Annual Report

2015

on the Farm Credit System by the 

FARM CREDIT ADMINISTRATION

Regulator of the FCS
Contents

Statement of the Board Chairman and CEO 2

Farm Credit Administration 5

Overview and mission 5

The Board 5

Farm Credit System—Role, Structure, and Safety and Soundness 9

FCS role 9

FCS structure 9

The safety and soundness of the FCS 11

FCS Banks and Associations 12

Financial condition 12

Borrowers served	 20

System funding for other lenders	 22

Farm debt and market shares	 24

Serving Young, Beginning, and Small Farmers and Ranchers 26

Characteristics of YBS producers	 26

FCS lending to YBS borrowers	 26

YBS programs	 32

Regulatory Policy and Approvals 35

Regulatory activity in 2015	 35

Corporate activity in 2015	 37

Funding activity in 2015	 39

Maintaining a Dependable Source of Credit for Farmers and Ranchers 41

Conducting a risk-based examination and oversight program	 41

Identifying and responding to potential threats to safety and soundness	 41

Measuring the system’s safety and soundness	 42

Providing differential supervision and enforcement	 44

Protecting borrower rights	 44

Condition of Farmer Mac 45

Capital	 46

Program activity	 47

Asset quality	 48

Earnings	 48

Challenges Facing the Agricultural Economy and the Farm Credit System 50

The farm economy	 50

The general economy	 56

Farm Credit System portfolio	 61

Appendix 62

Farm Credit Administration offices	 63

Agency officials	 65

Glossary	 70

Acronyms and abbreviations	 73

Additional information	 74

Photo credits: Bachrach (Board member photos) and Mattox Photography (agency official photos). All other photos taken by Linda Toki, Kevin Kramp, or selected 

from commercial stock. Layout and design by Linda Toki. 
2

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Statement of the Board Chairman and CEO

June 2016

Dear Reader,

On behalf of the board and the staff of the Farm Credit Administration, I present the 2015 Annual Report on the 

Farm Credit System. I am pleased to report that the System’s overall condition and performance remain sound. Its 

net income was $4.69 billion in 2015, down slightly from $4.72 billion in 2014, and its capital position is strong.

Overall, the quality of System loans remains high. As of December 31, 2015, 0.69 percent of the System’s gross 

loans outstanding were nonperforming. This was a slight improvement over the prior year, when nonperforming 

loans accounted for 0.80 percent at year-end. 

However, credit quality is expected to decline in 2016 because large supplies of corn and soybeans are pushing 

prices down for farmers. The decline in commodity prices in turn is pushing prices down for farmland, which 

serves as collateral for many System loans. 

Another factor that may affect the System’s asset quality is the high U.S. dollar, which makes it hard for U.S. products to compete with the products of other agricultural exporters. In addition, slower growth in the economies of 

some of our biggest trading partners, such as China, may further reduce export sales. 

We expect that the System will withstand these challenges in 2016 for several reasons. First, the underwriting 

standards of System institutions were prudent during the recent rapid increase in farmland values. Also, until 2014, 

farmers had several years of record farm income, and many used these gains to pay down debt.

The System’s strong capital levels also safeguard the System from credit quality declines. As of December 31, 2015, 

the System’s total capital had increased to $48.8 billion, up from $45.7 billion a year earlier. 

Because the System obtains its loan funds from the securities it sells to the debt capital markets, investor demand 

for System securities is also key to the System’s ability to withstand these challenges. In 2015, Systemwide debt 

increased by 8.0 percent, and we expect investor demand for System securities to remain strong in 2016. The Farm 

Credit Insurance Fund, which held just over $4 billion at year-end 2015, further strengthens the financial position of 

the System by protecting investors in Systemwide debt, thus strengthening investor confidence in the System. 

This report also contains our annual report on the System’s service to young, beginning, and small (YBS) farmers 

and ranchers. In 2015, the number of new loans made and the dollar volume of new loans made rose for each YBS 

category. The number and dollar volume of loans outstanding also rose in every category. The growth in outstanding loan volume for beginning and small farmers exceeded the growth in the System’s overall farm lending, while 

the growth in outstanding loan volume for young farmers lagged slightly behind the growth in the System’s overall farm lending.
3

As the arm’s-length regulator of the System, we examine System institutions for their safety and soundness and their 

compliance with laws and regulations, providing heightened oversight of institutions with higher risk. In addition to 

the areas normally considered, our examiners are currently emphasizing internal controls and operations risk, and 

they are monitoring the growth in credit risk.

I am pleased to report that, after publishing a proposed capital rule in September 2014, the agency issued a final 

rule in early 2016 that made extensive revisions to the agency’s capital regulations. The rule modernizes our capital requirements while ensuring that System institutions continue to hold enough regulatory capital to fulfill their 

mission. It ensures that the System’s capital requirements are appropriate for the System’s cooperative structure and 

comparable to the Basel III framework and the standardized approach that the federal banking regulatory agencies 

have adopted.

The final capital rule represents the agency’s largest, most significant rulemaking in many years. It helps ensure the 

continued safety and soundness of the Farm Credit System. The rule will also make it easier to compare the System’s 

capital adequacy and financial condition with that of a joint-stock bank. This ease of comparison should make System debt securities more attractive to informed investors.

This document also includes a report on the Federal Agricultural Mortgage Corporation, or Farmer Mac. On December 31, 2015, Farmer Mac’s portfolio of program business reached $15.9 billion, and its tier 1 capital was approximately $560 million, the highest levels achieved in both measures in the corporation’s history. The credit quality of 

program assets also remained near historically high levels. Farmer Mac is well positioned to withstand the widely 

anticipated decline in credit quality throughout the agricultural sector in 2016.

For 100 years the System has provided a dependable and affordable source of credit to our nation’s farmers and 

ranchers. The Farm Credit System played an important role in giving the United States one of the strongest farm 

economies in the world. We at the Farm Credit Administration will work hard to ensure that the System will be 

there to serve our farmers and ranchers for the next 100 years. 

Sincerely,

Kenneth A. Spearman
4

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

The Farm Credit Administration ensures 

a safe, sound, and dependable source 

of credit and related services 

for all creditworthy and eligible persons 

in agriculture and rural America.
5

Farm Credit Administration

Overview and mission

The Farm Credit Administration is 

an independent agency in the executive branch of the U.S. government. 

We are responsible for regulating and 

supervising the Farm Credit System 

(its banks, associations, and related 

entities) and the Federal Agricultural 

Mortgage Corporation (Farmer Mac).

The System is a nationwide network 

of borrower-owned financial institutions that provide credit to farmers, 

ranchers, residents of rural communities, agricultural and rural utility 

cooperatives, and other eligible borrowers.

FCA derives its powers and authorities from the Farm Credit Act of 

1971, as amended (12 U.S.C. 2001 – 

2279cc). The U.S. Senate Committee 

on Agriculture, Nutrition, and Forestry and the U.S. House of Representatives Committee on Agriculture 

oversee FCA and the FCS.

FCA is responsible for ensuring that 

the System remains a dependable 

source of credit for agriculture and 

rural America. We do this in two 

specific ways:

• We ensure that System institutions, including Farmer Mac, 

operate safely and soundly and 

comply with applicable laws and 

regulations. Our examinations 

and oversight strategies focus on 

an institution’s financial condition and any material existing 

or potential risk, as well as on 

the ability of its board of directors and management to direct 

its operations. We examine each 

institution’s compliance with 

laws and regulations to serve eligible borrowers, including young, 

beginning, and small farmers and 

ranchers. If a System institution 

violates a law or regulation or 

operates in an unsafe or unsound 

manner, we use our supervisory 

and enforcement authorities to 

bring about appropriate corrective action.

• We issue policies and regulations 

governing how System institutions conduct their business and 

interact with borrowers. These 

policies and regulations focus 

on protecting System safety 

and soundness; implementing 

the Farm Credit Act; providing 

minimum requirements for lending, related services, investments, 

capital, and mission; and ensuring adequate financial disclosure 

and governance. We also approve 

corporate charter changes, System 

debt issuances, and other financial and operational matters.

Our headquarters and one field office 

are in McLean, Virginia. We also 

have field offices in Bloomington, 

Minnesota; Dallas, Texas; Denver, 

Colorado; and Sacramento, California.

FCA does not receive a federal 

appropriation. We maintain a revolving fund financed primarily by 

assessments from the institutions we 

regulate. Other sources of income 

for the revolving fund are interest 

earned on investments with the U.S. 

Treasury and reimbursements for services we provide to federal agencies 

and others.

The Board

FCA policy, regulatory agenda, and 

supervisory and examination activities are established by a full-time, 

three-person Board whose members 

are appointed by the President of 

the United States with the advice 

and consent of the Senate. Board 

members serve a six-year term and 

may remain on the Board until a 

successor is appointed. The President 

designates one member as Chairman of the Board, who serves in that 

capacity until the end of his or her 

own term. The Chairman also serves 

as our Chief Executive Officer.

FCA Board members also serve as 

the Board of Directors for the Farm 

Credit System Insurance Corporation.
6

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Kenneth A. Spearman

Board Chairman and CEO

Kenneth A. Spearman is Chairman 

of the Board and CEO of the Farm 

Credit Administration. Mr. Spearman 

was appointed to the FCA Board by 

President Barack Obama on October 

13, 2009. He was designated Chairman and CEO by President Obama 

on March 13, 2015.

Since his appointment to the FCA 

Board in 2009, Mr. Spearman served 

as Chairman of the Board of Directors of the Farm Credit System Insurance Corporation, which is responsible for ensuring the timely payment 

of principal and interest on obligations issued on behalf of Farm Credit 

System banks. He will continue to 

serve concurrently as a member of 

the FCSIC Board of Directors.

Mr. Spearman brings to his position on the FCA Board many years 

of experience in finance, agriculture, 

and agricultural cooperatives. He 

spent 28 years in the citrus industry. 

From 1980 to 1991, he was controller of Citrus Central, a $100 million 

cooperative in Orlando, Florida, 

where he was responsible for financial management and reporting and 

the supervision of staff accountants.

He later served as director of internal 

audit for Florida’s Natural Growers, 

where he designed and implemented 

the annual plan for reviewing and 

appraising the soundness, adequacy, 

and application of accounting, financial, and other operating internal 

controls.

From January 2006 until his appointment to the FCA Board, Mr. Spearman served as an independently 

appointed outside director on the 

AgFirst Farm Credit Bank board in 

Columbia, South Carolina. During his 

tenure, he served on the board compensation committee and the board 

governance committee.

Before entering agriculture in central 

Florida, Mr. Spearman served with 

the U.S. Army and is a Vietnam veteran. He later was employed by the 

public accounting firm Arthur Andersen & Co. and was involved with the 

development of a public accounting 

firm in Chicago, Illinois. He served 

as chairman of the board of trustees 

for the Lake Wales Medical Center. 

He is a member of the Institute of 

Internal Auditors, as well as the 

National Society of Accountants for 

Cooperatives, where he served a 

term as national president.

He obtained his master’s degree in 

business administration from Governors State University in University 

Park, Illinois, and his B.S. in accounting from Indiana University. He also 

attended Harvard Kennedy School 

Executive Education, where he completed a program with a concentration in Government Agency Strategic 

Planning.

Mr. Spearman and his wife, Maria, 

of Winter Haven, Florida, have three 

children — twin daughters, Michelle 

Springs and Rochelle Puccia, and a 

son, Dr. Kenneth Spearman.
7

Dallas P. Tonsager

Board Member

Dallas P. Tonsager was appointed to 

the FCA Board by President Barack 

Obama on March 13, 2015, for a term 

that expires May 21, 2020.

Mr. Tonsager also serves as Chairman of the Board of Directors of 

the Farm Credit System Insurance 

Corporation, which is responsible 

for ensuring the timely payment of 

principal and interest on obligations 

issued on behalf of FCS banks.

Mr. Tonsager served as Under 

Secretary for Rural Development at 

the U.S. Department of Agriculture 

(USDA) from 2009 to 2013. In this 

position, he expanded broadband 

communication in rural America and 

implemented other key elements of 

the Recovery Act for rural America. 

He dramatically expanded USDA’s 

water and wastewater programs, 

expanded funding for first- and second-generation biofuels, and funded 

hospitals and other public facilities in 

rural America. 

In addition, Mr. Tonsager worked 

with the Farm Credit System and 

others to set up new venture capital 

investment funds. From 2010 to 2013, 

he was a member of the Commodity 

Credit Corporation Board of Directors.

From 2004 to 2009, Mr. Tonsager 

served as a member of the FCA 

Board as well as a member of the 

FCSIC Board of Directors. 

From 2002 to 2004, he was the executive director of the South Dakota 

Value-Added Agriculture Development Center. In this position, he 

coordinated initiatives to better serve 

producers interested in developing 

value-added agricultural projects. 

Services provided by the center 

include project facilitation, feasibility 

studies, business planning, market 

assessment, technical assistance, and 

education.

In 1993, he was selected by President William J. Clinton to serve as 

USDA’s state director for rural development in South Dakota. Mr. Tonsager oversaw a diversified portfolio 

of housing, business, and infrastructure loans in South Dakota. His term 

ended in February 2001. 

A longtime member of the South 

Dakota Farmers Union, Mr. Tonsager 

served two terms as president of 

the organization, from 1988 to 1993. 

During that same period, he was a 

board member of Green Thumb Inc., 

a nationwide job training program 

for senior citizens. In addition, he 

served on the Board of National 

Farmers Union Insurance from 1989 

to 1993, and he was a member of the 

Advisory Board of the Commodity 

Futures Trading Commission from 

1990 to 1993. 

Mr. Tonsager grew up on a dairy 

farm near Oldham, South Dakota. 

For many years, he and his older 

brother owned Plainview Farm in 

Oldham, a family farm on which 

they raised corn, soybeans, wheat, 

and hay. Mr. Tonsager is a graduate of South Dakota State University, 

where he earned a Bachelor of Science in agriculture in 1976.
8

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Jeffery S. Hall

Board Member

Jeffery S. Hall was appointed to 

the FCA Board by President Barack 

Obama on March 17, 2015. Succeeding Leland A. Strom, Mr. Hall will 

serve a term that expires on October 

13, 2018. 

Mr. Hall was president of The 

Capstone Group, an association 

management and consulting firm 

that he cofounded in 2009. He was 

the State Executive Director for the 

U.S. Department of Agriculture’s 

Farm Service Agency in Kentucky 

from 2001 to 2009. In that role, he 

had responsibility for farm program 

and farm loan program delivery and 

compliance.

From 1994 to 2001, Mr. Hall served 

as Assistant to the Dean of the 

University of Kentucky, College of 

Agriculture, advising the Dean on 

state and federal legislative activities 

and managing a statewide economic 

development initiative called AgProject 2000.

Mr. Hall also served as a senior staff 

member in the office of U.S. Senator Mitch McConnell from 1988 until 

1994. During that time, he was the 

Legislative Assistant for Agriculture, 

accountable for internal and external 

issue management. 

Before joining Senator McConnell’s 

staff, Mr. Hall served on the staff 

of the Kentucky Farm Bureau Federation. Over his 30-year career in 

agriculture, he has held leadership 

positions in the following nonprofits: 

the Kentucky Agricultural Council, 

the Agribusiness Industry Network, 

the Louisville Agricultural Club, the 

Kentucky Agricultural Water Quality 

Authority, and the Governor’s Commission on Family Farms.

Mr. Hall was raised on a family farm 

in southern Indiana, which has been 

in his family for nearly 200 years. 

He is currently a partner in the farm 

with his mother and sister. Mr. Hall 

received a B.S. from Purdue University.
9

Farm Credit System—Role, Structure, 

and Safety and Soundness

FCS role

The Farm Credit System (FCS or System) is a network of borrower-owned 

cooperative financial institutions and 

service organizations serving all 50 

states and the Commonwealth of 

Puerto Rico. Created by Congress in 

1916 to provide American agriculture 

with a dependable source of credit, 

the FCS is the nation’s oldest government-sponsored enterprise.1

FCS institutions provide credit and 

financially related services to farmers, ranchers, producers or harvesters 

of aquatic products, and agricultural 

and aquatic cooperatives. They also 

make credit available for agricultural 

processing and marketing activities, 

rural housing, certain farm-related 

businesses, rural utilities, and foreign 

and domestic entities in connection 

with international agricultural trade.

The System raises funds for its business activities by selling securities in 

the national and international money 

markets; its Systemwide debt funding 

is subject to FCA approval. The U.S. 

government does not guarantee the 

securities issued by the System.

According to the Farm Credit Act of 

1971, as amended, Congress established the System to improve the 

income and well-being of American 

farmers and ranchers. The System 

is to provide a permanent, reliable 

source of credit and related services 

to agriculture and aquatic producers, farmer-owned cooperatives, 

and farm-related businesses in rural 

America.

Congress formed the FCS as a system of farmer-owned cooperatives 

to ensure that farmer- and rancherborrowers participate in the management, control, and ownership of 

their institutions. The participation 

of member-borrowers helps keep the 

institutions focused on serving their 

members’ needs.

The System helps to meet a broad 

public need by preserving liquidity 

and competition in rural credit markets in both good and bad economic 

times. The accomplishment of this 

public goal benefits all eligible borrowers, including young, beginning, 

and small farmers, as well as rural 

homeowners.

FCS structure

The lending institutions

As of January 1, 2016, the System 

was composed of 78 banks and associations. The following 4 banks provide loans to 72 Agricultural Credit 

Association (ACA) parent organizations and 2 stand-alone Federal Land 

Credit Associations (FLCAs)2:

• CoBank, ACB

• AgriBank, FCB

• AgFirst Farm Credit Bank

• Farm Credit Bank of Texas

An ACA can make agricultural production and intermediate-term loans 

and real estate mortgage loans; an 

FLCA can make only long-term real 

estate loans. Under the Farm Credit 

Act of 1971, as amended, the FLCA 

is exempt from state and federal 

income taxes.

CoBank, one of the four Farm Credit 

banks, is an Agricultural Credit 

Bank (ACB), which has a nationwide 

charter to make loans to agricultural 

and aquatic cooperatives and rural 

utilities, as well as to other persons 

or organizations that have transactions with, or are owned by, these 

cooperatives. The ACB finances U.S. 

agricultural exports and imports 

and provides international banking 

services for farmer-owned cooperatives. In addition to making loans to 

cooperatives, the ACB provides loan 

funds to 23 ACAs and 1 FLCA.

Each ACA contains two subsidiaries, a Production Credit Association 

(PCA), which can make only agricultural production loans and intermediate-term loans, and an FLCA.3

 The 

parent-subsidiary structure, with an 

ACA as parent and its wholly owned 

PCA and FLCA as subsidiaries, 

accounted for over 97 percent of all 

direct-lender associations as of January 1, 2016.

The ACA and its two subsidiaries 

operate with a common board of 

directors and staff, and each of the 

three entities is responsible for the 

debts of the others. For most regula1. The Federal Land Banks were created in 1916, when the System was originally established. Other major parts of the FCS were created in 1923 and 

1933.

2. An FLCA is a Federal Land Bank Association that has received a transfer of direct long-term real estate lending authority under section 7.6 of the 

Farm Credit Act.

3. Although legally separated, the ACA, the PCA, and the FLCA operate an integrated lending business, with loans made through the subsidiaries 

possessing the appropriate authority. The ACA, the PCA, and the FLCA are jointly and severally liable on the full amount of the indebtedness to 

the bank under the bank’s General Financing Agreement. In addition, the three associations agree to guarantee each other’s debts and obligations, 

pledge their respective assets as security for the guarantee, and share each other’s capital.
10

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

tory and examination purposes, FCA 

treats the ACA and its subsidiaries 

as a single entity; however, when 

appropriate, we may choose to treat 

the parent and subsidiaries as separate entities.

The ACA’s parent-subsidiary structure enables the ACA to preserve the 

tax-exempt status of the FLCA. This 

structure offers several other benefits 

as well. It allows the ACA to build 

and use capital more efficiently, and 

it enables members to hold stock in 

only the ACA but to borrow either 

from the ACA or from one or both 

of its subsidiaries. This gives the 

ACA and its subsidiaries greater flexibility in serving their borrowers, and 

it allows credit and related services 

to be delivered to borrowers more 

efficiently.

Further, the structure allows an 

association to provide a broader 

range of specialized services to its 

member-borrowers. It enables onestop borrowing, allowing borrowers 

to obtain agricultural production 

and intermediate-term loans and real 

estate mortgage loans from the same 

institution.

Special-purpose entity and 

service corporations

In addition to the banks and lending 

associations, the System also contains a special-purpose entity known 

as the Federal Farm Credit Banks 

Funding Corporation. Established 

under the Farm Credit Act, the Funding Corporation issues and markets 

debt securities on behalf of the Farm 

Credit banks to raise loan funds. 

It also issues quarterly and annual 

information statements for investors.

The System also contains the following five service corporations. These 

corporations exist under the authority of section 4.25 of the Farm Credit 

Act4

:

• AgVantis, Inc., provides technology-related and other support 

services to the associations affiliated with CoBank, ACB. AgVantis is owned by the bank and 14 

of its affiliated associations.

• Farm Credit Leasing Services 

Corporation provides equipment 

leasing services to eligible borrowers, including agricultural 

producers, cooperatives, and 

rural utilities. It is wholly owned 

by CoBank, ACB.

• Farm Credit Financial Partners, 

Inc., provides support services to 

four associations affiliated with 

CoBank; one association affiliated 

with AgriBank, FCB; and the 

Leasing Corporation. It is owned 

by four associations to which the 

corporation provides services.

