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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 * * EEGL
ESTABLISHED
MINUTES OF THE REGULAR MEETING
OF THE
FARM CREDIT ADMINISTRATION BOARD
September 11, 2014
These minutes reflect the business transacted at the September 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 10:18 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.
Board Chair Long Thompson read a statement reflecting on the Thirteenth Anniversary of the
September 11 Attacks. (The statement is attached as Exhibit A.)
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 B.)
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 C.)
1
Mr. Spearman moved to adopt the Agenda as published.
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.
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 August 14, 2014 Regular Board Meeting
(BM-11-SEP-14-01)
Mr. Spearman moved to approve the minutes for August 14, 2014 Regular Board Meeting.
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-11-SEP-14-01)
(A copy of the official "Board Action Item" is attached as Exhibit D.)
New Business
Fall 2014 Abstract of the Unified Agenda of Federal Regulatory and Deregulatory Actions
and
Fall 2014 Regulatory Projects Plan
(BM-11-SEP-14-02)
Jeremy Edelstein of the Office of Regulatory Policy and Nancy Tunis of the Office of General Counsel
presented the Fall 2014 Abstract of the Unified Agenda of Federal Regulatory and Deregulatory
Actions and Fall 2014 Regulatory Projects Plan.
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 merger.
Mr. Strom moved that the Board approve the Fall 2014 Abstract of the Unified Agenda of Federal
Regulatory and Deregulatory Actions and Fall 2014 Regulatory Projects Plan.
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-SEP-14-02)
(A copy of the "Board Action Item" is attached as Exhibit E.)
Reports
Quarterly Report on Economic Conditions and FCS Conditions
Steve Gabriel of the Office of Regulatory Policy and Hal Johnson of the Office of Examination
presented the Quarterly Report on Economic Conditions and Farm Credit System Conditions.
Board Chair Long Thompson asked staff to provide additional information regarding soybean prices
and yields over the past two years. Staff agreed to provide the information.
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.)
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 instructed all members of the public to exit.
Board Chair Long Thompson convened the closed session of the meeting at 9:52 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.
3
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 B).
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 10:17 a.m.
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. Strom moved that the meeting be adjourned.
Mr. Spearman 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 10:18 a.m.
4
NOTATIONAL VOTE ACTIONS
There were four notational vote actions approved by the FCA Board from August 15, 2014, through
September 10, 2014, as follows:
Item Number
Action Date
Voting Results
Subject
NV 14-17
9/02/2014
Approved
FCA Revised FY 2015 and Proposed FY 2016 Budget
NV 14-16
8/26/2014
Approved
Margin and Capital Requirements for Covered Swap
Entities - Joint Proposed Rulemaking
NV 14-14
8/21/2014
Approved
Proposed Merger of AgTexas FCS, ACA, with and into
Great Plains AgCredit, ACA
NV 14-15
8/20/2014
Approved
Updated FCA Policy Statement #62 on Equal
Employment Opportunity and Diversity
The undersigned hereby certify that the foregoing minutes are the official minutes of the Regular
Meeting of the Farm Credit Administration Board held on September 11, 2014.
/s/
/s/
Jill Long Thompson
Dale L. Aultman
Board Chair and Chief Executive Officer
Secretary to the Board
Approved: October 9, 2014
5
Exhibit A
Reflections on the Thirteenth Anniversary of the September 11 Attacks
Statement by Jill Long Thompson, Board Chair
Farm Credit Administration Board Meeting
September 11, 2014
Thirteen years ago today our nation changed forever. The attacks on September 11 took 2,977 lives.
While these brutal attacks appalled and frightened, they also strengthened our resolve to stand up to
those who threaten us. And they strengthened our appreciation for the kind of country we live in
and the democratic and capitalist ideals upon which our nation is built.
We at the Farm Credit Administration have the privilege of regulating a government-sponsored
enterprise that reflects these ideals and adds value to our capitalist economy. As cooperatives, the
banks and lending associations of the Farm Credit System are democratic organizations, owned and
controlled by their borrowers. Just as our democratic nation champions the ideal of equal
opportunity for all, the System's banks and associations are open to all who are creditworthy and
meet the eligibility requirements to borrow from the System.
