Farm Credit Bank of Texas Reports Strong Mid-Year Earnings

AUSTIN, Texas — The Farm Credit Bank of Texas (FCBT) reported strong earnings at mid-year. Net income for the six months ended June 30, 2013, totaled $96.4 million, an increase of $7.9 million over the same period of 2012. Net income for the quarter ended June 30, 2013, was $42.6 million, compared with $54.3 million during the same period last year. The record-high level of net income in the prior year is partly attributable to a refund of $9.8 million in excess fund reserves from the Farm Credit System Insurance Corporation received in the second quarter of 2012.

The bank’s return on average assets was 1.26 percent and return on average shareholder’s equity was 14.75 percent at June 30, 2013, up from 1.23 percent and 14.21 percent, respectively, at June 30, 2012.

Gross loan volume at the end of the second quarter was $11.36 billion, an increase of $19.18 million compared with Dec. 31, 2012. In the second quarter, the bank reported a $740.8 million increase in average earning assets over the second quarter of 2012, which includes increases in participation loans, investments and direct loans to the bank’s affiliated lending institutions.

Credit quality remained high, with 97.7 percent of total loans classified as acceptable or special mention, compared with 97.5 percent at Dec. 31, 2012, reflecting the high-quality loans that have been added to the bank’s portfolio. High-risk assets, which include nonaccrual loans, formally restructured loans and other property owned, decreased 32.12 percent from Dec. 31, 2012, to June 30, 2013, and provision for credit losses decreased $15.6 million, or 75.2 percent, in the first six months of 2013 over the same period last year.

“Farm Credit Bank of Texas is achieving strong credit quality, income and key results in 2013,” said Larry Doyle, FCBT chief executive officer. “Our region is faring very well in overall economic performance and job creation relative to the rest of the country. We have great confidence in the market for rural lending and are investing heavily to improve our IT systems. This will benefit our affiliated lending cooperatives, the largest rural lending network in our five-state territory.”

Established in 1916, Farm Credit Bank of Texas receives its funding through the sale of Farm Credit notes and bonds in the nation’s capital markets. It provides funding to its owners, 17 rural lending cooperatives in Alabama, Louisiana, Mississippi, New Mexico and Texas. These lenders, in turn, finance agricultural production, agribusiness, agricultural real estate and rural homes.

Combined, the institutions in the Texas Farm Credit District had $17.16 billion in gross loan volume at June 30, 2013, an increase of $298 million, or 1.8 percent, from Dec. 31, 2012. The district reported $219.4 million in combined net income for the first six months of this year, compared with $222.6 million for the same period last year.

“Improving weather and economic conditions hold promise for many agricultural sectors in our territory,” said Jimmy Dodson, FCBT board chairman. “This summer, Farm Credit celebrates 97 years of providing reliable financing for agriculture and rural communities, and the bank is well positioned to meet our customers’ ongoing needs in the years ahead.”

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 $1.10 billion and $2.25 billion for the three-month and six-month periods ended June 30, 2013. This compares with combined net income of $1.07 billion and $2.12 billion for the same periods last year.