2019 Annual Report of the 

Farm Credit Administration

Regulator of the Farm Credit System
Contents

About this report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

About FCA and the Farm Credit System . . . . . . . . . . . . . . . . . . . . . . . . 3

Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Our authorities and governance . . . . . . . . . . . . . . . . . . . . . . . . . 4

The Farm Credit System Insurance Corporation . . . . . . . . . . . . . 4

Message from the board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Our priorities and progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Current conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Diversity, fairness, and inclusion . . . . . . . . . . . . . . . . . . . . . . . . 10

In conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

FCS banks and associations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

FCS structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Borrowers served . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

System funding for other lenders . . . . . . . . . . . . . . . . . . . . . . . . 15

Farm debt and market shares . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Financial condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Serving young, beginning, and small farmers and ranchers . . . . . . . 29

Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Examining and regulating the banks and associations . . . . . . . . . . . . 35

Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Farmer Mac . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Examining and regulating Farmer Mac . . . . . . . . . . . . . . . . . . . 41

Financial condition of Farmer Mac . . . . . . . . . . . . . . . . . . . . . . 42

FCA’s organization and leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Organization of FCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

FCA’s leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
About this report

This is the Farm Credit Administration’s annual report to Congress. Section 5.17(a)(3) of the Farm Credit Act of 1971, as amended, 

requires this report to include the following:

• An annual report to Congress on the condition of the Farm 

Credit System (FCS or System) and its institutions

• A summary and analysis of the annual reports submitted to 

us by the FCS banks regarding programs for serving young, 

beginning, and small farmers and ranchers

The report also includes information about our agency and the 

work we do to ensure that the System continues to meet its mission 

and to operate safely and soundly. 

This report is available on the FCA website at www.fca.gov.

If you have any questions about it, please contact the Office of 

Congressional and Public Affairs at info-line@fca.gov or 703-883-

4056. Also, please contact the office if you have accessibility issues 

with any of the charts in the report.

For more financial information about the Farm Credit System, 

go to the website for the Federal Farm Credit Banks Funding 

Corporation at www.farmcreditfunding.com. For information about 

the Farm Credit System Insurance Corporation, go to www.fcsic.gov.
FCA’s mission 

is to ensure that 

System institutions 

and Farmer Mac 

are safe, sound, 

and dependable 

sources of credit and 

related services for 

all creditworthy and 

eligible persons in 

agriculture and 

rural America.
2019 FCA Annual Report | 3

About FCA and the Farm Credit System

1 Although Farmer Mac is an FCS institution under the Farm Credit Act, we discuss Farmer Mac separately from the 

other institutions 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 

page 41.

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).1

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.

Farmer Mac is a federally chartered corporation that provides a secondary market 

for agricultural real estate loans, government-guaranteed portions of certain 

loans, rural housing mortgage loans, and 

eligible rural utility cooperative loans.

FCA’s mission is to ensure that System 

institutions and Farmer Mac are safe, 

sound, and dependable sources of credit 

and related services for all creditworthy 

and eligible persons in agriculture and 

rural America. We have two primary functions: examination and regulation. 

Examination 

We conduct onsite examinations at every 

System institution on a regular basis to 

• evaluate its financial condition; 

• evaluate its compliance with laws and 

regulations; 

• identify any risks that may affect the 

institution or the System as a whole; 

and 

• ensure it is fulfilling its public mission to serve the credit and related 

needs of farmers and ranchers, including those who are young, beginning, or small. 

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. 

Regulation 

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. 
4 | Farm Credit Administration

We also approve corporate charter changes, System debt issuances, and other financial and operational matters. 

Our authorities and governance 

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 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. 

FCA’s access to the revolving fund, however, is regulated through congressional 

appropriations legislation.

FCA is governed 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 term. The chairman 

also serves as our chief executive officer. 

For information about our current board, 

see page 47. 

The Farm Credit System Insurance 

Corporation 

FCA board members also serve as the 

board of directors for the Farm Credit System Insurance Corporation (FCSIC), which 

was established by the Agricultural Credit 

Act of 1987 in the wake of the agricultural 

credit crisis of the 1980s. The purpose of 

FCSIC is to protect investors in Systemwide 

debt securities by insuring the timely payment of principal and interest on obligations issued by FCS banks. 

It fulfills this purpose by maintaining 

the Farm Credit Insurance Fund, a reserve 

that represents the equity of FCSIC. The 

balance in the Insurance Fund at June 

30, 2020, reflects the secure base amount. 

For more information about FCSIC, go to 

www.fcsic.gov. Also see FCSIC’s 2019 annual report.

6 | Farm Credit Administration arm Credit Administration

Message from the board

On behalf of the board, it is our pleasure to present the 2019 annual 

report of the Farm Credit Administration. In this message from the board, we describe three important priorities and the progress we’ve made toward achieving 

our goals. We also describe current conditions (as of fall 2020) in the Farm Credit 

System, Farmer Mac, and in the general and farm economies. We conclude by 

renewing our commitment to fostering diversity and fairness at FCA and across 

the System. The balance of this report focuses on results from 2019.

FCA Board Chairman and CEO Glen Smith (left) and FCA Board Member Jeff Hall.
2019 FCA Annual Report | 7

Our priorities and progress

We have focused on three main priorities 

this past year: monitoring credit risk; improving service to young, beginning, and 

small (YBS) farmers and ranchers; and 

improving the timeliness and efficiency of 

our regulatory activities. These continue 

to be our priorities as we enter the fall of 

2020. 

Monitoring credit risk

Although the Farm Credit System and 

Farmer Mac remain strong and financially 

sound, monitoring credit risk must always 

be the agency’s highest priority. Under 

normal circumstances, this involves sending our examiners out to banks and associations to perform onsite examinations. But 

of course, there was nothing normal about 

the circumstances we’ve encountered in 

2020. 

To keep our staff safe, as well as the 

staff at System institutions, we shifted to 

conducting most of our examination activities remotely. Thanks to the expertise 

and commitment of our examiners and 

our information technology team, we had 

the knowledge, skills, and technology 

needed to successfully monitor the safety 

and soundness of System institutions remotely. We did not allow the challenges 

of COVID-19 to materially interrupt our 

examination activities and our monitoring 

of risk.

Without a doubt, COVID-19 is not the 

only challenge facing the farm economy 

and farm lenders. Even as this report goes 

to print, wildfires in the western United 

States are threatening both lives and livelihoods, and recent storms have struck 

regions across the country. Low prices for 

several agricultural products are also adding to the financial stress many borrowers 

are experiencing.

We will continue to closely monitor the 

effects that these and other challenges are 

having on credit quality. Our goal must 

always be the safety and soundness of the 

System so that it can continue to provide 

credit to future generations of farmers and 

ranchers—which leads us to our second 

priority.

Improving service to YBS producers

In 1980, Congress established a mandate 

for the institutions of the Farm Credit 

System to develop and maintain programs 

to provide credit and related services to 

young, beginning, and small farmers and 

ranchers. Congress recognized that, for 

the U.S. economy to remain strong, the 

country needs new entrants to agriculture. 

And because of the high capital demands 

of agriculture, these new entrants will 

require affordable, dependable credit. 

For this reason, improving service to YBS 

producers is one of our highest priorities, 

and we have identified three key steps for 

meeting this goal:

1. Improve data accuracy and reporting.

2. Identify and share best practices.

3. Evaluate growth and performance.

For the past year, we have made significant strides in improving the collection 

of YBS data. We have worked with System 

institutions to both improve the quality 

of current reporting and to enhance 

reporting on YBS lending for the future. 

We are working to make the collection of 

YBS data more automated and consistent. 

This enhances our ability to analyze the 

data while reducing the regulatory burden 

for System institutions. We have also improved the tracking of nonlending activities that support YBS producers. The past 

year’s progress in improving data quality 

will support our other two YBS goals—to 

share best practices across the System and 
8 | Farm Credit Administration arm Credit Administration

to evaluate the growth and performance 

of YBS programs over the long term. In 

addition, we recently began working 

with USDA’s Farm Service Agency to find 

specific ways for agricultural lenders to 

better leverage USDA resources for YBS 

producers.

Improving the timeliness and efficiency of 

regulatory activities

Another important priority for our board 

has been to improve the timeliness and efficiency of our regulatory activities. We’re 

pleased to report significant progress on 

this front in recent months despite the regulatory pause we took earlier in the year to 

allow the System and the agency to focus 

on COVID-19 concerns. 

So far in 2020, we have issued four final 

rules (on swap margins, amortization, 

investment eligibility, and financial reporting) and a proposed rule on the capital 

framework. We also acted decisively and 

quickly to provide extensive guidance to 

the System regarding the Paycheck Protection Program. We wanted to ensure 

that the institutions understood how the 

program worked so they could participate 

in it and get relief to qualified borrowers 

as quickly as possible.

To help the System manage the challenges associated with COVID-19, we 

issued an informational memorandum 

in April, followed by half a dozen supplements. For example, one supplement 

addressed how to handle troubled debt 

restructurings; another provided guidance 

on conducting annual meetings and board 

elections during the pandemic. 

FCA has also been a leader among 

federal financial regulators in providing 

guidance to lenders on financing hemp 

production. In February 2020, we issued 

an informational memorandum that 

outlined a number of factors institutions 

should consider when extending loans to 

hemp producers and processors.

Current conditions 

Following is a brief update about conditions in the Farm Credit System and 

Farmer Mac, as well as conditions in the 

general and farm economies.