As we go forward in time, further and further from that tragic day, I hope we will never forget the
lives lost and the lessons learned. I hope we will never lose our appreciation for the great fortune we
enjoy as Americans. And I hope that we, as citizens of this great democracy, will never cease to work
toward the ideals for which our country stands.
6
Exhibit B
Page 1 of 2
STAFF PRESENT AT THE
FCA REGULAR BOARD MEETING
September 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
Quinn, Christine
X
X
OSMO
Rea, Laurie
X
X
Hudson, Bruce
X
X
Beckers, Christel
X
X
OGC
Rawls, Charles
X
X
Strickland, Joy
X
X
Tunis, Nancy
X
X
Donner, Mary Alice
X
X
7
Exhibit B
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
ORP
Van Meter, Gary
X
X
Mardock, Barry
X
X
Gabriel, Steve
X
X
Edelstein, Jeremy
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
8
Exhibit c
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
September 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 September 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
August 14, 2014
New Business
2
Fall 2014 Abstract of the Unified Agenda of Federal Regulatory and Deregulatory Actions and Fall 2014
Regulatory Projects Plan
Reports
3
Quarterly Report on Economic Conditions and FCS Conditions
CLOSED SESSION
4
Office of Examination Quarterly Report¹
August 29, 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).
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
Minutes for August 14, 2014 Regular Board Meeting
BM-11-SEP-14-01
Effective Date:
September 11, 2014
Effect on Previous Action:
None
THE FCA BOARD HEREBY:
Approves the minutes for August 14, 2014, Regular Board Meeting as submitted.
DATED THIS 11th DAY OF SEPTEMBER 2014
BY ORDER OF THE BOARD
/s/
Dale L. Aultman
Secretary to the Board
10
Exhibit E
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
Fall 2014 Abstract of the Unified Agenda of Federal Regulatory and Deregulatory Actions
and
Fall 2014 Regulatory Projects Plan
BM-11-SEP-14-02
Effective Date:
September 11, 2014
THE FCA BOARD HEREBY:
1. Approves the Fall 2014 Abstract of the Unified Agenda of Federal Regulatory and
Deregulatory Actions and authorizes the staff to prepare and submit the necessary
documents for publication on the Internet at www.reginfo.gov.;
2. Approves the Fall 2014 Regulatory Projects Plan and authorizes publication on FCA's
Web site; and
3. Authorizes staff to make any technical or grammatical changes that may be necessary
prior to publication.
DATED THIS 11th DAY OF SEPTEMBER 2014
BY ORDER OF THE BOARD
/s/
Dale L. Aultman
Secretary to the Board
11
FCA Board Meeting
September 2014
Quarterly Report on
FCS Condition
September 11, 2014
Stephen Gabriel
Hal Johnson
Exhibit F
12
GREDE
Topics for Open Session
Economic Conditions Affecting the FCS
FCS Condition and Performance
13
2
Economic Conditions Affecting
the Farm Credit System
Stephen Gabriel
Chief Economist
Office of Regulatory Policy
14
Economy is gaining momentum;
BLISHED
higher inflation and interest rates
Consensus Forecasts (percent)*
2013
2014
2015
GDP growth
2.2
2.1
3.1
CPI
1.5
1.9
2.1
Unemployment rate
7.4
6.2
5.7
10 Yr T-Bond (Dec '13; Nov '14; Aug '15)
3.0
2.9
3.5
Source: Consensus Economics, Inc.