• The FCS Building Association 

acquires, manages, and maintains 

facilities to house FCA headquarters and field office staff. 

The FCS Building Association is 

owned by the FCS banks, but the 

FCA Board oversees the Building 

Association’s activities.

• Farm Credit Foundations provides human resource services 

to its employer-owners. These 

services include payroll processing, benefits administration, 

centralized vendor management, 

workforce management and 

operations, corporate tax and 

financial reporting services, and 

retirement workshops. Employerowners consist of 39 Farm Credit 

associations, 1 service corporation (AgVantis, Inc.), and 1 Farm 

Credit Bank (AgriBank, FCB).

Farmer Mac

The Federal Agricultural Mortgage 

Corporation (Farmer Mac), which is 

also recognized by law as an FCS 

institution, provides a secondary 

market arrangement for agricultural 

real estate loans, government-guaranteed portions of certain loans, rural 

housing mortgage loans, and eligible 

rural utility cooperative loans. The 

4. Section 4.25 of the Farm Credit Act provides that one or more FCS banks or associations may organize a service corporation to perform functions and 

services on their behalf. These federally chartered service corporations are prohibited from extending credit or providing insurance services.
11

purpose of Farmer Mac’s activities is 

to provide greater liquidity and lending capacity to all agricultural and 

rural lenders, including insurance 

companies, credit unions, commercial 

banks, and FCS lending institutions.

The Farm Credit Act established 

Farmer Mac as a federally chartered 

instrumentality and an institution of 

the FCS. However, it has no liability for the debt of any other System 

institution, and the other System 

institutions have no liability for 

Farmer Mac debt.

Farmer Mac is owned by its investors 

— it is not a member-owned cooperative. Investors in voting stock may 

include commercial banks, insurance 

companies, other financial organizations, and FCS institutions. Any 

investor may own nonvoting stock.

FCA regulates and examines Farmer 

Mac through its Office of Secondary 

Market Oversight, whose director 

reports to the FCA Board on matters 

of policy.

Although Farmer Mac is an FCS 

institution under the Farm Credit 

Act, we discuss Farmer Mac separately from the other entities of the 

FCS. Therefore, throughout this 

report, unless Farmer Mac is explicitly mentioned, the Farm Credit 

System refers only to the banks and 

associations of the System. For more 

information about Farmer Mac, see 

“Condition of Farmer Mac” on page 

45.

The safety and soundness 

of the FCS

FCA regulates the FCS — its lending 

institutions, the Funding Corporation, the service corporations, and 

Farmer Mac. Our regulatory activities and examinations support the 

System’s mission by ensuring that 

FCS institutions operate in a safe and 

sound manner, without undue risk to 

taxpayers, investors in System securities, or borrower-stockholders. For an 

overview of our agency, see page 5 

or visit our website at www.fca.gov.

The Farm Credit System Insurance 

Corporation (FCSIC) also helps protect the safety and soundness of the 

Farm Credit System. It was established by the Agricultural Credit Act 

of 1987 in the wake of the agricultural credit crisis of the 1980s, when 

the FCS, like most lenders heavily 

concentrated in agriculture, experienced severe financial difficulties. 

The purpose of FCSIC is to protect 

investors in Systemwide debt securities by ensuring the timely payment 

of principal and interest on insured 

notes, bonds, and other obligations 

issued on behalf of FCS banks.

FCSIC ensures timely payment by 

maintaining the Farm Credit Insurance Fund, a reserve that represents 

the equity of FCSIC. The balance 

in the Insurance Fund at December 

31, 2015, was $4.0 billion. For more 

information about FCSIC, go to 

www.fcsic.gov. Also see FCSIC’s 2015 

annual report.

Investors in Systemwide debt securities are further protected by the Farm 

Credit Act’s joint and several liability 

provision, which applies to all FCS 

banks. The banks are jointly and 

severally liable for the principal and 

interest on all Systemwide debt securities. Therefore, if a bank is unable 

to pay the principal or interest on 

a Systemwide debt security and if 

the Farm Credit Insurance Fund has 

been exhausted, then FCA must call 

all nondefaulting banks to satisfy the 

security.
12

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

FCS Banks and Associations

Financial condition

The overall condition and performance of the FCS5

 was strong in 

2015, and the System remains fundamentally safe and sound. For 2015, 

the System reported solid earnings, 

strong capital levels, and favorable 

portfolio credit quality. Tables 1 and 

2 provide a breakdown of the System’s major financial indicators.

While the overall FCS remained 

financially sound, a small number of 

individual System institutions exhibited weaknesses. As the System’s 

regulator, we addressed these weaknesses by increasing our supervision of these institutions. For more 

information on measures we took 

to address these weaknesses, see 

“Maintaining a Dependable Source 

of Credit for Farmers and Ranchers” 

on pages 41 to 44 of this report. For 

more information on the condition 

of the System, see the 2015 Annual 

Information Statement of the Farm 

Credit System on the website of the 

Federal Farm Credit Banks Funding 

Corporation at www.farmcreditfunding.com.

Agricultural producers faced a more 

difficult operating environment in 

2015. The U.S. Department of Agriculture estimates that both crop 

and livestock receipts were down in 

2015. As a result, USDA expects that 

net farm income has dropped significantly for the second consecutive 

year. 

Crop producers continued to see 

considerable pressure on profitability 

in 2015. Margins were low to negative as a result of two factors: weak 

grain prices, which have declined 

because of large U.S. and global crop 

supplies, and high input costs, which 

have been slow to adjust downwards. 

Financial stress is expected to intensify for the crop sector if commodity 

prices remain low for an extended 

period of time. 

Low grain prices are also putting 

downward pressure on farmland 

values, especially in the Midwest. 

Rising interest rates in response to 

a strengthening of the U.S. economy 

would put additional pressure on 

farmland values.

For livestock producers, lower crop 

prices translated into lower feed 

costs, but profitability fell as product 

prices weakened. Expanding production, particularly in the hog, dairy, 

and broiler sectors, was responsible 

for the decline in product prices. 

In 2015, fears of slowing global 

economic growth in major foreign 

markets, particularly China, and 

a strengthening of the U.S. dollar 

hurt export demand for agricultural 

products. U.S. agricultural exports 

are again projected to fall in 2016 

because of the strong dollar, stiff 

competition from other major exporting nations, and reduced demand 

from slowing economies around the 

world. 

For a detailed discussion of potential 

risks facing the System in 2016 and 

beyond, see “Challenges Facing the 

Agricultural Economy and the Farm 

Credit System” on pages 50 to 61.

5. Throughout this chapter, when referring to the Farm Credit System, we mean only the banks and direct-lending associations of the System, excluding 

Farmer Mac. The analyses in this section are based on data that System institutions provided to FCA or to the Federal Farm Credit Banks Funding 

Corporation. These analyses are based on publicly available information and, except where noted, are based on the 12-month period ended December 

31, 2015. They are based on a combination of bank and association data; these data exclude transactions between System entities.
13

Table 1

Farm Credit System major financial indicators, annual comparison

As	 of	December	 31

Dollars in thousands

At and for the 12 months ended 31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11

FCS Banks1

Total assets	 267,533,786	 249,370,568 230,427,442 219,043,177 205,087,928

Gross loan volume	 208,766,996	 192,083,080 179,260,572 173,227,170 158,420,741

Nonaccrual loans	 231,520	 227,872 275,228 365,478 384,795

Cash and marketable investments	 57,123,019	 55,472,944 49,241,806 43,618,788 44,047,407

Net income	 1,945,693	 2,042,527 2,057,199 2,011,314 1,860,347

Nonperforming loans/total loans2 0.13%	 0.15%	 0.18%	 0.23%	 0.27%

Capital/assets3 6.28%	 6.41%	 6.58%	 6.51%	 6.49%

Unallocated retained earnings/assets	 3.45%	 3.42%	 3.39%	 3.23%	 3.25%

Return on assets	 0.74%	 0.84%	 0.91%	 0.94%	 0.92%

Return on equity	 11.47%	 12.76%	 13.31%	 13.86%	 13.68%

Net Interest margin4 0.98%	 1.05%	 1.15%	 1.25%	 1.28%

Operating expense ratio5 0.33%	 0.33%	 0.32%	 0.31%	 0.31%

Efficiency ratio6 25.30%	 24.20%	 22.20%	 20.00%	 20.14%

Payout ratio7 59.44%	 58.19%	 54.61%	 47.79%	 53.76%

FCS Associations 

Total assets	 180,005,335	 167,312,405	 157,085,461	 148,778,120	 136,717,742

Gross loan volume	 169,995,422	 157,543,635	 146,873,767	 138,314,966	 126,187,799

Nonaccrual loans	 1,095,207	 1,146,358	 1,465,651	 1,932,706	 2,353,352

Net Income	 3,126,729	 3,383,894	 3,304,680	 2,989,912	 3,007,154

Nonperforming loans/gross loans2 0.80%	 0.92%	 1.17%	 1.59%	 2.03%

Capital/assets3 18.68%	 18.78%	 18.48%	 17.80%	 17.84%

Unallocated retained earnings/assets	 17.33%	 17.40%	 17.24%	 16.65%	 16.78%

Return on assets	 1.84%	 2.07%	 2.14%	 2.06%	 2.24%

Return on equity	 9.57%	 10.69%	 11.34%	 11.23%	 12.42%

Net interest margin4 2.68%	 2.75%	 2.80%	 2.83%	 2.94%

Operating expense ratio5 1.50%	 1.51%	 1.48%	 1.45%	 1.43%

Efficiency ratio6 41.38%	 39.52%	 37.14%	 39.13%	 31.27%

Payout ratio7 28.31%	 25.22%	 25.45%	 25.82%	 22.57%

Total Farm Credit System8

Total assets	 303,503,000	 282,733,000	 260,782,000	 246,664,000	 230,411,000

Gross loan volume	 235,890,000	 217,054,000	 201,060,000	 191,904,000	 174,664,000

Bonds and notes	 246,214,000	 228,958,000	 210,704,000	 200,365,000	 186,889,000

Nonperforming loans	 1,629,000	 1,737,000	 2,040,000	 2,608,000	 2,997,000

Nonaccrual loans	 1,324,000	 1,375,000	 1,736,000	 2,300,000	 2,738,000

Net income	 4,688,000	 4,724,000	 4,640,000	 4,118,000	 3,940,000

Nonperforming loans/gross loans2 0.69%	 0.80%	 1.01%	 1.36%	 1.72%

Capital/assets3 16.09%	 16.17%	 16.34%	 15.65%	 15.60%

Surplus/assets	 13.33%	 13.36%	 13.44%	 12.94%	 12.90%

Return on assets	 1.62%	 1.74%	 1.84%	 1.73%	 1.71%

Return on equity	 9.75%	 10.50%	 11.28%	 10.89%	 11.17%

Net interest margin4 2.55%	 2.64%	 2.78%	 2.87%	 2.86%

Sources: FCA’s Consolidated Reporting System as of December 31, 2015, and the Farm Credit System Quarterly Information Statement provided by the 

Federal Farm Credit Banks Funding Corporation.

Note: Changes to previous periods occasionally occur for accounting reasons.

1. Includes Farm Credit Banks and the Agricultural Credit Bank.

2. Nonperforming loans are defined as nonaccrual loans, accruing restructured loans, and accrual loans 90 or more days past due.

3. Capital includes restricted capital (amount in Farm Credit Insurance Fund) and excludes mandatorily redeemable preferred stock and protected 

borrower capital.

4. Net interest margin ratio measures net income produced by interest-earning assets, including the effect of loanable funds, and is a key indicator of 

loan pricing effectiveness.

5. Operating expenses divided by average gross loans.

6. The efficiency ratio measures total noninterest expenses for the preceding 12 months divided by net interest income plus noninterest income for 

the preceding 12 months.

7. The percentage of earnings paid out in patronage dividends to borrower-owners and in dividends to holders of preferred stock. (Patronage dividends

constitute the majority of earnings paid out.) This ratio is only valid at year-end (December 31).

8. Cannot be derived by adding the categories above because of intradistrict and intra-System eliminations used in Reports to Investors.
14

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Table 2

Farm Credit System major financial indicators, by district

December 31, 2015

Dollars in thousands

Gross Allowance Cash and Operating

Farm Credit Total Loan Nonaccrual for Loan Marketable Capital Total Expense

System Banks Assets Volume Loans Losses Investments1 Stock2 Surplus3 Capital4 Ratio5

AgFirst	 30,642,851	 22,140,758	 26,649	 15,113	 8,192,858	 462,471	 1,732,628	 2,255,021	 0.58%

AgriBank	 99,506,834	 82,819,652	 43,394	 18,076	 16,237,330	 2,313,343	 2,945,638	 5,174,116	 0.16%

CoBank	 117,394,526	 89,035,580	 156,805	 486,144	 27,674,227	 4,024,728	 3,845,728	 7,810,469	 0.39%

Texas	 19,989,575	 14,771,006	 4,672	 5,833	 5,018,604	 855,823	 725,086	 1,553,578	 0.59%

Total	 267,533,786	 208,766,996	 231,520	 525,166	 57,123,019	 7,656,365	 9,249,080	 16,793,184	 0.33%

FCS Associations 

AgFirst	 19,914,776	 18,934,719	 225,859	 163,503	 156,344	 216,156	 3,876,687	 4,062,643	 2.12%

AgriBank	 92,654,127	 86,905,787	 473,613	 267,635	 1,778,921	 341,760	 16,360,541	 16,702,301	 1.39%

CoBank	 50,921,973	 48,168,349	 286,946	 259,523	 368,974	 1,513,008	 8,685,717	 10,100,608	 1.43%

Texas	 16,514,459	 15,986,567	 108,789	 64,514	 36,439	 285,982	 2,473,875	 2,756,213	 1.55%

Total	 180,005,335	 169,995,422	 1,095,207	 755,175	 2,340,678	 2,356,906	 31,396,820	 33,621,765	 1.50%

Total FCS6 303,503,000 235,890,000 1,324,000 1,280,000 29,378,000 1,726,000 40,458,000 48,834,000

Sources: Farm Credit System Call Report as of December 31, 2015, and the Farm Credit System Quarterly Information Statement provided by the Federal 

Farm Credit Banks Funding Corporation.

1. Includes accrued interest receivable on marketable investments.

2. Includes capital stock and participation certificates, excludes mandatorily redeemable preferred stock and protected borrower capital.

3. Includes allocated and unallocated surplus.

4. Includes capital stock, participation certificates, perpetual preferred stock, surplus, accumulated other comprehensive income. For the total Farm 

Credit System amount, total capital also includes $4.038 billion of restricted capital, which is the amount in the Farm Credit Insurance Fund. Excludes 

mandatorily redeemable preferred stock and protected borrower capital.

5. Operating expense per $100 of gross loans.

6. Cannot be derived by adding the categories above because of intradistrict and intra-System eliminations used in Reports to Investors.
15

Earnings

Despite the challenges facing U.S. 

agriculture, the System reported solid 

earnings in 2015, with net income 

of $4.69 billion, down slightly from 

$4.72 billion for 2014 (See figure 1). 

Although net interest income was 

up in 2015, higher provisions for 

loan losses and noninterest expenses 

resulted in the slight drop in net 

income.

For 2015, net interest income 

increased by $211 million because 

higher average earning asset balances 

offset the effect of lower net interest 

margins. Driven largely by growth in 

loan volume, average earning assets 

grew by $17.5 billion, or 6.8 percent, 

to $275 billion in 2015. Net interest 

margin decreased 9 basis points to 

2.55 percent as a result of competitive pressures, loan volume repricing 

at lower rates, and higher debt costs. 

Return on average assets declined to 

1.64 percent in 2015 from 1.77 percent in 2014, and the return on average capital decreased to 9.87 percent 

from 10.62 percent.

As cooperative institutions, FCS 

banks and associations typically pass 

a portion of their earnings on to their 

borrower-owners as patronage distributions. For 2015, System institutions 

declared a total of $1.5 billion in 

patronage distributions — $1.12 billion in cash, $308 million in allocated 

retained earnings, and $72 million in 

stock. This represents 32.0 percent of 

the System’s net income for 2015 as 

compared with 30.4 percent in 2014. 

Also in 2015, the System distributed 

$161 million in cash from patronage 

allocations for earlier years.

Figure 1

FCS net income, 2007 – 2015

As of December 31

Sources: Federal Farm Credit Banks Funding Corporation Annual Information Statements. 
16

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

System growth

The System continued to grow at a 

moderately strong pace in 2015. Total 

assets increased to $303.5 billion, up 

$20.8 billion or 7.3 percent from 2014. 

Gross loan balances were $235.9 billion at year-end, up $18.8 billion or 

8.7 percent from 2014. (See figure 2.)

The growth in System loan balances 

was largely due to increases in real 

estate mortgage, agribusiness, production and intermediate-term, and 

energy lending. Real estate mortgage 

lending was up $7.0 billion or 6.9 

percent mainly due to continued 

demand for cropland. Real estate 

mortgage loans represent the largest component of the System’s loan 

portfolio at 45.7 percent. 

Agribusiness lending (primarily processing and marketing loans) was up 

$3.7 billion or 11.1 percent. Production and intermediate-term lending 

increased $2.9 billion or 6.3 percent 

primarily because farmers financed 

more of their production costs. 

Energy loans increased by $2.9 billion 

or 19.2 percent because of greater 

lending activity in the electric distribution and power supply sectors.

Figure 2

Annual growth rate of FCS loans outstanding, 2004 – 2015

Source: Federal Farm Credit Banks Funding Corporation, Annual Information Statements. 

 
17

Asset quality

Overall, the quality of System loans 

remains very good. Credit stress continued to build for cash grain producers because large supplies of corn 

and soybeans weighed on prices. 

As a result, loan delinquencies may 

rise. With weak margins, farmers 

will look to strengthen their balance 

sheets and change their operating 

structures to reduce their cost of 

production.

As of December 31, 2015, nonperforming loans totaled $1.6 billion, or 

0.69 percent of gross loans outstanding, down from $1.7 billion or 0.80 

percent at year-end 2014. (See figure 

3.) Loan delinquencies (accruing 

loans that are 30 days or more past 

due) fell slightly to 0.20 percent of 

total accruing loans from 0.23 percent 

at year-end 2014. 

The allowance for loan losses was 

$1.280 billion, or 0.54 percent of loans 

outstanding, at year-end 2015. This 

compares with an allowance for loan 

losses of $1.237 billion, or 0.57 percent of loans outstanding, at year-end 

2014. The System recognized provisions for loan losses of $106 million 

in 2015 as compared to $40 million in 

2014 and a loan loss reversal of $31 

million in 2013. Net loan charge-offs 

remain low, falling to $37 million in 

2015 from $68 million in 2014. 

Figure 3

FCS nonperforming loans, 2010 – 2015

As of December 31

Sources: Federal Farm Credit Banks Funding Corporation, Annual Information Statements.

 
18

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Funding

Throughout 2015, the System had 

reliable access to the debt capital 

markets to support its mission, and 

investor demand for all System debt 

products remained favorable. Securities due within a year increased 

by 5.4 percent while securities with 

maturities greater than one year 

increased by 9.6 percent. In total, 

Systemwide debt increased by 8.0 

percent.

The System’s funding composition remained stable. Securities due 

within a year accounted for 37.7 

percent of total Systemwide debt 

compared with 38.6 percent a year 

ago. (See “Funding Activity in 2015” 

on page 39 for further discussion of 

the System’s funding environment.)

Liquidity

Each System bank maintains a liquidity reserve to ensure adequate liquidity to meet its business and financial 

needs, especially during unanticipated disruptions in the capital markets. As of December 31, 2015, the 

System’s liquidity position equaled 

181 days, up from 173 days at yearend 2014 and significantly above the 

90-day regulatory minimum.

Investments available for sale (based 

on fair value) increased 1.5 percent to 

$50.0 billion in 2015, with a weighted 

average yield of 1.37 percent. 

Mission-related and other investments available for sale (based on 

fair value) decreased 21.7 percent to 

$300 million, with a weighted average yield of 2.61 percent. Missionrelated and other investments held 

to maturity decreased 6.0 percent to 

$2.5 billion, with a weighted average 

yield of 3.11 percent.

Each System bank may hold federal 

funds and available-for-sale securities in an amount not to exceed 35 

percent of its average loans outstanding for the quarter. Criteria for 

eligible investments are defined by 

FCA regulations. If an investment no 

longer meets the eligibility criteria, 

it becomes ineligible for regulatory 

liquidity calculation purposes, but 

the bank may continue to hold the 

investment provided certain requirements are met.
19

Capital

The System maintained its strong 

capital position in 2015. Total capital 

equaled $48.8 billion at December 31, 

2015, compared with $45.7 billion at 

year-end 2014. The increase in capital 

was due in large part to the System’s 

strong earnings performance. At yearend 2015, the System’s capital-toassets ratio was 16.1 percent, compared with 16.2 percent in 2014.

As figure 4 shows, surplus accounts 

for the vast majority of total capital. 

FCA regulations establish the minimum capital requirements that each 

System bank and association must 

achieve and maintain. As of December 31, 2015, the permanent capital ratios for all System banks and 

associations were significantly above 

the regulatory minimum of 7.0 percent. The ratios ranged between 14.9 

percent and 20.8 percent for System 

banks and between 13.1 percent and 

36.0 percent for System associations. 

In addition, as of December 31, 2015, 

the FCS had $4.0 billion of restricted 

capital in the Farm Credit Insurance 

Fund.