The Farm Credit System 

So far in 2020, credit risk continues to remain manageable in the Farm Credit System. Nonperforming assets (nonaccrual 

loans, restructured loans, loans that are 90 

days or more past due, and other property 

owned) increased by $140 million during 

the first six months of 2020 to just under 

$2.5 billion. Most of the increase was in 

accruing loans 90 days or more past due, 

which are considered well secured and 

in the process of collection. Despite this 

increase, nonperforming assets still represented less than 1% (0.84%) of the System’s 

$297 billion loan portfolio plus other property owned at June 30, 2020. Loan losses 

remain very low, with net charge-offs 

representing only 2 basis points of volume 

in calendar year 2019. Loans classified as 

less than acceptable amounted to 6.8% of 

volume at June 30, 2020, down from 7.1% 

of volume at Dec. 31, 2019, and 7.2% a year 

earlier. 

Agricultural producers in certain key 

crop and livestock sectors have endured 

several years of low prices and decreasing 

cash flows. The emergence of COVID-19 

this year has increased the uncertainty 

and risk in the general economy and the 

farm economy. The impact of the current 

health crisis on the farm economy, System 

institutions, and rural communities won’t 

be known for some time, but much depends on its duration and severity.

For several years now, FCA has stressed 

the importance of capital in its oversight 
2019 FCA Annual Report | 9

and guidance of System institutions. 

Strong earnings have supported continued 

capital growth and liquidity, providing 

System institutions the risk-bearing capacity to support U.S. farmers and ranchers 

during adverse economic cycles. The System’s strong capital position makes System 

debt attractive to investors. The board is 

keenly aware of the importance of maintaining the excellent reputation of System 

financial instruments in order to offer the 

best possible interest rates to American 

agriculture. In this year of unprecedented 

challenges, this focus on capital has paid 

off.

Although the System remains safe and 

financially sound, these are difficult times. 

Agriculture and rural communities are 

being challenged by considerable uncertainty, rapidly changing market conditions, and significant business disruptions. 

During times like these, the System’s mission to provide reliable credit and related 

services in support of agriculture and 

rural America becomes more important 

than ever. System institutions are well-positioned to work with borrowers to develop 

appropriate action plans to meet funding 

and liquidity needs. This may include loan 

modifications for borrowers impacted by 

COVID-19.

Farmer Mac

Farmer Mac also remains safe and sound. 

For the 12-month period that ended June 

30, 2020, its portfolio grew $1.3 billion, or 

6.2%, to $22.0 billion. The Farm & Ranch 

and Rural Utilities business lines were the 

primary contributors to this growth, with 

Farm & Ranch increasing by $727 million 

(10%) and Rural Utilities increasing by 

$530 million (25%) over the 12-month 

period. USDA Guarantees grew 6.2% or 

$157 million while Institutional Credit declined 1.4% or $123 million. Farmer Mac’s 

core capital was $915.6 million, up 16.4% 

for the 12-month period; its core capital 

was $247.9 million above the minimum 

requirement.

Farmer Mac’s credit quality remained 

manageable, but the trend warrants a 

watchful eye. Loans classified as 90 days 

past due increased from 0.38% to 0.86% of 

loans outstanding. As a percentage of total 

outstanding loan volume, special-mention 

and substandard volume increased from 

7.6% to 9.4%. 

The general economy

The onset of the COVID-19 pandemic 

earlier this year had an immediate and 

unprecedented impact on communities, 

businesses, and markets around the world. 

U.S. economic activity plunged, resulting 

in skyrocketing unemployment claims. 

Efforts to slow the spread of the disease 

and the response of consumers have contributed to the depth and severity of the 

pullback in 2020. 

To temper the evolving economic crisis, 

the federal government responded with 

massive monetary and fiscal stimulus. 

After a steep and rapid contraction, the 

U.S. economy is now improving, and local 

economies are reopening. Unemployment 

rates are also improving, and this is a good 

sign for farm household income because 

off-farm employment contributes significantly to loan repayment in rural America. 

The farm economy

The first half of 2020 saw many setbacks 

for agricultural producers, with the pandemic causing major disruptions to our 

food supply and delivery system. Many of 

these challenges persist—such as wildfires in the West and regionalized adverse 

weather events around the country.

Fortunately, going into the fall, we are 

starting to see marked improvement in 

many ag commodity prices, precipitated 

To help the 

System manage 

the challenges 

associated 

with COVID-19, 

we issued an 

informational 

memorandum in 

April, followed 

by half a dozen 

supplements.
10 | Farm Credit Administration

primarily by robust ag exports. In addition, crop receipts for many commodities 

will be favorable, with strong production 

numbers coming in for much of the country. As global economies stabilize, the 

demand for our livestock products will 

gain solid footing. Like the Market Facilitation Program (MFP) payments in 2018 

and 2019, the Coronavirus Food Assistance 

Program payments will contribute significantly to a wide diversity of agricultural 

enterprises in 2020. And, of course, the 

Farm Credit System will continue its vital 

role in providing competitive rates of 

financing to the agriculture industry.

Diversity, fairness, and inclusion

Finally, we would like to reaffirm our 

commitment to the principles of diversity, 

fairness, and inclusion. We are committed 

to these principles both in our own workplace and in the System. Ever since the 

2012 final rule took effect requiring institutions to promote diversity and inclusion in 

their human capital and marketing plans, 

our examiners have evaluated institutions’ 

efforts to promote diversity and inclusion 

in their workplace and their customer 

base. And we’re pleased to report that 

FCA has been recognized for our efforts. 

In 2019, we were named the second-best 

place to work among small agencies in the 

federal government by the Partnership 

for Public Service, and we were ranked 

first in the subcategory for diversity and 

inclusion. 

In conclusion

The COVID-19 pandemic has affected all 

of us both professionally and personally. 

The board is proud of the way FCA staff 

has adapted to meet the challenges created 

by this historic global event. FCA has a talented and hard-working staff, and we look 

forward to working with both them and 

the System in the coming year. As always, 

our goal is to ensure that the Farm Credit 

System can continue to provide dependable, affordable credit to agriculture and 

rural America in good times and bad, for 

generations to come. 

Glen R. Smith

FCA Board Chairman and CEO 

Jeffery S. Hall

FCA Board Member

In 2019, we 

were named 

the second-best 

place to work 

in the federal 

government by 

the Partnership 

for Public Service, 

and we were 

ranked first in 

the subcategory 

for diversity and 

inclusion. 

The System obtains the money 

it lends by selling securities in 

national and international money 

markets through the Federal Farm 

Credit Banks Funding Corporation. 
2019 FCA Annual Report | 13

FCS banks and associations

The banks and associations of 

the Farm Credit System form 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.

As federally chartered cooperatives, 

the banks and associations of the Farm 

Credit System are limited-purpose lenders. 

Congress created them to “improve the income and well-being of American farmers 

and ranchers” by providing credit and related services for them, their cooperatives, 

and “selected farm-related businesses 

necessary for efficient farm operations.” 

Congress also gave the Farm Credit System 

the authority to support rural economic 

development by financing rural residences 

and rural utilities.

Congress formed the FCS as a system of 

farmer-owned cooperatives to ensure that 

farmer- and rancher-borrowers 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 broad public 

needs by providing 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.

The System obtains the money it lends 

by selling securities in national and 

international money markets through 

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 FCS banks to raise loan funds. The 

System’s debt issuances are subject to FCA 

approval. The U.S. government does not 

guarantee the securities that the System 

issues.

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 non-defaulting banks to satisfy the liability.

FCS structure

The System is composed of the following 

four banks:

• CoBank, ACB

• AgriBank, FCB

• AgFirst Farm Credit Bank

• Farm Credit Bank of Texas

These banks provide loans to 68 associations, which in turn make loans to farmers, ranchers, and other eligible borrowers. (See figure 1.) All but one of these 

associations are structured as agricultural 

credit associations (ACAs) with two subsidiaries—a production credit association 

(PCA) and a federal land credit association 
14 | Farm Credit Administration

(FLCA). The PCA primarily makes agricultural production and intermediate-term 

loans, and the FLCA primarily makes real 

estate loans. The other remaining association is a stand-alone FLCA.

The ACA’s parent-subsidiary structure 

offers several benefits. It allows the association to preserve the tax-exempt status 

of the FLCA and to build and use capital 

more efficiently. It also 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 

them to deliver credit and related services 

to borrowers more efficiently.

Each 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 regulatory 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.

CoBank, one of the four FCS banks, is 

an agricultural credit bank (ACB). It 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, CoBank provides loan funds 

to 21 ACAs.

Figure 1

Chartered territories of FCS banks

As of July 1, 2020
2019 FCA Annual Report | 15

Borrowers served

Under the Farm Credit Act of 1971, as 

amended, the System has the authority, 

subject to certain conditions, to make the 

following types of loans:

• Agricultural real estate loans

• Agricultural production and intermediate-term loans (e.g., for farm 

equipment)

• 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 mortgages

• Loans that finance agricultural exports and imports

• Loans to rural utilities

• Loans to farmers and ranchers for 

other credit needs

Also, under its similar-entity authority, 

the System may participate with other 

lenders to make loans to those who are 

not eligible to borrow directly from the 

System but whose activities are functionally like those of eligible borrowers. 

Through these participations, the System 

diversifies its portfolio, reducing the 

risks associated with serving a single 

industry.

As required by law, borrowers own 

stock or participation certificates in 

System institutions. The FCS had nearly 

1.2 million loans and leases and over 

574,000 stockholders in 2019. Approximately 87% of the stockholders were 

farmers or cooperatives with voting 

stock. The remaining percent were 

nonvoting stockholders, including rural 

homeowners and other financing institutions that borrow from the System.

