2021 

Annual Report 

of the Farm Credit Administration

Regulator of the Farm Credit System
ii | Farm Credit Administration

Contents

About this report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

About the cover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

About FCA and the Farm Credit System . . . . . . . . . . . . . . . . . . . . . . . . 3

Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Our authorities and governance . . . . . . . . . . . . . . . . . . . . . . . . . 4

The Farm Credit System Insurance Corporation . . . . . . . . . . . . . 4

Message from the board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Our priorities and progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Current conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

In conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

FCS banks and associations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

FCS structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Borrowers served . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

System funding for other lenders . . . . . . . . . . . . . . . . . . . . . . . . 16

Farm debt and market shares . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Financial condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Serving young, beginning, and small farmers and ranchers . . . . . . . 29

Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Examining and regulating the banks and associations . . . . . . . . . . . . 35

Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Farmer Mac . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Examining and regulating Farmer Mac . . . . . . . . . . . . . . . . . . . 41

Financial condition of Farmer Mac . . . . . . . . . . . . . . . . . . . . . . 42

FCA’s organization and leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Organization of FCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

FCA’s leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
About this report

This is the Farm Credit Administration’s annual report to 

Congress. Section 5.17(a)(3) of the Farm Credit Act of 1971, as 

amended, requires this report to include the following:

• An annual report to Congress on the condition of the Farm 

Credit System (FCS or System) and its institutions and on the 

manner and extent to which the objectives of the Farm Credit 

Act are being carried out

• A summary and analysis of the annual reports submitted to 

us by the FCS banks regarding programs for serving young, 

beginning, and small farmers and ranchers

The report also includes information about our agency and the work 

we do to ensure that the System continues to meet its mission and to 

operate safely and soundly. 

About the cover

In this report, we typically include lots of stock photos featuring 

farmers, farm scenes, and commodities, but this year we decided 

to invite our staff to send us their own farm photos for inclusion in 

the report. 

Our cover features a photo illustration of the Indiana farmstead 

of Board Member Jeff Hall and his family. The small inset photo 

on the front cover shows associate FCA examiner Susan Graves 

as she bottle-feeds a calf. On the back cover, from top to bottom 

and left to right, we have (1) associate FCA examiner Nicole Peek 

holding a baby goat; (2) associate FCA examiner Betsy States with 

her prom date; (3) associate FCA examiner Gretchen Corson on 

a tractor; (4) the son of FCA examiner Peter Desens stacking hay 

with a neighbor; (5) the young son of FCA examiner Cindi Burke; 

and (6) the granddaughter of FCA administrative assistant and 

photographer Sherrell Carr. 
FCA’s mission is to ensure 

that System institutions 

and Farmer Mac are safe, 

sound, and dependable 

sources of credit and 

related services for all 

creditworthy and eligible 

persons in agriculture and 

rural America.

In May 2022, FCA examiners visited this 

Minnesota farm on a two-day tour to learn 

more about the challenges facing farmers 

today. This land is farmed by members of the 

Hmong American Farmers Association.
2021 FCA Annual Report | 3

About FCA and the Farm Credit System

1 Although Farmer Mac is an FCS institution under the Farm Credit Act, we discuss Farmer Mac separately from 

the other institutions of the FCS. Therefore, throughout this report, unless Farmer Mac is explicitly mentioned, the 

Farm Credit System refers only to the banks and associations of the System. For more information about Farmer 

Mac, see page 41.

The Farm Credit Administration 

is an independent agency in the executive 

branch of the U.S. government. We are 

responsible for regulating and supervising 

the Farm Credit System (its banks, associations, and related entities) and the Federal 

Agricultural Mortgage Corporation (Farmer Mac).1

The System is a nationwide network of 

borrower-owned financial institutions that 

provide credit to farmers, ranchers, residents of rural communities, agricultural 

and rural utility cooperatives, and other 

eligible borrowers.

Farmer Mac is a federally chartered corporation that provides a secondary market 

for agricultural real estate loans, government-guaranteed portions of certain 

loans, rural housing mortgage loans, and 

eligible rural utility cooperative loans.

FCA’s mission is to ensure that System 

institutions and Farmer Mac are safe, 

sound, and dependable sources of credit 

and related services for all creditworthy 

and eligible persons in agriculture and 

rural America. We have two primary functions: examination and regulation. 

Examination 

We conduct onsite examinations at every 

System institution on a regular basis to 

• evaluate its financial condition; 

• evaluate its compliance with laws and 

regulations; 

• identify any risks that may affect the 

institution or the System as a whole; 

and 

• ensure it is fulfilling its public mission to serve the credit and related 

needs of farmers and ranchers, 

including those who are young, 

beginning, or small. 

If a System institution violates a law or 

regulation or operates in an unsafe or 

unsound manner, we use our supervisory 

and enforcement authorities to bring 

about appropriate corrective action. 

Regulation 

We issue policies and regulations governing how System institutions conduct their 

business and interact with borrowers. 

These policies and regulations focus on 

• protecting System safety and 

soundness; 

• implementing the Farm Credit Act; 

• providing minimum requirements 

for lending, related services, investments, capital, and mission; and 

• ensuring adequate financial disclosure and governance. 

We also approve corporate charter changes, System debt issuances, and other financial and operational matters. 
4 | Farm Credit Administration

Our authorities and governance 

FCA derives its powers and authorities 

from the Farm Credit Act of 1971, as 

amended (12 U.S.C. 2001 – 2279cc). The 

U.S. Senate Committee on Agriculture, 

Nutrition, and Forestry and the U.S. House 

of Representatives Committee on Agriculture oversee FCA and the FCS. 

FCA does not receive a federal appropriation. We maintain a revolving fund 

financed primarily by assessments from 

the institutions we regulate. Other sources 

of income for the revolving fund are interest earned on investments with the U.S. 

Treasury and reimbursements for services 

we provide to federal agencies and 

others. FCA’s access to the revolving fund, 

however, is regulated through congressional appropriations legislation.

FCA is governed by a full-time, 

three-person board whose members are 

appointed by the president of the United 

States with the advice and consent of the 

Senate. Board members serve a six-year 

term and may remain on the board until a 

successor is appointed. The president designates one member as chairman of the 

board, who serves in that capacity until 

the end of his or her term. The chairman 

also serves as our chief executive officer. 

For information about our current board, 

see page 46. 

The Farm Credit System Insurance 

Corporation 

FCA board members also serve as the 

board of directors for the Farm Credit System Insurance Corporation (FCSIC), which 

was established by the Agricultural Credit 

Act of 1987 in the wake of the agricultural 

credit crisis of the 1980s. The purpose of 

FCSIC is to protect investors in Systemwide 

debt securities by insuring the timely payment of principal and interest on obligations issued by FCS banks. 

It fulfills this purpose by maintaining 

the Farm Credit Insurance Fund, a reserve 

that represents the corporation’s equity. 

FCSIC reports the balance of the Insurance 

Fund in its quarterly financial statements, 

which are posted on its website at www.

fcsic.gov.

As part of the May 2022 FCA farm tour, participants 

visited the Iowa family farm of FCA Board Chairman 

and CEO Glen Smith. Chairman Smith took the 

group on a brief tour of the 2,000-acre farm, which 

is managed and operated by his son Peter. For FCA 

employees who have not had much experience with 

agriculture, the visit gave them an opportunity 

to see up close the kind of land and equipment 

financed by the institutions they help examine and 

oversee. 
Supervisory FCA examiner Rachel Connolly 

grew up on a Wisconsin dairy farm. Her 

young son likes to ride the tractor with his 

grandpa. 
6 | Farm Credit Administration arm Credit Administration

Message from the board

On behalf of the agency’s board, it is our pleasure to present the 2021 

annual report of the Farm Credit Administration. Most of the report focuses 

on the 2021 calendar year. However, our “message from the board” describes 

current conditions (as of late summer 2022) in the Farm Credit System, Farmer 

Mac, and the general and farm economies. This message, which serves as an 

introduction to the report, also outlines our priorities and the progress we’ve 

made toward achieving them.

Our priorities and progress

To protect the health and well-being of our 

staff, we placed our employees on mandatory telework beginning March 2020. This 

status continued through much of 2021 as 

our nation continued to wrestle with the 

challenges of the COVID-19 pandemic. 

However, by early spring of 2022, after the 

vaccines had been widely disseminated 

and FCA had instituted careful health 

and safety protocols, we asked some of 

our employees to begin returning to the 

office. Today most of our employees have 

returned to in-office work for at least a 

portion of the work week.

We continued to fulfill our mission as 

regulator of the Farm Credit System and 

Farmer Mac throughout the pandemic. 

However, returning to the office when 

health conditions improved allowed us to 

pursue our priorities with renewed vigor. 

Three of our greatest priorities continue 

to be monitoring credit risk; improving 

service to young, beginning, and small 

(YBS) farmers and ranchers; and improving the timeliness and efficiency of our 

regulatory activities. 

Monitoring credit risk

To ensure that the System can continue to 

finance future generations of American 

farmers and ranchers, one of our highest 

priorities must be monitoring credit risk. 

Currently, both the Farm Credit System 

and Farmer Mac are strong and financially 

sound. During the pandemic, we relied 

on resources provided by our information technology team to help us monitor 

the safety and soundness of System institutions remotely. Now that COVID-19 

conditions have improved, our examiners are again able to perform in-person 

examinations.

The pandemic and efforts to contain its 

spread created several challenges: supply 

chain issues, labor constraints, and rapidly 

rising consumer prices. These challenges 

continue to affect producers and their 

lenders. Although prices for agricultural 

products are strong, producers face major 

cost increases across a broad range of 

inputs, including feed, transportation, 

chemicals, and labor. Also, drought conditions in the western United States continue 

to affect both crop and livestock producers, especially those in the cattle sector.
2021 FCA Annual Report | 7

We will continue to closely monitor the 

effects on credit quality of these and other 

challenges.

Improving service to YBS producers

Since both of us were at one time young 

farmers, we understand the challenges 

facing YBS producers, and we want to do 

whatever we can to support them. This is 

also a high priority for Congress: In 1980, 

Congress enacted a law mandating that 

System associations maintain programs 

to provide credit and related services to 

young, beginning, and small farmers and 

ranchers. And the topic of service to YBS 

producers often comes up at congressional 

hearings in which FCA representatives 

participate. 

We’re happy to report that we’ve 

taken advantage of the improvement in 

COVID-19 conditions to strengthen the 

agency’s YBS focus. In the fall of 2021, we 

partnered with the University of Nebraska 

– Lincoln to sponsor a YBS symposium. 

The event brought YBS borrowers together 

with government agencies and agricultural 

lenders to discuss ways to better serve the 

credit needs of YBS producers. The symposium gave the agency a chance to hear 

from many YBS producers and learn about 

the opportunities and challenges they face 

with their businesses. 

Then, in March 2022, we partnered with 

Colorado State University to hold a national YBS event. This forum brought together 

leaders from CSU, USDA, the Farm Service 

Agency, the Farm Credit System, and FCA; 

agricultural industry stakeholders; and 

YBS producers to discuss matters of importance to the YBS community. 

A few weeks later, the agency held a 

two-day farm tour in which a number of 

FCA employees, including several young 

examiners, visited the operations of 

YBS producers in Minnesota and Iowa. 

The purpose of the tour was to help our 

employees better understand and appreciate the challenges YBS producers face.

In addition to hosting these events, we 

published a proposed rule in May of 2022 

on service to YBS producers. This rule 

would revise parts 614 and 620 of FCA’s 

regulations. The purpose of the proposed 

rule is to increase System associations’ 

service to YBS producers. The comment 

period for the proposed rule has just 

closed, and we are now in the process of 

reviewing the comments received. 

Meanwhile, we continue to make progress on these three YBS initiatives:

1. Work with System institution data 

workgroups to modernize YBS data 

collection and reduce the reporting 

burden

2. Improve the agency’s ability to track 

System associations’ service to YBS 

producers and identify best practices the associations can use to serve 

them — such as working with other 

government agencies for the benefit 

of YBS producers

3. Evaluate the effectiveness of each 

association’s YBS program

FCA Board Chairman 

and CEO Glen Smith 

(left) and FCA Board 

Member Jeff Hall.

Since both of us 

were at one time 

young farmers, we 

understand the 

challenges facing 

YBS producers, 

and we want to do 

whatever we can 

to support them.
8 | Farm Credit Administration arm Credit Administration

We’re pleased with the progress we’ve 

made toward meeting our YBS goals, and 

we look forward to further progress over 

the next year.

Improving the timeliness and efficiency of 

regulatory activities

Another important priority for our board 

has been to improve the timeliness and 

efficiency of our regulatory activities. The 

FCA board believes in a strong regulatory 

presence, with efficient, timely processes 

for policymaking and rulemaking. We use 

a collaborative process to carry out the 

policy direction of the board. This process 

requires early discussion of regulatory and 

policy issues among agency leaders.

