Farm Credit System Insurance 

Corporation 

Audited Financial Statements 

For the Years Ended December 31, 2023 and 2022
Farm Credit System Insurance Corporation 

Contents 

Independent Auditors' Report F1 – F5

Financial Statements

Statements of Financial Condition F6 

Statements of Income and Expenses and Changes in Insurance Fund F7 

Statements of Cash Flows F8 

Notes to the Financial Statements F9 - F15 

Management’s Report on Internal Control Over Financial Reporting F16 
F1 

INDEPENDENT AUDITORS’ REPORT

Board of Directors 

Farm Credit System Insurance Corporation 

McLean, VA 22102 

In our audit of the 2023 financial statements of the Farm Credit System Insurance 

Corporation (FCSIC), we found: 

 The financial statements as of and for the fiscal year ended December 31, 2023, are

presented fairly, in all material respects, in accordance with accounting principles

generally accepted in the United States of America;

 FCSIC maintained, in all material respects, effective internal control over financial

reporting as of December 31, 2023; and

 No reportable noncompliance in fiscal year 2023 with the provisions of applicable

laws; regulations; contracts; and grant agreements that we tested.

The following sections contain: 

1. Our report on FCSIC’s financial statements and on internal control over financial

reporting, which includes an other-matter paragraph related to the prior-year financial

statements being audited by other auditors, and other information included with the

financial statements;1 and

2. Our report on FCSIC’s compliance and other matters as required by Government

Auditing Standards. This section also includes FCSIC’s comments on our report.

REPORT ON THE FINANCIAL STATEMENTS AND ON INTERNAL CONTROL OVER FINANCIAL 

REPORTING

Opinion on the Financial Statements 

We have audited the financial statements of FCSIC, which comprise the statement of 

financial condition as of December 31, 2023; the related statement of income and expenses 

and changes in insurance fund and statement of cash flows for the year then ended; and the 

related notes to the financial statements.

In our opinion, FCSIC’s financial statements present fairly, in all material respects, the 

financial position of FCSIC as of December 31, 2023, and the results of its operations and its 

cash flows for the years then ended, in accordance with accounting principles generally 

accepted in the United States of America.

Opinion on Internal Control over Financial Reporting 

We also have audited FCSIC’s internal control over financial reporting as of December 31, 

2023, based on criteria established in the Internal Control – Integrated Framework (2013), 

issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 

1 Other information consists of information included with the financial statements, other than the auditors’ report. 
F2 

In our opinion, FCSIC maintained, in all material respects, effective internal control over 

financial reporting as of December 31, 2023, based on COSO.

Basis for Opinions 

We conducted our audit in accordance with auditing standards generally accepted in the 

United States of America (GAAS); standards applicable to financial statement audits 

contained in Government Auditing Standards, issued by the Comptroller General of the 

United States; and guidance contained in Office of Management and Budget (OMB) 

Bulletin 24-01, Audit Requirements for Federal Financial Statements. Our responsibilities 

under those standards and OMB Bulletin 24-01 are further described in the Auditors’ 

Responsibilities for the Audit of the Financial Statements and Internal Control over Financial 

Reporting section of our report. We are required to be independent of FCSIC and to meet our 

other ethical responsibilities, in accordance with the relevant ethical requirements relating to 

our audits. We believe that the audit evidence we have obtained is sufficient and appropriate 

to provide a basis for our audit opinions.

Other Matter 

The financial statements of FCSIC for the year ended December 31, 2022, were audited by 

other auditors, who expressed an unmodified opinion on those statements on February 23, 

2023. 

Responsibilities of Management for the Financial Statements and Internal Control over 

Financial Reporting

Management is responsible for (1) the preparation and fair presentation of these financial 

statements in accordance with accounting principles generally accepted in the United States 

of America; (2) preparing and presenting other information included in FCSIC’s Annual 

Report, and ensuring the consistency of that information with the audited financial 

statements; (3) the design, implementation, and maintenance of internal control relevant to 

the preparation and fair presentation of financial statements that are free from material 

misstatement, whether due to fraud or error; (4) assessing the effectiveness of internal 

control over financial reporting based on the criteria established under the Federal Managers’ 

Financial Integrity Act of 1982 (FMFIA); and (5) its assessment about the effectiveness of 

internal control over financial reporting as of December 31, 2023, included in the 

accompanying Management’s Report on Internal Control over Financial Reporting.

