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Jill Long Thompson, Board Chair and Chief Executive Officer
Kenneth A. Spearman, Board Member
Leland A. Strom, Board Member
COMMISSION CREET FARM * *
ESTABLISHED 1933
MINUTES OF THE REGULAR MEETING
OF THE
FARM CREDIT ADMINISTRATION BOARD
March 13, 2014
These minutes reflect the business transacted at the March 13, 2014, Regular Meeting of the Farm
Credit Administration Board (FCA Board) pursuant to the Government in the Sunshine Act (Act), 5
U.S.C. § 552b, and the regulations of the Farm Credit Administration (FCA) adopted thereunder.
The FCA Board meeting was held at the FCA office in McLean, Virginia, beginning at 9:00 a.m. and
concluding at 9:44 a.m. Members of the Board present were:
Jill Long Thompson, Board Chair and Chief Executive Officer
Kenneth A. Spearman, Member
Leland A. Strom, Member
The above named constitute the full Board.
Others present included Charles Rawls, General Counsel; Dale Aultman, Secretary to the Board; staff
of the FCA and Farm Credit System Insurance Corporation (FCSIC); and four members of the general
public. (A list of staff attendees is attached as Exhibit A.)
The Secretary read a statement that announced the meeting would be conducted according to the
requirements of the Government in the Sunshine Act.
Board Chair Long Thompson reviewed the published Agenda. (A copy of the Public Announcement
publishing the Agenda for the meeting is attached as Exhibit B.)
Mr. Spearman moved to adopt the Agenda as published.
Mr. Strom seconded the motion.
1
There being no further discussion, Board Chair Long Thompson called the question.
The Secretary polled the Board Members and the motion carried unanimously.
Mr. Strom noted that the Agenda did not include any items that should be discussed in closed
session, as permitted by the Government in the Sunshine Act, and therefore moved that the entire
meeting remain open to the public.
Mr. Spearman seconded the motion.
There being no further discussion, Board Chair Long Thompson called the question.
The Secretary polled the Board Members and the motion carried unanimously.
OPEN SESSION
Approval of Minutes
Minutes for February 18, 2014 Regular Board Meeting
(BM-13-MAR-14-01)
Mr. Spearman moved to approve the minutes for February 18, 2014 Regular Board Meeting, that
was rescheduled from February 13, 2014, per FCA Notational Vote Notational Vote 14-06, approved
February 12, 2014.
Mr. Strom seconded the motion.
There being no further discussion, Board Chair Long Thompson called the question.
The Secretary polled the Board Members and the motion carried unanimously. (BM-13-MAR-14-01)
(A copy of the official "Board Action Item" is attached as Exhibit C.)
New Business
Advisory Votes - Interim Final Rule
(BM-13-MAR-14-02)
Deborah Wilson of the Office of Regulatory Policy and Laura McFarland of the Office of General
Counsel presented the Advisory Votes - Interim Final Rule.
Board Chair Long Thompson asked that her written statement pertaining to the vote be attached as
an exhibit to the minutes. (A copy is attached at Exhibit D.)
Mr. Spearman concurred with the Board Chair's comments.
2
Mr. Strom asked that his written statement pertaining to the vote be attached as an exhibit to the
minutes. (A copy is attached at Exhibit E.)
Board Chair Long Thompson asked if there was any further discussion and asked staff to provide
their recommendation. Staff provided their recommendation.
Board Chair Long Thompson called for a motion on the staff's recommendation regarding the final
rule.
Mr. Strom moved that the Board approve the Advisory Votes - Interim Final Rule.
Mr. Spearman seconded the motion.
Board Chair Long Thompson asked if there was any further discussion.
There being no further discussion, the Board Chair called the question.
The Secretary polled the Members and the motion carried unanimously. (BM-13-MAR-14-02)
(A copy of the "Board Action Item" is attached as Exhibit F.)
Reports
Report on the Farm Credit System's Funding Conditions
Before the report began, Board Chair Long Thompson noted that as William Dunn was planning to
retire soon, this may be his last report. She thanked him for his contributions to Rural America all his
efforts at FCA.
William Dunn and David Lewandrowski of the Office of Office of Regulatory Policy presented the
Report on the Farm Credit System's Funding Conditions.
Board Chair Long Thompson asked if there were any questions or further discussion from the Board.
There were no further questions or discussion.
(A copy of the PowerPoint presentation is attached as Exhibit G.)
ADJOURNMENT
There being no further business to come before the Board, Board Chair Long Thompson indicated she
would entertain a motion to adjourn the meeting.
