Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
24469424
label
Board Meeting Minutes, December 2014
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
24469424
sourceUrl
contentType
document
title
Board Meeting Minutes, December 2014
citationUrl
collections
Records of the Farm Credit Administration
Board Meeting Minutes
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
24469424
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
mediaId
80fb10ec42df8385
ocrText
Jill Long Thompson, Board Chair and Chief Executive Officer
Kenneth A. Spearman, Board Member
Leland A. Strom, Board Member
COMMUNICATION CREET FARM * * EEGL
ESTABLISHED
MINUTES OF THE REGULAR MEETING
OF THE
FARM CREDIT ADMINISTRATION BOARD
December 11, 2014
These minutes reflect the business transacted at the December 11, 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 10:32 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 three 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 include a portion of the meeting that should be closed to the
public as permitted by the Government in the Sunshine Act and therefore moved that the meeting
be closed at that point.
Mr. 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 November 13, 2014 Regular Board Meeting
(BM-11-DEC-14-01)
Mr. Strom moved to approve the minutes for November 13, 2014 Regular Board Meeting.
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. (BM-11-DEC-14-01)
(A copy of the official "Board Action Item" is attached as Exhibit C.)
New Business
Organization, Mergers, Consolidations and
Charter Amendments of Banks or Associations
Proposed Rule
(BM-11-DEC-14-02)
Shirley Hixson of the Office of Regulatory Policy and Laura McFarland of the Office of General
Counsel presented the Organization, Mergers, Consolidations and Charter Amendments of Banks or
Associations, Proposed Rule.
Board Chair Long Thompson opened the discussion for questions by the Board.
2
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
proposed rule.
Mr. Strom moved that the Board approve the Organization, Mergers, Consolidations and Charter
Amendments of Banks or Associations proposed 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-11-DEC-14-02)
(A copy of the "Board Action Item" is attached as Exhibit D.)
Reports
Quarterly Report on Economic Conditions and Farm Credit System Conditions
Steve Gabriel of the Office of Regulatory Policy and Hal Johnson of the Office of Examination
presented the Quarterly Report on Economic Conditions and Farm Credit System Conditions.
For the next quarterly report, Mr. Strom asked staff to provide information and data related to the
impact of declining oil prices on agriculture.
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 E.)
Semi-Annual Report on Office of Examinations Operations
Hal Johnson of the Office of Examination presented the Semi-Annual Report on Office of
Examinations Operations.
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 F.)
3
CLOSED SESSION
Board Chair Long Thompson announced that the next topic on the Agenda was a closed session item
pursuant to previous Board action.
The Board Chair thanked the members of the public for attending and asked them to exit.
Board Chair Long Thompson convened the closed session of the meeting at 10:05 a.m. and
instructed the Secretary to activate the electronic recording device so that the proceedings of the
closed session were properly recorded as required by the Government in the Sunshine Act.
The Board Chair then instructed the General Counsel to furnish the Secretary with a certification,
pursuant to 5 U.S.C. § 552b(f), that the portions of the meeting held in closed session may be
properly closed to the public.
(A copy of the Certification is attached hereto as Exhibit G.)
Members of the Board present were:
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 Dale Aultman, Secretary to the Board; and Charles Rawls, General Counsel.
(A list of staff attendees is attached as Exhibit A).
Reports
Office of Examination Quarterly Report
Robert Coleman and Roger Paulsen of the Office of Examination presented the OE Quarterly Report.
Board Chair Long Thompson asked if there were any questions or further discussion from the Board.
There were no further questions or discussion.
The closed session ended at 10:31 a.m.
4
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.
Board Chair Long Thompson called the question.
The Secretary polled the Board Members and the motion carried unanimously.
The meeting adjourned at 10:32 a.m.
NOTATIONAL VOTE ACTION
There was one notational vote action approved by the FCA Board from November 14, 2014, through
December 10, 2014, as follows:
Item Number
Action Date
Voting Results
Subject
NV 14-23
11/19/2014
Approved
Farm Credit System Building Association 2015 Budget,
Operating Plan, and Bank Assessments
The undersigned hereby certify that the foregoing minutes are the official minutes of the Regular
Meeting of the Farm Credit Administration Board held on December 11, 2014.
