2021	Annual	Report
The	Farm	Credit	System	Insurance	Corporation,	a	government-controlled,	independent	entity,	

shall

• protect	investors	in	insured	Farm	Credit	System	obligations	and	taxpayers	through	

sound	administration	of	the	Farm	Credit	Insurance	Fund,

• exercise	its	authorities	to	minimize	Insurance	Fund	loss,	and

• help	ensure	the	future	of	a	permanent	system	for	delivery	of	credit	to	agricultural	

borrowers.
June	30,	2022

Dear	Mr.	President	and	Madam	Speaker:

The	Farm	Credit	System	Insurance	Corporation	is	pleased	to	submit	its	annual	report	for	

calendar	year	2021.	This	report	highlights	our	role	as	the	independent	federal	governmentcontrolled	corporation	established	to	insure	the	timely	payment of	principal	and	interest	to	

investors	in	insured	Farm	Credit	System	debt	securities.

The	balance	in	the	Farm	Credit	Insurance	Fund	as	of	December	31,	2021,	was	$6.0	billion.	In	

2021,	we	earned	$460.8	million	in	insurance	premiums	from	Farm	Credit	System	banks	and	

$48.9	million	in	investment	income.	In	2022,	we	expect	to	incur	$4.7	million	in	operating costs.

FCSIC	is	proud	of	the	role	we	play	in	supporting the	safety	and	soundness	of	the	Farm	Credit	

System,	and	we	are	committed	to	faithfully	fulfilling our	mission.

Sincerely,

Jeffery	S.	Hall

Chairman

The	President	of	the	United	States	Senate

The	Speaker	of	the	United	States	House	of	Representatives

Protecting	Investors	in	Agriculture	and	Rural	America 1
CONTENTS

Message	from	the	Chairman.................................................................................................. 3

Board	of	Directors.................................................................................................................. 4

Jeffery	S.	Hall.................................................................................................................... 5

Glen	R.	Smith.................................................................................................................... 6

2021	—	Year	in	Review .......................................................................................................... 7

Independent	Auditor's	Report............................................................................................... F1

Financial	Statements.............................................................................................................. F4

Notes	to	the	Financial	Statements......................................................................................... F7

Compliance	with	the	Federal	Civil	Penalties	Inflation	Adjustment	Act	Improvements	Act	

The	Farm	Credit	System......................................................................................................... 10

Insurance	Fund	Management................................................................................................ 17

Investments............................................................................................................................ 23

Risk	Management .................................................................................................................. 25

Financial	Assistance	and	Resolutions..................................................................................... 31

Management	Assurances....................................................................................................... 33

of	2015 ................................................................................................................................... 35

Performance	Management	Program..................................................................................... 36

Glossary.................................................................................................................................. 39

Acronyms	and	Abbreviations................................................................................................. 41

Corporate	Staff....................................................................................................................... 42

Contact	Information............................................................................................................... 42

Banks	Insured	by	FCSIC .......................................................................................................... 43

Additional	Information........................................................................................................... 44

2 Farm	Credit	System	Insurance	Corporation
MESSAGE	FROM	THE	CHAIRMAN

I	am	pleased	to	present	the	2021	Annual	Report	of	the	Farm	Credit	System	Insurance	

Corporation.	It	is	gratifying	to	note	that,	for	the	32nd	consecutive	year	since	we	began	issuing

financial	statements,	our	independent	public	auditor	has	issued unmodified	or	unqualified	

opinions	on	those	statements.	The	enclosed	opinion	letter	indicates	that	the	financial	

statements	of	the	Farm	Credit	Insurance	Fund,	of	which	we	are	stewards,	are	fairly	and	

accurately	presented	and	FCSIC	maintained	effective	internal	control	over	financial	reporting.

FCSIC’s	net	income	for	2021	was	$505.5	million,	compared	with	$316.0	million	for	the	previous	

year.	The	Insurance	Fund	balance	as	of	December	31,	2021,	was	$6.0	billion,	compared	with	

$5.5	billion	at	year-end	2020	(see	Table	1).

Revenue	from	insurance	premiums	paid	by	Farm	Credit	System	banks	was	$460.8	million	for	

2021,	compared	with	$255.4	million	for	2020.	Interest	income	for	2021	totaled	$48.9	million,	

compared	with	$64.6	million	in	2020.

In	accordance	with	the	requirements	of	the	Federal	Managers’	Financial	Integrity	Act	of	1982,	

management	conducts	an	annual	assessment	of	FCSIC’s	internal	controls.	The	2021	assessment	

found	that,	in	the	reviewed	areas,	internal	controls	comply	with	the	standards	prescribed	by	

the	U.S.	Government	Accountability	Office	and	provide	reasonable	assurance	that	program	

objectives	are	being met.

We	will	continue	to	carry	out	our	mission	and	work	in	2022	to	achieve	our	strategic	goals	and	

objectives.	We	are	mindful	of	our	public	trust	and	will	ensure	that	investors,	Congress,	the	Farm	

Credit	System,	and	other	regulatory	agencies	receive	timely	and	accurate	information	on	issues	

concerning the	Insurance	Fund.

Sincerely,

Jeffery	S.	Hall

Protecting	Investors	in	Agriculture	and	Rural	America 3
BOARD	OF	DIRECTORS

The	Farm	Credit	System	Insurance	Corporation	is	managed	by	a	three-member	board	of	

directors	comprising	the	same	three	individuals	who	make	up	the	Farm	Credit	Administration	

(FCA)	board.	However,	the	same	member	may	not	serve	as	chairman	of	both	entities.	FCA	is	the	

independent	federal	agency	responsible	for	the	regulation	and	examination	of	the	Farm	Credit	

System	(System),	a	nationwide	network	of	financial	cooperatives	that	lend	to	agriculture	and	

rural	America.

Currently,	the	two	members	of	the	board	of	directors	are	Chairman	Jeffery	S.	Hall	and	Glen	R.	

Smith.	Mr.	Hall	is	serving	a	term	that	expired	on	October	13,	2018.	Mr.	Smith	is	serving a	term	

that	expired	on	May	21,	2022.	One	position	remains	vacant.

4 Farm	Credit	System	Insurance	Corporation
JEFFERY	S.	HALL

Jeffery	S.	Hall	is	chairman	of	the	board	of	directors	of	FCSIC. He	

was	elected	to	this	position	on	November	29,	2016.	Mr.	Hall	has	

served	on	the	FCSIC	board	and	on	the	FCA	board	since	his	

appointment	by	President	Barack	Obama	on	March	17,	2015.	He	

is	serving a	term	that	expired	on	October	13,	2018.

Before	coming to	FCSIC	and	FCA,	Mr.	Hall	was	president	of	The	

Capstone	Group,	an	association	management	and	consulting

firm	that	he	cofounded	in	2009.	From	2001	to	2009,	he	was	the	

state	executive	director	for	the	U.S.	Department	of	Agriculture’s	

(USDA’s)	Farm	Service	Agency	in	Kentucky.	In	that	role,	he	was	

responsible	for	farm	program	and	farm	loan	program	delivery	

and	compliance.

From	1994	to	2001,	Mr.	Hall	served	as	assistant	to	the	dean	of	

the	University	of	Kentucky,	College	of	Agriculture,	advising the	

dean	on	state	and	federal	legislative	activities	and	managing a	

statewide	economic	development	initiative	called	Ag-Project	

2000.

Mr.	Hall	also	served	as	a	senior	staff	member	in	the	office	of	

U.S.	Senator	Mitch	McConnell	from	1988	to	1994.	During that	

time,	he	was	the	legislative	assistant	for	agriculture,	

accountable	for	internal	and	external	issue	management.

Before	joining	Senator	McConnell’s	staff,	Mr.	Hall	served	on	the	

staff	of	the	Kentucky	Farm	Bureau	Federation.	Over	his	30-year	

career	in	agriculture,	he	has	held	leadership	positions	in	the	

following	nonprofits:	the	Kentucky	Agricultural	Council,	the	

Agribusiness	Industry	Network,	the	Louisville	Agricultural	Club,	

the	Kentucky	Agricultural	Water	Quality	Authority,	and	the	

Governor’s	Commission	on	Family	Farms.

Mr.	Hall	was	raised	on	a	family	farm	in	southern	Indiana,	which

has	been	in	his	family	for	more	than	200	years.	He	is	currently a	

partner	in	the	farm	with	his	mother	and	sister.	Mr.	Hall	received	

a	Bachelor	of	Science	degree	from	Purdue	University.

Protecting	Investors	in	Agriculture	and	Rural	America 5
GLEN	R.	SMITH

Glen	R.	Smith	was	appointed	to	the	Farm	Credit	System	

Insurance	Corporation	board	of	directors	and	Farm	Credit	

Administration	board	by	President	Donald	Trump	on	December	

8,	2017.	Mr.	Smith	is	serving a	term	that	expired	on	May	21,	

2022.

Mr.	Smith	is	a	native	of	Atlantic,	Iowa,	where	he	was	raised	on	a	

diversified	crop	and	livestock	farm.	His	farm	experience	started	

at	a	very	early	age,	after	his	father	was	involved	in	a	disabling

farm	accident.	He	graduated	from	Iowa	State	University	in	1979	

with	a	Bachelor	of	Science	in	agricultural	business	and	accepted	

a	position	with	Doane	Agricultural	Services	as	state	manager	of	

the	company’s	farm	real	estate	division.

In	1982,	Mr.	Smith	and	his	wife,	Fauzan,	moved	back	to	his	

hometown	and	started	farming	and	developing his	ag	service	

business.	Today,	their	family	farm,	Smith	Generation	Farms	Inc.,	

has	grown	to	encompass	about	2,000	acres	devoted	to	corn,	

soybeans,	hay,	and	a	small	beef	cow	herd.

Mr.	Smith	is	founder	and	co-owner	of	Smith	Land	Service	Co.,	an	

ag	service	company	that	specializes	in	farm	management,	land	

appraisal,	and	farmland	brokerage,	serving about	30	Iowa	

counties.	From	2001	to	2016,	he	was	also	co-owner	and	

manager	of	S&K	Land	Co.,	an	entity	involved	in	the	acquisition,	

improvement,	and	exchange	of	Iowa	farmland.	Mr.	Smith	has	

served	on	numerous	community,	church,	and	professional	

boards.	He	was	elected	to	the	Atlantic	Community	School	Board	

of	Education	on	which	he	served	for	nine	years.

In	1990,	he	earned	the	title	of	Accredited	Rural	Appraiser	from

the	American	Society	of	Farm	Managers	and	Rural	Appraisers.	In	

2000,	he	served	as	president	of	the	Iowa	chapter	of	that	

organization.	He	is	a	lifelong member	of	the	Farm	Bureau,	Iowa	

Corn	Growers	Association,	Iowa	Soybean	Association,	and	Iowa	

Cattlemen’s	Association.

The	Smiths	have	four	grown	children	and	five	grandchildren.	

Three	of	their	children	are	involved	in	production	agriculture.	

Their	son	Peter	has	assumed	managerial	responsibilities	for	

both	the	family	farm	and	business.

6 Farm	Credit	System	Insurance	Corporation
2021	—	YEAR	IN	REVIEW

FCSIC	Operations	During	the	Pandemic

Because	of	the	COVID-19	pandemic,	in	March	2020,	FCSIC	began	operating 100%	remotely,	with	

all	employees	working	from	home.	We	initially	thought	this	status	would	last	60	to	90	days;	

instead,	we	remained	in	maximum	telework	status	throughout	2021.	FCSIC's	very	small	staff	

means	that	ensuring	that	all	of	employees	are	protected	from	undue	risk	is	vital	to	being able	to	

fulfill	our	mission.	FCSIC	is	committed	to	the	health	and	safety	of	our	employees	and	we	will	

continue	to	operate	in	a	manner	that	does	not	create	undue	risks	for	our	staff	as	we	transition	

back	to	in-office	operations	in	2022.

Working remotely,	we	continued	to	fulfill	our	mission	and	complete	all necessary	tasks,	

maintaining our	business	model	of	operating efficiently	with	a	small	core	staff	and	outsourcing

support	services	from	government	and	private-sector	contractors.	In	2021,	we	accomplished	

the	following:

• Kept	our	operating	costs	below	budget,	totaling	$4.2	million,	up	slightly	from	$4.1	

million	in	2020.

• Earned	enough	in	interest	income	from	investments	to	cover	annual	operations	during

the	first	five	weeks	of	2021.

• Insured	repayment	of	$353	billion	at	the	end	of	2021,	up	from	$323	billion	in	2020	(a

9.4%	annual	increase	and	up	from	$53	billion	when	we	became	operational	in	January	

1993).

