2012 Annual Report - Farm Credit Services of America

Transcription

working
right by you.
2012 A n n u al R e p o r t
“tHey understand our
operation. ... WHen i come in WitH
an idea, tHey aren’t aFraid
to sHare tHeir ideas, too.”
– rH o nda m c d o nne l l
Financial Highlights
2012
loans
$
18.5 billion
members’ equity
net income
cash-back dividends declared
$
$
2011
15.9 billion
3.2 billion
481.1 million
$
$
130 million
$
$
2010
15.5 billion
2.9 billion
456.4 million
$
$
130 million
$
$
2.5 billion
419.1 million
$
110 million
pg.
NA M E :
Rhonda McDonnell,
McDonnell Farms
lO C ATIO N :
Quinn, South Dakota
Op E RATIO N :
Cash grain
Cu STO M E R SIN C E :
1997
REl ATIO N Sh I p S :
Real estate, operating,
AgDirect®
Rhonda McDonnell values her family connections and it shows. She farms with her
dad and mom, Steve and Terry McDonnell, and brothers, Brady and Jay, to help run
a cash grain operation that produces dryland wheat and corn. “What I love about
farming is that I get to be with my family every day and everybody works together.
I enjoy combining; it’s like you’re seeing the history of your land go by.”
Rhonda has been an FCSAmerica customer since she started farming 15 years ago.
“My dad went with FCSAmerica, and my brothers were going with them, so that’s
where I went. They understand our operation. We have a good relationship. When I
come in with an idea, they aren’t afraid to share their ideas, too.”
3
“our pHilosopHy, overall, is
to remain consistent tHrougH botH
good as Well as cHallenging times –
to be consistent all tHe time.
– d o u g l a s r . sta r k
p r e sid e n t an d ce o
pICTu R E D:
Ryan Neiman
Rancher
Hulett, Wyoming
pg.
I am pleased to report that during 2012, Farm Credit
As we look ahead, we anticipate another year of market
Services of America (FCSAmerica) exceeded every
volatility and uncertainty. There are many unknowns as the
expectation in terms of loans, members’ equity and
impact of farm legislation, tax policies, markets, weather
net income.
and world economies unfold.
Despite areas of drought, agriculture in our four-state
Our philosophy, overall, is to remain consistent through
area continued to grow and expand. producers financed
both good as well as challenging times – to be consistent
new real estate purchases, upgraded farm equipment and
all the time.
invested in farm improvements.
It means we will continue to exemplify the benefits of
It was a year of contrast as we financed the growing
our cooperative business model – the most unique and
demands of grain producers seeking to acquire more
compelling in the lending industry. We will continue to
land, while supporting livestock producers challenged by
build our financial strength, use sustainable lending
higher input costs. We served both sides of the equation in
practices, provide optimum crop insurance plans and
meeting our customer needs.
offer long-term rate conversions that make sense.
As a mission-driven lender, we are using our expertise to
our customer relationships, finance and encourage the
develop customized, individual solutions for customers
next generation in agriculture, and share a portion of our
We develop services and technologies that add value to
under stress. More than understanding their businesses,
net income with our customer-owners in the form of
we have compassion for the challenges they face.
cash-back dividends.
We also have capacity and commitment. We know that
No other financial institution in agriculture is doing
cycles are part of our industry, and it’s why we’ve become,
what we’re doing to meet and exceed customers’ needs
financially, one of the strongest lenders in agriculture – so
and expectations.
we can stand by customers when times are troubled and
help them grow when the time is right.
I am proud to serve as your president and CEO, grateful
for the guidance and support of your Board, and humbled
Our financial strength and efficiency allowed us to
by the effort of our FCSAmerica employees who dedicate
distribute cash-back dividends totaling $130 million in 2012.
themselves to serving your needs.
It marks the eighth consecutive year a significant portion
of our earnings was returned to the customer-owners we
Thank you for putting your trust in FCSAmerica and for
serve, benefiting the communities they call home.
contributing to its success. We look forward to serving you
in 2013 and beyond.
Douglas R. Stark
president and CEO
5
N AM E :
Matthew and Kayla McCarthy
l OC ATIO N :
Newell, Iowa
Op E RATIO N :
Cash grain, swine custom
nursery and finishing
Cu STO M E RS SIN C E:
2007
REl ATIO N S h I p S :
crop insurance, young and
beginning producers
Matt and Kayla McCarthy have been FCSAmerica customers since they started their
own operation five years ago. “They helped me get started on a bigger scale,” Matt
says. “With their commitment to agriculture, their deep knowledge of the business
and the attractive interest rates they offer, I don’t see how you could go elsewhere
and do better.”
Matt appreciates that his financial officer takes the time to understand the
McCarthys’ goals when they are considering a new venture. “he doesn’t say yes to
financing an idea until we’ve talked things through, and I’ve put together a detailed
business plan.”
pg.
when you’re in agriculture for keeps,
it pays to know a lender who is, too.
Farm Credit Services of America’s 2012 financial highlights reflect a dynamic
agricultural economy that experienced strong net farm income, primarily
influenced by profits in the grain industry.
High market prices for corn and soybeans, in particular, were driven by lower
production and global demand for food, feed and biofuels. Profitability in the
grain industry contributed to record land values in spite of reduced yields
caused by drought conditions.
The livestock industries experienced more mixed results due to high feed
prices in the second half of 2012, causing these industries at times to face
narrow to negative margins.
And while drought negatively affected the returns of many customers, high
participation in risk management plans and relatively strong cash positions
continued to support an overall high credit quality for your Association.
As a lender dedicated entirely to agriculture, we understand the economic and
weather cycles that impact yields and markets, and have planned for them. Our
financial strength allows us to continue financing opportunities for producers
seeking to grow, fulfilling our commitment to our customer-owners.
WitH tHeir commitment to agriculture,
tHeir deep knoWledge oF tHe business and
tHe attractive interest rates tHey oFFer,
i don’t see HoW you could go elseWHere
and do better.”
– m at t and k ay l a m c ca rtH y
7
capacity WHen it’s needed.
strengtH WHere it counts.
Working to make a diFFerence.
With nearly $20 billion in assets and more than $480 million in net income,
FCSAmerica is among the largest agricultural lenders in the U.S.
We are proud of this achievement and the role we play financing rural America.
Our goal is to provide strength and capacity, and to grow with our customers.
As a financial cooperative dedicated to agriculture, we understand the unique
needs of each customer and work to exceed expectations with services and
expertise that contribute positively to our customers’ bottom line.
enhancing the customer experience.
Every day we look for new ways to make working with us as simple and productive
as possible. Along with “behind-the-scenes” technologies that speed processes
and add efficiencies to our business, we are introducing technologies that do the
same for our customers, and add convenience and value to their business.
Last year, for example, we launched a new online service called AgriPoint ®, an
information-rich tool that allows customers to manage their lending accounts,
develop marketing plans, analyze their business and more. Customers also can
view customized commodity markets, local cash bids and weather information.
And it’s all available 24 hours a day, seven days a week.
Technology will never replace the face-to-face experience our customers value,
but it does offer added convenience for those who desire day-to-day account
access and management options.
We tHink oF tHem as more tHan lenders.
tHey’ve become Friends.”
– Jim an d r i ta sH oe m a ke r
pg.