Figure 4

FCS capital, 2008 – 2015

As of December 31

Dollars in billions

Sources: Federal Farm Credit Banks Funding Corporation Annual Information Statements.
20

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Table 3

FCS gross loans outstanding, 2011 – 2015

As of December 31

Dollars in millions

 Percent Percent

 change change

2011 2012 2013 2014 2015 from 2011 from 2014

Agricultural real estate

	 mortgage loans	 $85,644	 $92,504	 $95,209	 $100,811	 $107,813	 25.9%	 6.9%

Agricultural production

	 and intermediate-term loans	 40,578	 43,446	 44,309	 46,305	 49,204	 21.3%	 6.3%

Agribusiness loans to the following:

Processing and 

	 	 marketing operations	 8,098	 10,735	 13,164	 16,974	 19,949	 146.3%	 17.5%

	 Cooperatives	 9,207	 10,255	 10,885	 12,553	 13,113	 42.4%	 4.5%

	 Farm-related businesses	 2,596	 2,858	 2,999	 3,408	 3,533	 36.1%	 3.7%

Rural utility loans by type of utility:	

	 Energy	 11,585	 13,193	 14,304	 15,036	 17,925	 54.7%	 19.2%

	 Communication	 2,638	 3,435	 4,159	 5,044	 6,196	 134.9%	 22.8%

	 Water/wastewater	 1,061	 1,215	 1,325	 1,488	 1,677	 58.1%	 12.7%

Rural home loans	 6,047	 6,430	 6,511	 6,754	 7,117	 17.7%	 5.4%

Agricultural export finance	 4,486	 4,729	 4,743	 4,837	 5,075	 13.2%	 4.9%

Lease receivables	 2,139	 2,415	 2,706	 2,976	 3,373	 57.7%	 13.3%

Loans to other financing

	 institutions	 585	 689	 746	 868	 915	 56.4%	 5.4%

Total $174,664 $191,904 $201,060 $217,054 $235,890 35.1% 8.7%

Sources: Federal Farm Credit Banks Funding Corporation Annual Information Statements.

 

 

Borrowers served

The System fulfills its overall mission by lending to agriculture and 

rural America. Its lending authorities 

include the following:

• Agricultural real estate loans

• Agricultural production and 

intermediate-term loans

• Loans to producers and harvesters of aquatic products

• Loans to certain farmer-owned 

agricultural processing facilities 

and farm-related businesses

• Loans to farmer-owned agricultural cooperatives

• Rural home loans

• Loans that finance agricultural 

exports and imports

• Loans to rural utilities

• Limited portions of loans to 

entities that qualify under the 

System’s similar-entity authority6 

Nationwide, the System had $236 billion in gross loans outstanding as of 

December 31, 2015. Agricultural producers represented by far the largest 

borrower group, with $157 billion, 

or 66.6 percent, of the total dollar 

amount of loans outstanding.7 See 

table 3 and figure 5 for a breakdown 

of lending by type. 

As required by law, borrowers own 

stock or participation certificates in 

System institutions. The FCS had 

nearly 1,304,000 loans and more than 

504,000 stockholders in 2015. Approximately 86.0 percent of the stockholders were farmers or cooperatives 

with voting stock. The remaining 

14.0 percent were nonvoting stockholders, including rural homeowners 

and other financing institutions that 

borrow from the System. Over the 

past five years, the total number of 

System stockholders has increased 

gradually, rising 3.4 percent since 

year-end 2011.

Total loans outstanding at FCS banks 

and associations (net of intra-System 

lending) increased by $18.8 billion, 

or 8.7 percent, during the year that 

ended December 31, 2015. This compares with increases of 8.0 percent in 

6. A similar-entity borrower is not eligible to borrow directly from an FCS institution, but because the similar-entity borrower’s operation is functionally 

similar to that of an eligible borrower, the System can participate in these loans (the participation interest must be less than 50 percent).

7. This amount includes real estate mortgages, production loans, and intermediate-term loans, but excludes leases and loans to “rural homeowners” (as 

defined in 613.3030 of the FCA regulations).
21

2014 and 4.8 percent in 2013. Since 

year-end 2011, total System loans 

outstanding have increased by $61.2 

billion, or 35.1 percent.

The increase in 2015 was driven by 

increases in real estate mortgage, 

processing and marketing, energy, 

and production and intermediateterm loans. Real estate mortgage 

loans increased $7.0 billion, or 6.9 

percent, primarily because of the continued demand for cropland financing. Production- and intermediateterm loans also increased, going up 

$2.9 billion, or 6.3 percent primarily 

because farmers needed to finance 

more of their production costs (for 

inputs such as fertilizer, seed, and 

fuel). 

Processing and marketing loans 

increased $3.0 billion, or 17.5 percent, 

in 2015 largely because of advances 

on existing loans. And loans to 

energy utilities increased $2.9 billion, 

or 19.2 percent, because of increased 

lending activity in the electric distribution and power supply sectors. 

The other loan categories also posted 

significant increases for the year. 

For example, communication loans 

increased $1.2 billion, or 22.8 percent, 

primarily because of new loans to 

develop or expand data networks.

Figure 5

Farm Credit System lending by type

As of December 31, 2015

Sources: Federal Farm Credit Banks Funding Corporation Annual Information Statements.
22

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

System funding for other 

lenders

Other financing institutions 

Under the Farm Credit Act, System 

banks may further serve the credit 

needs of rural America by providing 

funding and discounting services to 

certain non-System lending institutions described in our regulations as 

“other financing institutions.” OFIs 

include the following:

• Commercial banks

• Savings institutions

• Credit unions

• Trust companies

• Agricultural credit corporations

• Other specified agricultural lenders that are significantly involved 

in lending to agricultural and 

aquatic producers and harvesters

System banks may fund and discount agricultural production and 

intermediate-term loans for OFIs that 

demonstrate a need for additional 

funding to meet the credit needs of 

borrowers who are eligible to receive 

loans from the FCS. OFIs benefit by 

using the System as an additional 

source of liquidity for their own 

lending activities and by capitalizing 

on the System’s expertise in agricultural lending.

As of December 31, 2015, the System served 23 OFIs, down from 24 

in 2014 and 26 in 2013, 2012, and 

2011, and down from 28 in 2010 and 

2009. Outstanding loan volume to 

OFIs was $917 million at year-end, 

up $47 million from 2014. OFI loan 

volume continues to be less than half 

of one percent of the System’s loan 

portfolio. About three-quarters of the 

System’s OFI lending activity occurs 

in the AgriBank district.

Syndications and loan 

participations with non-FCS 

lenders

In addition to the authority to 

provide services to OFIs, the Farm 

Credit Act gives System banks and 

associations the authority to partner 

with financial institutions outside the 

System, including commercial banks, 

in making loans to agriculture and 

rural America. Generally, System 

institutions partner with these financial institutions through loan syndications and participations.

• A loan syndication (or “syndicated bank facility”) is a large 

loan in which a group of financial institutions work together to 

provide funds for a borrower. 

Usually one financial institution takes the lead, acting as an 

agent for all syndicate members 

and serving as a liaison between 

them and the borrower. All syndicate members are known at the 

outset to the borrower.

• Loan participations are large 

loans in which two or more 

lenders share in providing loan 

funds to a borrower. One of the 

participating lenders originates, 

services, and documents the loan. 

Generally, the borrower deals 

with the institution originating 

the loan and is not aware of the 

other participating institutions.

Financial institutions primarily use 

loan syndications and participations 

to reduce credit risk and to comply 

with lending limits. For example, a 

financial institution with a high concentration of production loans for a 

single commodity could use participations or syndications to diversify 

its loan portfolio, or it could use 

them to sell loans that are beyond 

its lending limit. Institutions also use 

syndications and participations to 

manage and optimize capital, earnings, and liquidity.

The System’s gross loan syndication 

volume has grown by more than $1 

billion over the past three years to 

$13.8 billion at year-end 2015. This 

figure includes volume from syndications that System institutions have 

with other System institutions as well 

as with non-FCS institutions. 

At year-end 2015, the System had 

$4.8 billion in net eligible-borrower 

loan participations with non-System 

lenders. Net eligible-borrower loan 

participations peaked in 2010 at $5.4 

billion when sales of these participations were at a low point. The 

volume of eligible-borrower loan 

participations purchased from nonSystem lenders has grown from $6.3 

billion in 2011 to $7.5 billion in 2015, 

and the volume of eligible-borrower 

loan participations sold to nonSystem lenders was $2.6 billion in 

2015, down from $3.0 billion the year 

before. However, this figure is up 

from $1.2 billion in 2010. 

In addition to participating in loans 

to eligible borrowers, FCS institutions have the authority to work with 

non-System lenders that originate 

“similar-entity” loans. A similar-
23

entity borrower is not eligible to borrow directly from an FCS institution, 

but because the borrower’s operation 

is similar in function to that of an 

eligible borrower’s operation, the 

System has authority to participate 

in the borrower’s loans (the participation interest must be less than 50 

percent).

The System had $13.2 billion in net 

similar-entity loan participations as 

of December 31, 2015, up from $11.4 

billion the prior year. As figure 6 

indicates, the volume of similar-entity 

participations that System institutions sell to non-System institutions 

is relatively small, amounting to $700 

million or less each year over the 

past six years.

AgDirect, LLP

AgDirect is a point-of-sale agricultural equipment financing program 

developed by Farm Credit Services 

of America, ACA, which is affiliated 

with AgriBank, FCB. AgDirect allows 

System institutions to participate in 

retail installment loans or leasing 

contracts originated by equipment 

dealerships. The program enhances 

financial options for borrowers and 

institutions, and provides an additional revenue stream to AgDirect 

owners and AgriBank.

In 2015, FCA approved investments by an additional three System associations, bringing the total 

number of institutions participating 

in AgDirect to 16. AgDirect financing is now available in many states. 

As of December 31, 2015, the total 

outstanding participation interests in 

loans purchased was $3.2 billion.

Figure 6

Loan participation transactions with non-System lenders, 2010 – 2015

As of December 31

Dollars in billions 

Sources: Farm Credit System Call Reports.
24

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Farm debt and market 

shares

The U.S. Department of Agriculture’s 

estimate of total farm business debt 

for the year ended December 31, 

2015, was $364 billion, up 5.4 percent 

from its $346 billion estimate for 

year-end 2014.8 

USDA estimates that, from 2005 to 

2015, total farm business debt rose 

by more than $155 billion, or 74 

percent. (See figure 7.) In inflationadjusted dollars, this is an increase 

of $104 billion, or 46 percent. During 

this period, farmers invested heavily 

in new capital items, and they took 

on more debt to cover rising farm 

production costs.

Farm real estate debt grew more 

slowly in 2015 than it did in 2014. 

Producers were discouraged from 

investing in farmland, as well as 

farm equipment and structures, 

because of lower prices for major 

crops and tighter livestock margins. 

However, non-real estate debt grew 

faster than farm real estate debt 

because many farmers needed to borrow to cover their production costs.

On the supply side, lenders had sufficient funds to lend in 2015. Even 

with the prospect of weak liveFigure 7

U.S. farm business debt, 1990 – 2015

Dollars in billions

Note: Figure shows year-end estimates.

Source: FCA’s Office of Regulatory Policy, based on data from USDA, Economic Research Service.

 8. USDA calculates market share for farm business debt only (i.e., debt that is used for farm production and real estate purposes). The estimate for 2015 

debt held by the various lender groups will be released in August 2016. Market share information is not available for the other portions of the System’s 

portfolio, such as agribusiness lending, rural utility lending, or rural home lending.
25

stock and crop revenues, demand 

for credit could be strong again in 

2016 because of the greater need to 

finance farm production expenses. 

However, a significant rise in farm 

interest rates could weaken demand 

for credit. 

The most current market share information from USDA is for year-end 

2014. USDA’s estimate of debt by 

lender shows that the System held 

39.6 percent of total farm business 

debt, while commercial banks held 

41.7 percent. (See figure 8). Before 

stabilizing in recent years, the System’s market share for farm business 

debt was growing faster than the 

commercial banks’ share.

Except for brief periods, the FCS 

has typically had the largest market 

share of farm business debt secured 

by real estate. At year-end 2014, the 

System held 45.2 percent of this debt, 

compared with 37.3 percent for commercial banks. 

Commercial banks have historically 

dominated non-real estate farm lending. At year-end 2014, commercial 

banks held 47.5 percent of this debt, 

and the System held 32.2 percent. 

Figure 8

Estimated market shares of U.S. farm business debt, 1990 – 2015

Source: FCA’s Office of Regulatory Policy, based on data from USDA, Economic Research Service.
26

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Serving Young, Beginning, and Small 

Farmers and Ranchers

The Farm Credit Act requires Farm 

Credit System banks and associations to have programs to provide 

financially sound and constructive 

credit and related services to young, 

beginning, and small (YBS) farmers 

and ranchers. Loans to YBS borrowers can help individuals enter the 

agriculture industry, and they can 

help smooth the transition of farm 

businesses from one generation to 

the next. They also allow System 

institutions to serve a more diversified customer base — from very 

small to very large operations, from 

producers of grain staples for export 

to producers of organic foods for 

local and regional food markets.

At FCA, we are strongly committed 

to ensuring that the System fulfills its 

responsibility to serve all creditworthy producers, including those who 

are young, beginning, or small. We 

support the YBS mission through our 

regulatory activities, data collection 

and reporting, disclosure requirements, and examination activities.

We define young farmers as those 

who are 35 years of age or younger, 

beginning farmers as those who 

have 10 years or less of experience at 

farming or ranching, and small farmers as those who normally have gross 

annual sales of less than $250,000. 

These criteria apply to the date on 

which a loan is made. 

Characteristics of YBS 

producers

Generally, the shares of Systemwide 

total farm lending going to the three 

separate YBS categories have been 

consistent with the shares of these 

farmer segments in the total farmer 

population. The smallest share of 

total System farm lending goes to 

the young farmer segment, and the 

largest share goes to the small farmer 

segment. Below, we look at some 

trends in these categories, then we 

discuss the System’s lending to YBS 

borrowers.

Young

According to the 2012 Census of 

Agriculture, less than 6 percent of 

all principal farm operators and just 

over 8 percent of all operators (primary, secondary, and tertiary operators) were under 35 years of age in 

2012.9 These percentages have held 

relatively constant from 2002 to 2012. 

Demographic data generally show 

the share of those under 35 has been 

relatively stable over the past decade, 

while median or average ages have 

generally been rising.

Beginning

The Census of Agriculture data show 

a steady decline in the share of principal farm operators who have been 

on their farms for less than 10 years. 

Of the 2.1 million principal operators 

in 2012, 22 percent had been on their 

farms for less than 10 years. Thirty 

years ago, that percentage was much 

higher: 38 percent of all principal 

operators in 1982 had been on their 

farms for less than 10 years.

Small

U.S. farms have been consolidating 

for generations as new technologies have increased productivity and 

reduced the number of farmers 

needed. From 1982 to 2012, the share 

of total farms considered to be small 

farms — those with $250,000 or less 

in farm sales — declined from 96 

percent to 88 percent. Commodity 

price inflation, particularly since the 

mid-2000s, has contributed to this 

decline, with total farm revenues and 

average sales per farm rising.

FCS lending to YBS 

borrowers

The Farm Credit Act stipulates that 

each System bank must have written policies that direct each association board to have a program for 

furnishing sound and constructive 

credit and financially related services 

to YBS farmers. Associations must 

also coordinate with other government and private sources of credit in 

implementing their YBS programs. 

In addition, each institution must 

report yearly on the lending volume, 

operations, and achievements of its 

YBS program. (See the YBS Programs 

section on page 32.)

9. FCA’s definitions of a young farmer and a beginning farmer differ slightly from the Ag Census measures. See the note below table 4B.
27

FCA regulations require each System 

lender’s YBS program to include a 

mission statement that describes the 

program’s objectives and specific 

means to achieve the objectives. The 

regulations also require each program to include annual quantitative 

targets for credit to YBS farmers; 

these targets should be based on 

reliable demographic data for the 

institution’s lending territory. YBS 

programs must also include outreach 

efforts and annual qualitative goals 

for offering credit and related services that are responsive to the needs 

of YBS farmers.

The association’s board oversight 

and reporting are integral parts of 

each YBS program. Each association’s 

operational and strategic business 

plan must include the goals and targets for YBS lending. And each association must have an internal control 

program to ensure proper implementation and management of the YBS 

program; it must also have methods 

in place to ensure that credit is provided in a safe and sound manner 

and within the lender’s risk-bearing 

capacity.

FCA’s oversight and examination 

activities encourage System institutions to assess their performance and 

market penetration in the YBS area. 

This self-assessment increases each 

institution’s awareness of its mission 

and prompts it to allocate resources 

to serve the YBS market segment. In 

addition, we continuously consider 

ways to support and strengthen 

the System’s YBS programs. For 

example, we issued an Informational 

Memorandum to System associations 

in 2014 to outline ways they can 

enhance their service to YBS farmers 

through loan programs provided by 

USDA’s Farm Service Agency.

Please note that, because the YBS 

mission is focused on each borrower 

group separately, data are reported 

separately for each of the three YBS 

categories. Since some loans fit more 

than one category, adding the loans 

across categories does not produce 

an accurate measure of the System’s 

YBS lending involvement.

System’s YBS lending in 201510

The number and volume of loans 

made during the year is an indicator 

of the extent to which System institutions are serving YBS farmers. Table 

4A contains information on loans 

made in each category during the 

year; table 4B provides information 

on loans outstanding at the end of 

2015. Loans and commitments to YBS 

farmers include real estate mortgages 

and production and intermediateterm credits, but do not include rural 

home loans.

Relative to 2014, the number of new 

loans made and the dollar volume of 

new loans made to YBS farmers rose 

in 2015. The number and dollar volume of loans outstanding in all three 

YBS categories also increased in 2015 

from the number and dollar volume 

in 2014.

Young — The System made 62,143 

loans, amounting to $9.4 billion, to 

young farmers in 2015. The dollar volume and the number of new 

loans made to young farmers rose 8.0 

percent and 5.1 percent, respectively, 

from 2014. 

Beginning — The System made 

79,642 loans, amounting to $12.7 billion, to beginning farmers in 2015. 

The dollar volume and the number 

of new loans made to beginning 

farmers rose 12.2 percent and 7.5 

percent, respectively, from 2014. 

Small — FCS institutions made 

150,022 loans, totaling $11.8 billion, 

to small farmers in 2015. The dollar 

volume and number of new loans 

made to small farmers rose 10.0 percent and 6.7 percent, respectively. 

10. System data on service to YBS farmers and ranchers cover the calendar year and are reported at year-end. The statistics show loans made during 

the year (both number of loans and dollar volume of loans), as well as loans outstanding at year-end (both number and dollar volume). The volume 

measure includes loan commitments to borrowers, which typically exceed actual loan advances. Borrowers may have more than one loan; thus the 

loan numbers reported here do not directly measure the number of borrowers.
28

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Table	 4A	

YBS loans outstanding

As	 of	December	 31,	 2015		 

 Percentage Percentage 

of total Dollar of total 

Number number volume 

of of System of loans 

volume Average

of System loan

loans farm loans in millions farm loans size

Young	farmers/ranchers	 188,696	 18.1	 $27,070	 11.0	 $143,458

Beginning	farmers/ranchers	 274,942	 26.4	 $41,473	 16.9	 $150,844

Small	farmers/ranchers	 502,398	 48.2	 $46,729	 19.0	 $93,012

 

Table	 4B

YBS loans made during 2015

As	of	December	31

 Percentage Percentage 

of total Dollar of total 

Number 

of 

number 

of System 

volume 

of loans 

volume 

of System 

Average

loan

loans farm loans in millions farm loans size

Young	farmers/ranchers	 62,143	 17.2	 $9,430	 11.3	 $151,749

Beginning	farmers/ranchers	 79,642	 22.0	 $12,741	 15.2	 $159,938

Small	farmers/ranchers	 150,022	 41.4	 $11,815	 14.1	 $78,754

Sources: Annual Young, Beginning, and Small Farmer Reports submitted by each System lender through the Farm Credit banks.

Note: A “young” farmer/rancher is defined as 35 years old or younger when the loan is made; a “beginning” farmer/rancher has been operating a farm 

for not more than 10 years; and a “small” farmer/rancher generates less than $250,000 in annual sales of agricultural or aquatic products. Since the totals 

are not mutually exclusive, one cannot add across young, beginning, and small categories to count total YBS lending. Also, the totals listed in tables 4A 

and 4B include loans, advancements, and commitments to farmers, ranchers, and aquatic producers, and exclude rural home loans, loans to cooperatives, and activities of the Farm Credit Leasing Services Corporation. In 2015, the Farm Credit System made 362,125 new farm loans, totaling $83.781 

billion. As of December 31, the System had 1,042,171 farm loans outstanding, amounting to $245.550 billion.
29

Comparing the System’s YBS 

lending with overall lending

In 2015, the pace of new lending to 

YBS farmers equaled or exceeded the 

pace in overall System lending to 

farmers.11 Therefore, the share of new 

total System farm loan volume and 

loan numbers made to all three YBS 

categories equaled or rose from that 

of 2014. 

In recent years, the total share of 

new System farm loans (in terms of 

loan numbers) made to young and 

beginning farmers has been slowly 

rising. For young farmers, the share 

rose to 17.2 percent in 2015 from 

16.9 percent in 2014, and the share 

for beginning farmers rose to 22.0 

percent from 21.2 percent in 2014. 

(See figures 9A and 9B.) The percentages for both categories were the 

highest since 2001, when the current 

reporting started. The total share of 

new System farm loan volume made 

to young and beginning farmers 

has been more stable in recent years 

around 11 percent for young farmers 

and 15 percent for beginning farmers. 