• Managed	an	insurance	fund	of	approximately	$6.0	billion	at	the	end	of	2021,	up	from	

$5.5	billion	in	2020	(and	up	from	$488	million	in	January	1993).

• Kept	FCSIC’s	staff	small,	growing from	9	employees	in	1993	to	only	11	in	2021,	despite	

the	significant	growth	in	insured	debt	and	the	Insurance	Fund.

• Kept	our	operating	costs	very	low	as	a	percentage	of	average	assets,	at	about 7	basis	

points	in	2021,	unchanged	from	2020.

• Welcomed	a	new	Chief	Risk	Officer,	John	Simonson,	who	brings	over	30	years	of	

experience	in	finance,	risk	management	and	resolution	planning to	FCSIC.	

• Implemented	a	new	Governance,	Risk	and	Compliance	(GRC)	software	tool	to	further	

automate	processes	and	enhance	internal	controls.

• Maintained	readiness	to	provide	liquidity	assistance	to,	and	act	as	receiver	or	

conservator	for,	a	System	institution.	

• Received	an	unqualified	or	unmodified	opinion	on	our	financial	statements	for	the	32nd	

consecutive	year.	Our	external	auditor	also	issued	an	opinion	stating that	FCSIC	

maintained	effective	internal	control	over	financial	reporting.	

• Furthered	our	operational	efficiency	in	vital	services	by	entering into	a	new	four-year	

Interagency	Agreement	with	FCA	and	renewed	our	contract	with	the	Bureau of	Fiscal	

Services	Administrative	Resource	Center.

Protecting	Investors	in	Agriculture	and	Rural	America 7
Collaboration	with	Other	Federal	Agencies

In	addition	to	leveraging	public	and	private	sector	resources	to	support	our	operations,	we	

maintain	productive	dialogue	with	a	number	of	other	federal	agencies	to	support	our	mission.	

During 2021,	we	worked	closely	with	the	Farm	Credit	Administration	on joint	issues	of	concern,	

including	climate	risk,	cyber	risk,	liquidity,	and	capital.	We	strengthened	our	relationship	with	

the	Federal	Deposit	Insurance	Corporation	(FDIC)	to	provide	support	and	training for	

receivership	and	conservatorship	readiness.	We	also	maintained	contact	with	the	National	

Credit	Union	Administration	(NCUA)	on	resolution	issues	and	with	both	the	FDIC	and	NCUA	on	

best	practices	for	administration	of	our	Insurance	Fund.	We	also	interacted	with	

representatives	from	the	Federal	Housing	Finance	Agency,	the	Federal	Reserve,	and	the	Office	

of	Comptroller	of	the	Currency	to	discuss	risk	issues	of	joint	concern.	We	value	and	appreciate	

the	support	we	receive	from	our	federal	counterparts.	

8 Farm	Credit	System	Insurance	Corporation
Table	1

Selected	Financial	Statistics	for	the	Farm	Credit	System	Insurance	Corporation

(Dollars	in	Millions)

BALANCE	SHEET 2021 2020 2019

Total	assets

Total	liabilities

Insurance	Fund

Allocated	insurance	reserves	accounts

Unallocated	Insurance	Fund

OPERATIONS

Revenues

Operating expenses

Net	income

$	 5,960.5	 $	 5,454.9	 $	 5,201.5	

0.7	 0.6	 0.5	

0.0	 0.0	 62.7	

5,959.8	 5,454.3	 5,138.3	

509.7	 320.0	 317.1	

4.1	 4.0	 3.9	

$	 505.5	 $	 316.0	 $	 313.2	

Protecting	Investors	in	Agriculture	and	Rural	America 9
THE	FARM	CREDIT	SYSTEM

Structure	and	Funding

The	Farm	Credit	System	is	a	network	of	federally	chartered,	cooperative	lending institutions	

owned	by	the	agricultural	and	rural	customers	it	serves,	including farmers,	ranchers,	producers	

and	harvesters	of	aquatic	products,	agricultural	cooperatives,	and	farm-related	businesses.	As	

of	December	31,	2021,	the	System	had	4	banks	and	67	associations.	Each	association	has	its	

own	chartered	territory	and	is	affiliated	with	one	of	the	four	banks.	See	Table	2	for	the	

combined	financial	statistics	for	the	banks	and	associations.

Table	2

Combined	Farm	Credit	System	Statistics

(Dollars	in	Billions)

2021 2020 2019

Insured	debt	outstanding1

Real	estate	mortgage	loans

Production	and	intermediate-term	loans

Agribusiness	loans:

Processing and	marketing

Loans	to	cooperatives

Farm-related	business

Rural	infrastructure	loans:

Power

Communication

Water/Waste	water

Rural	residential	real	estate	loans

Agricultural	export	finance	loans

Lease	receivables

Loans	to	other	financing institutions

Cash	and	investments

Net	income

Nonperforming	loans	as	a	percentage	of	total	

loans

$	 353.4	

164.5	

$	 323.0	

147.6	

$	 294.4	

132.2	

62.6	 58.0	 56.1	

34.3	

21.3	

5.1	

31.9	

20.0	

4.5	

28.2	

17.8	

4.1	

23.6 22.1	 19.4	

10.3 9.7	 7.9	

3.1 2.7	 2.4	

6.9 6.9	 7.4	

7.1 6.9	 6.7	

4.2 4.3	 3.9	

1.0 0.9	 0.9	

80.8 74.2	 68.3	

6.8 6.0	 5.4	

0.5	% 0.6	% 0.8	%

Source:	Federal	Farm	Credit	Banks	Funding	Corporation

1. Insured	debt	outstanding	is	based	on	System	institution	call	report	information	and	reflects	the book	value of	

insured	debt	outstanding	plus	accrued	interest	as	of	December	31,	2021,	2020,	and	2019.	(Book	value	excludes	

fair-value	adjustments.)

10 Farm	Credit	System	Insurance	Corporation
Associations	receive	funding from	their	affiliated	bank	and	lend	directly	to	their	owner-	

borrowers,	providing	a	consistent	and	reliable	source	of	agricultural	and	rural	credit	throughout	

the	United	States,	including	the	Commonwealth	of	Puerto	Rico.	One	of	the	System	banks	

(CoBank)	also	has	nationwide	authority	to	make	retail	loans	to	cooperatives	and	other	eligible	

entities.

The	banks	obtain	funds	for	their	operations	primarily	through	the	sale	of	consolidated	

Systemwide	debt	securities.	The	banks	own	and	use	the	Federal	Farm	Credit	Banks	Funding

Corporation	(Funding	Corporation)	to	issue	Systemwide	debt	securities	in	the	capital	markets.	

As	the	fiscal	agent	for	the	banks,	the	Funding	Corporation	partners	with	a	select	group	of	

dealers	to	market	and	distribute	the	securities	to	investors	throughout	the	world.

Systemwide	debt	securities	are	the	general	unsecured	joint	and	several	obligations	of	the	

banks.	Systemwide	debt	securities	are	not	obligations	of	and	are	not	guaranteed	by	the	U.S.	

government.	In	addition,	Systemwide	debt	securities	are	not	the	direct	obligations	of	the	

System	associations	and,	as	a	result,	the	capital	of	the	associations	may	not	be	available	to	

support	principal	and	interest	payments	on	Systemwide	debt	securities.

Investor	Protection

Investors	provide	the	funds	that	the	System	lends	to	agriculture	and	rural	America.	FCSIC’s	

primary	purpose,	as	defined	by	the	Farm	Credit	Act,	is	to	insure	the	timely	payment	of	principal	

and	interest	on	Systemwide	debt	securities	purchased	by	these	investors.	

Regulatory	Oversight

FCA	is	responsible	for	the	examination,	supervision,	and	regulation	of	each	System	institution.	It	

is	an	independent	agency	in	the	executive	branch	of	the	U.S.	government	and	derives	its	

authorities	from	the	Farm	Credit	Act.	These	authorities	include examination	and	enforcement	

authorities	similar	to	those	of	commercial	bank	regulators.	The	U.S.	Senate	Committee	on	

Agriculture,	Nutrition,	and	Forestry	and	the	U.S.	House	of	Representatives	Committee	on	

Agriculture	oversee	FCSIC,	FCA,	and	the	System.

Insured	Obligations

FCSIC	insures	Systemwide	and	consolidated	bonds,	notes,	and	other	obligations	issued	by	

System	banks	through	the	Funding Corporation	under	section	4.2(c)	or	(d)	of	the	Farm	Credit	

Act.	Figure	1	shows	that	insured	debt	outstanding increased	by	9.4%	in	2021	to	$353.4	billion,	

compared	with	an	increase	of	9.7%	in	2020.

Protecting	Investors	in	Agriculture	and	Rural	America 11
Figure	1

Insured	Debt	Outstanding:

Growth	Averaged	6.5%	Over	the	Past	Five	Years

(Dollars	in	Billions)

$266

$283 $294

$323

$353

2.9%

6.2%

4.2%

9.7% 9.4%

Insured	Debt	Outstanding Percentage	of	Growth

2017 2018 2019 2020 2021

$175

$200

$225

$250

$275

$300

$325

$350

$375

Note:	Insured	debt	outstanding,	which	is	based	on	the	call	report	information	provided	by	System	institutions,

reflects	the book	value	of	insured	debt	outstanding,	plus	accrued	interest.	(Book	value	excludes	fair-value

adjustments.)

Farm	Credit	System	Capital

The	primary	source	of	funds	to	repay	insured	Systemwide	debt	securities	is	the	System’s	

borrowers.	Each	borrower	must	have	a	minimum	net	worth,	and	in	most	cases,	collateral	

posted	to	secure	the	loan.	The	borrower	makes	payments	on	the	loan	to	the	lending bank	or	

association,	the	lending association	in	turn	makes	payments	on	its	loan	to	the	lending bank,	and	

the	banks	ultimately	repay	Systemwide	debt	securities.

All	the	banks	and	associations	currently	exceed	their	minimum	regulatory	capital	requirements	

as	protection	and	support	for	the	repayment	of	the	outstanding insured	debt.	If	a	bank	were	

unable	to	repay	its	portion	of	an	insured	Systemwide	debt	obligation,	FCSIC	would	use	the	

Insurance	Fund	to	make	the	payment	on	its	behalf.	If	the	assets in	the	Insurance	Fund	were	

exhausted,	the	Farm	Credit	Act’s	provisions	for	joint	and	several	liability	would	be	triggered,	

requiring the	other	System	banks	to	repay	the	defaulting bank’s	portion	of	the	debt.

As	Figure	2	shows,	the	amount	of	System	bank	capital	plus	the	balance in	the	Insurance	Fund	

increased	25.9%	from	$23.2	billion	at	year-end	2017	to	$29.2	billion	at	year-end	2021.	Bank	

capital	plus	the	amount	in	the	Insurance	Fund	as	a	percentage	of	insured	debt	outstanding has	

fluctuated	in	the	range	of	8.3%	to	8.8%	over	the	past	five	years,	with	bank	capital	plus	the	

amount	in	the	Insurance	Fund	as	a	percentage	of	insured	debt	equaling	8.3%	as	of	year-end	

12 Farm	Credit	System	Insurance	Corporation
2021	(see	Figure	3).	Without	the	Insurance	Fund,	bank	capital	as	a	percentage	of	insured	debt	

was	6.6%	at	year-end	2021	and	7.0%	at	year-end	2020.

Overall,	the	financial	performance	and	condition	of	the	System	on a	consolidated	basis	remains	

strong,	although	some	institutions	continue	to	experience	stress	from	credit	deterioration	in	

certain	agricultural	sectors.	(See	trends	in	the	Financial	Institution	Rating	System	[FIRS] in	the	

“Risk	Management”	section.)

A	bank’s	credit	exposure	to	borrowing	associations	is	partially	mitigated	by	the	associations’	

capital	levels.	Increases	in	System	associations’	capital	levels,	the	result	of	higher	retention	

levels	of	association	net	incomes,	further	reduce	credit	risk.

As	Figure	4	shows,	from	2017	to	2021,	combined	association	capital	increased	$10.0	billion	—	

an	annual	average	increase	of	approximately	6.0%.	The	associations	continue	to	collectively	

achieve	solid	earnings	and	preserve	capital.	Since	2018,	association	capital	as	a	percentage	of	

total	association	assets	has	declined,	as	association	asset	growth	has	outpaced	association	

capital	growth.	However,	all	associations	were	well	capitalized	at	the	end	of	2021,	with	

association	capital	as	a	percentage	of	total	association	assets	equaling	18.1%	(see	Figure	5).

