The Farm Credit Bank of Texas (FCBT) reported strong mid-year results. The bank’s net income for the second quarter was $27.3 million, a 22.9 percent increase from the second quarter of last year. Net income for the first six months was $43.9 million, an increase of $0.7 million, or 1.6 percent, over the same period of 2008.

“The bank’s performance in the second quarter reflects the careful monitoring of the bank’s earning assets and debt management strategies, which contributed to achieve increased earnings,” said Larry Doyle, FCBT chief executive officer. “One key factor was a 33-basis-point increase in the bank’s interest rate spread, which was achieved by calling high-cost debt and replacing it with lower-cost debt.”

The Austin-based bank and its 19 affiliated financing cooperatives make up the largest rural lending district serving Alabama, Louisiana, Mississippi, New Mexico and Texas. Together the district reported combined net income of $95.8 million for the six months ended June 30, 2009, a decrease of $49.2 million, or 33.9 percent, from the same period of 2008.

Gross loan volume at June 30, 2009, was $16.49 billion, reflecting a 0.6 percent decrease from Dec. 31, 2008, and a 1.1 percent increase from June 30, 2008.

“In spite of the current difficult economic environment, the lending cooperatives continued to generate positive earnings,” said Ralph W. Cortese, FCBT board chairman. “Our loan volume is stable compared with this time last year, and we continue to manage our financial position so that we remain strong for the benefit of our member-owners.”

The district’s net income for the quarter ended June 30, 2009, was $45.9 million, a decrease of 38.9 percent from the second quarter of 2008. This decrease was primarily due to a $36.8 million increase in provision for loan losses and a $5.6 million increase in noninterest expense, offset by a $12.6 million increase in net interest income.

Nonaccrual loans for the district accounted for 3.11 percent of total loans at June 30, 2009, compared to 1.94 percent at Dec. 31, 2008, and 0.83 percent at June 30, 2008. Credit quality decreased slightly to 95.2 percent of loans rated acceptable at June 30, 2009. Combined assets totaled $19.4 billion at mid-year. Members’ equity in the cooperatively owned lending organizations totaled $2.45 billion.

The FCBT and its affiliated associations are part of the nationwide Farm Credit System, established by Congress in 1916. The cooperative 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 $682 million and $1.297 billion for the three and six months ended June 30, 2009, as compared with combined net income of $793 million and $1.553 billion for the same periods last year.