AgriBank Reports Fourth Quarter 2021 and Year-End Financial Results

Rhea-AI Summary

AgriBank announced robust financial results for Q4 and the full year of 2021. The bank reported a net income of $765.2 million and a net interest income of $779.8 million, marking a 9.2% increase year-over-year. The total loan portfolio rose to $122 billion, an 11.1% increase from 2020, with credit quality at 98.3% acceptable loans. However, non-interest income declined by 23.4% to $145.5 million. Capital remained strong at $7 billion, exceeding regulatory requirements.

Positive

• Net income of $765.2 million for 2021, strong profitability.
• Net interest income increased by $65.4 million, or 9.2%, year-over-year.
• Loan portfolio grew 11.1% to $122 billion, indicating strong demand.
• Credit quality remained high with 98.3% of loans classified as acceptable.
• Total capital increased to $7 billion, above regulatory requirements.

Negative

• Non-interest income decreased by $44.5 million, or 23.4%, compared to 2020.

ST. PAUL, Minn., March 2, 2022 /PRNewswire/ -- Today, St. Paul-based AgriBank announced financial results for the fourth quarter and full year of 2021, with strong profitability, credit quality, and liquidity and capital.

Highlights:

• Profitability: Net income remained strong at $765.2 million for the year ended December 31, 2021. AgriBank's year-to-date return on assets (ROA) ratio of 57 basis points was above the target of 50 basis points.
• Credit quality: Total loan portfolio credit quality was strong, with 98.3 percent of loans classified as acceptable at December 31, 2021, compared to 99.3 percent at December 31, 2020.
• Liquidity and capital: End-of-the-quarter liquidity was 158 days, well above the regulatory requirement. Capital also remained well above the regulatory minimums and company targets.

Year-to-date 2021 Results of Operations

Net interest income was $779.8 million for the year ended December 31, 2021, an increase of $65.4 million, or 9.2 percent, compared to same period of the prior year. Net interest income increased mainly due to continued increases in both wholesale and retail loan volume.

Non-interest income was $145.5 million for the year ended December 31, 2021, a decrease of $44.5 million, or 23.4 percent, compared to the same period of the prior year. The decline was primarily driven by lower conversion fees, which were significantly elevated in 2020, partially offset by increased mineral income.

Fourth Quarter 2021 Results of Operations

Net interest income was $206.4 million for the quarter ended December 31, 2021, an increase of $40.2 million, or 24.2 percent, compared to the same period of the prior year. These changes were primarily related to increases in loan volume and lower interest expense due to the low interest environment, partially offset by lower interest income on our investment portfolio.

Loan Portfolio 

Total loans were $122.0 billion at December 31, 2021, an increase of $12.2 billion, or 11.1 percent, compared to December 31, 2020. This increase was primarily attributable to increased wholesale loans and, to a lesser extent, increases in retail production and intermediate-term and agribusiness loans. Throughout 2021, District Associations experienced loan growth in the real estate mortgage, production and intermediate-term, and agribusiness sectors, contributing to the growth in our wholesale loans.

AgriBank's credit quality reflects the overall financial strength of District Associations and their underlying portfolios of retail loans. AgriBank's portfolio was composed of 98.3 percent loans classified as acceptable as of December 31, 2021, compared to 99.3 percent at December 31, 2020. Loans classified as acceptable represent the highest-quality assets. The credit quality of AgriBank's retail loan portfolio increased to 95.4 percent classified as acceptable at December 31, 2021, compared to 94.0 percent acceptable at December 31, 2020. The improvement in the acceptable percentage of the retail portfolio was positively impacted by the participation purchases during 2021. Additionally, continued strong net farm income and strong commodity prices in specific sectors contributed to the overall improvement.

COVID-19 Pandemic

As domestic public health measures have been implemented to limit the spread of the coronavirus, including the availability of vaccines, many restrictions have been lifted across the U.S. While the emergence of COVID-19 variants have negatively impacted certain regions of the U.S., the overall economy continues to recover, and the outlook is positive for many sectors, including agriculture.

Some AgriBank employees, at their discretion and in compliance with established health and safety measures, have periodically voluntarily returned to the office. In January 2022, AgriBank ended its business continuity protocols activation, which had been in place since the start of the COVID-19 pandemic. Collectively, AgriBank's business continuity responses and ongoing measures have allowed it to continue to serve its mission.