Protecting	Investors	in	Agriculture	and	Rural	America 13
Figure	2

Bank	Capital	Plus	Insurance	Fund

(Dollars	in	Billions)

$18.4 $19.2 $20.7 $22.7 $23.2

$4.8 $5.0

$5.2

$5.5 $6.0

Bank	Capital Insurance	Fund

2017 2018 2019 2020 2021

$0

$5

$10

$15

$20

$25

$30

Source:	Federal	Farm	Credit	Banks	Funding Corporation

Figure	3

Bank	Capital	Plus	Insurance	Fund	as	Percentage	of	Insured	Debt

8.7%

8.5%

8.8%

8.7%

8.3%

2017 2018 2019 2020 2021

7.5%

8.0%

8.5%

9.0%

9.5%

Source:	Federal	Farm	Credit	Banks	Funding Corporation

14 Farm	Credit	System	Insurance	Corporation
Figure	4

Combined	Association	Capital

(Dollars	in	Billions)

$38.2 $40.5 $42.7 $45.0

$48.2

2017 2018 2019 2020 2021

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

Source:	Federal	Farm	Credit	Banks	Funding Corporation

Figure	5

Combined	Association	Capital	as	Percentage	of	Total	Association Assets

19.3%

19.5%

19.3%

18.6%

18.1%

2017 2018 2019 2020 2021

18.0%

18.5%

19.0%

19.5%

20.0%

Source:	Federal	Farm	Credit	Banks	Funding Corporation

Protecting	Investors	in	Agriculture	and	Rural	America 15
Risk	Management	Tools

Farm	Credit	System	banks	use	risk	management	tools	to	protect	investors.	One	tool	is	the	

Contractual	Interbank	Performance	Agreement	(CIPA).	All	System	banks	have	entered	into	this	

agreement,	which	measures	the	financial	condition	and	performance of	each	bank	by	using

ratios	that	consider	bank	capital,	asset	quality,	earnings,	interest	rate	risk,	and	liquidity.	The	

CIPA	contains	triggers	that	financially	penalize	banks	that	do	not	meet	performance	standards.

The	System	banks	and	the	Funding	Corporation	have	also	entered	into	the	Market	Access	

Agreement.	The	Market	Access	Agreement	establishes	conditions	for	each	bank’s	continued	

participation	in	the	debt	market.	If	a	bank	fails	to	meet	agreed-upon	performance	measures,	it	

may	be	restricted	from	issuing debt.	The	performance	criteria	used	under	the	Market	Access	

Agreement	are	the	CIPA	scores	and	the	bank’s	tier	1	leverage	and	total	capital	ratios.

The	Farm	Credit	Administration’s	liquidity	regulation	requires	the	banks	to	effectively	manage	

liquidity	risk	and	maintain	a	three-tiered	liquidity	reserve	to	better	withstand	a	liquidity	crisis.	

Each	System	bank	is	authorized	to	hold	eligible	investments	in	an	amount	not	to	exceed	35%	of	

its	total	outstanding loans	for	the	purposes	of	maintaining	a	liquidity	reserve,	managing short-	

term	surplus	funds,	and	managing interest	rate	risk.

The	liquidity	reserve	must	always	consist	of	readily	marketable	instruments	that	are	sufficient	

to	fund	at	least	90	days	of	the	principal	portion	of	on-balance-sheet	maturing	obligations.	The	

liquidity	reserve	must	consist	of

• level	1	instruments	to	cover	the	principal	portion	of	each	bank’s	on-balance-sheet	

maturing	obligations	for	the	first	15	days,

• level	1	and	2	instruments	sufficient	to	cover	days	16	to	30,	and

• level	1,	2,	and	3	instruments	to	cover	days	31	to	90.	

Level	1	instruments	include	cash,	overnight	money	market	investments,	obligations	of	U.S.	

government	agencies	with	a	final	remaining maturity	of	3	years	or	less,	non-System	

government-sponsored	enterprise	(GSE)	senior	debt	securities	that	mature	within	60	days,	and	

diversified	investment	funds	composed	exclusively	of	level	1	instruments.

Level	2	instruments	include	obligations	of	U.S.	government	agencies	with	a	final	remaining

maturity	of	more	than	3	years,	mortgage-backed	securities	that	are	fully	guaranteed	by	a	U.S.	

government	agency	as	to	the	timely	repayment	of	principal	and	interest,	and	diversified	

investment	funds	composed	exclusively	of	level	1	and	2	instruments.

Level	3	instruments	include	non-System	GSE	senior	debt	securities	with	maturities	exceeding 60	

days,	mortgage-backed	securities	that	are	fully	guaranteed	by	a	GSE	as	to	the	timely	repayment	

of	principal	and	interest,	money	market	instruments	maturing	within	90	days,	and	diversified	

investment	funds	composed	exclusively	of	level	1,	2,	and	3	instruments.	All	four	System	banks	

exceeded	these	requirements	in	2021.

16 Farm	Credit	System	Insurance	Corporation
INSURANCE	FUND	MANAGEMENT

The	Insurance	Fund	and	the	Secure	Base	Amount

The	Farm	Credit	Insurance	Fund	is	FCSIC’s	equity;	it	is	the	difference	between	total	assets	and	

total	liabilities,	including	insurance	obligations.	The	Insurance	Fund	is	composed	of	an	

unallocated	insurance	fund	(the	portion	of	the	Insurance	Fund	for	which	no	specific	use	has	

been	designated)	and	an	allocated	insurance	fund	(the	portion	of	the	Insurance	Fund	that	has	

been	transferred	to	the	allocated	insurance	reserves	accounts).

The	Farm	Credit	Act	established	the	secure	base	amount	as	2%	of	the	aggregate	outstanding

insured	obligations	(adjusted	to	exclude	90%	of	federal	government–guaranteed	loans	and	

investments	and	80%	of	state	government–guaranteed	loans	and	investments).	Table	3	shows	

how	the	secure	base	amount	is	calculated.	The	Farm	Credit	Act	also	gives	FCSIC	the	sole	

discretion	to	choose	another	percentage	that	we	determine	to	be	actuarially	sound	to	maintain	

the	Insurance	Fund,	considering the	risk	of	insuring outstanding	debt	obligations.

FCSIC’s	premiums	are	set	with	the	goal	of	reaching and	maintaining the	2%	secure	base	

amount.	However,	if	growth	of	insured	debt	is	greater	than	forecast	when	premium	accrual	

rates	are	established	(or	the	Fund	is	used	for	some	authorized	purpose),	the	Insurance	Fund	will	

end	the	year	below	the	secure	base	amount,	and	FCSIC	will	need	to	collect	additional	premiums	

in	the	following	year	to	make	up	the	shortfall.	If	growth	of	insured	debt	is	less	than	forecasted	

when	premium	accrual	rates	are	set,	then	the	Insurance	Fund	may	end	the	year	above	the	

secure	base	amount.

If	the	Insurance	Fund	exceeds	the	secure	base	amount	at	the	end of	any	calendar	year,	FCSIC	

allocates	the	excess	amounts,	minus	budgeted	annual	operating expenses	and	insurance	

obligations,	to	the	AIRAs	established	by	Congress	for	the	benefit	of	the	System	banks.

Once	FCSIC	determines	that	the	allocation	is	appropriate	and	that	the	funds	in	the	allocated	

insurance	reserves	accounts	(AIRAs)	are	not	otherwise	needed,	FCSIC	may	pay	the amounts	in	

the	AIRAs	to	the	accountholders	in	accordance	with	the	formula	specified	in	the	Farm	Credit	

Act.

Protecting	Investors	in	Agriculture	and	Rural	America 17
Table	3

Calculation	of	Secure	Base	Amount	

(Dollars	in	Millions)

12/31/2021 12/31/2020

Total	principal	and	interest	of	debt	outstanding

Less:

90%	federal	government–guaranteed	loans

80%	state	government–guaranteed	loans

90%	federal	government–guaranteed	investments

80%	state	government–guaranteed	investments

Total	deduction

Adjusted	insured	debt

Secure	base	amount	(2%)

Unallocated	and	allocated	Insurance	Fund	balance

Unallocated	and	allocated	Insurance	Fund	as	a	

percentage	of	adjusted	insured	debt

$	 353,382	

(7,789)	

(17)	

(44,918)	

0	

(52,724)	

300,658	

6,013	

5,960	

1.98	%

$	 322,992	

(8,520)	

(21)	

(32,429)	

0	

(40,970)	

282,022	

5,640	

5,454	

1.93	%

Both	total	Insurance	Fund	and	total	assets	increased	by	9.3%	to	$5.96	billion	in	2021	(see	Figure	

6).	Insured	debt	outstanding	grew	$30.4	billion	in	2021	(9.4%).	Because	of	the	significant	

growth	in	insured	debt,	the	Insurance	Fund	finished	2021	at	1.98%,	which	was	$53	million	

below	the	secure	base	amount	(see	Figure	7).	Consequently,	no	funds	were	transferred	to	the	

AIRAs.	The	Insurance	Fund	finished	2020	at	1.93%,	$186	million	below	the	secure	base	amount.	

18 Farm	Credit	System	Insurance	Corporation
Figure	6

Insurance	Fund	Balances

(Dollars	in	Billions)

$4.85 $4.95 $5.20 $5.45

$5.96

2017 2018 2019 2020 2021

$0

$1

$2

$3

$4

$5

$6

Figure	7

Insurance	Fund	Relative	to	2%	Secure	Base	Amount

2.00% 2.00% 2.00% 1.93% 1.98%

0.08% 0.03% 0.03%

Unallocated Allocated

2017 2018 2019 2020 2021

0.00%

0.25%

0.50%

0.75%

1.00%

1.25%

1.50%

1.75%

2.00%

2.25%

Protecting	Investors	in	Agriculture	and	Rural	America 19
Premiums

In	setting	premiums,	FCSIC	board’s	objective	is	to	achieve	and	maintain	the	statutory	secure	

base	amount	of	2%	in	the	Insurance	Fund.	The	board	reviews	premium	assessment	rates	as	

often	as	necessary	but	at	least	semiannually.	The	review	focuses	on	the	current	level	of	the	

Insurance	Fund	and	the	amount	of	money	and	time	needed	to	reach the	secure	base	amount	

based	on	expected	growth	in	Systemwide	insured	obligations.	The	review	also	examines	the	risk	

that	the	Insurance	Fund	will	need	to	be	used	in	the	12	months	following	the	review	and	

includes	an	analysis	of	the	condition	of	the	System,	the	health	of	the	agricultural	economy,	and	

risks	in	the	financial	environment.

The	Farm	Credit	Act	requires	premium	assessments	to	be	20	basis	points	on	adjusted	insured	

debt	outstanding	unless	they	are	reduced	by	the	board	of	directors.	There	is	a	risk	surcharge	of	

up	to	10	basis	points	on	nonaccrual	loans	and	on	other-than-temporarily	impaired	investments.	

In	addition,	the	Farm	Credit	Act	reduces	the	total	insured	debt on	which	premiums	are	assessed	

and	requires	premiums	to	be	based	on	outstanding	insured	debt	obligations	adjusted	

downward	by	90%	of	federal	government–guaranteed	loans	and	investments	and	by	80%	of	

state	government–guaranteed	loans	and	investments.

The	unallocated	Insurance	Fund	began	2021	at	1.93%	of	the	secure	base	amount.	The	board	of	

directors	set	premium	accrual	rates	at	its	January	28,	2021	meeting at	16	basis	points	on	

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

points	on	the	average	principal	balance	outstanding for	nonaccrual	loans	and	other-thantemporarily	impaired	investments.	The	board	of	directors	reviewed	premiums	at	its	June	17,	

2021	meeting	and	voted	to	maintain	the	premium	accrual	rate	on	average	adjusted	insured	

debt	at	16	basis	points	and	continued	the	assessment	of	the	surcharge	of	10	basis	points	on	the	

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

impaired	investments	for	the	second	half	of	2021.	The	most	important	determinants	in	setting

premium	accrual	rates	are	the	Insurance	Fund	balance	and	prospects	for	Systemwide	debt	

growth	during the	year.

During 2021,	insured	debt	outstanding increased	by	9.4%.	The	Insurance	Fund	finished	2021	

below	the	2%	secure	base	level,	at	1.98%	of	adjusted	insured	obligations	or	$53	million	below	

the	target	level.

20 Farm	Credit	System	Insurance	Corporation
Revenues	and	Expenses

FCSIC	operates	with	no	annually	appropriated	funds.	We	collect	insurance	premiums	from	each	

Farm	Credit	System	bank.	These	premiums	and	the	income	from	our	investment	portfolio	

provide	the	funds	necessary	to	fulfill	our	mission.

