Kenneth A. Spearman, Board Chairman and Chief Executive Officer

Dallas Tonsager, Board Member

Jeffery S. Hall, Board Member

MINUTES OF THE REGULAR MEETING

OF THE

FARM CREDIT ADMINISTRATION BOARD

April 14, 2016 

These minutes reflect the business transacted at the April 14, 2016, Regular Meeting of the Farm 

Credit Administration Board (FCA Board) pursuant to the Government in the Sunshine Act (Act), 5 

U.S.C. § 552b, and the regulations of the Farm Credit Administration (FCA) adopted thereunder.

The FCA Board meeting was held at the FCA office in McLean, Virginia, beginning at 9:00 a.m. and 

concluding at 10:46 a.m. Members of the Board present were:

Kenneth A. Spearman, Board Chairman and Chief Executive Officer

Dallas Tonsager, Member

Jeffery S. Hall, Member

The above named constituted the full Board. 

Others present included Charles Rawls, General Counsel; Dale Aultman, Secretary to the Board; staff 

of the FCA and Farm Credit System Insurance Corporation (FCSIC); and two members of the general 

public. (A list of staff attendees is attached as Exhibit A.) 

The Secretary read a statement that announced the meeting would be conducted according to the 

requirements of the Government in the Sunshine Act. 

Board Chairman Spearman reviewed the published Agenda. (A copy of the Public Announcement 

publishing the Agenda for the meeting is attached as Exhibit B.)

Mr. Tonsager moved to adopt the Agenda as published. 

Mr. Hall seconded the motion.

1
There being no further discussion, Board Chairman Spearman called the question.

The Secretary polled the Board Members and the motion carried unanimously.

Mr. Hall noted that the Agenda did include portions of the meeting that should be closed to the 

public as permitted by the Government in the Sunshine Act and therefore moved that the meeting 

be closed at that point. 

Mr. Tonsager seconded the motion.

There being no further discussion, Board Chairman Spearman called the question.

The Secretary polled the Board Members and the motion carried unanimously.

OPEN SESSION

Approval of Minutes

Minutes for March 10, 2016 

(BM-14-APR-16-01) 

Mr. Tonsager moved to approve the minutes for March 10, 2016, FCA Regular Board Meeting. 

Mr. Hall seconded the motion.

There being no further discussion, Board Chairman Spearman called the question.

The Secretary polled the Board Members and the motion carried unanimously. (BM-14-APR-16-01) 

(A copy of the official “Board Action Item” is attached as Exhibit C.)

Reports

Quarterly Report on

Economic Conditions and FCS Conditions

Steve Gabriel of the Office of Regulatory Policy and Hal Johnson of the Office of Examination (OE) 

presented the Quarterly Report on Economic Conditions and Farm Credit System Conditions. 

Board Chairman Spearman asked if there were any questions or further discussion from the Board. 

There were no further questions or discussion. 

(A copy of the PowerPoint presentation is attached as Exhibit D.)

2
Farm Credit System Building Association Auditor’s Report on 2015 Financial Audit

Rick Albrecht, President of the Farm Credit System Building Association (FCSBA); and Craig Hunter

and Brandon Welsh of Cherry Beakert, LLP presented the FCSBA Auditor’s Report on 2015 Financial 

Audit.

Board Chairman Spearman asked if there were any questions or further discussion from the Board. 

There was no further discussion. 

(A copy of the PowerPoint presentation is attached as Exhibit E.)

CLOSED SESSION

Board Chairman Spearman noted that this was a Closed Session and ensured that members of the 

public and nonessential FCA and FCSIC staff were not in the room so the Board could meet with 

Office of Examination staff in Closed Session. 

Board Chairman Spearman convened the closed session of the meeting at 9:51 a.m. and instructed 

the Secretary to activate the electronic recording device so that the proceedings of the closed 

session were properly recorded as required by the Government in the Sunshine Act. 

Board Chairman Spearman then instructed the General Counsel to furnish the Secretary with a 

certification, pursuant to 5 U.S.C. § 552b(f), that the portions of the meeting held in closed session 

may be properly closed to the public. 

