Dallas P. Tonsager, Board Chairman & 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

December 8, 2016 

These minutes reflect the business transacted at the December 8, 2016, 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 10:44 a.m. Members of the Board present were:

Dallas P. Tonsager, Board Chairman & Chief Executive Officer

Jeffery S. Hall, Member

Kenneth A. Spearman, Member (by telephone)

The above named constitute the full Board. 

Chairman Tonsager recognized Mr. Spearman’s service as prior FCA Board Chairman and CEO. 

Chairman Tonsager directed that his statement be attached to the minutes. (A copy is attached as 

Exhibit A.) 

Mr. Spearman thanked Chairman Tonsager and congratulated him as being designated Chairman 

and asked that his statement be attached to the minutes. (A copy is attached as Exhibit B.)

Others present at the meeting included Charles Rawls, General Counsel; Dale Aultman, Secretary to 

the Board; staff of the FCA and Farm Credit System Insurance Corporation (FCSIC); and four members 

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

1
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 D.)

Mr. Hall moved to adopt the Agenda as published. 

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.

Mr. Spearman noted that the Agenda did include 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 

meeting be closed at that point. 

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 November 10, 2016 Regular Board Meeting

(BM-8-DEC-16-01) 

Mr. Hall moved to approve the minutes for the November 10, 2016, 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-8-DEC-16-01) 

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

2
REPORTS

Quarterly Report on

Economic Conditions and FCS Conditions

Steve Gabriel of the Office of Regulatory Policy and Hal Johnson of the Office of Examination

presented the Quarterly Report on Economic Conditions and FCS Conditions. 

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 F.)

Semi-Annual Report on Office of Examination Operations

Hal Johnson of the Office of Examination presented the Semi-Annual Report on Office of Examination 

Operations.

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 G.)

CLOSED SESSION

The Board Chairman noted that this was a Closed Session and ensured that members of the public 

and nonessential FCA and FCSIC staff were not in the room so the Board could meet with Office of 

Examination staff in Closed Session. 

Board Chairman Tonsager convened the closed session of the meeting at 10:09 a.m. and instructed 

the Secretary to activate the electronic recording device so that the proceedings of the closed 

session were properly recorded as required by the Government in the Sunshine Act. 

The Board Chairman then instructed the General Counsel to furnish the Secretary with a 

certification, pursuant to 5 U.S.C. § 552b(f), that the portions of the meeting held in closed session 

may be properly closed to the public. 

(A copy of the Certification is attached hereto as Exhibit H.) 

3
Members of the Board present were:

Dallas P. Tonsager, Board Chairman & Chief Executive Officer

Jeffery S. Hall, Board Member

Kenneth A. Spearman, Board Member (by telephone)

The above named constitute the full Board. 

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

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

Office of Examination Quarterly Report

Robert Coleman and Roger Paulsen of the Office of Examination presented the update on OE 

Supervisory and Oversight Activities. 

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

There were no further questions or discussion.

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. Spearman 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 10:44 a.m.

4
NOTATIONAL VOTE ACTIONS 

There were two notational vote action approved by the FCA Board from November 10, 2016, through 

December 7, 2016 as follows:

Item Number Action Date Voting Results Subject

NV 16-22 11/17/2016 Approved Farm Credit System Building Association Budget and 

Assessments for 2017

NV 16-23 12/5/2016 Approved Regulatory Treatment of Certain Securitizations

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

Meeting of the Farm Credit Administration Board held on December 8, 2016. 

__________/s/_______________ __________/s/_______________

Dallas P. Tonsager Dale L. Aultman

Chairman & Chief Executive Officer Secretary to the Board

 Approved: _January 12, 2017__

5
Exhibit A 

Statement

Dallas P. Tonsager, Chairman

Farm Credit Administration Board Meeting, December 8, 2016

Good morning, everyone. Before we start on the meeting agenda, I’d like to take a moment to 

recognize Ken’s service as FCA’s Board Chairman and CEO. 

In that role, Ken made a positive and valuable impact on the agency. He was responsible for ushering 

in the new capital rule, and for issuing guidance on internal controls and similar entities. 