Nationwide, the System had $287 billion in gross loans outstanding as of Dec. 

31, 2019. Loans for agricultural production and agricultural real estate purposes 

represented by far the largest type of 

lending, with $188 billion, or 66%, of the 

total dollar amount of loans outstanding.

See figure 2.

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 

Figure 2

Farm Credit System lending by type

As of Dec. 31, 2019

Long-term real estate – 46.2%

Production and

intermediate-term – 19.5%

Processing and marketing – 9.8%

Loans to cooperatives – 6.2%

Agricultural export finance – 2.3%

Farm-related business – 1.4%

Lease receivables – 1.4%

Other financing institutions – 0.3%

Rural power – 6.8%

Rural homes – 2.6%

Rural communications – 2.7%

Rural water/wastewater – 0.8%

Source: 2019 Federal Farm Credit Banks Funding Corporation Annual Information Statement.
16 | Farm Credit Administration

institutions” (OFIs). These 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 Dec. 31, 2019, the System served 19 

OFIs, down from 20 in 2018. Outstanding 

loan volume to OFIs stood at $845 million 

at year-end. OFI loan volume continues to 

be less than half of 1% of the System’s loan 

portfolio. About 70% 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 

FCS 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 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. Syndications and participations allow the System 

to more fully meet its mission by serving 

agricultural and rural borrowers who 

might not otherwise receive funding.

The System’s gross loan syndication volume grew by more than $2.7 billion over 

the past year to $20.6 billion at year-end 

2019. This figure includes volume from 

syndications that System institutions have 

with other System institutions, as well as 

with non-FCS institutions.

At year-end 2019, the System had $5.7 

billion in net eligible-borrower loan participations with non-System lenders. Net 

eligible-borrower loan participations have 

increased from their 2012 value of $3.7 

billion, when sales of these participations 
2019 FCA Annual Report | 17

were at a low point. The volume of eligible-borrower loan participations purchased from non-System lenders grew 

from $7.5 billion at Dec. 31, 2015, to $10.0 

billion at year-end 2019, and the volume of 

eligible-borrower loan participations sold 

to non-System lenders was $4.3 billion at 

year-end 2019, up over $1 billion from the 

prior year.

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-entity borrower is not 

eligible to borrow directly from an FCS 

institution, but because the borrower’s 

operation is functionally similar 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%). Similar-entity 

loans contain other limitations as specified in sections 3.1(11)(B) and 4.18A of the 

Farm Credit Act.

The System had $14.6 billion in acquired 

similar-entity loan participations as of 

Dec. 31, 2019, up from $13.5 billion the 

prior year. As figure 3 indicates, the volume of similar-entity participations that 

System institutions sell to non-System institutions is relatively small, amounting to 

$500 million over the past several years.

Figure 3

Loan participation transactions with non-System lenders, 2015 – 2019

As of Dec. 31

Dollars in billions

2015 2016 2017 2018 2019

$16

$14

$12

$10

$8

$6

$4

$2

$0

Similar-entity loan

 participations

 acquired

Net similar-entity 

loan participations

Participations 

purchased involving 

eligible borrowers

Net loan participations 

involving eligible 

borrowers

Participations sold 

involving eligible 

borrowers

Similar-entity loan 

participations sold

Source: Farm Credit System Call Reports.
18 | Farm Credit Administration

Farm debt and market shares 

The U.S. Department of Agriculture’s estimate of total farm business debt for the 

year ended Dec. 31, 2019, was $419 billion, 

up 4.1% from its $402 billion estimate for 

year-end 2018. The System’s market share 

of total farm business debt rose from 

41.4% at the end of 2018 to 42.6% at the 

end of 2019. (See figure 4.)

Except for brief periods, the FCS has 

typically had the largest market share of 

farm business debt secured by real estate. 

At year-end 2019, the System held 47% of 

this $267 billion of debt; by comparison, 

commercial banks held 36.7%. Commercial banks have historically dominated 

non-real estate farm lending. At year-end 

2019, commercial banks held 46.3% of this 

$152 billion of debt, and the System held 

34.9%. 

Financial condition

The System reported strong financial results in 2019, including record earnings, 

increased capital levels, and acceptable 

portfolio credit quality. FCS banks had 

reliable access to debt capital markets and 

maintained liquidity levels well above the 

90-day regulatory minimum. Tables 1 and 

2 provide a summary of the System’s major 

financial indicators. For more information 

on the condition and performance of the 

System, see the 2019 Annual Information 

Statement of the Farm Credit System on 

the website of the Federal Farm Credit 

Banks Funding Corporation.

While the System is financially sound, 

a small number of individual FCS institutions displayed some weaknesses in 2019. 

As the System’s regulator, we addressed 

these weaknesses by increasing our oversight and supervision of these institutions. 

For more information on our supervisory 

and enforcement approach, see page 35 to 

37. 

2019 was a difficult year for many U.S. 

farmers and ranchers. Trade uncertainties, weather extremes, and low farm 

prices presented significant economic 

challenges for agricultural producers. This 

follows several years of declining producer 

cash flows, which have depleted working 

capital and increased borrowing needs. 

Crop insurance, farm programs, and Market Facilitation Program payments provided important financial support to the farm 

economy, although the level of support 

varied by region and commodity.

Partly because of large commodity 

supplies, producers in several key crop 

and livestock sectors saw a continuation of 

price volatility, low margins, and tight cash 

flows in 2019. High-cost producers and 

those with significant leverage likely faced 

significant stress.

Weather-related crop losses, particularly in parts of the Midwest, added to the 

Figure 4

Estimated market shares of U.S. farm business debt

As of Dec. 31, 2019

Commercial banks – 40.2%

Farm Credit System – 42.6%

Life insurance companies – 4.0%

Individuals and others – 8.4%

Farmer Mac – 1.8%

Farm Service Agency – 3.0%

Source: FCA’s Office of Data Analytics and Economics, based on Sept. 2, 2020, data from USDA’s 

Economic Research Service.
2019 FCA Annual Report | 19

financial stress on some crop producers. 

Market conditions were generally favorable for livestock sectors, but trade disruptions hurt producer profitability for the 

export-dependent pork and dairy sectors.

Farmland values were relatively stable 

in 2019, with some regional weaknesses 

and strengths. Farmer interest and financial capacity to buy land lessened, but the 

limited amount of land for sale, the solid 

demand from nonfarmers, and low interest rates contributed to stability in land 

markets.

Table 1

Farm Credit System major financial indicators, by annual comparison

Dec. 31, 2019

Dollars in millions

Item 31-Dec-19 31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15

Total assets $365,359 $348,992 $329,518 $319,915 $303,503

Gross loan volume $286,964 $273,378 $259,888 $249,791 $236,750

Bonds and notes $295,499 $283,276 $267,119 $260,213 $246,214

Nonperforming assets1 $2,347 $2,282 $2,022 $2,037 $1,725

Net income, full year $5,446 $5,332 $5,189 $4,848 $4,688

Nonperforming assets/Gross loans and other 

property owned

0.82% 0.83% 0.78% 0.82% 0.73%

Capital & insurance/Assets2 16.90% 16.75% 16.81% 16.35% 16.09%

Retained earnings/Assets 13.41% 13.31% 13.24% 13.50% 13.33%

Return on average assets 1.54% 1.59% 1.62% 1.56% 1.64%

Return on average capital 8.91% 9.29% 9.49% 9.44% 9.87%

Net interest margin3 2.42% 2.46% 2.48% 2.49% 2.55%

Efficiency ratio4 36.2% 35.2% 35.1% 34.6% 35.0%

Operating expenses/Average loans5 1.18% 1.17% 1.17% 1.16% 1.21%

Sources: FCA’s Consolidated Reporting System as of Dec. 31, 2019, and the Farm Credit System Quarterly Information Statement provided by the Federal Farm 

Credit Banks Funding Corporation.

1 Nonperforming assets are defined as nonaccrual loans, accruing restructured loans, accrual loans 90 or more days past due, and other property owned.

2 Capital excludes mandatorily redeemable preferred stock and protected borrower capital. Insurance refers to the funds in the Farm Credit Insurance Fund 

administered by the Farm Credit System Insurance Corporation.

3 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.

4 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.

5 Operating expenses divided by average gross loans, annualized.
20 | Farm Credit Administration

Earnings

The System reported strong earnings in 

2019. For the year, System net income 

equaled $5.4 billion, up $114 million or 

2.1% from 2018 (See figure 5). Year over 

year, net interest income was up $290 million, loan loss provisions decreased $25 

million, noninterest income was down $44 

million, noninterest expenses increased 

$180 million, and income tax provisions 

declined $23 million.