(A copy of the Certification is attached hereto as Exhibit G.) 

Members of the Board present were:

Kenneth A. Spearman, Board Chairman and Chief Executive Officer

Dallas Tonsager, Member

Jeffery S. Hall, Member

The above named constituted the full Board. 

Others present included Dale Aultman, Secretary to the Board; and Charles Rawls, General Counsel. 

(A list of staff attendees is attached as Exhibit A).

Office of Examination Quarterly Report

Board Chairman Spearman reminded those speaking to state their name before speaking. 

Robert Coleman and Roger Paulsen of the Office of Examination presented the OE Quarterly Report.

Board Chairman Spearman thanked the OE staff at the conclusion of their report. 

3
CLOSED EXECUTIVE SESSION

Executive Session with External Auditor

Board Chairman Spearman announced that the next topic on the Agenda was a closed executive 

session pursuant to previous Board action and 5 U.S.C. § 552b(c)(2). 

Board Chairman Spearman instructed all to exit except for Board Members, Executive Assistants, the 

General Counsel, and the Secretary to the Board so that the Board could meet with Craig Hunter and 

Brandon Welsh as approved by the Board previously. 

Board Chairman Spearman reminded those speaking to state their name before speaking and asked 

the Auditors to further discuss the audit. 

Board Chairman Spearman asked if there were any questions or further discussion from the Board. 

There was no further discussion. 

ADJOURNMENT

There being no further business to come before the Board, Board Chairman Spearman indicated he 

would entertain a motion to adjourn the meeting.

Mr. Hall moved that the meeting be adjourned.

Mr. Tonsager seconded the motion.

Board Chairman Spearman called the question. 

The Secretary polled the Board Members and the motion carried unanimously.

The meeting adjourned at 10:46 a.m.

NOTATIONAL VOTE ACTIONS 

There were three notational vote actions approved by the FCA Board from March 11, 2016, through 

April 13, 2016 as follows:

Item Number Action Date Voting Results Subject

NV 16-05 03/14/2016 Approved The FCA Board did not object to the disclosure statement that 

CoBank, ACB, intends to use to issue up to $375 million in 

noncumulative perpetual preferred stock in one or more future 

offerings.

NV 16-06 03/15/2016 Approved CoBank, ACB request to invest up to $10 million in bonds issued by a 

regional healthcare center in South Dakota. The bonds will provide 

financing to renovate and expand the center’s facilities. FCA placed 

conditions on CoBank in conjunction with this investment.

NV 16-07 04/05/2016 Approved FCA Strategic Plan for 2016 to 2021.

4
The undersigned hereby certify that the foregoing minutes are the official minutes of the Regular

Meeting of the Farm Credit Administration Board held on April 14, 2016. 