Mr. Spearman moved that the meeting be adjourned.
Mr. Strom seconded the motion.
3
Board Chair Long Thompson called the question.
The Secretary polled the Board Members and the motion carried unanimously.
The meeting adjourned at 9:44 a.m.
NOTATIONAL VOTE ACTIONS
There were no notational vote actions by the FCA Board from February 19, 2014, through March 12,
2014.
The undersigned hereby certify that the foregoing minutes are the official minutes of the Regular
Meeting of the Farm Credit Administration Board held on March 13, 2014.
/s/
/s/
Jill Long Thompson
Dale L. Aultman
Board Chair and Chief Executive Officer
Secretary to the Board
Approved: April 10, 2014
4
Exhibit A
Page 1 of 2
STAFF PRESENT AT THE
FCA REGULAR BOARD MEETING
March 13, 2014
JILL LONG THOMPSON, Board Chair and Chief Executive Officer
KENNETH A. SPEARMAN, Board Member
LELAND A. STROM, Board Member
OPEN
OFFICE
SESSION
Office of the Board
Aultman, Dale
X
Smulkstys, Inga
X
Corey, Kathryn
X
Buccolo, Deb
X
Johansen, Mark
X
Calhoun, Gaye
X
Middleton, Russell
X
OCOO
Hoffman, William
X
OCPA
Stokke, Mike
X
OSMO
Rea, Laurie
X
OGC
Rawls, Charles
X
Strickland, Joy
X
Donner, Mary Alice
X
McFarland, Laura
X
5
Exhibit A
Page 2 of 2
OPEN
OFFICE
SESSION
OE
Coleman, Robert
X
OIG
Dean, Elizabeth
X
ORP
Van Meter, Gary
X
Mardock, Barry
X
Dunn, William
X
Lewandrowski, David
X
Wilson, Deborah
X
OMS
Smith, Stephen
X
FCSIC
Rubin, Howard
X
Pfitzinger, Rick
X
EEO & Inclusion
Burlew, Thais
X
GENERAL PUBLIC
4
6
Exhibit B
Farm Credit Administration
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090
PUBLIC ANNOUNCEMENT OF
MEETING SUBJECT TO THE GOVERNMENT IN THE SUNSHINE ACT
Farm Credit Administration Board
Regular Meeting
March 13, 2014
Summary: Notice is hereby given, pursuant to the Government in the Sunshine Act (5 U.S.C. Sec. 552b(e) (1)), of the
forthcoming regular meeting of the Farm Credit Administration Board.
Date and Time: The regular meeting of the Board will be held March 13, 2014. The meeting is scheduled to be held at
the office of the Farm Credit Administration in McLean, Virginia, from 9:00 a.m. until such time as the Board may
conclude its business.
Address: Farm Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-5090. Submit attendance
requests via e-mail to [email protected]. See SUPPLEMENTARY INFORMATION for further information about
attendance requests.
For Further Information Contact: Dale L. Aultman, Secretary to the Farm Credit Administration Board (703) 883-4009.
TTY is (703) 883-4056.
Supplementary Information: This meeting of the Board will be open to the public (limited space available). Please send
an e-mail to [email protected] at least 24 hours before the meeting. In your e-mail include: name, postal address,
entity you are representing (if applicable), and telephone number. You will receive an e-mail confirmation from us.
Please be prepared to show a photo identification when you arrive. If you need assistance for accessibility reasons, or if
you have any questions, contact Dale L. Aultman, Secretary to the Farm Credit Administration Board, at (703) 883-4009.
The matters to be considered at the meeting are:
OPEN SESSION
Approval of Minutes
1
February 18, 2014
New Business
2
Advisory Votes - Interim Final Rule
Reports
3
Report on the Farm Credit System's Funding Conditions
March 6, 2014
/s/
Date
Dale L. Aultman
Secretary to the Board
7
Exhibit c
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090
(703) 883-4000
BOARD ACTION ITEM
FCA
FARM CREDIT ADMINISTRATION
FCA BOARD ACTION ON
Minutes for February 18, 2014 Regular Board Meeting
BM-13-MAR-14-01
Effective Date:
March 13, 2014
Effect on Previous Action:
None
THE FCA BOARD HEREBY:
Approves the minutes for February 18, 2014, Regular Board Meeting as submitted.
