C O N T E N T S
 

2 Chairman’s Message 

3 Highlights 

4 Board of Directors 

6 Overview 

7 Mission Statement 

8 Corporate Activities 

Insurance Fund Management 

Risk Management 

14 Report of Independent 

Public Accountants 

16 Financial Statements 

19 Notes to the Financial Statements 

26 Corporate Officers 

27 References 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHAIRMAN’S MESSAGE
 

The Farm Credit System achieved an important objective during 1998 when, for 

the first time, the Farm Credit Insurance Fund reached the secure base amount 

re q u i red by the Agricultural Credit Act of 1987. The System can be quite proud of 

this achievement and investors in Farm Credit System debt securities can view this 

as an important milestone as well. 

Since the inception of the Insurance Fund in 1989, the Farm Credit System 

Insurance Corporation’s Board of Directors (Board) has focused on building the 

amount in the Fund to 2 percent of insured debt outstanding as re q u i red by 

C o n g ress. Reaching the secure base amount, however, is only one step because the 

B o a rd has an ongoing statutory responsibility not only to achieve, but to maintain, 

the 2 percent level. 

Early in 1998, the Board reduced insurance premium rates to a level that, when 

considering growth in insured debt outstanding projected by System banks, was 

designed to maintain the Insurance Fund at the secure base amount throughout the 

y e a r. Actual growth in System insured debt (roughly 9 percent) during the year 

outstripped growth projected by System banks (about 3 to 4 percent). This caused 

the Insurance Fund to drop below the secure base amount at yearend. The Board 

is committed to maintaining the Insurance Fund at the secure base amount and 

will adjust premium rates as needed to achieve this objective. 

The financial condition of the System remains strong, with solid profits, stro n g 

loan volume growth, high loan quality, and higher capital levels at most institutions. 

The Board recognizes, however, that there are considerable uncertainties on the 

horizon re g a rding lower commodity prices and weaker agricultural export markets 

that will affect farm income in 1999. As a result, the loan portfolios of System 

institutions may reflect more risk during the year. The Board will closely monitor 

changing conditions and factor these into future premium rate decisions. 

I encourage everyone to closely review the accompanying audit re p o rt. In doing 

so, you will find the Corporation continues to effectively manage and control its 

operations and programs. Also noteworthy is that the Corporation’s primary 

computer systems are Year 2000 compliant. 

I wish to thank my colleagues on the Board for their service and the dedicated 

Corporation staff for their outstanding work. 

Michael M. Reyna, Chairm a n 

May 1999 

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During the first quarter of 

1998, the Insurance Fund 

for the first time attained 

its secure base amount of 

Selected 

Financial Data 

2 percent of adjusted 

i n s u red debt outstanding. (Dollars in millions) 1 9 9 8 1997 

The balance in the Farm Financial Condition: 

C redit Insurance Fund at 

December 31, 1998, was Total Assets $ 1,408 $ 1,310 

$1.26 billion. 

Total Liabilities $ 1 4 9 $ 139 

In accordance with targets 

established in the Strategic Insurance $ 1,259 $ 1,171 

Plan, the Corporation has Fund Balance 

successfully completed Y2K 

testing of its computer 

systems. Each system is O p e r a t i o n s : 

now Y2K compliant. 

R e v e n u e s $ 99.5 $ 142.3 

The Corporation held 1998 

calendar year operating Operating Expenses $ 1.5 $ 1.5 

costs to $1.5 million, 

unchanged from 1997. Insurance Expense $ 9.7 $ 9.1 

Investment income 

Net Income $ 8 8 . 3 $ 131.7 

exceeded perf o rmance 

m e a s u res with the port f o l i o ’s 

average yield exceeding 

the interest yield at seven 

comparable private sector 

System Insured 

Debt Outstanding 

(principal and 

i n t e rest in billions) 

$ 6 8 . 4 $ 62.9 

funds that invest in U.S. 

Tre a s u ry securities. Insurance Fund as a 1 . 9 4 % 1 . 9 7 % 

p e rcentage of 

Adjusted Insured Debt 

$ 1 , 1 6 9 

$ 130 

$ 1,039 

$ 147.2 

$ 1.5 

$ 8.5 

$ 137.2 

$ 60.7 

1 9 9 6 

1 . 8 2 % 

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The Farm Cre d i t 

System Insurance 

Corporation 

is managed by a 

t h ree-member board 

of directors composed 

of the members of 

the Farm Cre d i t 

Administration (FCA) 

B o a rd. The Chairm a n 

of the Corporation’s 

B o a rd of Dire c t o r s , 

h o w e v e r, must be an 

FCA Board Member 

other than the 

C h a i rman of the 

FCA Board. 

BOARD OF DIRECTORS 

Michael M. Reyna became a member of the Corporation’s Board in 

October 1998 and was elected by his colleagues as its Chairman in 

November 1998. Prior to joining the Board, he served as Pre s i d e n t 

C l i n t o n ’s director of USDA Rural Development (formerly known as 

F a rmers Home Administration) in California from November 1993 to 

October 1998. In this capacity, Mr. Reyna was responsible for gro w i n g 

and managing a diversified portfolio of housing, business, and infras t ru c t u re loans totaling more than $2.6 billion. He implemented a 

number of significant initiatives in California on behalf of the 

C l i n t o n - G o re Administration, including the Northwest Economic 

Adjustment Initiative, the Rural Empowerment Zone-Enterprise 

Community program, the AmeriCorps program, and several 

Reinventing Government Initiatives. Pre v i o u s l y, Mr. Reyna served 

as a principal advisor to the California State Legislature for 11 years, 

working on financial service industry regulation, and a wide range of 

issues including housing, economic development, local govern m e n t 

finance and political re f o rm. While serving as a private consultant to 

the Texas 2000 Project, an initiative of the Govern o r’s Office of 

Budget and Planning, he developed and implemented a computerbased simulation model of the Texas economy, which estimated 

employment and population trends through the year 2000. He was 

an appointed member of several local commissions, including the 

Sacramento City Planning Commission, of which he served as 

C h a i rman in 1993. Mr. Reyna holds a bachelor’s degree in business 

administration from the University of Texas at Austin and a master’s 

d e g ree in public policy and administration from the LBJ School of 

Public Affairs at the University of Te x a s . 

