AUSTIN, Texas – Farm Credit Bank of Texas (FCBT), a wholesale bank that funds 14 rural Farm Credit lending cooperatives in five states, reported strong asset growth and credit quality in the third quarter of 2018.
In the first nine months of 2018, total loans increased 5.5 percent to $18.0 billion, and total assets increased 6.3 percent to $24.3 billion at Sept. 30. Credit quality remained strong, with 99.8 percent of loans considered acceptable or special mention.
The bank’s diversified loan portfolio consists largely of direct notes to Farm Credit cooperatives that lend to farmers, ranchers and other rural borrowers. The bank also participates with other lenders in loans to agribusinesses, rural infrastructure companies, and other businesses that ag producers and rural communities rely on.
“For the first time in its history, the bank has exceeded $18 billion in loans and $24 billion in assets as of the end of September,” said Larry Doyle, FCBT chief executive officer. “The growth reflects the strong marketing efforts of our lenders at a time when competition for loans remains high.”
Net interest income increased 2.7 and 0.2 percent for the three months and nine months ended Sept. 30, 2018, compared with the same periods in the prior year. The interest rate environment and competitive market continue to put pressure on the net interest margin, which was 1.09 percent for the first nine months of 2018, compared with 1.17 percent for the same period in 2017. Net income of $52.7 million for the third quarter of 2018 decreased 0.2 percent from the same period year over year. Net income of $136.2 million for the nine months ended Sept. 30, 2018, reflected a $9.0 million or 6.2 percent decrease from the same period in 2017, largely due to increases in noninterest expense and provision for credit losses.
Capital and liquidity continued to exceed the regulatory requirements established by the bank’s federal regulator, the Farm Credit Administration. Cash and high-quality investments totaled $5.9 billion, providing 226 days of liquidity coverage, compared with the regulatory minimum of 120 days.
The bank is part of the Farm Credit System, a nationwide network of cooperatives established in 1916. Nationally, the System reported combined net income of $1.4 billion and $4.0 billion for the three and nine months ended Sept. 30, 2018, compared with $1.3 billion and $3.7 billion a year earlier.