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    "ocrText": "Jill Long Thompson, Board Chair and Chief Executive Officer\nKenneth A. Spearman, Board Member\nLeland A. Strom, Board Member\nCOMMISSION CREET FARM * * EEGL\nESTABLISHED\nMINUTES OF THE REGULAR MEETING\nOF THE\nFARM CREDIT ADMINISTRATION BOARD\nSeptember 11, 2014\nThese minutes reflect the business transacted at the September 11, 2014, Regular Meeting of the\nFarm Credit Administration Board (FCA Board) pursuant to the Government in the Sunshine Act (Act),\n5 U.S.C. $ 552b, and the regulations of the Farm Credit Administration (FCA) adopted thereunder.\nThe FCA Board meeting was held at the FCA office in McLean, Virginia, beginning at 9:00 a.m. and\nconcluding at 10:18 a.m. Members of the Board present were:\nJill Long Thompson, Board Chair and Chief Executive Officer\nKenneth A. Spearman, Member\nLeland A. Strom, Member\nThe above named constitute the full Board.\nBoard Chair Long Thompson read a statement reflecting on the Thirteenth Anniversary of the\nSeptember 11 Attacks. (The statement is attached as Exhibit A.)\nOthers present included Charles Rawls, General Counsel; Dale Aultman, Secretary to the Board; staff\nof the FCA and Farm Credit System Insurance Corporation (FCSIC); and three members of the general\npublic. (A list of staff attendees is attached as Exhibit B.)\nThe Secretary read a statement that announced the meeting would be conducted according to the\nrequirements of the Government in the Sunshine Act.\nBoard Chair Long Thompson reviewed the published Agenda. (A copy of the Public Announcement\npublishing the Agenda for the meeting is attached as Exhibit C.)\n1\nMr. Spearman moved to adopt the Agenda as published.\nMr. Strom seconded the motion.\nThere being no further discussion, Board Chair Long Thompson called the question.\nThe Secretary polled the Board Members and the motion carried unanimously.\nMr. Strom noted that the Agenda did include a portion of the meeting that should be closed to the\npublic as permitted by the Government in the Sunshine Act and therefore moved that the meeting\nbe closed at that point.\nMr. Spearman seconded the motion.\nThere being no further discussion, Board Chair Long Thompson called the question.\nThe Secretary polled the Board Members and the motion carried unanimously.\nOPEN SESSION\nApproval of Minutes\nMinutes for August 14, 2014 Regular Board Meeting\n(BM-11-SEP-14-01)\nMr. Spearman moved to approve the minutes for August 14, 2014 Regular Board Meeting.\nMr. Strom seconded the motion.\nThere being no further discussion, Board Chair Long Thompson called the question.\nThe Secretary polled the Board Members and the motion carried unanimously. (BM-11-SEP-14-01)\n(A copy of the official \"Board Action Item\" is attached as Exhibit D.)\nNew Business\nFall 2014 Abstract of the Unified Agenda of Federal Regulatory and Deregulatory Actions\nand\nFall 2014 Regulatory Projects Plan\n(BM-11-SEP-14-02)\nJeremy Edelstein of the Office of Regulatory Policy and Nancy Tunis of the Office of General Counsel\npresented the Fall 2014 Abstract of the Unified Agenda of Federal Regulatory and Deregulatory\nActions and Fall 2014 Regulatory Projects Plan.