AUSTIN, Texas — Farm Credit Bank of Texas (FCBT), a wholesale bank that funds 14 rural lending cooperatives in five states, reported growth across its highly diversified loan portfolios in the first quarter of 2016.
Total loan volume at March 31, 2016, was a record $15.3 billion, an increase of 3.3 percent from Dec. 31, 2015. Credit quality remained very strong, with 99.9 percent of the bank’s overall portfolio considered acceptable or special mention.
Through its direct loan portfolio, the bank funds locally owned Farm Credit lending cooperatives that provide financing and related services to farmers, ranchers and other rural borrowers. It also participates with other lenders in capital markets loans to businesses that ag producers and rural communities rely on, such as food processors, agribusinesses and rural infrastructure companies.
Total assets exceeded $20.4 billion at March 31, 2016, an increase of 2.5 percent from year-end and 11.8 percent from March 31, 2015. Net interest income for the first quarter of 2016 was $56.9 million, a 0.4 percent increase compared with the same period of 2015, reflecting low interest rates and continued pressure on interest rate spreads in the current market environment. The bank took advantage of this environment by calling $1.2 billion in debt and issuing new debt at lower rates, reducing its interest expense.
The bank reported $42.1 million in net income for the first quarter of 2016, compared with $52.1 million for the same period in 2015. The change reflects a $6.0 million decrease in noninterest income and a $4.4 million increase in noninterest expense, both due primarily to a nonrecurring February 2015 disposition of other property owned.
“Net income is down slightly due to the nonrecurring event early last year,” said Larry Doyle, FCBT chief executive officer. “We continue to see modest asset growth, and expect our financial performance to be much more consistent with our previous levels as we go through the year.”
The bank continued to maintain strong capital and liquidity levels, exceeding regulatory requirements set by its federal regulator, the Farm Credit Administration. At March 31, 2016, the bank had $1.6 billion in shareholders’ equity and a permanent capital ratio of 17.2 percent. Cash and investments exceeded $5.0 billion, providing 173 days of liquidity.
“Farm Credit is committed to supporting rural communities and agriculture,” said FCBT Board Chairman Jimmy Dodson. “The growth and diversity of our district’s loan portfolios show that dedication.”
The bank and its affiliated cooperatives across Alabama, Louisiana, Mississippi, New Mexico and Texas constitute the Texas Farm Credit District, which reported combined loan volume of $21.7 billion in the first quarter of 2016, an increase of 2.3 percent from year-end. District total assets reached a record $27.1 billion at March 31, 2016. Together, the bank and associations reported $98.6 million in net income for the first quarter of 2016, compared with $106.3 million for the same period in 2015. Credit quality remained strong, with 98.8 percent of district loans classified as acceptable or special mention.
The district is part of the Farm Credit System, a nationwide network of cooperatives established in 1916. Nationally, the System reported combined net income of $1.16 billion for the first quarter of 2016, compared with $1.13 billion a year earlier.
The bank, district and System results discussed herein are preliminary and unaudited.