N ame : Jim and Rita Shoemaker,
JNR Farms
North Loup, Nebraska
l ocation :
Cash grain, cattle feedlot
op eration :
c ustomers since :
2005
re l ations h i ps :
installment, crop insurance,
AgDirect
When Jim and Rita Shoemaker of JNR Farms were looking at financing options for
their North Loup, Nebraska, crop and cattle-feeding operation in 2005, they did
research and interviewed several lenders. They chose FCSAmerica. “Their interest
rates were attractive then – they still are – and now we use nearly all of their
services. We think of them as more than lenders. They’ve become friends.”
The Shoemakers’ two sons also are involved in the farming and cattle businesses.
Joe farms with them and has his own cattle operation while Nick, a professional
fireman, helps as time allows. “We’re building our operation for our future and for
the boys and our daughter,” the Shoemakers agree. “Farming’s risky, but we’ve
made enough right decisions that we’re still in business.”
9
NA M E :
Seth and Etta Smith,
Coon River Farms, Inc.
lO C ATIO N :
Nemaha, Iowa
Op E RATIO N :
Row crops, both organic
and conventional; forages,
cow-calf, cattle feedlot
Cu STO M E RS SIN C E :
2001
crop insurance, AgDirect,
young and beginning
producers
When Seth and Etta Smith decided to use organic production methods for part
of their cropping operation, they wondered how their FCSAmerica financial officer
would react. “he was totally open to it,” the Smiths say. “In fact, he put us in touch
with several other customers who had experience with organics. The information
and ideas they shared were very helpful.”
The end result has been good for the Smiths, who point to organics and their
cow-calf operation as their two most profitable enterprises. And they believe the
concept of sharing is one that permeates their lender’s business. “We like the idea
of a cooperative financial system, where if they make a profit, it comes back into
the hands of all of us as owners,” the Smiths say. “That money is spent in every little
community across the area, in stores and in church collection plates.”
pg.
growing rural america.
More than financing the business needs of the customers we serve, we are
working to grow agriculture as a vocation, invest in its future, provide learning
opportunities and give back to the rural communities we serve.
Today, you’ll find FCSAmerica and our team members supporting a variety of
initiatives ranging from Annie’s Project – a series of business courses focusing
on succession, estate and retirement planning for women in agriculture – to
hundreds of local community projects involving advocacy, sponsorships, farm
safety, youth agriculture education, food banks and more.
We are proud to take an active role in supporting agriculture and giving back to
the rural life we so highly value.
working for the next generation.
In 2012, we worked with more than 9,000 producers in our Young & Beginning
Program – offering financial guidance and programs to help foster good financial
practices and sustain business success.
We also work closely with local, state and national agricultural groups and
organizations, such as 4-H and FFA, to provide project loans and offer college
scholarships for agriculture students.
Our efforts reflect our commitment to promoting agriculture as a vocation and
building the next generation of farmers and ranchers.
WitH our organics and Forages, our
coverage can be complicated. i like tHat
tHey Have staFF on Hand WHo are crop
insurance specialists.”
– set H an d e t ta sm i tH
11
focused on long-term solutions.
Our industry is a volatile one. Because of this volatility, we look for strong and
consistent long-term solutions and quality tools that benefit our customers,
strengthen the customer’s financial position, and sustain and grow agriculture.
These long-term solutions include adopting a sustainable lending model,
consistently conducting stress testing of our portfolio, and continuing a loan
conversion program designed to help our customers reduce their interest rates
and lock in long-term fixed interest rates where it makes financial sense.
As a mission-driven, agriculture-focused cooperative, we are uniquely positioned
to take a long-term view.
record earnings deliver exceptional
cash-back dividends.
The 2012 performance of FCSAmerica once again resulted in record loan volume,
members’ equity and net income. Cash-back dividends totaling $130 million were
distributed in March 2013, adding up to $685 million in distributions since 2004.
As a financial cooperative, the money we make contributes to our financial
strength, helps finance customer growth and expansion, supports customers in
challenging times, and helps grow future generations in agriculture.
What’s left is returned as cash-back dividends that benefit our customer-owners
and the communities they call home.
No other lender shares its success like FCSAmerica.
tHey stick WitH us in tougH times and
We stick WitH tHem during good times.
We understand and trust eacH otHer.”
– Jim d . n e i m a n
pg.
NA M E :
Jim D. Neiman,
Neiman Enterprises, Inc.
lO C ATIO N :
Hulett, Wyoming; Spearfish
and Hill City, South Dakota;
Montrose, Colorado
Op E RATIO N :
Timber and lumber mills
Cu STO M E R SIN C E :
1997
AgDirect
13
Jim D. Neiman is vice president and CEO of Neiman Enterprises, Inc., a familyowned company based in hulett, Wyoming. The company is involved in several
businesses including timber production under the Sustainable Forestry Initiative,
lumber mill operations, a ranch and a cow-calf herd comprised primarily of registered
Angus cattle. Jim represents the third generation involved in the company founded
by his grandfather 76 years ago. his parents, James Sr. and Sally Ann Neiman,
remain active. Jim’s son, Marcus, and nephew, Ryan, also work in the business.
“FCSAmerica works with a lot of different enterprises in agriculture so they
understand our industry,” Jim says. “In 2008, 18 months into the worst recession
since the Great Depression, we were contemplating a major expansion. FCSAmerica
stepped up and asked, ‘how can we help?’ They designed a loan package that allowed
us to manage our cash flows to meet our needs. They stick with us in tough times
and we stick with them during good times. We understand and trust each other.”
a rain gauge is no measure
oF a good Farmer.
The American farmer has always been innovative and resilient when it comes to
meeting challenges, but the weather can be the most devastating challenge of all.
Last year’s severe drought gave FCSAmerica the opportunity to demonstrate
compassion, commitment and financial strength in helping crop and livestock
customers who were affected.
As a lender 100 percent dedicated to rural America, we understand the cycles
of agriculture and what’s at stake for those within it. It’s why, for those facing
adversity, we develop custom-tailored solutions to see them through.
Today’s agriculture comes with a high cost and high risk. As a mission-driven
cooperative owned by the customers we serve, our job isn’t just to finance crop
and livestock producers every year, but to help them be here in the future.
pg.
crop insurance:
doing WHat’s rigHt For tHe
customers We serve.
Crop insurance has proven to be a critical risk management tool for agriculture.
Not only does it provide individual producers with a risk management tool, but at
a macro level, it is a safety net for farm income.
Producers understand how important crop insurance is and appreciate the value
of working with crop insurance specialists who know how to help them structure
coverage around their individual risk-bearing capacity needs.
Most of our customers retained the fall harvest price option, for example, and
that made a difference of hundreds of dollars per acre in indemnity payments in
2012. Other decisions such as hail insurance, wind coverage, fire coverage, trendadjusted yield option and an enterprise unit structure provided options to reduce
risk and maximize coverage.
Crop insurance is all our insurance specialists do. They understand the
implications of how every crop insurance change affects customers’ livelihoods.
And because our crop insurance team is not commission-based, the coverage our
customers choose is right, specifically for them and no one else.
15
NA M E :
Max and Theresa McFarland,
Mac's Creek Winery and
Vineyards
lO C ATIO N :
Lexington, Nebraska
Op E RATIO N :
Vineyards and winery
Cu STO M E RS SIN C E :
2002
AgDirect
When professional educators Max and Theresa McFarland were considering what
to do with a 12-acre parcel of land adjacent to their home just outside lexington,
Nebraska, they did considerable research. “Our families have been involved in
Dawson County agriculture for more than 100 years, and we wanted to reconnect
with our roots,” Max recalls. “The parcel is too small for row crops, and we wanted
to do something different. So we decided to plant grapes.”