He promoted diversity and inclusion both here at FCA and within the Farm Credit System. In fact, 

under his chairmanship, the agency stepped up its recruiting of minority populations, which has 

resulted in a more inclusive workplace. 

He also had the vision to spearhead some major organizational changes at the agency that have led 

to more robust IT security and a dedicated office to human resources. 

He accomplished all of this while remaining the consummate professional and a steadfast colleague. 

We are fortunate that Ken will continue to serve on the board, and we thank him for all his years of 

commitment and service.

6
Exhibit B 

Statement

Kenneth A. Spearman, Member

Farm Credit Administration Board Meeting, December 8, 2016

Dallas, Congratulations on being designated by the President to Chair the FCA Board. I have every 

confidence that you will do an outstanding job of ensuring the System remains safe and sound and

that it continues to serve its mission of providing constructive credit to all of America’s farmers and 

ranchers.

Also, I want to thank you and Jeff for your support and input that you have given me during my 

Chairmanship. In addition, I want to thank Bill, the Senior Staff and all the employees at FCA. It is 

your dedication and service that is the driving force of the agency, and who deserve much of the 

credit for our success.

7
Exhibit C 

Page 1 of 2 

STAFF PRESENT AT THE 

FCA REGULAR BOARD MEETING

December 8, 2016

Dallas P. Tonsager, Chairman & Chief Executive Officer

Jeffery S. Hall, Board Member

Kenneth A. Spearman, Board Member (by telephone)

OFFICE

OPEN 

SESSION

CLOSED 

SESSION

Office of the Board

Aultman, Dale X X

Middleton, Russell X X

Laguarda, Wendy X X

Buccolo, Deb X

Corey, Kathryn X

Kramp, Kevin X X

Calhoun, Gaye X

EEOI

Burlew, Thais X

COO

Hoffman, William X X

OIT

Shaffer, Jeannie X X

OCPA

Stokke, Mike X X

Meaux, Willy X X

OSMO

Rea, Laurie X X

OGC

Rawls, Charles X X

Strickland, Joy X X

Donner, Mary Alice X X

8
Exhibit C 

Page 2 of 2

OFFICE OPEN 

SESSION

CLOSED 

SESSION

OE

Coleman, Robert X X

Paulsen, Roger X X

Johnson, Hal X X

Greenlee, Angela X X

Boston, Robin X X

OIG

Dean, Elizabeth X X

ORP

Van Meter, Gary X X

Mardock, Barry X X

Gabriel, Steve X X

OCFO

Smith, Stephen X X

OAS

Fowlkes, Jerome X X

FCSIC

Pfitzinger, Rick X X

Wynn, Wade X X

GENERAL PUBLIC 4

9
Exhibit D 

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

December 8, 2016 

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 December 8, 2016. 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), and 

parts will be closed to the public. 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 November 10, 2016 

Reports

2 Quarterly Report on Economic Conditions and FCS Conditions

3 Semi-Annual Report on Office of Examination Operations

CLOSED SESSION

4 Office of Examination Quarterly Report1

_ _November 28, 2016_______ _____________/s/__________________

 Date Dale L. Aultman

 Secretary to the Board

_________________________

1Session Closed-Exempt pursuant to 5 U.S.C. Section 552b(c)(8) and (9).

10
Exhibit E 

Farm Credit Administration 1501 Farm Credit Drive

 McLean, Virginia 22102-5090

 (703) 883-4000

BOARD ACTION ITEM

 

FCA BOARD ACTION ON

Minutes for November 10, 2016 Regular Board Meeting

BM-8-DEC-16-01

Effective Date: December 8, 2016

Effect on Previous Action: None

THE FCA BOARD HEREBY:

 

Approves the minutes for November 10, 2016, Regular Board Meeting as submitted.