As a result, so far in 2022, we have accomplished the following: 

• Adopted a proposed rule that implements provisions of the 2018 Farm 

Bill concerning FCA’s appointment 

of the Farm Credit System Insurance 

Corporation as the conservator or 

receiver of a distressed System bank, 

association, service corporation, or 

the Funding Corporation

• Issued a final rule on current expected credit loss (CECL), a new accounting standard that changes how financial institutions account for expected 

credit losses

• Issued, together with four other 

federal regulatory agencies, revised 

questions and answers regarding 

flood insurance 

• Adopted a proposed rule on YBS service (as mentioned above)

• Issued a request for comment on regulatory burden

• Issued a proposed rule on cyber risk 

management

• Issued an informational memorandum on the LIBOR transition rule, 

annual threshold adjustments, and 

compliance resources

• Issued a revised bookletter providing 

guidance to System institutions on 

implementing the tier 1/tier 2 capital 

framework

• Developed an initiative to explore 

how the size and complexity of an 

association can affect its ability to 

achieve its mission

Fulfilling its mission as a GSE and a 

cooperative

In addition to the three priorities we’ve 

outlined above, another important priority 

is to ensure that the System continues to 

fulfill its mission. 

In 1916, Congress created the System as 

the nation’s first government-sponsored 

enterprise — that is, a quasi-government entity established to enhance the 

flow of credit to a specific sector of the 

American economy. In this case, of course, 

the economic sector is agriculture, and 

the Farm Credit System’s public purpose is 

to provide a dependable source of credit 

to American farmers, ranchers, and their 

cooperatives, and to provide a flexible flow 

of money into rural areas. 

While being a GSE has many benefits, 

including the ability to issue highly 

sought-after GSE debt, those benefits come 

with responsibility. Over the years the 

System has fulfilled its responsibility and 

lived up to its public purpose. FCA will 

expect all System institutions to continue 

to act in a manner commensurate with its 

status as a GSE.

Another important part of the System’s 

mission relates to its cooperative business model. Because System institutions 

are cooperatives, their farmer- and 

rancher-borrowers participate in the 

Jeff Hall 
2021 FCA Annual Report | 9

management, control, and ownership of 

their institutions. This structure, different from that of most non-GSE lenders, 

ensures that customers — both big and 

small — have a voice in the business of 

the institutions and receive a share of the 

profits in the form of patronage. It keeps 

the focus of the institution on fulfilling its 

congressionally mandated public purpose 

of improving the income and well-being of 

American farmers and ranchers by providing them with credit and related services. 

Therefore, it is one of FCA’s priorities to 

critically review any structural changes 

that could jeopardize borrower-member 

control at System institutions.

The System has done a remarkable job 

of navigating through challenging conditions and economic changes. As we look 

toward the future, we must continue to 

respect the System’s special role and status 

as a GSE and a cooperative in fulfilling its 

critical mission to provide credit to agriculture and rural America.

Current conditions 

Following is a brief update about current 

conditions in the Farm Credit System and 

Farmer Mac, as well as conditions in the 

general and farm economies.

The Farm Credit System

Despite the usual risks, such as weather 

and volatility in commodity prices and input costs, the Farm Credit System reported 

solid financial results for the first half of 

2022, including increased earnings, low 

portfolio credit risk, and a strong capital 

base. For the six months ended June 30, 

System net income equaled $3.6 billion, 

up from $3.4 billion for the same period 

a year ago. Higher net interest income, 

partially offset by an increase in noninterest expenses, accounted for much of the 

increase. 

System loans continued to perform well, 

and credit risk in the portfolio remained 

low. Nonperforming assets (nonaccrual 

loans, accruing restructured loans, accruing loans that are 90 days or more past 

due, and other property owned) increased 

$191 million during the first six months 

of 2022 to $1.8 billion. At June 30, nonperforming assets represented 0.50% of the 

System’s loans and other property owned. 

Loans classified less than acceptable 

amounted to 3.5% of the System’s loan 

portfolio, down from 5.2% a year ago.

A strong capital base ensures that 

System institutions have the risk-bearing 

capacity to support U.S. farmers and 

ranchers during difficult times. At June 

30, System capital totaled $68.9 billion, 

up 0.8% from a year ago. Capital as a percentage of total assets was 15.1%, down 

from 15.9% at Dec. 31, 2021. Regulatory 

capital ratios at all System banks and associations were well above minimum capital 

requirements.

Farmer Mac

Farmer Mac also remains safe and sound. 

For the first half of 2022, its outstanding 

business volume grew from $23.6 billion 

to $24.5 billion, or 3.7%. The Agricultural 

Finance portfolio, which includes Farm 

& Ranch and Corporate AgFinance, was 

the primary contributor to this growth, 

increasing by $0.5 billion (3.0%) over the 

six-month period. Rural Infrastructure 

Finance volume, which includes Rural 

Utilities and Renewable Energy, increased 

by $0.3 billion (5.6%). 

Farmer Mac’s core capital was $1.3 billion as of June 30, 2022, up 8.5% for the 

12-month period, which is $506.3 million 

above the minimum requirement. Farmer 

Mac’s credit risk remained manageable, 

and year-over-year trends showed improvement. Loans classified as 90 days 

past due decreased from 0.70% to 0.20% 

Glen Smith
10 | Farm Credit Administration arm Credit Administration

of loans outstanding. As a percentage of 

total outstanding agricultural finance loan 

volume, special-mention and substandard 

volume decreased from 6.5% at year-end 

2021 to 6.3% six months later.

The general economy

In 2021, the U.S. economy continued its 

strong recovery from the unprecedented 

impacts of COVID-19 on communities, 

businesses, and markets around the world. 

Pent-up demand, low interest rates, and 

additional government support fueled 

growth. 

With the ramp-up of economic activity, 

supply chains and labor markets struggled 

to adjust, and demand-driven price increases heightened inflationary concerns. 

Although the U.S. economy remained 

resilient in the face of these challenges, 

growth started to slow. The Federal Reserve initially held interest rates steady 

despite growing concerns about inflation.

In February 2022, Russia’s invasion of 

Ukraine and the subsequent war added 

tremendous uncertainty to global energy 

and commodity markets, where prices 

were already rising. By spring 2022, the 

U.S. economy was experiencing its highest annual inflation in 40 years, driven 

by energy, shelter, and food. The Federal 

Reserve has responded by raising interest 

rates and reducing its balance sheet to try 

to curb inflation. 

As 2022 continues to unfold, the U.S. 

economy faces several challenges. Economic growth has slowed amid continued 

supply chain disruptions, inflation, and 

rising interest rates. Consumer spending, 

which has leveled off, is a major concern, 

along with declining consumer confidence. Economic challenges outside the 

United States have pushed up the value 

of the dollar, helping to lower the cost of 

imported goods but negatively affecting 

export-dependent sectors like agriculture. 

One bright spot has been the labor market, which has seen strong wage growth 

amid a return to near-historic lows in the 

unemployment rate. However, labor force 

participation remains below pre-pandemic levels, and increasing expectations of 

future inflation could set off a wage-price 

spiral. 

A deterioration in U.S. and global economic conditions later this year and next 

would adversely impact the agricultural 

economy if household income levels 

weaken. Demand for agricultural products 

— especially high-value products like meat 

and dairy — could decline and put downward pressure on farm prices.

The farm economy

For agricultural producers in 2021, the 

U.S. food system continued to adjust to 

demand shifts and supply questions. More 

costly inputs and supply chain problems 

affected agricultural producers and marketers, with major cost increases for energy, transportation, chemicals, and labor. 

Difficulties obtaining farm equipment 

and parts added to the challenges facing 

farmers. Still, economic growth fueled 

demand for farm products domestically 

and abroad, supporting commodity prices 

and farm receipts. 

Higher crop profits in 2021, favorable 

farm financials, low borrowing rates, and 

strong farmer and investor demand helped 

push up cropland values, especially in the 

Midwest. Livestock producer margins in 

2021 were generally favorable because 

strong domestic and export demand 

and limited production gains helped 

lift livestock prices. Cow-calf producers 

in drought-impacted areas were under 

greater stress. Dairy margins were near 

breakeven, with milk price gains falling 

far short of rising feed costs.

In 2022, high commodity prices have 

been offsetting high input costs for many 
2021 FCA Annual Report | 11

producers. Fertilizer, which was already 

expensive and in short supply before the 

invasion of Ukraine, became even more 

expensive and hard to come by after the 

invasion because Russia is a major exporter of fertilizer and fertilizer inputs. 

However, the disruption of grain exports 

from Ukraine, coupled with less-than-ideal 

weather in some regions for planting and 

growing, supported prices in late spring. 

Drought in the western half of the United 

States continues to affect both crop and 

livestock sectors, supporting commodity 

prices but increasing financial pressure on 

many producers. 

Relatively high input costs, including 

interest expenses, are expected to increasingly impact agricultural producers this 

year and next. Margin compression could 

result if commodity prices decline while 

input prices remain elevated. Consequently, producers and their lenders will need to 

be ready for financial pressures ahead. 

Government payments to farmers 

have bolstered farm income in recent 

years, with ad hoc assistance providing 

significant support. If farm receipts 

decline sharply next year, a similar level 

of government support would likely require additional action by Congress or the 

current administration. Under current 

farm programs, farm payments would not 

be activated until market prices drop well 

below current levels. 

Regardless of the course of the farm 

economy, the Farm Credit System will 

continue its vital role in providing competitive rates of financing to the agriculture 

industry.

In conclusion

As a GSE devoted to agriculture, whose 

institutions are owned and operated by 

the producers who borrow from them, 

the Farm Credit System understands its 

borrowers and their needs better than 

many nonagricultural lenders can. And 

like the board members and employees of 

System institutions, FCA’s board members 

and employees have strong personal connections to agriculture. 

Some of us are currently involved in 

farming operations on a part-time basis; 

some grew up on farms or spent time on 

farms as children. In our report this year, 

we’ve decided to visually highlight these 

connections by featuring farm photos provided by FCA employees. For all original 

photos, we provide captions that tell you 

a bit about the employees and the farming operations in which they are or were 

involved.

And for those employees who don’t have 

strong farm or ranch connections, we 

make a point to provide them with opportunities to see agriculture up close and personal. That was one of the goals of the May 

farm tour. In fact, we’ve included some of 

the photos from that tour in this report. 

We’re exceptionally proud of, and 

grateful to, the FCA workforce. Based on 

employee feedback on the 2021 Federal 

Employee Viewpoint Survey, FCA has once 

again ranked high on the Partnership for 

Public Service’s list of best places to work 

in the federal government. We ranked 

number 6 among small federal agencies, 

and our engagement and satisfaction score 

was 79.1 — over 15 points higher than the 

governmentwide average. 

Thanks to the dedication of FCA employees, we have no doubt that the agency will continue to fulfill its important 

mission as regulator of the Farm Credit 

System for years to come.

Glen R. Smith

FCA Board Chairman and CEO 

Jeffery S. Hall

FCA Board Member

Like the board 

members and 

employees 

of System 

institutions, 

FCA’s board 

members and 

employees have 

strong personal 

connections to 

agriculture.
Created by Congress 

in 1916 to provide 

American agriculture 

with a dependable 

source of credit, the 

FCS is the nation’s 

oldest governmentsponsored enterprise.

Associate FCA examiner Betsy States 

grew up on a lifestyle farm, where she 

was active in 4-H. She enjoyed raising 

and showing all kinds of animals, 

including the sheep she is washing here.
2021 FCA Annual Report | 13

FCS banks and associations

The banks and associations of 

the Farm Credit System form a network 

of borrower-owned cooperative financial 

institutions and service organizations serving all 50 states and the Commonwealth 

of Puerto Rico. Created by Congress in 

1916 to provide American agriculture with 

a dependable source of credit, the FCS is 

the nation’s oldest government-sponsored 

enterprise.

As federally chartered cooperatives, 

the banks and associations of the Farm 

Credit System are limited-purpose lenders. 

Congress created them to “improve the income and well-being of American farmers 

and ranchers” by providing credit and related services for them, their cooperatives, 

and “selected farm-related businesses 

necessary for efficient farm operations.” 

Congress also gave the Farm Credit System 

the authority to support rural economic 

development by financing rural residences 

and rural utilities.

Congress formed the FCS as a system of 

farmer-owned cooperatives to ensure that 

farmer- and rancher-borrowers participate 

in the management, control, and ownership of their institutions. The participation 

of member-borrowers helps keep the institutions focused on serving their members’ 

needs.

The System helps to meet broad public 

needs by providing liquidity and competition in rural credit markets in both 

good and bad economic times. The accomplishment of this public goal benefits 

all eligible borrowers, including young, 

beginning, and small farmers, as well as 

rural homeowners.

The System obtains the money it lends 

by selling securities in national and 

international money markets through 

the Federal Farm Credit Banks Funding 

Corporation. Established under the Farm 

Credit Act, the Funding Corporation issues 

and markets debt securities on behalf of 

the FCS banks to raise loan funds. The 

System’s debt issuances are subject to FCA 

approval. The U.S. government does not 

guarantee the securities that the System 

issues.

