AUSTIN, Texas – Farm Credit Bank of Texas (FCBT), a cooperatively owned wholesale funding bank, reported record earnings for 2010, which allowed the bank to pay a record patronage to its owners last year.
The Austin-based bank had $168.5 million in net income for the year ended Dec. 31, 2010, a 58 percent increase over 2009 income and its highest earnings since it was established in 1916. Net interest income of $212.5 million for 2010 was up 25.6 percent over the previous year.
“We are extremely pleased with how well the bank performed in 2010, considering we were dealing with the residual effects of a significant economic downturn the previous two years,” said Larry Doyle, FCBT chief executive officer. “We attribute our strong earnings largely to careful management of the bank’s liabilities, which involved calling high-cost debt and replacing it with lower-cost debt.”
The bank shared its success with its customer-owners by distributing $76.1 million in patronage to them. The patronage payment had the effect of reducing the 17 rural financing cooperatives’ net cost of borrowing to less than the bank’s costs of funds.
“We believe in the cooperative business model and the benefits it provides to our owners,” said Ralph W. Cortese, FCBT board chairman. “Through this patronage payment, the bank demonstrated its commitment to provide our affiliated lending cooperatives with the lowest possible cost of funds. We want them to be competitive in their markets, because ultimately their success benefits the farmers, ranchers and rural citizens they serve.”
The bank showed significant improvement in two key results areas. Return on average assets and return on average shareholders’ equity for the year ended Dec. 31, 2010, increased to 1.20 and 16.78 percent, respectively, from 0.74 and 13.07 percent, respectively, for the year ended Dec. 31, 2009.
Loans outstanding totaled $10.5 billion at Dec. 31, 2010, compared with $11.0 billion a year earlier. This 5.2 percent decrease in the loan portfolio from 2009 to 2010 was attributed to reduced borrowing by the bank’s affiliated lending cooperatives, offset by a slight increase in its participation loan portfolio and other loans. The demand for funding by the local lending cooperatives decreased in 2010 as a result of general economic conditions, which have resulted in a decline in demand for rural real estate and enhanced credit standards.
FCBT assets totaled $14.1 billion at Dec. 31, 2010, compared with $13.8 billion a year earlier.
The bank and its 17 affiliated rural lending cooperatives in Alabama, Louisiana, Mississippi, New Mexico and Texas together comprise the Texas Farm Credit District. At Dec. 31, 2010, the district reported record net income of $275.3 million for the year and a $15.6 billion loan portfolio. District assets totaled $19.6 billion at year-end 2010.
Farm Credit Bank of Texas is part of the Farm Credit System, the nation’s oldest and largest source of financing for agriculture and rural America. The System reported combined net income of $3.495 billion at Dec. 31, 2010, compared with net income of $2.850 billion the previous year.