CoBank Announces Board Election Results

CoBank today announced results of shareholder elections for the bank's 2017 Board of Directors.

A total of four board seats were on the ballot. CoBank is in the process of a shareholder-approved downsizing of its board and will have 23 elected directors from six regions in 2017. The bank’s governance bylaws also call for two outside, independent board members with no customer or Farm Credit affiliation and up to four additional appointed directors.

CoBank Again Named To Worlds 50 Safest Banks List

CoBank has been named to Global Finance magazine’s list of the world’s safest banks for a sixth consecutive year.

Global Finance, which covers the financial services industry, publishes the “World’s 50 Safest Banks” list annually. Banks are ranked using a methodology that includes total assets and an evaluation of long-term ratings from major rating agencies. CoBank was first named to the list in 2011.

“Supporting rural communities and agriculture with reliable, consistent credit and financial services is central to CoBank’s mission,” said Robert B. Engel, CoBank’s chief executive officer. “Market conditions in many of the industries where our customers operate can be volatile, and our bank’s financial strength helps these critical rural businesses to grow and thrive. We are pleased to have earned this distinction for the sixth year in a row, as we believe it reflects our bank’s commitment to financial stewardship while providing exceptional value to our customers.”

The ranking will be published in the November issue of Global Finance. Further information is available at the magazine’s web site at www.gfmag.com.

Farm Supply Co-ops and Other Ag Retailers Face Tighter Margins, Cyclical Challenges

Accounts receivable at farm supply co-ops and other ag retailers are growing and so are their challenges, according to a new report from CoBank. After an extended run of impressive financial performances, retailers are adjusting to a tougher economic environment accompanying the down-phase of the current ag commodity cycle.

Current headwinds are directly related to a sharp decline in commodity prices that has reduced farm income and tightened farm cash flows. A downturn in fertilizer prices and a spate of mergers and acquisitions in the seed and fertilizer industry have aligned to create adversity for ag retailers going forward.

“The drop in farm income over the past three years is the steepest decrease since the Depression,” says Tanner Ehmke, CoBank senior economist covering, the grains, oilseeds and ethanol, and farm supply sectors. “Producer incomes have fallen more than 50 percent from 2013 to today and their debt-to-income ratio is on the rise. Not surprisingly, total accounts receivable for ag retailers posted an 11 percent gain for 2015, and that’s expected to grow in the year ahead due to ongoing farmer cash flow challenges.”

CoBank Reports Second Quarter Financial Results

CoBank today announced financial results for the second quarter and first six months of 2016. Net income for the second quarter increased 5 percent to $243.3 million, compared to $232.3 million in the second quarter of 2015.  For the first six months of 2016, net income was $486.6 million, a 5 percent increase from $464.6 million in the same period last year. The increases in earnings primarily resulted from higher net interest income, partially offset by higher provisions for loan losses, increases in operating expenses and lower overall noninterest income in the 2016 period.

Net interest income for the second quarter was $345.9 million, a 12 percent increase compared to $309.4 million in the same period last year. For the first six months of the year, net interest income increased 9 percent to $682.8 million, compared to $624.6 million for the first six months of 2015. The increases in net interest income were primarily driven by higher average loan volume and increased earnings on balance sheet positioning, somewhat offset by spread compression in the bank’s loan portfolio due to continued strong competition and a higher cost of short-term debt.

U.S. Grain Elevators Facing A Host Of Challenges In New Crop Year

U.S. grain merchandisers are beginning the new-crop growing season facing significant challenges, according to a new research report by CoBank. Low price volatility, ample grain and oilseed inventories, slow farmer selling and an anemic export program suggest elevators are in for a difficult 2016-2017 season.

“With no relief immediately in sight, grain merchandisers will undergo further belt-tightening in the year ahead,” said Tanner Ehmke, senior economist with CoBank’s Knowledge Exchange Division. “Most grain elevators have solid balance sheets thanks to multiple years of strong revenues. Nonetheless, pressure for consolidation will likely intensify in an environment of slimmer profit margins.”

Amid ample inventories in the U.S. and a lackluster export market, the grain and oilseed basis markets continue to remain stagnant, offering limited opportunities for elevators to profit on old-crop basis appreciation. However, grain elevators could still stand to profit by year’s end off the opportunity to buy wider new-crop basis post-harvest, says Ehmke.