The banks are jointly and severally liable 

for the principal and interest on all Systemwide debt securities. Therefore, if a bank is 

unable to pay the principal or interest on a 

Systemwide debt security and if the Farm 

Credit Insurance Fund has been exhausted, then FCA must call all non-defaulting 

banks to satisfy the liability.

FCS structure

The System is composed of the following 

four banks:

• CoBank, ACB

• AgriBank, FCB

• AgFirst Farm Credit Bank

• Farm Credit Bank of Texas

As of July 1, 2022, these banks provide 

loans to 63 associations, which in turn 

make loans to farmers, ranchers, and other eligible borrowers. (See figure 1.) All 

but one of these associations are structured as agricultural credit associations 

(ACAs) with two subsidiaries — a production credit association (PCA) and a federal 
14 | Farm Credit Administration

land credit association (FLCA). The PCA 

primarily makes agricultural production 

and intermediate-term loans, and the 

FLCA primarily makes real estate loans. 

The other remaining association is a 

stand-alone FLCA.

The ACA’s parent-subsidiary structure 

offers several benefits. It allows the association to preserve the tax-exempt status 

of the FLCA and to build and use capital 

more efficiently. It also enables members to hold stock in only the ACA but to 

borrow either from the ACA or from one 

or both of its subsidiaries. This gives the 

ACA and its subsidiaries greater flexibility 

in serving their borrowers, and it allows 

them to deliver credit and related services 

to borrowers more efficiently.

Each ACA and its two subsidiaries operate with a common board of directors 

and staff, and each of the three entities is 

responsible for the debts of the others. For 

most regulatory and examination purposes, FCA treats the ACA and its subsidiaries 

as a single entity; however, when appropriate, we may treat the parent and subsidiaries as separate entities.

CoBank, one of the four FCS banks, is 

an agricultural credit bank (ACB). It has 

a nationwide charter to make loans to 

agricultural and aquatic cooperatives and 

rural utilities, as well as to other persons 

Figure 1

Chartered territories of FCS banks

As of July 1, 2022

FCB of Texas

AgFirst FCB

AgriBank, FCB

CoBank, ACB

Source: FCA GIS

July 2022

Farm Credit System District Territories

1 FCB, 12 ACAs

AgriBank District

1 FCB, 18 ACAs

AgFirst District

1 FCB, 13 ACAs, 1 FLCA

Texas District

1 ACB, 19 ACAs

CoBank District

Note: As of July 1, 2022, CoBank funds 19 associations in the indicated areas and serves cooperatives nationwide; Farm Credit Bank 

of Texas funds 14 associations; AgriBank, FCB, funds 12 associations; and AgFirst Farm Credit Bank funds 18 associations. The Farm 

Credit System contains a total of 67 banks and associations.
2021 FCA Annual Report | 15

or organizations that have transactions 

with, or are owned by, these cooperatives. 

The ACB finances U.S. agricultural exports 

and imports and provides international 

banking services for farmer-owned cooperatives. In addition to making loans to 

cooperatives, CoBank provides loan funds 

to 19 ACAs.

Borrowers served

Under the Farm Credit Act of 1971, as 

amended, the System has the authority, 

subject to certain conditions, to make the 

following types of loans:

• Agricultural real estate loans

• Agricultural production and intermediate-term loans (e.g., for farm 

equipment)

• Loans to producers and harvesters of 

aquatic products

• Loans to certain farmer-owned 

agricultural processing facilities and 

farm-related businesses

• Loans to farmer-owned agricultural 

cooperatives

• Rural home mortgages

• Loans that finance agricultural 

exports and imports

• Loans to rural utilities

• Loans to farmers and ranchers for 

other credit needs

Also, under its similar-entity authority, 

the System may participate with other 

lenders to make loans to those who are not 

eligible to borrow directly from the System 

but whose activities are functionally like 

those of eligible borrowers. Through these 

participations, the System diversifies its 

portfolio, reducing the risks associated 

with serving a single industry.

As required by law, borrowers own stock 

or participation certificates in System 

institutions. The FCS had approximately 

964,000 loans and 632,000 stockholders at 

year-end 2021. Approximately 89% of the 

stockholders were farmers or cooperatives 

with voting stock. The remaining percent 

were nonvoting stockholders, including 

rural homeowners and other financing institutions that borrow from the System.

Nationwide, the System had $343.9 billion in gross loans outstanding as of Dec. 

31, 2021. Loans for agricultural production 

and agricultural real estate purposes represented by far the largest type of lending, 

with $227.2 billion, or 66%, of the total dollar amount of loans outstanding. See 

figure 2.

Figure 2

Farm Credit System lending by type

As of Dec. 31, 2021

Source: 2021 Federal Farm Credit Banks Funding Corporation Annual Information Statement.
16 | Farm Credit Administration

System funding for other lenders

Other financing institutions 

Under the Farm Credit Act, System banks 

may further serve the credit needs of 

rural America by providing funding and 

discounting services to certain non-System 

lending institutions described in our regulations as “other financing institutions” 

(OFIs). These include the following:

• Commercial banks

• Savings institutions

• Credit unions

• Trust companies

• Agricultural credit corporations

• Other specified agricultural lenders 

that are significantly involved in 

lending to agricultural and aquatic 

producers and harvesters

As of Dec. 31, 2021, the System served 17 

OFIs, down from 18 in 2020. Outstanding 

loan volume to OFIs stood at nearly $1 billion at year-end. 

Syndications and loan participations with 

non-FCS lenders

In addition to the authority to provide 

services to OFIs, the Farm Credit Act gives 

FCS banks and associations the authority 

to partner with financial institutions outside the System in making loans to agriculture and rural America. Generally, System 

institutions partner with these financial 

institutions through loan syndications and 

participations, primarily to reduce credit 

risk and comply with lending limits.

A loan syndication (or “syndicated bank 

facility”) is a large loan in which a group 

of financial institutions work together to 

provide funds for a borrower. Usually, one 

financial institution takes the lead, acting 

as an agent for all syndicate members and 

serving as a liaison between them and 

the borrower. All syndicate members are 

known at the outset to the borrower. The 

System’s gross loan syndication volume 

grew by almost $2.9 billion over the past 

year to $26.3 billion at year-end 2021.

Loan participations are loans in which 

two or more lenders share in providing 

loan funds to a borrower. At year-end 

2021, the System had $7.4 billion in net 

eligible-borrower loan participations with 

non-System lenders. 

As noted above, FCS institutions also 

have the authority to lend to “similarentity” borrowers (that is, those who are 

not eligible to borrow directly from the 

System but whose operations are functionally similar to those of eligible borrowers). 

This authority allows FCS institutions to 

participate with other lenders to make 

loans to similar-entity borrowers. The 

System had $17.9 billion in net 

similar-entity loan participations with 

non-System lenders as of Dec. 31, 2021, up 

from $16.0 billion the prior year (figure 3).

Farm debt and market shares 

The U.S. Department of Agriculture’s estimate of total farm business debt for the 

year ended Dec. 31, 2020, was $441 billion, 

up 5.1% from its $420 billion estimate for 

year-end 2019. The System’s market share 

of total farm business debt rose from 

42.6% at the end of 2019 to 44.4% at the 

end of 2020. (See figure 4. Also, please 

note that 2021 data were not available at 

the time of publication of this report.)

Except for brief periods, the FCS has had 

the largest market share of farm business 

debt secured by real estate. At year-end 

2020, the System held 48.7% of this $289 

billion of debt; by comparison, commercial banks held 33.6%. Commercial banks 

have historically dominated non-real estate 

farm lending. At year-end 2020, commercial banks held 41.4% of this $153 billion of 

debt, and the System held 36.2%. 
2021 FCA Annual Report | 17

Figure 3

Loan participation transactions with non-System lenders, 2011 – 2021

As of Dec. 31

Dollars in billions

Source: Farm Credit System Call Reports.

Figure 4

Estimated market shares of U.S. farm business debt

As of Dec. 31, 2020

Source: FCA’s Office of Data Analytics and Economics, based on February 4, 2022, data from 

USDA’s Economic Research Service.
18 | Farm Credit Administration

Figure 5

FCS net income, 2012 – 2021

As of Dec. 31, Dollars in billions

Source: Annual Information Statements of the Federal Farm Credit Banks Funding Corporation.

Financial condition

Farm income rebounded sharply in 2021 

as economic growth increased demand 

for agricultural products here and aboard. 

The System reported strong 2021 financial results, including higher earnings, 

increased capital, and strong portfolio 

credit quality. FCS banks had reliable 

access to debt capital markets and maintained liquidity levels well above the 90-

day regulatory minimum.

Tables 1 and 2 provide a summary of 

the System’s major financial indicators. For 

more information on the condition and 

performance of the System, see the 2021 

Annual Information Statement of the Farm 

Credit System on the website of the Federal 

Farm Credit Banks Funding Corporation.

While the System is financially sound, a 

small number of individual FCS institutions 

displayed some weaknesses in 2021. As 

the System’s regulator, we addressed these 

weaknesses by increasing our oversight 

and supervision of these institutions. For 

more information on our supervisory and 

enforcement approach, see pages 35 to 37. 

The U.S. economy remained resilient 

in 2021 despite supply chain issues, labor 

constraints, and rapidly rising prices. 

Although prices for agricultural products 

were strong, producers faced major cost 

increases across a broad range of inputs, 

including feed, transportation, chemicals, 

and labor. Also, drought in the western 

United States continued to affect both crop 

and livestock producers, especially those 

in the cattle sector.

Major cash crop prices soared higher in 

2021 on strong global demand and tighter-than-expected world supplies. High 

prices and strong yields pushed producer 

profitability to near record levels for cash 

grain producers. 

For the protein sector, strong domestic 

and export demand and limited production gains supported higher prices in 2021. 

Margins were favorable, but higher feed 

costs squeezed profitability gains. 

Higher crop profits, favorable farm 

financials, low borrowing rates, and strong 

demand from both farmers and investors 

pushed cropland values significantly 

higher in 2021, particularly in the Midwest. Water availability, especially in the 

western half of the United States, became 

an increasingly important consideration 

in assessing land use and valuation. Rising interest rates will pressure farmland 

prices in 2022.

Earnings

The System reported strong earnings 

growth in 2021. For the year, System consolidated net income totaled $6.8 billion, 

up $794 million or 13.2% from 2020 (See 

figure 5). Growth in net income was the result of a $718 million increase in net interest income and a $259 million change in 
2021 FCA Annual Report | 19

loan provisions, partially offset by a $196 

million increase in noninterest expense. 

Higher average earning assets were 

the principal driver of the increase in net 

interest income. Because of the System’s 

strong loan growth, average earning assets rose $28.8 billion, or 7.8%, to $396.7 

billion. Net interest spread increased 7 

basis points to 2.33% mainly because 

of a decline in rates on interest-bearing 

liabilities. During 2020 and 2021, System 

banks were able to leverage the low interest rate environment to lower costs by 

calling debt. Net interest margin remained 

unchanged at 2.46% because the rate on 

earning assets funded by noninterest 

sources (principally capital) offset the 

increase in interest spread. The System’s 

Table 1

Farm Credit System major financial indicators, by annual comparison

Dec. 31, 2021

Dollars in millions

Item 31-Dec-21 31-Dec-20 31-Dec-19 31-Dec-18 31-Dec-17

Total assets $435,957 $400,693 $365,359 $348,992 $329,518

Gross loan volume $343,929 $315,490 $286,964 $273,378 $259,888

Bonds and notes $356,446 $325,214 $295,499 $283,276 $267,119

Nonperforming assets1 $1,578 $1,897 $2,347 $2,282 $2,022

Net income, full year $6,796 $6,002 $5,446 $5,332 $5,189

Nonperforming assets/Gross loans 

and other property owned 0.46% 0.60% 0.82% 0.83% 0.78%

Capital & insurance/Assets2 15.94% 16.36% 16.90% 16.75% 16.81%

Retained earnings/Assets 12.59% 12.92% 13.41% 13.31% 13.24%

Return on average assets 1.66% 1.57% 1.54% 1.59% 1.62%

Return on average capital 9.94% 9.26% 8.91% 9.29% 9.49%

Net interest margin3 2.46% 2.46% 2.42% 2.46% 2.48%

Efficiency ratio4 35.3% 35.9% 36.2% 35.2% 35.1%

Operating expenses/Average loans5 1.14% 1.18% 1.18% 1.17% 1.17%

Sources: FCA’s Consolidated Reporting System as of Dec. 31, 2021, and the Farm Credit System Quarterly Information Statement provided by the Federal Farm 

Credit Banks Funding Corporation.

1 Nonperforming assets are defined as nonaccrual loans, accruing restructured loans, accrual loans 90 or more days past due, and other property owned.

2 Capital excludes mandatorily redeemable preferred stock and protected borrower capital. Insurance refers to the funds in the Farm Credit Insurance Fund 

administered by the Farm Credit System Insurance Corporation.

3 Net interest margin ratio measures net income produced by interest-earning assets, including the effect of loanable funds, and is a key indicator of loan pricing 

effectiveness.