\nBoard Chair Long Thompson opened the discussion for questions by the Board.\n2\nBoard Chair Long Thompson asked if there was any further discussion and asked staff to provide\ntheir recommendation. Staff provided their recommendation.\nBoard Chair Long Thompson called for a motion on the staff's recommendation regarding the\nproposed merger.\nMr. Strom moved that the Board approve the Fall 2014 Abstract of the Unified Agenda of Federal\nRegulatory and Deregulatory Actions and Fall 2014 Regulatory Projects Plan.\nMr. Spearman seconded the motion.\nBoard Chair Long Thompson asked if there was any further discussion.\nThere being no further discussion, the Board Chair called the question.\nThe Secretary polled the Members and the motion carried unanimously. (BM-11-SEP-14-02)\n(A copy of the \"Board Action Item\" is attached as Exhibit E.)\nReports\nQuarterly Report on Economic Conditions and FCS Conditions\nSteve Gabriel of the Office of Regulatory Policy and Hal Johnson of the Office of Examination\npresented the Quarterly Report on Economic Conditions and Farm Credit System Conditions.\nBoard Chair Long Thompson asked staff to provide additional information regarding soybean prices\nand yields over the past two years. Staff agreed to provide the information.\nBoard Chair Long Thompson asked if there were any questions or further discussion from the Board.\nThere were no further questions or discussion.\n(A copy of the PowerPoint presentation is attached as Exhibit F.)\nCLOSED SESSION\nBoard Chair Long Thompson announced that the next topic on the Agenda was a closed session item\npursuant to previous Board action.\nThe Board Chair instructed all members of the public to exit.\nBoard Chair Long Thompson convened the closed session of the meeting at 9:52 a.m. and instructed\nthe Secretary to activate the electronic recording device so that the proceedings of the closed\nsession were properly recorded as required by the Government in the Sunshine Act.\n3\nThe Board Chair then instructed the General Counsel to furnish the Secretary with a certification,\npursuant to 5 U.S.C. § 552b(f), that the portions of the meeting held in closed session may be\nproperly closed to the public.\n(A copy of the Certification is attached hereto as Exhibit G.)\nMembers of the Board present were:\nJill Long Thompson, Board Chair and Chief Executive Officer\nKenneth A. Spearman, Member\nLeland A. Strom, Member\nThe above named constitute the full Board.\nOthers present included Dale Aultman, Secretary to the Board; and Charles Rawls, General Counsel.\n(A list of staff attendees is attached as Exhibit B).\nReports\nOffice of Examination Quarterly Report\nRobert Coleman and Roger Paulsen of the Office of Examination presented the OE Quarterly Report.\nBoard Chair Long Thompson asked if there were any questions or further discussion from the Board.\nThere were no further questions or discussion.\nThe closed session ended at 10:17 a.m.\nADJOURNMENT\nThere being no further business to come before the Board, Board Chair Long Thompson indicated she\nwould entertain a motion to adjourn the meeting.\nMr. Strom moved that the meeting be adjourned.\nMr. Spearman seconded the motion.\nBoard Chair Long Thompson called the question.