In preparing the financial statements, management is required to evaluate whether there are 

conditions or events, considered in the aggregate, that raise substantial doubt about FCSIC’s 

ability to continue as a going concern for a reasonable period of time.

Auditors’ Responsibilities for the Audits of the Financial Statements and Internal 

Control over Financial Reporting 

Our objectives are to obtain reasonable assurance about whether the financial statements as 

a whole are free from material misstatement, whether due to fraud or error, and whether 

effective internal control over financial reporting was maintained in all material respects, and 

to issue an auditors’ report that includes our opinions. 
F3 

Reasonable assurance is a high level of assurance but is not absolute assurance and 

therefore is not a guarantee that an audit of the financial statements or an audit of internal 

control over financial reporting conducted in accordance with GAAS, Government Auditing 

Standards, and OMB guidance will always detect a material misstatement or a material 

weakness when it exists.2 The risk of not detecting a material misstatement resulting from 

fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, 

intentional omissions, misrepresentations, or the override of internal control. Misstatements, 

including omissions, are considered material if there is a substantial likelihood that, 

individually or in the aggregate, they would influence the judgment made by a reasonable 

user based on the financial statements. 

In performing an audit of financial statements and an audit of internal control over financial 

reporting in accordance with GAAS, Government Auditing Standards, and OMB guidance, 

we: 

 Exercise professional judgment and maintain professional skepticism throughout the

audits.

 Identify and assess the risks of material misstatement of the financial statements,

whether due to fraud or error, and design and perform audit procedures responsive to

those risks. Such procedures include examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

 Obtain an understanding of internal control relevant to the audit in order to design

audit procedures that are appropriate in the circumstances.

 Obtain an understanding of internal control relevant to our audit of internal control

over financial reporting, assess the risks that a material weakness exists, and test and

evaluate the design and operating effectiveness of internal control over financial

reporting based on the assessed risk. Our audit of internal control also considered

FCSIC’s process for evaluating and reporting on internal control over financial

reporting based on criteria established under COSO. We did not evaluate all internal

controls relevant to operating objectives as broadly established under COSO, such as

those controls relevant to preparing performance information and ensuring efficient

operations. We limited our internal control testing to testing controls over financial

reporting. Our internal control testing was for the purpose of expressing an opinion on

whether effective internal control over financial reporting was maintained, in all

material respects. Consequently, our audit may not identify all deficiencies in internal

control over financial reporting that are less severe than a material weakness.

 Evaluate the appropriateness of accounting policies used and the reasonableness of

significant accounting estimates made by management, as well as evaluate the

overall presentation of the financial statements.

 Perform other procedures we consider necessary in the circumstances.

 Conclude whether, in our judgment, there are conditions or events, considered in the

aggregate, that raise substantial doubt about FCSIC’s ability to continue as a going

concern for a reasonable period of time.

2 A material weakness is a deficiency, or combination of deficiencies, in internal control over financial 

reporting, such that there is a reasonable possibility that a material misstatement of the entity’s 

financial statements will not be prevented, or detected and corrected, on a timely basis. A deficiency in 

internal control exists when the design or operation of a control does not allow management or 

employees, in the normal course of performing their assigned functions, to prevent, or detect and 

correct, misstatements on a timely basis. 
F4 

We are required to communicate with those charged with governance regarding, among 

other matters, the planned scope and timing of the audit, significant audit findings, and 

certain internal control-related matters that we identified during the audit.

Definition and Inherent Limitations of Internal Control over Financial Reporting 

An entity’s internal control over financial reporting is a process effected by those charged with 

governance, management, and other personnel. The objectives of internal control over 

financial reporting are to provide reasonable assurance that (1) transactions are properly 

recorded, processed, and summarized to permit the preparation of financial statements in 

accordance with U.S. generally accepted accounting principles, and assets are safeguarded 

against loss from unauthorized acquisition, use, or disposition, and (2) transactions are 

executed in accordance with provisions of applicable laws, including those governing the use 

of budget authority, regulations, contracts, and grant agreements, noncompliance with which 

could have a material effect on the financial statements. 