Marsha Pyle Mart i n , a member of the Corporation’s Board since 

October 1994, is also Chairman and Chief Executive Officer of the 

F a rm Credit Administration. She brings to her position more than 35 

years of experience in agriculture and agricultural finance. The Te x a s 

native, who holds a B.A. from Texas Wo m a n ’s University and an M.S. 

f rom Texas A&M University, joined the Federal Intermediate Cre d i t 

Bank of Texas in 1970 and in 1979 earned the distinction of being the 

first woman appointed to a senior officer position in the Farm Cre d i t 

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System. During her career with the Farm Credit Bank of Texas she 

gained broad management experience, providing leadership and dire ction for the bank’s corporate relations, legal, operations and superv ision, management information, human re s o u rces, marketing, and 

public and legislative affairs departments. She has held leadership 

positions with various agricultural councils and advisory committees in 

the State of Texas. In 1995, she received the Academy of Honor in 

Agricultural Credit, awarded the Texan making the most significant 

contribution to agricultural credit. She holds the Texas Wo m a n ’s 

University Distinguished Alumna Aw a rd for 1996 and was the 1990 

recipient of the Cooperative Communicators Association’s H.E. 

Klinefelter Aw a rd, the association’s highest honor, in recognition of 

her distinguished contributions to cooperative communications. 

Ann Jorg e n s e n became a member of the Corporation’s Board in May 

1997. She brings to her position extensive experience in pro d u c t i o n 

a g r i c u l t u re and accounting. She started farming in partnership with 

her husband in 1963. Their farming enterprise now includes a cro pping operation, Jorg-Anna Farms, and a hog operation, Ti m b e r l a n d 

Hogs Ltd. She has worked as a tax accountant and as a licensed commodity bro k e r. In 1981, she started Farm Home Offices, a mail ord e r 

catalog company, which markets farm management products to help 

f a rmers improve their financial and production management systems. 

She served on a number of governing boards for the State of Iowa, 

including six years as a member of the Board of Regents. The Board 

of Regents is responsible for the state’s three universities, including 

the University of Iowa Hospital, a world renowned teaching hospital, 

and its affiliated clinics. She is a co-author of a pro d u c e r’s guide entitled The Farm e r’s Guide to Total Resource Management and is the author of 

a book Put Paperwork in its Place.She was honored as the Outstanding 

Young Woman for the State of Iowa in 1976 and was inducted into the 

Iowa Volunteer Hall of Fame in 1989. She and her husband were 

recognized by F a rm Future smagazine in 1983 as the owners of one of 

the Top 10 Best Managed Farms. In 1997, she was one of the national 

agricultural leaders named by Alpha Zeta, the national honorary 

agricultural fratern i t y, to its Centennial Honor Roll. A native of Iowa, 

she holds a B.A. from the University of Iowa. 

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O V E RV I E W
 

The Farm Credit System Insurance Corporation ( C o r p o r a t i o n ) 

was established by the Agricultural Credit Act of 1987 (1987 Act) as 

an independent U.S. Govern m e n t - c o n t rolled corporation. The 

C o r p o r a t i o n ’s primary purpose is to ensure the timely payment of 

principal and interest on insured notes, bonds, and other obligations 

issued on behalf of Farm Credit System (System) banks. This re p o rt 

discusses the Corporation’s operations for 1998, including management of the Insurance Fund, the level of insured debt outstanding, 

and risk management activities. 

The System is a privately owned, nationwide financial cooperative 

that lends to agriculture and rural America. By ensuring the re p a yment of System debt securities to investors, the Corporation helps to 

maintain a dependable source of funds for the farmers, ranchers, and 

other borrowers of the System. The 1987 Act provided for all System 

banks to be insured. At yearend 1998, there were eight insure d 

System banks. 

During the first quarter of 1998, the Insurance Fund, for the 

first time, attained its secure base amount of 2 percent of adjusted 

i n s u red debt outstanding. The 2 percent secure base amount is 

defined in statute and its achievement has been the principal goal 

of the Corporation since its inception in 1989 when it first began to 

manage the Insurance Fund. The Insurance Fund finished 1998 at 

$1.26 billion, slightly below the secure base amount as a result of 

9 percent growth in insured debt during the course of the year. 

The System, with $84 billion in assets on a combined basis, earn e d 

$1.2 billion in net income during 1998. Surplus as a percentage of total 

assets (excluding the Insurance Fund) increased from 10.8 percent at 

December 1997 to 11.1 percent at yearend. Asset quality re m a i n e d 

good at most System institutions; however, some deterioration was 

experienced with non-perf o rming assets increasing from 1.4 percent of 

total loans and other pro p e rty owned in 1997 to 2.1 percent at yeare n d . 

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As an independent entity, the
 

F a rm Credit System Insurance
 

Corporation shall:
 

● P rotect investors in insured 

F a rm Credit System obligations 

and taxpayers through sound 

administration of the Farm Credit 

Insurance Fund (Insurance Fund); 

●	 E x e rcise its authorities to minimize 

loss to the Insurance Fund; and 

●	 Help ensure the future of a 

p e rmanent system for delivery of 

c redit to agricultural borro w e r s . 

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INSURANCE FUND MANAGEMENT
 

8 

A C T I V I T I E S 

G rowth in the Insurance Fund The Insurance Fund grew to $1.26 

billion at yearend, an increase of 8 percent from 1997. The Insurance 

Fund re p resents the Corporation’s equity, i.e., the diff e rence between 

its total assets ($1.408 billion) and its total liabilities, including its 

insurance obligations ($149 million). The chart below shows growth in 

total Corporation assets and the Insurance Fund balance for the past 

five years. 

GROWTH IN THE INSURANCE FUND 

Revenues and Expenses The Corporation’s revenues are derived 

f rom two sources, premiums collected from insured System banks 

and interest income earned on the Corporation’s investment port f o l i o . 

Total revenues for 1998 were $99 million. Revenues declined fro m 

$142 million in 1997 as a result of lower insurance premium rates 

in effect during the year. The decrease in insurance premium 

income was partially offset by an increase in interest income on the 

C o r p o r a t i o n ’s investment portfolio. The Corporation’s net income in 

1998 was $88 million. 

Corporation expenses totaled $11.3 million in 1998. Insurance 

expense was $9.7 million, consisting entirely of the annual pro v i s i o n 

for the liability to repay the Farm Credit System Financial Assistance 

Corporation (FAC) (see Note 5). 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1998 REVENUES 

The Corporation operates with a small core staff of 

10 and utilizes contractors when necessary for specialized expertise. This organizational stru c t u re helps keep 

operating costs low while offering the flexibility to leverage capabilities by using external re s o u rces. For example, the FCA provides examination and certain administrative services to the Corporation on a reimbursable fee 

basis. The Corporation also uses contractual arr a n g ements with the Federal Deposit Insurance Corporation 

and the General Services Administration for other 

specialized serv i c e s . 