DATED THIS 8th DAY OF DECEMBER 2016 

BY ORDER OF THE BOARD

 

___________/s/_____________________

Dale L. Aultman

Secretary to the Board 

11
FCA Board Meeting 

December 2016

Quarterly Report on 

FCS Condition

December 8, 2016

Stephen Gabriel

Hal Johnson

Exhibit F

12
Topics for Open Session

2

Economic Conditions Affecting the FCS

FCS Condition and Performance

13
Economic Conditions Affecting 

the Farm Credit System

Stephen Gabriel

Chief Economist

Office of Regulatory Policy

14
Economic growth expected to 

continue at sub-par pace

4

Consensus Forecasts (percent)

Red indicates forecast

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 

2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018

GDP growth* 2.0 0.9 0.8 1.4 3.2 2.1 2.1 2.3 2.3 2.1 2.1 2.2

CPI* 1.4 0.8 -0.3 2.5 1.6 2.8 2.0 2.3 2.3 2.5 2.3 2.3

Unemployment rate 5.2 5.0 4.9 4.9 4.9 4.8 4.8 4.7 4.7 4.6 4.6 4.6

10 Yr T-Bond 2.0 2.2 1.8 1.5 1.6 1.8 1.9 2.1 2.2 2.3 2.6 2.7

Source: Consensus Economics, Inc.

Survey date - November 7, 2016

* % change from prior quarter, seasonally adjusted annual rate

15
Short-term interest rates are rising

5

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

3-Month Treasury Bill: Secondary Market Rate, Percent, Weekly

3-Month LIBOR, based on U.S. Dollar©, Percent, Weekly

Source: ICE Benchmark Administration Limited, Board of Governors of the Federal Reserve System 

16
Long-term treasuries are moving 

higher

6

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Source: Board of Governors of the Federal Reserve System (US) 

10-Year Treasury Constant Maturity Rate, Percent, Weekly

17
What’s a “normal” 10-year 

treasury rate?

7

0

2

4

6

8

10

12

14

16 10-Year Treasury Constant Maturity Rate, Percent, Annual, Not Seasonally Adjusted

Percent Change in CPI (5-Yr Moving Average)

Source: Board of Governors of the Federal Reserve System, US. Bureau of Labor Statistics 

18
The value of the dollar is 

strengthening

8

100

105

110

115

120

125

130

Source: Board of Governors of the Federal Reserve System (US) 

Trade Weighted U.S. Dollar Index: Broad, Index Jan 1997=100, Weekly

19
Farm sector developments and 

concerns

 USDA projecting record corn and soybean crops

 Corn and soybean exports projected to be strong 

this marketing year

 Continued concerns about shrinking grain and 

soybean profit margins and working capital

 Production growth in the protein and dairy sectors is 

pressuring prices and margins

 Continued weakness in Midwest farmland markets?

9

20
Real net cash farm income is 

reverting to the mean

10

0

20

40

60

80

100

120

140

160

Real Net Cash Income - Bil. 2009 $

Average Real Net Cash Income - Bil. 2009 $ (1976 - 2010)

Source: USDA, ERS

21
Will farm debt growth moderate 

in coming years?

11

0

50

100

150

200

250

300

350

400

Real Estate Debt (Bil. 2009 $) Nonreal Estate Debt (Bil. 2009 $) Total Debt (Bil. 2009 $)