4 The efficiency ratio measures total noninterest expenses for the preceding 12 months divided by net interest income plus noninterest income for the preceding 

12 months.

5 Operating expenses divided by average gross loans.
20 | Farm Credit Administration

return on average assets was 1.66%, up 

from 1.57% in 2020. The return on average 

capital increased to 9.94% from 9.26%.

As cooperative institutions, FCS banks 

and associations typically pass on a portion 

of their earnings as patronage distributions to their borrower-owners. For 2021, 

System institutions declared a total of $3.0 

billion in patronage distributions — $2.7 

billion in cash, $221 million in allocated 

retained earnings, and $99 million in capital stock and participation certificates. 

This represents 44.2% of the System’s net 

income for 2021 as compared with 48.1% 

in 2020. The System also distributed $166 

million in cash from allocated retained 

earnings related to patronage distributions 

from previous years.

System growth

The System continued to experience 

strong growth in 2021. Total assets increased to $436 billion, up $35.3 billion or 

8.8% from 2020. Gross loan balances 

Table 2

Farm Credit System major financial indicators, by district

Dec. 31, 2021

Dollars in millions

Institution Name Total 

Assets

Gross 

Loan 

Volume

Nonaccrual 

Loans

Allowance 

for Loan 

Losses

Cash and 

Investments

Capital 

Stock1

Total 

Capital

Net 

Income

FCS banks

AgFirst $39,275 $28,536 $35 ($20) $10,362 $299 $2,303 $486

AgriBank $142,417 $121,994 $51 ($37) $19,698 $3,826 $7,006 $765

CoBank $170,306 $128,529 $123 ($651) $40,538 $4,013 $12,234 $1,314

Texas $33,093 $25,674 $6 ($12) $6,912 $477 $1,998 $255

Total2 $384,688 $304,366 $215 ($720) $77,510 $8,302 $23,244 $2,700

FCS associations

AgFirst $27,075 $26,103 $162 ($192) $36 $151 $5,421 $766

AgriBank $135,058 $126,747 $452 ($335) $2,080 $171 $24,549 $2,508

CoBank $77,666 $72,724 $268 ($311) $1,099 $53 $14,217 $1,652

Texas $26,674 $25,777 $81 ($74) $125 $72 $3,995 $548

Total2 $266,520 $251,351 $963 ($912) $3,356 $512 $48,211 $5,474

Total FCS2 $435,957 $343,929 $1,176 ($1,632) $80,816 $2,069 $69,477 $6,796

Sources: FCA’s Consolidated Reporting System as of Dec. 31, 2021, and the Farm Credit System Quarterly Information Statement provided by the Federal Farm 

Credit Banks Funding Corporation.

1 Includes capital stock and participation certificates, excludes mandatorily redeemable preferred stock and protected borrower capital.

2 Cannot be derived by adding the categories above because of intradistrict and intra-System eliminations used in Reports to Investors. Also, the total FCS numbers 

exclude mandatorily redeemable preferred stock and protected borrower capital but include restricted capital from the Farm Credit Insurance Fund.
2021 FCA Annual Report | 21

increased 9.0% or $28.4 billion to $343.9 

billion. (See figure 6 and table 3.)

A strong increase in real estate mortgage 

lending, and to a lesser extent production 

and intermediate-term and agribusiness 

lending, accounted for much of the System’s loan growth in 2021. 

Real estate mortgages, the largest segment of the loan portfolio at almost 48%, 

increased by $16.9 billion or 11.5% from a 

year ago. Production and intermediateterm lending increased $4.6 billion or 

8.0%, and agribusiness lending grew by 

$4.2 billion or 7.5%.

Several factors contributed to the strong 

demand for real estate mortgage loans, 

including high profits for the crop sector, 

favorable interest rates, and both farmer 

and investor demand for farmland. For 

production and agribusiness lending, 

increased loan demand reflected greater 

seasonal financing needs and accelerated 

purchases of production inputs.

With respect to portfolio commodity 

concentrations, loan volume increased 

across most major commodity categories 

in 2021. The cash grains and cattle sectors 

were the System’s two largest commodity 

categories, equaling almost 25% of the 

total loan portfolio. For the year, loan volume for these sectors increased 9.6% and 

13.3% respectively.

Asset quality

Agricultural producers experienced significant market uncertainty in 2021. U.S 

farmers and ranchers faced escalating 

input costs, supply chain issues, drought, 

and uncertain demand. Despite these challenges, the System’s portfolio performed 

well, and loan quality was strong.

As of Dec. 31, 2021, nonperforming 

loans totaled $1.54 billion, or 0.45% of 

gross loans outstanding. This is down from 

$1.86 billion, or 0.59%, at year-end 2020 

(See figure 7.) Loan delinquencies (accruing loans that are 30 days or more past 

Figure 6

Annual growth rate of FCS loans outstanding, 2010 – 2021

Source: Annual Information Statements of the Federal Farm Credit Banks Funding Corporation.

Figure 7

FCS nonperforming loans, 2016 – 2021

As of Dec. 31

Source: Annual Information Statements of the Federal Farm Credit Banks Funding Corporation.
22 | Farm Credit Administration

Table 3

FCS gross loans outstanding, 2017 – 2021

As of Dec. 31

Dollars in millions

Loan Type 2021 2020 2019 2018 2017 Percent 

Change 

from 

2017

Percent 

Change 

from 

2020

Agricultural real estate 

mortgage loans

$164,535 $147,623 $132,215 $126,310 $120,561 36.5% 11.5%

Agricultural production and 

intermediate-term loans

62,620 57,973 56,095 53,447 51,724 21.1% 8.0%

Agribusiness loans to the following:

Processing and marketing 

operations

34,308 31,939 28,205 24,832 21,582 59.0% 7.4%

Cooperatives 21,286 20,020 17,776 17,589 17,335 22.8% 6.3%

Farm-related businesses 5,053 4,453 4,068 3,692 3,293 53.4% 13.5%

Rural utility loans by type of utility:

Energy 23,621 22,066 19,432 20,100 19,689 20.0% 7.0%

Communication 10,272 9,708 7,847 6,755 6,311 62.8% 5.8%

Water / wastewater 3,122 2,703 2,390 2,305 1,965 58.9% 15.5%

Rural home loans 6,883 6,928 7,405 7,308 7,261 -5.2% -0.6%

Agricultural export finance 7,079 6,873 6,712 6,581 5,645 25.4% 3.0%

Lease receivables 4,165 4,345 3,902 3,630 3,665 13.6% -4.1%

Loans to other financing 

institutions

985 859 917 829 857 14.9% 14.7%

Total $343,929 $315,490 $286,964 $273,378 $259,888 32.3% 9.0%

Sources: Federal Farm Credit Banks Funding Corporation Annual Information Statements.
2021 FCA Annual Report | 23

due) remained largely unchanged at 0.27% 

of total accruing loans compared with 

0.28% at year-end 2020. In total, 95.7% of 

System loans were classified as acceptable, 

up from 94.0% at year-end 2020.

Because of improvements in portfolio 

quality combined with a release of the 

general reserves that were added during 

2020, the System reported a reversal of 

loan loss provisions of $152 million in 

2021. This compares with provisions for 

loan losses of $107 million in 2020. Largely 

because of the loan loss reversal, the 

allowance for loan losses declined to $1.63 

billion, or 0.47% of loans outstanding, 

down from $1.80 billion, or 0.57% of loans 

outstanding, at year-end 2020. Also, net 

loan charge-offs declined to $19 million in 

2021 compared with $90 million in 2020.

Capital

Strong earnings continued to support increased capital levels in 2021. At Dec. 31, 

total capital equaled $69.5 billion compared 

with $65.5 billion at year-end 2020. (Please 

note that these numbers include restricted 

capital, which is the amount held in the 

Farm Credit Insurance Fund.) At year-end, 

the System’s capital-to-assets ratio was 

15.9%, compared with 16.4% a year ago.

As shown in figure 8, retained earnings 

are the most significant component of 

System capital, equaling 79.0% of total 

capital at year-end 2021, unchanged from 

a year ago. FCA regulations establish 

minimum capital levels that each FCS 

bank and association must achieve and 

maintain. As of Dec. 31, 2021, capital levels 

Figure 8

FCS capital, 2014 – 2021

As of Dec. 31

Source: Annual Information Statements of the Federal Farm Credit Banks Funding Corporation.

Note: Retained earnings include accumulated other comprehensive income or loss.
24 | Farm Credit Administration

at all System banks and associations were 

above the regulatory minimum capital 

requirements.

Funding and liquidity

During 2021, as global capital markets 

continued to grapple with the COVID-19 

pandemic and its effects, the System 

maintained reliable access to the debt 

capital markets. Investors continued to be 

attracted to the System’s debt offerings for 

a variety of reasons:

• The System is a government-sponsored enterprise (GSE), and certain 

regulatory requirements promote the 

use of GSE debt.

• The System’s financial performance 

continued to be strong.

• The availability of GSE debt continued 

to decline, and the System accounted 

for nearly 25% of that debt at yearend 2021.

Risk premiums for pricing on System 

debt securities remained very favorable 

during most of 2021. However, continuing 

market volatility caused risk premiums 

demanded by investors to widen significantly at times. The primary causes of 

this widening were the economic impacts 

of the pandemic and efforts to control it. 

And the greatest economic impact was 

the significant rise in inflation, which has 

reached levels not seen since the 1980s. 

However, the Federal Reserve, along with 

other central banks, continued to provide 

many forceful accommodative monetary 

actions. Additional accommodative fiscal 

policy measures were also taken. 

The System funds loans and investments 

primarily with consolidated Systemwide 

debt in concert with a sizeable portion of 

equity capital. The Funding Corporation, 

the fiscal agent for System banks, sells 

debt securities, such as discount notes, 

bonds, and designated bonds, on behalf of 

the System. This process allows funds to 

flow efficiently from worldwide capitalmarket investors to agriculture and rural 

America, thereby providing rural communities with ready access to global credit 

resources. 

At year-end 2021 Systemwide debt outstanding was $352.9 billion, representing 

a 9.4% increase from the preceding yearend. Several factors contributed to the 

$30.4 billion increase in Systemwide debt 

outstanding. Gross loans increased $28.4 

billion in 2021, while the System’s combined investments, federal funds, and cash 

balances increased by $6.6 billion.

The System had $3.993 billion in outstanding preferred stock at the end of 

2021, an increase of $689 million from 

the previous year-end. During 2021, the 

System issued subordinated debt totaling 

$400 million. As of the end of 2021, outstanding subordinated debt stood at $398 

million. Prior to 2021, no subordinated 

debt had been outstanding since June of 

2016. Certain individual System institutions recently issued either preferred stock 

or subordinated debt or both to help fund 

some of their growth; all preferred stock 

and subordinated debt issuances are the 

sole obligations of their respective issuing 

institutions.

The amount of debt issued by the System decreased slightly in 2021. For the 12 

months ended Dec. 31, 2021, the System 

issued just under $415 billion in debt securities, compared with $421 billion in 2020. 

Although the size of the 2021 issuance 

was similar to that of the 2020 issuance, 

the composition was different: 60.2% of 

the 2021 issuance was in discount notes, 

which have a maximum maturity of one 

year, while only 45.2% of the 2020 issuance 

was in discount notes. The System issued 

more discount notes in 2021 because of 

the increase in longer-term interest rates 
2021 FCA Annual Report | 25

while interest rates for debt securities with 

maturities under one year remained near 

zero.

The amount of outstanding debt on 

which the System exercised its call options 

decreased dramatically in 2021 because 

the Federal Reserve stabilized short-term 

interest rates by maintaining the target 

federal funds range of 0.0% to 0.25% 

throughout the year. The Federal Reserve 

left in place several other significant 

monetary policy actions to help reduce 

longer-term rates as well. The System 

exercised calls on only $35.6 billion of its 

outstanding debt during 2021, compared 

with a record $115.2 billion in the preceding year.

Favorable investor sentiment and lower 

yields continued to provide the System 

with access to a wide range of debt maturities in 2021. The weighted average of 

remaining maturities increased for 2021 to 

3.2 years from 2.9 years at the end of 2020. 

The weighted-average interest rates for insured debt decreased further, from 1.04% 

as of Dec. 31, 2020, to 0.80% as of Dec. 31, 

2021.

To participate in the issuance of an 

FCS debt security, a System bank must 

maintain — free from any lien or other 

pledge — specified eligible assets (available collateral) that are at least equal in 

value to the total amount of its outstanding 

debt securities. Securities subject to the 

available collateral requirements include 

Systemwide debt securities for which 

the bank is primarily liable, investment 

bonds, and other debt securities that the 

bank may have issued individually, such 

as limited life (term) preferred stock and 

subordinated debt.

Furthermore, our regulations require 

each FCS bank to maintain a tier 1 leverage ratio (primarily unallocated retained 

earnings, certain common cooperative 

equities, and noncumulative perpetual 

preferred stock divided by total assets) 

of not less than 4%. FCA regulations also 

provide for a tier 1 leverage ratio buffer 

of an additional 1%. Certain restrictions 

apply if the buffer does not exceed 1%. 

