1

Dallas P. Tonsager, Chairman and Chief Executive Officer

Jeffery S. Hall, Board Member

Glen R. Smith, Board Member

MINUTES OF THE REGULAR MEETING 

OF THE 

FARM CREDIT ADMINISTRATION BOARD

March 8, 2018 

These minutes reflect the business transacted at the March 8, 2018, Regular Meeting of the Farm 

Credit Administration Board (FCA Board) pursuant to the Government in the Sunshine 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 9:43 a.m. Members of the Board present were:

Dallas P. Tonsager, Chairman and Chief Executive Officer

Jeffery S. Hall, Member

Glen R. Smith, Member

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 the Farm Credit System Insurance Corporation; and two members of 

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

Before starting the meeting, Board Chairman Tonsager recognized that this month is FCA’s 85 

Anniversary. He noted that on March 27, 1933, President Franklin D. Roosevelt signed the 

Executive Order creating the FCA, which Congress had approved in legislation earlier in the 

month.

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

the requirements of the Government in the Sunshine Act. 

Board Chairman Tonsager 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. Smith 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.
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Mr. Smith noted that the Agenda did not include any portions of the meeting that should be 

closed to the public as permitted by the Government in the Sunshine Act and therefore moved 

that the entire meeting remain open. 

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 8, 2018

(BM-8-MAR-18-01) 

Mr. Hall moved to approve the minutes for the February 8, 2018, FCA Regular Board Meeting. 

Mr. Smith 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-8-MAR-18-

01) 

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

Report

Farm Credit System Funding Update 

David Lewandrowski, of the Office of Regulatory Policy provided the Farm Credit System 

Funding Update. 

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

Board.

There were no further questions or discussion.

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

New Business

Lending and Loan Servicing Controls Bookletter

(BM-8-MAR-18-02) 

Ira Marshall of the Office of Regulatory Policy (ORP), Lynn Major of the Office of 

Examination (OE) and Jane Virga of the Office of General Counsel (OGC) presented the 

Lending and Loan Servicing Controls Bookletter. 

Board Chairman Tonsager open the discussion for questions by the board.

Board Chairman Tonsager asked if there was any further discussion and asked staff to provide 

their recommendation. Staff provided their recommendation.

Board Chairman Tonsager called for a motion on the staff’s recommendation. 
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Mr. Smith moved to approve the Lending and Loan Servicing Controls Bookletter as 

recommended by staff. 

Mr. Hall seconded the motion.

Board Chairman Tonsager asked if there was any further discussion.

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

The Secretary polled the Board Members and the motion carried unanimously. (BM-8-MAR-18-

02) 

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

Prior Approval of CoBank, ACB’s Request to Retire Certain 

Equities Included in Common Equity Tier 1 Capital 

(BM-8-MAR-18-03) 

Jeremy Edelstein of the Office of Regulatory Policy (ORP) and Becky Orlich of the Office of 

General Counsel (OGC) presented CoBank, ACB’s request to retire certain equities included in 

Common Equity Tier 1 Capital.

Board Chairman Tonsager open the discussion for questions by the board.

Board Chairman Tonsager asked if there was any further discussion and asked staff to provide 

their recommendation. Staff provided their recommendation.

Board Chairman Tonsager called for a motion on the staff’s recommendation. 

Mr. Hall moved to approve CoBank, ACB’s request to retire certain equities included in Common 

Equity Tier 1 capital as recommended by staff.

Mr. Smith seconded the motion.

Board Chairman Tonsager asked if there was any further discussion.

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

The Secretary polled the Board Members and the motion carried unanimously. (BM-8-MAR-18-

03) 

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

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. Smith moved that the meeting be adjourned.

Mr. Hall seconded the motion.

Board Chairman Tonsager called the question.

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

The meeting adjourned at 9:43 a.m.
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NOTATIONAL VOTE ACTION

There was one notational vote action approved by the FCA Board from February 9, 2018, through 

March 7, 2018 as follows:

Item 

Number

Action Date Voting 

Results

Subject

NV 18-03 02/20/2018 Approved Spring 2018 Unified Agenda and Regulatory Plan

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 8, 2018.

________/s/______________

Dallas P. Tonsager

Board Chairman and Chief Executive Officer

________/s/_____________

Dale L. Aultman

Secretary to the Board

Approved: _April 12, 2018_ 
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Exhibit A 