They planted their first vineyard in 2000 and built a bonded winery in 2002 –
the fifth in the state at the time – with help from their local FCSAmerica team.
“We talked with other lending institutions, and they basically questioned our
judgment. They wouldn’t touch our business with a 10-foot pole,” Max says. “On
our families’ recommendations, we talked with FCSAmerica. Our financial officer
helped us evaluate and truly understand our business plan. he was supportive and
encouraging throughout the process.”
pg.
making sense of real estate lending.
Rising land prices and continuing volatility of commodity prices prompted your
Association to continue a conservative approach to real estate lending.
The large increases in farmland prices experienced – in the range of 100 to 300
percent during five- and 10-year time frames – were driven by three factors:
strong domestic and global demand for commodities, historically low interest
rates and very strong net farm income from cropping enterprises.
To manage the financial risks associated with rising land prices, FCSAmerica
has adopted a sustainable value lending approach. This approach establishes a
reasonable return over the long term given various commodity pricing scenarios,
which can be expected from a prospective land purchase.
No one wants overextended credit and our customer-owners appreciate being
encouraged to approach land purchases from a position of financial strength.
We assist our customers in managing risk by limiting lending and their debtservice obligations to a level that can be supported by cash rent plus a
normalized profit margin.
our Financial oFFicer Helped us evaluate
and truly understand our business plan.
He Was supportive and encouraging
tHrougHout tHe process.”
– m a x and tH e re sa m c Fa rl a n d
17
“tHe capacity to serve means
Having tHe Will as Well as tHe
Financial resources to do so.
– ro b e rt b r u x vo o rt
2 0 1 2 b oa r d c Ha irp e rso n
pICTu R E D:
Mark Petersen
Young & Beginning Producer
Minden, Nebraska
pg.
19
Financially, 2012 was among the best years for Farm Credit
Among our accomplishments this past year was the rollout
Services of America, but our success is tempered knowing
of the online service called Agripoint, which provides a
that, for many of our customers, it was also among the
variety of ag-related information and marketing tools.
most challenging.
The commitment to this effort is part of our mission to
We all know drought can be devastating, but thanks to
make more money for us as an organization, but it can help
crop insurance, most crop producers still had a good year.
our customers be more successful – it’s what differentiates
As a result of high feed prices and poor grazing conditions,
us, as a financial cooperative, from other lenders.
provide support to our customers. Services like this don’t
livestock producers have felt the greatest impact.
One initiative that is particularly close to members of your
This is a time when we can demonstrate our value
Board is the ongoing effort to support young and beginning
proposition to our customers.
producers. Many of us have sons and daughters working
We have not only the financial strength and capacity to
next generation – the future of agriculture – is among our
work with our customers but also the will to do so. What
highest priorities.
to establish themselves during this challenging time. The
financial statements don’t show is the kind of relationships
our people have with their customers. We understand the
Before I was a member of your Board, I viewed the
stress and the emotions that are part of a crop loss or herd
relationship between the customer and financial officer as
liquidation, and I’ve seen our employees reach out beyond
the strength of this organization. Today, after five years of
the financial aspects of a relationship to help.
working with Farm Credit Services of America, I see this
Our financial strength has been demonstrated in the
dedicated people who believe in our vision and work to
strength runs through the entire organization, through
$130 million in cash-back dividends that were distributed
build customer success – to be agriculture’s most valued
in March. I am pleased to share that your Board of
financial partner.
Directors has authorized a patronage program for 2013
to be distributed in 2014.
I personally want to thank the members of your Board –
people who share your voice and are committed to the
Through this period of record land values, increasing
long-term viability of this organization.
costs and volatile markets, your Board fully supports a
sustainable value lending approach for farmland purchases
Thank you for choosing FCSAmerica. We wish you success
within a cooperative business model. This balanced
and prosperity in 2013.
approach acknowledges our responsibility for protecting
both the customers who make purchases and those who
don’t.
Certainly, when it comes to our lending philosophy, we are
looking to the future and also learning from the past.
Robert Bruxvoort
2012 Board Chairperson
fcsamerica aca directors
Robert Bruxvoort / New Sharon, IA
Bruxvoort operates a family farm producing corn and soybeans. he was elected to the
Board effective January 1, 2008, and his current term will end March 31, 2014.
Margaret Doyle / Waukee, IA
An Appointed Director, Doyle is a self-employed financial consultant. She previously served
as CFO for McCarthy Group, llC, a private equity firm in Omaha, NE, and currently
serves on its board of directors. Doyle also has served on the board of directors at
AmeriSphere Multifamily Finance, llC, a multifamily mortgage broker in Omaha, NE, and on
the board of directors at TNE holdings llC, an independent insurance agency and financial
services company in Des Moines, IA. She was appointed to the Board effective August 1,
2006, and her current term will end March 31, 2014.
Jim Ehlers / Newell, IA
Ehlers has a farming operation raising corn and soybeans. he was elected to the Board
effective January 1, 2009, and his current term will end March 31, 2015.
Richard hall / Massena, IA
hall is general manager of the Southwest Iowa Egg Cooperative, a layer-hen
cooperative, and he operates a small cow-calf herd. he was elected to the Board
Jeremy heitmann / Byron, NE
heitmann farms with his family. They raise corn, soybeans and wheat, and run a
background-feeder cattle operation. he was appointed to the Board effective January 1,
2008. he was elected to the Board effective January 1, 2011, and his current term will
end March 31, 2014.
Steve henry / Nevada, IA
henry has a commercial and seed-crop production operation. he was elected to the
Board effective January 1, 2011, and his current term will end March 31, 2015.
Nicholas hunt / Atlantic, IA
hunt owns and operates a farm, growing corn, soybeans and alfalfa, and has a cattlefeeding operation. he was elected to the Board effective January 1, 2007, and his
current term will end March 31, 2013.
Robert Joki / Cook, MN
An Appointed Director, Joki was the grain group controller for Ag processing Inc., a
cooperative for procuring, processing, marketing, and transporting grains and grain
products in the united States and Canada. Joki also is a certified public accountant.
he was appointed to the Board effective January 1, 2011, and his current term will end
March 31, 2015.
pg.
Cris Miller / Spearfish, SD
Miller has a family ranching business with a commercial cow-calf operation, and a
background and finish cattle enterprise. Miller was elected to the Board effective
January 1, 2012, and his current term will end March 31, 2016.
Randy peters / McCook, NE
peters has a family farm and ranch operation raising wheat, corn, soybeans and
sunflowers. peters also raises and sells certified seed wheat, and has a Black Angus
and a Red Angus cow-calf herd. he was elected to the Board effective January 1, 2003,
and his current term will end March 31, 2015.
John Reisch / howard, SD
Reisch is a farmer and cattle feeder. As a partner of Reisch Farms, Inc., he raises corn,
wheat, soybeans, alfalfa and cattle. he was elected to the Board effective January 1,
2008, and his current term will end March 31, 2014.
Dan Shaw / Edgar, NE
Shaw has a corn, soybean, wheat and cow-calf operation with his wife and son. he
owns and manages Shaw Grain llC, a grain elevator. he was elected to the Board
Nancy Tarver / Gillette, WY
Tarver operates a cow-calf and yearling operation with her husband and two sons. She
also serves as trustee and vice-chairperson for the Campbell County Memorial hospital
in Gillette, WY. She was elected to the Board effective January 1, 2007, and her current
term will end March 31, 2015.
