Dallas P. Tonsager, Chairman and Chief Executive Officer

Jeffery S. Hall, Board Member

Kenneth A. Spearman, Board Member (by telephone)

MINUTES OF THE REGULAR MEETING

OF THE

FARM CREDIT ADMINISTRATION BOARD

March 9, 2017 

These minutes reflect the business transacted at the March 9, 2017, Regular Meeting of the Farm 

Credit Administration Board (FCA Board) pursuant to the Government in the Sunshine Act (Act), 5 

U.S.C. § 552b, and the regulations of the Farm Credit Administration (FCA) adopted thereunder.

The FCA Board meeting was held at the FCA office in McLean, Virginia, beginning at 9:00 a.m. and 

concluding at 9:31 a.m. Members of the Board present were:

Dallas P. Tonsager, Chairman and Chief Executive Officer

Jeffery S. Hall, Member

Kenneth A. Spearman, Member (by telephone)

The above named constitute the full Board. 

Others present included Charles Rawls, General Counsel; Dale Aultman, Secretary to the Board; staff 

of the FCA and Farm Credit System Insurance Corporation (FCSIC); and two members of the general 

public. (A list of staff attendees is attached as Exhibit A.) 

The Secretary read a statement that announced the meeting would be conducted according to the 

requirements of the Government in the Sunshine Act. 

The Board Chairman reviewed the published Agenda. (A copy of the Public Announcement 

publishing the Agenda for the meeting is attached as Exhibit B.)

Mr. Hall moved to adopt the Agenda as published. 

Mr. Spearman seconded the motion.

1
There being no further discussion, Board Chairman Tonsager called the question.

The Secretary polled the Board Members and the motion carried unanimously.

Mr. Spearman noted that the Agenda did not include any items that should be discussed in closed 

session, as permitted by the Government in the Sunshine Act, and therefore moved that the entire 

meeting remain open to the public. 

Mr. Hall seconded the motion.

There being no further discussion, Board Chairman Tonsager called the question.

The Secretary polled the Board Members and the motion carried unanimously.

OPEN SESSION

Approval of Minutes

Minutes for February 9, 2017 

(BM-9-MAR-17-01) 

Mr. Hall moved to approve the minutes for the February 9, 2017, FCA Regular Board Meeting. 

Mr. Spearman seconded the motion.

There being no further discussion, Board Chairman Tonsager called the question.

The Secretary polled the Board Members and the motion carried unanimously. (BM-9-MAR-17-01) 

(A copy of the official “Board Action Item” is attached as Exhibit C.)

Report

Annual Farm Credit System Funding Update

David Lewandrowski of the Office of Regulatory Policy presented the Annual Farm Credit System

Funding Update Report.

Board Chairman Tonsager asked if there were any questions or further discussion from the Board. 

There was no further discussion. 

(A copy of the PowerPoint presentation is attached as Exhibit D.)

2
ADJOURNMENT

There being no further business to come before the Board, Board Chairman Tonsager indicated he 

would entertain a motion to adjourn the meeting.

Mr. Hall moved that the meeting be adjourned.

Mr. Spearman seconded the motion.

Board Chairman Tonsager called the question. 

The Secretary polled the Board Members and the motion carried unanimously.

The meeting adjourned at 9:31 a.m.

NOTATIONAL VOTE ACTIONS 

There were three notational vote actions approved by the FCA Board from February 10, 2017, 

through March 8, 2017 as follows:

Item Number Action Date Voting Results Subject

NV 17-04 2/16/2017 Approved Proposed Merger of Badgerland, ACA and 1st FCS, ACA; with and into 

Agstar, ACA, and name change to Compeer Financial, ACA subject to certain 

conditions. If the voting stockholders of the three associations vote to 

approve the plan of merger and all conditions for final approval are met, 

the merger will take effect on July 1, 2017.

NV 17-05 3/6/2017 Approved Proposed Merger of United Farm Credit Services, ACA with and into 

AgCountry Farm Credit Services, ACA subject to certain conditions. If all 

requirements for the final approval are satisfied, the merger will take effect 

on July 1, 2017.

NV 17-06 3/8/2017 Approved Removal of regulatory capital conditions and limitations FCA had previously 

imposed on System institutions’ outstanding issuances of preferred stock 

and subordinated debt to outside investors (i.e., investors other than the 

cooperative member-borrowers of the institutions) and confirmed the 

regulatory capital treatment of these issuances under FCA’s new tier 1/tier 

2 capital rule. The new capital rule became effective on January 1, 2017.

The undersigned hereby certify that the foregoing minutes are the official minutes of the Regular 

Meeting of the Farm Credit Administration Board held on March 9, 2017. 