The share of total new System loans 

made to small farmers rose in 2015 

to 41.4 percent, up from 40.2 percent in 2014. (See figure 9C.) After 

trending down since the mid-2000s, 

the share of total new loan counts 

made to small farmers has now risen 

for the past two years. The share of 

total 2015 farm loan volume made 

to small farmers increased slightly in 

2015 to 14.1 percent from 13.9 percent in 2014. 

One of the reasons the small farmers’ 

share of the System’s total lending 

has trended downward is the growth 

in farm incomes since about 2005. 

Because the number of farms with 

gross farm sales in excess of $250,000 

have increased, fewer farms qualify 

as small farms. However, over the 

past two years, farm incomes have 

dropped; this likely contributed to 

the increase in the loan counts and 

dollar amounts made within the 

small farmer category.

 11. The volume of all System farm loans made (including commitments) during 2015 was $83.7 billion, up 8.8 percent from 2014 and the total number of 

farm loans made in 2015 (362,125) was up 3.7 percent from 2014.
30

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Figure 9A

Young farmers and ranchers

Figure 9A, 9B, and 9C

Loans made to, and loans outstanding to, YBS farmers and ranchers, 2001 – 2015

Figure 9B

Beginning farmers and ranchers
31

Figure 9C

Small farmers and ranchers
32

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

YBS results for individual 

associations versus the System’s 

average YBS results

YBS lending varies considerably 

across FCS associations. Some institutions may have a high number or 

dollar volume of loans in one category and be low in another, while 

activity levels for other institutions 

may be just the opposite. Activity 

can vary considerably from one year 

to the next, especially for institutions 

with a small lending base. Outstanding volumes and loan numbers are 

more stable from one year to the 

next, especially for larger institutions.

While the share of total outstanding 

System farm loans to young farmers was 18 percent, this share ranged 

from 5 percent to 26 percent at individual associations. The ranges in the 

share of total outstanding loans to 

beginning farmers were even greater. 

Whereas 26 percent of the System’s 

total farm loans outstanding were to 

beginning farmers in 2015, this share 

ranged across associations from as 

little as 13 percent to as much as 62 

percent.

The ranges for the small farmer category are greater still. In 2015, 48 percent of the System’s total farm loans 

outstanding went to small farmers, 

but the percentage for individual 

associations ranged from less than 16 

percent to more than 83 percent. For 

this YBS category, almost half of all 

associations had lending shares that 

exceeded the Systemwide average.

With the general increase in loan 

numbers and loan volume made to 

young, beginning, and small farmers, most associations experienced 

gains in the share of their total farm 

lending to these groups. The share of 

total loans and dollar volume made 

in 2015 to young borrowers rose in 

three-quarters of the associations, and 

the share of total loans and dollar 

volume to beginning and small borrowers rose in about two-thirds of 

the associations. 

YBS programs

Delivering credit services

As a government-sponsored enterprise with a statutory YBS mandate, 

the FCS is in a unique position to 

assist the next generation of American farmers, and System institutions 

have developed and cultivated YBS 

programs to provide this assistance.

Using these programs, System 

associations may offer lower interest 

rates and more flexible underwriting 

standards, such as higher loan-tovalue ratios or lower debt coverage 

requirements, to allow potential YBS 

borrowers to qualify for loans. Associations also offer training through 

their YBS programs to help these 

borrowers be successful.

In 2015, System institutions used 

the following methods to help them 

make loans to young, beginning, or 

small farmers.

• Interest rate concessions — 

offered to young and beginning 

farmers by 60 percent of associations and to small farmers by 53 

percent. These percentages rose 

from 2014.

• Exceptions to underwriting standards — offered by 77 percent of 

associations to young farmers, by 

59 percent to beginning farmers, 

and by 53 percent to small farmers. The percentage of associations that used this method for 

young farmers increased significantly from 2014; the percentages 

using this method for beginning 

and small farmers were similar to 

those in 2014.

• Concessionary loan fees —

offered to young and beginning 

farmers by 39 percent and to 

small farmers by 33 percent of 

associations. All of these percentages were similar to those in 

2014.

•		 Specifically designed loan covenants — offered to young and 

beginning farmers by 21 percent 

of associations and to small farmers by 19 percent. All of these 

percentages increased slightly 

from 2014.

As required by the Farm Credit Act, 

System institutions coordinate their 

YBS programs with other government programs whenever possible. 

Several state and federal programs 

provide interest rate reductions, 
33

guarantees, or loan participations 

for YBS farmers. By partnering with 

these government programs, FCS 

institutions are able to better mitigate 

the credit risk to these borrowers.

In 2015, approximately 40 percent 

of System institutions used government loan participations for loans to 

young and beginning farmers, and 37 

percent used these participations for 

loans to farmers in the small category. The percentages to all of these 

categories were up from 2014. 

Also, System institutions continued 

to use guarantee programs from federal, state, and local sources for YBS 

lending. About 70 percent of associations indicated they had obtained 

loan guarantees for YBS loans made 

in 2015, down slightly from 75 percent of associations in 2014.

YBS program management

FCS institutions are using various 

approaches and sources of information to more effectively manage and 

assess their YBS programs. They continued to develop mission statements 

that describe program objectives and 

quantitative measures for achieving 

those objectives.

Over the past five years, 33 institutions have modified their YBS 

mission statements. Modifications 

include adding references regarding 

outreach towards diversity and inclusion; the goal is to ensure that the 

institutions reach out to all demographics, geographic locations, and 

types of agriculture practiced in their 

territories. To measure performance 

of individual YBS programs, associations primarily used goals in loan 

volume and the number of loans 

made each year. 

Many associations used advisory 

committees to get input on credit 

and related services to best serve the 

needs of YBS farmers in their territories. Advisory committees are composed of a variety of stakeholders 

— both internal and external. YBS 

advisory committees were used by 40 

percent of all associations in 2015. 

Of the associations with YBS advisory committees, approximately 60 

percent of them used these committees to provide input to their 

board members more frequently 

than annually. In 2015, advisory 

committees provided valuable input 

that improved outreach efforts and 

services for YBS farmers; for example, some committees recommended 

additional loan programs and more 

educational efforts.

FCS institutions continued to provide training to staff on their YBS 

programs. In 2015, over 90 percent of 

associations provided training at least 

annually, up slightly from 2014. In 

addition, more associations now link 

YBS performance criteria to the performance evaluations of management 

and lending staff. The percentage of 

institutions that do so increased from 

39 percent in 2014 to 43 percent in 

2015.

Training, outreach, and education

System institutions offer many 

opportunities to educate existing 

and potential YBS borrowers. Most 

associations provided educational 

opportunities to the YBS segment. 

For example, they developed comprehensive educational or outreach programs, sponsored seminars delivered 

by third parties, and sponsored local 

organizations that deliver education 

or training. 

Associations provide these opportunities by using the expertise of their 

own staff, by coordinating with other 

associations, and by partnering with 

district banks. In 2015, many FCS 

institutions attended a Systemwide 

YBS conference. 

Over one-third of FCS institutions 

conducted new studies or market 

research in 2015 to better understand 

the demographics and financial needs 

of current and potential YBS borrowers. The institutions that didn’t 

conduct studies in 2015 relied upon 

either recently completed studies or 

the most recent Ag Census data to 

understand YBS demographics and 

financial needs in their territories.

System institutions use a variety of 

methods to train and educate current 

and potential YBS borrowers. YBS 

programs continue to evolve to meet 

the needs of changing agricultural 

markets. FCS programs are specialized for the YBS segment and are 

customized to meet the specific needs 

of YBS farmers through ongoing 
34

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

training and education. These YBSspecific programs cover such topics 

as the following:

• Production and risk management

• Business management, including 

financial recordkeeping

• Succession and estate planning

• Leadership and business start-up

In addition, System institutions 

continued to work with local groups, 

collaborating with colleges and 

universities and youth agricultural 

groups to foster continuing education. These organizations provided 

education in various ways: by providing online and in-person workshops and by disseminating information through social media and 

web-based resource centers. 

Identifying and reaching potential 

YBS borrowers remain a key component to fulfilling the Farm Credit 

mission. In 2015, the FCS used a 

variety of methods to market to 

potential YBS borrowers. Institutions 

foster early relationships by partnering with state or national young 

farmer groups, colleges of agriculture, land-grant extension offices, 

state or national cooperative association leadership programs, local chapters of 4-H and National FFA, Ag in 

the Classroom, and other agricultural 

organizations. Also included in these 

outreach, training, and educational 

activities are local and regional YBS 

food producers and supporters of 

local food systems, as well as producers who are veterans and members of minority groups. 

Institutions reach out to these potential borrowers by providing grant 

money, participating in conferences 

related to local food markets, advertising in different languages and 

through diverse media hubs, and 

creating specific programs to enhance 

credit opportunities to all YBS borrowers.
35

Regulatory Policy and Approvals

As the regulator of the Farm Credit 

System, we issue regulations, policy 

statements, and other guidance to 

ensure that the System, including its 

banks, associations, Farmer Mac, and 

other related entities, complies with 

the law, operates in a safe and sound 

manner, and efficiently carries out 

its statutory mission. Our regulatory 

philosophy is to provide a regulatory environment that enables the 

System to safely and soundly offer 

high-quality, reasonably priced credit 

and related services to farmers and 

ranchers, agricultural cooperatives, 

rural residents, and other entities on 

which farming depends.

We strive to develop balanced, 

well-reasoned regulations whose 

benefits outweigh their costs. With 

our regulations, we seek to meet 

two general objectives. The first is to 

ensure that the System continues to 

be a dependable source of credit and 

related services for agriculture and 

rural America while also ensuring 

that System institutions comply with 

the law and with the principles of 

safety and soundness. The second is 

to promote participation by memberborrowers in the management, control, and ownership of their System 

institutions.

Regulatory activity in 2015

The following paragraphs describe 

some of FCA’s regulatory efforts in 

2015, along with several projects that 

will remain active in 2016. Full text 

for the items below is available on 

the FCA website.

To access Board Policy Statements, 

FCA Bookletters, and Informational 

Memorandums, go to www.fca.gov/ 

law/guidance.html. To access proposed rules and final rules whose 

effective dates are pending, go to 

www.fca.gov. Under the Law & 

Regulations tab, select FCA Regulations. Then from the menu on the 

left, select FCA Pending Regulations 

and Notices.

Governance

Mergers, consolidations, and charter amendments — The FCA Board 

approved a final rule in August 2015 

to amend the regulations pertaining 

to mergers, consolidations and charter amendments of System banks and 

associations. The amendments clarify 

processes and incorporate existing 

practices into the rule.

Pension benefits disclosure — The 

FCA Board approved a final rule in 

February 2015 to amend the rules for 

the disclosure requirement regarding the summary compensation table. 

The amendment excludes certain 

employees and their associated compensation amounts from the reporting requirement.

Institution stockholder voting procedure — The FCA Board approved a 

final rule in May 2015 to clarify and 

enhance voting procedures related 

to the tabulation of votes, the use of 

teller committees, and the handling 

of ballots.

Portfolio management in volatile

times — We issued an Informational 

Memorandum to System institutions 

in January 2015 to discuss emerging 

risks and areas we will be examining to determine how institutions are 

responding to the volatile environment.

TILA-RESPA integrated mortgage 

disclosures – clarification of borrower stock and participation 

certificates disclosure — We issued 

an Informational Memorandum to 

System institutions in April 2015 to 

clarify how to properly disclose System borrower stock and participation 

certificate purchases on the new integrated mortgage disclosures under 

the Truth in Lending Act (TILA) and 

the Real Estate Settlement Procedures 

Act (RESPA). Institutions were to 

begin using these integrated mortgage disclosures on August 1, 2015. 

Safety and soundness of the Farm 

Credit System — We issued an 

Informational Memorandum to 

System institutions in July 2015 to 

stress the importance for System 

institutions to have effective internal controls. The memorandum also 

communicated our intent to conduct 

more comprehensive evaluations of 

internal controls during our examinations of System institutions.

Whistleblower programs — We 

issued an Informational Memorandum to System institutions in July 

2015 to provide guidance on whistleblower programs.
36

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Cybersecurity assessment and expectations for System institutions —

We issued an Informational Memorandum to System institutions in 

August 2015 to communicate recent 

guidance concerning cybersecurity 

risks, as well as our expectations 

related to cybersecurity.

Compliance with section 4.38 of 

the Farm Credit Act – affirmative 

action — We issued an Informational 

Memorandum to System institutions 

in November 2015 to clarify how we 

will evaluate an institution’s compliance with section 4.38 of the Farm 

Credit Act, which relates to affirmative action. 

Compensation for 2016 — We issued 

an Informational Memorandum in 

February 2016 to communicate the 

annual adjustment in the maximum 

annual compensation payable to 

FCS bank directors. The adjustment 

reflects the change in the Consumer 

Price Index.

Lending

Flood insurance — The FCA Board 

approved a final rule in June 2015 to 

require System institutions to escrow 

premiums and fees for flood insurance for any loan secured by residential improved real estate or a mobile 

home. The amendments also address 

force-placement of flood insurance 

and detached structures.

Limited suspension of enforcement 

actions relating to private flood

insurance — We issued an Informational Memorandum to System institutions in December 2015 to clarify 

the mandatory purchase requirement 

for designated loans. The memorandum clarifies that we will not bring 

an enforcement action against any 

System institution for accepting a 

private flood insurance policy in satisfaction of the mandatory purchase 

requirement for designated loans. 

This limited suspension will remain 

in effect until the FCA Board adopts 

final regulations implementing the 

private flood insurance provision of 

the Biggert-Waters Insurance Reform 

Act of 2012, or until we determine 

that the suspension is no longer 

appropriate. 

Servicing loans to borrowers in

distressed industries — We issued 

an Informational Memorandum to 

System institutions in January 2016 

as a follow-up to the January 2015 

communication titled “Portfolio 

Management in Volatile Times.” This 

memorandum expanded the discussion of the servicing of loans when 

industries are under widespread 

stress.

Loan syndications and assignment 

markets study — We continued to 

study loan syndications and assignment markets to determine whether 

our regulations should be modified 

to reflect significant changes in the 

markets.

Capital and investments 

Capital requirements — The FCA 

Board approved a final rule in March 

2016 to modify the regulatory capital 

requirements for System banks and 

associations. The purpose of the rule 

is to modernize capital requirements 

while ensuring that institutions 

continue to hold sufficient regulatory capital to fulfill their mission as 

a government-sponsored enterprise. 

The rule ensures that the System’s 

capital requirements are comparable 

to the Basel III framework and the 

standardized approach that the federal banking regulatory agencies have 

adopted, but it also recognizes the 

cooperative structure and the organization of the System.

Margin and capital requirements 

for swap entities — The FCA Board 

approved an interagency final rule in 

October 2015 that establishes margin 

and capital requirements for FCS 

institutions, including Farmer Mac, 

that engage in noncleared swaps 

and noncleared security-based swap 

transactions. The rulemaking fulfills a 
37

requirement of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act. The FCA Board further 

approved an interagency interim final 

rule that exempts certain financial 

end users from the margin requirements in the final rule.

Similar-entity authority — The 

FCA Board approved a bookletter in 

March 2016 that provides guidance 

to System institutions that purchase 

participations in loans originated 

by non-System lenders to qualified 

similar-entity borrowers.

Farmer Mac

Farmer Mac board governance and

standards of conduct — The FCA 

Board approved a proposed rule in 

February 2015 that would enhance 

existing regulations on Farmer Mac 

board governance and standards of 

conduct, including director election 

procedures and conflicts of interest.

Farmer Mac investment eligibility — 

The FCA Board approved a proposed 

rule in January 2016 that would 

consider changes related to eligible 

investment asset classes and address 

the removal of references to credit 

ratings as required by section 939A 

of the Dodd-Frank Act.

Other

National Oversight and Examination Program for 2015 — We issued 

an Informational Memorandum in 

September 2015 that summarized the 

National Oversight Plan for 2016. The 

plan detailed strategies for addressing critical risks and other areas of 

focus.

Corporate activity in 2015

In 2015 and early 2016, we analyzed 

and approved five corporate applications.

• On January 1, 2015, two ACAs 

affiliated with the Farm Credit 

Bank of Texas merged their 

operations following stockholder 

approval. The PCA and FLCA 

subsidiaries associated with the 

ACAs also merged.

• On January 1, 2015, an ACA 

affiliated with CoBank, ACB, 

changed its name. The names of 

its subsidiaries also changed.

• On July 1, 2015, an FLCA affiliated with the Farm Credit Bank 

of Texas changed its name. 

• On November 1, 2015, following 

stockholder approval, an ACA 

affiliated with CoBank, ACB, 

merged with and became a subsidiary of another ACA in that 

district.

• On January 1, 2016, two ACAs 

affiliated with CoBank, ACB, 

merged their operations following stockholder approval. The 

PCA and FLCA subsidiaries 

associated with the ACAs also 

merged.

The total number of associations as 

of January 1, 2016, was 74 (72 ACAs 

and 2 FLCAs), compared with 76 

associations a year earlier. Figure 10 

shows the chartered territory of each 

FCS bank. Details about specific corporate applications are available on 

FCA’s website at www.fca.gov/info/

mergers.html.
38

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Figure 10

Chartered territories of FCS banks

As of January 1, 2016

Note: As of January 1, 2016, CoBank was funding 24 associations in the indicated areas and serving cooperatives nationwide; Farm Credit Bank of Texas 

was funding 14 associations; AgriBank, FCB, was funding 17 associations; and AgFirst Farm Credit Bank was funding 19 associations. The FCS contains 

a total of 78 banks and associations.

Source: FCA Office of Regulatory Policy.
39

12. The government-sponsored enterprises are the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

13. The primary function of the Funding Corporation, whose headquarters are in Jersey City, New Jersey, is to issue, market, and handle debt securities on behalf of the System’s four banks. In addition, the Funding Corporation assists the banks with a variety of asset/liability management and 

specialized funding activities. The Funding Corporation is responsible for financial disclosure and the release of public information concerning the 

financial condition and performance of the System as a whole.

14. Payment of principal and interest on Systemwide debt securities is insured by the Farm Credit System Insurance Corporation’s Farm Credit Insurance Fund to the extent provided in the Farm Credit Act. Investors in Systemwide debt securities are also protected by a joint and several liability 

provision that applies to all System banks. If a bank is unable to pay the principal or interest on a Systemwide debt security and if the Farm Credit 

Insurance Fund has been exhausted, then FCA must call all nondefaulting banks to satisfy the security. However, an FCS bank may issue debt 

individually, as well. Debt issued by an individual bank is uninsured, and the issuing bank is solely liable for the principal payments.

Funding activity in 2015

During 2015, the System maintained 

reliable access to the debt capital 

markets. Investors were attracted by 

the System’s status as a governmentsponsored enterprise, as well as its 

long-term financial performance and 

strength.

Even after the Federal Reserve concluded its quantitative easing policy 

near the end of 2014, risk spreads 

and pricing on System debt securities during 2015 remained favorable 

for the System — albeit somewhat 

volatile at times — relative to corresponding U.S. Treasuries. Also, 

because of the continuing reduction 

in debt issuances by the two housing-related government-sponsored 

enterprises,12 which are in conservatorship, investors viewed the System 

as a desirable alternative. As a result, 

the System was able to continue to 

issue debt on a wide maturity spectrum at very competitive rates.

The System funds loans and investments primarily with a combination 

of consolidated Systemwide debt and 

equity capital. The Funding Corporation, the fiscal agent for the System 

banks, sells debt securities such as 

discount notes, bonds, and designated bonds on behalf of the System.13 This process allows funds to 

flow from worldwide capital-market 

investors to agriculture and rural 

America, thereby providing rural 

communities with efficient access to 

global resources. At year-end 2015, 

Systemwide debt outstanding was 

$243.2 billion, representing a 7.9 

percent increase from the preceding 

year-end.14

Several factors contributed to the 

$17.8 billion increase in Systemwide debt outstanding. Gross loans 

increased $18.8 billion in 2015, while 

the System’s combined investments, 

federal funds, and cash balances 

increased by $1.5 billion during the 

year.

As the System’s regulator, we have 

several responsibilities pertaining to 

System funding activities. The Farm 

Credit Act requires the System to 

obtain our approval before distributing or selling debt. We make it a 

high priority to respond efficiently 

to the System’s requests for debt 

issuance approvals. For example, 

we have a program that allows the 

System to issue discount notes at 

any time up to a maximum of $60 

billion as long as it provides us with 

periodic reports on this activity. In 

addition, we approve the majority of 

longer-term debt issuances through 

a monthly “shelf” approval program. 

For 2015, we approved $158.6 billion in longer-term debt issuances 

through this program.

The amount of debt issued by the 

System decreased significantly in 

2015. For the 12 months ended 

December 31, 2015, the System issued 

$298 billion in debt securities, compared with $330 billion for 2014, $377 

billion for 2013, $371 billion for 2012, 

and $563 billion for 2011. The System 

has continued to exercise call options 

on higher-cost debt because unsettling global events as well as intermittent domestic economic concerns 

have shifted the yield curve downward for limited spans. However, the 

System has exercised far fewer call 

options than it did when the yield 

curve dropped precipitously immediately after the financial crisis; the 

drop in the yield curve contributed 

to the larger issuances noted in the 

prior years, particularly in 2011.

