Quarterly Report on FCS Conditions 

June 8, 2023

Yuri Katrinic - Senior Economist

Hal Johnson - Senior Financial Analyst
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

Inflation levels-off, supply chain pressures ease as 

interest rates rise

Source: Federal Reserve, Federal Reserve Bank of New York, Bureau of Labor Statistics 

Federal Funds 

Rate

Core PCE inflation

0%

1%

2%

3%

4%

5%

6%

2020 2021 2022 2023

Consumer inflation and interest rates

Global Supply 

Chain Pressure 

Index

Producer Price 

Index

-4%

0%

4%

8%

12%

16%

-2

-1

0

1

2

3

4

5

2020 2021 2022 2023

Supply chain pressure and wholesale inflation
4

Inflation has shifted from goods to services

▶ Early pandemic: 

▪Supply chain disruptions

▪Changing consumption trends

▪Inflation in goods

▶ Today: 

▪Normalized consumption

▪Labor and housing shortages

▪Inflation in services

Source: Bureau of Labor Statistics

Services, less 

energy

Durable Goods

-5%

0%

5%

10%

15%

20%

25%

2018 2019 2020 2021 2022 2023

Change in CPI for core services and 

durable goods since 2018
5

Workforce struggles to meet demand for labor

Source: Bureau of Labor Statistics

Unemployment

Participation, Age 25 to 54

78%

80%

82%

84%

0%

5%

10%

15%

Jan-20

Apr-20

Jul-20

Oct-20

Jan-21

Apr-21

Jul-21

Oct-21

Jan-22

Apr-22

Jul-22

Oct-22

Jan-23

Apr-23

▶ 1.6 job openings per applicant, Unemployment and labor force participation

down from 2

▶ Fed continues to watch wages to 

inform interest rate decisions

▶ Longer term labor supply 

constraints from aging population 
6

High mortgage rates weigh on housing market

Source: Census Bureau, Department for Housing and Urban Development

Monthly supply 

of new houses

Median sales 

price 

-50%

-25%

0%

25%

50%

75%

2020 2021 2022 2023

Change since 2020

Change in supply and price of houses

Housing starts

30-year fixed 

rate mortgage

2%

4%

6%

8%

800

1,200

1,600

2,000

2020 2021 2022 2023

Thousands of Units

Housing starts and mortgage rates
7

Consumer debt and spending continues to evolve 

with inflation and wage growth

Source: New York Fed Center for Microeconomic Data, Bureau of Economic Analysis

Auto

Credit cards

Personal Loans

3%

4%

5%

6%

7%

8%

9%

10%

Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23

Total household debt, 90+ days delinquent

$11

$12

$13

$14

$15

Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23

Trillions 

Real consumer spending 
8

Weather has improved from a year ago

2020

2021

2022

2023

1,040

1,050

1,060

1,070

1,080

1,090

1,100

JAN MAR MAY JUL SEP NOV

Feet above sea level

Lake Mead water surface elevation

Source: U.S. Drought Monitor, Bureau of Reclamation 

0% 25% 50% 75% 100%

Missouri

Iowa

Washington

South Dakota

Oklahoma

Idaho

Kansas

Nebraska

Wyoming

Colorado

Montana

Oregon

Arizona

California

Severe drought by state

2023

2022
9

Commodity prices and production costs fall

Source: Bureau of Labor Statistics, Energy Information Administration, Green Markets, Chicago Board of Trade

Fertilizer

Producer Price Index 

Ag Equipment

Diesel

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

May-22 Aug-22 Nov-22 Feb-23 May-23

Change in input costs last 12 months

Wheat

Soybeans

Corn

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

May-22 Aug-22 Nov-22 Feb-23 May-23

Change in commodity prices last 12 months
10

Livestock producer margins diverge

▶ Cattle

▪High calf demand as pastures 

improve

▪High beef prices after herd 

reductions

▪Lower feed costs

▶ Hogs

▪Higher than expected supplies 

▪Tepid export demand

▪California production policy 

changes

Source: Iowa State University

Hogs farrow to 

finish

Steer calves to 

finish

-$20

-$10

$0

$10

$20

Apr-22 Jul-22 Oct-22 Jan-23 Apr-23

$/cwt

Iowa estimated returns
11

Questions
Farm Credit System

Condition and Performance

as of March 31, 2023

Hal Johnson

Senior Financial Analyst

Office of Examination
System growth slows in the first quarter

Source: Federal Farm Credit Banks Funding Corporation Information Statements 13

2.0% 1.6% 1.5%

4.6%

2.0%

0.4% 0.8%

5.6%

4.7%

-0.8%

1.2%

3.2%

1.0%

Portfolio Loan Growth

(% change year-over-year)

2.2%

-6.1%

10.1%

3.5%

1.2%

-8.8%

30.1%

2.3%

-1.0%

-8.0%

10.8%

7.3%

RE Mortgage

(45%)

Prod. & Intermediate

(16%)

Agribusiness

 (20%)