__________/s/_______________ __________/s/_______________

Dallas P. Tonsager Dale L. Aultman

Chairman and Chief Executive Officer Secretary to the Board

 Approved: _April 13, 2017__

3
Exhibit A

Page 1 of 2

STAFF PRESENT AT THE 

FCA REGULAR BOARD MEETING

March 9, 2017

Dallas P. Tonsager, Chairman and Chief Executive Officer

Jeffery S. Hall, Board Member

Kenneth A. Spearman, Board Member (by telephone)

OFFICE

OPEN 

SESSION

Office of the Board

Aultman, Dale X

Middleton, Russell X

Laguarda, Wendy X

Corey, Kathryn X

Kramp, Kevin X

Calhoun, Gaye X

EEOI

Burlew, Thais X

COO

Hoffman, Bill X

OIT

Golley, Jerald X

OCPA

Stokke, Mike X

Meaux, Willy X

OSMO

Rea, Laurie X

OGC

Rawls, Charles X

Strickland, Joy X

4
Exhibit A

Page 2 of 2

OFFICE OPEN 

SESSION

OE

Coleman, Robert X

Paulsen, Roger X

OIG

Dean, Elizabeth X

ORP

Van Meter, Gary X

Mardock, Barry X

Lewandrowski, David X

OCFO

Smith, Stephen X

OAS

 Fowlkes, Jerome X

FCSIC

Rubin, Howard X

Pfitzinger, Rick X

GENERAL PUBLIC 2

5
Exhibit B 

Farm Credit Administration Farm Credit Administration

 1501 Farm Credit Drive McLean, Virginia 22102-5090

 

PUBLIC ANNOUNCEMENT OF

MEETING SUBJECT TO THE GOVERNMENT IN THE SUNSHINE ACT

Farm Credit Administration Board

Regular Meeting

March 9, 2017 

Summary: Notice is hereby given, pursuant to the Government in the Sunshine Act (5 U.S.C. Sec. 552b (e) (1)), of the 

forthcoming regular meeting of the Farm Credit Administration Board.

Date and Time: The regular meeting of the Board will be held March 9, 2017. The meeting is scheduled to be held at the 

office of the Farm Credit Administration in McLean, Virginia, from 9:00 a.m. until such time as the Board may conclude its 

business.

Address: Farm Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-5090. Submit attendance 

requests via e-mail to VisitorRequest@FCA.gov. See SUPPLEMENTARY INFORMATION for further information about

attendance requests. 

For Further Information Contact: Dale L. Aultman, Secretary to the Farm Credit Administration Board (703) 883-4009. 

TTY is (703) 883-4056.

Supplementary Information: Parts of this meeting of the Board will be open to the public (limited space available). 

Please send an e-mail to VisitorRequest@FCA.gov at least 24 hours before the meeting. In your e-mail include: name, 

postal address, entity you are representing (if applicable), and telephone number. You will receive an e-mail 

confirmation from us. Please be prepared to show a photo identification when you arrive. If you need assistance for 

accessibility reasons, or if you have any questions, contact Dale L. Aultman, Secretary to the Farm Credit Administration 

Board, at (703) 883-4009. The matters to be considered at the meeting are:

OPEN SESSION

Approval of Minutes

1 February 9, 2017 

Report

2 Annual FCS Funding Update 

 

 

_ February 28, 2017_______ __________/s/_______________

 Date Mary Alice Donner

 Acting Secretary to the Board

6
Exhibit C 

Farm Credit Administration 1501 Farm Credit Drive

 McLean, Virginia 22102-5090

 (703) 883-4000

BOARD ACTION ITEM

 

FCA BOARD ACTION ON

Minutes for February 9, 2017 Regular Board Meeting

BM-9-MAR-17-01

Effective Date: March 9, 2017

Effect on Previous Action: None

THE FCA BOARD HEREBY:

 

Approves the minutes for February 9, 2017, Regular Board Meeting as submitted.

DATED THIS 9th DAY OF MARCH 2017 

BY ORDER OF THE BOARD

 

__________/s/______________

Dale L. Aultman

Secretary to the Board 

7
The Farm Credit System’s 

Funding Conditions

Exhibit D

8
Recent High Finance Headlines

• Federal Reserve Eyes Aggressive 

Rate Increases

2

9
Recent High Finance Headlines

• U.S. Government bonds dropped sharply

Wednesday, pushing the yield on the twoyear Treasury note to its highest close in

more than seven years.

3

10
Recent High Finance Headlines

4

11
 Global Market

 Agency Debt Market

 Yields & Spreads on FCS Debt

 Funding Corporation Activity

 FCS Liquidity

5

Funding Conditions Topics 

12
 Federal Reserve

 E.C.B., Bank of England, Bank of Japan

 U.S. Treasury

 China

6

Global Market 

13
Credit Rating Agencies -

Outlook for the United States

 Standard & Poors – AA+ 

Outlook – Stable

 Moody’s – Aaa

Outlook – Stable

 Fitch – AAA 

Outlook – Stable

7

14
Agency Debt Outstanding

Source: Agency Websites

8

Billions of Dollars 2012 2013 2014 2015 2016

F.H.L.B. $ 688 $ 767 $ 847 $905 $ 989 

Fannie Mae 622 534 460 390 329 

Freddie Mac 552 511 450 418 354 

FCS 197 207 222 242 258 

Tenn.V.A. 25 25 25 25 25 

Farmer Mac 12 12 13 14 14 

Total $2,096 $2,056 $2,017 $1,994 $1,969 

15
Funding Corp.’s Dealer Group

Barclays Capital Inc. Morgan Stanley & Co. LLC

Cantor Fitzgerald & Co Nomura Securities Inter. Inc.

