AUSTIN, Texas – Farm Credit Bank of Texas (FCBT), a cooperatively owned wholesale funding bank that funds rural lending cooperatives in five states, reported growth in earnings and loan volume in the third quarter of 2017.
The bank reported $16.7 billion in total loans and $22.3 billion in total assets at Sept. 30, 2017, increases of 4.7 percent and 5.0 percent since year-end 2016. Its loan portfolio consists largely of direct notes to Farm Credit cooperatives and other financing institutions that lend to farmers, ranchers and other rural borrowers. It also participates with other lenders in loans to ag-related businesses and companies that provide essential services and infrastructure in rural communities.
Credit quality remained strong, with 99.7 percent of the bank’s overall loan portfolio considered acceptable or special mention.
Bank net income increased 19.6 percent and 9.7 percent for the three months and nine months ended Sept. 30, 2017, compared with the same periods in the prior year. The change reflects growth in the bank’s earning assets with the net interest spread remaining steady at 108 basis points for the year to date.
“Earnings continue to benefit from our highly diversified loan portfolio and the strong economy in our five-state territory,” said Larry Doyle, FCBT chief executive officer. “Loans from our affiliated cooperatives to agricultural producers once again surpassed projections in the third quarter.”
Capital and liquidity exceeded regulatory requirements set by the bank’s federal regulator, the Farm Credit Administration. At Sept. 30, 2017, the bank had a permanent capital ratio of 16.53 percent, tier 1 capital ratio of 16.51 percent and shareholders’ equity of $1.7 billion. Cash and investments totaled $5.4 billion, providing 208 days of liquidity.
Together, the bank and 14 affiliated Farm Credit cooperatives across Alabama, Louisiana, Mississippi, New Mexico and Texas constitute the Texas Farm Credit District. At Sept. 30, 2017, the institutions reported a 3.6 percent increase in combined loan volume and a 4.1 percent increase in combined total assets since year-end. Credit quality remained strong, with 98.4 percent of the district loan portfolio considered acceptable or special mention in credit classification.
“It is in times like the third quarter, when borrowers in parts of our district felt the impact of Hurricane Harvey, that Farm Credit’s mission matters most,” said FCBT Board Chairman Jimmy Dodson. “Our institutions receive steady funding and are structured as borrower-owned cooperatives so that agriculture and rural communities always have access to dependable credit.”
Combined net income in the district increased 10.9 percent and 3.9 percent for the three months and nine months ended Sept. 30, 2017, compared with the same periods of the prior year, reflecting growth in loan volume, fees and other income.
The district is part of the Farm Credit System, a nationwide network of cooperatives established in 1916. Nationally, the System reported combined net income of $1.3 billion and $3.7 billion for the three months and nine months ended Sept. 30, 2017, compared with $1.3 billion and $3.6 billion for the same periods in 2016.