Jon Van Beek / primghar, IA
Van Beek has a family farm operation raising corn and soybean seed, and hogs and
contract feeder pigs. he was elected to the Board effective January 1, 2009, and his
Nick Vande Weerd / Brookings, SD
An Appointed Director, Vande Weerd is part of two agricultural businesses – Vande Weerd
Family Farms and pleasant Dutch Dairy. he was appointed to the Board effective
November 1, 2011, and his current term will end March 31, 2016.
Kim Vanneman / Ideal, SD
Vanneman and her husband own and operate a diversified farming operation including row
crops, small grains, finishing feeder pigs and a commercial beef-cow herd. She served as a
member of the South Dakota State legislature from 2007 through 2012. She was elected to
the Board effective January 1, 2007, and her current term will end March 31, 2013.
Jennifer Zessin / Madison, NE
Zessin has a family farm operation, and past business experience in personnel and
internal auditing. She was elected to the Board effective January 1, 2009, and her
21
Financial Information
23Consolidated Five-Year Summary of Selected Financial Data
24
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
32
Report of Management
33
Report on Internal Control Over Financial Reporting
34
Report of Audit Committee
35
Independent Auditor’s Report
36
Consolidated Financial Statements
40
Notes to Consolidated Financial Statements
63
Disclosure Information Required by
Farm Credit Administration Regulations (Unaudited)
pg.
23
Farm Credit Services of America, ACA
Consolidated Five-Year Summary of Selected Financial Data
(Dollars in thousands)
2012
2011
2010
2009
2008
$18,489,616
$15,890,986
$15,545,238
$13,503,604
$12,435,537
60,000
58,000
84,000
102,000
55,000
18,429,616
15,832,986
15,461,238
13,401,604
12,380,537
455,203
426,735
437,729
422,019
413,762
Balance Sheet Data
Loans
Less allowance for loan losses
Net loans
Investment in AgriBank, FCB
AgDirect, LLP investment in AgriBank, FCB
Cash
Other property owned
Other assets
Total assets
Obligations with maturities of one year or less
Other liabilities
Total liabilities
82,388
65,412
216,109
157,260
92,169
129,521
104,692
4,800
4,330
6,495
6,514
617
418,984
420,232
380,054
351,892
$16,905,707
$16,417,863
$14,339,712
$13,251,500
$16,060,763
$13,720,771
$13,623,203
$11,884,405
$10,947,193
325,747
310,720
245,002
214,383
242,476
16,386,510
14,031,491
13,868,205
12,098,788
11,189,669
–
46,978
Total members’ equity
Total liabilities and members’ equity
–
422,048
Protected members’ equity
Retained earnings
–
$19,610,164
At-risk capital stock
Accumulated other comprehensive (loss) gain
–
–
3,176,676
1,734
2,365
3,013
3,720
47,116
48,127
47,922
45,884
(188)
73
111
140
2,825,554
2,499,093
2,189,878
2,012,087
3,223,654
2,874,216
2,549,658
2,240,924
2,061,831
$19,610,164
$16,905,707
$16,417,863
$14,339,712
$13,251,500
$509,687
$482,620
$431,639
$362,412
$328,548
15,051
(9,775)
17,504
74,126
24,090
201,915
166,156
180,549
135,882
113,401
Statement of Income Data
Net interest income
Provision for (reversal of) credit losses
Noninterest income
Noninterest expense and taxes
Net income
215,465
202,147
175,535
194,426
175,080
$481,086
$456,404
$419,149
$229,742
$242,779
Key Financial Ratios
For the year
2.75%
2.84%
2.84%
1.70%
1.79%
15.60%
16.63%
17.46%
10.71%
12.26%
N
et interest income as a percentage
of average earning assets
3.07%
3.17%
3.07%
2.83%
2.55%
Net charge-offs as a percentage of average loans
0.06%
0.04%
0.25%
0.21%
0.02%
16.44%
17.00%
15.53%
15.63%
15.56%
Return on average assets
Return on average total members’ equity
At year-end
Members’ equity as a percentage of total assets
A
llowance for loan losses as a percentage
of total loans
0.32%
0.37%
0.54%
0.76%
0.44%
Permanent capital ratio
14.86%
15.06%
13.92%
13.35%
13.41%
Total surplus ratio
14.60%
14.77%
13.60%
13.00%
13.04%
Core surplus ratio
14.60%
14.77%
13.60%
13.00%
13.04%
Other
Cash patronage distribution payable to members
$130,000
$130,000
$110,000
$52,000
$60,000
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
The following commentary reviews the consolidated financial
position and consolidated results of operations of Farm Credit
Services of America, ACA and its subsidiaries (FCSAmerica)
and provides additional specific information. The accompanying
consolidated financial statements and notes also contain important
information about our financial position and results of operations.
To request a free copy of our annual or quarterly reports, contact us
at PO Box 2409, Omaha, NE 68103-2409, (800) 531-3905, via email
to [email protected] or view them on our website, fcsamerica.com.
The annual report is available on our website 75 days after the end of
the calendar year, and members are provided a copy of the report 90
days after the end of the year. The quarterly reports are available on
our website 40 days after the end of each calendar quarter.
Forward-Looking Information
Certain sections of this annual report contain forward-looking
statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions
that are difficult to predict. Words such as “anticipate,” “believe,”
“estimate,” “may,” “expect,” “intend” and similar expressions are
used to identify such forward-looking statements. These statements
reflect our current views with respect to future events. However,
actual results may differ materially from our expectations due to a
number of risks and uncertainties which may be beyond our control.
These risks and uncertainties include, but are not limited to:
• p
olitical, legal, regulatory and economic conditions and
developments in the United States and abroad;
• economic fluctuations in the agricultural, energy, financing and
leasing sectors;
• economic conditions and credit performance of our loan portfolio,
portfolio growth and seasonal factors;
• changes in our estimates underlying the allowance for loan losses
and reserve for unfunded commitments;
• periodically occurring weather-related, disease and other adverse
climatic or biological conditions that impact agricultural
productivity and income;
• changes in United States government support of the agricultural
industry and the Farm Credit System as a government-sponsored
enterprise, as well as investor and rating agency actions relating to
events involving the United States government, other governmentsponsored enterprises and other financial institutions; and
• actions taken by the Federal Reserve System in implementing
monetary policy.
2012 Highlights
The year ended December 31, 2012, was another year of solid
financial performance. A strong balance sheet and earnings provide
a solid foundation for 2013. Highlights include:
• In December, the Board declared a $130 million cash-back
dividend distribution under the 2012 patronage program.
• Loan volume increased 16.4 percent to $18.5 billion.
• Total members’ equity increased 12.2 percent to $3.224 billion
after recording a liability for the $130 million cash-back dividend
payment.
• Net income for the year was $481.1 million compared to
$456.4 million for 2011, an increase of 5.4 percent.
• The allowance for loan losses remained relatively stable at
$60 million compared to $58 million at the end of 2011.
Commodity Review and Outlook
Agricultural producers and agribusinesses experienced mixed
results in 2012, with profits impacted by the widespread drought
across our four-state territory. Corn and soybean prices rose
dramatically during late spring and summer, leading to strong profit
potential for cash grain farmers while eroding margins for protein
producers. On a national level, the United States Department of
Agriculture forecasts 2012 net farm income at $114 billion, down
$4 billion or 3.3 percent from the 2011 record. Average prices
received by farmers and ranchers in December compared to prior
years are reflected in the following chart based on United States
Department of Agriculture data:
Averages for the Month of December:
Commodity
2012
2011
2010
2009
2008
Corn
$6.87
$5.86
$4.94
$3.60
$4.11
$14.30
$11.50
$11.70
$9.80
$9.24
$8.29
$7.19
$7.05
$4.87
$5.95
$124.00 $120.00
$97.60
$78.50
$79.70
$51.90
$45.00
$41.90
Soybeans
Wheat
Beef cattle
Hogs
$62.40
$63.50
pg.
