AgriBank Reports Fourth Quarter 2023 and Year-End Financial Results

Rhea-AI Summary

AgriBank reports strong financial performance for 2023 with robust net income, credit quality, and liquidity. Net income stood at $873.3 million, with a return on assets ratio above target. Loan portfolio credit quality remained high at 99.4%. Liquidity was well above regulatory requirements, and capital exceeded minimums. AgriBank's financial success led to over $864 million returned to lenders. Despite a decline in non-interest income, total loans grew by 11.4% to $148.7 billion.

Positive

• None.

Negative

• Non-interest income decreased by 8.3% due to lower conversion and prepayment fees.
• Loan servicing expenses increased by 7.3% in 2023.
• The credit quality of AgriBank's retail loan portfolio slightly decreased from 95.8% to 96.2% acceptable loans.
• The USDA-ERS forecasted a decline in U.S. farm income for 2024.
• Net farm income is expected to decrease by 25.5% in 2024 compared to 2023.
• Despite lower net farm income expectations, the farm sector balance sheet remains strong.
• AgriBank redeemed all outstanding shares of preferred stock on January 1, 2024.

Strong Net Income and Loan Credit Quality

ST. PAUL, Minn., March 1, 2024 /PRNewswire/ -- Today, St. Paul-based AgriBank announced financial results for the fourth quarter and full year of 2023, with strong profitability, credit quality, and liquidity and capital.

Highlights:

• Profitability: Net income remained strong at $873.3 million for the year ended December 31, 2023. AgriBank's year-to-date return on assets (ROA) ratio of 53 basis points was above the target of 50 basis points.
• Credit quality: Total loan portfolio credit quality remained strong, with 99.4 percent of loans classified as acceptable at December 31, 2023.
• Liquidity and capital: End-of-the-quarter liquidity was 161 days, well above the regulatory requirement. Capital also remained well above the regulatory minimums and company targets.

"We are pleased to report that AgriBank completed the year with strong financial performance, which reflects the effectiveness of our business model and the Farm Credit lenders we support," said Jeffrey Swanhorst, AgriBank chief executive officer. "AgriBank shared this financial success by returning over $864 million in earnings to those lenders, our customer/owners, in the form of cash and stock patronage distributions, nearly 12 percent higher than the previous year. Ultimately, those funds benefit the rural borrowers we collectively serve."

2023 Results of Operations

Net interest income was $985.2 million for the year ended December 31, 2023, an increase of $130.7 million, or 15.3 percent, compared to the same period of the prior year. Net interest income increased, primarily driven by the positive impact of the sharp rise in interest rates on the benefit on non-interest bearing funding, growth in the retail portfolio and increased spreads on investment securities.

Non-interest income was $105.5 million for the year ended December 31, 2023, a decrease of $9.6 million, or 8.3 percent, compared to the same period of the prior year, mostly related to a decline in conversion and prepayment fees due to high interest rates, as well as a slight decrease in mineral income.

Non-interest expense was $198.3 million for the year ended December 31, 2023, an increase of $13.6 million, or 7.3 percent, compared to the same period of the prior year. The increase was mainly due to increases in loan servicing expenses related to the growth in participations purchased through AgriBank's asset pool programs in 2023.

Loan Portfolio 

Total loans were $148.7 billion at December 31, 2023, an increase of $15.3 billion, or 11.4 percent, compared to December 31, 2022. This increase was primarily attributable to wholesale loan growth and increases in retail 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 99.4 percent acceptable loans at December 31, 2023, compared to 99.6 percent at December 31, 2022. Loans classified as acceptable represent the highest-quality assets. The credit quality of AgriBank's retail loan portfolio increased slightly to 96.2 percent classified as acceptable at December 31, 2023, compared to 95.8 percent acceptable at December 31, 2022.

Agricultural Conditions

On February 7, 2024, 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 2024 and updated its 2023 forecast. The revised 2023 nominal net farm income (NFI) forecast of $155.9 billion represented a $29.7 billion decline from the record-high 2022 level, down 16.0 percent, following three-consecutive years with substantial increases. Although down, when adjusting for inflation, the 2023 real NFI forecast is $41.1 billion, or 34.8 percent, above the 20-year average (2003-2022) net farm income in 2024 dollars. The initial 2024 nominal NFI projection of $116.1 billion would represent a decline of $39.8 billion, or 25.5 percent, from the revised 2023 NFI forecast. Although NFI is forecast to decline significantly for the second-consecutive year, the 2024 forecast, if realized, would be just 1.8 percent, $2.0 billion, below the 20-year average real net farm income.