Because of its inherent limitations, internal control over financial reporting may not prevent, or 

detect and correct, misstatements due to fraud or error. We also caution that projecting any 

evaluation of effectiveness to future periods is subject to the risk that controls may become 

inadequate because of changes in conditions, or that the degree of compliance with the 

policies or procedures may deteriorate. 

Other Information 

FCSIC’s other information contains a wide range of information, some of which is not directly 

related to the financial statements. This information is presented for purposes of additional 

analysis and is not a required part of the financial statements. Management is responsible for 

the other information included in the annual report. The other information comprises the 

information included in the annual report but does not include the financial statements and our 

auditors’ report thereon. Our opinion on the financial statements does not cover the other 

information, and we do not express an opinion or any form of assurance thereon. 

In connection with our audit of the financial statements, our responsibility is to read the other 

information and consider whether a material inconsistency exists between the other 

information and the financial statements, or the other information otherwise appears to be 

materially misstated. If, based on the work performed, we conclude that an uncorrected 

material misstatement of the other information exists, we are required to describe it in our 

report.

REPORT ON COMPLIANCE AND OTHER MATTERS

In connection with our audits of FCSIC’s financial statements, we tested compliance with 

selected provisions of applicable laws, regulations, contracts, and grant agreements 

consistent with our auditors’ responsibilities discussed below. 

Results of Our Tests for Compliance with Laws, Regulations, Contracts, and Grant 

Agreements and Other Matters 

Our tests for compliance with selected provisions of applicable laws, regulations, contracts, 

and grant agreements disclosed no instances of noncompliance or other matters for 2023 

that would be reportable under Government Auditing Standards. However, the objective of 
F5 

our tests was not to provide an opinion on compliance with laws, regulations, contracts, and 

grant agreements applicable to FCSIC. Accordingly, we do not express such an opinion.

Basis for Results of Our Tests for Compliance with Laws, Regulations, Contracts, and 

Grant Agreements and Other Matters 

We performed our tests of compliance in accordance with Government Auditing Standards. 

Responsibilities of Management for Compliance with Laws, Regulations, Contracts, 

and Grant Agreements 

FCSIC management is responsible for complying with laws, regulations, contracts, and grant 

agreements applicable to FCSIC. 

Auditor’s Responsibilities for Tests of Compliance with Laws, Regulations, Contracts, 

and Grant Agreements 

Our responsibility is to test compliance with selected provisions of laws, regulations, 

contracts, and grant agreements applicable to FCSIC that have a direct effect on the 

determination of material amounts and disclosures in FCSIC’s financial statements, and to 

perform certain other limited procedures. Accordingly, we did not test compliance with all 

provisions of laws, regulations, contracts, and grant agreements applicable to FCSIC. We 

caution that noncompliance may occur and not be detected by these tests. 

Purpose of Report on Compliance with Laws, Regulations, Contracts, and Grant 

Agreements and Other Matters 

The purpose of this report is solely to describe the scope of our testing of compliance with 

selected provisions of applicable laws, regulations, contracts, and grant agreements, and the 

results of that testing, and not to provide an opinion on compliance. This report is an integral 

part of an audit performed in accordance with Government Auditing Standards in considering 

compliance. Accordingly, this report on compliance with laws, regulations, contracts, and 

grant agreements is not suitable for any other purpose. 

FCSIC’s Comments 

FCSIC’s management did not provide any formal comments to this report. 