Our	revenues	increased	by	59.3%	to	$509.7	million	in	2021	from	$320.0	million	in	2020	(see	

Figure	8).	Interest	income	decreased	24.4%	in	2021	to	$48.9	million	from	$64.6	million	in	2020.

Figure	8

FCSIC	Revenues

(Dollars	in	Millions)

$57.7 $73.1 $94.4 $64.6 $48.9

$340.8

$212.5 $222.7 $255.4

$460.8

Interest	Income Premiums

2017 2018 2019 2020 2021

$0

$100

$200

$300

$400

$500

To	avoid	duplication	of	effort	and	to	minimize	costs,	we	operate	with	a	small	core	staff	and	use	

private-	and	public-sector	contractors	to	leverage	our	efforts.	The	board	of	directors	and	

management	adopted	this	model	as	a	cost-effective	and	efficient	way	to	use	available	

expertise,	services,	and	resources	to	accomplish	our	mission.

Our	operating	costs	as	a	percentage	of	total	assets	represented	7	basis	points	for	2021,	

unchanged	from	2020.	Costs	for	staff	salaries,	rent,	and	miscellaneous expenses	were	$3.3	

million	of	the	$4.1	million	total	for	the	year	(see	Figure	9).	The	remaining expenses	of	$0.8	

million	were	for	contracted	services.

Protecting	Investors	in	Agriculture	and	Rural	America 21
Figure	9

FCSIC	Operating	Expenses

(Dollars	in	Millions)

$3.7 $3.7 $3.9 $4.0 $4.1

2017 2018 2019 2020 2021

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

22 Farm	Credit	System	Insurance	Corporation
INVESTMENTS

FCSIC’s	investments	increased	from	$4.5	billion	as	of	year-end	2020	to	$5.5	billion	as	of	yearend	2021	(see	Figure	10).	The	increase	occurred	due	to	investment	of	premiums	collected	and	

amounts	previously	held	in	the	overnight	investment	account.	At	December	31,	2021,	we	held	

only	$1.9	million	in	the	overnight	investment	account,	compared	to	$664.3	million	at	December	

31,	2020.	The	funds	in	the	overnight	investment	account	are	classified	as	“cash	and	cash	

equivalents.”

Our	primary	investment	objective	is	to	ensure	adequate	liquidity	of	the	Insurance	Fund	to	meet

our	mission.	Our	secondary	objective	is	to	optimize	the	rate	of	return	on	our	investment	

portfolio.	Funds	are	invested	in	U.S.	Treasury	securities	in	accordance	with	the	Farm	Credit	Act	

and	our	investment	policy.

We	use	several	benchmarks	to	enhance	our	ability	to	assess	portfolio	performance.	The	FCSIC	

Policy	Statement	Concerning	Investments	prohibits	trading	for	capital	gains	purposes.	In	2021,	

the	average	FCSIC	investment	portfolio	yield	was	0.91%,	down	from	1.26%	in	2020.	The	average	

yield	for	our	primary	benchmarks	ranged	from	0.16%	to	0.92%.

In	2020,	the	board	of	directors	revised	FCSIC’s	policy	statement	to	implement	a	short-duration	

investment	strategy	to	minimize	loss	exposure	in	the	event	FCSIC	needed	to	make	

disbursements	to	meet	its	statutory	obligations.	Under	the	revised	policy,	at	least	40%	of	the	

portfolio	must	consist	of	Treasury	securities	with	remaining maturities	of	two	years	or	less,	and	

Treasury	securities	with	maturities	of	between	five	and	ten	years	must	not	exceed	20%	of	the	

portfolio.	FCSIC	does	not	purchase	Treasury	securities	with	maturities	that	exceed	ten	years.

The	weighted-average	maturity	of	the	portfolio	at	year-end	was	1.35	years.	The	composition	of	

the	investment	portfolio	as	of	December	31,	2021,	is	shown	in	Figure	11.

Protecting	Investors	in	Agriculture	and	Rural	America 23
Figure	10

FCSIC	Investments

(Dollars	in	Billions)

$4.5 $4.4

$4.9

$4.5

$5.5

2017 2018 2019 2020 2021

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

$5.5

Note:	Total	investments	reflected	on	this	chart do	not	include	overnight	investments	classified	as	“cash	and	cash	

equivalents”	on	the	balance	sheet.

Figure	11

Investment	Portfolio	by	Maturity	as	of	December	31,	2021

(Dollars	in	Millions)

<1	year

$2,118

38.7%

1-2	years

$2,069

37.8%

2-3	years

$1,287

23.5%

 

Note:	Total	investments	reflected	in	this	chart	include	overnight	investments	classified	as	“cash	and	cash	

equivalents”	on	the	balance	sheet.

24 Farm	Credit	System	Insurance	Corporation
RISK	MANAGEMENT

FCSIC’s	Risk	Profile

FCSIC’s	primary	purpose	is	to	insure	the	timely	payment	of	principal	and	interest	on	

Systemwide	debt	securities.	The	System	banks,	through	the	jointly	owned	Federal Farm	Credit	

Banks	Funding	Corporation,	issue	Systemwide	debt	securities,	insured	by	FCSIC,	to	fulfill	their	

mission.	Anything impairing	the	System	banks’	ability	to	repay	their	insured	debt	constitutes	an	

insurance	risk.	To	carry	out	our	mission,	FCSIC	monitors	conditions	in	the	farm,	rural,	domestic,	

and	global	economies	that	affect	the	System’s	ability	to	repay	insured	debt	obligations.

FCSIC’s	Insurance	Fund	is	exposed	to	a	variety	of	risks,	some	inherent	in	insuring financial	

institutions	and	others	specific	to	the	System.	Examples	of	specific	events	that	could	increase	

risk	to	the	Insurance	Fund	include	the	following:

• Material	reduction	in	System	bank	capital

• Material	adverse	change	in	the	System	banks’	ability	to	access	debt	markets

• Catastrophic	operational	failure	at	a	System	institution	related	to	a	control	deficiency	or	

cybersecurity	breach

• Inadequate	governance	at	a	System	institution,	such	as	a	failed	business	strategy	or	

mismanagement	of	the	organization

• Significant,	rapid,	or	unexpected	credit	deterioration	resulting	from	adversity	in	the	

agricultural	sector

Major	categories	of	risk	monitored	by	FCSIC	include	the	following:

Credit	risk —	the	risk	of	default	on	a	debt	that	may	arise	from	a	borrower failing to	make	

required	payments.	Credit	risk	includes	consideration	of	loan	concentrations	and	other	broad	

elements	of	System	institution	portfolios.	FCSIC	primarily	focuses	on	credit	risk	issues	affecting

the	underlying	agricultural	borrowers’	ability	to	repay	their	debts	to	individual	System	

institutions.	These	risks	include	the	following:

• Changes	in	farmland	values

• Price	volatility	for	agricultural	commodities

• Changes	in	government	support	programs	for	agricultural	producers

• Changes	in	supply	and	demand	for	U.S.	agricultural	products

• Changes	in	international	trade	and	the	value	of	the	U.S.	dollar

• Changes	in	production	costs

• Changes	in	the	domestic	economy	that	affect	incomes	from	off-farm	jobs

• Climate,	weather,	and	other	environmental	conditions

• Availability	of	agricultural	workers

Liquidity	risk	—	the	risk	that	an	institution	may	be	unable	to	meet	short-term	financial	

demands	without	unacceptable	losses.	The	System	relies	on	its	ability	to	regularly	issue	new	

debt	obligations,	in	part	to	pay	maturing	obligations.	The	System	banks	also	hold	liquidity	

Protecting	Investors	in	Agriculture	and	Rural	America 25
investments	that	are	available	if	needed.	A	significant	disruption	in	the	System	banks’	ability	to	

issue	new	debt	obligations	or	sell	liquidity	investments	would	impair	their	ability	to	repay	

insured	obligations.	As	further	discussed	on	page	31,	FCSIC	has	procedures	in	place	to	provide	

liquidity	assistance	to	System	banks	if	external	market	circumstances	make	it	likely	that	the	

banks	will	be	unable	to	pay	maturing	insured	obligations.

Interest	rate	risk	—	the	risk	that	changes	in	interest	rates	may	reduce	the	value	of	assets	with	a	

consequent	negative	impact	on	operating results	and	financial	condition.

Operational	risk —	the	prospect	of	losses	resulting from	inadequate	or	failed	procedures,	

controls,	systems,	or	policies,	including employee	errors,	systems	failures,	or	fraud	or	other	

unauthorized	activity.	Operational	risk	also	includes	inadequate	defenses	against	cyberthreats.

Strategic	risk	—	the	risk	that	a	failed	business	strategy,	decision,	or	series	of	decisions	leads	to	

losses.

Structural	risk	—	the	risk	related	to	the	design	of	the	Farm	Credit	System.	For	example,	as	a	

lender	to	a	single	industry	(agriculture),	the	System	has	a	built-in	concentration	risk.	Also, any	

changes	to	the	System’s	fundamental	organization,	such	as	an	alteration	in	the	supervisory	

relationship	between	System	banks	and	associations,	or	diminution	of	the	two	layers	of	loss	

absorbing capital,	may	create	risk	to	the	Insurance	Fund.

Reputational	risk —	the	risk	resulting	from	events	that	affect	the	reputation	of	the	System	or	

the	agriculture	industry.	Such	events	may	affect	the	System’s	funding costs	depending on	

market	reaction.

Political	risk	—	the	risk	of	loss	of	support	from	federal	and	state	governments.	This	includes	any	

change	in	government	support	for	government-sponsored	enterprises.

The	Risk	Environment	in	2021

The	global	economy	experienced	a	robust	recovery	in	2021	despite	the	persistence	of	

COVID-19.	Substantial	fiscal	support	in	advanced	economies	spurred	strong	demand	for	goods	

in	the	first	half	of	the	year.	However,	longer-than-expected	supply	chain	disruptions	and	

shipping	backlogs	continued	through	the	last	half	of	the	year.	Raw	material	and	supply	

shortages,	along	with	higher	energy	prices,	pushed	inflation	to	multiyear	highs.	The	scale	of	the	

global	inflation	shock	took	most	forecasters	and	central	banks	by	surprise.	A	shift	to	global	

monetary	policy	normalization	is	underway	in	2022.

U.S.	real	gross	domestic	product	increased	5.7%	in	2021,	the	strongest	level	of	annual	growth	in	

almost	four	decades.	Personal	consumption	expenditures	increased	by	7.9%,	with	most	of	the	

increase	coming	from	goods	consumption.	Gross	private	domestic	investment	increased	by	

9.8%	as	residential	investment	soared	and	businesses	spent	heavily	on	equipment	and	

intellectual	property	products	to	further	automate	production.	The	trade	deficit	continued	to	

widen	as	the	U.S.	economy	grew	more	rapidly	than	that	of	most	other	countries.

26 Farm	Credit	System	Insurance	Corporation
The	U.S.	government	provided	further	fiscal	support	to	the	economy	in	early	2021	to	mitigate	

the	effects	of	COVID-19.	The	Federal	Reserve	held	the	federal	funds	rate	near	zero	throughout	

2021	and	continued	to	purchase	Treasury	and	agency	mortgage-backed	securities	to	support	

the	economic	recovery.	However,	in	view	of	persistent	inflation,	the	Federal	Reserve	began	

phasing	out	asset	purchases	in	November	and	accelerated	the	pace	of	this	phaseout	in	

December.

The	U.S.	labor	market	continued	to	heal	throughout	the	year.	The	unemployment	rate	dropped	

from	6.7%	at	the	end	of	2020	to	3.9%	at	the	end	of	2021.	As	the	labor	market	improved,	labor	

shortages	developed	in	many	industries	that	contributed	to	slowdowns	in	production,	tighter	

supplies,	and	higher	prices.

Inflation	rapidly	picked	up	as	the	initial	wave	of	COVID-19	ebbed	and	consumers	ventured	out	

more	in	the	spring	and	early	summer	of	2021.	The	year-over-year	increase	in	the	consumer	

price	index	steadily	climbed,	reaching 7.0%	by	the	end	of	2021.	Treasury	yields	remained	low	

throughout	most	of	2021	but	began	to	rise	in	October	as	the	Federal	Reserve	gave	clear	signals	

that	it	would	begin	tapering asset	purchases	before	the	end	of	the	year.

The	U.S.	agricultural	sector	performed	remarkably	well	in	2021.	In	its	February	2022	report,	the	

U.S.	Department	of	Agriculture	(USDA)	estimated	that	2021	net	farm	income	increased	for	the	

third	consecutive	year	despite	a	substantial	decline	in	direct	government	payments	from	the	

previous	year.	The	USDA	estimated	that	cash	receipts	from	crop	and	livestock	sales	increased	

by	nearly	19%	in	2021,	offsetting an	increase	of	10%	in	cash	expenses.

