AgriBank posts a 40 percent rise in earnings

Updated: August 9, 2010 - 9:30 PM

The St. Paul-based bank reports that earnings rose 40 percent.

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AgriBank reported strong second-quarter results Monday with a 40 percent year-over-year increase in profits.

Net income for the second quarter was $147.1 million, up from $105.1 million for the same period in 2009. Net income for the first half of the year was $283.3 million, up 49 percent from a year earlier.

The St. Paul-based bank markets to farmers and rural residents between Ohio and Wyoming and from Minnesota to Arkansas.

It said the increased profits resulted primarily from net interest income, insurance refunds from reserves set up by the Farm Credit System Insurance Corp., reduced impairment on securities, and gains on sales of previously impaired securities in the bank's "liquidity investment portfolio."

The bank attributed the increase in its net interest income to lower interest rates on its debts and to a repricing of its loan rates to better reflect current credit risks and market conditions.

CEO Bill York said, "AgriBank's financial strength in the second quarter of 2010 is a result of a self-sustaining business model with operational flexibility. Our fundamental strengths continue to play a significant role in our financial results."

The bank's loan portfolio was relatively stable at $55.2 billion in the second quarter, and the loan portfolio credit quality was 99.4 percent "acceptable."

The bank said its bad loans stabilized in the quarter despite the fact that the global demand for commodities decreased. Capital and liquidity levels increased to $10.3 billion at quarter's end, compared with $9.6 billion at the end of last year, exceeding the requirements of the Farm Credit Administration, which regulates the bank.

AgriBank is the largest of five banks in the Farm Credit System, which facilitates agricultural lending and rural development.

DAN BROWNING