Fitch Affirms Farm Credit Bank of TX's IDRS at ‘AA-/F1+’; Upgrades Support Rating Floor to ‘A’

Fitch Ratings – New York-13 September 2011: Fitch Ratings has affirmed the long- and short-term Issuer Default Ratings (IDRs) of Farm Credit Bank of Texas (FCBT) at ‘AA-’ and ‘F1+’, respectively. At the same time, Fitch has upgraded FCBT's Support Rating Floor to ‘A’ from ‘A-.’
The Rating Outlook is Stable. These actions follow a collective review of the banks in the Farm Credit System (FCS). A complete list of ratings can be found at the end of this release.

The affirmation of FCBT's ratings reflects its strong operating performance and sound financial condition. The company is operated in a conservative manner and benefits from its access to government sponsored entity (GSE) funding (for additional information, please see press release dated Aug. 12, 2011).

The Stable Outlook reflects Fitch's view of FCBT's ability to manage through the current and anticipated stress resulting from weather related issues, such as the severe drought in its region, or weakness in any specific agricultural sector. Further, the Stable Outlook considers FCBT's ability to meet its mission of providing for the funding and liquidity needs of its agricultural district given a short-term disruption in its access to funding via the Federal Farm Credit Banks Funding Corporation, the funding arm of the FCS.

The upgrade of the Support Rating Floor to ‘A’ from ‘A-’ for FCBT is in conjunction with Fitch's systemwide assessment of support rating floors for the banks in the FCS, which is a part of Fitch's on-going review of support among global financial institutions. Support rating floors convey Fitch's view of the minimum rating that would likely be assigned should support for the institution be required.

Fitch believes that support would likely be stronger than the previously assigned ‘A-’ given the integral role of the banks within the FCS, as well as potentially even stronger support for the system as reflected in Fitch Support Rating Floor of 'AAA' for the FCS. The upgrade considers historical support for FCS and the agricultural sector as a whole, as well as considering more recent support actions for other cooperative entities.

FCBT's ratings could be negatively affected should there be a protracted disruption in access to its primary source of funding, as would significant negative developments in the agricultural sector. Ratings could also be negatively affected should FCBT stray from its core mission or assume risks not wholly related to its mission. Additionally, although not anticipated, the ratings could be negatively impacted should the FCS lose its GSE status or if there is a change in Fitch's view of support for the system.

FCBT, with about $14 billion in assets, is one of the five banks in the FCS. FCBT's district spans five states across parts of the Southwest and Southeast. Fitch has upgraded the following rating:
--Support Floor to ‘A’ from ‘A-’.

Fitch has affirmed the following ratings with a Stable Outlook:

• Farm Credit Bank of Texas
• Long-term IDR at ‘AA-’;
• Short-term IDR at ‘F1+’;
• Subordinated debt at ‘A+’;
• Preferred stock at ‘A’;
• Support at ‘1’;

Contact:
Primary Analyst
Ken Ritz
Senior Director
+1-212-908-0368
Fitch, Inc.
One State Street Plaza
New York, NY 10004

Secondary Analyst
Brandon Bajema
Associate Director
+1-312-606-2332

Committee Chairperson
Thomas Abruzzo
Managing Director
+1-212-908-0793

Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email:
brian.bertsch@fitchratings.com.

Additional information is available at ‘www.fitchratings.com’.

Applicable Criteria and Related Research:

–‘Global Financial Institutions Rating Criteria’ (Aug. 16, 2010);
–‘Short-Term Ratings Criteria for Corporate Finance’ (Nov. 2, 2010);
–‘Rating Criteria for Banking Structures Backed by Mutual Support Mechanisms’ (April 11, 2011);
–‘Rating Linkages to the U.S. Sovereign Rating’ (July 18, 2011).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547685
Short-Term Ratings Criteria for Corporate Finance
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=568726
Rating Criteria for Banking Structures Backed by Mutual Support Mechanisms
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=591785
Rating Linkages to the U.S. Sovereign

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