Operating costs for 1998 of $1.5 million were 

unchanged from 1997. Of this amount, the 

C o r p o r a t i o n ’s fixed costs for permanent staff, travel, 

rent, and miscellaneous expenses totaled $1.3 million. 

Contract services re p resented the balance of operating 

expenses of $0.2 million. These expenses include 

amounts reimbursed to the FCA for examination and 

other support and amounts paid to other contractors. 

Operating costs re p resented 0.11 percent of average 

assets. This efficiency ratio has improved over the 

past five years, declining from 0.18 percent in 1994. 

The Corporation’s budget in 1999 for operating 

costs is $1.8 million. 

P remium Collection and Secure Base Amount 

The Corporation assessed $20 million in premium 

revenue in 1998, a 72 percent decrease that reflects 

the effect of a reduction in insurance premium rates 

a p p roved by the Corporation’s Board in January 1998. 

P remiums are collected annually from all System banks 

based on the retail loan volume at each bank and its 

related associations. The Farm Credit Act of 1971, as 

amended, (the Act) provides for insurance premiums 

to be assessed on four classes of System loan assets: 

●	 A c c rual loans (non-government guaranteed balance) – 

f rom zero to 15 basis points; 

●	 N o n a c c rual loans – from zero to 25 basis points; 

●	 P o rtions of Federal Government-guaranteed accrual 

loans – from zero to 1.5 basis points; and 

●	 P o rtions of state government-guaranteed accrual 

loans – from zero to 3 basis points. 

(See Note 4 to the Corporation’s financial statements.) 

P remium revenue was accrued at December 31, 

1998, re p resenting the estimated premiums that were 

e a rned but not yet collected for calendar year 1998; 

these premiums were collected on January 28, 1999. 

The Corporation’s Board sets insurance pre m i u m 

rates in accordance with its Policy Statement on 

Adjustments to Insurance Premiums. The Policy 

Statement provides for a review to be conducted 

O P E R ATING EXPENSES AS A PERCENTAGE OF ASSETS 

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semiannually and sets out the following five factors the 

B o a rd will consider in determining whether to adjust 

p re m i u m s : 

●	 Level of the Insurance Fund relative to the secure 

base amount; 

●	 Any projected losses to the Insurance Fund; 

●	 Condition of the System; 

●	 Health of the agricultural economy; and 

●	 Risk in the financial enviro n m e n t . 

In January 1998, the Board established insurance 

p remium rates on accrual loans at 3 basis points, a 

75 percent reduction from the rate assessed in 1997. 

This reduction reflected the strong financial condition 

of the System and the near attainment of the Insurance 

F u n d ’s secure base amount. Insurance premium rates 

w e re maintained at 25 basis points on nonaccrual loans 

and zero basis points on government-guaranteed loans. 

These rates were aff i rmed by the Board at its mid-year 

review in August. 

The Act establishes the secure base amount for the 

Insurance Fund as 2 percent of insured obligations 

issued and outstanding or such other percentage determined by the Corporation, in its sole discretion, to be 

actuarially sound. A reduction from insured obligations 

outstanding of a percentage of the guaranteed port i o n s 

of principal outstanding on govern m e n t - g u a r a n t e e d 

loans in accrual status is re q u i red in determining the 

s e c u re base amount. The chart below compares the 

INSURANCE FUND RELATIVE TO 2% SECURE BASE AMOUNT 

g rowth in the Insurance Fund over the past three years 

with the secure base amount. 

In the first quarter of 1998, the Insurance Fund 

attained the 2 percent secure base amount for the first 

time. Significant growth in insured debt outstanding 

during the balance of 1998 left the Insurance Fund 

at 1.94 percent at yearend. Because the secure base 

amount is a percentage of insured debt outstanding, it 

fluctuates depending upon System bank funding tre n d s . 

The Corporation monitors insured debt issuance 

t rends on a monthly basis. 

After the secure base amount is reached and 

maintained, the Act provides for the Corporation to 

annually determine and segregate any excess Insurance 

Fund balances into allocated insurance re s e rve accounts 

(AIRAs). A separate account is established for each 

System bank (90 percent) and stockholders of the 

FAC (10 perc e n t ) . 

This annual allocation is determined by the amount 

by which the Insurance Fund exceeds the secure base 

amount calculated on an average daily balance basis, 

after adjustment for estimated operating and insurance 

expenses for the immediately succeeding calendar year. 

Excess Insurance Fund balances may be paid to System 

banks and FAC stockholders beginning no sooner than 

eight years after the aggregate Insurance Fund balance 

attains the secure base amount, but not before 2005. 

The law provides for this authority to be exercised at 

the sole discretion of the Corporation’s Board. Because 

the Insurance Fund was below the secure base amount 

at yearend 1998, there were no excess balances to 

a l l o c a t e . 

In October the Corporation’s Board approved a 

p roposed Policy Statement governing the operation of 

the AIRAs. The Policy Statement was published in 

the Federal Registerfor public comment in October 

1998. The comment period closed in January 1999 

and Corporation staff are reviewing the comments that 

have been re c e i v e d . 

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Investment of Insurance Fund Assets The Corporation had cash and investments totaling $1.36 billion at 

December 31, 1998, up 13 percent from yearend 1997. 

Funds are invested in U.S. Tre a s u ry securities in accordance with section 5.62 of the Act, 12 U.S.C. 2277a-11, 

and the Corporation’s Investment Policy. The Policy 

p rovides that the Corporation will seek the maximum 

re t u rn consistent with its liquidity needs and a minimum exposure to loss of principal. The average 

p o rtfolio yield for 1998 was 6.03 perc e n t . 

As a measure of investment management perf o rmance, the Corporation’s average yield is compared 

with the interest yield of seven comparable U.S. 

Tre a s u ry securities investment funds available in the 

private sector. The comparison for the past five years 

is shown in the chart to the right. 

The Corporation’s average yield has exceeded the 

peer group over time, primarily as a result of the slightly 

longer weighted average portfolio maturity maintained 

by the Corporation. During periods of rising intere s t 

rates this diff e rential narrows, while the opposite occurs 

during periods of falling interest rates. 

The Corporation maintains an investment strategy 

of purchasing a ladder of maturities and holding investments to maturity in accordance with its Investment 

P o l i c y. The Policy provides for the portfolio to be 

divided into a liquidity pool and an investment pool. 

The liquidity pool may only be invested in U.S. 