/s/
/s/
Jill Long Thompson
Dale L. Aultman
Board Chair and Chief Executive Officer
Secretary to the Board
Approved: January 8, 2015
5
Exhibit A
Page 1 of 2
STAFF PRESENT AT THE
FCA REGULAR BOARD MEETING
December 11, 2014
JILL LONG THOMPSON, Board Chair and Chief Executive Officer
KENNETH A. SPEARMAN, Board Member
LELAND A. STROM, Board Member
OPEN
CLOSED
OFFICE
SESSION
SESSION
Office of the Board
Aultman, Dale
X
X
Smulkstys, Inga
X
X
Corey, Kathryn
X
Buccolo, Deb
X
Johansen, Mark
X
X
Calhoun, Gaye
X
Middleton, Russell
X
X
OCOO
Hoffman, William
X
X
OCPA
Stokke, Mike
X
X
Meaux, Willy
X
X
OSMO
Rea, Laurie
X
X
OGC
Rawls, Charles
X
X
Strickland, Joy
X
X
McFarland, Laura
X
Donner, Mary Alice
X
X
6
Exhibit A
Page 2 of 2
OPEN
CLOSED
OFFICE
SESSION
SESSION
OE
Coleman, Robert
X
X
Paulsen, Roger
X
X
Johnson, Hal
X
X
OIG
Dean, Elizabeth
X
X
Cerne, Sonya
X
X
ORP
Van Meter, Gary
X
X
Gabriel, Steve
X
X
Hixson, Shirley
X
Wilson, Debbie
X
X
OMS
Smith, Stephen
X
X
Fowlkes, Jerome
X
X
FCSIC
Rubin, Howard
X
X
Pfitzinger, Rick
X
X
EEO & Inclusion
Burlew, Thais
X
GENERAL PUBLIC
3
7
Exhibit B
Farm Credit Administration
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090
PUBLIC ANNOUNCEMENT OF
MEETING SUBJECT TO THE GOVERNMENT IN THE SUNSHINE ACT
Farm Credit Administration Board
Regular Meeting
December 11, 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 December 11, 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: Parts of this meeting of the Board will be open to the public (limited space available), and
parts will be closed. 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
November 13, 2014
New Business
2
Organization, Mergers, Consolidations and Charter Amendments of Banks or Associations - Proposed Rule
Reports
3
Quarterly Report on Economic Conditions and FCS Conditions
4
Semi-Annual Report on Office of Examination Operations
CLOSED SESSION
5
Office of Examination Supervisory and Oversight Activities Report 1
December 1, 2014
/s/
Date
Dale L. Aultman
Secretary to the Board
1 Session Closed-Exempt pursuant to 5 U.S.C. Section 552b(c)(8) and (9).
8
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 November 13, 2014 Regular Board Meeting
BM-11-DEC-14-01
Effective Date:
December 11, 2014
Effect on Previous Action:
None
THE FCA BOARD HEREBY:
Approves the minutes for November 13, 2014, Regular Board Meeting as submitted.
DATED THIS 11th DAY OF DECEMBER 2014
BY ORDER OF THE BOARD
/s/
Dale L. Aultman
Secretary to the Board
9
Exhibit D
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
Organization, Mergers, Consolidations and
Charter Amendments of Banks or Associations
BM-11-DEC-14-02
Effective Date:
December 11, 2014
THE FCA BOARD HEREBY:
Approves the proposed rule that would modify FCA regulations in part 611
pertaining to the merger or consolidation of Farm Credit System banks and
associations as well as make other related changes; and
Authorizes staff to make any technical or grammatical changes that may be
necessary for publication in the Federal Register.