\nThe Secretary polled the Board Members and the motion carried unanimously.\nThe meeting adjourned at 10:18 a.m.\n4\nNOTATIONAL VOTE ACTIONS\nThere were four notational vote actions approved by the FCA Board from August 15, 2014, through\nSeptember 10, 2014, as follows:\nItem Number\nAction Date\nVoting Results\nSubject\nNV 14-17\n9/02/2014\nApproved\nFCA Revised FY 2015 and Proposed FY 2016 Budget\nNV 14-16\n8/26/2014\nApproved\nMargin and Capital Requirements for Covered Swap\nEntities - Joint Proposed Rulemaking\nNV 14-14\n8/21/2014\nApproved\nProposed Merger of AgTexas FCS, ACA, with and into\nGreat Plains AgCredit, ACA\nNV 14-15\n8/20/2014\nApproved\nUpdated FCA Policy Statement #62 on Equal\nEmployment Opportunity and Diversity\nThe undersigned hereby certify that the foregoing minutes are the official minutes of the Regular\nMeeting of the Farm Credit Administration Board held on September 11, 2014.\n/s/\n/s/\nJill Long Thompson\nDale L. Aultman\nBoard Chair and Chief Executive Officer\nSecretary to the Board\nApproved: October 9, 2014\n5\nExhibit A\nReflections on the Thirteenth Anniversary of the September 11 Attacks\nStatement by Jill Long Thompson, Board Chair\nFarm Credit Administration Board Meeting\nSeptember 11, 2014\nThirteen years ago today our nation changed forever. The attacks on September 11 took 2,977 lives.\nWhile these brutal attacks appalled and frightened, they also strengthened our resolve to stand up to\nthose who threaten us. And they strengthened our appreciation for the kind of country we live in\nand the democratic and capitalist ideals upon which our nation is built.\nWe at the Farm Credit Administration have the privilege of regulating a government-sponsored\nenterprise that reflects these ideals and adds value to our capitalist economy. As cooperatives, the\nbanks and lending associations of the Farm Credit System are democratic organizations, owned and\ncontrolled by their borrowers. Just as our democratic nation champions the ideal of equal\nopportunity for all, the System's banks and associations are open to all who are creditworthy and\nmeet the eligibility requirements to borrow from the System.\nAs we go forward in time, further and further from that tragic day, I hope we will never forget the\nlives lost and the lessons learned. I hope we will never lose our appreciation for the great fortune we\nenjoy as Americans. And I hope that we, as citizens of this great democracy, will never cease to work\ntoward the ideals for which our country stands.\n6\nExhibit B\nPage 1 of 2\nSTAFF PRESENT AT THE\nFCA REGULAR BOARD MEETING\nSeptember 11, 2014\nJILL LONG THOMPSON, Board Chair and Chief Executive Officer\nKENNETH A. SPEARMAN, Board Member\nLELAND A. STROM, Board Member\nOPEN\nCLOSED\nOFFICE\nSESSION\nSESSION\nOffice of the Board\nAultman, Dale\nX\nX\nSmulkstys, Inga\nX\nX\nCorey, Kathryn\nX\nBuccolo, Deb\nX\nJohansen, Mark\nX\nX\nCalhoun, Gaye\nX\nMiddleton, Russell\nX\nX\nOCOO\nHoffman, William\nX\nX\nOCPA\nStokke, Mike\nX\nX\nMeaux, Willy\nX\nX\nQuinn, Christine\nX\nX\nOSMO\nRea, Laurie\nX\nX\nHudson, Bruce\nX\nX\nBeckers, Christel\nX\nX\nOGC\nRawls, Charles\nX\nX\nStrickland, Joy\nX\nX\nTunis, Nancy\nX\nX\nDonner, Mary Alice\nX\nX\n7\nExhibit B\nPage 2 of 