The increase in net interest income 

was primarily due to an increase in average earning assets, partially offset by 

a decline in net interest spread. Driven 

largely by growth in loan volume, average 

earning assets increased $16.5 billion, or 

5.1%, to $341.3 billion. Net interest spread 

decreased 8 basis points to 2.04% as the 

rising cost of System debt continued to 

outpace the increase in the rate on earning 

assets. Net interest margin decreased 4 

basis points to 2.42%. A 4-basis-point increase in income earned on earning assets 

Table 2

Farm Credit System major financial indicators, by district

Dec. 31, 2019

Dollars in millions

Institution 

Name

Total 

Assets

Gross 

Loan 

Volume

Nonaccrual 

Loans

Allowance 

for Loan 

Losses

Cash and 

Marketable 

Investments

Capital 

Stock1

Total 

Capital

Net 

Income

FCS banks

AgFirst $34,505 $25,112 $23 ($18) $9,027 $325 $2,331 $272

AgriBank $115,232 $98,298 $58 ($32) $16,094 $2,872 $6,182 $628

CoBank $145,004 $108,854 $241 ($655) $35,185 $3,622 $10,567 $1,091

Texas $25,664 $19,498 $17 ($11) $5,717 $388 $1,844 $203

Total $320,405 $251,762 $339 ($716) $66,023 $7,207 $20,924 $2,194 

FCS associations

AgFirst $23,372 $2,482 $240 ($193) $87 $177 $4,873 $541 

AgriBank $112,894 $106,015 $800 ($488) $1,755 $269 $21,803 $2,160 

CoBank $64,074 $60,503 $422 ($331) $288 $72 $12,676 $1,285 

Texas $20,559 $19,775 $111 ($78) $102 $66 $3,326 $394 

Total $220,899 $208,775 $1,573 ($1,090) $2,232 $584 $42,678 $4,380 

Total FCS2 $365,359 $286,964 $1,910 ($1,806) $68,266 $2,009 $61,730 $5,446 

Sources: FCA’s Consolidated Reporting System as of Dec. 31, 2019, and the Farm Credit System Quarterly Information Statement provided by the Federal Farm 

Credit Banks Funding Corporation.

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

2 Cannot be derived by adding the categories above because of intradistrict and intra-System eliminations used in Reports to Investors. Also, the total FCS numbers 

exclude mandatorily redeemable preferred stock and protected borrower capital but include restricted capital from the Farm Credit Insurance Fund.
2019 FCA Annual Report | 21

Figure 5

FCS net income, 2011 – 2019

As of Dec. 31, Dollars in billions

$3.94 $4.12

$4.64 $4.72 $4.69 $4.85 $5.19 $5.33

1.71%

1.54%

1.86%

8.91%

11.21% 11.43%

2011 2012 2013 2014 2015 2016 2017 2018 2019 

0%

2%

4%

6%

8%

10%

12%

14%

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

Net income (loss) Return on 

average assets

As of Dec. 31, Dollars in billions

Return on 

average capital

Rate of return

$5.45

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

funded by noninterest-bearing sources 

(principally capital) helped offset the decline in net interest spread. The return on 

average assets decreased to 1.54% in 2019 

from 1.59% in 2018. The return on average 

capital dropped to 8.91% from 9.29%.

As cooperative institutions, FCS banks 

and associations typically pass on a 

portion of their earnings as patronage 

distributions to their borrower-owners. 

For 2019, System institutions declared a 

total of $2.4 billion in patronage distributions—$2.2 billion in cash and $228 

million in allocated retained earnings. 

This represents 45.6% of the System’s net 

income for 2019 as compared with 42.6% 

in 2018. The System also distributed $187 

million in cash from allocated retained 

earnings related to patronage distributions 

from previous years.

System growth

The System grew at a moderate pace in 

2019. Total assets increased to $365.4 billion, up $16.4 billion or 4.7% from 2018. 

Gross loan balances were $287.0 billion at 

year-end, up $13.6 billion or 5.0% in 2019, 

compared with 5.2% in 2018. (See table 3

and figure 6.)

Most of the System’s loan growth in 2019 

related to real estate mortgages, production and intermediate-term lending, and 

processing and marketing lending. Real 

estate mortgages, the largest segment of 

the loan portfolio at 46.1%, grew by $5.9 

billion, or 4.7% for the year. Production 

and intermediate-term loans, the second 

largest loan category at almost 20%, increased $2.6 billion, or 5.0%. Processing 

and marketing loans, accounting for 9.8% 

of the loan portfolio, were up $3.4 billion, 

or 13.6% in 2019.

Loan volume increased for most major 

commodity categories in 2019. The cash 

grains and cattle sectors were the System’s 

two largest commodity categories, 

Figure 6

Annual growth rate of FCS loans outstanding, 2008 – 2019

5.0% 

13.0% 

2.1% 

6.4% 

-0.4% 

9.9% 

4.8% 

8.0% 

9.1% 

5.5% 

4.0% 

5.2% 

0%

2%

-2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 

Source: Annual Information Statements of the Federal Farm Credit Banks Funding Corporation.
22 | Farm Credit Administration arm Credit Administration

Table 3

FCS gross loans outstanding, 2015 – 2019

As of Dec. 31

Dollars in millions

Loan Type 2019 2018 2017 2016 2015

Percent 

Change 

from 2015

Percent 

Change 

from 2018

Agricultural real estate 

mortgage loans $132,215 $126,310 $120,561 $115,469 $108,673 21.7% 4.7%

Agricultural production and 

intermediate-term loans 56,095 53,447 51,724 50,282 49,204 14.0% 5.0%

Agribusiness loans to the following:

Processing and marketing 

operations 28,205 24,832 21,582 21,166 19,949 41.4% 13.6%

Cooperatives 17,776 17,589 17,335 15,300 13,113 35.6% 1.1%

Farm-related businesses 4,068 3,692 3,293 3,162 3,533 15.1% 10.2%

Rural utility loans by type of utility:

Energy 19,432 20,100 19,689 19,577 17,925 8.4% -3.3%

Communication 7,847 6,755 6,311 6,023 6,196 26.6% 16.2%

Water/wastewater 2,390 2,305 1,965 1,840 1,677 42.5% 3.7%

Rural home loans 7,405 7,308 7,261 7,148 7,117 4.0% 1.3%

Agricultural export finance 6,712 6,581 5,645 5,531 5,075 32.3% 2.0%

Lease receivables 3,902 3,630 3,665 3,480 3,373 15.7% 7.5%

Loans to other financing 

institutions 917 829 857 813 915 0.2% 10.6%

Total $286,964 $273,378 $259,888 $249,791 $236,750 21.2% 5.0%

Sources: Federal Farm Credit Banks Funding Corporation Annual Information Statements.
2019 FCA Annual Report | 23

equaling almost 25% of the total loan portfolio. Lending to the cash grains sector 

was up 3.7% in 2019, and loan volume to 

the cattle sector increased 4.4%.

Asset quality

Despite the challenges facing agriculture, 

portfolio loan quality was favorable in 

2019, although credit risk remained elevated in certain key agricultural sectors. 

Trade uncertainties, large commodity 

supplies, and weather extremes hurt farm 

prices and producer returns. While credit 

stress is likely to increase in 2020, the System’s risk-bearing capacity is strong.

As of Dec. 31, 2019, nonperforming 

loans totaled $2.3 billion, or 0.79% of gross 

loans outstanding. This is up from 

$2.2 billion, or 0.80%, at year-end 2018 

(See figure 7.) Loan delinquencies (accruing loans that are 30 days or more past 

due) decreased slightly to 0.32% of total 

accruing loans from 0.33% at year-end 

2018. In total, 92.9% of System loans were 

classified as acceptable, down from 93.4% 

at year-end 2018.

The allowance for loan losses was $1.81 

billion, or 0.63% of loans outstanding, 

at year-end 2019. This compares with an 

allowance for loan losses of $1.71 billion, 

or 0.63% of loans outstanding, at year-end 

2018. The System recognized provisions for 

loan losses of $169 million in 2019 as compared with $194 million in 2018. Net loan 

charge-offs remained low at $59 million in 

2019 as compared with $89 million in 2018.

Capital

Strong earnings continued to support 

System capital growth in 2019. Total capital equaled $61.7 billion at Dec. 31, 2019, 

compared with $58.4 billion at year-end 

2018. (Please note that these numbers 

include restricted capital, which is the 

amount held in the Farm Credit Insurance 

Fund.) At year-end 2019, the System’s capital-to-assets ratio was 16.9%, compared 

with 16.7% in 2018.

As illustrated in figure 8, retained earnings is the most significant component of 

System capital at 79.4%. FCA regulations 

establish minimum capital levels that each 

System bank and association must achieve 

and maintain. As of Dec. 31, 2019, capital 

levels at all System banks and associations 

were above the regulatory minimum capital requirements.

Funding and liquidity

During 2019, the System maintained reliable access to the debt capital markets. Investors were attracted by the System’s status as a government-sponsored enterprise 

(GSE), as well as its financial performance 

and strength.

Figure 7

FCS nonperforming loans, 2014 – 2019

As of Dec. 31

0.0%

0.5%

1.0%

1.5%

2.0%

0.79%

2019

0.80%

2014

0.69%

2015

0.79%

2016

0.76%

2017

0.80%

2018

Percentage of gross loans

Nonaccrual loans Restructured loans Past-due loans 

Source: Annual Information Statements of the Federal Farm Credit Banks Funding Corporation.
24 | Farm Credit Administration

Risk spreads and pricing on System debt 

securities during 2019 remained favorable. 

Since regulatory requirements promote 

the use of GSE debt, the System benefits 

from its GSE status. The System 

also benefits from its persistently strong 

financial performance and the continuing 

decline in debt issuances by the two housing-related GSEs, which are in conservatorship and are congressionally mandated 

to reduce their debt outstanding. As a result of the strong demand for System debt, 

the System was able to continue to issue 

debt on a wide maturity spectrum at highly 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 System banks, sells debt securities, 

such as discount notes, bonds, designated 

bonds, and retail bonds, on behalf of the 

System. This process allows funds to flow 

efficiently from worldwide capital-market 

investors to agriculture and rural America, 

thereby providing rural communities with 

ready access to global credit resources. At 

year-end 2019, Systemwide debt outstanding was $293.6 billion, representing a 4.3% 

increase from the preceding year-end.