Throughout 2021, all System banks maintained their tier 1 leverage ratios and their 

leverage buffer ratios above the required 

minimums, with 5.15% being the lowest 

for any individual bank as of Dec. 31, 2021.

All System banks have kept their days 

of liquidity well above the required minimum levels. The lowest liquidity levels at 

any individual bank as of Dec. 31, 2021, 

were as follows:

• 26 days (15 days regulatory minimum) 

of level 1 assets

• 97 days (30 days regulatory minimum) 

of level 1 and 2 assets

• 150 days (90 days regulatory minimum) of level 1, 2, and 3 assets

• 158 days overall (including the supplemental liquidity buffer)

In addition to the protections provided by 

the joint and several liability provisions, 

the Funding Corporation and the System 

banks have entered into the following voluntary agreements:

• The Amended and Restated Market 

Access Agreement, which establishes 

certain financial thresholds and provides the Funding Corporation with 

operational oversight and control 

over the System banks’ participation 

in Systemwide debt obligations.

• The Amended and Restated Contractual Interbank Performance Agreement, which is tied to the Market 

Access Agreement and establishes 

certain measures that monitor the 

financial condition and performance 

of the institutions in each FCS bank’s 

district. For all of 2021, all Farm 

The System 

funds loans and 

investments 

primarily with 

a combination 

of consolidated 

Systemwide debt 

and equity capital.
26 | Farm Credit Administration

Credit System banks maintained 

scores above the benchmarks in the 

Contractual Interbank Performance 

Agreement.

Ratings

FCA uses the Financial Institution Rating 

System (FIRS) to assess the safety and 

soundness of each FCS institution. Similar 

to the systems used by other federal banking regulators, FIRS is a framework of 

component and composite ratings to help 

examiners evaluate significant financial, 

asset quality, and management factors. 

FIRS ratings range from 1 for a sound 

institution to 5 for an institution that is 

likely to fail.

As figure 9 shows, the financial condition and performance of the FCS remains 

strong. The System’s strength reduces the 

risk to investors in FCS debt, to the Farm 

Credit System Insurance Corporation, and 

to FCS institution stockholders. As of January 1, 2022, 65 FCS institutions were rated 

1 or 2 (94%) and 4 institutions were rated 

3 or worse (6%). The institutions rated 3 

or worse represented less than 1.0% of the 

System’s total assets.

Figure 9

Financial Institution Rating System (FIRS) composite ratings for 

the FCS, 2018 – 2022

Source: FCA’s FIRS ratings database.

Note: Figure 9 reflects ratings for only the Farm Credit System’s banks and associations. Also, the 

numbers shown on the bars reflect the total number of institutions with a given rating; please refer 

to the y-axis to determine the percentage of institutions receiving a given rating.
Peter Smith, son of FCA Chairman Glen Smith, 2021 FCA Annual Report | 27

is planting no-till soybeans. The Smith family 

farm consists of 2,000 acres devoted to corn, 

soybeans, hay, and a small beef cow herd. 

The field Peter is planting in this photo was 

part of the land homesteaded by Glen’s greatgrandfather in 1875. 

Jim Duffy, father of Chief Examiner Mike Duffy, 

takes a break from the 2021 corn harvest. The 

Duffy farm has been in their family since 1883 

when Mike’s great-grandfather purchased the 

land. The family grows corn and soybeans 

and has a beef cattle operation. This was Jim 

Duffy’s 65th and final harvest. He passed away 

the following February at the age of 84.
28 | Farm Credit Administration In fall 2021, following the 

2020 conference with USDA, 

the University of Nebraska 

– Lincoln and FCA facilitated 

a YBS farmer symposium. 

The children of FCA examiner Cindi Burke 

are following in their father’s footsteps. 

Cindi; her husband, Dan; and their children 

recently moved back to the southwest Kansas 

farm where Dan grew up. They run a small, 

diversified operation where they raise corn, 

wheat, and milo, and have a small beef cattle 

herd. Cindi leads the YBS workgroup for FCA’s 

Office of Examination. 
2021 FCA Annual Report | 29

Serving young, beginning, and small farmers 

and ranchers 

FCA supports the Farm 

Credit System’s mission to serve young, 

beginning, and small (YBS) farmers, 

ranchers, and producers and harvesters of 

aquatic products. We define young farmers 

as those who are 35 years old or younger, 

beginning farmers as those who have been 

farming for 10 years or less, and small 

farmers as those with less than $250,000 in 

annual sales.

The System’s YBS mission is outlined in 

the Farm Credit Act, and we have adopted 

regulations to implement the YBS provisions of the act. The Farm Credit Act and 

FCA regulations stipulate that each FCS 

bank must have written policies that direct 

each of the associations it supervises to 

have the following:

• A program for furnishing sound and 

constructive credit and financially 

related services to YBS farmers

• A mission statement describing the 

program’s objectives and specific 

means to achieve the objectives

• Annual quantitative targets for credit 

to YBS farmers

• Outreach efforts and annual qualitative goals for offering credit and 

related services that meet the needs 

of YBS farmers

An association’s board oversight and 

reporting are key parts of every YBS 

program. Each association must report 

annually to its supervisory bank on the 

operations and achievements of its YBS 

program, and each bank must provide 

to FCA an annual summary of its district 

associations’ reports. Each association also 

must establish an internal controls program to ensure that it provides credit in a 

safe and sound manner.

In addition, FCA regulations require association business plans to include a marketing plan and strategies with special emphasis on diversity and inclusion within 

each market segment. Operational and 

strategic business plans must include the 

goals and targets for the association’s YBS 

lending. System associations must also 

coordinate with other government and 

private sources of credit in implementing 

their YBS programs. FCA’s oversight and 

examination activities monitor each institution’s assessment of its performance and 

market penetration in the YBS area.

In fall 2021, following the 2020 conference with USDA, the University of Nebraska – Lincoln and FCA facilitated a YBS 

farmer symposium. The event brought 

YBS borrowers together with government 

agencies and agricultural lenders to discuss ways to better serve the credit needs 

of YBS producers. The symposium gave 

the agency a chance to hear from many 

YBS producers and learn about the opportunities and challenges they face with 

their businesses. 

Because of the success of the Nebraska 

event, the agency partnered with Colorado 

State University to hold a national event 

in March 2022: the National Forum on 

Serving YBS Farmers and Ranchers. This 

As a child, associate 

FCA examiner Allie 

Wilson loved to feed 

the chickens on her 

family’s farm.
30 | Farm Credit Administration arm Credit Administration

forum brought together leaders from CSU, 

USDA, the Farm Service Agency, the Farm 

Credit System, and FCA; agricultural industry stakeholders; and YBS producers to 

discuss matters of importance to the YBS 

community. 

We continue to work with stakeholders 

to further improve financing opportunities 

for YBS farmers and ranchers. 

Results

The following information summarizes 

the lending information that System institutions provided for their YBS programs. 

(See tables 4A and 4B.)

In 2021, the System made a total of 

378,779 new loans, totaling $136.4 billion. 

The total number of outstanding loans at 

year-end 2021 was 963,530, amounting to 

$350.3 billion.

Young: The System reported making 67,647 

new loans to young farmers in 2021, and 

the volume of these loans amounted to 

$14.9 billion. The new loans made to 

young farmers in 2021 represented 17.9% 

of all loans the System made during the 

year and 11.0% of the dollar volume of 

loans made. At the end of 2021, the System 

reported 186,323 loans outstanding to 

young farmers, totaling $37.0 billion.

Table 4A

YBS loans made during 2021

YBS Category Number of Loans Percentage of 

Total Number of 

System Loans

Dollar Volume of 

Loans in Millions

Percentage 

of Total Volume 

of System Loans

Average Loan 

Size

Young 67,647 17.9% $14,946 11.0% $220,941

Beginning 97,127 25.6% $26,234 19.2% $270,096

Small 167,729 44.3% $25,627 18.8% $152,790

Table 4B

YBS loans outstanding as of Dec. 31, 2021

YBS Category Number of Loans Percentage of 

Total Number of 

System Loans

Dollar Volume of 

Loans in Millions

Percentage 

of Total Volume 

of System Loans

Average Loan 

Size

Young 186,323 19.3% $37,021 10.6% $198,695

Beginning 297,289 30.9% $64,665 18.5% $217,516

Small 478,672 49.7% $66,863 19.1% $139,685

Sources: Annual Young, Beginning, and Small Farmer Reports submitted by each System lender through the FCS banks.

Note: The YBS totals listed in tables 4A and 4B include loans, advancements, commitments, and participation interests to farmers, ranchers, and aquatic producers. 

The totals exclude rural home loans made under FCA regulation 613.3030, loans to cooperatives, and the activities of the Farm Credit Leasing Services Corporation.
2021 FCA Annual Report | 31

Beginning: The System reported making 

97,127 new loans to beginning farmers 

in 2021, and the volume of these loans 

amounted to $26.2 billion. The new loans 

made to beginning farmers in 2021 represented 25.6% of all System loans made 

during the year and 19.2% of the dollar 

volume of loans made. At the end of 2021, 

the System reported 297,289 loans outstanding to beginning farmers, totaling 

$64.7 billion.

Small: System institutions reported making 167,729 new loans to small farmers in 

2021, totaling $25.6 billion. The new loans 

made to small farmers in 2021 represented 

44.3% of all System loans made during 

the year and 18.8% of the dollar volume of 

loans made. At the end of 2021, the System 

reported 478,672 loans outstanding to 

small farmers, totaling $66.9 billion.

Please note: Because the YBS mission is 

focused on each borrower group separately, data are reported separately for each of 

the three YBS categories. Since some loans 

fit more than one category, adding the 

loans across categories does not produce 

an accurate measure of the System’s YBS 

lending. 

Table 5A

Change in new YBS lending from 2020 to 2021

YBS Category Dollar Volume Loan Numbers

Young 8.3% 2.8%

Beginning 16.7% 3.0%

Small 9.3% 0.8%

Table 5B

Change in outstanding YBS lending from 2020 to 2021

YBS Category Dollar Volume Loan Numbers

Young 10.3% 2.9%

Beginning 18.1% 4.8%

Small 14.2% 1.7%
32 | Farm Credit Administration

New loans made in 2021 by dollar volume 

and number of loans

From Dec. 31, 2020, to Dec. 31, 2021, the 

System’s total new loan dollar volume increased by 12.7%. New loan dollar volume 

to young farmers increased by 8.3%, to 

beginning farmers by 16.7%, and to small 

farmers by 9.3%. (See table 5A.)2

The number of total System loans made 

during the year increased by 2.1%. The 

number of loans to young farmers increased by 2.8%, to beginning farmers by 

3.0%, and to small farmers by 0.8%.

Over the past couple years (2020 and 

2021), two key factors have contributed to 

increases in System lending: 

• The System’s ability to re-price existing loans at low rates

2 Please note that some System institutions revised their totals for loan numbers and dollar volume after FCA’s 

2020 annual report was published. This revision was part of the normal course of business adjustments to their call 

report data. As a result, the System totals reported for 2020 changed slightly from the totals reported in last year’s 

annual report, and one should not calculate year-over-year increases based on totals reported in last year’s annual 

report.

• Continued high demand for agricultural land and rural lifestyle

Outstanding loans by dollar volume and 

number of loans

Both the dollar volume of the System’s total 

loans outstanding and the dollar volume of 

YBS loans outstanding increased in 2021. 

Total System loan dollar volume outstanding increased by 10.9%. The loan dollar 

volume outstanding to young farmers 

increased by 10.3%, to beginning farmers 

by 18.1%, and to small farmers by 14.2%. 

(See table 5B.)

The number of total System loans outstanding increased in 2021 by 1.8%. The 

number of loans outstanding to young 

farmers increased by 2.9%, to beginning 

farmers by 4.8%%, and to small farmers 

by 1.7%. 

Ratio of new and outstanding YBS loans to 

total System loans

The ratio of new YBS loans (by number) 

to total new System loans was 17.9% for 

young farmers, 25.6% for beginning farmers, and 44.3% for small farmers. The ratio 

of outstanding YBS loans (by number) to 

total outstanding System loans was 19.3% 

for young farmers, 30.9% for beginning 

farmers, and 49.7% for small farmers. 

(See figures 10A, 10B, and 10C). Compared 

to 2020, all the ratios remained relatively 

stable, with some mix in direction. 

Associate FCA examiner Gretchen Corson 

grew up on a hobby farm where she raised 

prize-winning goats. She now works parttime on a beef cattle operation.
2021 FCA Annual Report | 33

Figure 10A

Young farmers and ranchers

Figure 10B

Beginning farmers and ranchers

Figure 10C

Small farmers and ranchers
In this photo taken on the May 2022 FCA farm 

tour, several young FCA examiners admire a 

handsome turkey on the diversified family 

farm of Bryan and Shari Clemsen.

