COBANK, a cooperative financial institution serving agribusinesses, rural infrastructure providers and Farm Credit System associations, has reported an increase in net income for its 2012 fourth quarter and full year.
For the quarter and year ended Dec. 31, 2012, CoBank reported net income of $153.4 million and $853.9 million, compared with $142.7 million and $706.6 million in 2011. Its total loans outstanding at the end of the year were $72.0 billion
CoBank reported that net interest income increased 30% in the fourth quarter and 40% over the year, which it credited to its merger with AgBank at the beginning of the year (Feedstuffs, Jan. 9, 2012).
CoBank said it also experienced an increase in agricultural export financing due to "the growing role of U.S. agriculture in feeding the world" and an increase in loan volume to rural service providers. These increases offset declines in lending that were due to lower commodity prices in the first half of the year, shifts in farmers' delivery patterns at farm supply and grain cooperatives and strong financial positions at agribusinesses and cooperatives.
Chief executive officer and president Robert B. Engel said the merger with AgBank "more than lived up to expectations (and) delivered meaningful benefits for our business."
He noted that 2012 represented the bank's 13th consecutive year of earnings growth -- a record to which "very few other financial institutions in the world can point. We benefited immensely from the fundamental soundness of the U.S. rural economy."
At the same time, Engel said CoBank does face a number of ongoing challenges, including slow overall economic growth, greater competition for loans and low interest rates that have significantly decreased returns for invested capital.
CoBank reported that the credit quality in its loan portfolio improved modestly during 2012, and at the end of the fourth quarter and year, 1.01% of loans were considered adverse assets, compared with 1.03% at the end of the third quarter and 1.25% at the end of 2011.
CoBank noted that it is preparing to distribute record annual patronage totaling $425.0 million, $344.5 million of which will be in cash and $80.5 million in stock.
CoBank, based in Denver, Colo., provides loans, export financing, leases and other financial services to agribusinesses and rural communications, power and water utilities in all 50 U.S. states. It also provides wholesale loans and other services to Farm Credit System associations that serve farmers and other rural borrowers in 23 states.
CoBank is a member of the Farm Credit System.