*Survey date - August 11, 2014
15
4
Farm sector developments and
concerns
Corn and soybean prices plunge
Crop margins are compressing
Farmland markets are cooling
Protein, dairy and ethanol posting profits
California drought persists
Russian food import ban - impact not large
16
5
IDVINIST
Corn yields expected to be above
trend this year
Bushels/Acre
180
167.4
170
Corn Yield
160
150
Soybeans Yield
140
130
120
110
100
90
80
70
60
45.4
50
40
30
20
10
0
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
6
Source: USDA
Record corn crop pushes price
to five year low
70%
8.00
65%
6.89
60%
7.00
55%
6.00
50%
45%
5.00
40%
4.45
35%
4.00
30%
3.90
25%
3.00
20%
2.00
15%
10%
1.00
5%
0%
0.00
1975/76
19711/19
1111111
26/16/1961
////////////
///////////
111111
////////
umm
Ending U.S. Corn Stocks/Use Ratio (left axis)
Average Farm Corn Price - dollars/bu (right axis)
7
Source: USDA
Huge soybean harvest to boost
supplies and depress price
30%
16.00
14.40
14.00
25%
13.00
12.00
20%
10.00
10.35
15%
8.00
6.00
10%
4.00
5%
2.00
0%
0.00
1980/81
1983/84
1986/87
1989/90
1992/93
1995/96
1998/99
2001/02
2004/05
2007/08
2010/11
2013/14
Ending U.S. Soybeans Stocks/Use Ratio (left axis)
19
Average Farm Soybeans Price - dollars/bu (right axis)
8
Source: USDA
Lower wheat production offset by
reduced demand lifts supplies
100%
9.00
90%
7.77
8.00
80%
7.00
6.87
70%
6.30
6.00
60%
5.00
50%
4.00
40%
3.00
30%
20%
2.00
10%
1.00
0%
0.00
scesso
/////////////////////////
/////////////////////////
///////////
/////////
<<<<<<<<<<
IIIIIII
/////////// IIIIIII 2013/14
Ending U.S. Wheat Stocks/Use Ratio (left axis)
Source: USDA
Average Farm Wheat Price - dollars/bu (right axis)
9
Risk management is key to how
much red ink flows on corn farms
As of 8/12/14
Iowa Corn Profit Margins Under Different Price Assumptions and
0.20
Selected Government Support Mechanisms¹
0.07 0.07 0.07
0.10
0.00
-0.10
(0.02)
Dollars per Bushel
-0.20
(0.10)(0.10)
(0.15)(0.15)
-0.30
(0.22)
(0.29)
(0.28)
-0.40
-0.50
-0.60
-0.70
(0.63)
2013
2014 WASDE - $4.25 2014 WASDE - $3.90 2014 WASDE - $3.55
Margin
Margin w/ Gov. Payments
Margin w/ Gov. Payments & Insurance
1/ Margins reflect total production costs and actual state average yields, except for 2014, which reflects the 185 bushel per acre USDA lowa
average yield estimate. Government payments for 2014 assumes Agriculture Revenue Coverage County (ARC-CO) program is selected.
2013 margins with government payments reflect direct payments made under expired legislation. Insurance coverage assumes Revenue
10
2014 Protection (RP) insurance at the 85% maximum coverage was selected.
Soybean producers may face
losses next crop year
As of 8/12/14
lowa Soybean Profit Margins Under Different Price Assumptions and
1.50
Selected Government Support Mechanisms¹
1.03
1.03
0.89
1.00
0.50
0.15 0.15 0.15
Dollars per Bushel
0.00
-0.50
-1.00
(0.68)
(0.85) (0.83) (0.83)
(0.98)
-1.50
-2.00
(1.85)
2013
2014 WASDE - $11.35 2014 WASDE - $10.35 2014 WASDE - $9.35
Margin
Margin w/ Gov. Payments
Margin w/ Gov. Payments & Insurance
1/ Margins reflect total production costs and actual state average yields, except for 2014, which reflects the 50 bushel per acre USDA lowa
average yield estimate. Government payments for 2014 assumes Agriculture Revenue Coverage County (ARC-CO) program is selected. 2013
margins with government payments reflect direct payments made under expired legislation. Insurance coverage assumes Revenue Protection
11
(RP) insurance at the 85% maximum coverage.
