Quarterly Report on FCS Conditions 

December 14, 2023

Yuri Katrinic - Senior Economist

Jarvis Tillman - Supervisory Senior Examiner
2

Topics for Open Session

Economic Conditions Affecting the Farm Credit System

 Macroeconomic conditions

 Supply and demand for commodities

 Farm and ranch margin outlook

Farm Credit System Condition and Performance

 System growth and loan portfolio

 Earnings and capital

 Financial Institution Rating System (FIRS)
3

Higher interest rates cool inflation, labor market

Sources: Bureau of Economic Analysis, Bureau of Labor Statistics, Federal Reserve Bank of St. Louis

34.0

34.3

34.5

34.8

35.0

Average weekly hours of employees

(private sector)

PCE Inflation

Federal Funds 

Rate

Real M2

$5.5

$6.0

$6.5

$7.0

$7.5

$8.0

0%

1%

2%

3%

4%

5%

6%

Trillions

Inflation, interest rates, and money supply
4

Consumer spending resilient despite signs of stress 

Sources: Bureau of Economic Analysis, New York Federal Reserve, Center for Microeconomic Data

2015-2019 

Average

-0.5%

0.0%

0.5%

1.0%

Jun-21 Dec-21 Jun-22 Dec-22 Jun-23

Real personal consumption expenditures

Monthly growth

Newly 

delinquent

Credit card 

debt-toincome

4%

5%

6%

7%

8%

2019 2020 2021 2022 2023

Credit card metrics
5

Financial challenges for lenders and borrowers 

including in commercial real estate 

Sources: Federal Reserve Board of Governors

Net percentage is the percentage of respondents who are tightening standards 

minus the percentage of respondents who are loosening standards.

• Maturing debt for commercial 

real estate must be refinanced at 

higher rates. 

• Expensive deposits, tighter net 

interest margins for some 

lenders.

• Costly operating lines for 

farmers.

Net percentage 

tightening 

standards

Delinquency 

rate

0.5%

0.6%

0.7%

0.8%

0.9%

1.0%

1.1%

-20%

0%

20%

40%

60%

80%

2019 2020 2021 2022 2023

Commercial Real Estate at Commercial Banks
6

Higher interest rates slowing construction and 

related industries like timber 

Sources: Census Bureau, Freddie Mac, Virginia Tech Forest Landowner Education Program

$100

$110

$120

$130

$140

$150

$160

2010 2012 2014 2016 2018 2020 2022

Virginia Pine Sawtimber

$/1,000 board-feet

30-year fixed 

rate mortgage

Housing starts

1200

1300

1400

1500

1600

1700

1800

2%

3%

4%

5%

6%

7%

8%

Nov-20 May-21 Nov-21 May-22 Nov-22 May-23

Thousands of starts

Mortgage rates

Mortgage rates and housing starts
7

Grain prices lower than last year

Sources: CME Group, CBOT

Corn

Soybeans

Wheat

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

Change in price from year-ago
8

Falling water levels contribute to higher grain 

transportation costs

Sources: US Geological Survey, Bureau of Labor Statistics

-20

-10

0

10

20

2020 2021 2022 2023

Feet

Mississippi River at Baton Rouge, LA 

Height over seasonal average

0%

10%

20%

30%

40%

50%

Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23

Change in PPI for Water Transportation of Freight
9

Dairy and hog producers feel margin stress

Sources: USDA, Iowa State University

-$60

-$40

-$20

$0

$20

$40

$60

2020 2021 2022 2023

Iowa Swine: Total profit (loss), $/head

$10

$15

$20

$25

2020 2021 2022 2023

Class III Milk ($/hundredweight)
10

California tree nut prices declined following glut of 

plantings

Sources: USDA - NASS

• High tree nut prices in the last 

decade encouraged farmers to 

plant tree nuts. 

• 3-to-7-year lead time for trees to 

bear fruit means oversupply of 

nuts today.

• Emblematic of risks for many 

perennial crops. $0

$1

$2

$3

$4

$5

0

400

800

1,200

1,600

2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Tree nut acreage and prices

Bearing Walnuts Bearing Almonds

Walnut Price Almond Price
11

Questions
Farm Credit System

Condition and Performance

as of September 30, 2023

Jarvis Tillman

Supervisory Senior FCA Examiner

Office of Examination
Loan growth slows; rural infrastructure lending 

drives gains

Source: Federal Farm Credit Banks Funding Corporation Information Statements 13

+1.7% Qtr 1.9% Qtr

+3.3% YTD +3.2% YTD

+6.0% 12M +6.5% 12M

Total 

Assets

9/30/23

$492.8

billion

Gross

Loans

9/30/23

$385.1

billion

7.8%

0.6%

-5.3%

5.1% 4.0%

-1.1%

7.8%

11.6%

1.2%

4.3%

0.0%

17.0%

Real Estate

Mortgage

(45%)

Production &

Intermediate

(18%)

Agribusiness

(18%)

Rural Infrastructure

(13%)

Loan Growth by Loan Type

(% change year-to-date through September)

3.5%

4.5%

2.7%

0.9%

2.0%

1.0%

5.1%

3.3%

5.2%

3.2%

Portfolio Loan Growth

(% change year-to-date through September)
Source: Federal Farm Credit Banks Funding Corporation Information Statements