Tre a s u ry securities with maturities of one year or less 

and must be no less than 15 percent or more than 

C O R P O R ATION INTEREST YIELD 

( C o m p a red with Similar Bond Funds’ Interest Y i e l d ) 

25 percent of total investments. The investment pool 

consists of the balance of the portfolio and may be 

invested in U.S. Tre a s u ry securities with maturities 

f rom one to 10 years, with the limit that no more than 

25 percent of the investment pool may be invested 

longer than five years. 

The table below shows the balances and maturities 

of the liquidity pool and investment pool at December 

31, 1998. The weighted average portfolio maturity at 

y e a rend was 2.9 years. The liquidity pool component 

includes $61.9 million in cash equivalents. 

INVESTMENT PORT F O L I O 

$ Millions % of Port f o l i o 

L i q u i d i t y One Year or Less $ 299 2 2 % 

P o o l 

Investment One Year to Five Years $ 831 6 1 % 

Pool Five Years to Ten Ye a r s $ 230 1 7 % 

To t a l $1,360 1 0 0 % 

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OTHER OBLIGAT I O N S I n s u red and Other Obligations Obligations insure d 

by the Corporation are statutorily defined as any note, 

bond, debenture, or other obligation issued on behalf 

of insured System banks under subsection (c) or (d) 

of section 4.2 of the Act, 12 U.S.C. 2153. Section 

4.2(c) authorizes a System bank to join with any or 

all banks organized and operating under the same 

title of the Act to issue consolidated notes, bonds, 

d e b e n t u res, or other obligations. Curre n t l y, there are 

no consolidated notes, bonds, or other obligations 

outstanding. Section 4.2(d) authorizes a System bank 

to join with the other banks of the System to issue 

Systemwide notes, bonds, debentures, or other obligations. Insured obligations are issued through the 

Federal Farm Credit Banks Funding Corporation on 

behalf of the System banks. The outstanding principal 

and accrued interest balances of insured obligations at 

December 31 for the past five years are shown below. 

I n s u red obligations increased by 9 percent in 1998. 

This increase was used primarily to finance higher levels 

of System loan and investment assets. 

INSURED OBLIGAT I O N S 

(Principal and Intere s t ) 

The Corporation is also re q u i red by statute to use the 

Insurance Fund to satisfy System institution defaults on 

obligations related to FAC-issued bonds under section 

6.26(d)(3) of the Act, 12 U.S.C 2278b-6, and ensure the 

re t i rement of eligible borrower stock. The above chart 

illustrates the outstanding balances of these obligations 

at December 31 for the past five years. 

During 1998, other obligations declined as the FA C 

called and re t i red $240 million in high coupon assistance 

bonds in November. In addition, System banks have 

been providing funds to FAC for the repayment of other 

outstanding FAC assistance bonds. At December 31, 

1998, the System had provided for the repayment of 

a p p roximately $0.5 billion of the $1.0 billion of FA C 

assistance bonds still outstanding. Other obligations also 

declined as further re t i rement of outstanding eligible 

b o rrower stock occurred during the year. At yeare n d , 

eligible borrower stock outstanding at System institutions totaled $76 million. 

The Corporation’s principal liability for insurance 

obligations at December 31, 1998, was $149 million, 

which re p resents the liability to repay the FAC for 

financial assistance to the Federal Land Bank of Jackson 

in Receivership (see Note 5). 

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RISK MANAGEMENT
 

The Corporation’s program to identify and manage 

risk to the Insurance Fund minimizes the Fund’s 

e x p o s u re to potential losses through early detection. 

Corporation staff use special examination pro c ed u res to evaluate the condition of weaker System 

institutions. FCA examination staff perf o rm the 

majority of the fieldwork for these examinations on 

a reimbursable basis. In addition, the Corporation 

assesses risk exposure to the Insurance Fund 

t h rough its ongoing review and analysis of the financial condition of System institutions, operation of 

analytical models, review of corporate actions 

a p p roved by FCA for System institutions, Report s 

of Examination of System institutions, and by serving as a nonvoting participant on FCA’s Regulatory 

E n f o rcement Committee. Corporation staff also 

monitor the development of legislative, judicial, 

re g u l a t o ry, and economic trends that could aff e c t 

the various risks to the Insurance Fund. 

Financial Assistance and Receivership 

The Insurance Corporation is authorized to pro v i d e 

assistance to a System institution to prevent default, 

re s t o re it to normal operations, or to facilitate a merg e r 

or consolidation. At the present time, no assistance 

a g reements are outstanding. 

The Corporation’s program for managing re c e i v e rships and conservatorships relies on maintaining a 

capability to access specialized expertise, when 

needed, to handle resolutions of troubled institutions. 

This approach contains costs during periods of limited or no activity while providing the statutorily 

mandated capacity to deal effectively with potential 

receiverships or conserv a t o r s h i p s . 

Several developments occurred during the year 

which strengthened the Corporation’s stand-by 

capabilities. Early in 1998, the Corporation executed 

a Memorandum of Understanding with the Federal 

Deposit Insurance Corporation that provides access 

to specialized contractor expertise available to the 

FDIC. Later in 1998, the General Serv i c e s 

Administration awarded a Federal Govern m e n t - w i d e 

contract for Financial Asset Services. This contract, 

which is available to the Corporation, establishes a 

pool of pre-qualified firms including real estate management companies, public accounting firms, investment and commercial banks, and a variety of other 

f i rms specializing in asset management and disposition. After discussions with GSA re p re s e n t a t i v e s , 

the Corporation determined that these re s o u rc e s 

could be utilized to meet most contingencies. 

These contracting arrangements provide a quick, 

s t reamlined approach to securing additional staff 

e x p e rtise and re s o u rces, enhancing the Corporation’s 

capability to meet its statutory re s p o n s i b i l i t i e s . 

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FINANCIAL STAT E M E N T S
 

Statements of Financial Condition 

as of December 31, 1998 and 1997 

($ in thousands) 

1 9 9 8 1 9 9 7 

A s s e t s 

Cash and Cash Equivalents $ 61,959 $ 1 , 7 4 8 

Investments in U.S. Tre a s u ry Obligations 

(Note 3) 1 , 2 9 8 , 4 3 3 1 , 2 0 6 , 4 3 2 

A c c rued Interest Receivable 2 7 , 5 1 1 3 0 , 4 4 1 

P remiums Receivable (Note 4) 1 9 , 9 6 6 7 1 , 2 4 2 

Total Assets 1 , 4 0 7 , 8 6 9 1 , 3 0 9 , 8 6 3 

Liabilities and Insurance Fund 

Accounts Payable and 

A c c rued Expenses (Note 7) 1 7 8 1 6 4 

Liability for Estimated Insurance 

Obligations (Note 5) 1 4 8 , 9 2 1 1 3 9 , 1 7 8 

F a rm Credit Insurance Fund 1 , 2 5 8 , 7 7 0 1 , 1 7 0 , 5 2 1 

Total Liabilities and 

Insurance Fund $ 1,407,869 $ 1,309,863 

The accompanying notes are an integral part of these financial statements. 