Higher	cash	receipts	were	primarily	driven	by	high	global	commodity	prices	and	record	levels	of	

U.S.	exports.	Higher	expenses	were	the	result	of	global	supply	chain	disruptions	and	inflationary	

impacts	on	fuel,	natural	gas,	fertilizers,	and	other	agricultural	inputs.	Sector	wide	farm	financial	

stress	in	2021	was	low	compared	to	historical	levels,	though	some	individual	operations	

experienced	stress.	Farmland	values	remained	strong	in	2021	in	view	of	high	commodity	prices	

and	historically	low	interest	rates.

The	System	reported	net	income	of	$6.8	billion	for	2021,	up	13.2%	from	$6.0	billion	in	2020.	

The	net	interest	margin	was	2.46%	for	both	2020	and	2021.	The	net	interest	rate	spread	was	

2.33%	for	2021	compared	with	2.26%	in	2020.	This	increase	in	the	net	interest	rate	spread	is	

attributable	to	a	decrease	in	debt	costs.

The	System’s	loan	volume	increased	$28.4	billion	or	9.0%	to	$343.9	billion	at	year-end	2021	

compared	with	$315.5	billion	at	the	end	of	2020.	The	growth	was	primarily	due	to	increased	

real	estate	mortgages,	production	and	intermediate-term,	power,	and	agribusiness	loans.

System	credit	quality	remained	generally	stable	in	2021.	Nonaccrual	loans	decreased	$328	

million,	or	21.8%,	to	$1.2	billion	at	December	31,	2021.	The	decrease	was	primarily	due	to	the	

repayment	of	real	estate	mortgage	and	production	and	intermediate-term	loans.	The	ratio	of	

nonaccrual	loans	to	total	loans	outstanding was	0.34%	at	December	31,	2021,	compared	with	

0.48%	at	December	31,	2020	(see	Figure	12).

Protecting	Investors	in	Agriculture	and	Rural	America 27
Figure	12

Nonaccrual	Loans	as	a	Percentage	of	Total	Loans	Outstanding

1.20%

0.86%

0.63%

0.56%

0.64% 0.64%

0.69% 0.67%

0.48%

0.34%

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

0.00%

0.25%

0.50%

0.75%

1.00%

1.25%

1.50%

Source:	Federal	Farm	Credit	Banks	Funding Corporation

The	allowance	for	loan	losses	was	$1.6	billion	at	December	31,	2021,	a	decrease	of	$164	million,	

or	9.1%,	below	the	$1.8	billion	at	December	31,	2020.	The	allowance	for	loan	losses	represents	

the	aggregate	of	each	System	entity’s	individual	evaluation	of	its	allowance	for	loan	losses	

requirements.	Managements’	evaluations	consider	factors	that	include	loan	loss	experience,	

portfolio	quality,	and	loan	portfolio	composition,	collateral	value,	current	agricultural	

production,	and	economic	conditions.	Although	aggregated	for	the	System’s	combined	financial	

statements,	the	allowance	of	each	entity	is	specific	to	that	institution	and	is	not	available	to	

absorb	losses	at	other	System	entities.

The	System	continued	to	have	reliable	access	to	the	debt	markets	to	support	its	mission.	

Investor	demand	for	Systemwide	insured	debt	securities	remained	favorable	across	all	products	

throughout	2021.	The	System	is	a	government-sponsored	enterprise	that	continues	to	benefit	

from	broad	access	to	domestic	and	global	capital	markets,	providing a	dependable	source	of	

competitively	priced	debt.

FCA’s	capital	rule	for	banks	and	associations is	comparable	to	the	Basel	III	standardized	

approach	adopted	by	the	federal	banking	regulatory	agencies.	FCA’s	regulatory	minimums	

include	a	4.5%	common	equity	tier	1	risk-based	capital	ratio,	a 6.0%	tier	1	risk-based	capital	

ratio,	an	8.0%	total	risk-based	capital	ratio,	and	a	4.0%	tier	1	leverage	ratio,	of	which	at	least	

1.5%	must	be	composed	of	unallocated	retained	earnings	(URE)	and	URE	equivalents.	The	risk28 Farm	Credit	System	Insurance	Corporation
based	capital	ratios	also	include	a	2.5%	common	equity	tier	1	capital	conservation	buffer.	The	

tier	1	leverage	ratio	includes	a	1.0%	leverage	buffer.	As	of	December	31,	2021,	all	System	

institutions	exceeded	the	regulatory	minimum	and	buffer	requirements.

FCA	authorizes	each	System	bank	to	hold	eligible	investments	in	an	amount	not	to	exceed	35%	

of	its	total	outstanding loans	for	the	purposes	of	maintaining	a	liquidity	reserve,	managing

short-term	funds,	and	managing	interest	rate	risk.	The	liquidity	reserve	must	consist	of	

marketable	investments	that	are	sufficient	to	fund	90	days	of	on-balance-sheet	maturing

obligations.	The	System	banks	reported	a	combined	$77.5	billion	in	cash	and	available-for-sale	

investments	with	a	liquidity	position	of	180	days	at	year-end	2021 compared	with	171	days	at	

year-end	2020.

The	System	banks	are	further	required	to	maintain	a	three-tiered	liquidity	reserve,	consisting of	

level	1	instruments	to	cover	each	bank’s	maturing	obligations	for	the	first	15	days;	level	1	and	2	

instruments	sufficient	to	cover	days	16	to	30;	and	level	1,	2,	and	3	instruments	to	cover	days	31	

to	90.	All	four	System	banks	exceeded	these	requirements	in	2021.

The	System	banks	have	established	contingency	funding	plans	to	provide	for	events	that	could	

impede	access	to	the	debt	markets.	The	System	banks	also	regularly	perform	credit	and	

liquidity	stress	testing	to	determine	their	ability	to	withstand	severe	market	events	while	

continuing to	fulfill	their	mission.

Figure	13	shows	a	summary	of	composite	year-end	FIRS	ratings	for	System	banks	and	

associations.	Institutions	with	performance-related	issues	continued	to	receive	greater	

examination	scrutiny	and	supervisory	attention	from	FCA.

Protecting	Investors	in	Agriculture	and	Rural	America 29
	 	 	 	 	 	 	 	 	 	

Figure	13

FIRS	Composite	Year-End	Ratings	for	Banks	and	Associations	of	the	Farm	Credit	

SystemNumber	of	Institutions

39 34 30 32 33

29

32 35 35 32

5 6 7 4

4

1

Rating	1 Rating	2 Rating	3 Rating	4

2017 2018 2019 2020 2021

0

10

20

30

40

50

60

70

80

90

Source:	FCA

Note:	2021	FIRS	ratings	shown	for	69	FCS	institutions	is	proforma	for	association	mergers	that	closed	

1/1/22.	

30 Farm	Credit	System	Insurance	Corporation
FINANCIAL	ASSISTANCE	AND	RESOLUTIONS

FCSIC	has	statutory	authority	to	provide	“stand-alone	assistance”	to	a	System	bank	or	

association	for	any	of	the	following reasons:

• To	prevent	the	placing	of	the	institution	in	receivership

• To	restore	the	institution	to	“normal	operations”

• To	reduce	the	risk	to	FCSIC	posed	by	the	institution	when	“severe	financial	conditions”	

threaten	the	stability	of	the	banks

FCSIC	may	also	provide	assistance	to	facilitate	mergers	or	consolidations.

At	present,	no	assistance	agreements	are	outstanding.	If	a	System	institution	needs	financial	

assistance,	FCSIC	must	ensure	that	the	proposed	assistance	is	the	least	costly	means	for	

resolving	the	institution’s	problems;	by	law,	FCSIC	cannot	provide	financial	assistance	if	the	cost	

of	liquidation	is	lower	than	the	cost	of	providing assistance.

FCSIC	has	a	$10	billion	line	of	credit	with	the	Federal	Financing Bank,	that	can	be	accessed	when	

exigent	market circumstances	make	it	extremely	doubtful	that	the	System	banks	will	be	able	to	

pay	maturing	debt	obligations	that	we	insure.	This	liquidity	backstop	allows	us	to	provide	more	

assistance	to	System	banks	than	is	otherwise	available	from	the	Insurance	Fund	alone.

FCSIC	has	procedures	in	place	in	the	event	System	banks	require	liquidity	assistance	because	

severe	financial	conditions	threaten	the	banks’	ability	to	repay	maturing insured	debt.	The	

procedures	implement	FCSIC’s	Policy	Statement	Concerning Assistance.	Along with	the	

procedures,	we	developed	a	model	assistance	agreement,	drafted	necessary	forms	related	to	

valuation	of	collateral	and	liquidity	reserves,	and	entered	into	a	collateral	pledge	agreement	

with	each	bank	and	a	collateral	custodian.	We	review	the	procedures	annually	to	evaluate	if	

changes	are	needed.

When	appointed	by	FCA,	FCSIC	has	the	statutory	responsibility	to	serve	as	receiver	or	

conservator	for	System	banks	and	associations.	As	conservator,	we	will	operate	the	institution	

as	a	going	concern.	Upon	appointment	as	receiver,	we	will	take	possession	of	a	System	

institution	to	settle	its	business	operations,	collect	the	debts	owed	to	it,	liquidate	its	property	

and	assets,	pay	its	creditors,	and	distribute	any	remaining proceeds	to	stockholders.

The	Agriculture	Improvement	Act	of	2018	(2018	Farm	Bill)	clarified	and	updated	FCSIC’s	

statutory	authorities	to	act	as	receiver	or	conservator	for	a	System	institution.	Congress	stated	

its	intent	in	the	2018	Farm	Bill	Conference	Report	that	FCSIC’s authorities	be	“functionally	

equivalent	to	the	parallel	authorities	of	the	Federal	Deposit	Insurance	Corporation.”	The	2018	

Farm	Bill	also	provided	new	authority	for	FCSIC	to	create	and	FCA	to	charter,	a	System	bridge	

bank,	which	is	an	important	tool	for	resolving a	failed	bank.

Currently	there	are	no	active	receiverships	or	conservatorships	in	the	System.

Protecting	Investors	in	Agriculture	and	Rural	America 31
We	use	contractors	on	an	as-needed	basis	so	that	we	can	continue	to	operate	with	a	small	core	

staff	while	also	maintaining	our	readiness	to	act	as	receiver	or	conservator.	These	contractors	

provide	knowledgeable	and	readily	available	staff	resources	while	allowing us	to	contain	costs	

during	periods	of	limited	or	no	activity.

Our	staff	also	maintains	contact	with	the	resolution	staff	of	the	Federal	Deposit	Insurance	

Corporation	and	the	National	Credit	Union	Administration	to	stay	informed	about	best	practices	

and	exchange	information	concerning	receivership	management.

We	have	board-approved	policies	that	provide	guidance	related	to	resolution	activities,	

including appraisal	of	real	estate	securing nonperforming assets,	insurance	of	assets	that	come	

under	our	control,	and	environmental	hazards	assessments	of	real	estate	securing

nonperforming	assets.	The	FCSIC	board	must	review	and	approve	policy	statements	every	five	

years.

32 Farm	Credit	System	Insurance	Corporation

Farm Credit System Insurance 

Corporation 

Audited Financial Statements 

For the Years Ended December 31, 2021 and 2020 

The report accompanying these financial statements was issued by 

BDO USA, LLP, a Delaware limited liability partnership and the U.S. member 

of BDO International Limited, a UK company limited by guarantee. 
 

 

Farm Credit System Insurance Corporation 

Contents 

Independent Auditor’s Report F1 – F3 

Financial Statements 

Statements of Financial Condition F4 

Statements of Income and Expenses and Changes in Insurance Fund F5 

Statements of Cash Flows F6 

Notes to the Financial Statements F7 - F12 

Management’s Report on Internal Control Over Financial Reporting F13 
 

 

 

 

 

8401 Greensboro Drive

Suite 800 

McLean, VA 22102 

Tel: 703-893-0600

Fax: 703-893-2766 

www.bdo.com 

Independent Auditor’s Report 

Board of Directors 

Farm Credit System Insurance Corporation 

McLean, VA 22102 

Report on the Audit of the Financial Statements and Internal Control over Financials Reporting 

Opinions on the Financial Statements and Internal Control Over Financial Reporting 

We have audited the financial statements of the Farm Credit System Insurance Corporation (FCSIC), 

which comprise the statements of financial position as of December 31, 2021 and 2020, and the related 

statements of income and expenses and changes in Insurance Fund and cash flows for the years then 

ended, and the related notes to the financial statements. 