14

Portfolio loan quality is strong; credit risk indicators

move slightly higher

$2,056 $2,099

$2,439 $2,549

$2,321

$1,784 $1,830

$2,042

0.85% 0.83%

0.92% 0.92%

0.77%

0.55% 0.51% 0.53%

Nonaccrual Loans

Other Nonperforming

OPO

% Nonperforming assets

(amounts in millions)

4.0%

3.5%

5.8%

5.5%

2.4%

3.4%

3.0%

5.3%

4.8%

1.1%

4.9%

4.6%

7.5%

5.8%

1.2%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%

Total

Portfolio

Real Estate

Mortgage

Production &

Intermediate (1)

Agribusiness

Rural

 Infrastructure

Sep-23 Sep-22 Sep-21

Loans Classified Less than Acceptable

(as a percentage of loans outstanding)

(1) Includes lease receivables

(1) Prior to the adoption of CECL on 1/1/23, nonperforming assets included accruing restructured loans

Nonperforming Assets(1)

(as a percentage of loans outstanding and other property owned)
The System reported solid earnings through 

the 1st nine months

Source: Federal Farm Credit Banks Funding Corporation Information Statements 15

$3,589 $3,716 $4,012 $4,055

$4,446

$5,201 $5,449 $5,507

218 188 146 95 165 

(142) (9)

464 

3Q-16 3Q-17 3Q-18 3Q-19 3Q-20 3Q-21 3Q-22 3Q-23

System Net Income

Provisions for Credit Losses - Loans

(amounts in millions)

System Earnings

(year-to-date through September)

$58 

$10 

($269)

$145 

($473)

$645 

Net Income

Other

Noninterest Expense

Noninterest Income

Provisions for Credit Losses

Net Interest Income

4.40% 3.56% 3.16% 3.79%

5.47%

2.36%

1.30% 0.83% 1.63%

3.52%

2.04%

2.26% 2.33%

2.16%

1.95%

2.42% 2.46% 2.46% 2.39% 2.42%

2019 2020 2021 2022 Q3 2023

% Rate: Earning Assets % Rate: Interest-Bearing Liabilities

% Net Interest Spread % Net Interest Margin

Net Interest Spread | Net Interest Margin

Change in Net Income

(year-to-date through September)
System capital and liquidity levels are strong 

Capital & Liquidity

(as of September 30, 2023)

▶ In total, System capital has increased 

$2.9 billion or 4.1% year-over-year.

▶ Total regulatory capital ratios are sound

- Banks: 13.2% to 16.9%

- Associations: 12.5% to 33.9%.

▶ Days of liquidity for the 4 funding banks 

range from 167 to 197 days.

▶ Capital and the allowance for credit 

losses on loans equaled 19.2% of 

System loans as of September 30 

compared with 19.6% a year ago.

Source: Federal Farm Credit Banks Funding Corporation Information Statements (1) Restricted Capital represents capital associated with the FCS Insurance Fund

16

$45.8 $48.9

$52.4 $55.5 $58.2

$62.4

$66.0

$69.5 $69.4 $72.3

16.9% 16.8% 16.7% 17.3% 17.4% 17.6% 17.1% 16.9%

14.9% 14.7%

Restricted Capital (1)

Total Capital less Restricted

Capital-to-Assets Ratio

(amounts in billions)

System Capital

(as of September 30)
Capital-to-assets ratio has improved recently 

despite increase in AOCL

▶ The System’s capital-to-asset ratio as of 

September 30 was 14.7% as compared 

to 14.4% at year-end and 14.9% for the 

same period year ago.

▶ For 2023, accumulated other 

comprehensive loss (AOCL) has 

increased $437 million to $5.7 billion. 

▶ Although capital growth has outpaced 

asset growth in 2023, it continues to lag 

asset growth year-over-year. 

Source: Federal Farm Credit Banks Funding Corporation Information Statements (1) AOCL refers to accumulated other comprehensive loss

17

(1,051)

(2,991)

(5,299)(5,492) (5,278)(5,715)

16.9%

14.9%

14.4% 14.7%

17.1%

15.9%

15.4% 15.6%

Accum. Other

Comprehensive Loss

capital-to-asset ratio

capital-to-asset ratio

excl. AOCL

capital-to-assets ratio 

excluding AOCL(1)

capital-to-assets ratio

(amounts in millions)

Impact of AOCL(1) on the capital-to-asset ratio

(at quarter-end)
Composite FIRS ratings remain stable

Composite FIRS Ratings

(based on 9/30/23 financial reporting)

▶ Composite FIRS ratings reflect the 

System’s sound financial condition.

▶ Over 96% of System banks and 

associations have a Composite FIRS 

rating of 1 or 2.

▶ Institutions rated 3 or lower hold 

under 1% of System assets.

18 Source: FCA’s FIRS ratings database

(1) active and reporting

44 39 34 30 32 33 35 35

31

29

32 35 35 32 26 24

2

5 7 7 4 4

3 2

0

10

20

30

40

50

60

70

80

90

1/1/17 1/1/18 1/1/19 1/1/20 1/1/21 1/1/22 1/1/23 10/1/23

Number of Rated Institutions

1 Rated 2 Rated 3 Rated or lower

Composite FIRS Ratings

Farm Credit System Banks and Associations(1)