Citigroup Global Mkts. Piper Jaffray & Co.

Daiwa Capital Mkts. America Inc. RBC Capital Markets, LLC

Deutsche Bank Securities Inc. RBS Securities Inc

First Tennessee Bank N.A. Raymond James & Associates

Goldman, Sachs & Co. Robert W. Baird & Co. Inc.

HSBC Securities (USA) Inc. Stifel, Nicolaus & Company Inc

INTL FCStone Fin. Inc. - BD Rates Div. SunTrust Robinson Humphrey Inc.

Incapital LLC TD Securities (USA) LLC

J.P. Morgan Securities LLC UBS Securities LLC

Jefferies LLC Vining-Sparks IBG, Ltd. Partnership

Merrill Lynch, Inc. Wells Fargo Securities, LLC

Mizuho Securities USA Inc.

9

16
Source: FFCBFC Website

10

Funding Activity by FCS

($ millions) Discount 

Notes

Designated 

Bonds

Fixed Rate Bonds Floating Rate Bonds Retail 

Bonds

Other1 Total

Callable NonCallableLIBOR Prime Other

12/31/2016 29,603 4,500 59,964 68,003 81,324 7,975 6,545 252 22 257,918

12/31/2015 31,371 5,000 58,789 60,424 71,355 8,050 6,850 383 24 242,245

12/31/2014 23,975 8,200 56,509 57,534 59,170 7,225 8,850 389 28 221,879

12/31/2013 18,643 11,375 56,465 57,222 42,285 7,370 12,790 405 38 206,594

12/31/2012 14,557 15,325 52,020 50,113 41,955 7,505 14,771 225 46 196,516

1 Includes Linked Deposits

17
Assets – $319.9 billion (+ 5.4%)

Cash & Invts. – $ 62.6 billion (+ 5.3%)

Capital – $ 52.3 billion (+ 7.1%)

Net Income – $ 4.8 billion (+ 3.4%)

11

System High Level Financials 

18
FCS Debt Yields Increasing

12

19
Tight Spreads over Treasuries 

13

20
 Calls in ‘16 – $ 58 billion

 Calls in ‘15 – $ 34 billion

 Calls in ‘14 – $ 19 billion

 Calls in ‘13 – $ 24 billion

 Net Interest Spreads

 2.31% ‘16 versus 2.40% for ‘15, 2.50% for ‘14, 

and 2.64% for ’13.

14

Resurgence in Call Activity

21
 Weighted Average Maturity of FCS Debt has 

ebbed lower.

 Dec./2016 – 2.72 years

 Dec./2015 – 2.81 years

 Dec./2014 – 2.71 years

 Dec./2013 – 2.96 years

15

Debt Maturity 

22
 Percentage of Debt maturing within a year.

 Dec./2016 – 40.3 percent

 Dec./2015 – 37.6 percent

 Dec./2014 – 38.6 percent

 Dec./2013 – 33.8 percent

16

Debt Maturity 

23
 As of 12/31/16 System = 180 days:

• AgFirst = 201 days, AgriBank = 143 days,

• FCB of TX = 199 days, CoBank = 197 days 

 As of 12/31/15 System = 181 days:

• AgFirst = 206 days, AgriBank = 136 days,

• FCB of TX = 200 days, CoBank = 199 days 

17

Days of Liquidity 

24
Investments for Liquidity 

18

FCS Investments Available-For-Sale

(Fair Value at 12/31/16 by contractual 

maturity)

Due in 1 year Due after 1 year Due after 5 Due after 10 Weighted ($ millions) Total or less - 5 years years - 10 years years Avg. Yield

Commercial paper, CDs, bankers’ 

acceptances, and other securities 5,660 145 0 0 5,805 1.07%

US Treasury securities 3,826 8,916 2,802 0 15,544 1.36

US agency securities 1,558 1,592 2,315 0 5,465 1.62

Mortgage-backed securities 13 1,245 2,225 21,860 25,343 1.66

Asset-backed securities 4 1,776 29 761 2,570 1.23

Total fair value $11,061 $13,674 $7,371 $22,621 $54,727 1.49%

Total amortized cost $11,058 $13,655 $7,453 $22,673 $54,839

25
 Strong Demand for FCS Debt

 Debt Yields Rising

 Risk Premiums Very Favorable

 Interest Rate Spreads Continue to Narrow

 Bottom Line Benefitting Less

 Substantial High Quality Liquidity

19

Summary

26