Several factors contributed to the $12.1 

billion increase in Systemwide debt outstanding. Gross loans increased $13.6 

billion in 2019, while the System’s combined investments, federal funds, and cash 

balances increased by $1.8 billion during 

the year.

The System had $2.62 billion in outstanding perpetual preferred stock at the 

end of 2019, unchanged from the previous 

year-end. It has had no outstanding subordinated debt since June of 2016.

The amount of debt issued by the System increased in 2019. For the 12 months 

ended Dec. 31, 2019, the System issued 

$364 billion in debt securities, compared 

Figure 8

FCS capital, 2012 – 2019

As of Dec. 31

$61.7

$38.6 $42.6 $45.7 $48.8

$55.4 $58.4

16.9%

15.7%

12%

14%

16%

18%

20%

22%

$0

$20

$40

$60

$80

2012 2013 2014 2015 2016 2017 2018 2019

Capital as a percentage of assets

Dollars in billions

Retained earnings 

and other*

Restricted 

capital

Common 

stock

Preferred 

stock

Capital / Assets

$52.3

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

Note: Other includes additional paid-in capital and accumulated other comprehensive income or loss.
2019 FCA Annual Report | 25

with $309 billion in 2018. The System issued more debt in 2019 for three primary 

reasons: the increased opportunity to 

exercise call options, the growth in the domestic economy, and the increased credit 

needs of System borrowers.

The amount of outstanding debt on 

which the System exercised its call options increased significantly because of 

the substantial decline in yields during 

the second half of 2019 when the Federal 

Reserve decreased the target federal funds 

range by 0.75%. The System exercised calls 

on $54.5 billion of its outstanding debt in 

2019, compared with only $19 million in 

the preceding year.

Favorable investor sentiment and lower 

yields continued to provide the System 

with access to a wide range of debt maturities in 2019. The weighted average of 

remaining maturities decreased slightly 

for 2019 to 2.8 years from 2.9 years. The 

weighted-average interest rates for insured 

debt decreased as well, going from 2.31% 

as of Dec. 31, 2018, to 2.15% as of Dec. 31, 

2019.

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, our regulations require 

each System bank to maintain a tier 1 

leverage ratio (primarily unallocated 

retained earnings and certain common 

cooperative equities divided by total assets) of not less than 4%. In addition, FCA 

regulations provide for a 1% leverage ratio 

buffer. Certain restrictions apply if the 

buffer does not exceed 1%. Throughout 

2019, all System banks maintained their 

tier 1 leverage ratios above the required 

minimum and the accompanying buffer, 

with 5.49% being the lowest for any single 

bank as of Dec. 31, 2019.

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 Dec. 31, 2019, 

were as follows:

• 27 days (15 days regulatory minimum) 

of level 1 assets

• 71 days (30 days regulatory minimum) 

of level 1 and 2 assets

• 135 days (90 days regulatory minimum) of level 1, 2, and 3 assets

• 166 days overall (including the supplemental liquidity buffer)

In addition to the protections provided by 

the joint and several liability provisions, 

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.

• 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 FCS bank’s 

district. For all of 2019, all Farm 

Credit System banks maintained 

scores above the benchmarks in the 

Contractual Interbank Performance 

Agreement.

Favorable 

investor 

sentiment and 

lower yields 

continued to 

provide the 

System with 

access to a wide 

range of debt 

maturities in 

2019. 
26 | Farm Credit Administration

Ratings

FCA uses the Financial Institution Rating 

System (FIRS) to assess the safety and 

soundness of each FCS institution. Similar to the systems used by other federal 

banking regulators, FIRS is a framework of 

component and composite ratings to help 

examiners evaluate significant financial, 

asset quality, and management factors. 

FIRS ratings range from 1 for a sound institution to 5 for an institution that is likely 

to fail.

As figure 9 shows, the financial condition and performance of the FCS remains 

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.

Based on the institutions’ financial 

reporting as of Dec. 31, 2019, 65 FCS institutions were rated 1 or 2 (90%) and 7 

institutions were rated 3 or lower (10%). 

The institutions rated 3 or lower represented less than 2.3% of the System’s total 

assets, which is well within the System’s 

risk-bearing capacity.

Figure 9

Financial Institution Rating System (FIRS) composite ratings 

for the FCS, 2016 – 2020

1 Rated 2 Rated 3 Rated or Worse

0%

20%

40%

60%

80%

100%

30

35

7

01/01/20

46

29

3

01/01/16

44

31

2

01/01/17

39

29

5

01/01/18

34

32

7

01/01/19

Percentage of rated institutions

Source: FCA’s FIRS ratings database.

Note: Figure 9 reflects ratings for only the Farm Credit 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.

Using public comment 

and input, the agency 

is modernizing the 

System’s reporting of 

YBS data for lending and 

nonlending activities.
2019 FCA Annual Report | 29

Serving young, beginning, and small farmers 

and ranchers 

FCA supports the Farm 

Credit System’s mission to serve young, 

beginning, and small (YBS) farmers, 

ranchers, and producers and harvesters of 

aquatic products. We define young farmers 

as those who are 35 years old or younger, 

beginning farmers as those who have been 

farming for 10 years or less, and small 

farmers as those with less than $250,000 in 

annual sales.

The System’s YBS mission is outlined in 

the Farm Credit Act, and we have adopted 

regulations to implement the YBS provisions of the act. The Farm Credit Act and 

FCA regulations stipulate that each FCS 

bank must have written policies that direct 

each association to have the following:

• A program for furnishing sound and 

constructive credit and financially 

related services to YBS farmers

• A mission statement describing the 

program’s objectives and specific 

means to achieve the objectives

• Annual quantitative targets for credit 

to YBS farmers

• Outreach efforts and annual qualitative goals for offering credit and 

related services that meet the needs 

of YBS farmers

An association’s board oversight and 

reporting are key parts of every YBS 

program. Each institution must report 

annually to FCA on the operations and 

achievements of its YBS program. Each 

association also must establish an internal 

controls program to ensure that it provides 

credit in a safe and sound manner.

In addition, FCA regulations require 

association business plans to include a 

marketing plan and strategies with specific 

outreach toward diversity and inclusion 

within each market segment. Operational 

and strategic business plans must include 

the goals and targets for the association’s 

YBS lending. System institutions must also 

coordinate with other government and 

private sources of credit in implementing 

their YBS programs. FCA’s oversight and 

examination activities monitor each institution’s assessment of its performance and 

market penetration in the YBS area.

In early 2019, we engaged the public 

through our advance notice of proposed 

rulemaking. Using public comment and 

input, the agency is modernizing the System’s reporting of YBS data for lending and 

nonlending activities. To accomplish this 

long-term process, we are engaged in a 

collaborative and transparent process with 

System institutions to leverage existing 

data assets and establish data enhancements to reduce regulatory burden, improve efficiency, and promote consistency 

in YBS data reporting. 

Results

The following information summarizes 

the quantitative information that System 

institutions provided for their YBS programs. (See tables 4A and 4B.)

In 2019, a total of 269,939 new loans 

were made by the System, totaling $90.9 
30 | Farm Credit Administration

billion. The total number of outstanding 

loans at year-end 2019 was 914,386, 

amounting to $280.0 billion.

Young: The System reported making 49,104 

new loans to young farmers in 2019, and 

the volume of these loans amounted to 

$10.1 billion. The new loans made to 

young farmers in 2019 represented 18.2% 

of all loans the System made during the 

year and 11.1% of the dollar volume of 

loans made. At the end of 2019, the System 

reported 177,590 loans outstanding to 

young farmers, totaling $31.0 billion.

Beginning: The System reported making 

67,088 new loans to beginning farmers 

in 2019, and the volume of these loans 

amounted to $14.3 billion. The new loans 

made to beginning farmers in 2019 represented 24.9% of all System loans made 

during the year and 15.7% of the dollar 

volume of loans made. At the end of 2019, 

the System reported 272,654 loans outstanding to beginning farmers, totaling 

$48.6 billion.

Small: System institutions reported making 123,494 new loans to small farmers in 

2019, totaling $14.4 billion. The new loans 

made to small farmers in 2019 represented 

45.7% of all System loans made during 

the year and 15.9% of the dollar volume of 

loans made. At the end of 2019, the System 

reported 459,894 loans outstanding to 

small farmers, totaling $51.9 billion.

Please note: 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.

New loans made in 2019 by dollar volume 

and number of loans

From Dec. 31, 2018, to Dec. 31, 2019, the 

System’s total new loan dollar volume 

increased by 5.4%. New loan dollar volume to young farmers increased by 7.3%, 

to beginning farmers by 8.0%, and to small 

farmers by 15.9%. (See table 5A.)

The number of loans made during the 

year increased for both total System lending and for all YBS categories. The number 

of total System loans made during the year 

increased by 4.8%. The number of loans 

to young farmers increased by 5.9%, to 

beginning farmers by 8.1%, and to small 

farmers by 7.8%.

Outstanding loans by dollar volume and 

number of loans

Both the dollar volume of the System’s total 

loans outstanding and the dollar volume of 

YBS loans outstanding increased in 2019. 

Total System loan dollar volume outstanding increased by 6.3%. The loan dollar 

volume outstanding to young farmers increased by 3.3%, to beginning farmers by 

3.9%, and to small farmers by 4.6%. (See 

table 5B.)

The number of total System loans outstanding remained relatively flat in 2019, 

increasing by 0.5%. The number of loans 

outstanding to young farmers increased by 

1.0%, to beginning farmers by 1.8%, and 

to small farmers by 0.6%. 