Sikich CPA LLC 

February 21, 2024
Farm Credit System Insurance Corporation 

F6 

Statements of Financial Condition 

(Dollars in thousands) 

December 31, 2023 2022

Assets 

Cash and cash equivalents $ 3,240 $ 648 

Investments in U.S. Treasury obligations 6,784,993 5,993,783 

Premiums receivable 626,019 644,543 

Accrued interest receivable 43,771 33,776 

Operating lease right-of-use assets 300 452 

General property, plant, equipment, and software, net 0 1 

Total Assets $ 7,458,323 $ 6,673,203 

Liabilities and Insurance Fund 

Liabilities 

Operating lease liabilities $ 306 $ 457

Accounts payable and accrued expenses 691 703 

Total Liabilities 997 1,160 

Insurance Fund 

Unallocated Insurance Fund 

Allocated Insurance Fund 

7,334,531 

 122,795 

6,672,043 

0 

Total Insurance Fund 7,457,326 6,672,043 

Total Liabilities and Insurance Fund $ 7,458,323 $ 6,673,203

See accompanying notes to the financial statements. 
Farm Credit System Insurance Corporation 

F7 

Statements of Income and Expenses and Changes in Insurance Fund 

(Dollars in thousands) 

Year-ended December 31, 2023 2022 

Income 

Premiums $ 626,019 $ 644,597 

 Interest income 163,667 72,057 

Total Income 789,686 716,654 

Expenses 

Administrative operating expenses 4,403 4,379 

Total Expenses 4,403 4,379 

Net Income 785,283 712,275 

Insurance Fund - beginning of year 6,672,043 5,959,768 

Insurance Fund - end of year $ 7,457,326 $ 6,672,043 

See accompanying notes to the financial statements. 
Farm Credit System Insurance Corporation 

F8 

Statements of Cash Flows 

(Dollars in thousands) 

Year-ended December 31, 2023 2022 

Cash flows from operating activities 

Net income $ 785,283 $ 712,275 

Adjustments to reconcile net income to net cash 

provided by operating activities: 

Depreciation 1 5 

Noncash lease expense 152 150

Net amortization and accretion of investments (13,328) 48,230 

Principal reduction in operating lease liabilities (151) (145) 

Increase in premiums receivable 18,524 (184,040) 

Increase in accrued interest receivable (9,995) (10,589) 

Increase in accounts payable and accrued 

expenses (12) 9 

Net cash provided by operating activities 780,474 565,895 

Cash flows from investing activities 

Payments for purchase of U.S. Treasury obligations (2,796,741) (2,674,371) 

Proceeds from maturity of U.S. Treasury obligations 2,018,859 2,104,184 

Net cash used in investing activities (777,882) (570,187) 

Net change in cash and cash equivalents 2,592 (4,292) 

Cash and cash equivalents, beginning of year 648 4,940 

Cash and cash equivalents, end of year $ 3,240 $ 648 

Supplemental disclosure of cash flow information: 

Operating lease assets obtained in exchange for new 

Operating lease liabilities - Upon adoption (See Note 5) $ 602

See accompanying notes to the financial statements. 
Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

F9 

Note 1: Organization and Summary of Significant Accounting Policies 

Farm Credit Insurance Fund (Insurance Fund) 

Statutory Framework: 

The Agricultural Credit Act of 1987 established the Farm Credit System Insurance Corporation (the 

Corporation or FCSIC) for the purpose of insuring the timely payment of principal and interest on 

notes, bonds, debentures, and other obligations issued under subsection (c) or (d) of section 4.2 of 

the Farm Credit Act of 1971, as amended (the Farm Credit Act). Each bank in the Farm Credit System 

(System) participating in insured obligations is an insured System bank. At December 31, 2023 there 

were four insured System banks and 56 direct lender associations, down from four insured System 

banks and 63 direct lender associations at December 31, 2022. 

The Corporation is managed by a board of directors consisting of the same individuals as the Farm 

Credit Administration (FCA) board except that the chairman of the FCA board may not serve as the 

chairman of the Corporation's board of directors. 

The Corporation must spend amounts in the Insurance Fund necessary to insure the timely payment 

of interest and principal on insured obligations. The Corporation, in its sole discretion, is authorized 

to expend amounts to provide financial assistance to System banks and direct lender associations. 

The Corporation may also act as receiver or conservator of a System bank or association. In addition, 

FCSIC has the authority to create, and the Farm Credit Administration to charter, a System bridge 

bank, to assist with resolving a failed bank. 

