Farm Credit Bank of Texas reports third quarter 2024 financial results

AUSTIN, Texas - Farm Credit Bank of Texas (FCBT) reported solid earnings, loan growth and continued strong credit quality in the third quarter and first nine months of 2024.

Net income totaled $52.7 million and $151.4 million for the three months and nine months ended September 30, 2024, decreasing 5.5% and increasing 12.9% compared with the same periods of 2023. The decrease for the three months ended September 30, 2024 was driven primarily by higher provision for credit losses on loans and lower noninterest income, partially offset by higher net interest income. For the nine months ended September 30, 2024, the increase was driven primarily by lower provision for credit losses on loans and higher net interest income, partially offset by lower noninterest income.

Net interest income was $92.9 million for the third quarter and $266.0 million year to date, increasing 3.7% and 1.8% compared with the same periods of 2023. The increases reflect growth in the bank's average earning assets and income earned on assets funded by noninterest-bearing sources, partially offset by decreases in the net interest spread due to a continued challenging interest rate environment and elevated funding costs.

The bank recorded a $4.9 million provision for credit losses for the third quarter, due primarily to specific reserves for certain agribusiness loans and an increase in general reserves. The bank recorded a $12.0 million provision for credit losses year to date, primarily associated with specific reserves for certain agribusiness loans.

In addition, the bank redeemed $300.0 million of Class B perpetual noncumulative subordinated preferred stock in September. Preferred stock totaled $750 million at September 30, 2024, reflective of this redemption.

"While inflationary pressures have moderated from their peak, volatility in the macroeconomic environment continues to impact business conditions. Earnings have stabilized with improvement in net interest income and provision for credit losses year-to-date," said Amie Pala, FCBT chief executive officer. "The bank continues to closely monitor performance heading into the final quarter of its fiscal year as we navigate this dynamic environment."

Total loan volume increased 3.5% from year-end 2023 to $30.8 billion at September 30, 2024. The increase reflected growth in the bank's direct notes to its affiliated retail lenders, which finance agriculture, rural real estate, and agribusiness. Growth in participations also contributed to the increase in overall loan volume. Total assets increased 4.3% to $38.9 billion, reflecting growth in loans and investments. Nonperforming assets, which consisted of nonaccrual loans, accruing loans 90 days or more past due and other property owned, remained low at 0.12% of total loans, compared with 0.14% at year-end. Overall credit quality remained strong, with 99.5% of loans classified as acceptable or special mention.

Agricultural conditions were generally favorable across the bank's five-state district. Although agricultural producers and processors may face a variety of risk factors in the latter part of 2024, the district's loan portfolio is well supported by industry diversification and conservative advance rates.

"Loan growth at the bank and affiliated associations are reflective of the commitment of our organizations to agriculture and the customers and communities we serve," said Jimmy Dodson, FCBT board chair.

At the end of the third quarter, the bank had $1.9 billion in shareholders' equity and a total capital ratio of 14.7%. The 11.7% increase in shareholders' equity since year-end reflects the impact of net income and changes in other comprehensive income. Cash and investments totaled $7.6 billion, providing ample liquidity and exceeding regulatory requirements.

The bank is part of the Farm Credit System , a nationwide network of cooperatives established in 1916. The System reported combined net income of $1.98 billion and $5.91 billion for the three months and nine months ended September 30, 2024, compared with $2.00 billion and $5.51 billion for the same periods of the prior year.

These financial results are preliminary and unaudited. The bank will post its 2024 third quarter financial report at farmcreditbank.com/financials/bank-financial-reports.

About Farm Credit Bank of Texas

Farm Credit Bank of Texas is a cooperatively owned wholesale bank that finances agriculture and rural America. Headquartered in Austin, it funds 13 local lending cooperatives and two other financing institutions in Alabama, Louisiana, Mississippi, New Mexico, and Texas. These lenders make loans to farmers, ranchers, agribusinesses and rural property owners. The bank also partners with other lenders to finance agricultural production and processing, essential rural infrastructure and more.

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