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FINANCIAL STAT E M E N T S 

Statements of Income and Expenses and Changes in Insurance Fund 

for the Years Ended December 31, 1998 and 1997 

($ in thousands) 

I n c o m e 

P remiums (Note 4) 

I n t e rest Income 

Total Income 

1 9 9 8 

$ 1 9 , 9 7 2 

7 9 , 5 4 5 

9 9 , 5 1 7 

1 9 9 7 

$ 71,242 

7 1 , 0 8 8 

1 4 2 , 3 3 0 

E x p e n s e s 

Administrative Operating 

Expenses (Note 7) 

P rovision for Estimated Insurance 

Obligations (Note 5) 

Net Income 

1 , 5 2 5 

9 , 7 4 3 

8 8 , 2 4 9 

1 , 5 1 1 

9 , 1 0 5 

1 3 1 , 7 1 4 

F a rm Credit Insurance Fund, 

Beginning of Ye a r 1 , 1 7 0 , 5 2 1 1 , 0 3 8 , 8 0 7 

F a rm Credit Insurance Fund, 

End of Ye a r $ 1,258,770 $ 1,170,521 

The accompanying notes are an integral part of these financial statements. 

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FINANCIAL STAT E M E N T S
 

Statements of Cash Flows 

for the Years Ended December 31, 1998 and 1997 

($ in thousands) 

1 9 9 8 1 9 9 7 

Cash Flows from Operating Activities 

Net Income $ 8 8 , 2 4 9 $ 131,714 

Adjustments to Reconcile Net Income 

to Net Cash Provided by Operating Activities: 

D e c rease (Increase) in Accrued Interest Receivable 2 , 9 3 0 3 3 0 

D e c rease (Increase) in Premiums Receivable 5 1 , 2 7 6 1 4 , 4 7 4 

Net Amortization and Accretion of Investments 1 0 , 9 9 1 1 2 , 5 1 1 

( D e c rease) Increase in Accounts Payable 

and Accrued Expenses 1 4 ( 1 1 1 ) 

I n c rease in Liability for Estimated 

Insurance Obligations 9 , 7 4 3 9 , 1 0 5 

Net Cash Provided by Operating Activities 1 6 3 , 2 0 3 1 6 8 , 0 2 3 

Cash Flows from Investing Activities 

Payments for Purchase of U.S. Tre a s u ry 

O b l i g a t i o n s (336,871) ( 4 0 3 , 3 3 2 ) 

P roceeds from Redemption of 

U.S. Tre a s u ry Obligations 2 3 3 , 8 7 9 2 3 6 , 0 9 8 

Net Cash Used in Investing Activities ( 1 0 2 , 9 9 2 ) ( 1 6 7 , 2 3 4 ) 

Net Change in Cash and Cash Equivalents 6 0 , 2 1 1 7 8 9 

Cash and Cash Equivalents, 

Beginning of Year 1 , 7 4 8 9 5 9 

Cash and Cash Equivalents, 

End of Ye a r $ 61,959 $ 1 , 7 4 8 

The accompanying notes are an integral part of these financial statements. 

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NOTES TO THE FINANCIAL STAT E M E N T S 

As of December 31, 1998 and December 31, 1997 

Note 1 

Insurance Fund: Statutory Framework 

The Agricultural Credit Act of 1987 (1987 

Act) established the Farm Credit System 

Insurance Corporation (Corporation) for the 

purpose of ensuring the timely payment 

of principal and interest on notes, bonds, 

d e b e n t u res, and other obligations issued 

under subsection (c) or (d) of section 4.2 of 

the Farm Credit Act of 1971, as amended, 

(Act) (insured obligations). Each bank in the 

F a rm Credit System (System) part i c i p a t i n g 

in insured obligations is an insured System 

bank. At December 31, 1998, there were 

eight insured System banks and 153 dire c t 

lender associations. 

The Corporation is managed by a board of 

d i rectors consisting of the same individuals 

as the Farm Credit Administration (FCA) 

B o a rd except that the Chairman of the FCA 

B o a rd may not serve as the Chairman of the 

C o r p o r a t i o n ’s Board of Dire c t o r s . 

The Corporation has the responsibility to 

expend amounts to the extent necessary to: 

1. Ensure the timely payment of interest and 

principal on insured obligations in the 

event of default by an insured System 

b a n k ; 

2. Satisfy, pursuant to section 6.26(d)(3) of 

the Act, defaults by System banks on 

obligations related to the issuance of 

U.S. Tre a s u ry-guaranteed bonds by the 

F a rm Credit System Financial Assistance 

Corporation (FAC) (FAC bonds) 

(see Note 5); and 

3. Ensure the re t i rement of eligible borrower 

stock at par value. 

The Corporation, in its sole discretion, is 

authorized to expend amounts to pro v i d e 

financial assistance to certain insured institut i o n s . 

The balances outstanding at December 

31, 1998, for each of the components of the 

C o r p o r a t i o n ’s insurance responsibilities 

w e re $68.4 billion of insured obligations, 

$1.0 billion of FAC bonds (of which $0.5 billion in repayments have been provided for), 

and $76 million of eligible borrower stock. 

If the Corporation does not have suff i c i e n t 

funds to ensure payment on insured obligations, System banks will be re q u i red to make 

payments under joint and several liability, as 

re q u i red by section 4.4 (2) of the Act. 

Under section 5.63 of the Act, the 

Corporation is exempt from all Federal, state, 

and local taxes with the exception of re a l 

p ro p e rty taxes. 

Note 2 

S u m m a ry of Significant Accounting 

P o l i c i e s 

Accounting Principles and Repor t i n g 

P r a c t i c e s —The accounting and re p o rt i n g 

policies of the Corporation conform to generally accepted accounting principles and, as 

such, the financial statements have been prep a red using the accrual basis of accounting. 

The preparation of financial statements in 

c o n f o rmity with generally accepted accounting principles re q u i res management to make 

estimates and assumptions that affect the 

re p o rted amount of assets and liabilities at 

the date of the financial statements and the 

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re p o rted amount of revenues and expenses during the 

re p o rting period. Actual results could differ from those 

e s t i m a t e s . 