As of December 31, 2023, the System banks reported amounts totaling $418 billion of insured 

obligations compared to $392 billion as of December 31, 2022. 

When the Insurance Fund is exhausted after making payments on insured obligations, remaining 

System banks will be required to make payments under joint and several liability, as required by 

section 4.4 (a)(2) of the Farm Credit Act. The insurance provided by the Insurance Fund is limited to 

the resources in the Insurance Fund. System obligations are not guaranteed by the U.S. government. 

Under section 5.63 of the Farm Credit Act, the Corporation is exempt from all Federal, state, and 

local taxes with the exception of real property taxes. 

Accounting Framework: 

The Corporation applies accounting and reporting standards issued by the Financial Accounting 

Standards Board (FASB). 

Note 2: Basis of Accounting 

The accounting and reporting policies of the Corporation conform to accounting principles generally 

accepted in the United States of America (GAAP) and, as such, the financial statements have been 

prepared using the accrual basis of accounting. 
Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

F10 

Cash and Cash Equivalents 

Cash and cash equivalents include investments in U.S. Treasury obligations with original maturities of 

90 days or less. At December 31, 2023, the Corporation held $2,946.3 thousand in overnight Treasury 

certificates maturing on January 2, 2024, with an interest rate of 5.42 percent, and approximately 

$293.9 thousand in cash. At December 31, 2022, the Corporation held $405.1 thousand in overnight 

Treasury certificates maturing on January 3, 2023, with an interest rate of 3.95 percent, and 

approximately 242.4 in cash. 

Investments in U.S. Treasury Obligations 

Section 5.62 of the Farm Credit Act requires 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 FASB Accounting Standards Codification (ASC) 320, Investments - Debt and Equity 

Securities and carries them at amortized cost. Amortization of premium and accretion of discount on 

investments has been computed under the interest method since 2002. 

Premium Receivable – Concentration of Credit Risk 

The Farm Credit Act requires that the System banks pay premiums to FCSIC. The premium receivable 

balance consists of amounts due from the four System banks and as such is exposed to risks due to 

concentration. Historically, FCSIC has not experienced any losses related to the premium receivable 

balance. FCSIC performs a quarterly analysis related to estimating an allowance for premium 

receivable which continues to indicate that no allowance is warranted. 

Leases 

Leases arise from contractual obligations that convey the right to control the use of identified 

property, plant, or equipment for a period of time in exchange for consideration. At the inception of 

the contract, FCSIC determines if an arrangement contains a lease based on whether there is an 

identified asset and whether FCSIC controls the use of the identified asset. FCSIC also determines 

whether the lease classification is an operating or financing lease at the commencement date. 

A right-of-use asset represents FCSIC’s right to use an underlying asset and a lease liability represents 

FCSIC’s obligation to make payments during the lease term. Right-of-use assets are recorded and 

recognized at commencement for the lease liability amount, adjusted for initial direct costs incurred 

and lease incentives received. Lease liabilities are recorded at the present value of the future lease 

payments over the lease term at commencement. FCSIC uses a risk-free discount rate at the lease 

commencement date for all new leases and at January 1, 2022 (the “Adoption date”) (See 

“Accounting pronouncement adopted” paragraph below) to determine the present value of lease 

payments. 

FCSIC’s operating lease typically includes non-lease components such as common-area maintenance 

costs, utilities, and other maintenance costs. FCSIC has elected to include non-lease components with 

lease payments for the purpose of calculating lease right-of-use assets and liabilities. 

FCSIC’s lease terms may include options to extend or terminate the lease. FCSIC uses the base, noncancelable, lease term when recognizing the lease assets and liabilities, unless it is reasonably certain 

that FCSIC will exercise those options. FCSIC’s lease agreements do not contain any material residual 

value guarantees or material restrictive covenants. 

FCSIC does not have any short-term lease agreements. 
Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

F11 

Liability for Estimated Insurance Obligations 

The liability for estimated insurance obligations is the present 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. 