2\nOPEN\nCLOSED\nOFFICE\nSESSION\nSESSION\nOE\nColeman, Robert\nX\nX\nPaulsen, Roger\nX\nX\nJohnson, Hal\nX\nX\nOIG\nDean, Elizabeth\nX\nX\nORP\nVan Meter, Gary\nX\nX\nMardock, Barry\nX\nX\nGabriel, Steve\nX\nX\nEdelstein, Jeremy\nX\nX\nOMS\nSmith, Stephen\nX\nX\nFowlkes, Jerome\nX\nX\nFCSIC\nRubin, Howard\nX\nX\nPfitzinger, Rick\nX\nX\nEEO & Inclusion\nBurlew, Thais\nX\nGENERAL PUBLIC\n3\n8\nExhibit c\nFarm Credit Administration\nFarm Credit Administration\n1501 Farm Credit Drive\nMcLean, Virginia 22102-5090\nPUBLIC ANNOUNCEMENT OF\nMEETING SUBJECT TO THE GOVERNMENT IN THE SUNSHINE ACT\nFarm Credit Administration Board\nRegular Meeting\nSeptember 11, 2014\nSummary: Notice is hereby given, pursuant to the Government in the Sunshine Act (5 U.S.C. Sec. 552b(e) (1)), of the\nforthcoming regular meeting of the Farm Credit Administration Board.\nDate and Time: The regular meeting of the Board will be held September 11, 2014. The meeting is scheduled to be held\nat the office of the Farm Credit Administration in McLean, Virginia, from 9:00 a.m. until such time as the Board may\nconclude its business.\nAddress: Farm Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102-5090. Submit attendance\nrequests via e-mail to [email protected]. See SUPPLEMENTARY INFORMATION for further information about\nattendance requests.\nFor Further Information Contact: Dale L. Aultman, Secretary to the Farm Credit Administration Board (703) 883-4009.\nTTY is (703) 883-4056.\nSupplementary Information: Parts of this meeting of the Board will be open to the public (limited space available), and\nparts will be closed. Please send an e-mail to [email protected] at least 24 hours before the meeting. In your e-\nmail include: name, postal address, entity you are representing (if applicable), and telephone number. You will receive\nan e-mail confirmation from us. Please be prepared to show a photo identification when you arrive. If you need\nassistance for accessibility reasons, or if you have any questions, contact Dale L. Aultman, Secretary to the Farm Credit\nAdministration Board, at (703) 883-4009. The matters to be considered at the meeting are:\nOPEN SESSION\nApproval of Minutes\n1\nAugust 14, 2014\nNew Business\n2\nFall 2014 Abstract of the Unified Agenda of Federal Regulatory and Deregulatory Actions and Fall 2014\nRegulatory Projects Plan\nReports\n3\nQuarterly Report on Economic Conditions and FCS Conditions\nCLOSED SESSION\n4\nOffice of Examination Quarterly Report¹\nAugust 29, 2014\n/s/\nDate\nDale L. Aultman\nSecretary to the Board\n1 Session Closed-Exempt pursuant to 5 U.S.C. Section 552b(c)(8) and (9).\n9\nExhibit D\nFarm Credit Administration\n1501 Farm Credit Drive\nMcLean, Virginia 22102-5090\n(703) 883-4000\nBOARD ACTION ITEM\nFCA\nFARM CREDIT ADMINISTRATION\nFCA BOARD ACTION ON\nMinutes for August 14, 2014 Regular Board Meeting\nBM-11-SEP-14-01\nEffective Date:\nSeptember 11, 2014\nEffect on Previous Action:\nNone\nTHE FCA BOARD HEREBY:\nApproves the minutes for August 14, 2014, Regular Board Meeting as submitted.