While the overall agricultural outlook remains glum, the Land Bank of North Mississippi scored another impressive gain in net interest income in 2001.
The Senatobia, Miss.-based Land Bank, which recently dropped the word Federal from its name, reported 2001 net interest income of $6.12 million, an 8 percent increase over its $5.67 million in net interest income in 2000.
“We closed a total of 348 new loans in 2001 — 100 more than the previous high for the year,” said Ed Hester, chairman of the Land Bank's board and a producer from Benoit, Miss. “Those loans totaled $56.8 million in new money.”
Speaking at the association's annual meeting in Oxford, Miss., Hester said Land Bank's strong performance in 2001 enabled it to make a patronage payment to its stockholders in January. The 2001 refund, which was based on last year's net interest income, was the third year in a row for such payments.
“Over the past six years, we have returned $6.5 million in capital to our stockholders,” said Hester.
While the outlook for the general farm economy is uncertain, the Land Bank of North Mississippi is projecting continued increases in net interest income over the next three years.
From the 2001 total of $6.12 million, the Land Bank expects net interest income to reach $6.86 million in 2002, $7.52 million in 2003, and $8.2 million in 2004, according to Gary L. Gaines, president.
Gaines said the Land Bank of North Mississippi and other land banks in the Mid-South have experienced only a slight increase — from 0.10 percent in 2000 to 0.17 percent in 2001 in non-accruing loans (loans that are not earning interest because of lack of repayment).
“Our credit quality has remained strong,” he said. “We think our loan portfolio has performed remarkably well given the problems we've been experiencing in agriculture.”
Land Bank officials are projecting a slight decline in acceptable quality of its loans — from 98.39 percent in 2001 to 98.11 percent in 2002 — because of the continued economic problems in agriculture.
Gaines noted that loans to livestock operations returned to the No. 1 spot in the Land Bank's loan portfolio in 2001. Livestock loans made up 23.1 percent of the total, followed by rice operations at 17.2 percent, cotton at 15.9 percent, field crops at 12.1 percent, timber at 12.1 percent, and catfish at 8.4 percent.
In 2000, cotton was No. 1 at 17.2 percent, followed by livestock at 17.1 percent, field crops (corn, soybeans, wheat, etc.) at 15.3 percent, and rice at 15.2 percent. Rural home loans made up only 1.4 percent of the total in 2001.
The Land Bank opened a seventh branch in Corinth, Miss., last May to handle the increased loan demand in the region previously served by its Tupelo branch, said Gaines. Between its seven branches, the Land Bank had loans valued at $238.8 million at the end of 2001.
Gaines said Land Bank employees will continue to work to build steady loan growth for the association.
“We must maintain a strong level of income to satisfy our funding bank, the Farm Credit Bank of Texas, and investors who purchase bonds from the Farm Credit System,” he said. “That income is also needed to build capital and maintain it at a level to cover risks.”