Ratio of new and outstanding YBS loans to 

total System loans

The ratio of new YBS loans (by number) 

to total new System loans was 18.2% for 

young farmers, 24.9% for beginning farmers, and 45.7% for small farmers. The ratio 

of outstanding YBS loans (by number) to 

total outstanding System loans was 19.4% 

for young farmers, 29.8% for beginning 

farmers, and 50.3% for small farmers. (See 

figures 10A, 10B, and 10C). All the ratios 

either increased slightly from 2018 or remained flat.
2019 FCA Annual Report | 31

Table 4A

YBS loans made during 2019

YBS Category Number of Loans Percentage of 

Total Number of 

System Loans

Dollar Volume of 

Loans in Millions

Percentage 

of Total Volume of 

System Loans

Average Loan Size

Young 49,104 18.2% $10,085 11.1% $205,380

Beginning 67,088 24.9% $14,283 15.7% $212,906

Small 123,494 45.7% $14,421 15.9% $116,772

Table 4B

YBS loans outstanding as of Dec. 31, 2019

YBS Category Number of Loans Percentage of 

Total Number of 

System Loans

Dollar Volume of 

Loans in Millions

Percentage 

of Total Volume of 

System Loans

Average Loan Size

Young 177,590 19.4% $31,043 11.1% $174,802

Beginning 272,654 29.8% $48,645 17.4% $178,414

Small 459,894 50.3% $51,869 18.5% $112,785

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

Note: The YBS totals listed in tables 4A and 4B include loans, advancements, commitments, and participation interests to farmers, ranchers, and aquatic producers, 

and exclude rural home loans made under 613.3030, loans to cooperatives, and activities of the Farm Credit Leasing Services Corporation.

Table 5A

Change in new YBS lending from 2018 to 2019

YBS Category Dollar Volume Loan Numbers

Young 7.3% 5.9%

Beginning 8.0% 8.1%

Small 15.9% 7.8%

Table 5B

Change in outstanding YBS lending from 2018 to 2019

YBS Category Dollar Volume Loan Numbers

Young 3.3% 1.0%

Beginning 3.9% 1.8%

Small 4.6% 0.6%
32 | Farm Credit Administration

Figure 10A

Young farmers and ranchers

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

50

–

100

150

200

250

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Number of loans in thousands

Percentage of total FCS loans made

Figure 10B

Beginning farmers and ranchers

2010 2011 2012 2013 2014 2015 2016 2017 20182019

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

35.0%

30.0%

50

100

150

200

250

300

Number of loans in thousands

Percentage of total FCS loans made

–

Figure 10C

Small farmers and ranchers

0.0%

10.0%

20.0%

30.0%

40.0%

60.0%

50.0%

100

200

300

400

500

600

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Number of loans in thousands

Percentage of total FCS loans made

–

Number of young, beginning, or small 

loans made (left scale)

Number of young, beginning, or small 

loans outstanding (left scale)

Number of young, beginning, or small 

loans made as a percentage of total 

FCS loans made (right scale)

Number of young, beginning, or small 

loans outstanding as a percentage of 

total FCS loans outstanding (right 

scale)

Our examiners determine how 

issues affecting agriculture and 

the economy create risk for 

System institutions.
2019 FCA Annual Report | 35

Examining and regulating the banks and 

associations

Examination

Managing risk is a challenge for all kinds 

of lenders but especially for those lending 

to a single sector of the economy—in 

this case, agriculture. To manage this 

risk, Farm Credit 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. Our 

examiners determine how issues affecting 

agriculture and the economy create risk 

for System institutions.

Our examiners also evaluate whether 

each institution is fulfilling its chartered 

mission to provide credit and financially 

related services to all eligible, creditworthy customers. They do so in a couple 

of ways. They determine whether each institution is complying with mission-related 

laws and regulations. They also evaluate 

System outreach efforts and best practices 

in implementing innovative programs for 

serving the credit needs of eligible agricultural producers and cooperatives, including young, beginning, and small farmers 

and ranchers.

Our examiners review System institutions’ annual reports and business plans 

and encourage institutions to include a 

discussion of how they are meeting their 

mission. Ongoing oversight and examination efforts continue to address diversity 

and inclusion, along with compliance with 

YBS regulations and YBS data integrity.

As required by the Farm Credit Act, 

FCA examines each institution at least 

once every 18 months. In the interim between these statutory examinations, we 

also monitor and examine institutions as 

circumstances warrant. We customize our 

examination activities to each institution’s 

specific risks. To monitor and address 

FCS risk as effectively and efficiently as 

possible, we assign highest priority to 

institutions, or the parts of an institution’s 

operations, that present the greatest risk.

We require institutions to develop and 

maintain programs, policies, procedures, 

and controls to identify and manage risk. 

For example, our regulations require FCS 

institutions to have effective loan underwriting and loan administration processes. 

We also have regulations requiring FCS institutions to maintain strong asset-liability 

management capabilities.

National oversight program 

In addition to monitoring risks that are 

unique to a single institution, we also 

monitor risks that affect the System as a 

whole. Each year we develop a national 

oversight plan that takes certain systemic 

risks into account. In fiscal year 2020, we 

are focusing on three risk areas:

Lending controls. The System and its borrowers have been operating in a turbulent 

economic environment for the past several 

years. Our examination program emphasizes risk identification in stressed industries and institutions’ lending controls. 
36 | Farm Credit Administration

We particularly emphasize collecting and 

analyzing accurate and timely financial information, evaluating carry-over operating 

debt and repayment capacity projections, 

and servicing loans to correct weaknesses 

in borrower credit factors. We also continue to focus on collateral-related controls, 

as well as the effectiveness and reliability 

of automated lending systems used to underwrite loans. 

Internal audit governance. A sound 

internal controls environment is a basic 

requirement for every Farm Credit System 

institution, regardless of size or complexity. This governance process begins with a 

fully engaged board of directors and audit 

committee; sound policies, procedures, 

and internal controls; and an effective 

internal audit and review program. Our 

oversight and examination program 

evaluates the effectiveness of the control 

system, which includes the control environment, risk assessment, control activities, accounting and information systems, 

and the monitoring of the control system. 

Examination activities focus on board governance of internal controls, especially of 

the internal audit program. 

Cybersecurity. The increasing volume and 

sophistication of cybersecurity threats 

require the boards and management of all 

System institutions to identify and manage 

inherent security risks. We evaluate various aspects of the security programs of 

System institutions and provide guidance 

as needed. We focus examination activity in these areas to ensure appropriate 

controls are in place to protect customer 

information and maintain safe operations.

Three tiers of supervision

In examining and overseeing System institutions, we use a three-tiered 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 can 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 a timeframe for correcting 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 several 

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 
2019 FCA Annual Report | 37

document may require the institution to 

take corrective actions, such as reducing 

risk exposures, increasing capital, enhancing earnings, and strengthening risk 

management. Our examiners oversee the 

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

As of Jan. 1, 2020, no FCS institutions 

were under enforcement action.

Borrower rights

We also examine institutions to make sure 

they are complying with the borrower 

rights provisions of the Farm Credit Act. 

These provisions provide certain System 

borrowers and loan applicants with the 

following rights:

• To know the current effective rates 

of interest on their loans by the dates 

the loans close

• To be informed that they are required 

to purchase at-risk stock in their FCS 

institutions

• To receive copies of all the documents 

they have signed by the time their 

loans close

• To be informed promptly as to whether their loan applications have been 

accepted, reduced, or denied

• To be informed of their right to request restructuring for their loans 

if their loans are determined to be 

distressed

• To obtain credit committee reviews of 

denials or reductions of loan requests 

and denials of restructuring requests

• To have first refusal when their FCS 

institutions decide to sell agricultural 

properties their institutions have acquired from them

• To receive cooperation from their FCS 

institutions if they seek mediation

We also receive and review complaints 

from borrowers who believe their rights 

have been denied. If we find violations of 

law or regulations, we have several options 

to bring about corrective action. In 2019, 

we received 27 borrower complaints, compared with 33 in 2018.

Regulation

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 an 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 

member-borrowers in the management, 

control, and ownership of their System 

institutions.

Regulatory activity in 2019

The following paragraphs describe some 

of FCA’s regulatory efforts in 2019, along 

with several projects that will remain 

active in 2020. More information on these 

topics is available on our website. From 

We strive 

to develop 

balanced, 

well-reasoned 

regulations 

whose benefits 

outweigh their 

costs.
38 | Farm Credit Administration

the Laws & regulations tab at www.fca.

gov, you can read our board policy statements, bookletters, informational memorandums, proposed rules, and any final 

rules whose effective dates are pending.

Statement on regulatory burden—The FCA 

board approved a final notice of intent in 

May 2019 to publish a notice in the Federal 

Register that responded publicly to the 

comments FCA received from the 2017 

Regulatory Burden Solicitation.

Flood insurance—The FCA board approved 

a final rule in February 2019 that amends 

the regulations to implement the private 

flood insurance provisions of the Biggert-Waters Flood Insurance Reform Act of 

2012.

District financial reporting—The FCA 

board approved a proposed rule in December 2019 that would amend regulations 

governing the presentation of related association financial information within an 

FCS bank’s Annual Report to Shareholders.

Investment eligibility—The FCA board 

approved a proposed rule in August 2019 

that would amend the FCA regulations 

governing eligible investments for System 

associations.