\nDATED THIS 11th DAY OF SEPTEMBER 2014\nBY ORDER OF THE BOARD\n/s/\nDale L. Aultman\nSecretary to the Board\n10\nExhibit E\nFarm Credit Administration\n1501 Farm Credit Drive\nMcLean, Virginia 22102-5090\n(703) 883-4000\nBOARD ACTION ITEM\nFCA\nFARM CREDIT ADMINISTRATION\nFCA BOARD ACTION ON\nFall 2014 Abstract of the Unified Agenda of Federal Regulatory and Deregulatory Actions\nand\nFall 2014 Regulatory Projects Plan\nBM-11-SEP-14-02\nEffective Date:\nSeptember 11, 2014\nTHE FCA BOARD HEREBY:\n1. Approves the Fall 2014 Abstract of the Unified Agenda of Federal Regulatory and\nDeregulatory Actions and authorizes the staff to prepare and submit the necessary\ndocuments for publication on the Internet at www.reginfo.gov.;\n2. Approves the Fall 2014 Regulatory Projects Plan and authorizes publication on FCA's\nWeb site; and\n3. Authorizes staff to make any technical or grammatical changes that may be necessary\nprior to publication.\nDATED THIS 11th DAY OF SEPTEMBER 2014\nBY ORDER OF THE BOARD\n/s/\nDale L. Aultman\nSecretary to the Board\n11\nFCA Board Meeting\nSeptember 2014\nQuarterly Report on\nFCS Condition\nSeptember 11, 2014\nStephen Gabriel\nHal Johnson\nExhibit F\n12\nGREDE\nTopics for Open Session\nEconomic Conditions Affecting the FCS\nFCS Condition and Performance\n13\n2\nEconomic Conditions Affecting\nthe Farm Credit System\nStephen Gabriel\nChief Economist\nOffice of Regulatory Policy\n14\nEconomy is gaining momentum;\nBLISHED\nhigher inflation and interest rates\nConsensus Forecasts (percent)*\n2013\n2014\n2015\nGDP growth\n2.2\n2.1\n3.1\nCPI\n1.5\n1.9\n2.1\nUnemployment rate\n7.4\n6.2\n5.7\n10 Yr T-Bond (Dec '13; Nov '14; Aug '15)\n3.0\n2.9\n3.5\nSource: Consensus Economics, Inc.\n*Survey date - August 11, 2014\n15\n4\nFarm sector developments and\nconcerns\nCorn and soybean prices plunge\nCrop margins are compressing\nFarmland markets are cooling\nProtein, dairy and ethanol posting profits\nCalifornia drought persists\nRussian food import ban - impact not large\n16\n5\nIDVINIST\nCorn yields expected to be above\ntrend this year\nBushels/Acre\n180\n167.4\n170\nCorn Yield\n160\n150\nSoybeans Yield\n140\n130\n120\n110\n100\n90\n80\n70\n60\n45.4\n50\n40\n30\n20\n10\n0\n1980\n1982\n1984\n1986\n1988\n1990\n1992\n1994\n1996\n1998\n2000\n2002\n2004\n2006\n2008\n2010\n2012\n2014\n6\nSource: USDA\nRecord corn crop pushes price\nto five year low\n70%\n8.00\n65%\n6.89\n60%\n7.00\n55%\n6.00\n50%\n45%\n5.00\n40%\n4.45\n35%\n4.00\n30%\n3.90\n25%\n3.00\n20%\n2.00\n15%\n10%\n1.00\n5%\n0%\n0.00\n1975/76\n19711/19\n1111111\n26/16/1961\n////////////\n///////////\n111111\n////////\numm\nEnding U.S. Corn Stocks/Use Ratio (left axis)\nAverage Farm Corn Price - dollars/bu (right axis)\n7\nSource: USDA\nHuge soybean harvest to boost\nsupplies and depress price\n30%\n16.00\n14.40\n14.00\n25%\n13.00\n12.00\n20%\n10.00\n10.35\n15%\n8.00\n6.00\n10%\n4.00\n5%\n2.00\n0%\n0.00\n1980/81\n1983/84\n1986/87\n1989/90\n1992/93\n1995/96\n1998/99\n2001/02\n2004/05\n2007/08\n2010/11\n2013/14\nEnding U.S. Soybeans Stocks/Use Ratio (left axis)\n19\nAverage Farm Soybeans Price - dollars/bu (right axis)\n8\nSource: USDA\nLower wheat production offset by\nreduced demand lifts supplies\n100%\n9.00\n90%\n7.77\n8.00\n80%\n7.00\n6.87\n70%\n6.30\n6.00\n60%\n5.00\n50%\n4.00\n40%\n3.00\n30%\n20%\n2.00\n10%\n1.00\n0%\n0.00\nscesso\n/////////////////////////\n/////////////////////////\n///////////\n/////////\n<<<<<<<<<<\nIIIIIII\n/////////// IIIIIII 