25
The real estate market was active in South Dakota, Nebraska and
Iowa in 2012 with a record number of public auctions. There was
strong demand for cropland and pasture across our territory. Factors
impacting the agricultural real estate market include:
•
•
•
•
profitable cash grain production,
strong demand for cropland tracts,
relatively low interest rates, and
limited returns on alternative investments for purchasers.
The following chart compiled by our Appraisal team reflects
average value changes for each state over the past six-month,
one-year, five-year and ten-year periods:
State
Six-Month
One-Year
Five-Year
Ten-Year
Iowa
13.8%
20.8%
109.5%
303.1%
Nebraska
12.3%
30.7%
150.3%
313.3%
South Dakota
17.6%
32.7%
99.1%
328.5%
–
1.1%
(5.9)%
95.7%
Wyoming
Declining land values following sustained periods of land value
increases have historically created conditions of considerable risk
for collateral-based lenders. Nominal and real (inflation-adjusted)
agricultural land values have increased in proportions similar to other
asset classes such as stocks and urban residential and commercial
land during the last decade, but agricultural land values escaped the
valuation declines that other assets suffered during the recession.
This is largely because the agricultural sector, particularly crop
farming, remained profitable throughout the economic crisis period,
and major agricultural lenders such as the Farm Credit System
retained the capacity to continue lending for land purchases, unlike
lenders to other industrial or consumer sectors.
In order to retain the capacity to lend in poor economic
environments as well as good ones, our credit risk policies emphasize
loan repayment capacity in addition to conservative assessments
of collateral values that secure loans. Although Farm Credit
Administration regulations allow real estate mortgage loans of up to
85 percent of appraised value, our underwriting standards generally
limit lending to no more than 65 percent at origination. Due to very
strong land values in much of our territory, we have implemented
risk management practices that incorporate loan-to-appraised-value
thresholds below 65 percent. Furthermore, we impose a lending
limit of fixed dollar amounts per acre based on the land’s production
capacity. While underwriting exceptions on loan-to-appraised-value
are sometimes granted, in such cases they are often structured with
additional principal payments in the early years to reduce the risk of
lending at higher levels of appraised value.
Loan repayment capacity is largely dependent upon income from
corn, soybeans, hogs and cattle. Of somewhat less significance are
wheat, dairy and poultry. Many of our customers are also dependent
on off-farm income, although the level of off-farm income varies
widely. Government program payments related to corn, soybeans,
wheat, the Conservation Reserve Program, and to a lesser extent,
dairy are also a source of income for many of our customers.
Corn and soybean production is predominant in Iowa, with hogs
and cattle also a significant source of income. Corn, soybeans and
cattle are important income sources in Nebraska and South Dakota.
Western areas of our territory are dependent on income from wheat,
cow-calf and feeder-cattle operations. We have no single customer
or group of related customers who comprise more than 10 percent of
our volume or who would have a material effect if they no longer did
business with us.
The following reflects economic conditions for various
commodities prepared by our industry specialists based on United
States Department of Agriculture and commodity industry reports:
Grain: Cash grain farmers continued to experience strong profits
as commodity prices remained high and revenue was supported by
crop insurance payments to cover yield loss. More than 70 percent of
our customers who purchased crop insurance filed claims that have
resulted in $645 million in loss payments as of January 31, 2013.
Corn and soybean stocks declined by 17 percent in 2012. United
States corn production in 2012 was down 13 percent from a year
earlier at 10.8 billion bushels. Reduced yields were the primary
reason for the production decrease as they fell 24 bushels per acre
to 123 bushels per acre, more than offsetting a 4 percent increase in
harvested acres.
The drought severely impacted corn production in Iowa, Nebraska
and South Dakota. Iowa was the hardest hit with production down 21
percent based on average yields falling from 172 to 137 bushels per
acre. Nebraska production was down 16 percent with an 18 bushelper-acre yield reduction. South Dakota yields fell from 132 to 101
bushels per acre, an 18 percent reduction, even though an additional
950,000 acres were planted with corn compared to 2011.
Omaha cash corn prices ended the year at $7.25 per bushel, trading
in a narrower range in the fourth quarter. For the year, prices were
up $0.85 a bushel but did decline from a high of $8.41 per bushel in
August during the early harvest stage. The average price of $7.01 per
bushel for 2012 was modestly higher than the $6.82 per bushel in 2011
but was substantially higher than the 2010 average of $4.02 per bushel.
United States soybean production in 2012 was down 3 percent
from 2011 at 3.01 billion bushels as average yields fell to 39 bushels
per acre, more than offsetting a 3 percent increase in harvested
acres. Yields in Nebraska were down 13 bushels per acre, while Iowa
and South Dakota yields were down 7 bushels per acre compared
to 2011. Production was down 21 percent in Nebraska, 13 percent
in Iowa and 6 percent in South Dakota. Omaha cash soybean prices
ended the year at $14.30 per bushel, up $2.50 per bushel from
year-end 2011. Soybean meal averaged $415 per ton in 2011, ending
the year at $424 per ton after peaking at $568 per ton in August.
Cow-Calf: The drought forced additional cow herd liquidation,
further reducing the United States beef cow herd to less than 30
million head. This resulted in a continued tight feeder-cattle supply
and profits for ranchers having adequate available grass and hay.
The 2012 average cash price on a 550 lb. steer was a record high
$170 per cwt. compared to $146 per cwt. in 2011.
Beef Feedlot: Cattle feeders on average lost $85 per head as
they managed through the high feeder-cattle prices as well as high
feedstuff costs. Fed-steer prices averaged $122 per cwt. in 2012, up
from $115 per cwt. in 2011 and $95 per cwt. in 2010 as tight supply
pushed up prices. Cattle on feed numbered 11.2 million head at the end
of 2012, 5.1 percent below a year ago. The high prices did contribute to
softer domestic demand and a 12 percent drop in beef exports.
Swine: Hog producers selling into open markets lost about $13
per head marketed in 2012 as hog prices fell modestly and feedstuff
prices pushed higher in the second half of the year. Hog cash prices
averaged $64 per cwt., down $1.50 per cwt. compared to 2011,
while higher corn and soybean meal prices increased break-evens to
$68 per cwt. Strong exports continued to support hog prices, even
though pork supply grew modestly. The United States Department of
Agriculture December Hogs and Pigs Report indicated sow numbers
were up slightly from the end of 2011 at 5.82 million head; however,
production per sow continued to increase as average pigs per litter
improved to a record 10.15 in the fourth quarter.
Dairy: Milk prices were down in 2012, resulting in average
Midwest dairies experiencing a break-even year and low-cost
producers generating modest profit margins. The United States
Department of Agriculture reported the average all-milk price at
$18.60 per cwt., down $1.55 per cwt. from 2011, while increased feed
costs caused break-even prices to rise. Milk prices were significantly
lower in the West and Southwest United States compared to the
Midwest, resulting in losses for producers and herd contraction
in those areas. Annual dairy-cow slaughter was up 6 percent over
2011, and the United States dairy-cow herd was at 9.2 million head
the end of November. Even though cow numbers declined, total milk
production was up 1.5 percent year over year.
