Fitch Affirms Farm Credit Bank of Texas' 'AA-' Long-Term IDR; Outlook Stable

NEW YORK--(Business Wire)--
Fitch Ratings has affirmed the long-term and short-term Issuer Default Ratings
(IDR) of Farm Credit Bank of Texas (FCBT) at 'AA-' and 'F1+', respectively.
Today's rating action reflects continued stable operating performance, a
manageable increase in loan delinquency, and conservative liquidity and capital
management. The Rating Outlook is Stable. A list of ratings is found at the end
of this release.

FCBT is a Farm Credit Bank and is one of the five banks in the Farm Credit
System (FCS; rated 'AAA/F1+' by Fitch). FCS is a Government Sponsored Enterprise
(GSE) created by Congress in 1916 to provide a reliable source of credit and
liquidity to the U.S. agricultural community. The banks jointly own the Federal
Farm Credit Banks Funding Corporation (Funding Corp.), which acts as their agent
in the issuance of Farm Credit Banks consolidated system-wide debt. The five
banks are jointly and severally liable for the Federal Farm Credit Banks
system-wide debt securities. Over the last nine months, FCS funding has proved
invaluable to the agricultural community. Despite the turmoil in the financial
system, the Funding Corp. never lost access to the capital markets and
maintained the ability to fulfill daily liquidity needs.

As an instrumentality of the FCS, FCBT helps fulfill an important public mission
to promote a healthy agricultural industry by ensuring reliable credit and
liquidity to borrowers. As global economic weakness places pressures on farmers,
loan quality has deteriorated from pristine levels experienced in 2007. At June
30, 2009, the bank-only ratio of nonperforming assets (NPAs) to loans and other
property owned increased to 1.35% from 0.97% at year-end 2008 (YE08).
Approximately 74% of FCBT's loan portfolio is loans to its affiliated
associations. This reduces the risk to FCBT due to the association's reserves
for loan losses and capital which provides a buffer that would need to be
exhausted before FCBT experienced a loss. Nevertheless, it is important to
consider the asset quality of the association's loans, which serve as collateral
for FCBT's loans to its Associations. At June 30, 2009, the consolidated ratio
of non-accrual loans, accruing restructured and other property owned to loans
and other property owned increased to 3.39% from 2.02%. This notable increase is
largely due to its exposure to the ethanol and poultry industries, both of which
have experienced significant stress. Despite the unfavorable trend in
delinquency, 75% of loans deemed non-performing are current in respect to
principal and interest.

While FCBT and FCS are not guaranteed by the U.S. government, Fitch believes
that if the FCS were in need of support, it is extremely likely that it would be
provided; and in fact, support has been demonstrated in the 1980s. However, such
support may not extend to obligations of any single district bank, a factor
considered in FCBT's rating. The benefit gained through its ability to access
capital markets through a GSE channel is also a factor considered in the rating.
FCBT has adopted prudent risk management and corporate governance standards
enabling it to minimize risk concentrations.

The Stable Outlook reflects Fitch's view of FCBT's ability to manage through the
current and anticipated stress resulting from economic conditions and weakness
in several specific agricultural industries (e.g. poultry and alternative
energy). While FCBT's asset quality metrics are likely to continue to remain
under pressure, the adequate capital and reserve levels, including those of its
affiliated associations are significant risk buffers. The ratings also reflect
Fitch's view of the system's continued GSE status and political support for the
agricultural industry which has been an important factor for consistent and
favorable access to the capital markets.

Fitch affirms FCBT's ratings as follows:

Farm Credit Bank of Texas

--Long-term IDR at 'AA-';

--Short-Term IDR at 'F1+';

--Subordinated debt at 'A+';

--Preferred stock at 'A';

--Support at '1';

--Support floor at 'A-'.

The Rating Outlook is Stable.

Additional information is available at www.fitchratings.com.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF
CONDUCT' SECTION OF THIS SITE.

Fitch Ratings, New York
Eric Newell, CFA, 212-908-0769
Sharon Haas, CFA, 212-908-0362
or
Media Relations:
Brian Bertsch, 212-908-0549
Email: brian.bertsch@fitchratings.com

Copyright Business Wire 2009