DATED THIS 13th DAY OF MARCH 2014
BY ORDER OF THE BOARD
Dale L. Aultman
Secretary to the Board
8
Exhibit D
Statement
Jill Long Thompson, Board Chair
Farm Credit Administration Board Meeting
March 13, 2014
I thank Debbie Wilson and Laura McFarland, as well as the Offices of Regulatory Policy and General
Counsel for their hard and expeditious work on this interim final rule. I also commend my colleague
Lee Strom for taking on this issue several years ago when it was learned the Board of one of the
institutions in the System had approved a compensation package whose total cost it did not fully
comprehend.
The compensation rule we adopted in 2012 has merit and I was proud to support it. But, I
completely respect the authorities of the United States Congress. And they have spoken. Title VI of
the 2014 Appropriations Act prohibits FCA from using funds to implement or enforce this
requirement. And the Farm Bill states very clearly that the oversight of compensation practices is the
responsibility of the boards of directors, exclusive of, but accountable to their shareholders. This
interim final rule will make our regulation compliant with current law.
I am also pleased our action today will preserve the enhanced transparency of compensation
disclosures, as well as the enhanced responsibilities of the compensation committee of the boards of
directors.
9
Exhibit E
Statement
Leland Strom, Board Member
Farm Credit Administration Board Meeting
March 13, 2014
The final regulation we approved in September 2012-Compensation, Retirement Programs, and
Related Benefits-encourages member-borrowers of Farm Credit System institutions to participate in
the management, control, and ownership of their institutions. We developed the rule after some
unusual compensation payments were made in the Farm Credit System.
We responded initially by creating two pieces of guidance-an Informational Memorandum on
Executive Compensation and Benefits Programs and a Bookletter regarding Compensation
Committees. Later we developed the compensation rule.
In the 2014 Farm Bill, Congress affirmed the benefits of disclosure and transparency to the member-
borrowers of Farm Credit System institutions. I fully support Congress' findings, and I agree that a
primary responsibility of the boards of directors of System institutions is to oversee compensation
practices.
In making compensation decisions, institution boards of directors should carefully consider all of the
issues, such as performance and retention, appropriate compensation, benefits packages, and
concerns of their cooperative membership. In addition, boards should fully quantify and understand
both the near-term and long-term expenses and financial consequences associated with the
executive compensation programs they approve. As Government-sponsored enterprises, institutions
should also pay particular attention to any potential reputation risks their compensation programs
might create.
My hope going forward is that each board of directors will remain vigilant in evaluating its
compensation program. An effective compensation program strikes a balance between the goal of
attracting and retaining talented senior leadership and the long-term costs of the compensation
provided. Failing to strike this balance can adversely affect an institution's ability to provide cost-
effective credit to its member-borrowers and its ability to fulfill its mission. Further, it is my hope
that FCA, through examinations and policy development, will continue to review and enforce our
regulations on compensation practices and disclosure.
As a network of farmer-owned cooperatives, the System holds a unique and distinguished position in
agricultural financing and plays an increasingly significant role in lending to agriculture and rural
America. It is essential that the System remain safe, sound, and financially strong so it can be there
for America's next generation of farmers, ranchers, cooperatives, and rural communities. To ensure
this outcome, System institutions must remain accountable to their respective shareholders,
maintain strong governance practices, and demonstrate financial prudence in their decisions,
including those on executive compensation.
10
Exhibit F
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090
(703) 883-4000
BOARD ACTION ITEM
FCA
FARM CREDIT ADMINISTRATION
FCA BOARD ACTION ON
Advisory Votes - Interim Final Rule
BM-13-MAR-14-02
Effective Date:
March 13, 2014
Effect on Previous Actions:
The FCA Board Notational Vote of November 22, 2013, is rendered moot by adopting the interim
final rule that removes FCA regulations related to non-binding, advisory votes.
THE FCA BOARD HEREBY:
Adopts the interim final rule that would amend FCA regulations by
removing requirements for non-binding, advisory votes; and
Authorizes staff to make any technical or grammatical changes to the
rule that may be necessary for publication in the Federal Register.
DATED THIS 13th DAY OF MARCH 2014
BY ORDER OF THE BOARD
Dale L. Aultman
Secretary to the Board
11
THOMATH
The Farm Credit System's
Funding Conditions
Exhibit G
12
GREDIA
Funding Conditions Topics
Global Market
Agency Debt Market
Yields & Spreads on FCS Debt
Funding Corporation Activity
FCS Liquidity
13
2
Global Market
Ukraine
E.U.
Federal Reserve Monetary Policy
U.S. Treasury
Bitcoin?
