St. Paul, Minn.-based AgriBank announced strong financial results for fourth-quarter and full-year 2013 with continued growth in net income, strong credit quality and robust liquidity and capital. Net income rose 10% to $563.6 million for 2013. Net interest income was $523.8 million, compared with $483.9 million for 2012. Loan portfolio credit quality remains strong, as loan loss provisions decreased by $11.4 million and non-adverse loans stood at 99.8%.
The 2013 harvest produced the largest corn crop on record and third-largest soybean crop. Commodity prices for corn and other feed grains and, to a lesser extent, soybeans, have retreated substantially from levels in early 2013. The impact of the 2012 drought had little effect on the asset quality of the loan portfolio due to multi-peril crop insurance, explains Bill York, AgriBank CEO.
Total loans rose 6% year-over-year, primarily due to growth in wholesale loans to associations, which funded increased real estate mortgage lending for cropland. In addition, loans grew due to funding of increased loan participation interests in retail equipment financing.
Lower commodity prices for soybeans, and especially corn, are expected to substantially reduce the profitability of crop producers in 2014. However, most of these producers have built strong financial and liquidity positions from recent profitable years. Conversely, producers and processors who purchase these commodities as inputs should perform better in 2014 due to lower costs.