In our opinion, the accompanying financial statements present fairly, in all material respects, the 

financial position of the Farm Credit System Insurance Corporation as of December 31, 2021 and 2020, 

and the results of its operations and its cash flows of the years then ended in accordance with 

accounting principles generally accepted in the United States of America. 

We have also audited FCSIC’s internal control over financial reporting as of December 31, 2021, based 

on criteria established in Internal Control – Integrated Framework (2013), issued by the Committee of 

Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Farm Credit 

System Insurance Corporation maintained, in all material respects, effective internal control over 

financial reporting as of December 31, 2021, based on the COSO criteria. 

Basis for Opinions 

We conducted our audits in accordance with auditing standards generally accepted in the United States 

of America (GAAS) and the standards applicable to financial audits contained in Government Auditing 

Standards issued by Comptroller General of the United States. Our responsibilities under those 

standards are further described in the Auditor’s Responsibilities for the Audits of the Financial 

Statements and Auditor’s Responsibilities for the Audit of Internal Control Over Financial Reporting 

sections of our report. We are required to be independent of the Farm Credit System Insurance 

Corporation 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. 

Responsibilities of Management for the Financial Statements and Internal Control Over Financial 

Reporting 

Management is responsible for the preparation and fair presentation of the financial statements in 

accordance with accounting principles generally accepted in the United States of America, and for 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. Management is also responsible for designing, implementing, and maintaining effective 

internal control over financial reporting and for its assessment about the effectiveness of internal 

control over financial reporting, included in the accompanying Management’s Report on Internal 

Control Over Financial Reporting. 

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the 

international BDO network of independent member firms. 

BDO is the brand name for the BDO network and for each of the BDO Member Firms. 

F1 
 

 

 

 

 

 

 

 

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 FCISC’s ability to 

continue as a going concern within one year after the date that the financial statements are issued. 

Auditor’s Responsibilities for the Audit of the Financial Statements 

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 to issue an auditor’s report 

that includes our opinion. 

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

a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards 

will always detect a material misstatement when it exists. 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 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 in accordance with GAAS and Government Auditing Standards we: 

• Exercise professional judgment and maintain professional skepticism throughout the audit. 

• 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 financial statement audit in order 

to design audit procedures that are appropriate in the circumstances. 

• 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. 

• 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. 

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 controlrelated matters that we identified during the financial statement audit. 

Auditor’s Responsibilities for Audit of Internal Control Over Financial Reporting 

Our objectives are to obtain reasonable assurance about whether effective internal control over 

financial reporting was maintained in all material respects and to issue an auditor’s report that 

includes our opinion on internal control over financial reporting. Reasonable assurance is a high level 

of assurance but is not absolute assurance and therefore is not a guarantee that an audit of internal 

control over financial reporting conducted in accordance with GAAS will always detect a material 

weakness when it exists. 

F2 
 

 

 

 

 

 

In performing an audit of internal control over financial reporting in accordance with GAAS, we: 

• Exercise professional judgment and maintain professional skepticism throughout the audit. 

• Obtain an understanding of internal control over financial reporting relevant to the 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. 

Definition and 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, designed to provide reasonable assurance regarding 

the preparation of reliable financial statements in accordance with accounting principles generally 

accepted in the United States of America. An entity’s internal control over financial reporting includes 

those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, 

accurately and fairly reflect the transactions and dispositions of the assets of the entity; (2) provide 

reasonable assurance that transactions are recorded as necessary to permit preparation of financial 

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

America, and that receipts and expenditures of the entity are being made only in accordance with 

authorizations of management and those charged with governance; and (3) provide reasonable 

assurance regarding prevention, or timely detection and correction of unauthorized acquisition, use, 

or disposition of the entity’s assets that 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. Also, projections of any assessment of effectiveness to future periods are 

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. 

Report on Compliance and Other Matters Based on an Audit of Financial Statements 

As part of obtaining reasonable assurance about whether the Farm Credit System Insurance 

Corporation’s financial statements are free from material misstatement, we performed tests of its 

compliance with certain provisions of laws, regulations, contracts, and grant agreements, 

noncompliance with which could have a direct and material effect on the financial statements. 

However, providing an opinion on compliance with those provisions was not an objective of our audit, 

and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of 

noncompliance or other matters that are required to be reported under Government Auditing 

Standards. 

McLean, Virginia 

February 15, 2022 

F3 
 

 

 

 

 

 

 

Farm Credit System Insurance Corporation 

Statements of Financial Condition 

(Dollars in thousands) 

December 31, 2021 2020 

Assets 

Cash and cash equivalents $ 4,940 $ 664,600 

Investments in U.S. Treasury obligations 5,471,826 4,512,618 

Premiums receivable 460,503 255,365 

Accrued interest receivable 23,187 22,295 

General property, plant, equipment, and software, net 6 25 

Total Assets $ 5,960,462 $ 5,454,903 

Liabilities and Insurance Fund 

Liabilities 

Accounts payable and accrued expenses $ 694 $ 649 

Total Liabilities 694 649 

Insurance Fund 

Unallocated Insurance Fund 5,959,768 5,454,254 

Total Insurance Fund 5,959,768 5,454,254 

Total Liabilities and Insurance Fund $ 5,960,462 $ 5,454,903 

See accompanying notes to the financial statements. 

F4 
 

 

 

 

 

Farm Credit System Insurance Corporation 

Statements of Income and Expenses and Changes in Insurance Fund 

(Dollars in thousands) 

Year-ended December 31, 2021 2020 

Income 

Premiums $ 460,770 $ 255,365 

Interest income 48,894 64,650 

Total Income 509,664 320,015 

Expenses 

Administrative operating expenses 4,150 4,058 

Total Expenses 4,150 4,058 

Net income 505,514 315,957 

Insurance Fund - beginning of year 5,454,254 5,201,011 

Payments to AIRAs' account holders - (62,714) 

Insurance Fund - end of year $ 5,959,768 $ 5,454,254 

See accompanying notes to the financial statements. 

F5 
 

 

 

 

 

 

 

 

 

Farm Credit System Insurance Corporation

 Statements of Cash Flows 

(Dollars in thousands) 

Year-ended December 31, 2021 2020 

Cash flows from operating activities 

Net income $ 505,514 $ 315,957 

Adjustments to reconcile net income to net cash 

provided by operating activities: 

Depreciation 19 19 

Net amortization and accretion of investments 54,040 11,012 

Increase in premiums receivable (205,138) (32,689) 

Increase in accrued interest receivable (892) (117) 

Increase in accounts payable and accrued 

expenses 45 119 

Net cash provided by operating activities 353,588 294,301 

Cash flows from investing activities 

Payments for purchase of U.S. Treasury obligations (3,740,265) (1,866,956) 

Proceeds from maturity of U.S. Treasury obligations 2,727,017 2,196,561 

Net cash (used in) provided by investing activities (1,013,248) 329,605 

Cash flows from financing activity 

Payment to AIRAs accountholders - (62,714) 

Net cash used in financing activity - (62,714) 

Net change in cash and cash equivalents (659,660) 561,192 

Cash and cash equivalents, beginning of year 664,600 103,408 

Cash and cash equivalents, end of year $ 4,940 $ 664,600 

See accompanying notes to the financial statements. 

F6 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

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, 2021 there 

were four insured System banks and 67 direct lender associations, down from four insured System 

banks and 68 direct lender associations at December 31, 2020. 

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, 2021, the System banks reported amounts totaling $353 billion of insured 

obligations compared to $323 billion as of December 31, 2020. 

If the Corporation does not have sufficient funds to ensure payment on insured obligations, 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. 

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. 

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, 2021, the Corporation held $1.9 million in overnight Treasury 

certificates maturing on January 3, 2021, with an interest rate of 0.06 percent, and approximately 

$3.0 million in cash. At December 31, 2020, the Corporation held $664.3 million in overnight 

Treasury certificates maturing on January 4, 2021, with an interest rate of 0.06 percent, and $309.7 

thousand in cash. 

F7 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

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 Financial Accounting Standards Board Accounting Standards Codification 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. Fair value of investments is estimated based on quoted market prices for those or similar 

instruments. 

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. 

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, 2021. 

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 

F8 
 

 

 

 

 

 

 

 

 

 

 

 

 

Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

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

estimates. 

Note 3: Investments in U.S. Treasury Obligations 

In addition to the amounts referenced in Note 2, Cash and Cash Equivalents, at December 31, 2021 

and 2020, investments in U.S. Treasury obligations, which are carried at amortized cost, consisted 

of the following: 

(Dollars in thousands) 

Amortized 

Cost 

Gross 

Unrealized 

Gains 

Gross 

Unrealized 

Losses 

Estimated 

Fair Value 

December 31, 2021 

U.S. Treasury obligations $ 5,471,826 $ 27,397 $ (14,336) $ 5,484,887 

December 31, 2020 

U.S. Treasury obligations $ 4,512,618 $ 75,569 $ (183) $ 4,588,004 

The amortized cost and estimated fair value of U.S. Treasury obligations at December 31, 2021, by 

contractual maturity, are shown below: 

Amortized Estimated 

(Dollars in thousands) Cost Fair Value 

Due in one year or less $ 2,115,940 $ 2,119,377 

Due after one year through five years 3,355,886 3,365,510 

$ 5,471,826 $ 5,484,887 

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. 

The fair value of FCSIC's investments in U.S. Treasury obligations are estimated based on quoted 

market prices for those instruments. 

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 

F9 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

on adjusted insured debt outstanding. The Farm Credit Act also authorizes a risk surcharge of up to 

10 basis points 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 

government-guaranteed 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 semiannually. For 2021, the board of directors set premium 

accrual rates at its January 28, 2021 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 17, 2021 meeting and voted to maintain the premium 

accrual rate on average adjusted insured debt at 16 basis points 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 2021. In 2021, outstanding 

insured obligations increased by $30.4 billion (9.4 percent). At December 31, 2021, the total 

Insurance Fund was 1.98 percent of adjusted insured obligations. 

For 2020, the board of directors set premium accrual rates at its January 30, 2020 meeting at 8 

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-thantemporarily impaired investments. The board of directors again reviewed premiums at its June 25, 

2020 meeting and voted to increase the premium accrual rate on average adjusted insured debt to 

11 basis points 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 2020. In 2020, outstanding insured obligations increased by $28.6 billion (9.7 percent). 

At December 31, 2020, the total Insurance Fund was 1.93 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 did not exceed the 2 percent SBA at December 31, 2021 or 2020, 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. 

F10 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

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 recorded lease expense (including operating 

cost assessments) of $154 thousand and $150 thousand for 2021 and 2020, respectively. The 

following is a schedule by year of the future minimum lease payments required under this lease as 

of December 31, 2021: 

Years ending December 31, 

(Dollars in thousands) 

2022 

2023 

2024 

2025 

$ 155 

158 

161 

150 

$ 624 

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, the FFB may advance funds to the Corporation when 

exigent market circumstances make it extremely doubtful that insured System banks will be able to 

pay maturing debt obligations. The Corporation will in turn use the funds advanced by the FFB to 

provide assistance to the System banks until market conditions improve. The agreement provides 

for a short-term revolving credit facility of up to $10 billion, renewable annually and terminating 

on September 30, 2022, unless otherwise further extended. 

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 and the maturity 

date cannot be later than the final termination date of the agreement. 

The Corporation paid no commitment fee to secure this line of credit. There were no amounts drawn 

on this line of credit during 2021 and 2020. 

Note 7: Retirement Plan 

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

(FERS). The Corporation's contribution was 17.3 percent of base pay for the first nine months of 

2021 and 18.4 percent for the last three months of 2021. The Corporation's contribution was 16.0 

percent of base pay for the first nine months of 2020 and 17.3 percent for the last three months of 

2020. 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 $507 thousand in 2021 and $489 thousand in 2020. 

F11 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Farm Credit System Insurance Corporation 

Notes to the Financial Statements 

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 

2021 which totaled $358 thousand, compared with $379 thousand for 2020. 

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

the Corporation provided no services and recognized no revenue for 2021 and 2020. At December 

31, 2021 and 2020, the Corporation did not have any receivables from the FCA. 

Note 9: Risk and Uncertainties Related to COVID-19 

In early 2020, an outbreak of the novel strain of coronavirus (COVID-19) emerged globally. The effect 

of the COVID-19 pandemic on the overall financial performance of the System has been limited. The 

financial performance of the System was strong during 2021 and the overall credit quality of its 

customers remained strong. Consequently, the impact of the COVID-19 pandemic on the Insurance 

Fund has also been limited and the likelihood of a loss to the Insurance Fund related to the COVID19 pandemic appears remote in the near-term. 