Cash and Cash Equivalents—Cash and cash equivalents include investments in U.S. Tre a s u ry obligations 

with original maturities of 90 days or less. At December 

31, 1998, the Corporation held $61.9 million in 

o v e rnight Tre a s u ry Certificates maturing on January 4, 

1999, with an investment rate of 4.86 perc e n t . 

Investments in U.S. Tre a s u ry Obligations—S e c t i o n 

5.62 of the Act re q u i res that funds of the Corporation, 

not otherwise employed, shall be invested in obligations 

of the United States or in obligations guaranteed as to 

principal and interest by the United States. The 

Corporation has classified its investments as held to 

maturity in accordance with the Statement of Financial 

Accounting Standard (SFAS) No. 115 and carries them 

at cost. Premiums and discounts are amortized or accre ted using the straight-line method, which appro x i m a t e s 

the interest method, over the terms of the re s p e c t i v e 

i s s u e s . 

Liability for Estimated Insurance Obligations— 

The liability for estimated insurance obligations is the 

p resent value of estimated probable insurance payments 

to be made in the future based on the Corporation’s 

analysis of economic conditions of insured System 

banks. (Also see Note 5.) 

The insured System banks’ primary lending markets 

a re borrowers engaged in farming, ranching, and pro d u cing or harvesting of aquatic products, and their cooperatives. Financial weaknesses in these market segments 

and the effect of general market conditions on the 

i n s u red System banks’ borrowers could adversely aff e c t 

the banks’ financial condition and pro f i t a b i l i t y. Insure d 

System banks also face risks from changing interest rate 

e n v i ronments and the need to maintain ongoing access 

to financial markets. Adverse changes in the financial 

condition and profitability of insured System banks 

resulting from increased levels of credit, financial, or 

other risks could occur in the future which would have 

a material effect on the liability for estimated insurance 

o b l i g a t i o n s . 

P re m i u m s —Annual premiums are re c o rded as re v e n u e 

during the period on which the premiums are based. 

All premiums are due on or before January 31 of the 

year subsequent to the year in which they are earn e d . 

R e t i rement Plan—All permanent Corporation employees are covered by the Civil Service Retirement System 

(CSRS) or the Federal Employees Retirement System 

( F E R S ) . 

The Corporation’s contribution to the CSRS plan 

equals the 7 percent of base pay contributed by employees covered by that system. For those employees 

c o v e red by FERS, the Corporation’s contribution is 

11.4 percent of base pay. In addition, for FERS-covere d 

employees, the Corporation automatically contributes 

1 percent of base pay to the employee’s Thrift Savings 

Plan account, matches the first 3 percent contributed 

by the employee, and matches one-half of the next 

2 percent contributed by the employee. 

R e t i rement plan expenses amounted to $99,668 in 

1998 and $94,103 in 1997. 

20 
 

 

 

 

 

Note 3 

I n v e s t m e n t s 

At December 31, 1998, and at December 31, 1997, investments in U.S. Tre a s u ry obligations 

consisted of the following: 

($ in thousands) 

G ro s s G ro s s E s t i m a t e d 

December 31, A m o rt i z e d U n re a l i z e d U n re a l i z e d M a r k e t 

1 9 9 8 C o s t G a i n s L o s s e s Va l u e 

U.S. Tre a s u ry 

N o t e s 

$ 1 , 2 9 8 , 4 3 3 $ 4 3 , 3 6 0 ( $ 5 7 0 ) $ 1 , 3 4 1 , 2 2 3 

December 31, 

1 9 9 7 

U.S. Tre a s u ry 

N o t e s 

$ 1 , 2 0 6 , 4 3 2 $ 1 9 , 0 6 9 ( $ 8 4 3 ) $ 1 , 2 2 4 , 6 5 8 

The amortized cost and estimated market value of U.S. Tre a s u ry obligations at December 31, 

1998, by contractual maturity, are shown below. 

($ in thousands) E s t i m a t e d 

A m o rt i z e d M a r k e t 

C o s t Va l u e 

Due in one year or less $ 2 3 7 , 2 4 4 $ 2 3 9 , 3 5 7 

Due after one year through five years 8 3 1 , 1 7 0 8 5 9 , 9 4 0 

Due after five years through 10 years 2 3 0 , 0 1 9 2 4 1 , 9 2 6 

$ 1,298,433 $ 1,341,223 

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Note 4 

P re m i u m s 

Each System bank which issues insured obligations 

under subsection (c) or (d) of section 4.2 of the Act is an 

i n s u red System bank and is re q u i red to pay premiums to 

the Corporation. 

The Act establishes the range of insurance pre m i u m 

rates that the Corporation’s Board may assess for any 

calendar year based on four classes of an insured bank’s 

loan assets. The four classes of assets and the range that 

may be assessed for each are: (1) average annual accrual 

loans outstanding (other than the guaranteed portions 

of Government-guaranteed accrual loans) for the year 

may be from zero to 0.0015; (2) average annual nona c c rual loans outstanding may be from zero to 0.0025; 

(3) average annual portions of Federal Govern m e n t ­

guaranteed accrual loans may be from zero to 0.00015; 

and (4) average annual portions of state govern m e n t ­

guaranteed accrual loans may be from zero to 0.0003. 

In January 1998, the Board established insurance premium rates for 1998 at 0.0003 for accrual loans, 0.0025 for 

n o n a c c rual loans and zero for Govern m e n t - g u a r a n t e e d 

loans. In August 1998, the Corporation’s Board appro v e d 

continuing these rates for the second half of 1998. 

The 1987 Act set a base amount for the Insurance 

Fund to achieve. The statutory secure base amount is 

equivalent to 2 percent of the aggregate outstanding 

i n s u red obligations of all insured System banks (adjusted 

d o w n w a rd by a percentage of the guaranteed portions of 

principal outstanding on Government-guaranteed loans 

in accrual status) or such other percentage or amount 

d e t e rmined by the Corporation, in its sole discretion, to 

be actuarially sound. When the amount of the Insurance 

Fund exceeds the secure base amount, the Corporation 

is re q u i red to reduce the premiums, but it still must 

e n s u re that reduced premiums are sufficient to maintain 

the level of the Insurance Fund at the secure base 

amount. In the first quarter of 1998, the Insurance 

Fund attained the secure base amount for the first time. 

At December 31, 1998, due to growth in insured debt 

outstanding during the second half of the year, the 

Insurance Fund dropped to 1.94 percent of adjusted 

i n s u red obligations outstanding. 