DATED THIS 11th DAY OF DECEMBER 2014
BY ORDER OF THE BOARD
/s/
Dale L. Aultman
Secretary to the Board
10
CHEDE
FCA Board Meeting
December 2014
Quarterly Report on
FCS Condition
December 11, 2014
Stephen Gabriel
Hal Johnson
EXHIBIT E of December 12,
2014 FCA Board Meeting
11
Minutes
Topics for Open Session
Economic Conditions Affecting the FCS
FCS Condition and Performance
12
2
Economic Conditions Affecting
the Farm Credit System
Stephen Gabriel
Chief Economist
Office of Regulatory Policy
13
Modest economic growth expected;
long-term rates to rise gradually
Consensus Forecasts (percent)
Red indicates forecast
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2013
2013
2014
2014
2014
2014
2015
2015
2015
2015
2016
2016
GDP growth*
4.5
3.5
-2.1
4.6
3.9
2.6
2.9
2.8
2.9
2.9
3.0
3.0
CPI*
2.2
1.1
1.9
3.0
1.1
0.8
1.5
1.9
2.0
2.1
2.1
2.1
Unemployment rate
7.3
7.0
6.7
6.2
6.1
5.9
5.7
5.6
5.6
5.5
5.4
5.4
10 Yr T-Bond
2.6
3.0
2.7
2.5
2.4
2.5
2.7
2.9
3.1
3.3
3.4
3.6
Source: Consensus Economics, Inc.
Survey date - November 10, 2014
* % change from prior quarter, seasonally adjusted annual rate
14
4
Current expansion longer than
ISHED
average; shorter than recent ones
Expansion Duration in Months
140
120
120
106
100
92
80
73
66
58
58
60
45
37
39
36
40
24
20
12
0
1945 1948 1953 1957 1960 1969 1973 1980 1981 1990 2001 2007 Present 2009)
Oct
Oct.
Nov 1949 May Jul 1954 Apr Aug 1958 Feb Apr 1961 Nov Dec 1970 Mar Nov 1975 15 Jul Jan 1980 Nov Jul 1982 Mar Jul 1991 Nov Mar 2001 June Dec 2009 Average (1949
5
Source: National Bureau of Economic Research
Despite recent strength, the outlook
is for somewhat lackluster growth
Quarterly GDP Growth (Compounded Annual Rate of Change)
10.0
8.0
6.0
4.6
3.9
4.0
2.0
0.0
-2.0
-2.1
-4.0
-6.0
-8.0
-10.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
16
6
Source: Bureau of Economic Analysis
ISHED IDVENTS
Labor markets continue to
improve slowly
20
—
18
Total unemployed, plus all marginally attached workers plus total
employed part time for economic reasons (%)
16
—
Civilian Unemployment Rate (%)
14
12
11.5
10
8
6
5.8
4
2
0
94
95
96
97
98
99
00
07
02
EO
04
05
90
0>
08
09
OL
LL
12
E%
DL
DL
17
Source: Bureau of Labor Statistics
DWEDE
Farm sector developments and
concerns
Record corn & bean yields and production
projected for 2014
Average corn & soybean prices to fall sharply
Crop margins are compressing
Farmland markets are cooling
Strong dollar hurting exports
California drought persists
8
IDVENTIST
Large corn and soybean crops
push prices lower
30%
16.00
70%
8.00
14.40
65%
6.89
14.00
60%
7.00
25%
55%
6.00
12.00
13.00
50%
20%
45%
5.00
10.00
10.00
40%
4.46
35%
4.00
15%
8.00
30%
3.50
25%
3.00
6.00
10%
20%
2.00
4.00
15%
5%
10%
1.00
2.00
5%
0%
0.00
0%
0.00
1981 1975/76 1978/79
1/884/8571 7188
////////
2018/19
1980/81
183
189
193
103
Ending U.S. Corn Stocks/Use Ratio (left axis)
Ending U.S. Soybeans Stocks/Use Ratio (left axis)
Average Farm Corn Price - dollars/bu (right axis)
Average Farm Soybeans Price - dollars/bu (right axis) 9
Source: USDA
Source: USDA
Cow-calf returns reaching
unprecedented levels
12-Nov-14
ESTIMATED AVERAGE COW/CALF RETURNS
(Over Cash Costs) & BEEF COW INVENTORY
480
440
Returns
400
43,000
360
$/Hd Over Direct Costs
320
40,000
280
240
200
37,000
160
120
80
34,000
40