For 2022, the extent to which the COVID-19 pandemic impacts the System, including the insured 

System banks, depends on future developments that remain highly uncertain and cannot be 

predicted. Any impact on the System could impact the Insurance Fund. Management will continue 

to actively monitor the financial condition of the System. 

Note 10: Subsequent Events 

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

February 15, 2022, the date at which FCSIC’s financial statements were issued. No material 

subsequent events were identified for either recognition or disclosure. 

F12 
 

 

Management's Report on Internal Control Over Financial Reporting 

The Farm Credit System Insurance Corporation's (FCSIC) internal control over financial reporting is 

a process effected by those charged with governance, management, and other personnel, designed 

to provide reasonable assurance regarding the preparation of reliable financial statements in 

accordance with generally accepted accounting principles in the United States of America. Our 

internal control over financial reporting includes those policies and procedures that (1) pertain to 

the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions 

and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as 

necessary to permit preparation of financial statements in accordance with generally accepted 

accounting principles in the United States of America and that receipts and expenditures of FCSIC 

are being made only in accordance with authorizations of FCSIC management and those charged 

with governance; and (3) provide reasonable assurance regarding prevention, or timely detection 

and correction, of unauthorized acquisition, use, or disposition of FCSIC's assets that could have a 

material effect on our financial statements. 

Management of FCSIC is responsible for designing, implementing, and maintaining effective internal 

control over financial reporting. Management assessed the effectiveness of FCSIC's internal control 

over financial reporting as of December 31, 2021 using the criteria established in the Internal 

Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the 

Treadway Commission (COSO). Based on that assessment, management concluded that, as of 

December 31, 2021, FCSIC's internal control over financial reporting is effective, based on the COSO 

criteria. 

Internal control over financial reporting has inherent limitations. Internal control over financial 

reporting is a process that involves human diligence and compliance and is subject to lapses in 

judgment and breakdowns resulting from human failures. Internal control over financial reporting 

also can be circumvented by collusion or improper management override. Because of its inherent 

limitations, internal control over financial reporting may not prevent, or detect and correct, 

misstatements. Also, projections of any assessment of effectiveness to future periods are 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. 

        202

 

      2022.0

February 15, 2022 

F13 
MANAGEMENT	ASSURANCES

March	1,	2022

The	management	of	the	Farm	Credit	System	Insurance	Corporation	is	responsible	for	managing

risk	and	maintaining	effective	internal	control	to	meet	the	objectives	of	sections	two	and	four	

of	the	Federal	Managers’	Financial	Integrity	Act	(FMFIA).

FCSIC	is	an	independent	U.S.	government-controlled	corporation.	Our	primary	purpose	is	to	

insure	the	timely	payment	of	principal	and	interest	on	insured	debt	obligations	issued	on	behalf	

of	System	banks.

The	System	is	a	nationwide	government-sponsored	enterprise	of	cooperative	lending

institutions	owned	by	the	agricultural	and	rural	customers	it	serves.	By	protecting	investors,	we	

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

the	System.

FCSIC	actively	monitors	and	manages	insurance	risk	to	minimize	the	Farm	Credit	Insurance	

Fund’s	exposure	to	potential	losses.	When	appointed	by	the	Farm Credit	Administration,	we	

also	serve	as	receiver	or	conservator	of	any	System	bank	or	association.

Our	management	has	completed	an	assessment	of	the	effectiveness	of	FCSIC’s	enterprise	risk	

management	and	internal	control	systems	in	effect	during	2021	in	accordance	with	guidelines	

provided	by	the	Office	of	Management	and	Budget	(OMB)	in	consultation	with	the	comptroller	

general	(OMB	Circular	A-123,	Management’s	Responsibility	for	Enterprise	Risk	Management	

and	Internal	Control).	The	objective	of	these	controls	and	systems	is	to	provide	reasonable	

assurance	that

• obligations	and	costs	comply	with	applicable	laws;

• assets	are	safeguarded	against	waste,	fraud,	unauthorized	use,	and	mismanagement;

• revenues	and	expenditures	applicable	to	our	operations	are	recorded	and	accounted	for	

properly;	and

• financial	and	statistical	reports	are	reliable,	complete,	and	timely.

On	the	basis	of	established	guidelines	and	the	assessment	performed,	we	can	provide	

reasonable	assurance	that	internal	control	over	operations,	reporting,	and	compliance	was	

operating	effectively	as	of	December	31,	2021.

Protecting	Investors	in	Agriculture	and	Rural	America 33
In	addition,	as	stated	in	the	accompanying	report,	FCSIC’s	independent	auditor,	BDO	USA,	LLP

(BDO),	indicated	that	the	financial	statements	of	the	Farm	Credit	Insurance	Fund	as	of	

December	31,	2021,	of	which	we	are	stewards,	are	fairly	presented	in	all	material	respects.	BDO	

also	conducted	testing	on	the	effectiveness	of	FCSIC’s	internal	control	over	financial	reporting

and	issued	an	opinion	that	it	was	effective	in	all	material	aspects.

 

 

34 Farm	Credit	System	Insurance	Corporation
COMPLIANCE	WITH	THE	FEDERAL	CIVIL	

PENALTIES	INFLATION	ADJUSTMENT	ACT	

IMPROVEMENTS	ACT	OF	2015

FCSIC	has	authority	under	section	5.65(c)	of	the	Farm	Credit	Act	(12	U.S.C.	2277a-14)	to	impose	

civil	money	penalties	against	a	Farm	Credit	System	bank	that	willfully	fails	or	refuses to	file	any	

certified	statement	or	pay	any	required	premium.

In	addition,	section	5.65(d)	of	the	Farm	Credit	Act	provides	that,	except	with	the	prior	written	

consent	of	FCA,	it	shall	be	unlawful	for	any	person	convicted	of	any	criminal	offense	involving

dishonesty	or	a	breach	of	trust	to	serve	as	a	director,	officer,	or	employee	of	any	System	

institution	and	authorizes	FCSIC	to	recover	penalties	for	a	willful	violation	of	this	prohibition.	

Sections	5.65(c)	and	(d)	provide	for	a	penalty	of	not	more	than	$100	for	each	day	during which	

the	violation	continues.

The	Federal	Civil	Penalties	Inflation	Adjustment	Act	Improvements	Act	of	2015	(the	2015	Act)	

amended	the	Federal	Civil	Penalties	Inflation	Adjustment	Act	of	1990	(28	U.S.C.	2461	note)	to	

provide	for	regular	evaluation	of	civil	penalties	and	required	every	applicable	federal	agency	to	

adopt,	through	an	interim	final	rule,	a	one-time	“catch	up”	adjustment	to	be	effective	no	later	

than	August	1,	2016,	and	annual	adjustments	thereafter.

On	February	10,	2021,	FCSIC	published	a	final	rule	making the	annual	adjustment	required	by	

the	2015	Act	that	increased	our	civil	money	penalties	to	not	more	than	$217	for	each	day	

during	which	a	violation	continues	(86	Fed.	Reg.	8854).	On	January	13,	2022,	we	published	a	

final	rule	making	the	required	annual	adjustment	that	increased	our	civil	money	penalties	to	

not	more	than	$231	for	each	day	during	which	a	violation	continues	(87	Fed.	Reg.	2032).

Protecting	Investors	in	Agriculture	and	Rural	America 35
PERFORMANCE MANAGEMENT	PROGRAM	

FCSIC’s	mandate	is	to	insure	the	timely	payment	of	principal	and	interest	on	insured	Farm	

Credit	System	debt	securities	and	to	serve	as	receiver	or	conservator	when	appointed	by	the	

Farm	Credit	Administration	board.	To	fulfill	our	mandate,	we	have	three	fundamental	program	

goals:

• Manage	the	Insurance	Fund	to	protect	investors

• Monitor,	evaluate,	and	report	insurance	risk

• Maintain	the	capability	to	manage	assistance	requests,	receiverships,	and	

conservatorships

We	have	implemented	performance	measures	to	help	us	evaluate	the	effectiveness	of	these	

goals.	It	is	important	to	note	that	some	of	these	measures	use	management	estimates	that	may	

be	affected	by	the	performance	and	condition	of	System	institutions.	Also,	unforeseen	events	

may	have	a	material	effect	on	performance	measures	over	time.

Performance	Measures

1. Manage	the	Farm	Credit	Insurance	Fund	to	maintain	the	secure	base	amount	to	

provide	protection	for	investors	and	taxpayers	against	identified	risks

We	adjust	insurance	premium	assessments	when	appropriate	and	manage	assets	to	optimize	

investment	returns	to	build	and	maintain	the	Insurance	Fund	at	the statutory	2%	secure	base	

amount.	At	the	same	time,	we	must	maintain	appropriate	liquidity	to	carry	out	our	mission.

We	assess	the	effectiveness	of	our	performance	in	achieving	this	goal	through	the	following:

• Reviewing	semiannually	the	need	for	adjustments	to	insurance	premium	assessments

• Measuring	investment	performance	by	comparing	the	portfolio’s	average	yield	with	

peer	investment	funds	that	have	similar	investment	parameters	for	quality	and	maturity

• Comparing	the	level	of	the	Insurance	Fund	every	month	with	the	secure	base	amount	

and	reporting the	results	to	the	board	of	directors

Our	ability	to	maintain	the	Insurance	Fund	at	the	secure	base	amount	may	be	affected by	

events	beyond	our	control,	such	as	insurance	losses.

2. Monitor,	evaluate,	and	report	risks	that	could	generate	losses	to	the	Insurance	Fund

We	measure	progress	toward	this	program	goal	by	how	promptly	we	detect	emerging problems	

and	how	effectively	we	minimize	insurance	losses.	We	use	financial	indicators	to	monitor	

conditions	and	trends,	and	we	analyze	and	report	data	before	losses	become	likely.	In	periods	

when	there	are	insurance	claims	or	the	probability	of	claims,	the	ratio	of	estimated	losses	to	

actual	losses	helps	measure	our	ability	to	assess	prospective	loss	exposure.

36 Farm	Credit	System	Insurance	Corporation
As	guidance,	our	management	uses	criteria	specified	in	our	policy	statement	on	allowance	for	

Insurance	Fund	loss	and	in	the	Financial	Accounting Standards	Board’s	Accounting Standards	

Topic	450,	Contingencies.	Timely	evaluation	of	the	Insurance	Fund’s	risk	exposure	is	critical	to	

preserving	the	Insurance	Fund’s	solvency.	We	use	FCA	reports	of	examination	to	evaluate	risks	

to	the	Insurance	Fund.	When	necessary,	we	independently	examine and	require	information	

from	System	institutions.

3. Maintain	the	capability	to	manage	assistance	requests,	receiverships,	and

conservatorships

FCSIC	has	statutory	authority	to	provide	financial	assistance	to	System	institutions,	including

loans.	Any	assistance	agreement	is	subject	to	the	board’s	approval.	We	have	a	policy	statement	

on	assistance,	and	we	have	adopted	procedures	for	providing assistance	in	a	liquidity	crisis.	We	

measure	effectiveness	by	periodically	testing our	procedures	and	updating our	policy	statement	

so	that	we	remain	ready	to	provide	financial	assistance	in	a	timely	and	cost-effective	manner.

We	are	required	to	serve	as	receiver	or	conservator	of	System	banks	and	associations	when	

appointed	by	FCA.	This	program	goal	requires	us	to	maintain	readiness	through	periodic	staff	

training	and	evaluation	of	support	capabilities.	We	must	ensure	that	we	have	the	resources	we	

need	to	manage	receiverships	or	conservatorships	in	case	the	need	arises.

We	use	the	following	measures	to	determine	the	effectiveness	of	our	receivership	operations:

• Timeliness	of	initial	processing	of	all	claims	(Processing should	occur	within	a	period	of	

time	warranted	by	the	size	and	complexity	of	each	case.)

• The	ratio	of	operating	costs	to	total	assets

• The	ratio	of	actual	asset	recovery	returns	to	net	realizable	asset	values

We	did	not	have	any	assistance	requests	and	were	not	appointed	as	a	receiver	or	conservator	in	

2021.	

Strategic	Goals	and	Objectives

The	Government	Performance	and	Results	Act	of	1993,	as	amended,	requires	all	federal	

government	organizations	to	report	on	the	results	of	program	performance.	Performance	

results	are	included	in	regular	reports	to	the	board	of	directors	and	in	our	annual	report.	

Information	for	each	of	the	three	major	program	areas	is	presented	in	Table	4.	