________/s/_________________ ________/s/_________________

Kenneth A. Spearman Dale L. Aultman

Board Chairman and Chief Executive Officer Secretary to the Board

 Approved: _May 12, 2016_____

5
Exhibit A

Page 1 of 2 

STAFF PRESENT AT THE 

FCA REGULAR BOARD MEETING

April 14, 2016

Kenneth A. Spearman, Board Chairman and Chief Executive Officer

Dallas Tonsager, Board Member 

Jeffery S. Hall, Board Member

OFFICE

OPEN 

SESSION

CLOSED 

SESSION

EXECUTIVE SESSION

Office of the Board

Aultman, Dale X X X

Middleton, Russell X X X

Laguarda, Wendy X X X

Kramp, Kevin X X X

Calhoun, Gaye X

Buccolo, Debra X

Corey, Kathryn X

OIT

Shaffer, Jeannie X X

COO

Hoffman, William X X

Ibelli, Heyam X

OCPA

Stokke, Mike X X

OSMO

Connor, Joe X X

OGC

Rawls, Charles X X X

Donner, Mary Alice X X

6
Exhibit A

Page 2 of 2

OFFICE OPEN 

SESSION

CLOSED 

SESSION

EXECUTIVE SESSION

OE

Coleman, Robert X X

Paulsen, Roger X X

Johnson, Hal X X

 Wondra, Craig X

 MacLean, Michael X

Lindlauf, Jerry X

EEOI

Burlew, Thais X

OIG

Dean, Elizabeth X X

ORP

Van Meter, Gary X X

Mardock, Barry X X

Gabriel, Stephen X X

OMS

Smith, Stephen X X

FCSIC

Rubin, Howard X X

FCSBA

Albrecht, Rick X

Duffy, Morgan X

Cherry Beakert, LLP

Hunter, Craig X X

Welsh, Brandon X X

GENERAL PUBLIC 2

7
Exhibit B 

Farm Credit Administration Farm Credit Administration

 1501 Farm Credit Drive McLean, Virginia 22102-5090

 

PUBLIC ANNOUNCEMENT OF

MEETING SUBJECT TO THE GOVERNMENT IN THE SUNSHINE ACT

Farm Credit Administration Board

Regular Meeting

April 14, 2016 

Summary: Notice is hereby given, pursuant to the Government in the Sunshine Act (5 U.S.C. Sec. 552b (e) (1)), of the 

forthcoming regular meeting of the Farm Credit Administration Board.

Date and Time: The regular meeting of the Board will be held April 14, 2016. The meeting is scheduled to be held at the 

office of the Farm Credit Administration in McLean, Virginia, from 9:00 a.m. until such time as the Board may conclude its 

business.

Address: Farm Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-5090. Submit attendance 

requests via e-mail to VisitorRequest@FCA.gov. See SUPPLEMENTARY INFORMATION for further information about 

attendance requests. 

For Further Information Contact: Dale L. Aultman, Secretary to the Farm Credit Administration Board (703) 883-4009. 

TTY is (703) 883-4056.

Supplementary Information: Parts of this meeting of the Board will be open to the public (limited space available), and 

parts will be closed to the public. Please send an e-mail to VisitorRequest@FCA.gov at least 24 hours before the meeting. 

In your e-mail include: name, postal address, entity you are representing (if applicable), and telephone number. You will 

receive an e-mail confirmation from us. Please be prepared to show a photo identification when you arrive. If you need 

assistance for accessibility reasons, or if you have any questions, contact Dale L. Aultman, Secretary to the Farm Credit 

Administration Board, at (703) 883-4009. The matters to be considered at the meeting are:

OPEN SESSION

Approval of Minutes

1 March 10, 2016 

Reports

2 Quarterly Report on Economic Conditions and FCS Conditions

3 Farm Credit System Building Association Auditor’s Report on 2015 Financial Audit

CLOSED SESSION

4 Office of Examination Quarterly Report1 

CLOSED EXECUTIVE SESSION

5 Executive Session - FCS Building Association Auditor’s Report2

_ April 1, 2016_______ _____________/s/_____________________

 Date Dale L. Aultman

 Secretary to the Board 1Session Closed-Exempt pursuant to 5 U.S.C. Section 552b(c)(8) and (9).

2Session Closed-Exempt pursuant to 5 U.S.C. Section 552b(c)(2).

8
Exhibit C 

Farm Credit Administration 1501 Farm Credit Drive

 McLean, Virginia 22102-5090

 (703) 883-4000

BOARD ACTION ITEM

 

FCA BOARD ACTION ON

Minutes for March 10, 2016 Board Meeting

BM-14-APR-16-01

Effective Date: April 14, 2016

Effect on Previous Action: None

THE FCA BOARD HEREBY:

 

Approves the minutes for March 10, 2016, Regular Board Meeting as submitted.