Source: USDA, ERS

22
Lower farm income is leading to 

a greater debt burden

12

0

1

2

3

4

5

6

Source: USDA, ERS

Ratio of total farm debt to net cash income

23
Cow/calf returns are down 

sharply from previous two years

13

-120

-80

-40

0

40

80

120

160

200

240

280

320

360

400

440

480

520

560

$/Hd Over Direct Costs

ESTIMATED AVERAGE COW/CALF RETURNS

(Over Cash Costs) & BEEF COW INVENTORY 

8-Nov-16

Source: Informa Economics IEG

24
Hog producers face negative 

margins through the winter

14

-60

-40

-20

0

20

40

60

80

100

120

140

$/Head

Hog Producer Margin, Cash Based 8-Nov-16

Source: Informa Economics IEG

25
Broiler margins should turn 

positive in January

15

-20

-15

-10

-5

0

5

10

15

20

25

30

Cents/Pound

US Broiler Weighted Margins

85% cutout, 15% whole bird

8-Nov-16

Source: Informa Economics IEG

26
Dairy margins could see a rough 

patch through summer 2017

16

-6

-4

-2

0

2

4

6

8

10

Milk Price minus Estimated Total Cost

US Dairy Producer Net Margins

8-Nov-16

Source: Informa Economics IEG

27
There is continued weakness in 

Midwest farmland markets

17

-15

2

-2

-5

-5

-6

-17

3

-5

-8 -7

-9

-0.4 -0.5

-9

-4

-7

-20

-15

-10

-5

0

5

KS Western

MO

Mountain

States

NE OK Kansas

City

District

Nonirrigated Cropland

Irrigated Cropland

Ranchland

Source: Kansas City Federal Reserve Bank

Percent Change from the Previous Year, 3rd Quarter 2016

-4

1

-5

-11

2

-3

-12

-10

-8

-6

-4

-2

0

2

4

IL IN IA MI WI Chicago

District

Percent Change in the Value of “Good" Farmland from 

Previous Year, 3rd Quarter 2016

Source: Chicago Federal Reserve Bank

n/a

28
Risks to watch

 Potential deterioration in international trade 

environment

 Crop conditions in South America

 U.S. and global economic growth

 Interest rates

 Strength of the dollar

 Deteriorating agricultural credit quality

18

29
Questions

THANK YOU

30
Farm Credit System 

Condition and Performance

as of 

September 30, 2016

Hal Johnson

Sr. Financial Analyst

Office of Examination

31
Topics

21

 System Growth

 Loan Portfolio Growth

 Earnings

 Capital

 FIRS

32
System growth continues at a 

modest pace in 2016

Source: FCS Quarterly Information Statements 22

247 248 248 253 

261 264 266 271 

283 279 283 

291 

304 305 

315 314 

192 192 193 194 201 205 205 208 217 216 221 

227 236 238 244 242 

3.5%

-0.1%

0.5% 0.7%

3.5%

1.7%

0.2%

1.5%

4.3%

-0.4%

2.0% 2.9%

4.0%

1.1%

2.3%

-0.7%

Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16

$ billions

 Total FCS Assets

 Total Gross Loans

% change in Gross Loans

 (quarter-over-quarter)

33
Loan growth slows as production 

and intermediate term lending lags

Source: FCS Quarterly Information Statements 23

-2.7%

6.2%

1.2%

3.5% 4.5%

2.6%

YTD '11 YTD '12 YTD '13 YTD '14 YTD '15 YTD '16

Total Gross Loans

% change year-to-date (through September)

2.6%

4.9%

-1.1%

1.0%

2.6%

Total Gross

Loans

Real Estate

 Mortgage

[47%]

Production &

 Intermediate

[20%]

Agribusiness

[15%]

Other

[18%]

2016 Loan Growth by Loan Type 

% change year-to-date (through September)

Loan Growth by District 

(% change year-to-date through September)

