Quarterly Report on 

FCS Condition 

April 8, 2021 

Dennis A. Shields

Hal Johnson

FCA Board Meeting 

April 2021

1
Topics for Open Session

▶ Economic Conditions Affecting the Farm Credit 

System

▪Trade and commodities

▪Farm sector income

▪Government policies

▶ FCS Condition and Performance

▪System growth and loan portfolio

▪Earnings and capital

▪Financial Institution Rating System (FIRS)

2
Economic Conditions Affecting 

the Farm Credit System

Dennis A. Shields

Chief Economist 

Office of Data Analytics and Economics

3
U.S. ag exports ramp up as shipments to China 

increase to record level

Fiscal year U.S. ag exports ($ bil.)

Source: USDA.

Note: Forecasts as of February 18, 2021. 4

Country 2019 2020

2021 

forecast

China $10.1 $17.0 $31.5

Canada $21.0 $20.8 $21.0 

Mexico $19.0 $18.1 $19.5 

Europe $13.2 $11.7 $11.9 

Japan $12.1 $11.4 $12.4 

World $135.5 $135.7 $157.0

Selected markets 

in FY2021
$2.00

$3.00

$4.00

$5.00

$6.00

5/1/2019 9/1/2019 1/1/2020 5/1/2020 9/1/2020 1/1/2021

Corn ($/bu.)

$3.70

$3.00

$4.00

$5.00

$6.00

$7.00

5/1/2019 9/1/2019 1/1/2020 5/1/2020 9/1/2020 1/1/2021

Hard Red Winter Wheat ($/bu.)

$5.50

$7.00

$9.00

$11.00

$13.00

$15.00

5/1/2019 9/1/2019 1/1/2020 5/1/2020 9/1/2020 1/1/2021

Soybeans ($/bu.)

$8.40 

Crop prices remain at high levels, supporting 

producer margins

Source: MGEX elevator daily cash bids. 5

Elevator daily cash bids (national index)

Farm Bill reference price that triggers Price Loss Coverage payments using season average farm price

A distant past . . . 

low prices in June 2019, as seen 

through the elevator window.
4.5

0.3

1.1

-0.1

2.0

7.9

Soybeans

Corn

Sorghum

Cotton

Wheat

5-crop total

Farmers to expand plantings in 2021; 

drought is a concern

Prospective plantings: 

Million-acre change in 2021 

Source: Prospective Plantings, 3/31/21, USDA/NASS.

Drought covers much of the western U.S.

Source: U.S. Drought Monitor released 3/25/2021. 6
Livestock producers face higher feed costs

▶ Cow-calf margins are expected to be 

near breakeven in 2021; lingering 

drought conditions and higher feed 

costs remain a concern.

▶ Hog margins have deteriorated as 

feed costs increase, but lower hog 

inventory is supporting prices. 

▶ Meat export demand is relatively 

strong. 

7

Newborn calf with attentive cow.
Dairy farms challenged by income variability; 

returns depend on level of fixed costs

Midwest dairy income over feed costs

Source: Livestock Marketing Information Center. 8
Almond output expands; prices remain steady 

to lower

Source: USDA/NASS.

U.S. almond production and average grower price

9

$0

$2

$4

0

1

2

3

4

2004 2006 2008 2010 2012 2014 2016 2018 2020F

Bil. pounds $ per pound

Production (left axis) Price (right axis)
Farm income to remain above average in 2021

U.S. net cash farm income (adjusted for inflation)

Source: USDA/ERS, February 5, 2021. 10

93

2000-2020 average = $112.6 bil.

0

50

100

150

2000 02 04 06 08 2010 12 14 16 18 2020

$ billion 

(2021 dollars)

Direct government payments

Income without gov. payments

Average net cash farm income
Farmland values are strong in early 2021

11

% change in $ value of “good” farmland

Top: Oct. 2020 to Jan. 2021

Bottom: Jan. 2020 to Jan. 2021

Source: Federal Reserve Bank of Chicago.

▶ In the Midwest, strong 

demand for land and not 

much is available for sale.

▶ Illinois real estate 

professionals expect land 

values up 5-10% in 2021.