DATED THIS 14th DAY OF APRIL 2016 

BY ORDER OF THE BOARD

 

___________/s/____________________

Dale L. Aultman

Secretary to the Board 

9
FCA Board Meeting 

April 2016

Quarterly Report on 

FCS Condition

April 14, 2016

Stephen Gabriel

Hal Johnson

Exhibit D

10
Topics for Open Session

2

Economic Conditions Affecting the FCS

FCS Condition and Performance

11
Economic Conditions Affecting 

the Farm Credit System

Stephen Gabriel

Chief Economist

Office of Regulatory Policy

12
Uncertainty is still a key factor in 

the global economy

 Weak global economic growth

 Negative interest rates

 Divergent monetary policies

 Chinese economic slowdown

 Potential “Brexit”

 European migration crisis

 Geopolitical issues – N. Korea, Iran, ISIS, 

Ukraine, Syria 4

13
U.S. economic outlook: steady 

as she goes

5

Consensus Forecasts (percent)

Red indicates forecast

Q1 

2015

Q2 

2015

Q3 

2015

Q4 

2015

Q1 

2016

Q2 

2016

Q3 

2016

Q4 

2016

Q1 

2017

Q2 

2017

Q3 

2017

Q4 

2017

GDP growth* 0.6 3.9 2.0 1.4 2.1 2.4 2.5 2.4 2.4 2.4 2.3 2.3

CPI* -2.9 2.4 1.4 0.8 0.4 1.8 2.1 2.2 2.3 2.5 2.4 2.3

Unemployment rate 5.6 5.4 5.2 5.0 4.9 4.8 4.7 4.6 4.6 4.6 4.5 4.5

10 Yr T-Bond 2.0 2.4 2.0 2.2 2.0 2.1 2.3 2.4 2.7 2.8 3.0 3.1

Source: Consensus Economics, Inc.

Survey date - March 7, 2016

* % change from prior quarter, seasonally adjusted annual rate

14
Farm sector developments and 

concerns

 Farm sector net cash income projected to drop 

2.5% in 2016 after dropping 27% in 2015

 Receipts from both crops and animal products 

to decline in 2016

 Exports are being hurt by the strong dollar and 

a weak global economy

 Continued farmland market weakness

 California rains improve the water situation 6

15
Factors Contributing to the Strong 

Dollar and Declining Exports

7

16
U.S. economic growth exceeds 

other developed countries

8

2.5

2.4

0.9

0.0

1.2

2.4

1.5

0.5

1.5

2.2

1.6

1.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Canada United States Eurozone Japan

2014 2015 2016

Source: FCA-ORP from Bloomberg LLC data

GDP Growth Rate % (year over year)

17
Where would you put your money?

9

1.82

1.43

1.23

0.156

-0.10 -0.088

0.15

0.40

0.65

0.90

1.15

1.40

1.65

1.90

2.15

2.40

2.65

2.90

Percentage Points

Source: FCA-ORP from Bloomberg data

U.S. UK Canada EU Japan

Government Bond Yields, 10 Year, Daily Rates, Mar. 31, 2015 - Mar. 30, 2016

18
The dollar has strengthened relative 

to competitors and customers

10

124%

53%

32%

22% 21% 16%

7% 7%

0%

20%

40%

60%

80%

100%

120%

140%

Argentina Brazil Mexico Canada Eurozone Australia China Japan

% Change

Exchange Rate Changes: Dollar versus Foreign Currency 

% Change, Jan. 1, 2014 - Mar. 30, 2016

Source: FCA-ORP from Bloomberg LLC data

19
Export demand is down due to 

weakened global economic growth

11

Source: Wells Fargo Securities

3.5%

20
U.S. ag exports projected to 

decline for second year in a row

12

108.5 

137.5 135.9 141.1 

152.3 

139.7 

125.0 

79.0 

94.5 

103.4 103.9 

109.2 114.0 118.5 

29.5 

43.0 

32.5 37.2 43.1 

25.7 

6.5 

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Billion Dollars

Exports Imports Balance

U.S. Agricultural Trade, Fiscal Years 2010-2016*

Forecast

*Fiscal years = October of previous year through September of year indicated. 