14
3
Credit Rating Agencies -
ISHED
Outlook for the United States
Standard & Poors - AA+
Outlook - Stable
Moody's - Aaa
Outlook - Stable
Fitch - AAA
Outlook - Negative 15
4
INSURER THOMA
Agency Debt Outstanding
Billions of Dollars
2009
2010
2011
2012
2013
F.H.L.B.
$ 931
$ 796
$ 692
$ 688
$767
Fannie Mae
786
794
742
622
534
Freddie Mac
805
728
674
552
511
FCS
176
188
184
197
208
Tenn.V.A.
23
23
25
25
26
Farmer Mac
6
8
10
12
12
Total
$2,727
$2,537
$2,330
$2,096
$2,058
16
Source: SIFMA
5
System High Level Financials
Assets - -
$260.8 billion (+ 5.7%)
Cash & Invts.- $ 51.9 billion (+10.6%)
Capital -
$ 42.6 billion (+10.3%)
Net Income - $ 4.6 billion (+12.7%)
17
6
LISHED IDVINIST
FCS Debt Yields Have Risen
FCS Debt Yield Curve for 3/7/2014
4.50
4.00
3.50
12/20/13
3.00
2.50
2.00
1.50
3/7/14
1.00
0.50
3/8/13
0.00
Aeas
15 Day
30 Day
AEG 09
6Month
1-year
2-year
A-Vear
5-year
7-year
10-year
30-year
18
7
ICHEDE ESTABL
Higher Spreads over Treasuries
FCS Basis Points Spread over Treasuries
85
75
65
55
45
35
25
15
5
-5
6Month
10-year
30-year
-3/8/2013 -3/7/2014
8
Funding Activity by FCS
($ millions)
Discount
Designat
Fixed Rate Bonds
Floating Rate Bonds
Retail
Other1
Total
Notes
ed Bonds
Bonds
Callable
Non-
LIBOR
Prime
Other
Callable
03/09/2014
$22,709
$11,075
$53,107
$58,543
$44,210
$7,445
$11,690
$460
$35
$209,274
02/28/2014
21,494
11,075
53,815
58,881
43,690
7,370
11,740
460
35
208,559
01/31/2014
18,970
11,375
55,571
58,123
43,820
7,570
12,190
440
36
208,095
12/31/2013
18,643
11,375
56,465
57,222
42,285
7,370
12,790
405
38
206,594
12/31/2012
14,557
15,325
52,020
50,113
41,955
7,505
14,771
225
46
196,516
12/31/2011
14,375
21,450
46,429
43,986
36,155
5,805
15,656
356
66
184,277
1 Includes Linked Deposits
20
9
PRATION** ESTA URINGE
Reduced Calls by FCS
Calls in 2013 - $24 billion
Calls in 2012 - $63 billion
Net Interest Spreads
2.64% versus 2.71% for 2013 and 2012,
respectively.
21
10
Debt Maturity
Weighted Average Maturity of FCS Debt has
been trending higher.
Dec./2013 - 2.96 years
Dec./2012 - 2.91 years
Dec./2011 - 2.80 years
22
11
Regulatory Min. Days of Liquidity
Effective 6/12/13:
Level 1 = First 15 days
Level 2 or better = Second 15 days
Level 3 or better = Next 60 days
Supplemental Liquidity Buffer (SLB)
23
12
Days of Liquidity
As of 12/31/13 System = 194 days:
Level 1 = 36 days, Level 2 = 55 days,
Level 3 = 83 days, SLB = 20 days
AgriBank, FCB - 161 days
CoBank, ACB . 181 days
AgFirst, FCB - 246 days
FCB of Texas - 268 days
24
13
Investments for Liquidity - - 2/28/14
Due in 1 year
Due after 1 year
Due after
Due after
(In $ millions)
or less
- 5 years
5 - 10 yrs.
10 years
Total
Commercial paper, CDs, bankers'
$3,879
$313
$4,192
acceptances, and other securities
US Treasury securities
$4,531
$8,127
$3,596
US agency securities
$2
$3,491
$249
$989
$4,731
Mortgage-backed securities
$110
$337
$24,142
$24,589
Asset-backed securities
$1
$685
$59
$780
$1,525
Total fair value
$7,478
$9,130
$645
$25,911
$43,164
25
14
ABLISHED 19
Summary
Strong Demand for FCS Debt
Yields Paid have Increased
Interest Spreads Wider
Bottom Line Still Benefitting
Substantial High Quality Liquidity
26
15