STAFF PRESENT AT THE 

FCA REGULAR BOARD MEETING

March 8, 2018 

Dallas P. Tonsager, Chairman and Chief Executive Officer

Jeffery S. Hall, Board Member

Glen R. Smith, Board Member

OFFICE OPEN 

SESSION 

Office of the Board

Aultman, Dale X

Batta, Todd X

Kramp, Kevin X

Morris, James X

Corey, Kathryn X

Roque-Brehm, Awilda X

Calhoun, Gaye X

COO

Hoffman, William X

OIT

Golley, Jerald X

OCPA

Stokke, Michael X

Delancey, Toni X

Meaux, Willy X

OSMO

Rea, Laurie X

Hudson, Bruce X

OGC

Rawls, Charles X

Virga, Jane X

Donner, Mary Alice X

Strickland, Joy X

Orlich, Becky X

OE

Coleman, Robert X

Paulsen, Roger X

Fennewald, Dan X

Major, Lynn X

OIG

Laguarda, Wendy X

ORP

Mardock, Barry X

Van Meter, Gary X

Lewandrowski, Dave X

Edelstein, Jeremy X

Marshall, Ira X

Floyd, J.C. X
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OFFICE OPEN 

SESSION

EEOI

Burlew, Thais X

OCFO

Smith, Stephen X

Gandy, Doug X

OAS

Bell, Vonda X

FCSIC

Rubin, Howard X

Pfitzinger, Rick X

GENERAL PUBLIC 2
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Exhibit B 

Farm Credit Administration 1501 Farm Credit Drive

McLean, VA 22102-5090

(703) 883-4000

PUBLIC ANNOUNCEMENT OF

MEETING SUBJECT TO THE GOVERNMENT IN THE SUNSHINE ACT

Farm Credit Administration Board

Regular Meeting 

March 8, 2018 

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 8, 2018. 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: 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 email 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 8, 2018

Report 

2 Farm Credit System Funding Update

New Business

3 Lending and Loan Servicing Controls Bookletter

4 Prior Approval of CoBank, ABC’s Request to retire Certain Equities Included in Common Equity 

Tier 1 Capital

______February 27, 2018______

Date

___________/s/_________________

Dale L. Aultman

Secretary to the Board
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Exhibit C

Farm Credit Administration

BOARD ACTION ITEM

1501 Farm Credit Drive

McLean, VA 22102-5090

(703) 883-4000

FCA BOARD ACTION ON

Minutes for February 8, 2018 Regular Board Meeting

BM-8-MAR-18-01

Effective Date: March 8, 2018 

Effect on Previous Action: None

THE FCA BOARD HEREBY:

Approves the minutes for February 8, 2018, Regular Board Meeting as submitted.

DATED THIS 8th DAY OF MARCH 2018 

BY ORDER OF THE BOARD

__________/s/__________________

Dale L. Aultman

Secretary to the Board
The Farm Credit System’s 

Funding Update

Exhibit D
Recent High Finance Headlines

• U.S. Government Bonds

Weaken as Powell Makes

Debut Speech

10
Recent High Finance Headlines

• Japanese Are Selling U.S.

Bonds Over Budget, Dollar

Fears

11
Recent High Finance Headlines

• U.S. weekly jobless claims

drop to lowest level since

1969

12
Recent High Finance Headlines

• Investors Bet Against

Treasuries as Bond Market

Anxiety Intensifies

13
 Global Market

 Agency Debt Market

 Yields & Spreads on FCS Debt

 Funding Corporation Activity

 FCS Liquidity

14

Funding Update Topics 
 Federal Reserve

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

 U.S. Treasury

 China

15

Global Market 
Credit Rating Agencies -

Outlook for the United States

 Standard & Poors – AA+

Outlook – Stable

 Moody’s – Aaa

Outlook – Stable

 Fitch – AAA

Outlook – Stable

16
Agency Debt Outstanding

Source: Agency Websites

17

Billions of Dollars 2013 2014 2015 2016 2017

F.H.L.B. $ 767 $ 847 $ 905 $989 $1,034 

Fannie Mae 534 460 390 329 277 

Freddie Mac 511 450 418 354 314 

FCS 207 222 242 258 265 

Tenn.V.A. 25 25 25 25 25 

Farmer Mac 12 13 14 15 16 

Total $2,056 $2,017 $1,994 $1,970 $1,830 
Agency Debt Issuance

Source: Agency Websites

18

Billions of Dollars 2013 2014 2015 2016 2017

F.H.L.B. $1,306 $1,719 $2,054 $2,382 $2,498 

Fannie Mae N/A N/A 259 707 739 

Freddie Mac 406 312 604 597 480 

FCS 377 330 298 334 278 

Total $2,089 $2,361 $3,215 $4,020 $3,995 
Funding Corp.’s Dealer Group

(Asterisk are new in past year)

BNY Mellon Capital Mkts, LLC * Mizuho Securities USA Inc.

Barclays Capital Inc. Morgan Stanley & Co. LLC

Cantor Fitzgerald & Co Multi-Bank Securities, Inc. *

Citigroup Global Mkts. Nomura Securities Inter. Inc.

Daiwa Capital Mkts. America Inc. Piper Jaffray & Co.

Deutsche Bank Securities Inc. RBC Capital Markets, LLC 

First Tennessee Bank N.A. RBS Securities Inc 

Goldman, Sachs & Co. Raymond James & Associates

HSBC Securities (USA) Inc. Robert W. Baird & Co. Inc.

INTL FCStone Fin. Inc. - BD Rates Div. Stifel, Nicolaus & Company Inc

Incapital LLC SunTrust Robinson Humphrey Inc.