2013/14\nEnding U.S. Wheat Stocks/Use Ratio (left axis)\nSource: USDA\nAverage Farm Wheat Price - dollars/bu (right axis)\n9\nRisk management is key to how\nmuch red ink flows on corn farms\nAs of 8/12/14\nIowa Corn Profit Margins Under Different Price Assumptions and\n0.20\nSelected Government Support Mechanisms¹\n0.07 0.07 0.07\n0.10\n0.00\n-0.10\n(0.02)\nDollars per Bushel\n-0.20\n(0.10)(0.10)\n(0.15)(0.15)\n-0.30\n(0.22)\n(0.29)\n(0.28)\n-0.40\n-0.50\n-0.60\n-0.70\n(0.63)\n2013\n2014 WASDE - $4.25 2014 WASDE - $3.90 2014 WASDE - $3.55\nMargin\nMargin w/ Gov. Payments\nMargin w/ Gov. Payments & Insurance\n1/ Margins reflect total production costs and actual state average yields, except for 2014, which reflects the 185 bushel per acre USDA lowa\naverage yield estimate. Government payments for 2014 assumes Agriculture Revenue Coverage County (ARC-CO) program is selected.\n2013 margins with government payments reflect direct payments made under expired legislation. Insurance coverage assumes Revenue\n10\n2014 Protection (RP) insurance at the 85% maximum coverage was selected.\nSoybean producers may face\nlosses next crop year\nAs of 8/12/14\nlowa Soybean Profit Margins Under Different Price Assumptions and\n1.50\nSelected Government Support Mechanisms¹\n1.03\n1.03\n0.89\n1.00\n0.50\n0.15 0.15 0.15\nDollars per Bushel\n0.00\n-0.50\n-1.00\n(0.68)\n(0.85) (0.83) (0.83)\n(0.98)\n-1.50\n-2.00\n(1.85)\n2013\n2014 WASDE - $11.35 2014 WASDE - $10.35 2014 WASDE - $9.35\nMargin\nMargin w/ Gov. Payments\nMargin w/ Gov. Payments & Insurance\n1/ Margins reflect total production costs and actual state average yields, except for 2014, which reflects the 50 bushel per acre USDA lowa\naverage yield estimate. Government payments for 2014 assumes Agriculture Revenue Coverage County (ARC-CO) program is selected. 2013\nmargins with government payments reflect direct payments made under expired legislation. Insurance coverage assumes Revenue Protection\n11\n(RP) insurance at the 85% maximum coverage.\nIDVINIST\nGrowth in land values decelerated\nin 2nd quarter in some regions\nFarmland values in the Kansas City District (percent change from previous quarter)\n4.5\n2011:Q2\n2012:Q2\n2013:Q2\n2014:Q2\n4.0\n3.9\n3.5\n3.0\n2.6\n2.5\n2.4\n2.4\n2.3\n2.1\n2.0\n1.8\n1.5\n1.0\n1.0\n1.0\n1.0\n0.4\n0.5\n0.1\n0.0\nNonirrigated Cropland\nIrrigated Cropland\nRanchland\n12\nSource: Federal Reserve Bank of Kansas City\nLISHED IDVINIST\nMidwest farmland values held\nsteady or improved in the 2nd qtr.\nGood farmland values in the Chicago District (percent change from the previous quarter)\n4.5\n4\n4.0\n3.5\n3.0\n2.5\n2\n2.0\n1.5\n1\n1\n1.0\n0.5\n0.0\n2011:Q2\n2012:Q2 24\n2013:Q2\n2014:Q2\n13\nSource: Federal Reserve Bank of Chicago\nIllinois land undervalued relative to\nfundamentals; yet, correction looms\n14,000\nFarmland Price\n12,000\nCapitalized Value\n10,000\n2014 Capitalized Value with 100 basis point rise in interest rates and a 5% drop in rent (-21%)\n2014 Capitalized Value with 150 basis point rise in interest rates and a 5% drop in rent (-31%)\n8,000\n2014 Capitalized Value with 200 basis point rise in interest rates and a 5% drop in rent (-38%)\n6,000\n4,000\n2,000\n0\n1970\n1972\n1974\n1976\n1978\n1980\n1982\n1984\n1986\n1988\n1990\n1992\n1994\n1996\n1998\n2000\n2002\n2004\n2006\n2008\n2010\n2012\nPLOZ\n25\n14\nSource: USDA, NASS; Gary Schnitkey, University of Illinois; Federal Reserve Board; FCA\nCREDE\nDrought improvement seen in the\nDEPARTMENT\nPlains states; worse in California\nMay 13, 2014\nAugust 26, 2014\n26\nUC Davis economic analysis of\nimpact of 2014 California drought\nGreatest absolute reduction in water\navailability for California Ag in history\nReliant on groundwater substitution for\ndepleted surface water\nDrought likely to continue through 2015\nIf continued into 2015 and 2016, additional\ncosts to Central Valley crop farming would be\n$1 billion per year 27\n16\nUpdated study highlights estimated\ncosts of 2014 California drought\nDrought impact\nLoss\nAverage\nPercent\nquantity\nyear\nloss\nCrop production\nWater Use\n6.6 maf\n26 maf\n25%\nNet shortage after increased groundwater pumping\n1.5 maf\n26 maf\n6%\nFallowed irrigated land\n428,000 acres\nCrop revenue loss\n$810 million\n$35 billion\n2.3%\nRevenue lost plus additional pumping cost ($454 mil)\n$1.26 billion\nn/a\nEconomic loss\n$1.75 billion\nn/a\nDairy and livestock production\nDirect revenue losses\n$203 million\n$12.4 billion\n1.6%\nTotal revenue losses\n$442 million\nn/a\nSource: Richard Howitt, et al, \"Economic Analysis 28 of the 2014 Drought for California\nAgriculture,\" UCDavis Center for Watershed Sciences, July 15, 2014.\n17\nRisks to watch\nFarmland values correction\nCash flow squeeze for grain/soybean\nfarmers\nCalifornia drought\nGeopolitical developments\n29\n18\nGREDE ESTABLE SHED 1933\nQuestions\nTHANK YOU\n30\nSWEDE\nDEPARTMENT\nABLISHED\nFarm Credit System\nCondition and Performance\nas of\nJune 30, 2014\nHal Johnson\nOffice of Examination\nINSURED\nTopics\nSystem Growth\nEarnings / Capital\nPortfolio Credit Quality\nFIRS\n32\n21\n⑉\nADVINIST\nSystem grows at a modest pace\n261\n264\n266\n253\n247\n248\n248\n236\n240\n230\n231\n230\n228\n230\n231\n213\n216\n221\n$ billion S\n205\n205\n201\n192\n192\n193\n194\n182\n185\n178\n179\n175\n174\n175\n163\n168\n171\n162\n3.9%\n4.1%\n3.5%\n3.5%\n2.4%\n2.3%\n1.6%\n2.1%\n1.3%\n1.7%\n0.5%\n0.7%\n0.2%\n0.2%\n-0.1%\n-1.4%\n-1.8%\n-2.1%\n1Q-10\n2Q-10\n3Q-10\n4Q-10\n1Q-11\n2Q-11\n3Q-11\n4Q-11\n1Q-12\n2Q-12\n3Q-12\n4Q-12\n1Q-13\n2Q-13\n3Q-13\n4Q-13\n1Q-14\n2Q-14\nTotal Assets\nGross Loans\n% change in Gross Loans (quarter-over-quarter)\n33\nSource: FCS Quarterly Information Statements\n22\nAgribusiness lending drives\nyear-to-date loan growth\nLoan Growth by Loan Type (% change year-to-date)\nLoan Growth by District (% change year-to-date)\nYTD Jun '12\nYTD Jun '13\nYTD Jun '14\nYTD Jun '12\nYTD Jun '13\nYTD Jun '14\nAgFirst\n0.4%\nDistrict\n0.5%\n12.4%\n10.9%\n(11%)\n2.0%\n7.6%\nAgriBank\n3.6%\nDistrict\n1.3%\n3.9%\n3.3%\n2.6%\n3.3%\n(40%)\n0.4%\n2.0%\n2.9%\n1.2%\n0.5%\nCoBank\n4.3%\nDistrict\n-0.4%\n-1.8%\n:\n-2.2%\n(41%)\n3.4%\n-3.7%\n-4.4%\nTexas\n4.9%\nDistrict\n1.8%\nTotal Gross\nRE\nProduction &\n(8%)\n2.9%\nLoans\nMortgage\nIntermediate Agribusiness\nOther\n[47%]\n[21%]\n[15%]\n[17%]\nSource: FCS Quarterly Information Statements\n23\nSystem continues to report\nstrong financial results\nSystem Earnings ($M)\nSystem