Our examiners 

determine how issues 

affecting agriculture and 

the economy create risk 

for System institutions.
2021 FCA Annual Report | 35

Examining and regulating the banks 

and associations

Examination

Managing risk is a challenge for all kinds 

of lenders but especially for those lending 

to a single sector of the economy — in this 

case, agriculture. To manage this risk, 

Farm Credit System institutions must have 

both sufficient capital and effective risk 

management controls. As the independent regulator of the FCS, the Farm Credit 

Administration examines and supervises 

System institutions. Our examiners determine how issues affecting agriculture 

and the economy create risk for System 

institutions.

Our examiners also evaluate whether 

each institution is fulfilling its chartered 

mission to provide credit and financially 

related services to all eligible, creditworthy customers. They do so in a couple 

of ways. They determine whether each institution is complying with mission-related 

laws and regulations. They also evaluate 

the System’s efforts to implement programs for serving the credit needs of 

eligible agricultural producers and cooperatives, including young, beginning, and 

small (YBS) farmers and ranchers.

Our examiners review System institutions’ annual reports and business plans 

and encourage institutions to include a 

discussion of how they are meeting their 

mission. Ongoing oversight and examination efforts continue to address diversity 

and inclusion, as well as compliance with 

YBS regulations and YBS data integrity.

As required by the Farm Credit Act, FCA 

examines each institution at least once 

every 18 months. In between these statutory examinations, we also monitor and 

examine institutions on an ongoing basis. 

We customize our examination activities 

to each institution’s specific risks. To monitor and address FCS risk as effectively and 

efficiently as possible, we assign highest 

priority to institutions, or the parts of an 

institution’s operations, that present the 

greatest risk.

We require institutions to develop and 

maintain programs, policies, procedures, 

and controls to identify and manage risk. 

For example, our regulations require 

FCS institutions to have effective loan 

underwriting and loan administration 

processes. We also have regulations requiring FCS institutions to maintain strong 

asset-liability management capabilities.

National oversight program 

In addition to monitoring risks that are 

unique to a single institution, we also 

monitor risks that affect the System as a 

whole. Each year we develop a national 

oversight plan that takes certain systemic 

risks into account. In fiscal year 2022, we 

are focusing on two risk areas:

Cybersecurity in an increasing threat 

environment 

Cyber risks and threats continue to evolve 

and grow as the financial sector becomes 

more digitized and cybercriminals become 

more aggressive. Because so many people 

have been using technology to telework 

during the pandemic, cyber risks have 
36 | Farm Credit Administration

increased for both individuals and organizations. Cyberattacks targeting agriculture-related companies and the financial 

sector, including System institutions, have 

also increased. Examples of these attacks 

include efforts to exploit software vulnerabilities, ransomware events, and misdirected electronic payments. 

In view of these risks, our FY 2022 

examinations focus on the adequacy of 

vulnerability management programs, 

cybersecurity incident response plans, and 

controls over ACH/wire transfer programs. 

We also continue to assess the adequacy of 

audit programs in evaluating these areas 

of cyber risk. Finally, we are evaluating the 

numerous pending transitions from legacy 

financial systems to more dynamic, cloudbased financial systems.

Loan underwriting in a period of significant 

volatility

Many external variables are contributing to a volatile operating environment. 

Adverse weather conditions, the potential 

for reduced government support, extreme 

volatility in commodity markets, and significant input cost increases have affected 

and may continue to affect producers, as 

well as consumers. These conditions may 

have a long-term effect on certain commodities, industries, and operations, and 

they have magnified the importance of 

strong risk management practices. 

Discipline in loan underwriting and 

credit analysis is critical in this lending 

environment. It’s imperative to use sustainable assumptions and well-supported 

income projections, to identify risk in a 

timely manner, and to ensure that portfolio management practices are effective. 

Our FY 2022 examination program will 

emphasize these areas, particularly in 

portfolios experiencing strong growth 

and escalating real estate values. We also 

focus on ensuring effective internal credit 

reviews, robust stress testing, and wellsupported allowances for loan losses.

In addition to these topics, we continue 

to focus on several other important areas: 

programs for YBS farmers and ranchers, 

phaseout of the London Interbank Offered 

Rate (LIBOR), model risk management, 

and affiliation risk (when otherwise unrelated loans share a common link that 

creates interdependence).

Three tiers of supervision

In examining and overseeing System institutions, we use a three-tiered program: 

normal supervision, special supervision, 

and enforcement actions. Institutions 

under normal supervision are performing 

in a safe and sound manner and are complying with laws and regulations. These 

institutions can correct weaknesses in the 

normal course of business.

For those institutions displaying more 

serious or persistent weaknesses, we shift 

from normal to special supervision, and 

our examination oversight increases accordingly. Under special supervision, we 

give an institution clear and firm guidance 

to address weaknesses, and we give a timeframe for correcting the problems.

If informal supervisory approaches 

have not been or are not likely to be successful, we use our formal enforcement 

authorities to ensure that FCS institutions 

are safe and sound and that they comply 

with laws and regulations. We may take an 

enforcement action for several reasons:

• A situation threatens an institution’s 

financial stability.

• An institution has a safety or soundness problem or has violated a law or 

regulation.

• An institution’s board is unable or unwilling to correct problems we have 

identified. 
Our enforcement authorities include the 

following powers:

• To enter into formal agreements

• To issue cease and desist orders

• To levy civil money penalties

• To suspend or remove officers, directors, and other persons

If we take an enforcement action, the 

FCS institution must operate under the 

conditions of the enforcement document 

and report back to us on its progress in 

addressing the issues identified. The document may require the institution to take 

corrective actions, such as reducing risk 

exposures, increasing capital, enhancing 

earnings, and strengthening risk management. Our examiners oversee the institution’s performance to ensure compliance 

with the enforcement action.

As of Jan. 1, 2022, no FCS institutions 

were under enforcement action.

Borrower rights

We also examine institutions to make sure 

they are complying with the borrower 

rights provisions of the Farm Credit Act. 

These provisions provide certain System 

borrowers and loan applicants with the 

following rights:

• To know the current effective rates 

of interest on their loans by the dates 

the loans close

• To be informed that they are required 

to purchase at-risk stock in their FCS 

institutions

• To receive copies of all the documents 

they have signed by the time their 

loans close

• To be informed promptly as to whether their loan applications have been 

accepted, reduced, or denied

• To be informed of their right to request restructuring for their loans if 

they cannot meet current payments 

and their loans become distressed

• To obtain credit committee reviews of 

denials or reductions of loan requests 

and denials of restructuring requests

• To have first refusal when their FCS 

institutions decide to sell agricultural 

properties their institutions have 

acquired from them

• To receive cooperation from their FCS 

institutions if they seek mediation

We also receive and review complaints 

from borrowers and loan applicants who 

believe their rights have been denied. If 

we find violations of law or regulations, 

we have several options to bring about 

corrective action. The number of borrower 

complaints has been fairly consistent from 

2020 to 2021, with around 30 complaints 

for each year. In June 2021, we added an 

online complaint form to our website to 

provide an additional means by which 

borrowers and loan applicants may submit 

complaints regarding System institutions.

Regulation

As the regulator of the Farm Credit System, 

we issue regulations, policy statements, 

and other guidance to ensure that the 

System, including its banks, associations, 

Farmer Mac, and other related entities, 

complies with the law, operates in a safe 

and sound manner, and efficiently carries 

out its statutory mission. Our regulatory 

philosophy is to provide an environment 

that enables the System to safely and 

soundly offer high-quality, reasonably 

priced credit and related services to farmers and ranchers, agricultural cooperatives, rural residents, and other entities on 

which farming depends.

The son and nephew 

of FCA examiner Cindi 

Burke help feed the 

goats on the central 

Nebraska farm where 

Cindi grew up.
38 | Farm Credit Administration

We strive to develop balanced, well-reasoned regulations whose benefits outweigh 

their costs. With our regulations, we seek 

to meet two general objectives. The first is 

to ensure that the System continues to be 

a dependable source of credit and related 

services for agriculture and rural America 

while also ensuring that System institutions 

comply with the law and with the principles of safety and soundness. The second is 

to promote participation by memberborrowers in the management, control, 

and ownership of their System institutions.

Regulatory activity in 2021

When the president declared a national 

emergency on March 13, 2020, FCA implemented a regulatory pause, which delayed the publication of three rulemaking 

actions in the Federal Register. This delay 

postponed the dates of some planned 

rulemaking activities listed in the agency’s 

Spring 2020 Regulatory Projects Plan. 

However, by the end of 2021, we had published all three of the delayed rulemaking 

actions in the Federal Register. 

During 2020 and early 2021, FCA issued 

guidance to FCS institutions on managing 

some of the challenges created by the 

COVID-19 pandemic. Our guidance covered working with borrowers, meeting 

capital and liquidity requirements, complying with financial reporting requirements, and handling other managerial 

and operational issues. Our guidance also 

addressed the impact on FCS institutions 

of regulations issued by other federal 

agencies. We provided guidance on the 

Small Business Administration’s Paycheck 

Protection Program and the Consumer 

Financial Protection Bureau’s forbearance 

relief on federally backed mortgage loans.

The following paragraphs describe 

some of FCA’s regulatory efforts in 2021, 

along with several projects that will remain active in 2022. More information on 

these topics is available on our website. 

From the Laws & regulations tab at www.

fca.gov, you can read our board policy 

statements, bookletters, informational 

memorandums, proposed rules, and 

any final rules whose effective dates are 

pending.

Standards of conduct — The FCA board 

approved a final rule in August 2021 on 

standards of conduct. The rule requires 

System institutions to establish a standards 

of conduct program and adopt a code of 

ethics.

Tier 1/tier 2 capital framework, clarifying corrections and revisions — The FCA 

board approved a final rule in September 

2021 that amended the tier 1/tier 2 capital 

framework to clarify agency expectations on numerous provisions, to correct 

technical errors, and to codify previous 

guidance.

Repeal of certain FCA receiver and conservator regulations — The FCA board issued 

a direct final rule in March 2021 to repeal 

certain regulations in part 627, subparts B 

and C, because the regulations were superseded by the 2018 Farm Bill.

Change in the submission process for 

Farmer Mac reports — The FCA board 

issued a direct final rule in May 2021 that 

eliminates the requirement of the Federal 

Agricultural Mortgage Corporation (Farmer Mac) to submit to FCA’s Office of Secondary Market Oversight paper copies of 

certain reports and filings that it provides 

in electronic form.

Collateral evaluation — The FCA board 

approved a proposed rule in April 2021 

that changed FCA policy on collateral 

appraisals and evaluations.

Bank liquidity reserve — The FCA board 

approved an advance notice of proposed 

rulemaking in June 2021 to solicit public 

comment on liquidation management 
2021 FCA Annual Report | 39

for farm credit banks during crises. Comments were solicited on how to address 

viability issues and any adverse impact on 

the banks.

Risk weighting of high-volatility commercial real estate — The FCA board approved 

a proposed rule in July 2021 that would 

increase risk-weight requirements for 

high-volatility commercial real estate exposures on certain loans.

Questions and answers regarding private 

flood insurance — In March 2021, the FCA 

board, along with four other agencies, 

issued a notice and request for comment 

that reorganized, revised, and expanded 

the interagency questions and answers 

regarding flood insurance.

Criminal referrals — The FCA board issued 

a bookletter in January 2021 that provides 

additional guidance to System institutions 

on how to deter, detect, and report known 

or suspected criminal violations of federal 

laws or regulations.

Sound governance of wholesale funding 

and related processes — The FCA board 

issued a bookletter in November 2021 that 

explains FCA’s expectations for sound due 

diligence and adherence to best business 

practices in the governance and management of wholesale funding and related 

processes.

National oversight and examination program for 2021 — We issued an informational memorandum in October 2020 that 

summarized the national oversight plan 

for 2021. The plan detailed strategies for 

addressing critical risks and other areas of 

focus.

Loan syndications and assignment markets 

study — We continued to study loan syndications and assignment markets to determine whether our regulations should be 

modified to reflect significant changes in 

the markets.

Corporate activity in 2021

In 2021 and early 2022, we analyzed 

and approved the following corporate 

applications.

On May 5, 2021, we issued a revised 

charter for a headquarters relocation to a 

service corporation affiliated with CoBank. 

On Jan. 1, 2022, a CoBank-affiliated 

agricultural credit association (ACA) and 

its production credit association (PCA) 

and federal land credit association (FLCA) 

subsidiaries merged their operations with 

another ACA and its PCA and FLCA subsidiaries in the CoBank district.

On Jan. 1, 2022, an AgriBank-affiliated 

ACA and its PCA and FLCA subsidiaries 

merged their operations with another ACA 

and its PCA and FLCA subsidiaries in the 

AgriBank district.

The total number of associations as of 

Jan. 1, 2022 , was 64 (63 ACAs and 1 FLCA). 

We publish information about corporate 

applications on our website at www.fca.

gov.

Funding activity in 2021

As the System’s regulator, we have several 

responsibilities pertaining to System funding activities. The Farm Credit Act requires 

the System to obtain our approval before 

distributing or selling debt. 

