AUSTIN, Texas – Farm Credit Bank of Texas (FCBT), a cooperatively owned wholesale funding bank, reported increased earnings for the third quarter of 2011.
Net income for the three months ended Sept. 30, 2011, totaled $44.5 million, a 35.7 percent increase from the same quarter a year earlier. Net income for the nine months ended Sept. 30, 2011, was $135.7 million, up 19.3 percent from the same nine-month period of 2010.
Income growth in both quarters was driven primarily by increases in net interest income and decreases in provision for credit losses. For the three- and nine-month periods of 2011, the bank’s net interest income was $52.5 million and $169.4 million, respectively, representing increases of 3.2 percent and 13.5 percent, respectively, over the same periods of 2010.
“Considering the seriousness of the drought in much of our district and the domestic and global economic situation, Farm Credit Bank of Texas has been fortunate to perform extremely well,” said Larry Doyle, FCBT chief executive officer. “Our continued high marks from national rating organizations reaffirm our ability to perform in a challenging market.”
Return on average assets increased to 1.29 percent for the nine months ended Sept. 30, 2011, from 1.08 percent for the same period in 2010, while return on average shareholders’ equity decreased to 14.96 percent from 16.5 percent during the same period.
The bank’s gross loan volume totaled $10.0 billion at Sept. 30, 2011, down 4.5 percent from Dec. 31, 2010. The loan volume decrease was attributed to a reduction in the bank’s direct loans to its affiliated financing cooperatives, offset by an increase in participation loans.
At the end of the third quarter of 2011, the credit quality of the loan portfolio decreased slightly to 90.3 percent of the portfolio classified as “acceptable” or “other assets especially mentioned.”
“Despite the volatility in the U.S. and global financial markets, Farm Credit Bank of Texas continues to have both strong profitability and access to low-cost funding,” FCBT Board Chairman Ralph W. Cortese said. “That allows us to provide low-cost financing to our affiliated lending cooperatives.”
The Austin-headquartered Farm Credit Bank of Texas is the source of funds for 17 rural financing cooperatives in Alabama, Louisiana, Mississippi, New Mexico and Texas. These lenders, which own the bank, in turn make loans to their owners — farmers, ranchers, agribusiness firms, rural landowners and country homeowners.
Together, the bank and its affiliated lending cooperatives comprise the Texas Farm Credit District. With $15.3 billion in outstanding loans, the district is the largest rural lending network in the five-state region.
The Texas District lenders reported $95.9 million in combined net income for the quarter ended Sept. 30, 2011, a 94.6 percent increase over the same quarter of 2010. District net income for the first nine months of this year totaled $286.4 million, up 35.0 percent from the same period last year. These results were driven largely by an increase in net interest income and a decrease in provision for loan losses.
The district is a part of the 95-year-old Farm Credit System, the nation’s largest source of financing for agriculture and rural America. Nationally, the System reported combined net income of $1.008 billion and $2.994 billion for the respective three-month and nine-month periods ended Sept. 30, 2011. This compares to combined net income of $949 million and $2.633 billion for the same periods last year.