Capital ($B)\nYTD Jun '12\nYTD Jun '14\nYTD Jun '13\nNI $2,119M\nNI: $2,341M\nRestricted\nNI: $2,246M\nProvisions: $67M\nProvisions: -$35M\nCapital\nProvisions: $41M\nTotal less\nRestricted\n44.7\n43.7\nNet Income\n1,253\n42.6\n41.7\n1,196\n1,142\n1,141\n1,145\n40.6\n1,104\n39.6\n1,052\n1,067\n1,039\n38.5\n38.6\n960\n37.5\n36.6\nProvision for Loan Losses\n121\n125\n32\n35\n22\n19\n(32)\n(40)\n(12)\n(23)\nMar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14\nMar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14\nRestricted capital represents capital associated with the Insurance Fund.\n35\nSource: FCS Quarterly Information Statements\n24\nNDYMNIST\nPortfolio credit quality is very good\nBLISHED\nHighlights — Portfolio Credit Quality\n% of Nonperforming Loans to Total Loans ($M)\nAs of June 2014,\n1.53%\n1.53%\nNonperforming loans equaled\n1.41%\n1.36%\n0.92% of System loans\n1.31%\n1.15%\noutstanding\n1.01%\n1.01%\n0.92%\n96% of System loans were\n2,784\n2,832\n2,608\n2,711\nclassified as Acceptable\n2,522\n2,238\n2,040\n2,068\nThe System's allowance for\n1,883\nloan losses equaled 63% of\nnonperforming loans\nTotal capital and the\nallowance for loan losses\nJun-12\nSep-12\nDec-12\nMar-13\nJun-13\nSep-13\nDec-13\nMar-14\nJun-14\nrepresented 22.4% of System\nloans at quarter-end\nNonaccrual Loans\nOther nonperforming Loans\n36\nSource: FCS Quarterly Information Statements\n25\nGREAT ADVINIST\nSystem FIRS ratings\nComposite FIRS Ratings - System Banks & Associations\nHighlights — FIRS Ratings\n1 Rated\n2 Rated\n3 Rated\n4 Rated\nWith the most recent update,\nRatings Trend\nQuarter-over-Quarter\ncomparison\nComposite FIRS ratings\n2\n2\ncontinued to improve\n1\n1\n15\n11\n10\n10\n8\n7\nOver 91% of System Banks\nand Associations have a\n36\n30\n29\nComposite FIRS rating of 1\n49\n46\n44\nor 2\n3 rated institutions account\nfor less than 1.5% of total\n39\n44\n46\n26\n30\n31\nSystem assets\nJun-10\nJun-11\nJun-12\nJun-13\nMar-14\nJun-14\n37\nSource: FCA's FIRS ratings database\n26\nSummary and final points\nRisk factors affecting agriculture:\nMargins for crop producers squeezed as crop prices decline, but\nprofitability is strong in the protein, dairy, and ethanol sectors,\nMidwest farmland values hold steady in the 2ⁿᵈ quarter, but the\nmarket in some regions is cooling off,\nDrought diminishes in much of the Plains, no relief for California.\nThe System is financially sound, well-capitalized, has\nstrong portfolio credit quality, and solid earnings.\nSystem institutions are well-positioned for the current risk\nenvironment.\n38\n27\nGREDE ESTABLE SHED 1933 ADVENTS\nQuestions\nTHANK YOU\n39\nExhibit G\nFarm Credit Administration\n1501 Farm Credit Drive\nMcLean, Virginia 22102-5090\nFCA\nFARM CREDIT ADMINISTRATION\nCERTIFICATE OF CLOSED MEETING\nThe General Counsel, in accordance with the Government in the Sunshine Act, 5 U.S.C. $ 552b(f)(1),\nhereby certifies that the Farm Credit Administration Board regular meeting of September 11, 2014,\nwas properly closed to the public on the basis of the exemption set forth below:\nSupervisory and Oversight Activities of FCS Institution(s) - 5 U.S.C. § 552b(c)(8) and (9).\n/s/\nDate: September 11, 2014\nCharles R. Rawls\nGeneral Counsel\n40"
}