IDVINIST
Growth in land values decelerated
in 2nd quarter in some regions
Farmland values in the Kansas City District (percent change from previous quarter)
4.5
2011:Q2
2012:Q2
2013:Q2
2014:Q2
4.0
3.9
3.5
3.0
2.6
2.5
2.4
2.4
2.3
2.1
2.0
1.8
1.5
1.0
1.0
1.0
1.0
0.4
0.5
0.1
0.0
Nonirrigated Cropland
Irrigated Cropland
Ranchland
12
Source: Federal Reserve Bank of Kansas City
LISHED IDVINIST
Midwest farmland values held
steady or improved in the 2nd qtr.
Good farmland values in the Chicago District (percent change from the previous quarter)
4.5
4
4.0
3.5
3.0
2.5
2
2.0
1.5
1
1
1.0
0.5
0.0
2011:Q2
2012:Q2 24
2013:Q2
2014:Q2
13
Source: Federal Reserve Bank of Chicago
Illinois land undervalued relative to
fundamentals; yet, correction looms
14,000
Farmland Price
12,000
Capitalized Value
10,000
2014 Capitalized Value with 100 basis point rise in interest rates and a 5% drop in rent (-21%)
2014 Capitalized Value with 150 basis point rise in interest rates and a 5% drop in rent (-31%)
8,000
2014 Capitalized Value with 200 basis point rise in interest rates and a 5% drop in rent (-38%)
6,000
4,000
2,000
0
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
PLOZ
25
14
Source: USDA, NASS; Gary Schnitkey, University of Illinois; Federal Reserve Board; FCA
CREDE
Drought improvement seen in the
DEPARTMENT
Plains states; worse in California
May 13, 2014
August 26, 2014
26
UC Davis economic analysis of
impact of 2014 California drought
Greatest absolute reduction in water
availability for California Ag in history
Reliant on groundwater substitution for
depleted surface water
Drought likely to continue through 2015
If continued into 2015 and 2016, additional
costs to Central Valley crop farming would be
$1 billion per year 27
16
Updated study highlights estimated
costs of 2014 California drought
Drought impact
Loss
Average
Percent
quantity
year
loss
Crop production
Water Use
6.6 maf
26 maf
25%
Net shortage after increased groundwater pumping
1.5 maf
26 maf
6%
Fallowed irrigated land
428,000 acres
Crop revenue loss
$810 million
$35 billion
2.3%
Revenue lost plus additional pumping cost ($454 mil)
$1.26 billion
n/a
Economic loss
$1.75 billion
n/a
Dairy and livestock production
Direct revenue losses
$203 million
$12.4 billion
1.6%
Total revenue losses
$442 million
n/a
Source: Richard Howitt, et al, "Economic Analysis 28 of the 2014 Drought for California
Agriculture," UCDavis Center for Watershed Sciences, July 15, 2014.