Beef Cows (000 Hd)
0
31,000
-40
-80
Jan 1 Beef Cow Inventory (lagged 2 years)
-120
28,000
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004006
2008
20102012
2014
10
Source: Informa Economics
LOWELL
Broiler margins are expected to
be strong through next year
12-Nov-14
US Broiler Weighted Margins
30
25
85% cutout, 15% whole bird
20
15
Cents/Pound
10
5
0
-5
-10
-15
-20
Jan-04
Jul-04n-05
Jul-05n-06
Jul-06n-07
JUI-07
Jan-08
Jul-08n-09
Jul-09
Jan-10
Jul-10n-11
Jul-11
Jan-12
Jul-12n-13
Jul-13
Jan-14
Jul-14n-15
SL-inf
21
11
Source: Informa Economics
Multi-year stretch of hog
LISHED
producer profits is expected
12-Nov-14
Hog Producer Margin, Cash Based
140
120
100
80
60
$/Head
40
20
0
-20
-40
-60
Jan-04
May-04
to-das
so-uer
May-05
so-ders
Jan-06
May-06
90-ders
Lo-der
80-uer
80-ders
60-uer
May-09
60-des OL OL -Xew
May- Sep- Sep- Jan- Jan- 77 Sep-10 77 7 1 10
May- Sep- 12 12 Jan-12
≥1
EL EL -uer -Xew
DL DL DL EL -das -uer -Xew
GL GL GL -uer -das -Xew 12
Source: Informa Economics
Dairy margins to stay positive while
supplies add pressure this Spring
12-Nov-14
US Dairy Producer Net Margins
10
8
6
Milk Price minus Estimated Total Cost
4
2
0
-2
-4
-6
Jan-04
Aug-04
Mar-05
Oct-05
May-06
Dec-06
20-Inr
Feb-08
Sep-08
Apr-09
Nov-09
OL-unr
OL
Jan-11
"
Aug-11
"
Mar-12
Oct-12 May-13 Dec-13
15 Jul-14 Sep-15 Feb-15
GL
13
Source: Informa Economics
Midwest farmland values weaken
in the 3rd quarter
Percent change from previous quarter
Percent change in value of "good" farmland from the previous quarter
6
6
4.8
Kansas City Federal Reserve District
5
5
Chicago Federal Reserve District
5
3.8
4
3.3
3.3
4
3
2.3
2.4
3
2
1.5
1
2
1
0
1
-1
0
Nonirrigated Cropland
-2
Irrigated Cropland
-1
-1.9
Ranchland
-3
-2
-4
-2
-4.2
-3
-5
2012:Q3
2013:Q3
2014:Q3
2012:Q3
2013:Q3
2014:Q3
14
Source: Federal Reserve Bank of Kansas City
Source: Federal Reserve Bank of Chicago
Risks to watch
Farmland values correction
Cash flow squeeze for grain/soybean
farmers
California drought
World oil markets
Geopolitical developments
25
15
GREDE ESTABLE ISHED DISNEY THE
Questions
THANK YOU
26
Farm Credit System
Condition and Performance
as of
September 30, 2014
Hal Johnson
Office of Examination
ISHED
Topics
System Growth
Earnings / Capital
Portfolio Credit Quality
FIRS
28
18
System growth continues at a
modest pace
Total Assets
Gross Loans
% change in Gross Loans (quarter-over-quarter)
271
264
266
261
253
247
248
248
240
236
231
230
228
230
231
208
($ billions)
205
205
201
192
192
193
194
185
178
179
182
174
175
171
3.5%
3.5%
2.4%
2.3%
2.1%
1.6%
1.7%
1.5%
1.3%
0.5%
0.7%
0.2%
-2.1%
-1.8%
-0.1%
1Q-11
2Q-11
3Q-11
4Q-11
1Q-12
2Q-12
3Q-12
4Q-12
1Q-13
2Q-13
3Q-13
4Q-13
1Q-14
2Q-14
3Q-14
29
Source: FCS Quarterly Information Statements
19
Loan growth largely due to real estate
mortgage and agribusiness lending
Loan Growth by Loan Type (% change year-to-date)
Loan Growth by District (% change year-to-date)
YTD Sept '12
YTD Sept '13
YTD Sept '14
YTD Sept '12
YTD Sept '13
YTD Sept '14
AgFirst
1.3%
District
0.7%
(11%)
11.8%
3.6%
10.5%
8.6%
AgriBank
7.0%
6.2%
5.4%
District
3.8%
4.8%
4.3%
3.5%
3.2%
(40%)
2.9%
2.6%
2.4%
1.2%
0.4%
CoBank
5.9%
District
-1.3%
-1.6%
(40%)
3.4%
Texas
6.2%
-8.2%
District
2.8%
Total Gross
RE
Production &
(9%)
5.5%
Loans
Mortgage
Intermediate Agribusiness
