Farm Credit Bank of Texas (FCBT) reported solid loan growth and credit quality in the first six months of 2023.
The bank is part of the Farm Credit System, a nationwide network of cooperatives established in 1916. The System reported combined net income of $3.51 billion for the six months ending June 30, 2023, compared with $3.57 billion for the same period last year.
Total loan volume was $29.0 billion at June 30, 2023, an increase of 2.8% since the end of 2022. Total assets increased 2.6% over the same period to $36.9 billion. Overall credit quality remained high, with 99.5% of loans classified as acceptable or special mention, compared with 99.7% at year-end.
Net interest income was $171.8 million for the six months ending June 30, 2023, a decrease of 11.1% compared with the same period of 2022.
The change was driven primarily by a decrease of 25 basis points in net interest rate spread, partially offset by a $2.4 billion increase in the bank’s average earning assets.
The bank recognized a $32.1 million provision for credit losses for the first six months of the year. The provision primarily reflected specific reserves associated with a limited number of borrowers in the agribusiness, production and intermediate term, and energy sectors. Nonperforming assets, which consisted of nonaccrual loans and accruing loans 90 days or more past due, represented 0.26% of total loans, compared with 0.11% at year- end.
Year-to-date net income was $78.4 million, a 40.1% decrease year over year. The change was primarily due to the aforementioned increase in provision for credit losses and a decrease in net interest income.
At the end of the second quarter the bank had $1.6 billion in shareholders’ equity, a total capital ratio of 12.96%, and cash and investments of $7.4 billion. Capital and liquidity remain above regulatory requirements.
These financial results are preliminary and unaudited. The bank will post its 2023 secondquarter financial report at www.farmcreditbank. com/ financials/ bankfinancial- reports.
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