Favorable investor sentiment and 

continued low yields on the full 

spectrum of debt instruments 

allowed the System to access a 

wide range of debt maturities. Their 

weighted average of remaining maturity increased by one month during 

2015 to 2.8 years. Also, the weightedaverage interest rates for insured 

debt increased for the first time since 

2006, going from 0.93 percent as of 

December 31, 2014, to 1.01 percent as 

of December 31, 2015.
40

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

 15. The banks and the Funding Corporation entered into the Amended and Restated Market Access Agreement in the late 1990s. The agreement is 

periodically updated to adjust financial targets, economic incentives, and other matters. In 2011, FCA approved the draft of the Second Amended 

and Restated Market Access Agreement. The agreement became effective on January 1, 2012.

To participate in the issuance of an 

FCS debt security, a System bank 

must maintain, free from any lien or 

other pledge, specified eligible assets 

(available collateral) that are at least 

equal in value to the total amount 

of its outstanding debt securities. 

Securities subject to the available collateral requirements include Systemwide debt securities for which the 

bank is primarily liable, investment 

bonds, and other debt securities that 

the bank may have issued individually.

Furthermore, to ensure safety and 

soundness, our regulations require 

each System bank to maintain a 

net collateral ratio (primarily assets 

divided by liabilities) of not less than 

103 percent. We require certain System banks to maintain higher minimum net collateral ratios. All System 

banks have kept their net collateral 

ratios above the required minimum, 

with 105.7 percent being the lowest 

for any single bank as of December 

31, 2015.

All System banks have kept their 

respective days of liquidity above 

the required minimum levels. The 

lowest liquidity levels at any single 

bank as of December 31, 2015, were 

as follows:

• 25 days (15 days regulatory minimum) of Level 1 assets

• 40 days (30 days regulatory minimum) of Level 1 and 2 assets

• 111 days (90 days regulatory 

minimum) of Level 1, 2, and 3 

assets

• 136 days overall (including the 

supplemental liquidity buffer)

In addition to the protections provided by the joint and several liability provision, the Funding Corporation and the System banks have 

entered into the following voluntary 

agreements.

• The amended and restated 

Market Access Agreement, 

which establishes certain financial thresholds and provides the 

Funding Corporation with operational oversight and control over 

the System banks’ participation 

in Systemwide debt obligations.15

• The amended and restated Contractual Interbank Performance 

Agreement, which is tied to the 

Market Access Agreement and 

establishes certain measures that 

monitor the financial condition 

and performance of the institutions in each System bank’s 

district. For all of 2015, all Farm 

Credit banks maintained scores 

in excess of the benchmarks in 

the Contractual Interbank Performance Agreement.
41

Maintaining a Dependable Source of Credit 

for Farmers and Ranchers

As federally chartered cooperatives, 

the banks and associations of the 

Farm Credit System are limitedpurpose lenders. According to Congress, the purpose of the FCS is to 

“improve the income and well-being 

of American farmers and ranchers” by providing credit and related 

services to them, their cooperatives, 

and to “selected farm-related businesses necessary for efficient farm 

operations.”

Making loans exposes the System 

to risk. To manage this risk, System 

institutions must have both sufficient capital and effective risk-management controls.

As the independent regulator of the 

FCS, the Farm Credit Administration 

examines and supervises System 

institutions. We monitor specific 

risks in each institution; we also 

identify and monitor risks that affect 

the System as a whole.

Through our risk-based examination and supervisory program, our 

examiners determine how issues facing an institution or the agriculture 

industry may affect the nature and 

extent of risk in that institution.

Our examiners also evaluate 

whether each institution is meeting 

its public mission. They do so by 

determining whether each institution 

is complying with laws and regulations and whether it is serving the 

credit needs of eligible agricultural 

producers and cooperatives, including young, beginning, and small 

farmers and ranchers.

Conducting a risk-based 

examination and oversight 

program

As required by the Farm Credit Act, 

FCA examines each FCS institution at least once every 18 months. 

In the interim between these statutory examinations, we also monitor 

and examine institutions as risk and 

circumstances warrant. This approach 

allows us to customize our examination activities to each institution’s 

specific risks. In addition, we develop 

a National Oversight Plan every year 

that takes certain systemic risks into 

account.

We have designed our examination 

and oversight program to monitor 

and address FCS risk as effectively 

and efficiently as possible. Therefore, 

we assign highest priority to institutions, or the parts of an institution’s 

operations, that present the greatest 

risk. This approach also considers 

the ability of an FCS institution to 

identify and manage both institutionspecific and systemic risks. When 

institutions are either unable or 

unwilling to address unsafe and 

unsound practices or to comply with 

laws and regulations, we take appropriate supervisory or enforcement 

action.

Through our oversight, we require 

FCS institutions to have the programs, policies, procedures, and 

controls to effectively identify and 

manage risks. For example, our 

regulations require FCS institutions 

to have effective loan underwriting 

and loan administration processes. 

We also have specific regulations 

requiring FCS institutions to maintain 

strong asset-liability management 

capabilities. Our oversight program 

also requires compliance with laws 

and regulations.

We use a comprehensive regulatory and supervisory framework for 

ensuring System safety and soundness. FCS institutions, on their own 

and in response to our efforts, continue to improve their risk management systems.

Identifying and responding to 

potential threats to safety and 

soundness

Because of the dynamics and risks 

in the agricultural and financial 

industries, FCA assesses whether 

FCS institutions have the culture, 

governance, policies, procedures, 

and management controls to effectively identify and manage risks. We 

employ various processes for evaluating certain systemic risks in both 

agriculture and the financial services 

industry that can affect an institution, a group of institutions, and the 

System as a whole.

Currently, we are emphasizing the 

following areas:

• Internal controls and operations 

risk. FCA expects institutions to 

have an effective control environment, including active internal 

audit programs. Our examiners 

will ensure that boards invest 

sufficient resources to achieve 

effective preventive, detective, 

and corrective controls. Also, 

because of persistent security 

incidents in government and the 

banking industry, we will high-
42

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

light cybersecurity as part of our 

internal controls assessment.

• Intensifying credit risk. Lower 

commodity prices and adverse 

weather conditions are causing the potential for increased 

credit and collateral risk in some 

agricultural sectors. As a result, 

some operators are expected to 

have lower profits and higher 

stress over the next several years. 

Fortunately, System institutions 

currently have the financial 

capacity and risk-bearing ability 

to work with borrowers experiencing stress. In January 2016, 

FCA issued an Informational 

Memorandum on servicing loans 

to borrowers in distressed industries. As we explained in this 

memorandum, we expect System 

institutions to intensify loan servicing efforts as borrowers begin 

encountering increased stress. 

Conditions in the farm economy, 

as well as the response of FCS 

institutions to borrower stress, 

will require close attention from 

FCA examiners.

When we identify systemic issues, we 

inform institutions about those issues 

by producing the following:

• Reports of Examination

• FCA Board Policy Statements

• Informational Memoranda

• Bookletters

We keep an online library of these 

documents. Go to our website at 

www.fca.gov, click on the Law & 

Regulations tab, and select Info 

Memos, Bookletters, and Other Guidance from the dropdown menu.

Measuring the System’s safety 

and soundness

FCA uses the Financial Institution 

Rating System (FIRS) to indicate 

safety and soundness threats in each 

institution. Similar to the systems 

used by other federal banking regulators, the FIRS is a CAMELS-based 

system, with component ratings for 

capital, assets, management, earnings, 

liquidity, and sensitivity, all factoring 

into an overall composite rating. 

The FIRS process includes quantitative benchmarks for evaluating 

institution performance, qualitative 

rating criteria for evaluating risk 

management practices, and outlook 

ratings for evaluating risks. These 

benchmarks help our examiners 

apply FIRS ratings consistently from 

one institution to the next. 

Our examiners assign component and 

composite ratings to each institution 

on a scale of 1 to 5. A composite 

rating of 1 indicates an institution is 

sound in every respect. A rating of 3 

means an institution displays a combination of financial, management, or 

compliance weaknesses ranging from 

moderate to severe. A 5 rating represents an extremely high immediate or 

near-term probability of failure.16

Through our monitoring and oversight program, our examiners continually evaluate institutional risk 

and regularly review and update 

FIRS ratings to reflect current risks 

and conditions. We disclose the FIRS 

composite and component ratings to 

the institution’s board and CEO to 

give them perspective on the safety 

and soundness of their institution.

We also disclose these ratings to each 

association’s funding bank to ensure 

that the bank takes any actions necessary to address safety and soundness issues as it administers its direct 

loan with the institution.

In addition, we issue examination 

reports and other communications to 

provide the institution board with an 

assessment of management’s performance, the quality of assets, and the 

financial condition and performance 

of the institution.

As figure 11 shows, risks were 

higher in 2012 when stresses from 

the general economy, the credit crisis, 

and volatility in commodity prices 

affected some institutions. The ratings have gradually improved each 

year, and the FIRS ratings for 2015 

show that the financial condition and 

performance of the FCS was strong. 

The System’s strength reduces the 

risk to investors in FCS debt, to 

the Farm Credit System Insurance 

Corporation, and to FCS institution 

stockholders.

At December 31, 2015, 46 FCS institutions were rated 1 (59 percent), 

29 were rated 2 (37 percent), and 3 

were rated 3 (4 percent). Most of the 

institutions rated 3 were relatively 

small and collectively represent less 

than 1 percent of the System’s total 

assets. There were no institutions 

with a 4 or 5 rating. (FCA applies 

FIRS ratings only to the banks and 

associations of the FCS, not to the 

System’s service corporations. It also 

applies a FIRS rating to Farmer Mac, 

but Farmer Mac is not included in 

figure 11.)

16. See the Glossary for a complete description of the FIRS ratings. 
43

Figure 11

Financial Institution Rating System (FIRS) 

Composite Ratings for the FCS, 2012 – 2016

Source: FCA’s FIRS Ratings Database.

Note: Figure 11 reflects ratings for only the System’s banks and direct-lending associations; it does not include ratings for the System’s service 

corporations, Farmer Mac, or the Federal Farm Credit Banks Funding Corporation. Also, the numbers shown on the bars reflect the total number 

of institutions with a given rating; please refer to the y-axis to determine the percentage of institutions receiving a given rating.
44

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Providing differential supervision 

and enforcement

FCA uses a risk-based supervisory 

and enforcement program to respond 

to the risks and particular oversight 

needs of each FCS institution. Risks 

are inherent in lending, and managing risks associated with a single 

sector of the economy — in this case, 

agriculture — presents an additional 

challenge for FCS lenders. If we discover unacceptable risks, we require 

institutions to take corrective action 

to mitigate the risks. Some corrective 

actions include reducing risk exposures, increasing capital and enhancing earnings, and strengthening risk 

management.

We use a three-tiered supervision 

program: normal supervision, special 

supervision, and enforcement actions.

Institutions under normal supervision 

are performing in a safe and sound 

manner and are complying with laws 

and regulations. These institutions 

are able to correct weaknesses in the 

normal course of business.

For those institutions displaying 

more serious or persistent weaknesses, we shift from normal to 

special supervision, and our examination oversight increases accordingly. Under special supervision, we 

give an institution clear and firm 

guidance to address weaknesses, and 

we give the institution time to correct 

the problems.

If informal supervisory approaches 

have not been or are not likely to be 

successful, we will use our formal 

enforcement authorities to ensure 

that FCS institutions are safe and 

sound and that they comply with 

laws and regulations. We may take 

an enforcement action for a number 

of reasons:

• A situation threatens an institution’s financial stability.

• An institution has a safety or 

soundness problem or has violated a law or regulation.

• An institution’s board is unable 

or unwilling to correct problems 

we have identified.

Our enforcement authorities include 

the following powers:

• To enter into formal agreements

• To issue cease-and-desist orders

• To levy civil money penalties

• To suspend or remove officers, 

directors, and other persons

If we take an enforcement action, 

the FCS institution must operate 

under the conditions of the enforcement document and report back to 

us on its progress in addressing the 

issues identified. The document may 

require the institution to take corrective actions in such areas as financial 

condition and performance, portfolio 

management, asset quality, and institution management or governance. 

Our examiners oversee the institution’s performance to ensure compliance with the enforcement action. 

As of December 31, 2015, we had a 

formal written agreement with one 

association, whose assets were under 

$200 million. 

Protecting borrower rights 

Agricultural production is risky for 

many reasons — adverse weather, 

changes in government programs, 

international trade issues, fluctuations 

in commodity prices, and crop and 

livestock diseases. These risks can 

sometimes make it difficult for borrowers to repay loans.

The Farm Credit Act provides System borrowers certain rights when 

they apply for loans and when 

they have difficulty repaying loans. 

The act requires FCS institutions 

to notify borrowers of the right to 

seek restructuring of loans before 

the institutions begin foreclosure. It 

provides borrowers an opportunity 

to seek review of certain credit and 

restructuring decisions. The Farm 

Credit Act also provides borrowers 

the opportunity to buy or lease back 

their former agricultural properties 

when System institutions acquire the 

properties through foreclosure. FCA 

examines institutions to make sure 

that they are complying with these 

provisions.

We also receive and review complaints from borrowers who believe 

their rights have been denied. In 

2015, we received 22 borrower complaints. The number of complaints 

has declined in recent years.

Generally, borrowers who contact us 

with complaints are seeking clarification, additional information, and 

options to redress their concerns. If 

we find violations of law or regulations, we have several options to 

bring about corrective action.
45

Condition of Farmer Mac

Farmer Mac is a stockholder-owned, 

federally chartered instrumentality of 

the United States and an institution 

of the Farm Credit System. Created 

in 1988, Farmer Mac provides a secondary market for agricultural real 

estate mortgage loans, rural housing loans, and rural utility cooperative loans. This secondary market is 

designed to increase the availability 

of long-term credit at stable interest 

rates to America’s rural communities 

and to provide rural borrowers with 

the benefits of capital markets pricing 

and product innovation.

Farmer Mac conducts activities 

through four programs:

• Farm & Ranch (formerly Farmer 

Mac I), which involves mortgage 

loans secured by first liens on 

agricultural real estate and rural 

housing.

• USDA Guarantees (formerly 

Farmer Mac II), which involves 

certain agricultural and rural 

loans guaranteed by the U.S. 

Department of Agriculture, 

including farm ownership loans, 

operating loans, and rural business and community development loans.

• Rural Utilities Program, which 

involves loans to finance cooperatively owned rural electrification 

and telecommunications systems.

• Institutional Credit, which 

involves Farmer Mac’s purchase 

or guarantee of collateralized 

bonds known as AgVantage securities. AgVantage bonds are general obligations of lenders that 

are secured by pools of eligible 

loans.

Farmer Mac purchases eligible loans 

directly from lenders, provides 

advances against eligible loans by 

purchasing obligations secured by 

those loans, securitizes assets and 

guarantees the resulting securities, 

and issues long-term standby purchase commitments (standbys) for 

eligible loans. Securities guaranteed 

by Farmer Mac may be held either 

by the originator of the underlying 

assets or by Farmer Mac, or they 

may be sold to third-party investors.

FCA regulates Farmer Mac through 

the Office of Secondary Market Oversight (OSMO), which was established 

by the Food, Agriculture, Conservation, and Trade Act Amendments 

of 1991. This office provides for the 

examination and general supervision of Farmer Mac’s safe and sound 

performance of its powers, functions, 

and duties. 

The statute requires OSMO to be a 

separate office within our agency 

and to report directly to the FCA 

Board on matters of policy. The law 

also stipulates that OSMO’s activities 

must, to the extent practicable, be 

carried out by individuals who are 

not responsible for supervising the 

banks and associations of the FCS.

Through OSMO, we perform the following functions:

• Examine Farmer Mac at least 

annually for capital adequacy, 

asset quality, management performance, earnings, liquidity, and 

interest rate sensitivity

• Supervise and issue regulations 

governing Farmer Mac’s operations

Table 5 

Farmer Mac condensed balance sheets, 2010 – 2015

As of December 31	 	 	 	 	 	 	

Dollars in millions

 

 

 

 

Percentage 

growth

 rate

2010 2011 2012 2013 2014 2015 2014 – 2015

Total	assets	 $9,479.9	 $11,883.5	 $12,622.2	 $13,361.8	 $14,287.8	 $15,540.4	 8.8%

Total	liabilities	 $9,001.0	 $11,329.0	 $12,029.2	 $12,787.3	 $13,506.0	 $14,986.6	 11.0%

Net worth or 

	 equity	capital	 $478.9	 $554.5	 $593.0	 $574.5	 $781.8	 $553.7	 -29.2%

Sources: Farmer Mac’s Annual Reports on Securities and Exchange Commission Form 10-K.
46

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

• Oversee and evaluate Farmer 

Mac’s safety and soundness and 

mission achievement

OSMO reviews Farmer Mac’s compliance with statutory and regulatory 

minimum capital requirements and 

supervises its operations and condition throughout the year. Table 5 

summarizes Farmer Mac’s condensed 

balance sheets at the end of each 

year from 2010 to 2015.

Capital

On December 31, 2015, Farmer Mac’s 

net worth (that is, equity capital 

determined using generally accepted 

accounting principles [GAAP]) was 

$553.7 million, compared with $781.8 

million a year earlier. Net worth 

was 3.6 percent of on-balance-sheet 

assets as of December 31, 2015, 

compared with 5.5 percent at the end 

of 2014. The decrease was a result 

of the redemption of all outstanding 

shares of preferred stock known as 

Farm Asset-Linked Capital Securities 

(FALConS) during the first quarter of 

2015 and a decrease in accumulated 

other comprehensive income due to 

decreases in the fair value of available-for-sale securities. 

When Farmer Mac’s off-balance-sheet 

program assets (that is, essentially 

its guarantee obligations) are added 

to its total on-balance-sheet assets, 

net worth was 2.6 percent as of 

December 31, 2015, compared with 

4.3 percent in 2014. As of December 

31, 2015, Farmer Mac continued to be 

in compliance with all statutory and 

regulatory minimum capital requirements.

At year-end 2015, Farmer Mac’s core 

capital (the sum of the par value of 

outstanding common stock, the par 

value of outstanding preferred stock, 

paid-in capital, and retained earnings) remained above the statutory 

minimum requirement. As of December 31, 2015, it totaled $564.5 million, 

exceeding the statutory minimum 

capital requirement17 of $462.1 million 

by $102.4 million.

Its regulatory capital (core capital 

plus allowance for losses) exceeded 

the required amount as determined 

by the Risk-Based Capital Stress 

Test.18 Farmer Mac’s regulatory 

capital totaled $571.1 million as of 

December 31, 2015, exceeding the 

regulatory risk-based capital requirement of $72.2 million by $498.9 million. 

Regulatory capital was 4.1 percent 

of total Farm & Ranch and Rural 

Utilities Program volume (including 

both on-and off-balance-sheet volume 

but excluding USDA guarantees). 

Risk exposure on USDA guarantee 

loans is extremely low because they 

are guaranteed by the U.S. Department of Agriculture. Table 6 offers a 

historical perspective on capital and 

capital requirements for 2010 through 

2015.

Table	 6	 	 	 	 	 	

Farmer Mac capital positions, 2010 – 2015 

As	 of	December	 31	 	 	 	

Dollars in millions

2010 2011 2012 2013 2014 2015

GAAP	equity	

Core	capital	

Regulatory	capital	

Statutory	requirement	

Regulatory	requirement	

Excess	core	capital	over	statutory	requirement*	

Capital	margin	excess	over	the	minimum	

$478.9	

$460.6	

$480.7	

$301.0	

$42.1	

$159.6	

53.0%	

$554.5	

$475.2	

$492.7	

$348.6	

$52.9	

$126.5	

36.3%	

$593.0	

$519.0	

$535.9	

$374.0	

$58.1	

$145.0	

38.8%	

$574.5	

$590.7	

$604.0	

$398.5	

$90.8	

$192.2	

48.2%	

$781.8	

$766.3	

$776.4	

$421.3	

$121.6	

$345.0	

81.9%	

$553.7

$564.5

$571.1

$462.1

$72.2

$102.4

22.2%

Sources: Farmer Mac’s Annual Reports on Securities and Exchange Commission Form 10-K. 

* Farmer Mac is required to hold capital at or above the statutory minimum capital requirement or the amount required by FCA regulations as 

determined by the Risk-Based Capital Stress Test, whichever is higher. 

 

17. The statute requires minimum capital of 2.75 percent for on-balance-sheet assets and 0.75 percent for off-balance-sheet obligations.

18. See the FCA website at www.fca.gov/info/farmer_mac_test.html for more information about the Risk-Based Capital Stress Test.
47

We published a proposed rule in 

March 2015 on Farmer Mac’s corporate governance and standards of 

conduct. The proposed rule included 

provisions related to board nominations and elections, conflicts of 

interest, and risk governance, among 

other topics. We are preparing a 

final rule, to be issued in summer 

2016, for most of the proposed rule’s 

provisions; we plan to prepare a 

second proposed rule, to be issued in 

late 2016, in which we will modify 

some of the provisions of the earlier 

proposed rule.

We published a proposed rule in 

February 2016 governing eligibility 

criteria for Farmer Mac’s nonprogram 

investments. The proposed rule also 

includes revised creditworthiness 

standards; as required by the DoddFrank Wall Street Reform and Consumer Protection Act, these standards 

will replace references to credit ratings in these regulations. We expect 

the final rule to be presented for 

FCA Board action in late 2016.

Program activity

Farmer Mac’s total program activity 

increased to $15.9 billion on December 31, 2015, from $14.6 billion a 

year earlier. (See figure 12.) Farmer 

Mac experienced steady growth in 

its Farm & Ranch loan purchases, 

as well as its AgVantage products. 

AgVantage transactions are general 

obligations of the issuing financial 

institution that are purchased or 

guaranteed by Farmer Mac. In addition to the general obligation of the 

financial institution, each AgVantage 

security is secured by eligible loans 

under one of Farmer Mac’s programs 

in an amount at least equal to the 

outstanding principal amount of the 

security.