Note 5 

Financial Assistance to System Banks and 

Estimated Insurance Obligations 

The 1987 Act re q u i red that the FCA charter the Farm 

C redit System Assistance Board (Assistance Board) and 

the FAC (see Note 1) to carry out a program of financial 

assistance to the Farm Credit System. In order to raise 

funds to provide this assistance, the FAC had the authority to issue debt obligations with a maturity of 15 years. 

During 1988 to 1992, the FAC issued $1.26 billion in 

bonds. These funds were used to provide assistance to 

c e rtain System banks experiencing financial diff i c u l t y 

and for other statutory authorized purposes. 

Financial Assistance to Certain System Banks 

During the period from 1988 to 1992, assistance was 

p rovided to four open banks through the purchase by the 

FAC of $419 million in pre f e rred stock issued by these 

institutions. Similar assistance totaling $374 million 

was provided to the Federal Land Bank of Jackson in 

Receivership to facilitate its closing and liquidation. 

Subject to Assistance Board approval, these assistance 

funds were used by the FAC to purchase pre f e rred stock 

issued by an institution experiencing financial diff i c u l t y. 

Prior to the maturity of the related 15-year debt obligations, each institution can redeem its pre f e rred stock, 

pursuant to Section 6.26 of the Act, so as to allow the 

FAC to pay the principal of the maturing obligation. 

While an institution that issues pre f e rred stock to the 

FAC is primarily responsible for providing funds for payment of the FAC bonds (through redemption of the 

p re f e rred stock purchased with the proceeds of the FA C 

bonds), the institution may be prohibited from re d e e ming, or may elect not to redeem, the pre f e rred stock pursuant to section 6.26 of the Act. If this occurs, then the 

FAC must use funds from its trust fund, to the extent 

available, to re t i re the debt. The FAC Trust Fund (Tru s t 

Fund) re p resents the funds received from System institutions’ purchase of stock in the FAC. The Trust Fund 

totaled approximately $101 million and $94 million at 

December 31, 1998 and 1997, re s p e c t i v e l y. If the Tru s t 

Fund is not sufficient to re t i re the debt, then the 

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Corporation must purchase pre f e rred stock from the 

FAC to provide funds to re t i re such debt. If the 

Corporation does not have sufficient funds, the U.S. 

Tre a s u ry must re t i re the debt. If this should occur, the 

Corporation is re q u i red to repay the U.S. Tre a s u ry as 

funds become available from the payment of pre m i u m s . 

At December 31, 1998, the only pre f e rred stock held by 

the FAC was associated with the assistance provided to 

the Federal Land Bank of Jackson. 

On May 20, 1988, the FCA placed the Federal Land 

Bank of Jackson and the Federal Land Bank Association 

of Jackson in receivership (collectively the FLBJR) and 

appointed a receiver to liquidate their assets. As of 

April 27, 1990, the FCA, the Receiver of the FLBJR, the 

FAC, the System banks, the Assistance Board, and the 

Corporation entered into an agreement which called 

for the FAC to issue 15-year U.S. Tre a s u ry - g u a r a n t e e d 

bonds to purchase pre f e rred stock in the FLBJR. 

Upon the maturity of the FAC bonds used to purc h a s e 

p re f e rred stock in the FLBJR in 2005, the Corporation 

will provide funds to repay the principal of these debt 

obligations, to the extent that the Trust Fund is not 

s u fficient for such purpose. In January 1995, the 

FLBJR was terminated by the FCA and the receiver 

was discharged after transferring the remaining 

receivership assets to the FA C . 

Estimated Insurance Obligation 

The Corporation estimated the present value of its liability to provide funds for payment of the $374 million noncallable 15-year maturing debt to be approximately $149 

million and $139 million at December 31, 1998 and 1997, 

re s p e c t i v e l y. This liability is reflected in the accompanying statements of financial condition. The pre s e n t 

value of this obligation is based on a discount rate of 

7 percent to maturity, which was established at the time 

this liability was originally re c o rded. In accordance 

with SFAS No. 107, the fair value of this liability has 

been estimated by management using discount rates 

based upon U.S. Tre a s u ry securities of similar durations 

(4.8 percent for 1998 and 5.8 percent for 1997). The fair 

value was approximately $171 million and $151 million 

as of December 31, 1998 and 1997, re s p e c t i v e l y. 

P rovisions for changes in the Corporation’s liability are 

reflected in the statements of income and expenses in 

the amount of $9.7 million and $9.1 million for the years 

ended December 31, 1998 and 1997, re s p e c t i v e l y. 

The Corporation cannot predict the effects of future 

events upon System operations and upon the amount of 

the Trust Fund that will ultimately be available to re d u c e 

the Corporation’s liability for FLBJR-related FAC bonds. 

The Corporation will annually reassess the likelihood of 

earlier use of the Trust Fund, changes in Trust Fund 

e a rnings, and other assumptions underlying its estimate 

of the liability for FLBJR-related FAC bonds. 

Other Financial Assistance Provided to 

System Institutions by the FA C 

The Farm Credit Banks and Associations Safety and 

Soundness Act of 1992 (1992 Act) expanded the 

C o r p o r a t i o n ’s responsibility to insure defaults by System 

institutions on payments related to other assistance 

funded by FAC bonds. These FAC bonds, aggre g a t i n g 

$454 million, were issued to pay System Capital 

P re s e rvation Agreement accruals, to re t i re eligible 

b o rrower stock of certain liquidating System institutions, 

and to pay operating expenses of the Assistance Board . 

P re v i o u s l y, the Corporation had only been re q u i re d : 

(1) to satisfy defaults on the repayment of Tre a s u ry - p a i d 

i n t e rest; and (2) to purchase the pre f e rred stock of an 

assisted institution when the institution did not re t i re 

the stock at the maturity of the FAC bonds issued to 

p u rchase it. The 1992 Act made the Corporation re s p o nsible for defaults by System institutions on obligations 

related to the remaining $454 million of FAC bonds and 

related interest if such amounts cannot be re c o v e re d 

f rom defaulting institutions by the FAC or the 

Tre a s u ry, as the case may be, within 12 months. 

The 1992 Act also expanded the potential uses of 

the Trust Fund to satisfy System institution defaults on 

the principal and interest of other FAC obligations and 

re q u i red System banks to make annual annuity payments to the FAC to provide funds for the re t i rement of 

the Capital Pre s e rvation Agre e m e n t - related FAC bonds 

a g g regating $417 million and Tre a s u ry-paid interest at 

m a t u r i t y. The Corporation is also re q u i red to satisfy 

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defaults on the annual payments to the FAC to perm i t 

the repayment of Tre a s u ry-paid interest. During 1992 

t h rough 1998, all System banks made their annual annuity payments as scheduled. The Corporation is not 

a w a re of any events or circumstances which will pre v e n t 

System banks from meeting their FAC obligations. 