▶ In Texas, values in fourth 

quarter 2020 were +4% for 

cropland and +10% for 

ranchland. 
Policy developments affecting farm income 

and risk

▶ Trade boom, bust, boom 

▶ Farm Bill safety net 

programs 

▶ Renewed emphasis on 

climate and conservation 

12

No-till planting soybeans into corn stubble.
Concluding comments

▶ Economic recovery is underway.

▶ Grain prices are at high levels, benefiting many crop producers.

▶ Livestock margins are tight with higher feed costs.

▶ Risk management will be key. 

▶ Government assistance: depth, breadth, timeliness. 

13
Questions

THANK YOU

14
Farm Credit System 

Condition and Performance 

as of 

December 31, 2020

Hal Johnson

Sr. Financial Analyst

Office of Examination

15
Topics ▶ System growth ▶ Loan Portfolio ▶ Earnings ▶ Capital ▶ FIRS

16
System growth was the strongest since 2008

Source: FCS Information Statements 17

Total 

Assets

12/31/20

$400.7

billion

+4.1% Qtr

+9.7% FY 

Gross

Loans

12/31/20

$315.5

billion

 +4.6% Qtr

 +9.9% FY

3.0%

1.5%

-0.2%

1.2%

3.2%

0.3% 0.8%

0.0%

3.9%

2.0% 1.6% 1.5%

4.6%

Quarterly System Loan Growth

4.4 4.8 4.7 

11.7 

2.9 3.3 

5.0 

3.3 

6.5 

9.2 

8.5 

12.7 

9.9 

0

5

10

15

20

2017 2018 2019 2020

Loan Growth by Loan Type

% change year-over-year
The System’s loan portfolio performed well 

in a difficult year

▶ Portfolio credit quality 

remained sound despite the 

many challenges agricultural 

producers faced in 2020.

▶ Most credit risk measures 

improved compared to a 

year ago.

▶ Risk remains elevated for 

certain agricultural sectors 

and geographical regions.

Source: FCS Information Statements 18

$1.897 Qtr chg. - $424M or -18.3%

billion 12 month 

chg. - $450M or -19.2%

Q3 '20 0.28%

YE '19 0.32%

 Nonperforming 

Assets

(12/31/20)

 Delinquencies (1)

(12/31/20) 0.28%

(1) accruing loans 30 days or more past due as a % of accruing loans
Credit risk indicators trend lower in 2020; 

strong loan growth a factor

Source: FCS Information Statements 19

1.53%

1.11%

0.86%

0.73% 0.82% 0.78% 0.83% 0.82%

0.60%

(1) calculated as a percentage of gross loans outstanding and other 

property owned (OPO)

6.0

6.2

8.9

6.5

0.9

7.1

7.2

11.1

5.6

3.4

6.6

7.1

10.6

4.3

2.2

0.0 2.0 4.0 6.0 8.0 10.0 12.0

Total

Portfolio

Real Estate

Mortgage

Production &

Intermediate

Agribusiness

Rural

 Infrastructure

Dec-20 Dec-19 Dec-18

% of Nonperforming Assets(1) % of Loans Classified as Less Than Acceptable
System’s portfolio is diversified by commodity

System Loan Portfolio by 

Commodity Concentration

Source: FCS Information Statement

27

Cash Grains 49,475 15.7% 9.2%

Tree Fruits, Nuts & Grapes 19,145 6.1% 10.1%

Field Crops 17,367 5.5% 7.7%

Other Crop Production 16,657 5.3% 9.9%

Total Crop Production 102,644 32.5% 9.2%

Cattle 27,560 8.7% 6.7%

Dairy Farms 20,017 6.3% 6.4%

Poultry & Eggs 8,698 2.8% 8.4%

Hogs 7,476 2.4% 5.1%

Other Livestock 7,977 2.5% 9.3%

Total Animal Production 71,728 22.7% 6.9%

Rural Infrastructure 34,477 10.9% 16.2%

Food Products 24,049 7.6% 18.4%

Rural Home 19,069 6.0% 9.7%

Forestry 18,567 5.9% 8.8%

Farm Supply & Marketing 15,757 5.0% 12.3%

Other 29,199 9.3% 6.3%

 Total 315,490 100.0% 9.9%

Dec-20 % chg.

yr. over yr.