The insured System banks' primary lending markets are borrowers engaged in farming, ranching, and 

producing or harvesting of aquatic products, and their cooperatives. Financial weaknesses in these 

market segments and the effect of general market conditions on the System's borrowers could 

adversely affect the banks' financial condition and profitability. Insured System banks also face risks 

from changing interest rate environments 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 require 

a liability for estimated insurance obligations to be recorded. 

The Corporation actively monitors the creditworthiness and financial condition of the insured System 

banks. Management is not aware of any events or circumstances at this time which would require a 

liability for estimated insurance obligations to be recorded at December 31, 2023. 

Premiums 

Annual premiums are recorded as revenue during the 12-month calendar year period on which the 

premiums are based. All premiums are required to be paid to FCSIC on or before January 31st of the 

year subsequent to the year in which they are earned. 

Use of Estimates 

The preparation of financial statements, in conformity with GAAP, requires management to make 

estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of 

contingent assets and liabilities at the date of the financial statements and the reported amount of 

revenues and expenses during the reporting period. Actual results could differ from those estimates. 

Accounting pronouncements adopted 

In 2022, management adopted FASB Accounting Standards Updates (“ASU”) No. 2016-02, Leases (Topic 

842) (“ASU 2016-02”), and the additional ASUs issued to clarify and update the guidance in ASU 2016-

02 (collectively, “ASC Topic 842”). ASC Topic 842 modifies lease accounting for lessees to increase 

transparency and comparability by recording lease assets and liabilities for operating leases and 

disclosing key information about leasing arrangements. 

As of January 1, 2022, the adoption date for ASC Topic 842, FCSIC elected the package of practical 

expedients offered by the new standard including to (1) not reassess whether any expired or existing 

contracts are considered or contain leases; (2) not reassess the lease classification for any expired or 

existing leases; and (3) not reassess the initial direct costs for any existing leases. FCSIC does not 

have leases that contain land easements; therefore, this optional practical expedient was not 

elected. The adoption of ASC Topic 842 resulted in the recognition of total right-of-use assets and 

total lease liabilities of approximately $602 thousand as of January 1, 2022, related to FCSIC’s existing 

office space lease. 
Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

F12 

Note 3: Investments in U.S. Treasury Obligations

In addition to the amounts referenced in Note 2, Cash and Cash Equivalents, at December 31, 2023 

and 2022, investments in U.S. Treasury obligations, which are carried at amortized cost, consisted of 

the following: 

 

Amortized 

Gross 

Unrealized 

Gross 

Unrealized Estimated 

(Dollars in thousands) Cost Gains Losses Fair Value 

December 31, 2023 

U.S. Treasury obligations $ 6,784,993 $ 27,461 $ (103,448) $ 6,709,006 

 

December 31, 2022 

U.S. Treasury obligations $ 5,993,783 $ 1,722 $ (209,240) $ 5,786,265 

The fair value of FCSIC’s investments in U.S. Treasury obligations have been included below for 

disclosure purposes only and are estimated based on quoted market prices for those instruments. The 

estimated fair value of U.S. Treasury obligations is measured using the Level 1 hierarchy, which is 

defined in the accounting standards as unadjusted quoted prices in active markets for identical assets 

that are available at the measurement date. 

The amortized cost and estimated fair value of U.S. Treasury obligations at December 31, 2023, by 

contractual maturity, are shown below: 

(Dollars in thousands) 

Amortized 

Cost

Estimated 

Fair Value 

 

Due in one year or less $ 1,481,980 $ 1,454,251 

Due after one year through five years 5,303,013 5,254,755 

 

 $ 6,784,993 $ 6,709,006 

The Corporation follows GAAP for measuring, reporting, and disclosing fair value. These standards 

apply to all assets and liabilities that are measured, reported, and/or disclosed on a fair value basis. 

Note 4: Premiums, the Secure Base Amount and Excess Insurance Fund Balances 

Each System bank which issues insured obligations under subsection (c) or (d) of section 4.2 of the 

Farm Credit Act is an insured System bank and is required to pay premiums to the Corporation. 