The Corporation actively monitors the cre d i t w o rt h iness and financial position of the insured System banks. 

One System bank that accounts for less than 5 percent 

of System insured debt experienced significant incre a s e s 

in its nonperf o rming loans during 1998. That bank is 

p resently operating under a re g u l a t o ry enforc e m e n t 

action and at yearend its re g u l a t o ry core surplus ratio 

was below the level projected in its capital re s t o r a t i o n 

plan. It has announced, subject to shareholder appro v a l , 

its intent to merge with another System bank. 

Other than obligations that have occurred as a re s u l t 

of resolving the FLBJR, as described above, management is not aware of any events or circumstances at this 

time which would re q u i re a liability for estimated insurance obligations to be re c o rd e d . 

Early Redemption of Certain FAC Bonds 

In November 1998, System banks provided the necess a ry funds to allow the FAC to call and re t i re early $240 

million of the $1.26 billion in FAC bonds issued during 

1988 to 1992 (see paragraph 1, Note 5). Repayment 

of the remaining FAC bonds in accordance with the Act 

is being provided for by System banks and the Insurance 

C o r p o r a t i o n . 

Note 6 

Operating Lease 

On November 20, 1997, the Corporation executed a new 

six-year lease with the Farm Credit System Building 

Association for office space. The terms of the lease 

p rovide for an annual base rent for office space for the 

remaining term of $84,943 for 1999, $89,571 for 2000, 

$92,252 for 2001, $95,020 for 2002 and $98,134 for 2003. 

The Corporation re c o rded $85,859 and $66,851 for 1998 

and 1997, re s p e c t i v e l y. 

Note 7 

Related Part i e s 

The Corporation purchases services from the FCA 

under an Inter-Agency Agreement. These include 

examination and administrative support services. The 

Corporation had payables due to the FCA of $55,819 at 

December 31, 1998, and $22,093 at December 31, 1997. 

The Corporation purchased services for 1998 which 

totaled $152,185 compared with $160,141 for 1997. 

24 
 

 

 

 

 

INCOME AND EXPENSES 

F a rm Credit System Insurance Corporation By Year 

($ in thousands) 

I n c o m e E x p e n s e s 

P rovision for Administrative 

P re m i u m s I n v e s t m e n t I n s u r a n c e and Operating 

O b l i g a t i o n s E x p e n s e s 

1 9 8 9 

1 9 9 0 

1 9 9 1 

1 9 9 2 

1 9 9 3 

1 9 9 4 

1 9 9 5 

1 9 9 6 

1 9 9 7 

1 9 9 8 

$ 6 5 , 0 0 0 

$ 7 2 , 0 0 0 

$ 7 7 , 4 6 3 

$ 7 3 , 9 0 2 

$ 7 4 , 1 0 0 

$ 7 6 , 5 2 6 

$ 7 9 , 3 9 4 

$ 8 5 , 7 3 6 

$ 7 1 , 2 4 2 

$ 1 9 , 9 7 2 

$ 1 6 , 0 4 1 

$ 2 5 , 7 0 5 

$ 3 1 , 4 8 3 

$ 3 7 , 1 9 8 

$ 4 1 , 2 7 7 

$ 4 6 , 3 8 9 

$ 5 4 , 6 8 8 

$ 6 1 , 4 7 1 

$ 7 1 , 0 8 8 

$ 7 9 , 5 4 5 

— 

$ 1 4 0 , 0 0 0 

$ 1 5 , 5 5 5 

$ 1 2 , 0 6 2 

( $ 3 9 , 4 4 4 )1 

$ 8 , 8 9 0 

( $ 1 4 , 3 2 9 )2 

$ 8 , 5 0 9 

$ 9 , 1 0 5 

$ 9 , 7 4 3 

$ 1 1 8 

$ 2 4 3 

$ 9 5 3 

$ 1 , 2 0 0 

$ 1 , 2 7 8 

$ 1 , 4 8 2 

$ 1 , 3 7 9 

$ 1 , 4 6 9 

$ 1 , 5 1 1 

$ 1 , 5 2 5 

1In 1993, the FAC Trust Fund was initially considered available to pay a portion of the Insurance 

C o r p o r a t i o n ’s FAC obligation for assistance to the FLB of Jackson. 

2In 1995, this provision was adjusted to reflect a change in the FAC Trust Fund’s investment strategy 

and the termination of the FLB of Jackson receivership making available additional funds to re d u c e 

the Insurance Corporation’s related FAC obligation. 

25 
 

 

 

 

 

 

 

 

 

 

C O R P O R ATE OFFICERS 

M a ry Creedon Connelly 

Chief Operating Off i c e r 

Dennis M. Pittman 

D i rector of Risk Management 

Alan J. Glenn 

Chief Financial Off i c e r 

D o rothy L. Nichols 

General Counsel 

C. Richard Pfitzinger 

Asset Assurance Manager 

Vivian L. Portis 

S e c re t a ry to the Board 

Corporate Off i c e 

F a rm Credit System Insurance Corporation 

1501 Farm Credit Drive 

McLean, VA 22102 

(703) 883-4380 

FAX (703) 790-9088 

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For additional information about the Farm Credit System, its 

financial condition and perf o rmance, and activities of the Farm Cre d i t 

Administration, the following publications may be helpful. 

F a rm Credit System Annual Reports to Investors and Quarterly and 

Annual Information Statements for the current calendar year and the 

two preceding calendar years. These are available without charg e 

f ro m : 

Federal Farm Credit Banks 

Funding Corporation 

10 Exchange Place 

Suite 1401 

Jersey City, NJ 07302 

(201) 200-8000 

Annual Reports of the Farm Credit Administration (FCA) for the past 

five fiscal years and FCA’s Report on the Financial Condition and 

P e rf o rmance of the Farm Credit System for the past three calendar 

years. These are available without charge fro m : 

O ffice of Congressional and Public Aff a i r s 

F a rm Credit Administration 

1501 Farm Credit Drive 

McLean, VA 22102-5090 

(703) 883-4056 

P roduction of the 1998 Annual Report of the Farm Credit System 

Insurance Corporation coordinated by Anna Lacey with assistance 

f rom Michelle White and Christine Quinn. 

27