Other
[46%]
[22%]
[15%]
[17%]
Source: FCS Quarterly Information Statements
20
System reports solid results for
the 3rd quarter
System Earnings ($M)
Net Interest Spread (1)
(for the 9 months ending September)
YTD Sep '12
YTD Sep '13
YTD Sep '14
NI $3,158M
NI: $3,499M
NI: $3,569M
Provisions: $188M
Provisions: $9M
Provisions: $7M
2.67
2.72
2.60
2.65
Net Income
1,253
1,196
1,228
2.50
1,142
1,104
1,141
1,145
2.36
1,052
1,067
1,039
960
2.04
1.99
1.76
1.73
Provision for Loan Losses /
(Loan Loss Reversal)
121
125
32
35
22
19
42
(32)
(40)
(12)
(23)
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
31
(1) annualized
Source: FCS Quarterly Information Statements
21
ICHEDE
DEPARTMENT
System is well-capitalized
System Capital ($B)
Restricted
Capital and Liquidity
Capital
Total less
as of September 2014
Restricted
45.8
44.7
43.7
System capital as a percentage of
42.6
41.7
40.6
total assets increased to 16.9%
39.6
38.5
38.6
37.5
Surplus as a percentage of total
capital equaled 82.0%
System liquidity equaled 174 days
of coverage. At a bank level, days
of available liquidity ranged from
159 days to 238 days.
Jun-
12
Sep-1
12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-
13
Mar-14
Jun-14
Sep-14
Restricted capital represents capital associated with the Insurance Fund.
32
Source: FCS Quarterly Information Statements
22
Credit measures continue to trend
favorably; portfolio risk is low
Portfolio Credit Quality
% of Nonperforming Loans-to-Total Loans
as of September 2014
1.53%
Nonperforming loans equaled
-
1.36%
1.41%
—
1.31%
—
0.85% of System loans outstanding
1
1.15%
I
Over 96% of System loans were
1.01%
1.01%
0.92%
0.85%
classified as Acceptable
2,832
2,711
2,608
2,522
The System's allowance for loan
2,238
2,040
2,068
losses equaled 67% of
1,883
1,764
nonperforming loans
Total capital and the allowance for
loan losses represented 22.6% of
System loans at quarter-end
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Nonaccrual Loans
Other nonperforming Loans
Source: FCS Quarterly Information Statements
23
NEW ADVINIST
System FIRS ratings
Composite FIRS Ratings - System Banks & Associations
1 Rated
2 Rated
3 Rated
4 Rated
FIRS Ratings
Ratings Trend
Quarter-over-Quarter
comparison
With the most recent FIRS update,
3
2
2
1
1
Composite ratings continue to
12
1
15
11
10
8
7
be very good
4
Over 93% of System Banks and
36
29
33
52
49
46
40
Associations have a Composite
FIRS rating of 1 or 2
3 and 4 rated institutions account
for less than 1% of total System
41
46
43
30
35
assets
28
26
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Jun-14 Sep-14
34
Source: FCA's FIRS ratings database
24
Summary and final points
Risk factors for agriculture:
Crop prices drop due to record production, compressing
margins for producers
Midwest farmland values weakened in the 3rd quarter; lower
crop prices will continue to put pressure on land prices
Drought persists in California
The System is financially sound, well-capitalized, with
solid earnings, and favorable portfolio credit quality
System institutions are well-positioned for the current
risk environment
35
25
GREDE ESTABLE ISHED STATE
Questions
THANK YOU
36
CHEDE ESTABLE
FCA Board Meeting
December 2014
Semi-Annual Report on
Office of Examination
Operations
December 11, 2014