District Sep-14 Sep-15 Sep-16

AgFirst District (11%) 3.6% 4.2% 3.9%

AgriBank District (40%) 2.9% 3.6% 3.0%

CoBank District (40%) 3.4% 5.2% 1.7%

Texas District (9%) 5.5% 6.1% 4.4%

Total FCS 3.5% 4.5% 2.6%

34
Portfolio loan quality remains strong 

but risk indicators continue to trend up

24 Source: FCS Quarterly Information Statements

Sector Nonaccruals as a % of Loans Outstanding

• Nonperforming loans equaled 

0.82% of System loans 

outstanding in the 3rd quarter

• 94.4% of System loans were 

classified as Acceptable as 

compared to 96% at yearend 2015

• Loan delinquencies were 0.21% 

of accruing loans 

• The System’s allowance for loan 

losses equaled 74% of 

nonperforming loans

• Total capital and the allowance for 

loan losses represented 22.2% of 

System loans at quarter-end

Portfolio Credit Quality

as of September 2016

2,040 2,068

1,883 1,764 1,737 1,771 1,766 1,724 1,629

1,832 1,825

1,975

1.01% 1.01%

0.92% 0.85% 0.80% 0.82% 0.80% 0.76% 0.69% 0.77% 0.75% 0.82%

 Nonaccrual Loans Other nonperforming Loans

% of Nonperforming Loans-to-Total Loans

35
System continues to register solid 

financial results in 2016

25 Source: FCS Quarterly Information Statements

2,370 

2,018 

2,633 

2,994 

3,158 

3,499 3,569 3,481 3,589 

124 

733 

474 

352 

188 

9 7 

87 

218 

Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16

System Net Income

Provisions for Loan Losses

System Earnings ($M) 

- YTD through September -

4.48 4.24 4.06 3.79 3.59 3.46 3.41 3.46 

2.05

1.63 1.38 1.08 0.95 0.96 1.01 1.17

2.43 

2.61 

2.68 2.71 2.64 2.50 2.40 2.29 

2009 2010 2011 2012 2013 2014 2015 YTD '16

Rate: Earning Assets

Rate: Interest-Bearing Liabilities

Net Interest Spread

Net Interest Spread

Net Interest Income (YTD through September)

2016 2015 Inc / (Dec)

Inc / (Dec) due to

Rate Volume

Interest Income 7,738 6,948 790 114 676 

Interest Expense (2,214) (1,731) (483) (308) (175)

Net Interest

Income

36

5,524 5,217 307 (194) 501 
System remains well-capitalized

Source: FCS Quarterly Information Statements 26

• System capital as a percentage of 

total assets was 16.7% compared 

to 16.1% at year end 2015

• Surplus as a percentage of total 

capital equaled 82.0% 

• System liquidity equaled 177 days 

of coverage. Days of available 

liquidity for the four funding banks 

ranged from 144 days to 198 days.

Capital and Liquidity

as of September 2016

43.7 44.7 

45.8 45.7 46.8 

47.8 48.9 48.8 

50.0 51.4 

52.4 

16.6% 16.8% 16.9%

16.2%

16.8% 16.9% 16.8%

16.1% 16.4% 16.3% 16.7%

Restricted Capital

Total Capital less Restricted

Restricted capital represents capital associated with the Insurance Fund.

Capital-to-Asset Ratio

Total System Capital ($B)

37
System FIRS ratings

27

FIRS Ratings

• Composite FIRS ratings remain 

stable

• Over 95% of System Banks and 

Associations have a Composite 

FIRS rating of 1 or 2

• 3 rated institutions account for 

about 1.0% of total System 

assets

Source: FCA's FIRS ratings database

26 29 30 37 43 44 46 43 43 

50 46 44 38 31 32 29 31 32 

14 12 12 10 8 3 3 4 3 

3 2 1 1 

1 

Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Jun-16 Sep-16

1 Rated 2 Rated 3 Rated 4 Rated

Composite FIRS Ratings - System Banks & Associations

Ratings Trend Qtr-over-Qtr

comparison

38
Summary and final points

 Challenges for agriculture:

 General economic factors – sub-par economic growth in the U.S. 

and abroad, a strengthening dollar, rising interest rates

 Farm sector concerns – shrinking margins and cash flows concerns 

for grain producers, production levels pressuring prices and margins 

in the dairy and protein sectors, Midwest farmland values

 The System is financially strong and well-capitalized

 Portfolio credit quality remains good but credit risk is expected to 

intensify as many ag producers face significant financial challenges

 System institutions are well-positioned for the risks facing 

agriculture and have significant risk-bearing capacity 28

39
Questions

THANK YOU

40
FCA Board Meeting 

December 2016

Semi-Annual Report on 

Office of Examination 

Operations

December 8, 2016

Hal Johnson

Office of Examination Exhibit G

41
Highlights of OE Operations

2

 2016 Operating Plan Objectives

 OE Budget Results

 Staffing Update

 Summary

42
2016 Operating Plan Objectives

 Risk Supervision & Examination Activities

 Onsite at 71 associations (96%), all funding banks, 8 other 

System entities, National Cooperative Bank, and Farmer Mac

 Issued 55 Reports of Examination and 43 Interim Activity Letters

 4 institutions are currently under a higher level of supervisory 

oversight 

 Completed Compliance Horizontal Examination activity and 

Cybersecurity Horizontal Examination activity 

 Issued 2015 Shared Assets Examination Results (March 2016)

3

43
2016 Operating Plan Objectives

 Risk Supervision & Examination Initiatives

 Internal Controls – Published Audit and Review Examination Manual 

module including supporting documents and talking points. 

