AgriBank Reports Third Quarter 2024 Financial Results

Rhea-AI Summary

AgriBank reported strong Q3 2024 financial results with net income of $685.0 million for the nine months ended September 30, 2024. Net interest income increased 6.5% to $768.5 million, while total loans grew 6.9% to $159.0 billion. The bank maintained excellent credit quality with 99.4% of loans classified as acceptable. Total capital strengthened to $9.2 billion, and end-of-quarter liquidity was 155 days, well above regulatory requirements. The bank's return on assets of 51 basis points exceeded its target of 50 basis points.

Positive

• Net income remained strong at $685.0 million
• Net interest income increased 6.5% to $768.5 million
• Total loan portfolio grew 6.9% to $159.0 billion
• Excellent credit quality with 99.4% of loans classified as acceptable
• Strong liquidity position at 155 days coverage
• Total capital increased to $9.2 billion
• ROA of 51 basis points exceeded 50 basis points target

Negative

• Net interest margin compression due to inverted yield curve
• Spread income on investment securities declined
• Non-interest expenses increased 12.6% to $158.4 million
• Slight decrease in retail loan portfolio quality from 96.2% to 96.0% acceptable

Continued Strong Net Income and Loan Credit Quality

ST. PAUL, Minn., Nov. 7, 2024 /PRNewswire/ -- Today, St. Paul-based AgriBank announced financial results for the third quarter of 2024, with strong profitability, credit quality, and liquidity and capital.

Highlights:

• Profitability: Net income remained strong at $685.0 million for the nine months ended September 30, 2024. AgriBank's year-to-date return on assets (ROA) ratio of 51 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 September 30, 2024.
• Liquidity and capital: End-of-the-quarter liquidity was 155 days, well above the regulatory requirement. Capital also remained well above the regulatory minimums and company targets.

"Amid a continued volatile interest rate environment, AgriBank is able to report another successful quarter with consistent profitability, credit quality, and liquidity and capital," said AgriBank CEO Jeffrey Swanhorst. "We look forward to continuing to collaborate with the Farm Credit Associations we support to bolster their financial performance as, together, we meet the credit needs of farmers, ranchers and other rural borrowers."

2024 Results of Operations

Net interest income was $768.5 million for the nine months ended September 30, 2024, an increase of $46.6 million, or 6.5 percent, compared to the same period of the prior year. The increase was primarily driven by higher spread income on retail loans in AgriBank's asset pool portfolio, when compared to the prior year, due to the purchase of a significant number of loan participations during the second half of 2023. Additionally, the benefit of equity financing from higher interest rates compared to the same period of the prior year has also contributed to the increase in net interest income. Equity financing represents the benefit of non-interest bearing funding. AgriBank typically experiences slight net interest margin compression as fixed-rate assets age, usually offset by the margin from new volume. However, with the current inverted yield curve, new volume margins are not providing the typical offset. Additionally, spread income on investment securities has declined compared to the same period of the prior year due to the mix of investment securities and reduced spreads on money market instruments.

Non-interest income was $85.9 million for the nine months ended September 30, 2024, an increase of $12.7 million, or 17.3 percent, compared to the same period of the prior year, primarily related to an Allocated Insurance Reserve Accounts (AIRAs) distribution received from the Farm Credit System Insurance Corporation (FCSIC) during the second quarter of 2024. Additionally, mineral income increased for the nine months ended September 30, 2024, compared to the same period of the prior year, related to a rise in oil production, a result of an increase in new well activity during the first quarter of 2024.

Non-interest expense was $158.4 million for the nine months ended September 30, 2024, an increase of $17.8 million, or 12.6 percent, compared to the same period of the prior year. The increase was mainly due to expected increases in loan servicing fees related to expansion in AgriBank's asset pool programs in the second half of 2023 and continuing into 2024.

Loan Portfolio 

Total loans were $159.0 billion at September 30, 2024, an increase of $10.3 billion, or 6.9 percent, compared to December 31, 2023. This increase was primarily attributable to wholesale loan growth.