Despite declines in crop prices and lower net farm income expectations, the farm sector balance sheet remains strong. Many factors, including weather, trade, government and monetary policy, global agricultural production levels, and pathogenic outbreaks in livestock and poultry, may keep agriculture market volatility elevated for the next few years. Implementation of cost-saving technologies, marketing methods and risk management strategies will continue to cause a wide range of results among the respective agricultural producers.

Capital Resources and Liquidity

Total capital remained strong at $8.6 billion as of December 31, 2023, an increase of $1.4 billion compared to December 31, 2022. The increase was driven primarily by strong net income and net stock issuances, consistent with AgriBank's capital plan, which positively impacted shareholders' equity. Additionally, lower unrealized losses on fixed-rate investments positively impacted equity at the end of 2023. AgriBank exceeded all regulatory capital minimum requirements, including additional regulatory buffers.

Through effectively leveraging existing District capital and in supporting the achievement of AgriBank and Associations' business goals through the increased use of pool programs, AgriBank redeemed all its outstanding shares of preferred stock on January 1, 2024.

Cash and investments totaled $25.5 billion and $21.5 billion at December 31, 2023 and December 31, 2022, respectively. AgriBank's end-of-the-period liquidity position represented 161 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. AgriBank and those Associations compose the AgriBank District. The District covers a 15-state area stretching from Wyoming to Ohio and Minnesota to Arkansas. For more information, 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 approximately 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,
	2023	2022
Loans held to maturity	$148,370,212	$133,470,781
Allowance for loan losses	31,992	31,739
Net loans held to maturity	148,338,220	133,439,042
Loans held for sale	355,219	—
Net loans	148,693,439	133,439,042
Investment securities and other earning assets	25,454,925	21,450,899
Accrued interest receivable	1,590,342	1,028,153
Other assets	684,297	544,674
Total assets	$176,423,003	$156,462,768
Bonds and notes	$166,310,329	$148,228,998
Accrued interest payable	1,027,470	644,117
Other liabilities	502,026	404,097
Total liabilities	$167,839,825	$149,277,212
Shareholders' equity	$8,583,178	$7,185,556
Total liabilities and shareholders' equity	$176,423,003	$156,462,768

 

AGRIBANK, FCB
STATEMENTS OF INCOME INFORMATION
(in thousands)
	For the		For the
	three months ended		twelve months ended
	December 31,		December 31,
	2023	2022	2023	2022
	(Unaudited)	(Unaudited)
Interest income	$1,768,910	$1,129,633	$6,135,821	$3,108,460
Interest expense	1,505,622	896,430	5,150,665	2,254,016
Net interest income	263,288	233,203	985,156	854,444
Provision for (reversal of) credit losses	11,000	(1,000)	19,000	(6,000)
Net interest income after provision for (reversal of) credit losses	252,288	234,203	966,156	860,444
Non-interest income	32,268	28,006	105,460	115,018
Non-interest expense	57,709	47,623	198,322	184,765
Net income	$226,847	$214,586	$873,294	$790,697

 

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SOURCE AgriBank

FAQ

What was AgriBank's net income for the year ended December 31, 2023?

AgriBank reported a net income of $873.3 million for the year ended December 31, 2023.

What was the return on assets (ROA) ratio for AgriBank in 2023?

AgriBank's year-to-date return on assets (ROA) ratio was 53 basis points, above the target of 50 basis points.

How much did AgriBank return to lenders in 2023?

AgriBank returned over $864 million in earnings to lenders in 2023.

What was the total loan portfolio credit quality percentage at December 31, 2023?

AgriBank's total loan portfolio credit quality was 99.4% acceptable at December 31, 2023.

How much did AgriBank's loan portfolio increase by in 2023?

AgriBank's total loans grew by $15.3 billion, or 11.4%, to $148.7 billion at December 31, 2023.

What was the decrease in non-interest income for AgriBank in 2023?

Non-interest income decreased by $9.6 million, or 8.3%, in 2023.

What was the liquidity coverage at the end of December 31, 2023?

AgriBank's end-of-the-period liquidity position represented 161 days coverage of maturing debt obligations.

Did AgriBank redeem all outstanding shares of preferred stock? If so, when?

AgriBank redeemed all its outstanding shares of preferred stock on January 1, 2024.