J.P. Morgan Securities LLC TD Securities (USA) LLC

Jefferies LLC UBS Securities LLC

Loop Capital Mkts LLC * Vining-Sparks IBG, Ltd. Partnership

Merrill Lynch, Inc. Wells Fargo Securities, LLC 19
Source: FFCBFC Website

20

Funding Activity by FCS

($ millions) Discount Notes Designated 

Bonds

Fixed Rate Bonds Floating Rate Bonds Retail 

Bonds

Other1 Total

Callable NonCallableLIBOR Prime Other

12/31/2017 25,632 1,000 72,228 67,144 79,425 10,475 9,300 210 19 265,434

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

1 Includes Linked Deposits
Assets – $329.5 billion (+ 3.0%)

Cash & Invts. – $ 61.6 billion (- 1.3%)

Capital – $ 55.4 billion (+ 5.9%)

Net Income – $ 5.2 billion (+ 7.%)

21

System High Level Financials 
FCS Debt Yields Increasing

22
Tight Spreads over Treasuries 

23
In Red the Day After Lehman Brothers Declared Bankruptcy (9/16/2008) Spreads

over Treasuries Compared to This Month in Blue

24
 Calls in ‘17 – $ 5 billion

 Calls in ‘16 – $ 58 billion

 Calls in ‘15 – $ 34 billion

 Calls in ‘14 – $ 19 billion

 Calls in ‘13 – $ 24 billion

 Net Interest Spreads

 2.25% for ’17, 2.31% for ’16, 2.40% for ‘15, 2.50% for

‘14, and 2.64% for ’13.

25

Steep Decline in Call Activity
 Weighted Average Maturity of FCS Debt has

pushed higher.

 Dec./2017 – 2.88 years

 Dec./2016 – 2.72 years

 Dec./2015 – 2.81 years

 Dec./2014 – 2.71 years

 Dec./2013 – 2.96 years

26

Debt Maturity 
 Percentage of Debt maturing within a year.

 Dec./2017 – 39.1 percent

 Dec./2016 – 40.3 percent

 Dec./2015 – 37.6 percent

 Dec./2014 – 38.6 percent

 Dec./2013 – 33.8 percent

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Debt Maturity 
 As of 12/31/17 System = 175 days:

• AgFirst = 207 days, AgriBank = 151 days,

• FCB of TX = 227 days, CoBank = 176 days

 As of 12/31/16 System = 180 days:

• AgFirst = 201 days, AgriBank = 143 days,

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

28

Days of Liquidity 
Investments for Liquidity 

29

FCS Investments Available-For-Sale

(Fair Value at 12/31/17 by contractual 

maturity)

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

Commercial paper, CDs, bankers’ 

acceptances, and other securities 6,101 187 0 0 6,288 1.58%

US Treasury securities 3,445 8,113 3,128 0 14,686 1.61

US agency securities 1,080 1,112 1,445 0 3,637 2.07

Mortgage-backed securities 3 1,540 2,560 23,340 27,443 2.06

Asset-backed securities 5 909 214 656 1,784 1.80

Total fair value $10,634 $11,861 $7,347 $23,996 $53,838 1.87%

Total amortized cost $10,642 $11,930 $7,440 $24,125 $54,137
 Strong Demand for FCS Debt

 Debt Yields Rising

 Risk Premiums Remain Very Favorable

 Interest Rate Spreads Continue to Narrow

 Bottom Line Benefitting Less

 Substantial High Quality Liquidity

30

Summary
31

Exhibit E 

Farm Credit Administration

BOARD ACTION ITEM

1501 Farm Credit Drive

McLean, VA 22102-5090

(703) 883-4000

FCA BOARD ACTION ON

Lending and Loan Servicing Controls Bookletter

BM-8-MAR-18-02

Effective Date: March 8, 2018 

Effect on Previous Action: None

THE FCA BOARD HEREBY:

Approves the Lending and Loan Servicing Controls Bookletter. 

DATED THIS 8th DAY OF MARCH 2018 

BY ORDER OF THE BOARD

___________/s/_________________

Dale L. Aultman

Secretary to the Board
Exhibit F 

Farm Credit Administration

BOARD ACTION ITEM

1501 Farm Credit Drive

McLean, VA 22102-5090

(703) 883-4000

FCA BOARD ACTION ON

Prior Approval of CoBank, ACB’s Request to Retire Certain

Equities Included in Common Equity Tier 1 Capital

BM-8-MAR-18-03

Effective Date: March 8, 2018 

Impact on Previous Actions: This Board action would not have any impact on prior Board

actions. Section 628.20(f)(2) and (3) authorizes FCA to give prior approval to capital

retirements that are included in Tier 1 or Tier 2 Capital.

THE FCA BOARD HEREBY:

Approves the Prior Approval of CoBank, ABC’s Request to retire Certain Equities Included in

Common Equity Tier 1 Capital. 

DATED THIS 8th DAY OF MARCH 2018 

BY ORDER OF THE BOARD

___________/s/_________________

Dale L. Aultman

Secretary to the Board 

32