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 September 30, 2024, and December 31, 2023. Loans classified as acceptable represent the highest-quality assets. The credit quality of AgriBank's retail loan portfolio decreased slightly to 96.0 percent classified as acceptable at September 30, 2024, compared to 96.2 percent acceptable at December 31, 2023.

Agricultural Conditions

The U.S. Department of Agriculture's Economic Research Service (USDA-ERS) updated its 2024 forecast of the U.S. aggregate farm income and financial conditions on September 5, 2024. The release also converted the 2023 forecasts to estimates. The 2023 U.S. net farm income (NFI) estimate of $146.5 billion was $9.4 billion below the previous early 2024 forecast due to higher than forecast expenses, which more than offset higher than forecast cash receipts for crops and animals and animal products. USDA-ERS estimates that 2023 NFI decreased by $35.6 billion, or 19.5 percent, from the 2022 level in nominal terms due to declining cash receipts and rising expenses. While NFI decreased in 2023, it followed the record-high 2022 level. When adjusting for inflation, the 2023 U.S. NFI estimate was still 21.1 percent ($26.1 billion) above the ten-year average level.

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 $9.2 billion as of September 30, 2024, an increase of $586.1 million compared to December 31, 2023. The increase was driven primarily by AgriBank's net income and capital stock issuances. Offsetting these were cash patronage declared, consistent with AgriBank's capital plan and the redemption of $250 million of perpetual preferred stock. 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 $25.3 billion and $25.5 billion at September 30, 2024, and December 31, 2023, respectively. AgriBank's end-of-the-period liquidity position represented 155 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)
	September 30,	December 31,
	2024	2023
	(unaudited)
Loans held to maturity	$158,980,740	$148,370,212
Allowance for credit losses on loans	31,516	31,992
Net loans held to maturity	158,949,224	148,338,220
Loans held for sale	—	355,219
Net loans	158,949,224	148,693,439
Investment securities and other earning assets	25,330,463	25,454,925
Accrued interest receivable	1,890,486	1,590,342
Other assets	463,400	684,297
Total assets	$186,633,573	$176,423,003
Bonds and notes	$175,837,914	$166,310,329
Accrued interest payable	1,204,315	1,027,470
Other liabilities	422,034	502,026
Total liabilities	$177,464,263	$167,839,825
Shareholders' equity	$9,169,310	$8,583,178
Total liabilities and shareholders' equity	$186,633,573	$176,423,003

 

AGRIBANK, FCB
STATEMENTS OF INCOME INFORMATION
(in thousands)
	For the		For the
	three months ended		nine months ended
	September 30,		September 30,
	2024	2023	2024	2023
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Interest income	$2,035,362	$1,634,007	$5,704,430	$4,366,911
Interest expense	1,728,182	1,379,607	4,935,956	3,645,043
Net interest income	307,180	254,400	768,474	721,868
Provision for credit losses	3,000	5,000	11,000	8,000
Net interest income after provision for credit losses	304,180	249,400	757,474	713,868
Non-interest income	28,611	22,242	85,889	73,191
Non-interest expense	54,380	47,616	158,363	140,612
Net income	$278,411	$224,026	$685,000	$646,447

 

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SOURCE AgriBank

FAQ

What was AgriBank's net income for Q3 2024?

AgriBank reported net income of $685.0 million for the nine months ended September 30, 2024.

How much did AgriBank's total loans grow in Q3 2024?

Total loans increased by $10.3 billion, or 6.9%, to $159.0 billion compared to December 31, 2023.

What was AgriBank's credit quality in Q3 2024?

AgriBank maintained strong credit quality with 99.4% of loans classified as acceptable at September 30, 2024.

How much did AgriBank's net interest income increase in Q3 2024?

Net interest income increased by $46.6 million, or 6.5%, to $768.5 million compared to the same period last year.