Off-balance-sheet program activity 

consists of standbys, certain AgVantage securities, and agricultural mortgage-backed securities (AMBS) sold 

to investors. At the end of December 

2015, 33.8 percent of program activity 

consisted of off-balance-sheet obligations, as compared with 26.6 percent 

a year earlier.

Farmer Mac’s Long-Term Standby 

Purchase Commitment product is 

similar to a guarantee of eligible 

pools of program loans. Under the 

standbys, a financial institution pays 

an annual fee in return for Farmer 

Mac’s commitment to purchase 

loans in a specific pool under specified conditions at the option of the 

institution. As shown in figure 13, 

standbys represented 14.2 percent of 

Farmer Mac’s total program activity 

in 2015.

Figure 12

Farmer Mac program activity and nonprogram investment trends

As of December 31

Dollars in billions

Sources: Farmer Mac’s Annual Reports on Securities and Exchange Commission Form 10-K. 
48

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Asset quality

Figure 14 shows Farmer Mac’s allowance for losses, its levels of substandard Farm & Ranch assets, and 

its 90-day delinquencies relative to 

outstanding program volume, excluding AgVantage loan volume.

On December 31, 2015, Farmer Mac’s 

allowance for losses totaled $6.6 million, compared with $10.1 million on 

December 31, 2014. Of its Farm & 

Ranch program portfolio, $104.5 million was substandard, representing 

1.83 percent of the principal balance 

of Farm & Ranch loans purchased, 

guaranteed, or committed to be purchased.19 This compares with $132.6 

million, or 2.45 percent, on December 

31, 2014. Assets are considered to be 

substandard when they have a welldefined weakness or weaknesses that, 

if not corrected, are likely to lead to 

some losses.

As of December 31, 2015, Farmer 

Mac’s 90-day delinquencies increased 

to $32.1 million, or 0.56 percent of 

non-AgVantage Farm & Ranch loans, 

compared with $18.9 million, or 0.35 

percent, as of December 31, 2014. 

Real estate owned as of December 

31, 2015, was $1.37 million, up from 

$0.42 million a year earlier. Farmer 

Mac reported no delinquencies in 

its pools of rural utility cooperative 

loans.

Earnings

Farmer Mac reported net income 

available to common stockholders 

of $47.4 million (in accordance with 

GAAP) for the year ended December 31, 2015, up from $38.3 million 

reported at year-end 2014. Core 

earnings for 2015 were $47.0 million, compared with $53.0 million in 

2014.20 Net interest income, which 

excludes guarantee fee income, was 

reported at $125.8 million in 2015, up 

from $60.8 million in 2014. Guarantee fee income was $14.1 million, 

compared with $25.2 million in 2014. 

Table 7 shows a six-year trend for 

the basic components of income.

Figure 13

Farmer Mac total program activity

Source: Farmer Mac’s Report on Securities and Exchange Commision Form 10-K.

AMBS = agricultural mortgage-backed securities

19. We have excluded AgVantage volume from the Farm & Ranch loan volume because AgVantage products carry significantly less risk.

20. Core earnings provide a non-GAAP measure of financial results that exclude the effects of certain unrealized gains and losses and nonrecurring items. 

Farmer Mac reports core earnings to present an alternative measure of earnings performance. The components included in core earnings calculations 

are at Farmer Mac’s discretion
49

Figure 14

Asset quality, allowance, and delinquency trends, 2010 – 2015

Dollars in millions

Sources: Farmer Mac’s Annual Reports on Securities and Exchange Commission Form 10-K.

 

Table 7	 	 	 	 	 	 	

Farmer Mac condensed statements of operations, 2010 – 2015

As of December 31	 	 	 	 	 	 	

Dollars in millions 

 

 Growth Rate

2010 2011 2012 2013 2014 2015 2014 – 2015

 

Total	revenues	 $99.1	 $73.3	 $122.0	 $164.4	 $103.6	 $145.9	 41%

Total	expenses	 $77.0	 $59.5	 $78.1	 $92.5	 $65.4	 $98.5	 51%

Net income available 

	 to	common	shareholders	 $22.1	 $13.8	 $43.9	 $71.8	 $38.3	 $47.4	 24%

Core	earnings	 $25.4	 $42.9	 $49.6	 $54.9	 $53.0	 $47.0	 -11%

Sources: Farmer Mac’s Annual Reports on Securities and Exchange Commission Form 10-K.
50

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Challenges Facing the Agricultural Economy 

and the Farm Credit System

The following paragraphs identify 

the key challenges facing the Farm 

Credit System and Farmer Mac and 

their ability to fulfill their missions. 

We discuss the challenges encountered in 2015 and those expected in 

2016. We first discuss the challenges 

arising from the farm economy, then 

the challenges arising from the general economy.

The farm economy

The U.S. agricultural economy was 

shaped by global factors in 2015. 

These included slowing economic 

growth in key export markets; a 

strong U.S. dollar, which hampered 

export sales and boosted imports; 

and ample supplies of crops and 

livestock products here and abroad. 

These factors continued to put downward pressure on commodity prices 

and farm incomes.

Despite lower energy and fertilizer 

costs in 2015, depressed prices for 

major crops lowered profits for most 

producers. For some producers, the 

reduced prices resulted in minimal 

or negative returns. While low feed 

costs benefited livestock producers, lower prices for meat and dairy 

products in the second half of the 

year reduced profit margins. For 

some cattle-feeder, hog, broiler, and 

dairy operations, the margins became 

negative. 

As a result, net cash income fell for a 

third consecutive year from the historic highs of 2012. USDA estimates 

that net cash income fell 27 percent 

in 2015. Government payments and 

crop insurance helped offset some of 

the lower crop receipts for 2015. 

Farmers adjusted to the lower income 

environment by cutting equipment 

purchases, restructuring debt, and 

using lines of credit for operating 

expenses. U.S. farmers carrying large 

amounts of debt are increasingly 

likely to experience cash flow problems if the current profit environment continues throughout 2016. The 

lower profitability will likely result 

in increased loan delinquencies and 

other credit quality issues for agricultural lenders in the coming year. 

Drought 

According to the National Oceanic 

and Atmospheric Administration, 

2015 was the second warmest year 

but was also the third wettest year 

in 121 years of records. As a result, 

the national drought footprint shrank 

during the year.

The year began with 28.7 percent of 

the contiguous United States experiencing moderate to exceptional 

drought. The national drought footprint peaked in early April 2015 at 

36.9 percent, then shrank to 18.7 percent by year-end. A strong El Niño, 

which resulted in heavy precipitation 

during the second half of the year, 

contributed to the contraction of the 

national drought footprint.

Drought conditions affected eight 

western states in 2015, especially 

California and Nevada. Other states 

experiencing drought included 

Oregon, Washington, Idaho, Montana, Utah, and Arizona. Heavy precipitation during December brought 

significant drought recovery to the 

Pacific Northwest. New Mexico saw 

above-normal precipitation during 

2015, which brought some relief to 

the state’s multi-year drought. Widespread storms in the spring of 2016 

brought more drought relief to much 

of the West, particularly to Nevada, 

Utah, Colorado, and Wyoming. 

California agriculture continued 

to endure severe drought conditions during 2015, with hundreds 

of thousands of acres of farmland 

fallowed. Even though most of California remains in drought as summer 2016 approaches, more plentiful 

rainfall has also significantly reduced 

the area listed in the most severe 

drought categories and has replenished reservoirs. As of May 2016, 

only the central sections of California were experiencing exceptional 

drought. (See figure 15.)

A long-term drought lasting about 60 

months, which mostly affected Texas 

and Oklahoma, temporarily ended 

in the spring of 2015 following very 

heavy rains but returned with a dry 

summer. Heavy rains in fall 2015 

and rainfall in 2016 have once again 

eliminated drought in the Southern 

Plains states.
51

Major commodity prices

Over the past three years since the 

drought-reduced U.S. harvest of 2012, 

worldwide production has outpaced 

consumption for the major crops 

and some livestock products. Consumption and trade have slowed or 

declined because of sluggish economic activity around the world, 

particularly in China, a leading 

consumer and importer of U.S. 

agricultural products. Rising world 

inventories have led to downward 

pressure on commodity prices, leading to declines in cash receipts and 

farm incomes. 

As of mid-May 2016, USDA projected 

all major crop prices to decline for 

the 2015/16 marketing year to their 

lowest levels in years: the 2006/07 

marketing year for soybeans and rice, 

the 2008/09 marketing year for cotton, and the 2009/10 marketing year 

for corn and wheat. (See Figure 16.) 

Projected price declines for 2015/16 

range from around 3 percent for corn 

to 18 percent for wheat. However, 

inclement weather in South America 

during March and April 2016 — too 

wet in Argentina and too dry in 

Brazil — gave a boost to some crop 

prices, particularly soybeans, which 

should help some producers who 

were operating below breakeven 

levels.

Except for turkeys and eggs (which 

experienced strong price increases in 

2015 after the avian influenza outbreak reduced supplies), producer 

prices for steers, hogs, broilers, and 

milk all declined in 2015 because of 

larger supplies and weaker demand. 

The USDA outlook for 2016 is for all 

livestock product prices to decline 

from their 2015 levels to some of 

their lowest levels in years: 2006 for 

eggs, 2009 for hogs and milk, and 

2012 for broilers. Projected price 

declines for 2016 range from a low 

of 0.2 percent for turkeys to as much 

as 46 percent for eggs. Egg supplies 

have rebounded quickly from the 

sharp cuts in 2015 from the depopulation of Midwestern layer flocks that 

were affected by avian flu.

Figure 15

U.S. Drought Monitor

As of May 3, 2016

Source: USDA, http://droughtmonitor.unl.edu.
52

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Farm income

Lower commodity prices generally translate into lower profitability 

unless the cost of production falls by 

a greater amount. While input costs 

have been moderating recently, the 

cost savings have not been sufficient 

to offset the large declines in commodity prices over the past couple 

years. 

USDA is forecasting that crop and 

livestock receipts will decline more 

modestly in 2016 and will more 

closely match declines in production expenses. The expected drop in 

cash receipts is led by declines in 

nearly all major product categories, 

including dairy, meat animals, and 

poultry/eggs, as well as vegetables 

and melons. Cash receipts for most 

feed crops are also expected to 

decline. Corn receipts are projected 

to decline 36 percent through 2016 

mostly because of lower prices, while 

soybean receipts are projected to rise 

about 1.5 percent because production 

is expected to outweigh a slight price 

decline. Receipts for several other 

commodities are projected to increase 

slightly: turkeys, cotton, rice, sorghum, oil crops, dry beans, potatoes, 

and sugarcane/sugar beets. 

Farm production expenses are 

forecast to drop about 1 percent 

for 2016, which should soften the 

decline in cash receipts somewhat. 

Lower expenses for feed, livestock 

purchases, and fuels are projected 

to offset higher expenses for interest 

and hired labor. Interest expenses are 

forecast to increase by $1.3 billion, or 

6.8 percent, for 2016, while costs for 

hired labor costs are projected to rise 

$1.5 billion, or around 5 percent.

Based on USDA’s February 2016 outlook for the U.S. agricultural economy, net cash income is projected to 

fall for the fourth consecutive year 

because of lower farm receipts for 

most crop and livestock products. 

Net cash income is estimated at 

$90.9 billion for 2016, a 2.5 percent 

decrease from 2015 and a third lower 

than the record $135.3 billion farmers netted in 2012. Direct government 

farm program payments are forecast 

to rise 31 percent to $13.9 billion in 

2016, or about 15 percent of net cash 

income, to help offset some of the 

income declines from the marketplace.

Figure 16

Annual percentage change of prices for crop and livestock products for 2016 or 2015/2016*

As of May 10, 2016

Source: FCA’s Office of Regulatory Policy, based on data from USDA’s World Agricultural Supply and Demand Estimates, May 10, 2016.

* Livestock prices are for 2016; crop prices are for 2015/2016. Crops and milk are based on average prices received by farmers. Animal prices are based 

on wholesale prices.
53

Although net cash income in inflation-adjusted terms (2009 dollars) is 

down in recent years from 2012’s 

high of nearly $129 billion, it is still 

near its long-run average of $83.5 billion. Figure 17 indicates that the farm 

sector’s real net cash income has 

largely vacillated in a band between 

$70 billion and $90 billion, and the 

sharp peaks in net cash income in 

the early 1970s and in the 2011 to 

2014 period were aberrations.

Cropland values 

Consecutive years of lower farm 

incomes caused cropland values to 

soften in 2015, particularly in the 

nation’s midsection. This follows five 

years of double-digit price increases 

since 2009 for most Midwestern 

states. USDA’s August 2015 land values report shows that U.S. cropland 

values increased by just 0.7 percent 

for 2015, compared with increases of 

13.7 percent for 2013 and 7.6 percent 

for 2014. 

In the Corn Belt, cropland values 

decreased on average by 2.3 percent for 2015. Iowa cropland values 

dropped 6.3 percent in 2015, with 

eight other states also experiencing 

declines for 2015. 

The Federal Reserve Banks’ quarterly 

surveys of agricultural bankers show 

that, for the fourth quarter of 2015, 

cropland values declined between 2 

percent and 6 percent over the past 

year in the Midwest and in some of 

the Mountain states. Depending on 

land quality and region of the state, 

some bankers report cropland is off 

as much as 10 percent over the past 

year. Figure 18 shows cropland vales 

by state and the percentage change 

from 2014.

The majority of the bankers surveyed 

expect farmland values to decline 

between 5 percent and 10 percent for 

2016. Large global supplies of agricultural commodities, sluggish world 

demand, and weak U.S. exports are 

seen as weighing on farm profits and 

Figure 17

Inflation-adjusted net cash income for the farm sector, 1961 – 2016

In billions of 2009 dollars

Source: FCA’s Office of Regulatory Policy, based on data from USDA’s World Agricultural Supply and Demand Estimates, May 10, 2016.
54

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

therefore farmland bids. A rise in 

long-term interest rates over the next 

few years would be expected to put 

additional downward pressure on 

cropland values.

U.S. agricultural exports

According to its February 2016 trade 

outlook report, USDA forecasts agricultural exports in fiscal year 2016 to 

fall for the second year in a row to 

$125 billion. This is nearly 11 percent 

below FY 2015 and nearly 18 percent 

below FY 2014’s record exports of 

$152.3 billion. (See figure 19.) The 

last time a consecutive year drop in 

exports occurred was 17 years ago, 

in 1999. 

USDA’s projections have most crops 

and crop products declining in value 

for FY 2016. Grain and feed exports 

are projected to drop nearly 14 

percent in value as exports of corn, 

other coarse grains, wheat, and rice 

are all forecast to decline. Exports of 

oilseeds and products are also projected to decline in value for FY 2016 

by nearly 20 percent. Declines in 

soybeans and soybean meal are projected to offset an expected increase 

in soybean oil exports. 

On a positive note, products in 

which exports are projected to rise in 

value for FY 2016 include tree nuts, 

fruits, and vegetables. On a volume 

basis, most crops and crop products 

are forecast to decline except wheat 

and soybean oil, which are projected 

to increase in FY 2016.

Figure 18

Cropland value by state for 2015 and percent change from 2014

Dollars per acre

Source: FCA’s Office of Regulatory Policy, based on data from USDA’s National Agricultural Statistics Service. 
55

The outlook for livestock product 

exports for FY 2016 is for a decline 

in export value by 12.3 percent. All 

livestock categories are forecast to 

decline, mostly because of lower 

prices. On a volume basis, livestock product exports are projected 

to increase slightly in FY 2016, led 

by beef and pork variety meats at 

around 9 percent.

U.S. agricultural conditions for 2015 

were largely driven by global factors: large supplies of crops and 

livestock products; sluggish demand 

because of the slower economic 

growth of key importers like China, 

Japan, and the European Union; and 

the strengthening of the U.S. dollar against the currencies of major 

importers and competing exporters. 

Countries that rely on exporting 

goods to China experienced a sharp 

reduction in their earnings from 

abroad, which in turn contributed 

to slower economic growth at home. 

Low petroleum prices also reduced 

the earnings of petroleum-producing 

countries, which reduced their capacity to buy imported products. In 

terms of the global forces affecting 

agriculture, 2016 is shaping up to be 

quite similar to 2015.

From January 2014 through March 

2016, the value of the U.S. dollar 

increased substantially relative to the 

currencies of many of our customers 

and competitors in agricultural trade 

— from nearly 7 percent against 

the Japanese yen to a high of 124 

percent against the Argentine peso. 

(See figure 20.) This raises the cost 

of U.S. goods to importing countries 

Figure 19

U.S. agricultural trade, fiscal years 2005 – 2016*

Source: FCA’s Office of Regulatory Policy, based on the Outlook for U.S. Agricultural Trade, published on February 25, 2016, by USDA’s Economic Research Service.

* A fiscal year begins in October of the previous year and runs through September of the year indicated.

.
56

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

and makes our competitors’ products 

a better bargain. The strong dollar 

also made foreign products cheaper 

for domestic consumers, which can 

displace American products.

The general economy

Real gross domestic product (GDP) 

for the U.S. economy grew 2.4 

percent in 2015, the same rate as in 

2014. The growth in real GDP was 

driven primarily by personal consumption expenditures, residential 

and nonresidential fixed investment, private inventory investment, 

exports, and state and local government spending. However, an increase 

in imports weakened the GDP. The 

strength of the U.S. dollar and slower 

growth internationally have contributed to lower U.S. export growth and 

higher import growth. As a result, 

the deficit in net exports increased by 

$100.9 billion in 2015, which slowed 

U.S. economic growth. 

Real GDP increased at an annual 

rate of 0.5 percent in the first quarter of 2016 — 0.9 percentage points 

lower than the prior quarter. This 

was the third consecutive quarter 

in which the rate of growth slowed. 

(See figure 21.) Increased imports, 

lower nonresidential fixed investment, lower private inventory investment, lower exports, lower federal 

spending, and lower private inventory investment were the drivers 

of slower GDP growth in the first 

quarter of 2016. 

The consensus forecast from Consensus Economics projects real GDP 

for the U.S. economy to slow to 1.8 

percent for 2016, down from 2.4 

percent for 2015. The slowdown is 

attributed to two factors: a softenFigure 20

Change in value of U.S. dollar against foreign currencies 

January 1, 2014 – March 30, 2016

Source: FCA’s Office of Regulatory Policy, based on Bloomberg, LLC, data.
57

ing in domestic demand as consumers choose to save or reduce debt 

rather than spend, and a decline 

in U.S. exports as the strong dollar 

and slower economic activity abroad 

reduce demand for our products. 

Real personal consumption is projected to increase by 2.6 percent, real 

government consumption is projected 

to increase by 1.2 percent, and real 

business investment is projected to 

be flat in 2016 as businesses draw 

down inventories rather than increase 

production. Real net exports are 

calculated by deducting imports 

from exports; therefore, a negative 

real export balance indicates that 

imports exceeded exports. Real net 

exports totaled -$543 billion in 2015, 

and imports are expected to further 

outpace exports in 2016, with real net 

exports forecast at -$583 billion.

Employment prospects

Overall, the labor market strengthened further in 2015, but the pace 

of improvement has slowed. Payroll 

employment averaged about 229,000 

new jobs per month in 2015, almost 

23,000 jobs per month slower than 

in 2014. In April 2016, 160,000 jobs 

were created, well below the monthly 

average and the weakest pace since 

September 2015. Slower job growth 

is attributed to slower economic 

growth, which makes employers 

cautious about hiring. Not only has 

job creation slowed in recent periods, 

but the number of people filing for 

unemployment claims has increased. 

For the week ended April 30, the 

four-week moving average of seasonally adjusted initial unemployment 

claims rose by 2,000 to 258,000. 

In 2015, the unemployment rate 

declined from a high of 5.7 percent 

Figure 21

U.S. real GDP growth, chained 2009 dollars, quarterly

Seasonally adjusted annualized rate

Source: FCA’s Office of Regulatory Policy, based on data from the U.S. Department of Commerce, Bureau of Economic Analysis.

Note: Average real GDP for the period 1947 to 2016 is 3.2 percent.
58

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

in January to a low of 5.0 percent 

in December 2015, and averaged 5.3 

percent for the year. The unemployment rate fell to a new post-recession 

low of 4.9 percent in January and 

February 2016 — the lowest level 

since February 2008. In March and 

April 2016, the unemployment rate 

increased slightly to 5.0 percent. The 

consensus forecast from Consensus 

Economics projects a decline in the 

unemployment rate for 2016 to 4.8 

percent. 

The labor force participation rate is 

the percentage of adult Americans 

working or actively looking for a job. 

The annual average participation rate 

declined from 62.9 percent in 2014 

to 62.6 percent in 2015. It reached 

a low of 62.4 percent in September 

2015, the lowest level since October 

1977. In April 2016, the labor force 

participation rate was 62.8 percent — 

0.2 percentage points lower than the 

prior month. While down over the 

month, this is higher than the 2015 

average. 

Wages have shown gradual improvement over the past year. In December 2015, the average hourly earnings 

for all employees on private nonfarm 

payrolls increased by 2.5 percent to 

$25.24. Following a small increase in 

March 2016, average hourly earnings increased further in April to 

$25.53. In December 2015, growth 

in the employment cost index for 

the wages and salaries of workers 

in private industry increased by 2.1 

percent over the year — slightly 

lower than the 2.5 percent year-overyear increase in December 2014. The 

consensus forecast from Consensus 

Economics projects employment costs 

to increase by 2.4 percent in 2016. 

This is 0.3 percentage points faster 

than the wage growth in December 

2015.