17
Risks to watch
Farmland values correction
Cash flow squeeze for grain/soybean
farmers
California drought
Geopolitical developments
29
18
GREDE ESTABLE SHED 1933
Questions
THANK YOU
30
SWEDE
DEPARTMENT
ABLISHED
Farm Credit System
Condition and Performance
as of
June 30, 2014
Hal Johnson
Office of Examination
INSURED
Topics
System Growth
Earnings / Capital
Portfolio Credit Quality
FIRS
32
21
⑉
ADVINIST
System grows at a modest pace
261
264
266
253
247
248
248
236
240
230
231
230
228
230
231
213
216
221
$ billion S
205
205
201
192
192
193
194
182
185
178
179
175
174
175
163
168
171
162
3.9%
4.1%
3.5%
3.5%
2.4%
2.3%
1.6%
2.1%
1.3%
1.7%
0.5%
0.7%
0.2%
0.2%
-0.1%
-1.4%
-1.8%
-2.1%
1Q-10
2Q-10
3Q-10
4Q-10
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
Total Assets
Gross Loans
% change in Gross Loans (quarter-over-quarter)
33
Source: FCS Quarterly Information Statements
22
Agribusiness lending drives
year-to-date loan growth
Loan Growth by Loan Type (% change year-to-date)
Loan Growth by District (% change year-to-date)
YTD Jun '12
YTD Jun '13
YTD Jun '14
YTD Jun '12
YTD Jun '13
YTD Jun '14
AgFirst
0.4%
District
0.5%
12.4%
10.9%
(11%)
2.0%
7.6%
AgriBank
3.6%
District
1.3%
3.9%
3.3%
2.6%
3.3%
(40%)
0.4%
2.0%
2.9%
1.2%
0.5%
CoBank
4.3%
District
-0.4%
-1.8%
:
-2.2%
(41%)
3.4%
-3.7%
-4.4%
Texas
4.9%
District
1.8%
Total Gross
RE
Production &
(8%)
2.9%
Loans
Mortgage
Intermediate Agribusiness
Other
[47%]
[21%]
[15%]
[17%]
Source: FCS Quarterly Information Statements
23
System continues to report
strong financial results
System Earnings ($M)
System Capital ($B)
YTD Jun '12
YTD Jun '14
YTD Jun '13
NI $2,119M
NI: $2,341M
Restricted
NI: $2,246M
Provisions: $67M
Provisions: -$35M
Capital
Provisions: $41M
Total less
Restricted
44.7
43.7
Net Income
1,253
42.6
41.7
1,196
1,142
1,141
1,145
40.6
1,104
39.6
1,052
1,067
1,039
38.5
38.6
960
37.5
36.6
Provision for Loan Losses
121
125
32
35
22
19
(32)
(40)
(12)
(23)
Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14
Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14
Restricted capital represents capital associated with the Insurance Fund.
35
Source: FCS Quarterly Information Statements
24
NDYMNIST
Portfolio credit quality is very good
BLISHED
Highlights — Portfolio Credit Quality
% of Nonperforming Loans to Total Loans ($M)
As of June 2014,
1.53%
1.53%
Nonperforming loans equaled
1.41%
1.36%
0.92% of System loans
1.31%
1.15%
outstanding
1.01%
1.01%
0.92%
96% of System loans were
2,784
2,832
2,608
2,711
classified as Acceptable
2,522
2,238
2,040
2,068
The System's allowance for
1,883
loan losses equaled 63% of
nonperforming loans
Total capital and the
allowance for loan losses
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
represented 22.4% of System
loans at quarter-end
Nonaccrual Loans
Other nonperforming Loans
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Source: FCS Quarterly Information Statements
25
GREAT ADVINIST
System FIRS ratings
Composite FIRS Ratings - System Banks & Associations
Highlights — FIRS Ratings
1 Rated
2 Rated
3 Rated
4 Rated
With the most recent update,
Ratings Trend
Quarter-over-Quarter
comparison
Composite FIRS ratings
2
2
continued to improve
1
1
15
11
10
10
8
7
Over 91% of System Banks
and Associations have a
36
30
29
Composite FIRS rating of 1
49
46
44
or 2
3 rated institutions account
for less than 1.5% of total
39
44
46
26
30
31
System assets
Jun-10
Jun-11
Jun-12
Jun-13
Mar-14
Jun-14
37
Source: FCA's FIRS ratings database
26
Summary and final points
Risk factors affecting agriculture:
Margins for crop producers squeezed as crop prices decline, but
profitability is strong in the protein, dairy, and ethanol sectors,
Midwest farmland values hold steady in the 2ⁿᵈ quarter, but the
market in some regions is cooling off,
Drought diminishes in much of the Plains, no relief for California.
The System is financially sound, well-capitalized, has
strong portfolio credit quality, and solid earnings.
System institutions are well-positioned for the current risk
environment.
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27
GREDE ESTABLE SHED 1933 ADVENTS
Questions
THANK YOU
39
Exhibit G
Farm Credit Administration
1501 Farm Credit Drive
McLean, Virginia 22102-5090
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 September 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: September 11, 2014
Charles R. Rawls
General Counsel
40