AUSTIN, Texas – Farm Credit Bank of Texas (FCBT), a cooperatively owned wholesale funding bank, recently returned $66.3 million in cash patronage and allocated earnings to its owners and other patrons. The patronage distribution represents 38 percent of the bank’s net income for 2011.
The Austin-headquartered bank provides funds and services to its owners — retail rural lending organizations in Alabama, Louisiana, Mississippi, New Mexico and Texas.
“We are very pleased to distribute a significant portion of last year’s earnings to the rural financing co-ops that own the bank,” said Larry Doyle, FCBT chief executive officer. “Many of these lenders serve territories that were heavily impacted by challenging weather and economic circumstances in 2011, and this patronage payment helps them continue to offer competitive financing to their borrowers.”
FCBT net income for the year ended Dec. 31, 2011, was a record $174.2 million, an increase of 3.4 percent from 2010 net income of $168.5 million.
Doyle attributed the bank’s profitability largely to its access to low-cost funding and its careful debt management strategy of replacing high-cost debt with lower-cost debt.
“As a federated cooperative, we strive to provide our owners with low-cost funds, so that they can offer competitive financing to the agricultural producers and rural landowners who are their borrowers and owners,” said FCBT Board Chairman Jimmy Dodson. “This approach to success-sharing is one of the distinct benefits of the cooperative business model.”
The bank’s gross loan volume totaled $10.3 billion at Dec. 31, 2011, as compared to $10.5 billion a year earlier. The 1.7 percent decrease in loan volume was attributed largely to reduced borrowing by the bank’s affiliated lending cooperatives, which experienced weaker demand for loans from farmers and ranchers. This was offset by an increase in participation loans to the agribusiness sector.
“Although difficult weather circumstances resulted in lower crop yields and unprecedented cattle sell-offs in much of our territory last year, commodity prices were generally strong, and many of those who had crop failures benefited from crop insurance payments. As a result, many producers have been able to pay down their loans in recent months,” said Dodson, a farmer himself.
The quality of the bank’s loan portfolio remained relatively strong despite weakness in the general economy, with 91.2 percent of loans rated “acceptable” or “other assets especially mentioned.”
FCBT assets totaled $14.05 billion at Dec. 31, 2011, compared to $14.11 billion a year earlier.
The bank and its 17 affiliated lending cooperatives constitute the Texas Farm Credit District. Together they declared $188.4 million in patronage distributions, based on 2011 earnings. District net income was a record $368.7 million for the year ended Dec. 31, 2011, compared with $275.3 million for the previous year. Combined district loan volume totaled $15.6 billion at Dec. 31, 2011, down 0.03 percent from year-end 2010.
Farm Credit Bank of Texas is a part of the nationwide Farm Credit System, which is a network of rural lending cooperatives. Established in 1916, the System is the oldest and largest source of financing for U.S. agriculture and rural America.
Nationally, the Farm Credit System reported combined net income of $3.940 billion at Dec. 31, 2011, compared with $3.495 billion a year earlier.