Source: FCA-ORP from USDA-ERS, Outlook for U.S. Agricultural Trade, Feb. 25, 2016

21
Exports of most grains projected to 

fall on both value and volume basis

13

-33%

-30%

-21%

-16%

-15%

-14%

-14%

17%

-17%

-14%

-9%

-10%

-18%

3%

-12%

9%

-40% -30% -20% -10% 0% 10% 20%

Other coarse grains 2/

Soybean meal

Soybeans

Corn

Rice

Wheat

Feeds and fodders 1/

Soybean oil Volume

Value

1/ Includes corn gluten feed and meal and processed grain products. 

2/ Includes barley, sorghum, oats and rye.

Source: FCA-ORP from USDA-Economic Research Service, Outlook for U.S. Agricultural Trade, Feb. 25, 2016

U.S. Agricultural Exports Grains and Soybeans, % Change in Volume and Value, 

FY 2015 to Forecast FY 2016

22
Livestock product export value to 

drop despite higher volume

14

-24%

-17%

-13%

-12%

-8%

-6%

-6%

NA

0%

3%

NA

3%

9%

NA

-30% -25% -20% -15% -10% -5% 0% 5% 10% 15%

Hides, skins, and furs 2/

Broiler meat

Pork

Dairy products 2/

Beef and veal

Beef and pork variety meats

Other poultry products 1/ 2/ Volume

Value

1/ Includes all poultry products except broiler meat. 2/ Volume figures not available (NA).

Source: FCA-ORP from USDA-Economic Research Service, Outlook for U.S. Agricultural Trade, Feb. 25, 2016.

U.S. Agricultural Exports of Livestock Products, % Change in Volume and Value, 

FY 2015 to Forecast FY 2016

23
Factors Contributing to Low 

Grain and Soybean Prices and 

Lower Farm Income

15

24
World corn and soybean area 

rose substantially after 2005

16

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000 World Corn Area Harvested

World Soybeans Area Harvested

1,000 Hectares

Source: USDA, FAS

25
Global corn supplies are 

pressuring prices

17

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

World Corn Stocks/Use (right axis)

U.S. Corn Price - $/bu (left axis)

Source: USDA, FAS and NASS

26
World soybean supplies are also 

ample

18

0%

5%

10%

15%

20%

25%

30%

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

World Soybeans Stocks/Use (right axis)

U.S. Soybean Price - $/bu (left axis)

Source: USDA, FAS and NASS

27
Risks to watch

Growing conditions this summer

Signs of borrower stress, especially grain 

and soybean producers

Midwest farmland markets

World economic conditions

Exchange rates

Geopolitical tensions 19

28
Discussion

THANK YOU

29
Farm Credit System 

Condition and Performance

as of 

December 31, 2015

Hal Johnson

Sr. Financial Analyst

Office of Examination

30
Topics

22

 System Growth

 Loan Portfolio

 Earnings

 Capital

 FIRS

31
System growth up in 2015

Source: FCS Annual Information Statements 23

101 111 117 

125 

140 

163 

186 

214 215 

230 230 

247 

261 

283 

304 

83 90 93 96 

106 

123 

143 

161 165 

175 175 

192 201 

217 

236 

9.9%

8.9%

3.1% 3.9%

10.3%

16.2% 15.8%

13.0%

2.1%

6.4%

-0.4%

9.9%

4.8%

8.0% 8.7%

$ billions

 Total FCS Assets

 Total Gross Loans

% change in Gross Loans

 (year-over-year)

32
Loan growth strong across loan 

types and districts

Source: FCS Annual Information Statements 24

Loan Growth by Loan Type (% change year-over-year) Loan Growth by District (% change year-over-year)

4.8%

2.9% 2.0%

13.4%

8.0% 7.4%

5.9%

4.5%

21.8%

7.3%

8.7%

6.9% 6.3%

11.1%

14.3%

Total Gross

 Loans

RE Mortgage

[46%]

Production &

 Intermediate

[21%]

Agribusiness

[15%]

Other

[18%]

2013 2014 2015

9.5%

10.4%

7.3%

7.1%

9.2%

9.2%

6.9%

4.9%

5.1%

3.2%

7.4%

1.5%

Texas

District

(9%)