Poultry: High feed costs also limited 2012 profitability for graded
egg operations, while producers selling into breaker and liquid
markets generally reported losses. Profits in the second half of the
year were insufficient to erase losses experienced during late spring
and early summer. Midwest large-shell egg prices averaged $1.23
per dozen during 2012, $0.04 per dozen higher than a year ago.
Unpasteurized whole eggs averaged $0.58 per pound, up $0.06 per
pound from 2011, while average breaker prices were up from $0.62
per dozen to $0.64 per dozen. The average monthly layer flock grew
to 285 million layers in 2012, a six-year high, raising egg inventory in
the fourth quarter and further pressuring current egg prices.
Ethanol: Higher corn prices, declining gasoline demand and an
oversupply of ethanol contributed to operating losses for the average
producer for most of 2012. As a result, domestic production declined
from 93 percent of capacity utilization at the end of 2011 to 82 percent
at year-end 2012. These industry conditions have resulted in several
plants closing or idling production in the last half of 2012 with more
closings and idling anticipated in 2013. Ethanol producers benefited
from strong profit margins during most of 2011, which assisted in
limiting the adverse financial impact of losses experienced in 2012.
Loan Portfolio
Our loan volume increased $2.6 billion during 2012, an increase
of 16.4 percent. The continuation of favorable grain market prices,
along with continued strong real estate sales activity, resulted in a
year of significant loan growth in 2012. Approximately 80 percent of
the loan volume increase came from long-term agricultural mortgage
loans followed by approximately 5 percent increases in each of the
production and intermediate-term, processing and marketing, and
rural residential real estate loan categories.
Our loan portfolio consists primarily of agricultural real estate loans,
production operating loans and intermediate-term installment loans,
and credit facilities to agricultural businesses. A high percentage
of real estate loan installments are due in the December to March
period. Most operating loans mature and are refinanced after the fall
harvest and before spring planting. Operating loan volume tends to
peak late in the fall, decline toward January and trend upward during
the remainder of the year. Equipment loans generally have annual
installments that correlate to customer commodity sales.
Our chartered territory includes Iowa, Nebraska, South Dakota
and Wyoming. The geographic distribution of loan volume follows:
December 31,
State
2012
2011
2010
Iowa
41%
41%
40%
Nebraska
29
29
30
South Dakota
17
17
17
Wyoming
Other states
2
2
2
11
11
11
100%
100%
100%
pg.
27
The following table summarizes risk asset and delinquency
information (accrual loans include accrued interest receivable;
amounts are in thousands):
Comparative allowance coverage of various loan categories
follows:
December 31,
December 31,
2012
2011
2010
0.32%
0.36%
0.54%
Nonaccrual loans
83.12%
48.81%
50.81%
Total risk loans
71.50%
45.35%
49.64%
2012
2011
2010
Allowance as a
percentage of:
$72,181
$118,833
$165,327
Total loans
Restructured
9,085
8,925
3,111
9
0 days past due still
accruing interest
2,652
149
771
83,918
127,907
169,209
Risk loans:
Nonaccrual
Total risk loans
Other property owned, net
Total risk assets
4,800
4,330
6,495
$88,718
$132,237
$175,704
In our opinion, the allowance for loan losses at December 31,
2012, is adequate to provide for probable and estimable losses in
the loan portfolio at December 31, 2012.
Results of Operations
Risk loans as a percentage
of total loans
0.45%
0.79%
1.07%
otal delinquencies as a
T
percentage of total loans
0.16%
0.33%
0.34%
The decline in total risk loans is primarily due to payments
received on nonaccrual accounts and net charge-offs. Based on our
analysis, loans 90 days or more past due and still accruing interest
were adequately secured and in the process of collection. Risk loans
as a percentage of total loans remain at acceptable levels.
Other property owned at December 31, 2012, includes an equity
interest valued at $3.4 million in a renewable fuels industry company
that was acquired as a result of a troubled debt restructuring. Also
during 2010, properties were sold that were held in limited liability
corporations formed by the lenders. Some proceeds from the sales
have been released to the lenders, and the remaining proceeds are
being held pending resolution of litigation. Income related to these
sales totaled $4.5 million in 2010.
The credit quality of our portfolio continued to improve during
2012. Adversely classified assets decreased from 3.3 percent of
the portfolio at December 31, 2011, to 2.3 percent of the portfolio
at December 31, 2012. Adversely classified assets are assets we
have identified as showing some credit weakness outside our credit
standards. We have considered portfolio credit quality in assessing
the reasonableness of our allowance for loan losses.
The allowance for loan losses is an estimate of losses on loans
in our portfolio as of the financial statement date. We determine the
appropriate level of allowance for loan losses based on periodic
evaluation of factors such as loan loss history, portfolio quality, and
current economic and environmental conditions.
The following table provides profitability information:
December 31,
Net income (in thousands)
2012
2011
2010
$481,086
$456,404
$419,149
2.75%
2.84%
2.84%
15.60%
16.63%
17.46%
Return on average assets
Return on average
members’ equity
Changes to our return on average assets and return on average
members’ equity are related directly to the changes in income as
described below, the changes in assets discussed in the Loan
Portfolio section and the changes in members’ equity discussed in
the Members’ Equity section. Major components of the changes in
net income for 2012, 2011 and 2010 are outlined in the following
table (in thousands):
December 31,
Net income prior year
2012
2011
2010
$456,404
$419,149
$229,742
Increase (decrease) in
net income attributable
to changes in:
27,067
50,981
69,227
(24,826)
27,279
56,622
Noninterest income
35,759
(18,022)
48,409
Noninterest expense
(17,905)
(13,884)
410
Provision for income
taxes, net
4,587
(9,099)
14,739
$481,086
$456,404
$419,149
Net interest income
Provision for credit losses
Net income for the year
The effects on net interest income from changes in average
volumes and rates are presented in the following table (in thousands):
Changes in Net Interest
Income Due To:
2012 vs. 2011
2011 vs. 2010
Changes in volume
$46,501
$42,269
Changes in rates
(21,048)
13,327
Change in nonaccrual income
Net change
1,614
(4,615)
$27,067
$50,981
The average lending rate was 4.40 percent for 2012 compared to
4.74 percent for 2011. The average cost of debt was 1.54 percent for
2012 compared to 1.92 percent for 2011. The net interest margin was
3.07 percent in 2012 compared to 3.17 percent in 2011.
Net interest income included income on nonaccrual loans that
totaled $6.5 million in 2012, $4.9 million in 2011 and $9.5 million in
2010. Nonaccrual income is recognized when:
• received in cash,
• collection of the recorded investment is fully expected, and
• prior charge-offs have been recovered.
We recorded a $15.1 million provision for credit losses for 2012
compared to a $9.8 million provision for credit losses reversal for
2011. The provision for credit losses includes the provision for loan
losses and the provision for unfunded lending commitments. The
increase in the provision for credit losses is due to establishment
of a specific general reserve for the impact of the 2012 drought, an
industry-specific reserve for the poultry industry and net chargeoffs, partially offset by elimination of the industry-specific reserves
for Missouri River flooding and the energy/electric industry. Total
industry-specific and specific general reserves comprise $11.3
million of the $60.0 million allowance for loan losses balance at
December 31, 2012.
We recorded $10.1 million of net charge-offs in 2012 (0.06 percent
of average loans), primarily in the dairy industry. We recorded net
charge-offs of $6.2 million in 2011 (0.04 percent of average loans)
and $35.5 million in 2010 (0.25 percent of average loans).
