Farm Credit Bank of Texas Announces Solid Third Quarter Financial Results

AUSTIN, Texas — Farm Credit Bank of Texas (FCBT) reported solid financial results for the third quarter of 2010, highlighted by strong growth in net income and increases in liquidity and shareholders’ equity.

Net income for the quarter ended Sept. 30, 2010, totaled $32.75 million, up 62.1 percent over the same quarter of 2009. Net income of $113.78 million for the first nine months of 2010 was up 77.4 percent over the first nine months of 2009.

The increase in net income was largely the result of a $6.27 million or 14 percent increase in net interest income for the quarter, and a $5.28 million decrease in the provision for loan losses.

Larry Doyle, FCBT chief executive officer, said the bank took advantage of the continuing low-interest-rate environment to improve the bank’s overall financial position.

“Through a prudent debt management strategy of calling higher-cost debt and replacing it with lower-cost debt, we achieved a significant increase in earnings, which allowed us to absorb adversity within our loan portfolio,” Doyle said.

The bank reported loan volume of $10.61 billion at Sept. 30, 2010, a 3.8 percent decrease from Dec. 31, 2009. The decrease was attributed to declines in the bank’s direct loans to its affiliated Farm Credit cooperatives and Other Financing Institutions, offset by growth in the bank’s participation loan portfolio.

The bank’s total assets increased to $14.19 billion at Sept. 30, 2010, from $13.78 billion at year-end 2009. This increase was due to a planned strategy to increase the bank’s liquidity position through growth in high-quality investment securities and cash by 31.8 percent to $3.47 billion. During the same period, total shareholders’ equity increased by 49 percent to $1.22 billion, due to earnings of $113.78 million for the nine months ended Sept. 30, 2010, and the issuance of $300 million of non-cumulative subordinated perpetual preferred stock in August of 2010.

“Agriculture continues to be a bright spot in the economy, and Farm Credit Bank of Texas and our affiliated lenders remain well-positioned to meet the borrowing needs of this important industry across our five states,” said FCBT Board Chairman Ralph W. Cortese.  

The Farm Credit Bank of Texas provides funding to 18 rural financing cooperatives in Alabama, Louisiana, Mississippi, New Mexico and Texas and to four Other Financing Institutions serving rural America.

The bank and 18 local Farm Credit financing cooperatives comprise the Texas Farm Credit District. Together, these lenders reported $49.27 million in net income for the quarter ended Sept. 30, 2010, up 22.8 percent from the third quarter of 2009. District income for the nine months ended Sept. 30, 2010, was $212.1 million, a 56 percent increase over the same nine-month period of 2009.

Gross loan volume for the district totaled $15.67 billion, a 3.1 percent decrease from Dec. 31, 2009.

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 Farm Credit System reported combined net income of $949 million and $2.633 billion for the three and nine months ended Sept. 30, 2010, as compared with combined net income of $721 million and $2.018 billion for the same periods last year.