Risk Assets
Components of Risk Assets
(dollars in thousands)
2017 2016 2015
Loans:
Nonaccrual
Accruing restructured
Accruing loans 90 days or more past due $8,751
1,310
-- $5,906
1,483
-- $9,065
1,646
--
Total risk loans
Other property owned 10,061
-- 7,389
1,067 10,711
510
Total risk assets $10,061 $8,456 $11,221
0.3%
0.2%
69.3%
0.1% 0.2%
0.2%
85.6%
0.1% 0.3%
0.3%
50.8%
0.2%
As of December 31
Total risk loans as a percentage of total loans
Nonaccrual loans as a percentage of total loans
Current nonaccrual loans as a percentage of total nonaccrual loans
Total delinquencies as a percentage of total loans
Note: Accruing loans include accrued interest receivable.
Our risk assets have increased from December 31, 2016, but remained at acceptable levels. Despite the increase in risk assets, total risk loans as a
percentage of total loans were well within our established risk management guidelines.
The increase in nonaccrual loans was primarily due to the transfer of several loans in the production and intermediate term loan and real estate mortgage
categories to nonaccrual status. Nonaccrual loans remained at an acceptable level at December 31, 2017, 2016, and 2015.
Allowance for Loan Losses
The allowance for loan losses is an estimate of losses on loans in our portfolio as of the financial statement date. We determine the appropriate level of
allowance for loan losses based on the periodic evaluation of factors such as loan loss history, estimated probability of default, estimated loss severity,
portfolio quality, and current economic and environmental conditions.
Allowance Coverage Ratios
As of December 31
Allowance as a percentage of:
Loans
Nonaccrual loans
Total risk loans
Net charge-offs (recoveries) as a percentage of average loans
Adverse assets to risk funds
2017 2016 2015
0.4%
181.9%
158.2%
0.0%
13.6% 0.4%
278.2%
222.3%
0.0%
13.0% 0.5%
175.3%
148.3%
(0.0%)
5.9%
Note: Risk funds includes permanent capital and allowance for loan losses.
In our opinion, the allowance for loan losses was reasonable in relation to the risk in our loan portfolio at December 31, 2017.
Additional loan information is included in Notes 3, 10, 11, and 12 to the accompanying Consolidated Financial Statements.
OTHER INVESTMENTS
We and other Farm Credit Institutions are among the limited partners for Rural Business Investment Companies (RBICs). Our total commitment is $5.0
million, with varying commitment end dates through September 2021. Certain commitments may have an option to extend under certain circumstances. Our
investment in the RBICs totaled $180 thousand at December 31, 2017.
The investments were evaluated for impairment. For the year ended December 31, 2017, we have not recognized any impairment on these investments.
Additional other investment information is included in Note 5 to the accompanying Consolidated Financial Statements.
RESULTS OF OPERATIONS
Profitability Information
(dollars in thousands)
For the year ended December 31
Net income
Return on average assets
Return on average members' equity
5
2017 2016 2015
$70,142
1.8%
9.0% $61,566
1.7%
8.4% $60,583
1.8%
8.9%