A study was completed in 2011 to further assess the risk of
potential losses related to unfunded commitments. The reserve for
unfunded lending commitments is based on our best estimate of
losses inherent in lending commitments made to customers but not
yet disbursed. Factors such as likelihood of disbursal and likelihood
of losses given disbursement were utilized in determining this
contingency. The reserve for unfunded commitments was $13 million
at December 31, 2012, compared to $10 million at the end of 2011.
The increase is primarily due to establishment of an industry-specific
general reserve for commitments to the poultry industry.
The increase in noninterest income is primarily due to $16.7 million
of distributions from Allocated Insurance Reserve Accounts, program
fees and distributions received under our AgDirect trade credit
financing program, an increase in insurance services income and an
increase in patronage received from AgriBank, FCB. The Allocated
Insurance Reserve Accounts were established in previous years
by the Farm Credit System Insurance Corporation when premiums
collected increased the level of the Insurance Fund beyond the
required 2 percent of insured debt. There was no distribution in 2011.
The increase in AgriBank, FCB patronage is primarily due to a higher
patronage rate compared to the prior year. Additionally, patronage
income on our sale of a participation interest in certain real estate
loans to AgriBank, FCB increased by $1.6 million due to the share of
distributions from Allocated Insurance Reserve Accounts attributable
to these loans. In addition to the program fees paid by AgriBank, FCB
under our AgDirect trade credit financing program, AgriBank, FCB
started paying patronage in 2012 on the participation trade credit
financing loans sold to them through this program. Patronage paid
by AgriBank, FCB under this program is distributed to the AgDirect,
LLP partners.
The increase in noninterest expense is primarily due to additions in
staffing to support business initiatives and loan growth. The decrease
in provision for taxes for 2012 is primarily due to 2011 differences
between estimated deductions used in provision calculations and
actual tax deductions per the tax returns. These differences created
an adjustment to the 2011 provision.
Patronage Program
Our Board adopted a patronage program for eligible customers
in 2012, the ninth consecutive year a patronage program has been
in place. The 2012 program is based on each customer’s eligible
average loans outstanding during the year. The patronage program
includes a qualified (cash) distribution, referred to as cash-back
dividends, and a nonqualified distribution. The Board declared a
cash-back dividend of $130 million at its December 2012 meeting to
be distributed no later than April 30, 2013. We recorded a liability of
$130 million in December 2012 for payment by the end of April 2013.
The 2012 nonqualified patronage distribution is not intended to be
redeemed except in the unlikely event of liquidation.
The 2011 patronage program was also based on each
customer’s eligible average loans outstanding during the year. The
2010 patronage program was based on each eligible customer’s
contribution to our net interest income and related fees. The
2011 and 2010 programs also consisted of a qualified (cash) and
nonqualified distribution. The Board declared a cash-back dividend
of $130 million at its December 2011 meeting and $110 million at
its December 2010 meeting to be distributed no later than April
30 of the following year. We recorded a liability of $130 million in
December 2011 and $110 million in December 2010. The 2011 and
2010 nonqualified patronage distributions are also not intended to be
redeemed except in the unlikely event of liquidation.
Our Board has also adopted a patronage program for 2013. The
2013 patronage program will be based on each customer’s average
daily balance of eligible loans during 2013.
pg.
29
AgriBank, FCB Patronage Income
We receive two different types of discretionary patronage from
AgriBank, FCB. AgriBank, FCB’s Board of Directors sets the level of
patronage for each of the following:
• patronage on our note payable with AgriBank, FCB, and
• patronage based on the net earnings of the pool of loans sold to
AgriBank, FCB in October 2008.
We received patronage income based on the average balance of
our note payable to AgriBank, FCB. We recorded patronage income
of $45.6 million in 2012, $40.8 million in 2011 and $51.4 million in
2010. Changes in our note payable to AgriBank, FCB and patronage
rate changes caused the variances in the patronage income amounts.
The patronage rates paid by AgriBank, FCB were 32 basis points in
2012, 31 basis points in 2011 and 42 basis points in 2010.
We also received patronage income related to our sale of a
participation interest in certain real estate loans to AgriBank, FCB.
We received patronage income in an amount that approximates the
net earnings of those loans. Net earnings represents the net interest
income associated with these loans adjusted for certain fees and
costs specific to the related loans, as well as adjustments deemed
appropriate by AgriBank, FCB related to the credit performance
of the loans, as applicable. Similar to the patronage on our note
payable described earlier, we also received patronage income based
on the estimated note payable of the asset pool loans. Patronage
declared on these pools is solely at the discretion of the AgriBank,
FCB Board of Directors. We recorded asset pool patronage income
of $32.0 million in 2012, $34.5 million in 2011 and $43.9 million in
2010.
Beginning in 2009, AgriBank, FCB is paying patronage in cash
and stock.
Funding and Liquidity
The primary source of our liquidity and funding is a direct loan
from AgriBank, FCB, which is reported as “Notes payable” on the
Consolidated Balance Sheet. The direct loan precludes the need
for us to have a liquidity policy. As described in Note 7 to the
consolidated financial statements, “Notes Payable,” this direct loan
is governed by a General Financing Agreement and is collateralized
by a pledge of substantially all of our assets and is also subject to
regulatory borrowing limits. AgriBank, FCB has established a $19.0
billion revolving line of credit for us that is renegotiated annually.
We expect this line of credit to be sufficient to fund our operations.
The note payable related to this line of credit reprices monthly.
At December 31, 2012, the direct loan balance was $16.1 billion
compared to $13.7 billion at the end of 2011 and $13.6 billion at the
end of 2010.
The interest rate risk inherent in our loan portfolio is substantially
mitigated through this funding relationship. AgriBank, FCB manages
interest rate risk through its direct loan pricing and asset/liability
management processes. The direct loan pricing mechanism
essentially match funds loans with borrowings that reprice or mature
when the loans reprice or mature. The primary risks we manage
include pipeline risk and basis risk. Pipeline risk occurs when we
commit a fixed interest rate to a customer in advance of the loan’s
closing date and is effectively mitigated through use of rate-lock
agreements. Basis risk occurs when the interest rate on a loan
reprices according to one index, while the debt supporting that loan
reprices according to another index.
We provide financing to eligible customers with various interest
rate programs. New loans are priced with consideration given to the
local competitive conditions, the cost of debt that will be incurred
to fund the loan, the individual risk elements of the loan and profit
objectives. Interest on real estate loans is generally paid in full
annually, while interest on agricultural production loans is generally
paid in full at the annual renewal date of the loan.
We offer variable-rate loan products that include variable-rate
loans repriced at our discretion, as dictated by market conditions,
and market-indexed variable-rate loans that provide customers with
the option of indexing their interest rate to external market indices
such as LIBOR or the prime rate.
We also offer fixed-rate operating loans for up to two years,
fixed-rate installment loans for up to 10 years, and fixed-rate
mortgage loans in yearly increments from 5–35 years.
In addition, we offer real estate adjustable-rate loans that are
indexed to one-, three- or five-year United States Treasury rates.
The loans reprice at one-, three- or five-year intervals at a rate equal
to the corresponding United States Treasury rate plus a contractual
spread. The one-, three- and five-year adjustable-rate loans are
generally subject to periodic caps ranging from 2.00–2.50 percent
with a 6.00 percent life cap. The cost of debt supporting these loans
is capped accordingly.
We also offer a prepayment-restricted loan product. This is
a fixed-rate product with a prepayment penalty provision if
prepayments are made during the initial three, five or seven years of
the loan term. For agreeing to restricted prepayments, the customer
receives a reduced interest rate that remains in effect for the entire
loan term.