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 2022. Net farm income (NFI) for 2022 is forecast to decline a nominal $5.4 billion, or 4.5 percent, from the revised $119.1 billion 2021 NFI forecast. If realized at $113.7 billion, the 2022 NFI projection would be the third highest level ever in nominal dollars, trailing only 2021 and 2013. After adjusting for inflation, the 2022 NFI forecast equates to a $9.7 billion decline, or 7.9 percent, from the revised 2021 forecast. Despite the projected decline for 2022, the NFI forecast would still be more than $10 billion higher than the 10-year average real NFI if the 2021 and 2022 forecasts are realized.

The outlook for U.S. agriculture remains positive despite the challenges of rising expenses, supply chain disruptions and labor issues that many sectors are facing. However, weather, trade, government policy, global agricultural production levels and the potential for pathogenic outbreaks in livestock and poultry may keep agriculture market volatility elevated for the next twelve 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 $7.0 billion as of December 31, 2021, an increase of $426.4 million compared to December 31, 2020. This increase was driven primarily by net income and net stock issuances, which were substantially reduced by cash patronage distributions declared, consistent with AgriBank's capital plan. AgriBank exceeded all regulatory capital minimum requirements, including additional regulatory buffers.

Cash and investments totaled $19.7 billion and $19.8 billion at December 31, 2021 and 2020, respectively. AgriBank's end-of-the-period liquidity position represented 158 days coverage of maturing debt obligations, which supports operational demands, and was well above the 90-day minimum established by AgriBank's regulator.

About AgriBank

AgriBank is part of the customer-owned, nationwide Farm Credit System. Under Farm Credit's cooperative structure, AgriBank is primarily owned by 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,
	2021	2020
	(Unaudited)
Loans	$121,994,112	$109,785,695
Allowance for loan losses	37,558	39,850
Net loans	121,956,554	109,745,845
Investment securities, federal funds and cash	19,697,622	19,847,121
Accrued interest receivable	519,172	495,635
Other assets	243,248	219,533
Total assets	$142,416,596	$130,308,134
Bonds and notes	$134,702,607	$123,029,564
Accrued interest payable	260,462	273,685
Other liabilities	447,612	425,368
Total liabilities	$135,410,681	$123,728,617
Shareholders' equity	$7,005,915	$6,579,517
Total liabilities and shareholders' equity	$142,416,596	$130,308,134

 

AGRIBANK, FCB
STATEMENTS OF INCOME INFORMATION
(in thousands)
	For the		For the
	three months ended		twelve months ended
	December 31,		December 31,
	2021	2020	2021	2020
	(Unaudited)	(Unaudited)	(Unaudited)
Interest income	$503,032	$488,622	$1,967,029	$2,324,599
Interest expense	296,639	322,453	1,187,241	1,610,238
Net interest income	206,393	166,169	779,788	714,361
Provision for credit losses	1,000	2,000	1,000	11,000
Net interest income after provision for credit losses	205,393	164,169	778,788	703,361
Non-interest income	42,236	37,349	145,548	190,088
Non-interest expense	41,156	72,076	159,125	184,270
Net income	$206,473	$129,442	$765,211	$709,179

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/agribank-reports-fourth-quarter-2021-and-year-end-financial-results-301494235.html

SOURCE AgriBank

FAQ

What were AgriBank's financial results for Q4 2021?

AgriBank reported a net income of $206.5 million for Q4 2021, a significant increase from $129.4 million in the same quarter of 2020.

How did AgriBank perform in 2021 compared to 2020?

In 2021, AgriBank achieved a net income of $765.2 million, up from $709.2 million in 2020, highlighting its strong financial growth.

What is the total loan portfolio of AgriBank as of December 31, 2021?

AgriBank's total loan portfolio reached $122 billion as of December 31, 2021, reflecting an 11.1% increase compared to the previous year.

What is the credit quality of AgriBank's loans?

As of December 31, 2021, AgriBank reported that 98.3% of its loans were classified as acceptable, indicating strong credit quality.

What are the regulatory capital requirements for AgriBank?

AgriBank's total capital was $7 billion as of December 31, 2021, exceeding the regulatory minimums and company targets.