CoBank, a leading cooperative bank serving agribusinesses and rural utilities throughout the U.S., has announced financial results for the first nine months of 2008. Is the news good or bad for agricultural retailers?
In a very volatile global financial market, the bank reported strong growth in loan volume, net income, and regulatory capital as well as continued good overall credit quality.
Net earnings for the first nine months of the year increased 48 percent to $449 million, compared with $304 million for the same period in 2007. Net interest income rose 42 percent to $672 million, from $474 million the year before. Total loans and leases outstanding for CoBank were $43.1 billion at Sept. 30, 2008, compared to $40.5 billion at year-end 2007.
"We are pleased with the ongoing strength of CoBank’s financial performance, which has enabled us to continue meeting the borrowing needs of our customers at a time of extraordinary dislocation in the world economy and in global financial markets," says Robert B. Engel, president and chief executive officer of CoBank. "We remain focused on maintaining the foundation of strength and stability we have built over our long history serving lifeline businesses across rural America."
The bank saw solid growth in loans to international and corporate finance customers as well as to affiliated associations and other strategic partners inside the Farm Credit System. Growth in these areas was partially offset by a decline in loans to the commercial agribusiness customers. Commercial agribusiness lending decreased 23 percent from Dec. 31, 2007, to $10.6 billion, due to typical seasonal declines in demand as well as recent drops in commodity prices for grains and certain farm inputs.
Engel said that CoBank’s financial strength and its membership in the Farm Credit System have enabled the bank to maintain the confidence of investors and, as a result, access to the debt capital markets that the bank relies on to fund loans and serve customers.
CoBank, a $58 billion cooperative bank, provides financing to rural cooperatives and critical lifeline businesses — food, water, electricity ,and communications — across the United States. Part of the $208-billion U.S. Farm Credit System, the bank also finances agricultural exports. In addition to the national office in Denver, CoBank has offices across the United States and one international representative office in Singapore. For more information about CoBank, visit the bank’s Web site at www.cobank.com.