AUSTIN, Texas – Farm Credit Bank of Texas (FCBT), a cooperatively owned wholesale funding bank, reported solid financial results in the first quarter of 2015, highlighted by strong earnings and steady loan growth and credit quality.
Net income for the quarter ended March 31, 2015, was $52.1 million, a 16.3 percent increase over the $44.8 million in net income during the same period in 2014.
Total loan volume was $13.6 billion at March 31, 2015, compared with $13.3 billion at Dec. 31, 2014. This reflects increases both in direct notes to the bank’s affiliated lending cooperatives and other financing institutions, and in capital markets loans that provide capital and liquidity for food, agribusiness, energy and rural infrastructure companies. Credit quality remained strong, with 98.9 percent of the bank’s loans classified as acceptable or special mention.
The bank continued to maintain strong capital and liquidity levels, far exceeding regulatory requirements set by its independent regulator, the Farm Credit Administration. As of March 31, 2015, shareholders’ equity exceeded $1.5 billion, and the bank had a permanent capital ratio of 17.3 percent. Cash and investments totaled $4.5 billion, providing 219 days of liquidity.
“Our first quarter results build on our record earnings in 2014,” said Larry Doyle, FCBT chief executive officer. “The strong earnings and credit quality allow the bank to dedicate many of our resources to technology projects in order to provide our affiliated lending cooperatives with state-of-the-art tools to serve their borrowers.”
The bank is owned by 14 rural financing cooperatives in Alabama, Louisiana, Mississippi, New Mexico and Texas, which in turn are owned by their customers — farmers, ranchers, agribusinesses, and rural homeowners and landowners. Together, the Austin-based bank and its affiliated lenders compose the Texas Farm Credit District of the Farm Credit System.
In addition to providing technology and operational support, the bank has historically provided funding to its affiliated lenders at a spread equal to or below its marginal cost of funds. It accomplishes this by generating earnings through a strong and diversified portfolio, then distributing much of those earnings to the lenders through its patronage program. Those cooperatives then pass along the benefits to their member-borrowers.
“The people we serve are the most important aspect of Farm Credit,” said Jimmy Dodson, FCBT board chairman. “Our federated cooperative is focused on our mission to provide dependable credit to agriculture and the people of rural America.”
Overall, agricultural producers in the five-state district benefited from favorable rainfall levels and generally healthy crop, pasture and range conditions in the first quarter. Heading into the busy spring and summer seasons, the bank and district are well-capitalized and able to support loan growth. The high credit quality and diversification of the loan portfolios also position the bank and district to withstand a period of low commodity prices.
Collectively, the district lenders reported $106.3 million in net income for the first quarter of 2015, compared with $106.2 million in the same period in 2014. District loan volume was $19.7 billion at March 31, 2015, compared with $19.3 billion at year-end 2014. Credit quality remained steady, with 98.6 percent of district loans classified as acceptable or special mention.
The results discussed herein are preliminary and unaudited. The bank’s financial statements and the combined statements of the Texas District for the quarter ended March 31, 2015, are expected to be available on or about May 8, 2015.
The bank is part of the Farm Credit System, the nation’s oldest and largest source of financing for agriculture and rural America. Nationally, the System reported combined net income of $1.13 billion for the quarter ended March 31, 2015. This compares with combined net income of $1.15 billion for the same period in 2014.