AUSTIN, Texas – Farm Credit Bank of Texas (FCBT), a cooperatively owned wholesale funding bank, reported its ninth consecutive year of record net income in 2014, returning the majority of its earnings to its owners.
Based on the bank’s solid earnings and capital position, its board of directors approved the return of $130.7 million in patronage and dividends, or 69.4 percent of its 2014 net income, to the bank’s affiliated lending cooperatives and other stockholders.
Net income increased 4.7 percent in 2014 to $188.3 million. Strong growth in the bank’s portfolios of loans and investments led to an 11.1 percent increase in total assets, which reached a record $18.0 billion at year-end.
Loan volume rose $1.5 billion in 2014, ending the year at $13.3 billion. This included increases of 15.6 percent in the direct notes to its affiliated lenders and 7.6 percent in the bank’s participation loan volume. The record volume reflects strong lending in several sectors, such as agricultural real estate, agribusiness and production agriculture.
“Our asset growth benefited from the tremendous efforts of our member associations, the strong economy and agricultural diversity across our five-state territory,” said Larry Doyle, FCBT chief executive officer. “This growth gives us the opportunity to enhance the technology and operational support we provide to associations, allowing them to be more competitive in providing financing and related services for agriculture and rural America.”
The positive economic conditions, combined with rigorous underwriting standards and portfolio management, contributed to excellent credit quality. At the end of 2014, 98.8 percent of the bank’s overall portfolio was considered acceptable and special mention, compared with 98.2 percent the prior year.
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 Dec. 31, 2014, shareholders’ equity exceeded $1.4 billion, and the bank had a permanent capital ratio of 18.3 percent. Cash and investments totaled $4.5 billion, providing 232 days of liquidity.
Established in 1916, Farm Credit Bank of Texas receives its funding through the sale of highly rated Farm Credit notes and bonds. In 2014 it provided funding and services to 15 rural lending cooperatives in Alabama, Louisiana, Mississippi, New Mexico and Texas, and three other financing institutions.
Together, the bank and its affiliated cooperatives declared $232.7 million in patronage, based on 2014 earnings, effectively lowering the cost of borrowing for the agricultural producers, agribusinesses and rural property owners they serve.
“Our cooperative business model and our very strong team have provided extraordinary results even amid challenging economic and weather conditions over the past several years,” said FCBT Board Chairman Jimmy Dodson. “When we have success, those who benefit the most are the people who own us.”
The bank and its affiliated associations constitute the Texas Farm Credit District, which had record net income of $438.5 million for the year ended Dec. 31, 2014, compared with $419.3 million for the previous year. Combined district loan volume totaled $19.3 billion at Dec. 31, 2014, a 9.2 percent increase over the $17.7 billion total loan volume at year-end 2013. Total assets for the district increased 8.8 percent in 2014, ending the year at $24.3 billion.
The results discussed herein are preliminary and unaudited. The bank’s financial statements and the combined statements of the Texas District for the year ended Dec. 31, 2014, are expected to be available on or about March 10, 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 Farm Credit System reported preliminary unaudited combined net income of $4.7 billion for the year ended Dec. 31, 2014, compared with $4.6 billion a year earlier. The System’s financial statements for the year ended Dec. 31, 2014, are expected to be available on or about March 10, 2015.