Implementation of current expected credit 

losses methodology for allowances—The 

FCA board approved a proposed rule in 

August 2019 that would amend the capital 

framework to address changes to U.S. generally accepted accounting principles and 

make conforming amendments to other 

regulations to accurately reference credit 

losses.

Criteria to reinstate nonaccrual loans—The 

FCA board approved a proposed rule 

in February 2019 that would use more 

measurable standards to determine when 

high-risk loans are suitable for reinstatement to accrual status. The proposed 

standards closely resemble the standards 

of the Federal Financial Institutions Examination Council.

Young, beginning, and small farmers and 

ranchers—The FCA board approved an 

advance notice of proposed rulemaking 

in February 2019 that requested public 

comment on ways for FCA to improve the 

collection, evaluation, and reporting of 

FCS data regarding the System’s mission 

to provide credit and related services to 

young, beginning, and small farmers, 

ranchers, and producers or harvesters of 

aquatic products.

Interest rate risk management guidance—The FCA board approved a bookletter in March 2019 to provide guidance 

on interest rate risk management to the 

Federal Agricultural Mortgage Corporation 

(Farmer Mac).

National Oversight and Examination Program for 2020—We issued an informational memorandum in October 2019 that 

summarized the National Oversight Plan 

for 2020. The plan detailed strategies for 

addressing critical risks and other areas of 

focus.

Compensation for 2019—We issued an 

informational memorandum in January 

2019 to notify System institutions that 

the Agriculture Improvement Act of 2018 

repealed the limitations on bank director 

compensation contained in the Farm 

Credit Act. As a result, beginning in 2019, 

FCA will no longer calculate the maximum 

annual compensation adjustments in FCA 

regulation § 611.400(b)(c). 

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.
2019 FCA Annual Report

| 39

Corporate activity in 2019

In 2019 and early 2020, we analyzed 

and approved the following corporate 

applications. • On July 1, 2019, an ACA affiliated with 

CoBank, ACB, combined its opera-

tions with another ACA in the CoBank 

district. The PCA and FLCA subsidiar-

ies associated with the ACAs merged 

their operations on Dec. 31, 2019.

• Effective Feb. 1, 2020, AgriBank 

received approval from FCA for the 

issuance of a charter of an affiliated 

service corporation.

The total number of associations as of July 

1, 2020, was 68 (67 ACAs and 1 FLCA). We 

publish information about corporate appli-

cations on our website at www.fca.gov.

Funding activity in 2019

As the System’s regulator, we have several 

responsibilities pertaining to System fund-

ing activities. The Farm Credit Act requires 

the System to obtain our approval before 

distributing or selling debt. Because we 

make it a high priority to respond effi-

ciently to the System’s requests for debt 

issuance approvals, we have a program, 

which we monitor on an ongoing basis, 

that allows the System to issue discount 

notes at any time up to an outstanding bal-

ance of $100 billion. (In 2019, the discount 

note ceiling was $60 billion; it increased 

to $100 billion in 2020.) In addition, we 

approve most longer-term debt issuances 

through a monthly “shelf” approval pro-

gram. For 2019, we approved $157.6 billion 

in longer-term debt issuances through this 

program.
Farmer Mac provides a secondary 

market for agricultural real estate loans, 

government-guaranteed portions of certain 

loans, rural housing mortgage loans, and 

eligible rural utility cooperative loans.
2019 FCA Annual Report | 41 

Farmer Mac

Created in 1988, the Federal 

Agricultural Mortgage Corporation 

(Farmer Mac) provides a secondary market for agricultural real estate loans, government-guaranteed portions of certain 

loans, rural housing mortgage loans, and 

eligible rural utility cooperative loans. It 

offers greater liquidity and lending capacity to agricultural and rural lenders, including insurance companies, credit unions, 

commercial banks, other FCS institutions, 

and investors.

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 other 

FCS institutions. Any investor may own 

nonvoting stock.

Farmer Mac is 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 conducts activities through 

four major lines of business:

• Farm & Ranch, which involves mortgage loans secured by first liens on 

agricultural real estate and rural 

housing.

• USDA Guarantees, 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 made by cooperative 

lenders to finance rural electric 

facilities.

• Institutional Credit, which involves 

Farmer Mac’s purchase or guarantee of collateralized bonds known 

as AgVantage securities. AgVantage 

bonds are general obligations of the 

issuer that are secured by pools of 

eligible loans or real estate.

Farmer Mac purchases eligible loans 

directly from lenders, provides advances 

against eligible loans by purchasing obligations secured by those loans or assets 

that qualify as eligible agricultural real estate collateral, 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.

Examining and regulating Farmer Mac

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 
42 | Farm Credit Administration

directly to the FCA board. 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 examine Farmer 

Mac at least annually for capital adequacy, 

asset quality, management performance, 

earnings, liquidity, and interest rate sensitivity. We oversee and evaluate Farmer 

Mac’s safety and soundness and its mission achievement. We also supervise and 

issue regulations governing Farmer Mac’s 

operations.

In March 2019, the FCA board approved 

a bookletter to provide guidance to Farmer 

Mac on managing interest rate risk. In 

April 2019, OSMO provided formal guidance on providing a secondary market for 

hemp loans.

Financial condition of Farmer Mac

OSMO reviews Farmer Mac’s compliance 

with statutory and regulatory minimum 

capital requirements and supervises its 

operations and condition throughout the 

year. Table 6 summarizes Farmer Mac’s 

condensed balance sheets at the end of 

each calendar year from 2014 to 2019.

Capital

As of Dec. 31, 2019, Farmer Mac’s net 

worth (that is, equity capital determined 

using generally accepted accounting principles [GAAP]) was $799.3 million, compared with $752.6 million a year earlier. 

Its net worth was 3.7% of its on-balancesheet assets as of Dec. 31, 2019, slightly 

below 2018 results. Net worth, in terms of 

dollars, went up primarily because of an 

issuance of preferred stock.

Table 6

Farmer Mac condensed balance sheets, 2014 – 2019

As of Dec. 31

Dollars in millions

Item 2014 2015 2016 2017 2018 2019 Growth Rate 

2018–2019

Total assets $14,287.8 $15,540.4 $15,606.0 $17,792.3 $18,694.3 $21,709.4 16.1%

Total liabilities $13,506.0 $14,986.6 $14,962.4 $17,084.1 $17,941.8 $20,910.1 16.5%

Net worth or 

equity capital

$781.8 $553.7 $643.6 $708.1 $752.6 $799.3 6.2%

Sources: Farmer Mac’s Annual Reports on Securities and Exchange Commission Form 10-K.
2019 FCA Annual Report | 43

When Farmer Mac’s off-balance-sheet 

program assets (essentially its guarantee 

obligations) are added to its total on-balance-sheet assets, net worth was 3.2% as 

of Dec. 31, 2019, compared with 3.3% in 

2018. Farmer Mac continued to be in compliance with all statutory and regulatory 

minimum capital requirements.

At year-end 2019, 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. It totaled $815.4 million, exceeding 

the statutory minimum capital requirements of $618.8 million by $196.7 million 

or 31.8%.

Its regulatory capital (core capital 

plus allowance for losses) exceeded the 

required amount as determined by the 

Risk-Based Capital Stress Test. Farmer 

Mac’s regulatory capital totaled $828.1 

million as of Dec. 31, 2019, exceeding the 

regulatory risk-based capital requirement 

of $122.1 million by $706.0 million.

Regulatory capital was 4.5% 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 guaranteed portions is very low because they 

are backed by the U.S. Department of Agriculture. Table 7 offers a historical perspective on capital and capital requirements 

for 2014 through 2019.

Program activity

Farmer Mac’s total program activity increased to $21.1 billion by year-end 2019, 

up from $19.7 billion a year earlier. (See 

Table 7

Farmer Mac capital positions, 2014 – 2019

As of Dec. 31

Dollars in millions

Item 2014 2015 2016 2017 2018 2019

GAAP equity $781.8 $553.7 $643.6 $708.1 $752.6 $799.3

Core capital $766.3 $564.5 $609.7 $657.1 $727.6 $815.4

Regulatory capital $776.4 $571.1 $617.1 $665.9 $736.8 $828.1

Statutory requirement $421.3 $462.1 $466.5 $520.3 $545.0 $618.8

Regulatory requirement $121.6 $72.2 $104.8 $235.4 $119.0 $122.1

Surplus core capital over statutory 

requirement*

$345.0 $102.4 $143.2 $136.8 $182.6 $196.7

Capital margin excess over the 

minimum

81.9% 22.2% 30.7% 26.3% 33.5% 31.8%

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.
44 | Farm Credit Administration

figure 11.) Farmer Mac experienced steady 

growth in its Farm & Ranch loan purchases, as well as its Institutional Credit Program, which involves the purchase or guarantee of AgVantage securities. These bonds 

are general obligations of the issuing financial institution that are purchased or guaranteed by Farmer Mac. 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 2019, 

16.6% of program activity consisted of offbalance-sheet obligations, as compared 

with 20.2% 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 a fee in return for Farmer 

Mac’s commitment to stand ready (that is, 

“stand by”) to purchase loans at face value 

even under adverse conditions. As shown 

in figure 12, standbys represented 11.3% of 

Farmer Mac’s total program activity in 2019.

Asset quality

Figure 13 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.

As of Dec. 31, 2019, Farmer Mac’s allowance for losses totaled $12.6 million, compared with $9.2 million the year before. 

Of its Farm & Ranch program portfolio, 

$310.0 million was substandard, representing 3.99% of the principal balance of Farm 

& Ranch loans purchased, guaranteed, 

or committed to be purchased. This compares with $232.7 million on Dec. 31, 2018. 

