Tenth Farm Credit Bank reports strong net income

The Farm Credit Bank of Texas and its affiliated lending institutions have reported a combined net income of $145 million for the six months ended June 30, 2008, an increase of $33.7 million, or just over 30 percent, from the same period of 2007. Gross loan volume at June 30, 2008, was $16.31 billion, reflecting a 7.9 percent increase from Dec. 31, 2007, and a 17.8 percent increase from June 30, 2007.

The Austin-based bank and 20 financing cooperatives, collectively known as the Tenth Farm Credit District, make up the largest rural lending network serving Alabama, Louisiana, Mississippi, New Mexico and Texas.

The district's net income for the quarter ended June was $75.3 million, an increase of almost 70 percent from the second quarter of 2007.

The increase in net income for the first six months of 2008 was primarily the result of an $18.5 million increase in net interest income and an $11.9 million reduction in the district's provision for loan losses.

"Our strong growth is being fueled by a high level of loan volume that we continue to see across the Tenth District, combined with an increase in the bank's participations portfolio," said Buddy Cortese, board chairman of the Farm Credit Bank of Texas.

Nonaccrual loans for the district were 0.83 percent of total loans at June 30, 2008, compared to 0.66 percent at Dec. 31, 2007, and 0.60 percent at June 30, 2007. Credit quality remained high at 98.6 percent of loans rated acceptable at June 30, 2008.

Combined assets of the Tenth District totaled $19.3 billion at mid-year. Members' equity in the cooperatively owned lending organizations totaled $2.3 billion.

The Farm Credit Bank of Texas also reported strong second-quarter results.

The bank's net income for the second quarter was $22.2 million, a 21.8 percent increase from the second quarter of last year. Net income for the first six months was $43.2 million, an increase of $7.5 million, or 20.9 percent, over the same period of 2007.

"We are pleased with the continued growth of the Farm Credit Bank of Texas," said Larry Doyle, the bank's chief executive officer. "Our success was made even more significant recently when the bank received favorable ratings from Fitch Ratings and Moody's Investors Service."

Fitch assigned an "AA-" longterm Issuer Default Rating to the bank on June 19, and Moody's assigned an "Aa3" issuer rating on July 16.

The bank was assigned preferred stock ratings of "A" and "A2" by Fitch and Moody's respectively.

The Tenth District is part of the nationwide Farm Credit System, established by Congress in 1916. The Tenth District lenders provide loans and financial services to agricultural producers, agribusiness firms, country homeowners and other rural landowners.

Nationally, the Farm Credit System reported combined net income of $793 million and $1.553 billion for the three and six months ended June 30, 2008, as compared with combined net income of $640 million and $1.294 billion for the same periods last year.