Because we make it a high priority to 

respond efficiently to the System’s requests 

for debt issuance approvals, we have a 

long-standing program, which we monitor 

on an ongoing basis, that allows the System to issue discount notes at any time up 

to an outstanding balance of $100 billion. 

In addition, we approve most 

longer-term debt issuances through a 

monthly “shelf” approval program. For 

2021, we approved $214.9 billion in longer-term debt issuances through this 

program. For more information about the 

System’s funding and liquidity, see pages 

24 through 26.
FCA regulates Farmer 

Mac through the Office 

of Secondary Market 

Oversight (OSMO), 

which was established 

by the Food, Agriculture, 

Conservation, and Trade 

Act Amendments of 1991.

Associate FCA examiner Susan Graves helps out 

regularly on the Iowa farm where she grew up. 

Here, she is getting ready for planting season by 

buying seed.
2021 FCA Annual Report | 41

Farmer Mac

Created in 1988, the Federal 

Agricultural Mortgage Corporation 

(Farmer Mac) provides a secondary market for agricultural real estate loans, government-guaranteed portions of certain 

loans, rural housing mortgage loans, and 

eligible rural utility cooperative loans. It 

offers greater liquidity and lending capacity to agricultural and rural lenders, including insurance companies, credit unions, 

commercial banks, other FCS institutions, 

and investors.

Farmer Mac is owned by its investors —

it is not a member-owned cooperative. 

Investors in voting stock may include 

commercial banks, insurance companies, 

other financial organizations, and other 

FCS institutions. Any investor may own 

nonvoting stock.

Farmer Mac is a federally chartered 

instrumentality and an institution of the 

FCS. However, it has no liability for the 

debt of any other System institution, and 

the other System institutions have no 

liability for Farmer Mac debt.

Farmer Mac conducts activities through 

two major lines of business:

• Agricultural Finance, which includes 

mortgage loans secured by first liens 

on agricultural real estate, including 

part-time farms and rural housing, as 

well as agricultural and rural development loans guaranteed by USDA

• Rural Infrastructure Finance, which 

includes loans by lenders organized 

as cooperatives to finance electrification and telecommunications systems 

and renewable energy providers or 

projects in rural areas

Farmer Mac purchases eligible loans 

directly from lenders, provides advances 

against eligible loans by purchasing obligations secured by those loans or assets 

that qualify as eligible agricultural real 

estate collateral, securitizes assets and 

guarantees the resulting securities, and 

issues long-term standby purchase commitments (standbys) for eligible loans. 

Securities guaranteed by Farmer Mac may 

be held either by the originator of the underlying assets or by Farmer Mac, or they 

may be sold to third-party investors.

Examining and regulating Farmer Mac

FCA regulates Farmer Mac through the 

Office of Secondary Market Oversight 

(OSMO), which was established by the 

Food, Agriculture, Conservation, and 

Trade Act Amendments of 1991. This office 

provides for the examination and general 

supervision of Farmer Mac’s safe and 

sound performance of its powers, functions, and duties.

The statute requires OSMO to be a separate office within our agency and to report 

directly to the FCA board. The law also 

stipulates that OSMO’s activities must, to 

the extent practicable, be carried out by 

individuals who are not responsible for 

supervising the banks and associations of 

the FCS.

Through OSMO, we examine Farmer 

Mac at least annually for capital adequacy, 

asset quality, management performance, 

earnings, liquidity, and interest rate sensitivity. We oversee and evaluate Farmer 

Mac’s safety and soundness and its mission achievement. We also supervise and 
42 | Farm Credit Administration

issue regulations governing Farmer Mac’s 

operations.

In 2021, OSMO issued the following 

guidance documents to Farmer Mac:

• Examination focus areas for 2021 (Informational memorandum, January 

2021)

• The increase in ransomware attacks 

and how to protect critical data and 

systems (Informational memorandum, September 2021)

• Managing the LIBOR transition (Informational memorandum, December 2021)

Financial condition of Farmer Mac

OSMO reviews Farmer Mac’s compliance 

with statutory and regulatory minimum 

capital requirements and supervises its 

operations and condition throughout the 

year. Table 6 summarizes Farmer Mac’s 

condensed balance sheets at the end of 

each calendar year from 2016 to 2021.

Capital

As of Dec. 31, 

2021, Farmer Mac’s 

net worth (that 

is, equity capital 

determined using 

generally accepted 

accounting principles [GAAP]) was 

$1,204.4 million, 

compared with 

$992.5 million a year 

earlier. Its net worth 

was 4.8% of its onbalance-sheet assets 

as of Dec. 31, 2021, 

compared with 

4.1% a year earlier. 

Net worth, in terms 

of dollars, went up primarily because of 

an issuance of preferred stock and an increase in retained earnings.

When Farmer Mac’s off-balance-sheet 

program assets (essentially its guarantee 

obligations) are added to its total on-balance-sheet assets, net worth was 4.2% as 

of Dec. 31, 2021, compared with 3.6% in 

2020. Farmer Mac continued to be in compliance with all statutory and regulatory 

minimum capital requirements.

At year-end 2021, Farmer Mac’s core capital (the sum of the par value of outstanding common stock, the par value of outstanding preferred stock, paid-in capital, 

and retained earnings) remained above the 

statutory minimum requirement. It totaled 

$1,200.6 million, exceeding the statutory 

minimum capital requirement of $713.8 

million by $486.8 million or 68.2%.

Its regulatory capital (core capital plus 

allowance for credit losses) exceeded the 

required amount as determined by the 

Risk-Based Capital Stress Test. Farmer 

Mac’s regulatory capital totaled $1,217.0 

million as of Dec. 31, 2021, exceeding the 

regulatory risk-based capital requirement 

of $218.7 million by $998.3 million.

Risk exposure on USDA guaranteed 

portions is very low because they are 

backed by USDA. Table 7 offers a historical 

perspective on capital and capital requirements for 2016 through 2021.

Program activity

Farmer Mac’s total program activity increased to $23.6 billion by year-end 2021, 

up from $21.9 billion a year earlier. (See 

figure 11.) Farmer Mac experienced steady 

growth in its Agricultural Finance loan 

purchases, as well as in the purchase or 

guarantee of AgVantage securities. These 

bonds are general obligations of the issuing financial institution that are purchased 

or guaranteed by Farmer Mac. Each 

AgVantage security is secured by eligible 

While a neighbor bales 

straw, FCA examiner 

Peter Desens and his 

son stack the bales on 

a wagon. Peter and his 

family have a small 

farm in Minnesota.
2021 FCA Annual Report | 43

Table 6

Farmer Mac condensed balance sheets, 2016 – 2021

As of Dec. 31

Dollars in millions

Item 2016 2017 2018 2019 2020 2021 Growth Rate 

2020 – 2021

Total assets $15,606.0 $17,792.3 $18,694.3 $21,709.4 $24,355.5 $25,145.5 3.2%

Total liabilities $14,962.4 $17,084.1 $17,941.8 $20,910.1 $23,363.0 $23,941.1 2.5%

Net worth or equity 

capital

$643.6 $708.1 $752.6 $799.3 $992.5 $1,204.4 21.4%

Sources: Farmer Mac’s Annual Reports on Securities and Exchange Commission Form 10-K.

Table 7

Farmer Mac capital positions, 2016 – 2021

As of Dec. 31

Dollars in millions

Item 2016 2017 2018 2019 2020 2021

GAAP equity $643.6 $708.1 $752.6 $799.3 $992.5 $1,204.4

Core capital $609.7 $657.1 $727.6 $815.4 $1,006.4 $1,200.6

Regulatory capital $617.1 $665.9 $736.8 $828.1 $1,024.0 $1,217.0

Statutory requirement $466.5 $520.3 $545.0 $618.8 $680.9 $713.8

Regulatory requirement $104.8 $235.4 $119.0 $122.1 $197.4 $218.7

Surplus core capital over 

statutory requirement*

$143.2 $136.8 $182.6 $196.7 $325.5 $486.8

Capital margin excess over the 

minimum

30.7% 26.3% 33.5% 31.8% 47.8% 68.2%

Sources: Farmer Mac’s Annual Reports on Securities and Exchange Commission 

Form 10-K.

* Farmer Mac is required to hold capital at or above the statutory minimum 

capital requirement or the amount required by FCA regulations as determined 

by the Risk-Based Capital Stress Test, whichever is higher.
44 | Farm Credit Administration

loans under one of Farmer Mac’s programs 

in an amount at least equal to the outstanding principal amount of the security.

Off-balance-sheet program activity 

consists of standbys, certain AgVantage securities, and agricultural mortgage-backed 

securities (AMBS) sold to investors. At the 

end of December 2021, 16.1% of program 

activity consisted of off-balance-sheet 

obligations, as compared with 14.9% a 

year earlier.

Farmer Mac’s Long-Term Standby Purchase Commitment product is similar to a 

guarantee of eligible pools of program 

loans. Under the standbys, a financial institution pays a fee in return for Farmer 

Mac’s commitment to stand ready (that is, 

“stand by”) to purchase loans at face value 

even under adverse conditions. As shown 

in figure 12, standbys represented 11.4% 

of Farmer Mac’s total program activity in 

2021. 

Asset quality

Figure 13 shows Farmer Mac’s allowance 

for credit losses, its levels of substandard 

Farm & Ranch assets, and its 90-day delinquencies relative to outstanding program 

volume, excluding AgVantage loan volume.

As of Dec. 31, 2021, Farmer Mac’s allow

ance for credit losses totaled $16.4 million, 

compared with $17.6 million the year before. Of its Agricultural Finance portfolio, 

$246.7 million was substandard, representing 2.7% of the principal balance of Agricultural Finance loans purchased, guaranteed, or committed to be purchased. This 

compares with $291.5 million on Dec. 31, 

2020. Assets are considered to be substandard when they have a well-defined weakness or weaknesses that, if not corrected, 

are likely to lead to some losses.

As of Dec. 31, 2021, Farmer Mac’s 90-day 

delinquencies increased in volume to $47.3 

million, or 0.48% of Agricultural Finance 

Figure 11

Farmer Mac program activity and nonprogram investment 

trends

As of Dec. 31

Source: Farmer Mac’s Annual Reports on Securities and Exchange Commission 

Form 10-K.

Figure 12

Farmer Mac total program activity

As of Dec. 31

AMBS sold — 2.5%

Rural utility — 10.4% 

AMBS held — 10.6%

Standbys — 11.4%

Loans held — 29.7%

AgVantage — 35.3%

Source: Farmer Mac’s Annual Reports on Securities and Exchange Commission 

Form 10-K.

AMBS = agricultural mortgage-backed securities
2021 FCA Annual Report | 45

Figure 13

Asset quality, allowance, and delinquency trends

As of December 31, 2021

*Referred to as Farm & Ranch before 2021

Source: Farmer Mac’s Annual Reports on Securities and Exchange Commission Form 

10-K.

loans, from $46.2 million, or 0.54%, as of 

Dec. 31, 2020.

Farmer Mac had $0.64 million of real 

estate owned at the end of 2021; in 2020, 

it had no real estate owned. Farmer Mac 

reported no delinquencies in its pools of 

rural utility cooperative loans.

Earnings

Farmer Mac reported net income available 

to common stockholders of $107.6 million 

(in accordance with GAAP) for the year 

ended Dec. 31, 2021, up from $89.2 million 

reported at year-end 2020. Core earnings 

for 2021 were $113.6 million, compared 

with $100.6 million in 2020. Net interest 

income, which excludes guarantee fee 

income, was reported at $221.6 million 

in 2021, up from $182.8 million in 2020. 

Guarantee fee income was $12.7 million in 

2021, compared with $12.5 million in 2020. 

Table 8 shows a six-year trend for the basic 

components of income.

Table 8

Farmer Mac condensed statements of operations, 2016 – 2021

As of Dec. 31

Dollars in millions

Item 2016 2017 2018 2019 2020 2021 Growth Rate 

2020 – 2021

Total revenues $160.8 $175.1 $186.1 $194.1 $206.7 $240.2 16%

Total expenses $96.6 $103.8 $91.2 $100.4 $117.5 $132.6 13%

Net income available to 

common stockholders

$64.2 $71.3 $94.9 $93.7 $89.2 $107.6 21%

Core earnings $53.8 $65.6 $84.0 $93.7 $100.6 $113.6 13%

Sources: Farmer Mac’s Annual Reports on Securities and Exchange Commission Form 10-K.
46 | Farm Credit Administration arm Credit Administration

Figure 14

FCA organizational chart as of August 2022

For an accessible version of this chart, go to 

www.fca.gov/about/fca-organizational-chart.

