| For Immediate Release November 3, 2009 |
For more information, contact: Stan Ray, Vice President Marketing and Corporate Relations (512) 465-0577 |
Farm Credit Bank Releases Third Quarter Financial Results
AUSTIN, Texas – The Farm Credit Bank of Texas (FCBT) reported solid earnings during the third quarter of 2009, which were achieved in spite of weaknesses in certain sectors of the agricultural economy.
The Austin-based wholesale bank recorded net income of $20.2 million for the quarter ended Sept. 30, 2009, an increase of 5.5 percent from the quarter ended Sept. 30, 2008. For the first nine months of 2009, net income totaled $64.1 million, up 2.8 percent from the same period a year earlier.
The increases were largely the result of significantly higher net interest income and noninterest income, partially offset by increased provisions for loan losses. Net interest income was $44.7 million and $119.5 million for the three-month and nine-month periods ended Sept. 30, 2009, representing increases of 47.1 percent and 36.1 percent, respectively, over the same periods in 2008.
The bank increased its provision for loan losses to $22.7 million for the third quarter of 2009 from $6.0 million for the third quarter of 2008. The higher provision reflects credit deterioration primarily in sectors that are impacted by volatile commodity prices, such as ethanol, dairy and poultry, and by general economic conditions.
“In what otherwise might have been a dismal quarter, we achieved significant growth in net interest income by calling high-cost debt and replacing it with lower-cost debt,” said Larry Doyle, FCBT chief executive officer. “This was possible because of the bank’s debt management strategies and the continued strong reputation of the Farm Credit System in the financial markets.”
In October, Fitch Ratings affirmed the bank’s long- and short-term Issuer Default Ratings at ‘AA-’ and ‘F1+’ respectively, reflecting Fitch’s view of the bank’s ability to manage through the current and anticipated economic stress.
The bank reported an $11.3 billion loan portfolio at Sept, 30, 2009, down 0.6 percent from year-end 2008. This decrease was attributed largely to lower loan demand and a tightening of the bank’s underwriting standards over the past year. Loans classified as “acceptable” or “other assets especially mentioned” represented 94.4 percent of total loans at Sept. 30, 2009, compared to 98.9 percent at Dec. 31, 2008. Assets totaling $14.1 billion at Sept. 30, 2009, were down from the $14.8 billion reported at year-end 2008.
The Farm Credit Bank of Texas provides funding to 19 rural financing cooperatives serving Alabama, Louisiana, Mississippi, New Mexico and Texas, which comprise the Texas Farm Credit District.
Together, the bank and affiliated lenders reported $40.1 million in net income for the quarter ended Sept. 30, 2009, down 45.3 percent from the same quarter of 2008. This decrease was primarily due to a $49.4 million increase in provision for loan losses, offset by a $15.5 million increase in net interest income and a $5.1 million increase in noninterest income.
District net income for the nine months ended Sept. 30, 2009, totaled $136.0 million, a decrease of $82.4 million or 37.7 percent from the same period of 2008. The decrease includes the effects of a $109.4 million increase in provision for loan losses from the first nine months of the prior year.
Gross loan volume for the district totaled $16.4 billion at Sept. 30, 2009, down 1.3 percent from Dec. 31, 2008, and up 1.1 percent from a year earlier.
“While this year is proving to be more challenging for the agricultural and financial sectors than the last few years, the Texas Farm Credit District remains strong, profitable and capable of meeting the credit needs of qualified customers,” said FCBT Board Chairman Ralph W. Cortese.
The Farm Credit Bank of Texas and its affiliated lending cooperatives are part of the Farm Credit System, which is the nation’s largest source of financing for agriculture, agribusiness and rural real estate.
Nationally, the System reported combined net income of $721 million and $2.018 billion for the three and nine months ended Sept. 30, 2009, as compared with net income of $817 million and $2.370 billion for the same periods last year.