Completed examination of System internal controls using new 

workprograms. Working with ORP on proposed Bookletter providing 

regulatory expectations.

 Loan Portfolio Management – Published Risk Identification 

Examination Manual module and two supporting documents. 

Revised guidance on collateral risk management, chattel evaluations 

and verification, and credit administration.

 Completed analyses on cash grain risk exposures and drought risk.

4

44
2016 Operating Plan Objectives

 Risk Supervision & Examination Initiatives (cont.)

 Other Examination Manual modules published:

o Earnings Management

o Allowance for Loan Losses

o FCA Examination Process and Financial Institution Rating System 

 Risk Supervision & Examination Informational 

Memorandums

 National Oversight Plan FY 2017 (issued 9/27/2016)

 Servicing Loans to Borrowers in Distressed Industries (issued 1/21/16)

 Compliance w/ Section 4.38 of the Farm Credit Act -- Affirmative Action 

(issued 11/06/15) 5

45
2016 Operating Plan Objectives

 Public Mission as GSE

 Completed systemic risk assessment of out-of-territory lending

 Human Capital 

 Integrating Job Analysis results in Commissioning Program 

 Developing Post‐Commission training

 Expanded development opportunities 

 Identified recruiting and training cost-saving strategies 

 Operational Efficiency & Effectiveness

 Progress in Loan Database, EDGe, and leveraging 

technology 6

46
OE Budget Results (Fiscal Year 2016)

7

Travel Budget

♦ FY 2016 Travel Dollars Used 104%

♦ FY 2016 Travel Days Used 102%

FTEs

♦ Budgeted Full Year FTE's 168.6

♦ Actual Full Year FTE's 172.9

(Over)/Under Budget (4.3)

$31.3 $31.2 

Budget Actual

Fiscal Year 2016 

Actual OE 

spending within 

Operating Budget 

parameters

($ millions)

47
Staffing Update

8

Total OE Staff Planned Actual Variance

Beginning FY 2016 169 169 0 

Attrition / Retirements (16) (11) 5 

Hirings 25 19 (6)

Ending FY 2016 178 177 (1)

Commissioned Examiners Planned Actual Variance

Beginning FY 2016 90 90 0 

Attrition / Retirements (7) (6) 1 

Hirings 2 1 (1)

Newly Commissioned 8 5 (3)

Ending FY 2016 93 90 (3)

48
Summary

 Accomplished examination objectives as planned while maintaining 

a strong onsite risk supervision and oversight presence

 Significant guidance, communications, program activities, and risk 

analyses completed as part of our OE operating objectives 

 Several 2016 initiatives will carry forward into 2017 including 

internal controls and intensifying credit and collateral risk

 Recruiting and developing staff remains a priority

 Executed OE operating objectives within approved budget 

parameters

9

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Discussion

THANK YOU

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Exhibit H 

Farm Credit Administration 1501 Farm Credit Drive McLean, Virginia 22102-5090

 

 

CERTIFICATE OF CLOSED MEETING

The General Counsel, in accordance with the Government in the Sunshine Act, 5 U.S.C. § 552b(f)(1), 

hereby certifies that the Farm Credit Administration Board regular meeting of December 8, 2016, 

was properly closed to the public on the basis of the exemption set forth below:

• Supervisory and Oversight Activities of FCS Institution(s) – 5 U.S.C. § 552b(c)(8) 

and (9).

 

 ___________/s/_________________ Date: December 8, 2016 

 Charles R. Rawls

General Counsel 

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