FCA Board

Glen R. Smith, 

Chairman

Jeffery S. Hall, 

Member

—Office of the Board 

Chairman and Chief 

Executive Officer 

Glen R. Smith 

—Office of Inspector 

General 

Wendy R. Laguarda

—Office of the Chief Operating Officer

S. Robert Coleman

—Office of Congressional and Public 

Affairs 

Michael A. Stokke

—Office of Equal Employment 

Opportunity and Inclusion 

Thais Burlew

—Office of Secondary Market 

Oversight* 

Laurie A. Rea

—Designated Agency Ethics Official 

Jane Virga

—Secretary to the Board 

Ashley Waldron

—Office of Agency 

Services 

Vonda Bell

—Office of the Chief 

Financial Officer

Sandi Walters

—Office of Data Analytics 

and Economics 

Jeremy D’Antoni

—Office of Examination

Mike Duffy

—Office of General 

Counsel 

Clark Ogilvie†

—Office of Information 

Technology

Jerald Golley

—Office of Regulatory 

Policy

Kevin Kramp

* Reports to the board for policy and to 

the CEO for administration.

† Maintains a confidential advisory 

relationship with each of the board 

members.
2021 FCA Annual Report | 47

FCA’s organization and leadership

Organization of FCA

FCA’s headquarters is in McLean, Virginia. 

We also have field offices in Bloomington, 

Minnesota; Dallas, Texas; Denver, Colorado; and Sacramento, California. As of 

July 1, 2021, we had 337 employees.

FCA’s leadership

Currently, FCA has only two board members: Chairman Glen R. Smith and Board 

Member Jeffery S. Hall. The board has one 

vacancy because former Chairman Dallas 

Tonsager passed away in May 2019.

Glen R. Smith, FCA Board Chairman 

and CEO 

Glen R. Smith was designated chairman 

and CEO of the Farm Credit Administration 

by President Donald 

Trump on July 17, 

2019. He has served 

as a member of the 

FCA board since 

December 2017. Mr. 

Smith is serving a 

term that expired on 

May 21, 2022. He will 

continue to serve until his successor has been named.

He also serves as a member of the board 

of directors of the Farm Credit System Insurance Corporation, an independent U.S. 

government-controlled corporation that 

insures the timely payment of principal 

and interest on obligations issued jointly 

by Farm Credit System banks.

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, 

FCA Chairman Glen 

Smith with his family 

on his Atlantic, 

Iowa, farm. In the 

background is a lineup 

of vintage tractors that 

have been restored for 

use on the farm. 
48 | Farm Credit Administration

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 directly involved in production 

agriculture. Their son Peter has assumed 

managerial responsibilities for both the 

family farm and business.

Jeffery S. Hall, FCA Board Member

Jeffery S. Hall 

was appointed to 

the FCA board by 

President Barack 

Obama on March 

17, 2015. Mr. Hall 

is serving a term 

that expired on 

Oct. 13, 2018. He 

will continue to 

serve until his successor has been named.

Mr. Hall also serves as chairman of 

the board of directors of the Farm Credit 

System Insurance Corporation, an independent U.S. government-controlled corporation that insures the timely payment 

of principal and interest on obligations 

issued jointly by Farm Credit System banks.

Mr. Hall was president of The Capstone 

Group, an association management and 

consulting firm that he cofounded in 2009. 

He was the state executive director for the 

U.S. Department of Agriculture’s Farm 

Service Agency in Kentucky from 2001 to 

2009. In that role, he had responsibility 

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 until 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 over 200 years. He is currently 

a partner in the farm with his mother 

and sister. Mr. Hall received a Bachelor of 

Science from Purdue University.

In the photo to the left, Jeff Hall’s mother, Marilyn 

Hall, receives the Hoosier Homestead Farm Award 

from Indiana Department of Agriculture Director 

Bruce Kettler (right) and Deputy Director Jordan 

Seger. The award is presented to Indiana farms that 

have been owned by the same family for more than 

200 years.
2021 FCA Annual Report | 49

Appendix

Glossary

Agricultural credit association—An ACA 

results from the merger of a federal land 

bank association (FLBA) (or a federal land 

credit association (FLCA)) with a production credit association (PCA) in which the 

FLBA (or FLCA) and the PCA are subsidiaries of the ACA. The ACA has the combined 

authority of its subsidiary institutions. An 

ACA borrows funds from a farm credit 

bank or an agricultural credit bank to provide short-, intermediate-, and long-term 

credit to farmers, ranchers, and producers 

and harvesters of aquatic products. It also 

makes loans to these borrowers for certain 

processing and marketing activities, to 

rural residents for housing, and to certain 

farm-related businesses.

Agricultural credit bank—An ACB results 

from the merger of a farm credit bank and 

a bank for cooperatives and has the combined authorities of those two institutions. 

An ACB is also authorized to finance U.S. 

agricultural exports and provide international banking services for farmer-owned 

cooperatives. CoBank is the only ACB in 

the FCS.

Bank for cooperatives—A BC provided 

lending and other financial services to 

farmer-owned cooperatives, rural utilities 

(electric and telephone), and rural sewer 

and water systems. It was also authorized 

to finance U.S. agricultural exports and 

provide international banking services 

for farmer-owned cooperatives. The last 

remaining BC in the FCS, the St. Paul Bank 

for Cooperatives, merged with CoBank on 

July 1, 1999.

Farm Credit Act—The Farm Credit Act 

of 1971, as amended, (12 U.S.C. §§ 2001 – 

2279cc) is the statute under which the FCS 

operates.

Farm credit bank—FCBs provide services 

and funds to local associations that, in 

turn, lend those funds to farmers, ranchers, producers and harvesters of aquatic 

products, rural residents for housing, and 

some agriculture-related businesses. On 

July 6, 1988, the federal land bank and the 

federal intermediate credit bank in 11 of 

the 12 then-existing Farm Credit System 

districts merged to become FCBs. The 

mergers were required by the Agricultural 

Credit Act of 1987.

Farm Credit Leasing Services Corporation—

The Leasing Corporation is a service 

corporation owned by CoBank, ACB. It 

provides equipment leasing and related 

services to eligible borrowers, including 

agricultural producers, cooperatives, and 

rural utilities.

Farm Credit System Insurance Corporation—FCSIC was established by the 

Agricultural Credit Act of 1987 as an independent U.S. government-controlled 

corporation. Its purpose is to ensure the 

timely payment of principal and interest 

on insured notes, bonds, and other obligations issued on behalf of FCS banks and 

to act as conservator or receiver of FCS 

institutions. The FCA board serves ex officio as the board of directors for FCSIC. The 

chairman of the FCSIC board of directors 

must be an FCA board member other than 

the current chairman of the FCA board.
50 | Farm Credit Administration

Federal Agricultural Mortgage Corporation—Farmer Mac was created with the 

enactment of the Agricultural Credit Act 

of 1987 to provide a secondary market for 

agricultural real estate and rural housing 

mortgage loans.

Federal Farm Credit Banks Funding Corporation—The Funding Corporation, established by the Farm Credit Act and based in 

Jersey City, New Jersey, manages the sale 

of Systemwide debt securities to finance 

the loans made by FCS institutions. It uses 

a network of bond dealers to market its 

securities.

Federal intermediate credit bank—The Agricultural Credits Act of 1923 provided for 

the creation of 12 FICBs to discount farmers’ short- and intermediate-term notes 

made by commercial banks, livestock 

loan companies, and thrift institutions. 

The Farm Credit Act of 1933 authorized 

farmers to organize PCAs, which could discount notes with FICBs. As a result, PCAs 

became the primary entities for delivery 

of short- and intermediate-term credit 

to farmers and ranchers. The FICBs and 

the federal land banks merged to become 

FCBs or part of the ACB. Thus, no FICBs 

remain within the FCS.

Federal land bank—The Federal Farm 

Loan Act of 1916 provided for the establishment of 12 federal land banks to provide long-term mortgage credit to farmers 

and ranchers, and later to rural home buyers. All federal land banks and FICBs have 

merged to become FCBs or part of the 

ACB. Thus, no federal land banks remain.

Federal land bank association—These 

associations were lending agents for 

FCBs before they received their affiliated 

banks’ direct-lending authority to make 

long-term mortgage loans to farmers, 

ranchers, and rural residents for housing. 

As lending agents, the associations did not 

own loan assets but made loans only on 

behalf of the FCBs with which they were 

affiliated. As of Oct. 1, 2000, all active federal land bank associations had received 

direct-lending authority and did not serve 

as lending agents for FCBs.

Federal land credit association—An FLCA 

is the regulatory term for a federal land 

bank association that has received direct-lender authority from its affiliated 

FCB. An FLCA borrows funds from its FCB 

to make and service long-term loans to 

farmers, ranchers, and producers and harvesters of aquatic products. It also makes 

and services housing loans for rural residents. Today there is only one FLCA in the 

System that is not a subsidiary of an ACA.

Financial Institution Rating System—The 

FIRS is similar to the Uniform Financial 

Institutions Rating System used by other 

federal banking regulators. However, 

unlike the Uniform Financial Institutions 

Rating System, the FIRS was designed to 

reflect the nondepository nature of FCS 

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 those 

with lower ratings. Each institution in 

this category exhibits the best performance and risk management practices 

for its size, complexity, and risk profile. 
2021 FCA Annual Report | 51

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. Since 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, such institutions may be vulnerable to the onset of adverse business 

conditions and could easily deteriorate 

if concerted action is not effective in 

correcting the areas of weakness. Institutions that are in significant noncompliance with laws and regulations may 

also be accorded this rating. Risk management practices are less than satisfactory for the size, complexity, and risk 

profile 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 implemented.

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 

develop into a situation that will 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—A GSE 

is typically a federally chartered corporation 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 
52 | Farm Credit Administration

attributes) to allow it to overcome the barriers that prevented purely private markets 

from developing. The FCS is the oldest 

financial GSE.

Participation—A loan participation is 

usually a large loan in which two or more 

lenders share in providing loan funds 

to a borrower to manage credit risk or 

overcome a legal lending limit for a single 

credit. One of the participating lenders 

originates, services, and documents the 

loan. Generally, the borrower deals with 

the institution originating the loan and 

is not aware of the other participating 

institutions.

Production credit association—PCAs are 

FCS entities that deliver only short- and 

intermediate-term loans to farmers and 

ranchers. A PCA borrows money from its 

FCB to lend to farmers. PCAs also own 

their loan assets. Before Jan. 1, 2003, some 

PCAs were independent, stand-alone 

direct-lender associations. All PCAs are 

now subsidiaries of ACAs.

Service corporation—Sections 4.25 and 

4.28 of the Farm Credit Act authorize FCS 

banks and associations to organize service 

corporations for performing functions 

and services that banks and associations 

are authorized to perform under the Farm 

Credit Act, except that the corporations 

may not provide credit or insurance services to borrowers.

Syndication—A loan syndication (or “syndicated bank facility”) is a large loan in 

which a group of banks work together to 

provide funds for a borrower. Usually one 

bank takes the lead, acting as an agent for 

all syndicate members and serving as the 

focal point between them and the borrower. All syndicate members are known at 

the outset to the borrower and they each 

have a contractual interest in the loan.

Abbreviations 

ACA—agricultural credit association

ACB—agricultural credit bank

CAMELS—capital, assets, management, earnings, liquidity, 

and sensitivity

CEO—chief executive officer

Farm Credit Act—Farm Credit Act of 1971, as amended

Farmer Mac—Federal Agricultural Mortgage Corporation

FCA—Farm Credit Administration

FCB—farm credit bank

FCS—Farm Credit System

FCSIC—Farm Credit System Insurance Corporation

FIRS—Financial Institution Rating System

FLCA—federal land credit association

GAAP—generally accepted accounting principles

OFIs—other financing institutions

PCA—production credit association

USDA—U.S. Department of Agriculture

YBS—young, beginning, and small (farmers and ranchers)
2021 FCA Annual Report | 53

Additional information

The 2021 Annual Report of the Farm Credit Administration is available on FCA’s website at www.fca.gov. 

For questions about this publication, contact FCA:

Office of Congressional and Public Affairs

Farm Credit Administration

1501 Farm Credit Drive

McLean, VA 22102-5090

Telephone: 703-883-4056

Fax: 703-790-3260

Email: info-line@fca.gov

With support from the Farm Credit System banks, 

the Federal Farm Credit Banks Funding Corporation 

prepares the financial press releases, the System’s 

Annual and Quarterly Information Statements, and 

the System’s combined financial statements. These 

documents are available on the Funding Corporation’s website at www.farmcreditfunding.com. For 

copies of these documents, contact the Funding 

Corporation:

Federal Farm Credit Banks Funding Corporation

101 Hudson Street, Suite 3505

Jersey City, NJ 07302

Telephone: 201-200-8131

The Farm Credit System Insurance Corporation’s 

annual report is available on its website at www.fcsic.

gov. To receive copies of this report, contact FCSIC:

Farm Credit System Insurance Corporation

1501 Farm Credit Drive

McLean, VA 22102

Telephone: 703-883-4380

▲ Newly hired examiners receive extensive training to 

ensure they have the skills they need to carry out 

the agency’s mission.

▼ FCA senior policy analyst Dave Lewandrowski tries 

to keep this 1958 Ford tractor in working order. His 

family owns a farmette in upstate New York.
Copies available from

Office of Congressional and Public Affairs 

Farm Credit Administration

1501 Farm Credit Drive

McLean, VA 22102

703-883-4056

www.fca.gov

0922/75