Protecting	Investors	in	Agriculture	and	Rural	America 37
	 	

Table	4

Strategic	Goals	and	Objectives	by	Program	Area

FCSIC’s

Mission

Program	Areas Strategic	Goals Strategic	Objectives For	More

Information

Protect

investors	in	

insured	Farm

Credit	System

obligations	and	

taxpayers	

through	sound	

administration	

of	the	Insurance

Fund.

Exercise	its	

authorities	to	

minimize

Insurance Fund	

loss.

Help	ensure	the

future of	a	

permanent

system for

delivery of	

credit	to	

agricultural	

borrowers.

Insurance Fund	

management

Manage	the

Insurance	Fund	to	

maintain	the

secure base

amount	to	

provide

protection	for

investors	and	

taxpayers	against

identified	risks.

1.Manage	the	Insurance	Fund	to	ensure

adequate	liquidity	while	optimizing

investment	returns	and	ensuring

premium	collections	and	refunds	reflect

anticipated	changes	in	adjusted	insured	

debt	levels	and	potential	insurance

claims.

2.Use	actuarial	tools	to	evaluate	the

adequacy	of	investor	protections	and	

risk	exposures	to	the	Insurance Fund.

3. Ensure	that	System	banks	have

adequate	temporary	liquidity in	

situations	where	external	market	factors	

make	normal	debt	market	access	

extremely	doubtful.

4. Communicate	accurate	and	easily

understood	information	about	the

insurance	program	to	the	public,	insured	

investors,	and	System	institutions.

See	pages	17 -	

22 for	2021

results

Risk

management

Monitor,

evaluate, and	

report risks	that

could	generate

losses	to	the

Insurance Fund.

1.Use	analytical	models	and	other	risk

management	tools	and	processes	to	

identify	and	respond	to	potential	risks	to	

the	Insurance	Fund.	Conduct	trend	

analysis	on	the	System’s	growth, funding

needs,	condition,	and	performance.	

Regularly	report	to	the	board	of	

directors	on	identified	risk	exposures.

2.Monitor	conditions	in	the	agricultural	

and	financial	sectors	that	may	affect

insurance	risk	and	integrate	the	results	

into	the	process	for	setting annual	

insurance	premium	rates.

See	pages	25

-30 for	2021

results

Receivership	/	

conservatorship

Effectively

manage

assistance

requests,

receiverships,

and	

conservatorships.

1. Subject	to	the	provisions	of	the	Farm

Credit	Act,	including	the	least-cost	test,

provide	assistance	when	appropriate	to	

a	troubled	System bank or	association.

2. Ensure	receiverships	and	

conservatorships	are	managed	to	fulfill	

the	purposes	of	the	Farm	Credit	Act and	

protect	creditors	and	are	terminated	in	

an	orderly	and	timely	manner.

See	pages	31 -	

32 for	2021

results

38 Farm	Credit	System	Insurance	Corporation
GLOSSARY

Farm	Credit	Act	—	The	Farm	Credit	Act	of	1971,	as	amended,	(12	U.S.C.	2001	et	seq.)	is	the	

statute	under	which	the	Farm	Credit	System,	FCSIC,	and	the	Farm Credit	Administration	

operate.

Farm	Credit	Administration	—	FCA	was	established	in	1933	to	regulate	the	System.	It	is	

governed	by	a	three-member	presidentially	appointed	board.	To	ensure	the	safety	and	

soundness	of	the	System,	FCA	examines	and	supervises	System	institutions	and	develops	

regulations	to	govern	them.

Federal	Farm	Credit	Banks	Funding	Corporation	—	Based	in	Jersey	City,	New	Jersey,	the	

Funding	Corporation	manages	the	sale	of	Systemwide	debt	securities	to	finance	the	loans	made	

by	System	institutions.	It	uses	a	network	of	bond	dealers	to	market	the	System’s	securities.

Financial	Institution	Rating	System	(FIRS)	—	The	FIRS	is	similar	to	the	Uniform	Financial	

Institutions	Rating System	used	by	other	federal	banking	regulators	except	that	the	FIRS	reflects	

the	nondepository	nature	of	System	institutions.	The	FIRS	provides	a	general	framework	for	

assimilating	and	evaluating	all	significant	financial,	asset	quality,	and	management	factors	to	

assign	a	composite	rating	to	each	System	institution.	The	ratings	are	described	below.

Rating	1	—	Institutions	in	this	group	are	basically	sound	in	every	respect;	any	negative	

findings	or	comments	are	of	a	minor	nature	and	are	anticipated	to	be	resolved	in	the	

normal	course	of	business.	Such	institutions	are	well	managed,	resistant	to	external	

economic	and	financial	disturbances,	and	more	capable	of	withstanding the	

uncertainties	of	business	conditions	than	institutions	with	lower	ratings.	Each	institution	

in	this	category	exhibits	the	best	performance	and	risk	management	practices	for	its	

size,	complexity,	and	risk	profile.	These	institutions	give	no	cause	for	regulatory	concern.

Rating	2	—	Institutions	in	this	group	are	fundamentally	sound	but	may	reflect	modest	

weaknesses	correctable	in	the	normal	course	of	business.	Because	the	nature	and	

severity	of	deficiencies	are	not	material,	such	institutions	are	stable	and	able	to	

withstand	business	fluctuations.	Overall	risk	management	practices	are	satisfactory	for	

the	size,	complexity,	and	risk	profile	of	each	institution	in	this	group.	While	areas	of	

weakness	could	develop	into	conditions	of	greater	concern,	regulatory	response	is	

limited	to	the	extent	that	minor	adjustments	are	resolved	in	the	normal	course	of	

business,	and	operations	continue	in	a	satisfactory	manner.

Rating	3	—	Institutions	in	this	category	exhibit	a	combination	of	financial,	management,	

operational,	or	compliance	weaknesses	ranging	from	moderately	severe	to	

unsatisfactory.	When	weaknesses	relate	to	asset	quality	or	financial	condition,	these	

institutions	may	be	vulnerable	to	the	onset	of	adverse	business	conditions	and	could	

easily	deteriorate	if	weaknesses	are	not	corrected.	Institutions	that	are	in	significant	

noncompliance	with	laws	and	regulations	may	also	be	given	this	rating.	Risk	

management	practices	are	less	than	satisfactory	for	the	size,	complexity,	and	risk	profile	

Protecting	Investors	in	Agriculture	and	Rural	America 39
of	each	institution	in	this	group.	Institutions	in	this	category	generally	give	cause	for	

regulatory	concern	and	require	more	than	normal	supervision	to	address	deficiencies.	

Overall	strength	and	financial	capacity,	however,	still	make	failure	only	a	remote	

possibility	if	corrective	actions	are	taken.

Rating	4	—	Institutions	in	this	group	have	an	immoderate	number	of	serious	financial	or	

operating	weaknesses.	Serious	problems	or	unsafe	and	unsound	conditions	exist	that	

are	not	being	satisfactorily	addressed	or	resolved.	Unless	effective	actions	are	taken	to	

correct	these	conditions,	they	are	likely	to	impair	future	viability	or	constitute	a	threat	

to	the	interests	of	investors,	borrowers,	and	stockholders.	Risk	management	practices	

are	generally	unacceptable	for	the	size,	complexity,	and	risk	profile	of	each	institution	in	

this	group.	A	potential	for	failure	is	present	but	is	not	yet	imminent	or	pronounced.	

Institutions	in	this	category	require	close	regulatory	attention,	financial	surveillance,	and	

a	definitive	plan	for	corrective	action.

Rating	5	—	This	category	is	reserved	for	institutions	with	an	extremely	high,	immediate,	

or	near-term	probability	of	failure.	The	number	and	severity	of	weaknesses	or	unsafe	

and	unsound	conditions	are	so	critical	as	to	require	urgent	external	financial	assistance.	

Risk	management	practices	are	inadequate	for	the	size,	complexity,	and	risk	profile	of	

each	institution	in	this	group.	In	the	absence	of	decisive	corrective	measures,	these	

institutions	will	likely	require	liquidation	or	some	form	of	emergency	assistance,	merger,	

or	acquisition.

Government-sponsored	enterprise	(GSE) —	A	GSE	is	typically	a	federally	chartered	corporation	

created	by	Congress	that	is	privately	owned,	designed	to	provide	a	source	of	credit	nationwide,	

and	limited	to	servicing	one	economic	sector.	Each	GSE	has	a	public	or	social	purpose.	GSEs	are	

usually	created	because	the	private	markets	did	not	satisfy	a	purpose	that	Congress	deems	

worthy	either	to	fill	a	credit	gap	or	to	enhance	competitive	behavior	in	the	loan	market.	Each	is	

given	certain	features	or	benefits	(called	GSE	attributes)	to	allow	it	to	overcome	the	barriers	

that	prevented	purely	private	markets	from	developing.	The	System	is	the	oldest	financial	GSE.

40 Farm	Credit	System	Insurance	Corporation
ACRONYMS	AND	ABBREVIATIONS

AIRAs allocated	insurance	reserves	accounts

CIPA Contractual	Interbank	Performance	Agreement

Farm	Credit	Act Farm	Credit	Act	of	1971,	as	amended

FCA Farm	Credit	Administration

FCSIC Farm	Credit	System	Insurance	Corporation

FIRS Financial	Institution	Rating System

Funding Corporation Federal	Farm	Credit	Banks	Funding Corporation

GSE government-sponsored	enterprise

OMB Office	of	Management	and	Budget

System Farm	Credit	System

URE unallocated	retained	earnings

USDA United	States	Department	of	Agriculture

Protecting	Investors	in	Agriculture	and	Rural	America 41
CORPORATE	STAFF

Howard	I.	Rubin Chief	Operating Officer

Andrew	J.	Grimaldi Chief	Financial	Officer

Lynn	M.	Powalski General	Counsel

John	F.	Simonson Chief	Risk	Officer

Wade	Wynn Chief	Investment	Officer	and	Senior	Risk	Analyst

Gregory	Smith Asset	Assurance	Manager

Tanya	Renica Senior	Accountant

Mark	Bowen Accountant

Matthew	Morgan Financial	Analyst

Barbara	Loggins Senior	Administrative	Specialist

Molly	Sproles Administrative	Management	Assistant

CONTACT	INFORMATION

Farm	Credit	System	Insurance	Corporation

1501	Farm	Credit	Drive

McLean,	VA	22102

Voice:	(703)	883-4380

Fax:	(703)	790-9088

www.fcsic.gov

42 Farm	Credit	System	Insurance	Corporation
BANKS	INSURED	BY	FCSIC

To	obtain	copies	of	quarterly	and	annual	reports	of	a	Farm	Credit	System	bank	and	its	affiliated	

associations,	please	contact	the	bank	directly.	The	mailing addresses,	website	addresses,	and	

telephone	numbers	of	all	four	System	banks	are	provided	below.

AgFirst	Farm	Credit	Bank

P.O.	Box	1499

Columbia,	SC	29202-1499

(800)	845-1745

www.agfirst.com

AgriBank

30	E.	7th	Street,	Suite	1600

St.	Paul,	MN 55101-4914

(651)	282-8800

www.agribank.com

CoBank

P.O.	Box	5110

Denver,	CO	80217-5110

(800)	542-8072

www.cobank.com

Farm	Credit	Bank	of	Texas

P.O.	Box	202590

Austin,	TX	78720-2590

(512)	465-0400

www.farmcreditbank.com

Note:	Information	contained	on	these	websites	is	not	incorporated	by	reference	into	this	

annual	report,	and	you	should	not	consider	information	contained	on	these	websites	to	be	part	

of	this	annual	report.

Protecting	Investors	in	Agriculture	and	Rural	America 43
ADDITIONAL	INFORMATION

To	obtain	Farm	Credit	System	quarterly	and	annual	information	statements,	contact	the	Federal	

Farm	Credit	Banks	Funding Corporation	at	the	following address:

Federal	Farm	Credit	Banks	Funding Corporation

101	Hudson	Street,	Suite	3505

Jersey	City,	NJ	07302

(201)	200-8064

info@farmcreditfunding.com

These	documents	are	also	available	on	the	Funding Corporation’s	website	at	

www.farmcreditfunding.com.

To	obtain	copies	of	the	Farm	Credit	Administration’s	Annual	Report	and	the	FCA	Annual	

Performance	and	Accountability	Report,	contact	FCA	at	the	following address:

Office	of	Congressional	and	Public	Affairs

Farm	Credit	Administration

1501	Farm	Credit	Drive

McLean,	VA	22102

(703)	883-4056

These	documents	are	also	available	on	the	FCA	website	at	www.fca.gov.

44 Farm	Credit	System	Insurance	Corporation
Farm	Credit	System	Insurance	Corporation

1501	Farm	Credit	Drive

McLean,	VA	22102

Voice:	703-883-4380

Fax:	703-790-9088

www.fcsic