AgriBank's retail loan portfolio (accounting for approximately 10 percent of the total loan portfolio) increased to 94.0 percent classified as acceptable at December 31, 2020, compared to 90.1 percent acceptable at December 31, 2019. While currently strong, negative economic trends could impact borrowers and may result in changes to credit quality in AgriBank's loan portfolio.
Agricultural Conditions
The U.S. Department of Agriculture's Economic Research Service (USDA-ERS) released its initial forecast of the U.S. aggregate farm income and financial conditions for 2021 on February 5. The release also contained the revised estimates for 2020. Net farm income for 2021 is forecast to decline for the first time in five years to
The outlook for agriculture has improved remarkably since the second quarter of 2020. However, COVID-19 infection rates (including potential outbreaks in animal processing plants and new more virulent strains) along with weather, trade, government policy and global agricultural production levels may keep agriculture market volatility elevated for the next 12 months. Adoption of cost-saving technologies, marketing methods and risk management strategies will continue to cause a wide range of results among the respective producers.
Capital Resources and Liquidity
Total capital remained very strong at
Cash and investments totaled
About AgriBank
AgriBank is part of the customer-owned, nationwide Farm Credit System. Under Farm Credit's cooperative structure, AgriBank is primarily owned by 14 local Farm Credit Associations, which provide financial products and services to rural communities and agriculture. AgriBank obtains funds and provides funding and financial solutions to those Associations. The AgriBank District covers a 15-state area stretching from Wyoming to Ohio and Minnesota to Arkansas.
For more information, please visit 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 AgriBank's annual report, which is available no later than 75 days following the end of the year. AgriBank undertakes no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
AGRIBANK, FCB | |||||
STATEMENTS OF CONDITION INFORMATION | |||||
(in thousands) | |||||
December 31, | December 31, | ||||
2020 | 2019 | ||||
(Unaudited) | |||||
Loans | |||||
Allowance for loan losses | 39,850 | 32,089 | |||
Net loans | 109,745,845 | 98,265,934 | |||
Investment securities, federal funds and cash | 19,847,121 | 16,093,938 | |||
Accrued interest receivable | 495,635 | 727,636 | |||
Other assets | 219,533 | 144,562 | |||
Total assets | |||||
Bonds and notes | |||||
Accrued interest payable | 273,685 | 407,865 | |||
Other liabilities | 425,368 | 314,980 | |||
Total liabilities | |||||
Shareholders' equity | |||||
Total liabilities and shareholders' equity | |||||
AGRIBANK, FCB | ||||||||
STATEMENTS OF INCOME INFORMATION | ||||||||
(in thousands) | ||||||||
For the | For the | |||||||
three months ended | twelve months ended | |||||||
December 31, | December 31, | |||||||
2020 | 2019 | 2020 | 2019 | |||||
(Unaudited) | (Unaudited) | |||||||
Interest income | ||||||||
Interest expense | 322,453 | 575,142 | 1,610,238 | 2,461,562 | ||||
Net interest income | 166,169 | 185,096 | 714,361 | 681,545 | ||||
Provision for credit losses | 2,000 | 3,500 | 11,000 | 11,500 | ||||
Net interest income after provision for credit losses | 164,169 | 181,596 | 703,361 | 670,045 | ||||
Non-interest income | 37,349 | 29,601 | 190,088 | 97,185 | ||||
Non-interest expense | 72,076 | 36,507 | 184,270 | 139,637 | ||||
Net income | ||||||||
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SOURCE AgriBank
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