% of Total

 Portfolio

 System Loan Portfolio

($ in millions)

Cash Grains

15.7%

Rural 

Infrastructure

11.2%

Cattle

8.7%

Food 

Products

7.0%

Dairy Farms

6.3%

Rural Home

6.1%

Forestry

6.0%

Tree Fruits, Nuts 

& Grapes

5.9%

Field 

Crops

Other 5.5%

Crops

5.5%

Farm Supply & 

Marketing

5.0%

Poultry & Eggs

3.1%

Other 

Livestock

2.5%

Hogs

2.4%

Other

9.1%
Portfolio volume is geographically distributed

Top 5 States % of 

Portfolio

California 11.6%

Texas 7.1

Iowa 5.5

Illinois 5.2

Minnesota 4.4

Source: FCS Information Statement 21

% of System Loan Volume by State as of year-end 2020

(only states with at least 1% are displayed)
The System reported strong earnings and 

improved margins in 2020

Source: FCS Information Statements 22

3.41 3.48 3.75 4.21 4.40 

3.56 

1.01 1.17 1.50 2.09 2.36

1.30

2.40 2.31 2.25 2.12 2.04 

2.26 

2.55 2.49 2.48 2.46 2.42 2.46 

2015 2016 2017 2018 2019 2020

Rate: Earning Assets Rate: Interest-Bearing Liab.

% Net Interest Spread % Net interest Margin

4,688 4,848 5,189 5,332 5,446 

6,002 

106 

266 

197 194 169 107 

2015 2016 2017 2018 2019 2020

System Net Income

Provision for Loan Losses

Net Interest Spread | Net Interest Margin System Earnings ($M)

6.8%

9.0%

3.8% 4.4% 5.1%

7.8%

2015 2016 2017 2018 2019 2020

% Increase in Average Earning Assets 

(from the same period a year ago)
Capital and Liquidity

( as of December 31, 2020 )

▶ Total Regulatory Capital levels:

Banks: 15.2% to 19.5%

Associations: 11.8% to 37.6%

▶ Days of available liquidity for 

the 4 funding banks ranged 

from 167 to 196 days.

▶ Capital and the Allowance for 

Loan Losses as a % of loans for 

the combined districts ranged 

from 17.6% to 22.8%.

Source: FCS Information Statements

(a) includes $0.6B in accumulated other comprehensive loss

(b) Restricted Capital represents capital associated with the Insurance Fund 23

Strong earnings supported continued 

capital growth

Capital Stock

3.0%

Preferred Stock

4.9%

Restricted 

Capital (b)

8.3%

Additional

paid-in-capital

5.7%

Allocated retained 

earnings

5.2%

Unallocated 

retained 

earnings (a)

72.9%

Total System Capital: $65.5 B

as of yearend 2020
System FIRS ratings

FIRS Ratings

( based on 12/31/20 financials )

▶ Composite FIRS ratings reflect 

the System’s sound condition 

and strong financial 

performance.

▶ Almost 95% of System Banks and 

Associations have a Composite 

FIRS rating of 1 or 2.

▶ Institutions rated 3 or lower 

account for less than 1.5% of 

System assets.

Composite FIRS Ratings

Farm Credit System Banks and Associations

Source: FCA’s FIRS ratings database 24

43 44 46 44 39 34 30 32

31 32 29 31

29 32 35 35

8 4 3 2

5 7 7 4

0

10

20

30

40

50

60

70

80

90

100

Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20

Number of Rated Institutions

1 Rated 2 Rated 3 Rated or lower
Summary and final points

▶ Crop producers benefiting from robust exports and strong prices. 

▶ Rising feed costs squeeze margins for livestock producers.

▶ Continuing drought in the West is a concern.

▶ Portfolio loan quality is sound, but risks remain elevated for 

certain agricultural sectors and geographic regions.

▶ The Farm Credit System is safe and financially strong. 

▶ System institutions are strongly capitalized and are wellpositioned to support agricultural producers and rural America.

25
Questions

THANK YOU

26