AgTexas Farm Credit Services

Credit Highlights Although our rating incorporates the funding benefit AgTexas receives as a Farm Credit System member, we think the likelihood the U.S. government would provide extraordinary support directly to AgTexas, if it were in financial stress, is low. In our view, AgTexas' role is of limited importance to the government, and another entity could assume AgTexas' business should it come under significant stress. In addition, there is no history of the government providing direct support to associations like AgTexas, which limits its link to the U.S. government. Therefore, we do not include any rating uplift for potential government support. The stable outlook indicates our expectation that the company will maintain a strong capital position, including an S&P Global risk-adjusted

...AgTexas Farm Credit Services (AgTexas), an agricultural lender operating within the Farm Credit Bank of Texas (FCBT) district, has a history of stable operating performance. The association has a record of low credit losses, stable earnings, strong capital ratios, and access to low-cost funding from the FCBT. AgTexas has very limited geographic diversity and concentrated loan exposures to the agricultural industry. The association's district is limited to certain regions in Texas, and its loan exposure is substantially in the livestock and dairy sectors. Additionally, it is one of the smaller associations in terms of total assets. We view these factors negatively because they create additional risk that could threaten loan performance due to cyclicality and loan concentrations. However, asset quality metrics have been good, with adjusted nonperforming assets (NPAs) averaging well below 1% over the last five years. Our ratings on AgTexas incorporate the benefit it receives as a member of...

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