The Farm Credit Act sets a secure base amount (SBA) for the Insurance Fund to achieve. The statutory 

SBA is equivalent to 2 percent of the aggregate outstanding insured obligations of all insured System 

banks (adjusted downward by a percentage of the guaranteed portions of principal outstanding on 

certain government-guaranteed loans and investments) or such other percentage as determined by 

the Corporation in its sole discretion to be actuarially sound to maintain in the Insurance Fund taking 

into account the risk of insuring outstanding insured obligations. 

The Farm Credit Act requires FCSIC to assess premiums based on each bank's pro rata share of insured 

debt (rather than on individual loans). FCSIC may collect from 0 to 20 basis points annually on adjusted 

insured debt outstanding. The Farm Credit Act also authorizes a risk surcharge of up to 10 basis points 
Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

F13 

on nonaccrual loans and on other-than-temporarily impaired investments. The Farm Credit Act 

reduces the total insured debt on which premiums are assessed by 90 percent of Federal governmentguaranteed loans and investments and 80 percent of state government-guaranteed loans and 

investments and deducts similar percentages of such guaranteed loans and investments when 

calculating the secure base amount (SBA). 

Insurance premium rates are reviewed at least semiannually. For 2023, the board of directors set 

premium accrual rates at its February 8, 2023 meeting at 18 basis points on average adjusted insured 

debt and continued the assessment of the 10 basis point surcharge on the average principal balance 

outstanding for nonaccrual loans and other-than-temporarily impaired investments. The board of 

directors again reviewed premiums at its July 12, 2023 meeting and voted to maintain the premium 

accrual rate on average adjusted insured debt at 18 basis points and continued the assessment of 10 

basis points for nonaccrual loans and other-than-temporally impaired investments. In 2023, 

outstanding insured obligations increased by $26.1 billion (6.7 percent). At December 31, 2023, the 

total Insurance Fund was 2.03 percent of adjusted insured obligations. 

For 2022, the board of directors set premium accrual rates at its January 27, 2022 meeting at 16 basis 

points on average adjusted insured debt and continued the assessment of the 10 basis point surcharge 

on the average principal balance outstanding for nonaccrual loans and other-than-temporarily 

impaired investments. The board of directors again reviewed premiums at its June 8, 2022 meeting 

and voted to exercise its discretion to increase the premium rate on adjusted insured debt obligations 

to 20 basis points for 2022 and apply the rate retroactively for the entire 2022 premium billing cycle 

and continued the assessment of the 10 basis point surcharge on the average principal balance 

outstanding for nonaccrual loans and other-than-temporarily impaired investments for the remainder 

of 2022. In 2022, outstanding insured obligations increased by $38.9 billion (11.0 percent). At 

December 31, 2022, the total Insurance Fund was 1.97 percent of adjusted insured obligations. 

The Farm Credit Act requires if, at the end of any calendar year, the aggregate of the amounts in the 

Insurance Fund exceed the SBA, the Corporation is required to allocate to the Allocated Insurance 

Reserves Accounts (AIRAs) any excess balances less the amount that the Corporation, in its sole 

discretion, determines to be the sum of the estimated operating expenses and estimated insurance 

obligations of the Corporation for the immediately succeeding calendar year. 

The total Insurance Fund exceeded the 2 percent SBA at December 31, 2023 by $127.9 million, and 

after subtracting planned operating expenses of $5.1 million for 2024, $122.8 million was allocated 

to the AIRAs. The total Insurance Fund did not exceed the 2 percent SBA at December 31, 2022, and 

there were no allocations to the AIRAs for the Farm Credit System banks. 

The AIRAs' balances are recorded as part of the Insurance Fund until approved for payment by the 

Corporation's board of directors. AIRAs’ balances may be used to absorb any insurance losses and 

claims. Furthermore, the board of directors has discretion to limit or restrict the AIRAs’ payments. 

Note 5: Operating Lease 

The Corporation is committed under a ten-year lease with the FCS Building Association for office 

space expiring on November 30, 2025. The Corporation recognizes the right-of-use asset, and liability, 

initially measured at the present value of the lease payments. Additionally, the Corporation 

recognizes a single lease expense, which is allocated over the lease term, generally on a straight-line 

basis. 