Employment in nonmetropolitan 

areas

The recovery of the job market from 

the Great Recession in nonmetropolitan areas has lagged behind that 

of metropolitan areas. The growth 

of employment in metropolitan 

areas has been the key differentiator. Employment in nonmetropolitan 

areas has not reached pre-recession 

levels whereas metropolitan areas 

have exceeded those levels. According to USDA, employment in nonmetropolitan areas grew more than 

1 percent in the year between the 

second quarter of 2014 and 2015. 

Meanwhile, employment in metropolitan areas increased nearly 2 percent 

over the same period. 

In both areas, the unemployment rate 

has generally continued to decline. In 

nonmetropolitan areas, low growth 

in the population and labor force 

has contributed to the decline in 

the unemployment rate. Between 

2010 and 2014, the total population 

in nonmetropolitan areas declined 

for the first time and by a total of 

116,000 people. The more quickly the 

labor force grows, the more quickly 

employment must grow to keep 

unemployment rates from increasing. Therefore, if there is no change 

in the labor force, then employment 

growth is directly proportional to the 

rate of decline in unemployment. 

Consumer price inflation

Inflation affects agriculture by raising input costs, curbing consumer 

demand for high-value products 

(dairy, meat, and processed foods), 

and reducing consumption of food 

away from home. Greater inflationary 

pressures also increase the likelihood 

of higher long-term interest rates. In 

2015, the consumer price index (CPI) 

for all items increased 0.7 percent. 

This is slightly lower than the 0.8 

percent increase in 2014 and the second smallest December-to-December 

increase in the past 50 years. 

Declining energy prices contributed 

to lower total inflation. The CPI 

energy price index fell 12.6 percent 

in 2015 — following a 10.6 percent 

decline in 2014. The price of all 

major energy components declined in 

2015, led by fuel oil, which fell 31.4 

percent, followed by gasoline, which 

fell 19.7 percent. 

While energy prices declined in 

2015, food prices increased slightly 

faster than total inflation. The index 

for food prices rose 0.8 percent in 

2015 — down from a 3.4 percent 

increase in 2014. This is the smallest 

increase since food prices fell in 2009. 

The index for food at home fell 0.4 

percent in 2015, only the third time 

it has declined in the past 50 years. 

Declines in prices for meat and dairy 

products offset price increases for 

cereals, bakery products, fruits, and 

vegetables.
59

In March 2016, the CPI for all items 

increased 0.1 percent from the 

prior month. This change reflected 

a decline in food prices but higher 

energy prices for the first time since 

November 2015. The forecast from 

Consensus Economics for the change 

in total CPI is 1.2 percent for 2016.

The core CPI (excluding food and 

energy prices) increased by 2.1 percent in 2015 — this is 0.5 percentage 

points faster than in 2014. Core CPI 

increased 0.1 percent in March as 

well, but the increase was the smallest since August 2015. The increase in 

core CPI year-over-year as of March 

2016 was 2.2 percent. Over the past 

10 years, the average December-toDecember increase in core CPI was 

1.9 percent.

An alternative measure of price 

inflation is the price index for gross 

domestic purchases. The Federal 

Reserve uses this measure to target 

inflation for policy decisions. The 

index for personal consumption 

expenditures includes a broader 

range of expenditures than the CPI 

and is based on business surveys 

rather than the consumer surveys 

used for CPI. Similar to core CPI, the 

core index for personal consumption 

expenditures excludes the more volatile food and energy prices. In 2015, 

this index increased by 0.4 percent 

— 1.1 percentage points lower than 

in 2014.

Overall, inflation has continued 

below the Federal Reserve’s longterm objective of 2 percent growth in 

personal consumption expenditures. 

Over the past year, declining import 

prices for energy and non-energy 

have placed downward pressure on 

inflation. Based on the April Federal 

Open Market Committee statement, 

short-term inflation is expected to 

remain low because of energy prices. 

Over the medium term, the committee expects the downward pressure 

from energy prices and imports to 

subside and prices to rise above 2 

percent as the labor market strengthens. 

Housing sector recovery

According to the Federal Housing Finance Agency, the seasonally 

adjusted purchase-only house price 

index increased by 1.4 percent in 

the fourth quarter of 2015. For the 

year, U.S. housing prices increased 

by 5.8 percent in 2015. Housing 

prices rose across the board in 2015, 

with the largest increases in the 

states of Nevada, Colorado, Idaho, 

Washington, and Oregon. The Pacific 

region experienced the strongest 

appreciation in housing prices, while 

the Mid-Atlantic had the smallest 

growth. 

Based on the S&P/Case-Shiller home 

price index, few metropolitan areas 

have home prices that have fully 

recovered from the Great Recession. As of January 2016, 3 out of 

20 metropolitan areas in the index 

(Denver, Dallas, and Portland) had 

housing prices that exceeded prior 

peak levels. Along with housing 

prices, mortgage delinquency rates 

and foreclosures have improved as 

well. For the fourth quarter of 2015, 

the seasonally adjusted delinquency 

rate on single-family residential mortgages was 5.17 percent. This is down 

from 5.46 percent in the prior quarter 

and from a high of 11.26 percent in 

the first quarter of 2010. 

Homeownership has moved slightly 

lower, from 64 percent in the fourth 

quarter of 2014 to 63.8 percent in 

the fourth quarter of 2015. The 

homeowner and rental vacancy rates 

in the fourth quarter of 2015 were 

nearly unchanged from prior-year 

levels. Meanwhile, housing starts 

have increased over the past year. In 

March 2016, privately owned housing starts totaled 1,089,000 — down 

8.8 percent from February but up 

14.2 percent year-over-year. Singlefamily housing starts have driven 

most of the growth over this period. 

The growth in new home construction has been concentrated in the 

southern and western regions of the 

United States. The consensus forecast from Consensus Economics for 

housing starts is 1.20 million homes 

in 2016.

International trade

The U.S. dollar has been strengthening since 2011 and began appreciating more rapidly in mid-2014. It has 

continued to strengthen through 2015 

as economic growth has declined 

globally, interest rates for key trading partners have fallen, and higher 

interest rates in the United States 
60

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

have become increasingly likely. 

These factors have driven greater 

demand for U.S. currency and 

resulted in appreciation. As the currency appreciates relative to trade 

partners, our imports tend to go up, 

and our exports tend to go down. 

In the first months of 2016, the 

strength of the dollar has slightly 

subsided. The March 2016 tradeweighted U.S. dollar index level is 

119.66, which is slightly higher than 

the October 2015 level. Still, the dollar remains strong and poses continued challenges for international 

trade. In February 2016, the goods 

and services deficit was $47.1 billion. 

This is a year-over-year increase of 

$10.8 billion — meaning the value 

of imported goods and services 

increased relative to exports. Driving 

this change is a $20.5 billion decrease 

in exports (5.5 percent), which was 

partially offset by a $9.7 billion 

decrease in imports (2.1 percent). 

Because exports declined more than 

imports, net exports declined year to 

date. 

The largest trade deficits for the 

United States exist with China and 

the European Union. In 2015 the 

deficit with China and the European 

Union increased by 7 percent and 22 

percent, respectively. However, some 

of the changes in the balance of trade 

were favorable to the United States 

in 2015. In 2014, the U.S. trade deficit 

with Saudi Arabia and OPEC countries was $21.3 billion and $29.6 billion, respectively. These deficits were 

eliminated in 2015 and in both cases 

became trade surpluses of $6.4 billion 

and $29.9 billion, respectively. 

The growth in U.S. oil production 

has contributed to this change in 

trade position. From 2011 to 2013, 

the United States went from being 

the third largest to being the top producer of total petroleum and other 

liquids. Since 2012, U.S. production grew from 11.1 million barrels 

per day to 14.0 million. Meanwhile, 

production in Saudi Arabia fell 

from 11.8 million barrels per day to 

11.6 million. The United States also 

became the fifth largest exporter of 

crude oil (including lease condensate) 

in 2013 while not appearing in the 

top 15 in years prior. 

Household and business 

borrowing

The results of the Federal Reserve’s 

January 2016 Senior Loan Officer 

Opinion Survey on Bank Lending 

Practices show that banks tightened 

their standards on commercial/

industrial and commercial real estate 

loans in the fourth quarter of 2015. 

Demand for commercial/industrial 

loans declined in the fourth quarter while demand for auto and 

credit card loans remained largely 

unchanged. Demand for commercial real estate loans strengthened 

in the fourth quarter while demand 

for most residential real estate loans 

declined. 

Banks indicated in the survey that, 

in 2016, standards were expected 

to tighten on commercial/industrial 

loans and commercial real estate 

loans. Meanwhile, banks indicated 

a moderate easing of standards on 

some residential mortgage loans 

and auto loans. Loan performance 

of multifamily residential properties and commercial/industrial loans 

is expected to deteriorate. Delinquency rates and charge-offs for 

subprime auto loans are expected to 

increase in 2016 as well. The survey also reported that credit standards for approving revolving home 

equity lines of credit were largely 

unchanged while demand for these 

loans has increased somewhat. 

Household net worth and debt service as a percentage of disposable 

income have improved considerably 

since the recession. Household debt 

service payments as a percentage 

of disposable income peaked immediately preceding the recession at 

13.2 percent in the fourth quarter of 

2007. This declined significantly and 

bottomed out at 9.9 percent in the 

fourth quarter of 2012. In the fourth 

quarter of 2015 household debt 

service payments as a percentage of 

disposable income was 10.1 percent 

and has varied little since mid-2013. 

Federal deficit

The annual deficit for fiscal year 

2015 was $439 billion — nearly 10 

percent less than the $485 billion 

deficit in 2014. Government revenues 

increased to 18.2 percent of GDP in 

2015. As a percentage of GDP, individual income tax revenue reached 
61

the highest level since 2001, at 8.7 

percent. Federal spending, driven by 

mandatory outlays, outpaced revenue 

growth in 2015 and rose to 20.7 percent of GDP. 

According to the Congressional 

Budget Office (CBO), the deficit is 

projected to grow to $534 billion in 

fiscal year 2016. The deficit as a percentage of GDP is also expected to 

increase to 2.9 percent. This is a 0.4 

percentage point increase from 2015 

and ends a six-year stretch where the 

deficit declined relative to the size 

of the economy. The CBO attributes 

part of the increase in the deficit to 

a shift in the timing of benefit payments from the beginning of 2017 

to the end of 2016 (October 1, 2016, 

falls on a weekend). Adjusting for 

this shift, the CBO estimates that the 

deficit would be $493 billion in 2016, 

or 2.7 percent of GDP.

Debt held by the public increased 

by $337 billion to $13.1 trillion in 

2015 and totaled 74 percent of GDP. 

In 2016, debt held by the public as 

a percentage of GDP is expected to 

increase to 75.4 percent and total 

$13.951 trillion. The last time the 

federal debt as a percentage of GDP 

reached these levels were the years 

following World War II. 

According to the CBO, high and rising debt at these levels could have 

significant consequences for both the 

economy and the federal budget. 

When interest rates increase, federal 

spending on interest payments may 

rise considerably. Federal borrowing reduces national savings over 

time and would result in a lower net 

investment, lower productivity, and 

lower total wages. Fiscal policy could 

also become more constrained in its 

response to unexpected economic 

events. Investors might also demand 

significantly higher interest rates to 

compensate them for the additional 

risk of financing the government debt 

at higher levels. 

Farm Credit System 

portfolio21

System loan volume grew almost 9 

percent in 2015, and portfolio quality 

continued to improve. That growth 

was spread over most sectors of the 

portfolio. Growth continued in many 

areas where cash grain is produced, 

but also in other regions and sectors 

of agriculture. 

Lending to finance production 

inputs, inventories, equipment, and 

real estate purchases increased even 

though commodity prices declined. 

Mortgage loans grew because of 

continued demand for higher quality 

farmland. Also, growth in loans to 

cooperatives, marketing and processing operations, and rural utilities 

contributed significantly to overall 

loan growth.

Weather conditions were favorable in 

most parts of the country although 

drought conditions in the West were 

beginning to affect operations. While 

a large part of the Midwest experienced excellent yields, the production increase was insufficient to 

offset lower prices for most crops. 

Some producers also benefitted 

from government support programs. 

However, these revenue sources were 

no longer sufficient to offset other 

cost increases in some sectors, and 

both agricultural income and agricultural real estate values showed some 

decline in parts of the United States. 

Although commodity prices showed 

some decline, reduced costs for corn 

and other feedstuffs were sufficient 

to permit continued profits for animal protein and biofuel producers. 

As a result, the quality of loans to 

these sectors continued to improve 

this past year and no longer showed 

a higher risk profile than other sectors of the portfolio.

Sectors with a direct tie to housing, 

such as horticulture and forestry, 

continued to benefit from the recovery in housing demand and overall 

economic conditions. However, the 

$2.5 billion in loans to horticulture 

continued to include loans to borrowers with difficulty recovering 

from reduced demand and a high 

debt burden. 

Nonaccrual loans continued to 

decline. The System reported $1.3 

billion in total nonaccrual loans at 

year-end compared with almost $1.4 

billion last year. The System also 

reported $37 million in net chargeoffs on loans, down from $68 million 

the prior year. 

21. When referring to the Farm Credit System in this section, we mean only the banks and direct-lending associations of the System, excluding Farmer 

Mac.
62

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Appendix

Figure 22

FCA Organizational Chart

As of May 2015
63

FCA offices

As of December 31, 2015, FCA had 

294 full- and part-time employees. 

These employees are divided among 

the following offices, with the majority serving in the Office of Examination.

The FCA Board manages, administers, and establishes policies for FCA. 

The Board approves the policies, 

regulations, charters, and examination and enforcement activities that 

ensure a strong FCS. The Board also 

provides for the examination and 

supervision of the FCS, including 

Farmer Mac, and oversees the activities of the FCS Building Association, 

which acquires, manages, and maintains FCA headquarters and field 

office facilities.

The Chairman of the FCA Board

serves as the chief executive officer 

(CEO). The CEO enforces the rules, 

regulations, and orders of the FCA 

Board. He or she directs the implementation of policies and regulations 

adopted by the FCA Board. The 

Office of the Chief Executive Officer 

plans, organizes, directs, coordinates, 

and controls FCA’s day-to-day operations and leads the agency’s efforts 

to achieve and manage a diverse 

workforce.

The Chief Operating Officer has 

broad responsibility for planning, 

directing, and controlling the operations of the Offices of Management 

Services, Examination, Regulatory Policy, and General Counsel 

in accordance with the operating 

philosophy and policies of the FCA 

Board. He or she supervises and 

provides policy direction to the 

executive staff responsible for managing these offices. The COO oversees 

and coordinates the development and 

implementation of the Agency-wide 

Strategic, Operating, and Budget 

plans and activities. The COO also 

coordinates the resolution of internal policy, personnel, and program 

issues with Agency executive leadership and the FCA Board. 

The Office of Agency Services,

which was created in April 2016, 

manages human capital and administrative services for the agency. This 

includes providing the following 

services to the agency: staffing and 

placement, job evaluation, compensation and benefits, payroll administration, performance management and 

awards, employee relations, employee 

training and development, contracting, acquisitions, records and property management, supply services, 

agency purchase cards, photography, 

video, graphic design and publication 

services, and mail service.

The Office of the Chief Financial

Officer, which was created in April 

2016, manages and delivers timely, 

accurate, and reliable financial 

services to the agency. The office 

establishes financial policies and procedures and oversees the formulation 

and execution of the agency’s budget. The office reports periodically on 

the status of the agency’s financial 

position, results of operations, and 

budgetary resources. It also oversees 

the agency’s travel management, 

internal controls, and personnel security programs.

The Office of Congressional and

Public Affairs (OCPA) serves as the 

agency’s principal point of contact for Congress, the media, other 

government agencies, FCS institutions, employees, System borrowers, 

and the public. OCPA develops and 

monitors legislation pertinent to FCA 

and the FCS, serves as the agency’s 

congressional liaison, facilitates 

intergovernmental relations, and 

prepares testimony for the Chairman 

and other Board members. The office 

also provides information to external 

audiences through news releases, fact 

sheets, reports, and other publications. It cultivates relationships with 

media representatives who report on 

matters related to agriculture and 

rural credit, and it manages the content of the FCA website. OCPA also 

organizes special meetings, briefings 

for international visitors, and field 

hearings.

The Office of Examination is responsible for examining and supervising 

each FCS institution in accordance 

with the Farm Credit Act and applicable regulations. The office develops 

oversight plans; conducts examinations; monitors the System’s condition and current and emerging risks 

to the System; and develops supervisory strategies to ensure that the FCS 

operates in a safe and sound manner, 

complies with the law and regulations, and fulfills its public policy 

purpose. For more information about 

the role of the Office of Examination, 

go to www.fca.gov/law/guidance.

html and click View Board Policy 

Statements to read “Examination 

Policy” (FCA-PS-53).
64

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

The Office of General Counsel

(OGC) provides the FCA Board and 

staff with legal counsel as well as 

guidance on the Farm Credit Act and 

general corporate, personnel, ethics, 

and administrative matters. OGC 

supports the agency’s development 

and promulgation of regulations, 

enforcement of applicable laws and 

regulations, and implementation of 

conservatorships and receiverships. 

The office represents and advises 

the agency on civil litigation. It also 

serves as the liaison to the Federal 

Register, administers the agency’s 

ethics program, and handles Freedom 

of Information Act requests.

The Office of Information Technology (OIT), which was created in 

June 2015, manages and delivers the 

agency’s information technology, 

data analysis infrastructure, and the 

security supporting agency technology resources. The office is responsible for the planning and control of 

information technology investments 

and leading change to improve the 

efficiency and effectiveness of agency 

operations. OIT is responsible for 

continuing to leverage FCA’s investment in technology by collaborating 

across agency offices to identify and 

re-engineer business processes. OIT 

provides strategies to collaborate 

across offices on business intelligence 

tools to develop analysis models 

to meet the strategic needs of the 

agency.

The Office of Inspector General

provides independent and objective 

oversight of agency programs and 

operations through audits, inspections, investigations, and the review 

of proposed legislation and regulations. The office promotes economy 

and efficiency within FCA and seeks 

to prevent and detect fraud, waste, 

abuse, and mismanagement in the 

agency’s programs and operations.

The Office of Regulatory Policy

(ORP) manages policy and regulation 

development activities that ensure 

the safety and soundness of the FCS 

and support the System’s mission. 

Policy and regulation development 

activities include the analysis of policy and strategic risks to the System 

on the basis of economic trends and 

other risk factors. ORP also evaluates all regulatory and statutory prior 

approvals for System institutions 

on behalf of the FCA Board, including chartering and other corporate 

approvals as well as funding approvals.

The Office of Secondary Market

Oversight (OSMO) provides for the 

examination, regulation, and supervision of Farmer Mac to ensure 

its safety and soundness and the 

accomplishment of its public policy 

purpose as authorized by Congress. 

OSMO also ensures that Farmer Mac 

complies with applicable laws and 

regulations, and it manages FCA’s 

enforcement activities with respect to 

Farmer Mac.

The Secretary to the Board serves 

as the Parliamentarian for the Board 

and keeps permanent and complete 

records of the acts and proceedings 

of the Board. He or she ensures that 

the Board complies with statutory, 

regulatory, and internal operation 

reporting requirements. The Secretary 

to the Board also serves as Secretary 

to the Farm Credit System Insurance 

Corporation Board. In addition, he 

or she serves as the Sunshine Act 

Official for the FCA Board.

The Office of Equal Employment

Opportunity and Inclusion manages 

and directs the agency-wide Diversity, Inclusion, and Equal Employment Opportunity Program for FCA 

and FCSIC. The office serves as the 

chief liaison with the Equal Employment Opportunity Commission and 

the Office of Personnel Management 

on all EEO, diversity, and inclusion 

issues. The office provides counsel 

and leadership to agency management to carry out its continuing 

policy and program of nondiscrimination, affirmative action, and diversity.

The Designated Agency Ethics 

Official is designated by the FCA 

Chairman to administer the provisions of title I of the Ethics in Government Act of 1978, as amended, to 

coordinate and manage FCA’s ethics 

program and to provide liaison to 

the Office of Government Ethics with 

regard to all aspects of FCA’s ethics 

program.
65

William J. Hoffman is Chief 

Operating Officer. 

During Mr. Hoffman’s tenure as 

FCA’s COO (from 

2008 to the present), the agency 

has issued several 

significant final 

rules, including a rule that updates 

and modernizes the agency’s capital 

regulations and a rule requiring System institutions to include strategies 

in their business and marketing plans 

that emphasize diversity and inclusion. As COO, Mr. Hoffman has also 

supported diversity and inclusion 

programs and events at FCA. Before 

taking this position, Mr. Hoffman 

was Executive Assistant to Chairman 

and CEO Nancy C. Pellett. Prior to 

this, he served as the Associate Director for Examination and Supervision 

in the Office of Secondary Market 

Oversight, which oversees the Federal Agricultural Mortgage Corporation. He began his career as a credit 

representative in the Louisville Farm 

Credit District. In 1986 he joined the 

St. Louis Farm Credit Bank as vice 

president of risk assets. He later was 

the CEO of PennWest Farm Credit, 

ACA. Before joining FCA in 2004, he 

was involved in agricultural finance 

in the private sector and several 

international projects.

