AgriBank, FCB Reports First Quarter 2012 Financial Results

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Bank Records First Quarter 2012 Net Income of $114.8 Million, Continued Strong Levels of Capital, Liquidity and Credit Quality

We are focused on delivering financial tools that contribute to building an even better tomorrow for the farmers, ranchers and rural Americans we serve together.

AgriBank, FCB announced today its financial results for the first quarter of 2012, reporting continued strong levels of net income, capital, liquidity and credit quality.

“We are focused on delivering financial tools that contribute to building an even better tomorrow for the farmers, ranchers and rural Americans we serve together. AgriBank and affiliated Associations are in an enviable position of strength. We are working together to enhance our product line with additional, constructive and innovative ways to meet the credit, capital and funding needs of an asset-dependent industry,” said Bill York, AgriBank CEO.

Results of Operations
AgriBank reported strong net income of $114.8 million for the first quarter of 2012 compared to $104.2 million for the same period of 2011. Net interest income for the first quarter of 2012 was $109.0 million compared to $101.9 million for the same period of 2011 and continues to reflect the positive impact of funding actions and an increase in retail volume, primarily related to equipment financing participations purchased. The Bank continued to take advantage of a favorable interest rate environment and repriced callable debt at lower costs.

The Bank recorded provision for loan losses of $2.8 million in the first quarter of 2012 which primarily related to specific allowances recorded on individual customers. The Bank did not record provision expense during the first quarter of 2011.

Non-interest income was $35.3 million for the first quarter of 2012 compared to $24.0 million for the same period of 2011. Loan prepayment and fee income was $20.0 million compared to $7.6 million for the same period in 2011. The relatively low interest rate environment resulted in strong prepayment and interest rate conversion activity. Also contributing to non-interest income was mineral income of $12.6 million generated from mineral rights held primarily in North Dakota and Arkansas. The Bank recorded $10.4 million of mineral income during the same period of 2011.

Non-interest expense was $26.7 million in the first quarter of 2012 which primarily consisted of $14.0 million of operating expenses, $6.2 million of loan servicing fees paid to Associations and $5.5 million of investment impairment losses. This compares to $21.7 million of non-interest expense in the same period of 2011 consisting of $15.6 million of operating expenses, $2.7 million of loan servicing fees paid to Associations and $2.2 million of investment impairment losses.

Loan Portfolio
Total loans were $61.3 billion at March 31, 2012, a decrease of 1% from $62.0 billion at December 31, 2011. AgriBank’s primary business is providing wholesale lending to its affiliated Associations, which represented 87.6% of total loans. Wholesale volume directly reflects the retail marketplace activities at the Associations which are funded through their wholesale lines with the Bank. The decrease in loan volume from December 31, 2011 is reflective of paydowns that occurred in the first quarter as customers sold crops after year end.

AgriBank’s loan portfolio credit quality remains strong at 99.7% “acceptable” and “special mention” under the Farm Credit Administration’s Uniform Classification System at March 31, 2012 and at December 31, 2011.

Nonaccrual loans were $60.8 million at March 31, 2012, a decrease from $62.0 million at December 31, 2011.

The allowance for loan losses at March 31, 2012 was $11.9 million compared to $9.2 million at December 31, 2011, reflecting specific allowances recorded on individual customers.

Liquidity and Capital
Liquidity and capital levels remain strong and exceed regulatory minimum requirements.

Cash and investments totaled $11.0 billion at March 31, 2012, compared to $10.4 billion at December 31, 2011. The Bank’s liquidity position increased to 149 days coverage of maturing debt at March 31, 2012, compared to 138 days at December 31, 2011, each well above the 90-day minimum established by the Farm Credit Administration, the Bank’s regulator. Average liquidity for the quarter ended March 31, 2012 was 156 days. Capital increased to $3.891 billion at March 31, 2012, from $3.806 billion at December 31, 2011. The increase of $84.6 million primarily reflects net income earned and retained and a reduction in other comprehensive loss for the period, reflecting changes in fair value on cash flow hedges.

“AgriBank is proud to partner with successful Associations in financing America’s strongest industry, building rural communities and helping all those we serve, not only to be ready for, but to successfully redefine tomorrow,” said York.

About AgriBank
AgriBank, FCB is one of the largest banks within the national Farm Credit System, with over $73 billion in total assets. As agriculture’s borrower-owned financial leader, AgriBank complements the market-facing focus of affiliated Associations to serve rural America in a District that stretches from Ohio to Wyoming and from Minnesota to Arkansas, representing nearly 40% of farmland and over 54% of cropland in the United States. The affiliated Associations and AgriBank are collaborating in successfully shaping the future of agriculture.

Additional Information
For more information about AgriBank, including its annual and quarterly reports, visit the Bank’s website at http://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. The Bank undertakes no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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Rebecca Yaklich

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