As permitted under ASC Topic 842, the Corporation has elected not to recast/restate comparative 

periods and to set the initial adoption application date to January 1, 2022, the beginning of the period 
Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

F14 

of adoption; additionally, the Corporation has not separated lease and non-lease components under 

its office space lease. 

Office space payments are due on the first day of every month and the Corporation paid lease 

payments of approximately $158 thousand for the year ended December 31, 2023. The lease contains 

fixed payments which increase by 2% annually and does not include a current option to extend or 

renew beyond the current terms. 

During 2023, the Corporation recorded lease expense of approximately $159 thousand reported in the 

accompanying Statements of Income and Expenses and Changes in Insurance Fund 

As of December 31, 2023, remaining maturities of lease liabilities approximated were as follows: 

Years ending December 31, 

(Dollars in thousands) 

2024 161 

2025 150 

 

Total operating lease payments 311 

 

Less: imputed interest (5) 

 

Total operating lease liabilities $ 306 

Since the Corporation has only one lease as of December 31, 2023, the weighted-average lease term 

remaining is approximately 2 years. Because the Corporation does not have access to the rate implicit 

in the lease, the Corporation utilized the risk-free rate of 1.8% (the borrowing rate as of adoption 

date) as the discount rate. Likewise, the weighted average discount rate as of December 31, 2023 

was 1.8%. 

As of December 31, 2023, the Corporation recorded a right-of-use asset of approximately $300 

thousand and related lease liability of approximately $306 thousand in the accompanying Statements 

of Financial Condition. 

Note 6: Line of Credit 

On September 24, 2013, the Corporation entered into an agreement with the Federal Financing Bank 

(the FFB), a United States government corporation subject to the supervision and direction of the 

U.S. Treasury. Pursuant to this agreement, as amended, the FFB would advance funds to the 

Corporation under certain limited circumstances. The Corporation would use these funds to increase 

its capacity to provide assistance to the System banks in exigent market circumstances that threaten 

the banks' ability to pay maturing debt obligations. The agreement provides for a short-term revolving 

credit facility of up to $10 billion and will remain in full force and effect until terminated by either 

the Corporation or the FFB. Under the agreement, each provision of funds by the FFB is subject to 

certain terms and conditions. The interest rate for each advance will be established by the FFB at 

the time the respective advance is made. Each advance cannot have a maturity date longer than 

twelve months. The Corporation paid no commitment fee to secure this line of credit. There were no 

amounts drawn on this line of credit during 2023 and 2022 and no outstanding balance due as of 

December 31, 2023 and 2022. 
F15 

Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

Note 7: Retirement Plan 

All permanent Corporation employees are covered by the Federal Employees Retirement System 

(FERS). The Corporation's contribution was 18.4 percent of base pay for 2023. In addition, 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. In 2015, the Corporation began a 401K plan for employees. 

The Corporation automatically contributes 1 percent of base pay to the employee's 401K account and 

matches the first 2 percent contributed by the employee. Retirement plan expenses amounted to 

$568 thousand in 2023 and $585 thousand in 2022. 

Note 8: Related Parties 

The Corporation purchases services from FCA under an Interagency Agreement, including examination 

and administrative support services. The intention of the parties as stated in the agreement is that 

specified rates and fees will reimburse the party providing services for all reasonable costs associated 

with provision of the services. The Corporation purchased services for 2023 which totaled $318 

thousand, compared with $340 thousand for 2022. At December 31, 2023 and 2022, included in the 

accompanying Statements of Financial Condition are the amounts of $71 thousand and $29 thousand 

respectively which were due to FCA from the Corporation. 

The Corporation may also provide services to FCA under an Interagency Agreement; however, the 

Corporation provided no services and recognized no revenue for 2023 and 2022. At December 31, 2023 

and 2022, the Corporation did not have any receivables from FCA. 

Note 9: Subsequent Events 

FCSIC evaluated subsequent events from the date of the statement of financial condition 

through February 21, 2024, the date at which FCSIC’s financial statements were issued. No 

material subsequent events were identified for either recognition or disclosure. 
F16