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| Farm Credit Co-ops Declare $56.4 Million in Patronage | |
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AUSTIN - Rural financing cooperatives across the Tenth Farm Credit District will return a record $56.4 million, or approximately 25.7 percent of their 2005 earnings, in patronage distributions to their borrower-stockholders. The announcement highlighted the outstanding 2005 year-end financial results reported by the rural lending network. In 2004 and 2003, the local lending co-ops, or associations, distributed $39.8 million and $26.8 million, respectively, based on annual earnings. The Tenth District is composed of the Austin-based Farm Credit Bank of Texas (FCBT) and 21 rural financing associations in Alabama, Louisiana, Mississippi, New Mexico and Texas. Together, the associations finance approximately 48,500 farmers, ranchers, country homeowners, agribusiness firms and other rural landowners. When the bank does well, it returns earnings to its stockholders, the 21 lending associations and four Other Financing Institutions (OFIs). When the associations have a successful year, they distribute patronage to their borrower-stockholders. “In a cooperative, success is measured by the value we return to our owners. That’s why we are pleased that so many of our Farm Credit associations chose to share a significant portion of their 2005 income with their stockholders,” said Larry Doyle, FCBT chief executive officer. The Farm Credit Bank of Texas also paid a record patronage of $20.6 million to its customer-stockholders, based on average direct-note volume during 2005. “Patronage has the effect of reducing a customer’s cost of doing business,” Doyle added. “It’s the No. 1 advantage that sets co-ops apart from other forms of business.” In addition to record patronage, the Tenth Farm Credit District reported record loan volume and asset growth during the year. The district’s loan volume totaled $10.2 billion at Dec. 31, 2005. This was a 21 percent increase from the $8.4 billion loan volume reported at Dec. 31, 2004, and a 40.5 percent increase from Dec. 31, 2003. Total assets grew by 26 percent to $13.2 billion at year-end 2005, compared with $10.5 billion a year earlier. The quality of the district’s portfolio remained extremely high, increasing to 98.4 percent acceptable loan volume at Dec. 31, 2005, from 98.2 percent a year earlier. “By any measure, 2005 was another outstanding year for the Tenth District, but our 21 percent growth in loan volume is particularly noteworthy,” said Doyle. “While numerous factors, including a strong economy, contributed to our growth, most of the credit goes to the staff and boards of our local lending associations. We challenged them to reclaim their marketplace, and they responded with competitive loan pricing, new loan products and more aggressive marketing.”Net interest income of $340.5 million for the year ended Dec. 31, 2005, reflected a 12 percent increase from the $304.1 million reported the previous year, due largely to loan volume growth. Total noninterest income increased by 16 percent to $18.0 million in 2005 from $15.5 million in 2004. District net income totaled $219.9 million in 2005, compared to $342.5 million in 2004. Included in the 2004 results was a one-time reversal of the allowance for loan losses of $157.7 million. The one-time reversal resulted from the refinement of the Farm Credit System’s methodologies for determining the allowance for loan losses. The Farm Credit Bank of Texas, a wholesale lender to the 21 associations and four OFIs, also reported exceptional results for 2005. The bank’s loan portfolio totaled $8.5 billion at Dec. 31, 2005, up 23 percent from a year earlier. Total assets grew to $11.3 billion at year-end 2005, a 28 percent increase from the prior year end. FCBT net income of $57.6 billion in 2005 was up 23 percent from $47.0 million in net income in 2004. The Tenth Farm Credit District is part of the nationwide Farm Credit System, a network of cooperatively owned rural lending institutions established in 1916. The $140-billion System is the single largest source of financing for rural America. |
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