DENVER, COLORADO, U.S. — CoBank reported on Aug. 2 that net income for the second quarter rose almost 40% to $252.4 million, compared with $180.7 million for the second quarter of last year. Net interest income for the quarter was $307.1 million, compared with $276.5 million a year ago. Average loan volume for the quarter was $69.4 billion, compared to $52.1 billion for the same period in 2011.

For the first six months of 2012, net income increased 23% to $482.9 million from $392.8 million for the same period in 2011. Net interest income increased 7% to $620.2 million. Total loan volume for the bank at June 30 was $69.2 billion.

The bank's results reflected the benefits of its merger with U.S. AgBank, which closed on Jan. 1. Through the merger, the bank acquired U.S. AgBank's assets and liabilities, including approximately $20 billion in wholesale loans to 25 Farm Credit associations. The transaction increased average loan volume as well as net interest income, net income and certain other key measures of financial performance.

Second-quarter and year-to-date results also included the impact of $44.6 million in refunds from the Farm Credit System Insurance Corporation.

"We're pleased with CoBank's results through the midpoint of 2012," said Robert B. Engel, president and chief executive officer. "The merger with U.S. AgBank continues to deliver significant benefits for our business at a time of real challenge in the broader market environment. We remain focused on building the financial strength and flexibility of the bank and meeting the needs of our customers across all of the industries we serve."

The performance of the bank's individual operating segments has varied in 2012 due to the merger as well as external economic and market factors. Average agribusiness loan volume declined significantly owing to lower average prices for grains and other commodities earlier in the year and reduced inventory financing at agricultural cooperatives. At the same time, the bank continues to experience solid growth in lending to rural infrastructure customers, particularly in the power supply and electric distribution industries. Loans to Farm Credit associations have increased significantly due to the merger, but organic growth in that segment is soft due to continuing low demand for debt capital at the producer level of the U.S. farm economy.

"Credit quality in CoBank's loan portfolio remains strong compared to historical averages," said David P. Burlage, CoBank's chief financial officer. "CoBank continues to benefit from the addition of U.S. AgBank's portfolio of high quality loans to Farm Credit associations, as well as relatively strong conditions in the U.S. rural economy."

The bank's allowance for credit losses totaled $547.7 million at June 30, or 1.77% of non-guaranteed loans outstanding excluding loans to Farm Credit associations.