CoBank

District

(41%)

AgriBank

District

(39%)

AgFirst

District

(11%)

2013 2014 2015

33
System’s loan portfolio is well 

diversified within agriculture

Source: FCS Annual Information Statements 25

Cash Grains

17.7%

Rural Utility

10.9% Cattle

9.5%

Food Products

7.0%

Rural Home

6.6%

Dairy Farms

6.5%

Forestry

6.3%

Field Crops

5.4% Tree Fruits, 

Nuts & Grapes

4.8%

Farm Supply & 

Marketing

4.0%

Poultry & Eggs

2.5%

Hogs

2.1%

Other

16.7%

 FCS Loan Portfolio ($M)

% of % Change

Portfolio over 2014

 Cash Grains 41,710 17.7% 39,779 4.9%

 Rural Utility 25,798 10.9% 21,568 19.6%

 Cattle 22,347 9.5% 20,909 6.9%

 Food Products 16,607 7.0% 14,895 11.5%

 Rural Home 15,481 6.6% 14,522 6.6%

 Dairy Farms 15,265 6.5% 14,325 6.6%

 Forestry 14,855 6.3% 12,555 18.3%

 Field Crops 12,774 5.4% 11,850 7.8%

 Tree Fruits, Nuts 

 and Grapes

11,392 4.8% 10,137 12.4%

 Farm Supply & 

 Marketing 9,330 4.0% 8,707 7.2%

 Poultry & Eggs 5,966 2.5% 5,453 9.4%

 Hogs 4,963 2.1% 4,420 12.3%

 Other 39,402 16.7% 37,934 3.9%

 Total 235,890 100% 217,054 8.7%

Dec-15 Dec-14

34
Portfolio credit quality remains strong

26 Source: FCS Annual Information Statements

Sector Nonaccruals as a % of Loans Outstanding

1.28%

0.77% 0.56% 0.50% 0.43%

1.50%

2.14%

1.93%

1.72%

1.36%

1.01%

0.80% 0.69%

 Nonaccrual Loans Other nonperforming Loans

% of Nonperforming Loans-to-Total Loans

743

600 615 621

1,186

2,416

3,535

2,608

3,386

2,997

2,040

1,737 1,629

• Nonperforming loans equaled 

0.69% of System loans 

outstanding

• Over 96% of System loans were 

classified as Acceptable

• Loan delinquencies were 0.20% 

of accruing loans 

• The System’s allowance for 

loan losses equaled 79% of 

nonperforming loans

• Total capital and the allowance for 

loan losses represented 21.2% of 

System loans at quarter-end

Portfolio Credit Quality

as of December 2015

35
System continued to report 

strong financial results in 2015

Source: FCS Annual Information Statements 27

35 81 

408 

925 

667 

430 313 

(31)

40 106 

2,379 

2,703 

2,916 2,850 

3,495 

3,940 

4,118 

4,640 4,724 4,688 

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Provision for Loan Losses ($M)

System Net Income ($M)

System Earnings

6.65 6.84 

5.55 

4.48 

4.24 4.06 

3.79 3.59 3.46 3.41 

4.89 5.11

3.56

2.05

1.63

1.38

1.08 0.95 0.96 1.01

1.76 1.73 

1.99 

2.43 

2.61 2.68 2.71 2.64 

2.50 2.40 

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Rate: Earning Assets Rate: Interest-Bearing Liabilities

Net Interest Spread

36
System is well-capitalized

Source: FCS Annual Information Statements 28

• System capital as a percentage of 

total assets was 16.1% compared 

to 16.2% at year end 2014

• Surplus as a percentage of total 

capital equaled 82.8% 

• System liquidity at year end 2015 

equaled 181 days of coverage. 

Days of available liquidity for the 

four funding banks ranged from 136 

days to 206 days.