Assets are considered to be substandard 

Figure 11

Farmer Mac program activity and nonprogram investment 

trends

As of Dec. 31

0 

5 

10 

15 

20 

25 

2014 2015 2016 2017 2018 2019 

As of December 31 

Total program activity 

On-balance-sheet 

program assets 

Off-balance-sheet 

program activity

Nonprogram investments 

Dollars in billions

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

Figure 12

Farmer Mac total program activity

Standbys – 11.3% 

AgVantage – 40.0% 

Loans held – 25.0% 

AMBS held – 10.6% 

AMBS sold – 2.4% 

Rural utility – 10.8% 

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

AMBS = agricultural mortgage-backed securities
2019 FCA Annual Report | 45

Figure 13

Allowance, nonperforming asset, and delinquency trends, 

2014 – 2019

0.0% 

0.5% 

1.0% 

1.5% 

2.0% 

2.5% 

3.0% 

3.5% 

4.0% 

 -

 50

 100

 150

 200

 250

 300

 350

2014 2015 2016 2017 2018 2019 

Percentage of Farm & Ranch 

Allowance for losses (left scale)

Substandard assets (left scale)

Substandard assets as 

percentage of Farm & Ranch

90-day delinquencies(left scale) 90-day delinquencies as 

percentage of Farm & Ranch 

As of December 31 

Dollars in millions

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

when they have a well-defined weakness 

or weaknesses that, if not corrected, are 

likely to lead to some losses.

As of Dec. 31, 2019, Farmer Mac’s 90-day 

delinquencies increased to $61.0 million, 

or 0.78% of Farm & Ranch loans, from 

$26.9 million, or 0.37%, as of Dec. 31, 2018.

Real estate owned at the end of 2019 

was $1.77 million, up from $0.13 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 $93.7 million 

(in accordance with GAAP) for the year 

ended Dec. 31, 2019, down from $94.9 million reported at year-end 2018. Core earnings for 2019 were $93.7 million, compared 

with $84.0 million in 2018. Net interest income, which excludes guarantee fee income, was reported at $169.6 million in 

2019, down from $174.2 million in 2018. 

Guarantee fee income was $13.7 million, 

compared with $14.0 million in 2018. Table 

8 shows a six-year trend for the basic components of income.

Table 8

Farmer Mac condensed statements of operations, 2014 – 2019

As of Dec. 31

Dollars in millions

Item 2014 2015 2016 2017 2018 2019 Growth Rate 

2018–2019

Total revenues $103.6 $145.9 $160.8 $175.1 $186.1 $194.1 4%

Total expenses $65.4 $98.5 $96.6 $103.8 $91.2 $100.4 10%

Net income available to 

common stockholders

$38.3 $47.4 $64.2 $71.3 $94.9 $93.7 −1%

Core earnings $53.0 $47.0 $53.8 $65.6 $84.0 $93.7 12%

Sources: Farmer Mac’s Annual Reports on Securities and Exchange Commission Form 10-K.
46 | Farm Credit Administration arm Credit Administration

Figure 14

FCA organizational chart as of September 2020

For an accessible version of this chart, go to 

www.fca.gov/about/fca-organizational-chart.

FCA Board

Glen R. Smith, 

Chairman

Jeffery S. Hall, 

Member

—Office of the Board 

Chairman and Chief 

Executive Officer 

Glen R. Smith 

—Office of Inspector 

General 

Wendy R. Laguarda

—Office of the Chief Operating Officer

S. Robert Coleman

—Office of Secondary Market Oversight*

Laurie A. Rea

—Office of Congressional and 

Public Affairs 

Michael A. Stokke

—Designated Agency Ethics Official 

Jane Virga

—Equal Employment and Inclusion 

Director 

Thais Burlew

—Secretary to the Board 

Dale L. Aultman

—Office of the Chief 

Financial Officer

Stephen G. Smith

—Office of Agency Services

Vonda Bell

—Office of Examination

Roger Paulsen

—Office of Information 

Technology

Jerald Golley

—Office of Regulatory 

Policy

David Grahn

—Office of General 

Counsel†

Charles R. Rawls

—Office of Data Analytics 

and Economics 

Jeremy D’Antoni * Reports to the board for policy and to the CEO for administration.

† Maintains a confidential advisory relationship with each of the board members.
2019 FCA Annual Report | 47

FCA’s organization and leadership

Organization of FCA

FCA’s headquarters is in McLean, Virginia. 

We also have field offices in Bloomington, 

Minnesota; Dallas, Texas; Denver, Colorado; and Sacramento, California. As of Sept. 

1, 2020, we had 316 employees.

FCA’s leadership

Currently, FCA has only two board members: Chairman Glen R. Smith and Board 

Member Jeffery S. Hall. The board has one 

vacancy because former Chairman Dallas 

Tonsager passed away in May 2019.

Glen R. Smith, FCA Board Chairman and 

CEO 

Glen R. Smith was appointed to the FCA 

board by President 

Donald Trump on 

Dec. 8, 2017. Mr. 

Smith will serve a 

term that expires 

May 21, 2022.

He also serves 

as a member of the 

board of directors 

of the Farm Credit 

System Insurance 

Corporation, an 

independent U.S. government-controlled 

corporation that insures the timely payment of principal and interest on obligations issued jointly by Farm Credit System 

banks.

Mr. Smith is a native of Atlantic, Iowa, 

where he was raised on a diversified crop 

and livestock farm. His farm experience 

started at a very early age, after his father 

was involved in a disabling farm accident. 

He graduated from Iowa State University 

in 1979 with a Bachelor of Science in agricultural business and accepted a position 

with Doane Agricultural Services as state 

manager of the company’s farm real estate 

division.

In 1982, Mr. Smith and his wife, Fauzan, 

moved back to his hometown and started 

farming and developing his ag service 

business. Today, their family farm, Smith 

Generation Farms Inc., has grown to 

encompass about 2,000 acres devoted to 

corn, soybeans, hay, and a small beef cow 

herd.

Mr. Smith is founder and co-owner of 

Smith Land Service Co., an ag service 

company that specializes in farm management, land appraisal, and farmland 

brokerage, serving about 30 Iowa counties. 

From 2001 to 2016, he was also co-owner 

and manager of S&K Land Co., an entity 

involved in the acquisition, improvement, 

and exchange of Iowa farmland. Mr. Smith 

has served on numerous community, 

church, and professional boards. He was 

elected to the Atlantic Community School 

Board of Education on which he served for 

nine years.

In 1990, he earned the title of Accredited Rural Appraiser from the American 

Society of Farm Managers and Rural Appraisers. In 2000, he served as president of 

the Iowa chapter of that organization. He 

is a lifelong member of the Farm Bureau, 

Iowa Corn Growers Association, Iowa Soybean Association, and Iowa Cattlemen’s 

Association.
48 | Farm Credit Administration

The Smiths have four grown children 

and four grandchildren. Two of their 

children are involved in production agriculture. Their son Peter has assumed managerial responsibilities for both the family 

farm and business.

Jeffery S. Hall, FCA Board Member

Jeffery S. Hall was 

appointed to the 

FCA board by President Barack Obama 

on March 17, 2015. 

Mr. Hall is serving 

a term that expired 

on Oct. 13, 2018. 

He will continue 

to serve until his 

successor has been 

named.

Mr. Hall also serves as chairman of 

the board of directors of the Farm Credit 

System Insurance Corporation, an independent U.S. government-controlled corporation that insures the timely payment 

of principal and interest on obligations issued jointly by Farm Credit System banks.

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 Ag-Project 

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 Bachelor of 

Science from Purdue University.
2019 FCA Annual Report | 49

Appendix

Glossary

Agricultural credit association—An ACA 

results from the merger of a federal land 

bank association (or a federal land credit association) and a production credit 

association (PCA) and has the combined 

authority of the two institutions. An ACA 

borrows funds from a farm credit bank 

or an agricultural credit bank 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 System 

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.
50 | Farm Credit Administration

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’ short- and 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 merged to become 

FCBs or part of the ACB. Thus, no FICBs 

remain within the FCS.

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 before they received their affiliated 

banks’ direct-lending authority to make 

long-term mortgage loans to farmers, 

ranchers, and rural residents for housing. 

As lending agents, the associations did not 

own loan assets but made loans only on 

behalf of the FCBs with which they were 

affiliated. As of Oct. 1, 2000, all active federal land bank associations had received 

direct-lending authority and did not serve 

as lending agents for FCBs.

Federal land credit association—An FLCA 

is the regulatory term FCA uses for a federal land bank association that owns its 

loan assets. An FLCA borrows funds from 

an FCB to make and service long-term 

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 was designed to 

reflect the nondepository 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 those 

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.
2019 FCA Annual Report | 51

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.

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 
52 | Farm Credit Administration

from developing. 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 Jan. 1, 2003, all 

PCAs were eliminated as independent, 

stand-alone, direct-lender associations. All 

PCAs are now subsidiaries of ACAs.

Service corporation—Sections 4.25 and 

4.28 of the Farm Credit Act authorize FCS 

banks and associations to organize service 

corporations for performing functions 

and services that banks and associations 

are authorized to perform under the Farm 

Credit Act, except that the corporations 

may not provide credit or insurance services to borrowers.

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.

Abbreviations 

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)
2019 FCA Annual Report | 53

Additional information

The Farm Credit Administration 2019 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

With support from the Farm Credit 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

101 Hudson Street, Suite 3505

Jersey City, NJ 07302

Telephone: 201-200-8131

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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