Agency officials 

Samuel Robert Coleman is 

Director of the 

Office of Examination. Before 

accepting this 

position in October 2010, he was 

Director of the 

agency’s Office 

of Secondary Market Oversight for 

five years. Mr. Coleman joined FCA 

in 1986 as an examiner in the Office 

of Examination. He held various 

positions in that office, providing 

technical support to FCA field offices 

and to the Policy Development 

and Planning Division. During this 

period, Mr. Coleman completed the 

commissioning program and became 

a commissioned examiner in 1990. In 

1994, he transferred to the Office of 

Policy and Analysis, where he served 

as a policy analyst specializing in 

regulation development, and then as 

a senior policy analyst. Mr. Coleman 

was named Director of the Regulation and Policy Division in June 2003. 

He holds the Chartered Financial 

Analyst designation, which the CFA 

Institute awarded him in 2000.

Elizabeth M. 

Dean is the 

Inspector General. 

Before assuming 

this position in 

2013, Ms. Dean 

was the Deputy 

Inspector General and Counsel 

to the Inspector 

General since 1989. As Deputy IG 

and Counsel, she directed the investigative function of FCA’s OIG, periodically conducted inspections and 

evaluations, performed legal duties, 

and comanaged the OIG. From 1986 

to 1989, Ms. Dean served as a senior 

attorney in FCA’s Office of General 

Counsel, Litigation and Enforcement 

Division. Ms. Dean served on active 

duty as a U.S. Navy Judge Advocate 

from 1982 until 1986; she retired 

from the U.S. Naval Reserves in 2000. 

Upon completing law school in 1981, 

she worked for the Attorney General 

of the State of Ohio in the Criminal 

Activities Branch.
66

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

A. Jerome Fowlkes is Chief 

Human Capital 

Officer and Acting 

Director of the 

Office of Agency 

Services. Previously, from March 

2014 to April 2016, 

he served as Deputy Director of the Office of Management Services. From September 

2012 to March 2013, he served as the 

Associate Director and Team Leader 

of the Credit and Mission Team 

in the Office of Regulatory Policy. 

He joined FCA in 2010 as a senior 

financial analyst. Before that, he managed a portfolio of venture capital 

loans and investments for the Small 

Business Administration’s Office of 

Liquidation and was responsible for 

negotiating and collecting outstanding obligations from portfolio companies. He has served as a commercial 

lender and vice president at the 

predecessors to Bank of America and 

SunTrust. He has also worked as an 

investment banker at BIA Capital 

Strategies. He holds an MBA from 

the College of William and Mary and 

a B.S. in business from Virginia Tech.

Jerald Golley is 

Chief Information Officer and 

Director of the 

Office of Information Technology. Before 

joining FCA in 

November 2015, 

Mr. Golley had 

25 years of IT management experience. Most recently, he was the Deputy CIO for the Commodity Futures 

Trading Commission for six years. 

In 1996, he founded AMI Technical 

Consultants, Inc., a software development, Internet hosting, and technical 

consulting company based in Denver; 

he served as CEO there until 2009. 

He began his career as a programmer 

and geographic information system 

specialist at American Management 

Systems in Rosslyn, Virginia, where 

he worked from 1990 to 1994. Mr. 

Golley served in the 101st Airborne 

Division of the U.S. Army based out 

of Ft. Campbell, Kentucky, from 1982 

to 1984. He holds a bachelor’s degree 

in geography, with a minor in computer science from the State University of New York at Oneonta, as well 

as a Master of Arts in geography and 

geographic information systems from 

the State University of New York at 

Binghamton.

Charles R. Rawls

is the FCA General Counsel. 

Before joining FCA 

in March 2003, 

he was general 

counsel and vice 

president for legal, 

tax, and accounting at the National 

Council of Farmer Cooperatives. 

During the consideration of the 2002 

farm bill, he served as the General 

Counsel of the Senate Committee on 

Agriculture, Nutrition, and Forestry. 

From 1998 to 2001, he was General 

Counsel for the USDA, and from 

1993 to 1998 he was Chief of Staff to 

the Deputy Secretary of Agriculture. 

From 1988 to 1993, he was Legislative Director and then Administrative 

Assistant to Congressman Martin 

Lancaster. From 1985 to 1988, he 

was Associate General Counsel of 

the House Committee on Agriculture. He was Counsel to the House 

Agriculture Subcommittee on Forests, 

Family Farms, and Energy from 1983 

to 1985.
67

Laurie A. Rea is 

Director of the 

Office of Secondary Market Oversight (OSMO). 

She was named 

to this position in 

January 2011. Ms. 

Rea joined FCA in 

1986 after graduating from San Diego State University. 

She has held several positions with 

the agency, beginning with the Office 

of Examination where she became 

a commissioned FCA examiner in 

1989. In 1992, she joined the Office 

of Policy and Analysis (now the 

Office of Regulatory Policy), where 

she gained experience in policy and 

regulation development. From 2005 

until 2011, Ms. Rea served as associate director and finance and capital 

markets team leader in the Office of 

Regulatory Policy, where she managed the approval of Systemwide 

debt securities and led the agency’s 

regulatory capital and investment 

policy development. Ms. Rea is a 

Chartered Financial Analyst from the 

CFA Institute and a Certified Risk 

Professional.

Stephen G. 

Smith is Chief 

Financial Officer 

and Director of 

the Office of the 

Chief Financial 

Officer. Previously, from 2005 

to 2016, he served 

as the agency’s 

Director of the Office of Management Services. From 2001 to 2005, 

he served as the agency’s Inspector 

General. He joined FCA in 1981 as 

a technical specialist. He is a commissioned FCA examiner and served 

in several leadership roles, including Associate Regional Director for 

the Albany, New York, field office; 

Senior Staff Director for the Chief 

Examiner; and Director of the Technical and Operations Division. In 

1993, he assumed responsibilities as 

Director of the Information Resources 

Division. He was named Chief 

Information Officer in 1996, directing all technology and information 

operations for FCA. Before joining 

the agency, he worked at the North 

Central Jersey Farm Credit Association.

Michael Stokke

is Director of the 

Office of Congressional and 

Public Affairs. 

Prior to joining 

FCA, Mr. Stokke 

was founder 

and president of 

Prairie Strategies, 

a consulting firm based in Illinois, 

where he advised corporations and 

nonprofit organizations. He served 

as Deputy Chief of Staff to former 

Speaker of the House Dennis Hastert 

from February 1998 to October 2007. 

Prior to this, Mr. Stokke served as 

Chief of Staff for the Office of the 

Speaker in the Illinois House of Representatives from 1995 to 1998. He 

served as Chief of Staff for Representative Thomas W. Ewing of Illinois 

from 1991 through 1994. From 1987 

to 1991, he was Assistant Director 

of Personnel for the Office of the 

Governor of Illinois. He also served 

as Assistant to the Secretary of the 

Illinois Department of Transportation 

from 1985 to 1987.
68

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Gary K. Van 

Meter is Director of the Office 

of Regulatory 

Policy (ORP). 

He was named 

to this position 

in November 

2010 after having 

served as the Deputy Director of ORP for five years. 

Prior to this, he served in the Office 

of General Counsel (OGC) for 17 

years. In OGC, he served as a senior 

attorney and later as senior counsel 

before joining ORP. Mr. Van Meter 

holds a J.D. from West Virginia University College of Law and a master 

of law in taxation from Georgetown 

University Law Center. He is also 

a certified public accountant. From 

1972 to 1974, Mr. Van Meter was an 

enlisted member of the U.S. Marine 

Corps, and he was an officer in the 

U.S. Navy Judge Advocate General’s 

(JAG) Corps from 1981 to 1986.

Dale L. Aultman 

became Secretary to the FCA 

Board in January 

2011. He began 

working at FCA 

in 1988. For the 

first 10 years, he 

worked in the 

Office of Examination, where he became a commissioned examiner. Then for 12 years, 

he was a policy analyst in the Office 

of Regulatory Policy. Mr. Aultman is 

a member of the National Association of Parliamentarians. In 2010, he 

became Virginia’s eighth electronic 

notary. In 2007, he completed FCA’s 

Supervisory Development Program. 

Mr. Aultman graduated with distinction from Southwestern Graduate 

School of Banking at the Southern 

Methodist University and holds a 

finance degree from the University of 

Oklahoma.

Thais Burlew is 

Director of Equal 

Employment 

Opportunity and 

Inclusion. Before 

joining FCA in 

September 2011, 

she served as 

Executive Manager in the Office 

of EEO and Inclusiveness at the 

U.S. Postal Service. From 2001 to 

2008, Ms. Burlew held several positions at the U.S. Equal Employment 

Opportunity Commission, including 

attorney advisor to Chair Naomi 

Churchill-Earp and Acting Chief for 

the Intake and Compliance Branch. 

Prior to this, she served as Advocate 

for the Housing and Consumer Law 

Clinic and for the Juvenile Special 

Education Clinic. Ms. Burlew earned 

a J.D. magna cum laude from David 

A. Clarke School of Law at the 

University of the District of Columbia, where she served as managing 

and associate editor of the school’s 

law review. She also holds a B.S. in 

criminal justice from Middle Tennessee State University.
69

Philip J. 

Shebest is the 

Designated 

Agency Ethics 

Official (DAEO). 

As DAEO, 

Mr. Shebest 

administers the 

ethics program 

for FCA and 

the Farm Credit System Insurance 

Corporation. In addition to serving 

as DAEO, Mr. Shebest is an Assistant 

General Counsel in the Office of Gen-

eral Counsel and the Agency Con-

tracts Officer. While at FCA, he has 

held the position of Alternate DAEO, 

as well as Acting General Counsel, 

Chief Administrative Officer, and 

Chief Human Capital Officer. Prior 

to joining FCA in 1990, Mr. Shebest 

was a senior attorney with the Drug 

Enforcement Administration and a 

lieutenant in the U.S. Navy Judge 

Advocate General’s Corps. A gradu-

ate of East Stroudsburg University of 

Pennsylvania and Temple School of 

Law, he is a member of the Penn-

sylvania bar, as well as a certified 

mediator. 
70

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

Glossary 

Agricultural Credit Association —

An ACA results from the merger of 

a Federal Land Bank Association or 

an FLCA and a PCA and has the 

combined authority of the two institutions. An ACA borrows funds from 

an FCB or ACB to provide short-, 

intermediate-, and long-term credit 

to farmers, ranchers, and producers 

and harvesters of aquatic products. It 

also makes loans to these borrowers 

for certain processing and marketing activities, to rural residents for 

housing, and to certain farm-related 

businesses.

Agricultural Credit Bank — An 

ACB results from the merger of a 

Farm Credit Bank and a Bank for 

Cooperatives and has the combined 

authorities of those two institutions. 

An ACB is also authorized to finance 

U.S. agricultural exports and provide 

international banking services for 

farmer-owned cooperatives. CoBank 

is the only ACB in the FCS.

Bank for Cooperatives — A BC provided lending and other financial services to farmer-owned cooperatives, 

rural utilities (electric and telephone), 

and rural sewer and water systems. 

It was also authorized to finance 

U.S. agricultural exports and provide 

international banking services for 

farmer-owned cooperatives. The last 

remaining BC in the FCS, the St. Paul 

Bank for Cooperatives, merged with 

CoBank on July 1, 1999.

Farm Credit Act — The Farm Credit 

Act of 1971, as amended, (12 U.S.C. 

§§ 2001 – 2279cc) is the statute under 

which the FCS operates. The Farm 

Credit Act recodified all previous 

acts governing the FCS.

Farm Credit Bank — FCBs provide 

services and funds to local associations that, in turn, lend those funds 

to farmers, ranchers, producers and 

harvesters of aquatic products, rural 

residents for housing, and some agriculture-related businesses. On July 

6, 1988, the Federal Land Bank and 

the Federal Intermediate Credit Bank 

in 11 of the 12 then-existing Farm 

Credit districts merged to become 

FCBs. The mergers were required by 

the Agricultural Credit Act of 1987.

Farm Credit Leasing Services Corporation — The Leasing Corporation 

is a service entity owned by CoBank, 

ACB. It provides equipment leasing and related services to eligible 

borrowers, including agricultural 

producers, cooperatives, and rural 

utilities.

Farm Credit System Insurance Corporation — FCSIC was established 

by the Agricultural Credit Act of 

1987 as an independent U.S. government-controlled corporation. Its purpose is to ensure the timely payment 

of principal and interest on insured 

notes, bonds, and other obligations 

issued on behalf of FCS banks and to 

act as conservator or receiver of FCS 

institutions. The FCA Board serves ex 

officio as the Board of Directors for 

FCSIC. The chairman of the FCSIC 

board of directors must be an FCA 

Board member other than the current 

Chairman of the FCA Board.

Federal Agricultural Mortgage Corporation — Farmer Mac was created 

with the enactment of the Agricultural Credit Act of 1987 to provide 

a secondary market for agricultural 

real estate and rural housing mortgage loans.

Federal Farm Credit Banks Funding 

Corporation — The Funding Corporation, based in Jersey City, New Jersey, manages the sale of Systemwide 

debt securities to finance the loans 

made by FCS institutions. It uses a 

network of bond dealers to market 

its securities.

Federal Intermediate Credit Bank 

— The Agricultural Credits Act of 

1923 provided for the creation of 12 

FICBs to discount farmers’ shortand intermediate-term notes made 

by commercial banks, livestock loan 

companies, and thrift institutions. 

The Farm Credit Act of 1933 authorized farmers to organize PCAs, 

which could discount notes with 

FICBs. As a result, PCAs became 

the primary entities for delivery of 

short- and intermediate-term credit to 

farmers and ranchers. The FICBs and 

the Federal Land Banks in all Farm 

Credit districts merged to become 

FCBs or the ACB. Thus, no FICBs 

remain within the FCS.
71

Federal Land Bank — The Federal 

Farm Loan Act of 1916 provided for 

the establishment of 12 Federal Land 

Banks to provide long-term mortgage credit to farmers and ranchers, 

and later to rural home buyers. All 

Federal Land Banks and FICBs have 

merged to become FCBs or part of 

the ACB. Thus, no Federal Land 

Banks remain.

Federal Land Bank Association 

— These associations were lending agents for FCBs. Federal Land 

Bank Associations made and serviced 

long-term mortgage loans to farmers, ranchers, and rural residents for 

housing. The associations did not 

own loan assets but made loans only 

on behalf of the FCB with which 

they were affiliated. As of October 1, 

2000, there were no remaining Federal Land Bank Associations serving 

as lending agents for FCBs.

Federal Land Credit Association 

— An FLCA is a Federal Land 

Bank Association that owns its loan 

assets. An FLCA borrows funds from 

an FCB to make and service longterm loans to farmers, ranchers, and 

producers and harvesters of aquatic 

products. It also makes and services 

housing loans for rural residents.

Financial Institution Rating System 

— The FIRS is similar to the Uniform 

Financial Institutions Rating System 

used by other federal banking regulators. However, unlike the Uniform 

Financial Institutions Rating System, 

the FIRS were designed to reflect the 

no depository nature of FCS institutions. The FIRS provides a general 

framework for assimilating and 

evaluating all significant financial, 

asset quality, and management factors to assign a composite rating to 

each System institution. The ratings 

are described below.

• Rating 1 — Institutions in this 

group are basically sound in 

every respect; any negative findings or comments are of a minor 

nature and are anticipated to be 

resolved in the normal course 

of business. Such institutions 

are well managed, resistant to 

external economic and financial 

disturbances, and more capable 

of withstanding the uncertainties of business conditions than 

institutions with lower ratings. 

Each institution in this category 

exhibits the best performance and 

risk management practices for its 

size, complexity, and risk profile. 

These institutions give no cause 

for regulatory concern.

• Rating 2 — Institutions in this 

group are fundamentally sound 

but may reflect modest weaknesses correctable in the normal 

course of business. Since the 

nature and severity of deficiencies are not material, such 

institutions are stable and able 

to withstand business fluctuations. Overall risk management 

practices are satisfactory for the 

size, complexity, and risk profile 

of each institution in this group. 

While areas of weakness could 

develop into conditions of greater 

concern, regulatory response is 

limited to the extent that minor 

adjustments are resolved in the 

normal course of business and 

operations continue in a satisfactory manner.

• Rating 3 — Institutions in this 

category exhibit a combination 

of financial, management, operational, or compliance weaknesses 

ranging from moderately severe 

to unsatisfactory. When weaknesses relate to asset quality or 

financial condition, such institutions may be vulnerable to the 

onset of adverse business conditions and could easily deteriorate 

if concerted action is not effective in correcting the areas of 

weakness. Institutions that are in 

significant noncompliance with 

laws and regulations may also be 

accorded this rating. Risk management practices are less than 

satisfactory for the size, complexity, and risk profile of each 

institution in this group. Institutions in this category generally 

give cause for regulatory concern 

and require more than normal 

supervision to address deficiencies. Overall strength and financial capacity, however, still make 

failure only a remote possibility 

if corrective actions are implemented.
72

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

• Rating 4 — Institutions in this 

group have an immoderate 

number of serious financial or 

operating weaknesses. Serious 

problems or unsafe and unsound 

conditions exist that are not 

being satisfactorily addressed or 

resolved. Unless effective actions 

are taken to correct these conditions, they are likely to develop 

into a situation that will impair 

future viability or constitute a 

threat to the interests of investors, borrowers, and stockholders. 

Risk management practices are 

generally unacceptable for the 

size, complexity, and risk profile 

of each institution in this group. 

A potential for failure is present but is not yet imminent or 

pronounced. Institutions in this 

category require close regulatory 

attention, financial surveillance, 

and a definitive plan for corrective action.

• Rating 5 — This category is 

reserved for institutions with 

an extremely high, immediate or near-term probability of 

failure. The number and severity of weaknesses or unsafe and 

unsound conditions are so critical 

as to require urgent external 

financial assistance. Risk management practices are inadequate 

for the size, complexity, and risk 

profile of each institution in this 

group. In the absence of decisive 

corrective measures, these institutions will likely require liquidation or some form of emergency 

assistance, merger, or acquisition.

Government-sponsored enterprise —

A GSE is typically a federally chartered corporation that is privately 

owned, designed to provide a source 

of credit nationwide, and limited to 

servicing one economic sector. Each 

GSE has a public or social purpose. 

GSEs are usually created because 

the private markets did not satisfy a 

purpose that Congress deems worthy — either to fill a credit gap or to 

enhance competitive behavior in the 

loan market. Each is given certain 

features or benefits (called GSE attributes) to allow it to overcome the 

barriers that prevented purely private 

markets from developing. In some 

cases, the GSE receives public assistance only to get started; in other 

cases, the assistance is ongoing. The 

FCS is the oldest financial GSE.

Participation — A loan participation 

is usually a large loan in which two 

or more lenders share in providing 

loan funds to a borrower to manage 

credit risk or overcome a legal lending limit for a single credit. One of 

the participating lenders originates, 

services, and documents the loan. 

Generally, the borrower deals with 

the institution originating the loan 

and is not aware of the other participating institutions.

Production Credit Association —

PCAs are FCS entities that deliver 

only short- and intermediate-term 

loans to farmers and ranchers. A 

PCA borrows money from its FCB to 

lend to farmers. PCAs also own their 

loan assets. As of January 1, 2003, all 

PCAs were eliminated as independent, stand-alone, direct-lender associations. All PCAs are now subsidiaries of ACAs.

Syndication — A loan syndication 

(or “syndicated bank facility”) is a 

large loan in which a group of banks 

work together to provide funds for 

a borrower. Usually one bank takes 

the lead, acting as an agent for all 

syndicate members and serving as 

the focal point between them and the 

borrower. All syndicate members are 

known at the outset to the borrower 

and they each have a contractual 

interest in the loan.
73

ACA — Agricultural Credit Association

ACB — Agricultural Credit Bank

CAMELS — capital, assets, management, earnings, liquidity, and sensitivity

CEO — chief executive officer

Farm Credit Act — Farm Credit Act of 1971, as amended

Farmer Mac — Federal Agricultural Mortgage Corporation

FCA — Farm Credit Administration

FCB — Farm Credit Bank

FCS — Farm Credit System

FCSIC — Farm Credit System Insurance Corporation

FIRS — Financial Institution Rating System

FLCA — Federal Land Credit Association

GAAP — generally accepted accounting principles

OFIs — other financing institutions

PCA — Production Credit Association

USDA — U.S. Department of Agriculture

YBS — young, beginning, and small (farmers and ranchers)

Acronyms and abbreviations
74

Farm Credit Administration 2015 Annual Report on the Farm Credit System 

The Farm Credit Administration 2015 

Annual Report on the Farm Credit 

System is available on FCA’s website 

at www.fca.gov. For questions about 

this publication, contact FCA:

Office of Congressional and 

Public Affairs

Farm Credit Administration

1501 Farm Credit Drive

McLean, VA 22102-5090

Telephone: 703-883-4056

Fax: 703-790-3260

Email: info-line@fca.gov

Additional information With support from the System banks, 

the Federal Farm Credit Banks 

Funding Corporation prepares the 

financial press releases, the System’s 

Annual and Quarterly Information 

Statements, and the System’s combined financial statements. These 

documents are available on the Funding Corporation’s website at www.

farmcreditfunding.com. For copies of 

these documents, contact the Funding 

Corporation:

Federal Farm Credit Banks

Funding Corporation

10 Exchange Place, Suite 1401

Jersey City, NJ 07302

Telephone: 201-200-8000

The Farm Credit System Insurance 

Corporation’s annual report is available on its website at www.fcsic.

gov. To receive copies of this report, 

contact FCSIC:

Farm Credit System 

Insurance Corporation

1501 Farm Credit Drive

McLean, VA 22102

Telephone: 703-883-4380
Copies Available From:

Office of Congressional and Public Affairs

Farm Credit Administration

1501 Farm Credit Drive

McLean, VA 22102

703-883-4056

www.fca.gov

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