Capital and Liquidity

as of December 2015

18.9 

21.4 22.8 24.4 26.4 27.1 

30.0 

33.3 

35.9 

38.6 

42.6 

45.7 

48.8 

16.2% 17.1% 16.3%

15.0% 14.2% 12.7% 13.9%14.5% 15.6% 15.7% 16.3% 16.2% 16.1%

Restricted Capital

Total Capital less Restricted

Restricted capital represents capital associated with the Insurance Fund.

Capital-to-Asset Ratio

Total System Capital ($B)

37
System FIRS ratings

29

FIRS Ratings

• FIRS ratings remain stable. 

Relatively few rating changes with 

the most recent FIRS update

• 96% of System Banks and 

Associations have a Composite 

FIRS rating of 1 or 2

• 3 and 4 rated institutions account 

for less than 1% of total System 

assets

Source: FCA's FIRS ratings database

83 

57 

26 29 30 37 43 44 46 

14 

31 

50 46 44 38 31 32 29 

3 

6 

14 12 12 10 8 3 3 

1 3 2 1 1 

1 

1 Rated 2 Rated 3 Rated 4 Rated

Composite FIRS Ratings - System Banks & Associations

38
Summary and final points

 Challenges for agriculture:

 General economic factors – weak global economic growth, 

divergent monetary policies, strong dollar

 Farm sector concerns – Midwest farmland values, increased 

stress on corn and soybean producers, declining exports, lower 

expected cash receipts for animal products

 The System is financially sound, well-capitalized, with 

strong earnings, and favorable portfolio credit quality

 System institutions are well-positioned for the current risk 

environment

30

39
Questions

THANK YOU

40
Cherry Bekaert LLP

FCS Building Association

Report Regarding Financial Statement Audit 

for the Year Ended

December 31, 2015

Audit Team

Craig Hunter, Partner

Brynn McNeil, Senior Manager

Brandon Welsh, Senior

Exhibit E

41
FCS Building Association

 Overview of Audit Results

 We have completed our audit procedures related to the FCS Building 

Association’s year ended December 31, 2015 financial statements.

 Our procedures and scope were substantially consistent with our planned 

audit strategy and we did not experience any significant problems during 

the audit process.

 We issued an unmodified (clean) opinion on the Company’s financial 

statements

 We received excellent cooperation from the Company’s personnel.

2

42
General Financial Statement Comments

 Strong Balance Sheet as of December 31, 2015

 Cash reserve balance of $1.1 million

 Current Ratio of 4 to 1

 Total Liabilities to Equity Ratio 1 to 8

 Operating loss for the year ended December 31, 2015, as budgeted

 No new or unusual transactions noted for fiscal year 2015

 No significant new disclosures noted for fiscal year 2015

3

43
Areas of Focus for the 2015 Audit

 Procedures with respect to internal control

 Leasing activities

 Capital expenditures and repairs and maintenance

 Related party transactions (FCSBA and FCA)

 We identified no significant deficiencies or material weaknesses

4

44
Required Communications

 The auditor’s responsibility under generally accepted auditing standards –

reasonable assurance that financial statements are materially correct

 Significant accounting policies are disclosed in Note 2 of the F/S’s

 We have considered management judgments and accounting estimates 

included in the financial statements and believe them to be reasonable

 There were no disagreements with management during the engagement

 There were no major issues discussed with management prior to our being 

retained

 No irregularities or fraud identified as part of our audit

5

45
Exhibit F 

Farm Credit Administration 1501 Farm Credit Drive McLean, Virginia 22102-5090

 

 

CERTIFICATE OF CLOSED MEETING

The General Counsel, in accordance with the Government in the Sunshine Act, 5 U.S.C. § 552b(f)(1), 

hereby certifies that the Farm Credit Administration Board regular meeting of April 14, 2016, was 

properly closed to the public on the basis of the exemptions set forth below:

• Supervisory and Oversight Activities of FCS Institution(s) – 5 U.S.C. § 552b(c)(8) 

and (9).

• Information related solely to the internal practices of an Agency – 5 U.S.C. 

§552b(c)(2).

 

 __________/s/___________________ Date: April 14, 2016 

 Charles R. Rawls

General Counsel 

46