Hal Johnson
Office of Examination
Exhibit F of FCA December 12, 2014 Board Meeting Minutes
37
Highlights of OE Operations
Operating Plan Objectives
OE Budget Performance
Staffing Update
Summary
38
2
2014 Operating Plan Objectives
Risk Supervision & Examination Activities
Onsite at 94% of associations, all banks, 7 other
System entities, National Cooperative Bank, and
Farmer Mac
Issued 67 Reports of Examination and 54 Interim
Activity Letters
3 institutions under Enforcement and 3 institutions
under Special Supervision
39
3
2014 Operating Plan Objectives
Risk Supervision & Examination Activities (cont.)
Issued Loan Underwriting Standards examination
guidance (System communication is under development)
Issued Standards of Conduct examination guidance and
System communications summarizing findings from
Standards of Conduct examination activity
Examination guidance on Board Governance including
the nominating committee process is under development
40
4
INSUED
2014 Operating Plan Objectives
Farm Credit System - Public Mission as GSE
Completed Business Planning Diversity and Inclusion
examination activities
Issued System communication and developed
Frequently Asked Questions on Diversity and Inclusion
in business planning
Issued Business Planning examination guidance which
incorporated expectations on Diversity and Inclusion in
the planning process
41
5
2014 Operating Plan Objectives
Human Capital
Implemented new assessment questionnaire and
online tests for Associate Examiner applicants
Completed OE human capital analysis and examiner
job survey analysis
Operational Efficiency & Effectiveness
Ongoing enhancements to Loan Database, EDGe, and
Examination Manual content. Continue to leverage
technology
42
6
ANDYLINIST
OE Budget Performance (Fiscal 2014)
CARST
Fiscal Year 2014
Travel
($ millions)
FY 2014 Travel Budget Used
90%
$30.5
$28.9
FY 2014 Travel Days Used
92%
Actual funds
used were 5%
below budget
FTEs
Budgeted Full Year FTE's
176.5
Actual Full Year FTE's
166.9
(Over)/Under Budget
9.6
Budget
Actual
Expenditures
43
7
Staffing remains a challenge
BLISHED
Total Staff
Planned
Actual
Variance
Beginning FY 2014
173
168
(5)
Attrition
(12)
(15)
(3)
Hirings
19
11
(8)
Ending FY 2014
180
164
(16)
Commissioned Examiners
Beginning FY 2014
100
97
(3)
Attrition
(6)
(8)
(2)
Hirings
2
0
(2)
Newly Commissioned
9
8
(1)
Ending FY 2014
105
97
(8)
44
8
Summary
On-site presence at institutions maintained
A small number of institutions remain under a
higher level of supervision
Achieved OE Operating Plan objectives
Actual spending was below budget
Recruiting challenges and attrition resulted in
staffing below planned 45 levels
9
Discussion
THANK YOU
46
Exhibit G
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090
(703) 883-4000
FCA
FARM CREDIT ADMINISTRATION
CERTIFICATE OF CLOSED MEETING
The General Counsel, in accordance with the Government in the Sunshine Act, 5 U.S.C. § 552b(f)(1),
hereby certifies that the Farm Credit Administration Board regular meeting of December 11, 2014,
was properly closed to the public on the basis of the exemption set forth below:
Supervisory and Oversight Activities of FCS Institution(s) - 5 U.S.C. § 552b(c)(8) and (9).
/s/
Date: December 11, 2014
Charles R. Rawls
General Counsel
47