Rural Infrastructure

(13%)

Loan Growth by Loan Type

(% change from prior quarter) +1.6% Qtr +1.0% Qtr 

+7.0% 12M +4.7% 12M 

Total 

Assets

3/31/23

$484.5

billion

Gross

Loans

3/31/23

$377.0

billion
Source: Federal Farm Credit Banks Funding Corporation Information Statements 14

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

Nonperforming assets rise, but overall level 

remains low

$2,022

$2,282 $2,347

$1,897

$1,578

$1,755

$2,007

0.78%

0.83% 0.82%

0.60%

0.46% 0.47%

0.53%

Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Mar-23

Nonaccrual Loans

Accruing Restructed Loans

Accruing 90 days+ Past Due

Loans

OPO

% Nonperforming Assets (1)

Nonperforming Assets

3.3%

3.0%

5.0%

4.8%

1.1%

3.8%

3.6%

6.0%

4.7%

0.7%

5.6%

5.5%

8.5%

6.6%

1.2%

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00%

Total

Portfolio

Real Estate

Mortgage

Production &

Intermediate

Agribusiness

Rural

 Infrastructure

Mar-23 Mar-22 Mar-21

Loans Classified Less than Acceptable

(% of loans outstanding)
1st quarter earnings impacted by increased 

provisions and higher noninterest expenses

Source: Federal Farm Credit Banks Funding Corporation Information Statements 15

4.40%

3.56% 3.16%

3.79%

5.16%

2.36%

1.30% 0.83% 1.63%

3.18%

2.04%

2.26% 2.33%

2.16%

1.98%

2.42% 2.46% 2.46% 2.39% 2.41%

2019 2020 2021 2022 Q1 2023

% Rate: Earning Assets % Rate: Interest-Bearing Liab.

% Net Interest Spread % Net Interest Margin

Net Interest Spread | Net Interest Margin

8.6%

6.3%

3.6%

5.2% 4.8%

10.3% 9.6%

7.6%

1Q-16 1Q-17 1Q-18 1Q-19 1Q-20 1Q-21 1Q-22 1Q-23

Average Earning Assets 

(% change year-over-year)

1,157 

1,244 1,266 1,288 

1,432 

1,693 1,758 1,722 

69 37 69 65 57 28 

(5)

236 

1Q-16 1Q-17 1Q-18 1Q-19 1Q-20 1Q-21 1Q-22 1Q-23

System Net Income

Provisions for Loan Losses

System Earnings

(for the quarter ended Mar. 31)
System continues to be strongly capitalized 

Capital

(as of March 31, 2023)

▶ Total capital grew by 2.5% or $1.7 

billion for the quarter.

▶ The System’s capital-to-assets 

ratio increased to 14.5% compared 

with 14.4% at year-end.

▶ Total regulatory capital ratios:

- Banks: 12.5% to 17.6%

- Associations: 11.8% to 34.2%.

▶ Over 80% of System institutions 

were in the capital benchmark 1 

range and all institutions were in 

the benchmark 1 or 2 range.

Source: Federal Farm Credit Banks Funding Corporation Information Statements 16

$45.7

$48.8

$52.3

$55.4

$58.4

$61.7

$65.5

$69.5 $68.6 $70.3

16.2% 16.1% 16.4% 16.8% 16.7% 16.9% 16.4% 15.9%

14.4% 14.5%

Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Mar-23

System Capital ($B)

(at quarter-end)

capital-to-assets ratio
Accumulated other comprehensive loss 

improves; Bank liquidity levels are strong

17

(1,297) (1,534) (1,735)

(621) (1,210)

(5,492) (4,871)

16.9%

14.5%

16.6%

17.3%

15.5%

accumulated other comprehensive loss

capital-to-assets ratio

capital-to-assets ratio excl. AOCL

23

37

86

44

80 49

29

72

82

56

77 64

9

18

2

12

194

160

194 192

0

50

100

150

200

250

AgFirst,FCB AgriBank, FCB CoBank, ACB FCB of Texas

Supplemental

Level 3:

Level 2:

Level 1:

90 day 

regulatory 

minimum

Days of Liquidity | Farm Credit System Banks

(as of March 31, 2023)

Accumulated Other Comprehensive Loss

Source: Federal Farm Credit Banks Funding Corporation Information Statements and Farm Credit System Call Reports
Composite FIRS ratings remain steady

FIRS Ratings

(based on 3/31/23 financial reporting)

▶ Composite FIRS ratings reflect the 

System’s sound financial condition.

▶ Over 95% of System banks and 

associations have a Composite FIRS 

rating of 1 or 2.

▶ Institutions rated 3 or lower represent 

just over 1% of System assets.

Composite FIRS Ratings

Farm Credit System Banks and Associations

18

44 39 34 30 32 33 35 34

31

29

32 35 35 32 26 25

2

5 7 7 4 4

3 3

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 4/1/23

Number of Rated Institutions

1 Rated 2 Rated 3 Rated or lower

Source: FCA’s FIRS ratings database