A breakdown of the loan portfolio by rate type, as a percentage of
total volume at December 31, is shown in the table below:
December 31,
2012
2011
2010
Variable rate
40.1%
41.1%
40.6%
Fixed rate
59.6
58.4
58.8
Adjustable rate
0.3
0.5
0.6
100.0%
100.0%
100.0%
Members’ Equity
Relationship with AgriBank, FCB
Our equity structure is described in Note 8 to the consolidated
financial statements, “Members’ Equity.”
Members’ equity increased to $3.224 billion at December 31,
2012, compared to $2.874 billion at December 31, 2011. The increase
in 2012 was due to net income recorded in 2012 and reduction in
accumulated other comprehensive loss, partially offset by patronage
payable and net capital stock retired.
Members’ equity as a percentage of total assets decreased to
16.44 percent at December 31, 2012, compared to 17.00 percent
at December 31, 2011. The liabilities-to-members’ equity ratio was
5.08 to 1 at December 31, 2012, compared to 4.88 to 1 at December
31, 2011. The decrease in the members’ equity-to-assets ratio and
increase in the liabilities-to-members’ equity ratio was due to the
growth rate of assets and liabilities exceeding the growth rate of
members’ equity.
Farm Credit Administration regulations require us to maintain a
permanent capital ratio of at least 7 percent, a total surplus ratio of
at least 7 percent and a core surplus ratio of at least 3.5 percent. The
calculation of these ratios according to Farm Credit Administration
regulations is discussed below:
We borrow from AgriBank, FCB to fund our lending operations
in accordance with the Farm Credit Act of 1971, as amended.
Approval from AgriBank, FCB is required for us to borrow elsewhere.
A General Financing Agreement, as discussed in Note 7 to the
consolidated financial statements, “Notes Payable,” governs this
lending relationship. Cost of funds under the General Financing
Agreement includes:
• T
he permanent capital ratio is average at-risk capital divided by
average risk-adjusted assets. At December 31, 2012, our ratio was
14.86 percent compared to 15.06 percent at December 31, 2011.
• The total surplus ratio is average unallocated surplus less any
deductions made in the computation of permanent capital divided by
• The core surplus ratio is average unallocated surplus less any
deductions made in the computation of total surplus divided by
The capital adequacy ratios are directly impacted by the changes
in members’ equity as more fully explained earlier and the changes
in assets as further discussed in the Loan Portfolio section. In
February 2008, we entered into a credit default swap agreement that
is intended to mitigate risk in our loan portfolio and, consequently,
decrease the risk weighting of certain assets for regulatory capital
purposes. Further details are discussed in Note 3 to the consolidated
financial statements, “Loans and Allowance for Loan Losses.”
We are not aware of any reason why the capital ratios would fall
below the regulatory requirements during 2013.
•
•
•
a marginal cost-of-debt component,
a spread component, which includes cost of servicing, cost of
liquidity and bank profit, and
a risk-premium component, if applicable.
In the periods presented, we were not subject to the risk-premium
component. The marginal cost-of-debt approach simulates match
funding the cost of underlying debt with substantially the same terms
as the anticipated terms of our loans to borrowers. This methodology
substantially protects us from market interest rate risk.
We are required to invest in AgriBank, FCB capital stock as
a condition of borrowing. This investment may be in the form
of purchased stock or stock representing previously distributed
patronage refunds and capital distributions from AgriBank, FCB.
As of December 31, 2012, we were required to maintain a common
stock investment equal to 2.50 percent of the average quarterly
balance of our note payable to AgriBank, FCB, plus an additional
1.00 percent on growth that exceeded a targeted rate. Our growth
did not exceed the targeted rate in 2012. AgriBank, FCB’s current
bylaws allow AgriBank, FCB to increase the required investment
to 4.00 percent. However, AgriBank, FCB has not communicated a
plan to increase the required investment.
In addition, we are required to hold AgriBank, FCB common stock
equal to 8.00 percent of the quarter-end balance of a pool of real
estate loans sold to AgriBank, FCB.
At December 31, 2012, $269.3 million of our investment in
AgriBank, FCB consisted of stock representing distributed AgriBank,
FCB patronage refunds and capital distributions, and $185.9 million
consisted of purchased investment. For the periods presented
in this report, we have received no dividend income on this stock
investment, and we do not anticipate any in future years.
We receive patronage income based on the annual average daily
balance of our note payable to AgriBank, FCB, patronage income
in an amount that approximates the net earnings of the asset pool
loans, and patronage income based on the estimated note payable
of the asset pool loans. AgriBank, FCB’s Board of Directors sets the
patronage rates.
pg.
31
We purchase benefit and payroll services from Farm Credit
Foundations. Farm Credit Foundations had been operating as part
of AgriBank, FCB prior to January 1, 2012, when it formed a service
corporation and thus is no longer operating as part of AgriBank, FCB.
The Farm Credit System entities using Farm Credit Foundations as
their payroll and benefits provider contributed an investment into the
service corporation in January 2012. Our investment was $0.1 million.
Due to the nature of our financial relationship with AgriBank, FCB,
the financial condition and results of operations of AgriBank, FCB
materially affect our stockholders’ investment in FCSAmerica. To
request a free copy of the combined AgriBank, FCB and affiliated
associations’ financial reports, contact us at PO Box 2409,
Omaha, NE 68103-2409, (800) 531-3905 or via email to
[email protected]. You may also contact AgriBank, FCB at
30 East 7th Street, Suite 1600, St. Paul, MN 55101, (651) 282-8800
or via email to [email protected]. The reports are also
available through AgriBank, FCB’s website at agribank.com.
Also, in April and December 2011 and December 2012, we entered
into agreements with additional Farm Credit System associations
inside and outside of the AgriBank, FCB District to provide access
to our AgDirect trade credit financing program. The Farm Credit
Administration approved requests from these associations to invest
in the AgDirect, LLP. At December 31, 2012, AgDirect, LLP assets
primarily consist of a $129.3 million investment in AgriBank, FCB
to capitalize the loan participations sold to AgriBank, FCB. We hold
$82.4 million of this investment, and other Farm Credit System
entities hold the remaining investment. At December 31, 2012,
AgDirect, LLP had liabilities of $1.6 million consisting of a distribution
payable to LLP partners from patronage declared by AgriBank, FCB
for the fourth quarter of 2012. AgDirect, LLP had no liabilities at
December 31, 2011. AgDirect, LLP had net income of $6.8 million
for the year ended 2012 from patronage paid by AgriBank, FCB and
had no net income for the year ended December 31, 2011.
AgDirect, LLP
Other Matters
We entered into agreements with two other Farm Credit System
associations in the AgriBank, FCB District during 2010 to provide
access to our AgDirect trade credit financing program. The AgDirect
program includes origination and refinancing of agricultural
equipment loans through independent equipment dealers. In
February 2011, the Farm Credit Administration approved a request
from the three associations to invest in a limited liability partnership
(LLP) that will facilitate this collaborative AgDirect trade credit
financing program and allow us to leverage the AgDirect program
for the mutual benefit of our associations, and the farmers and
ranchers we serve. The LLP was established in the second quarter
of 2011. Our investment is reflected as “AgDirect, LLP investment
in AgriBank, FCB” on our Consolidated Balance Sheet. In April
2011, the LLP purchased participations of $858.7 million in AgDirect
loans from us that were originated subsequent to the agreements
described earlier. The LLP subsequently sold a like amount of loan
participations to AgriBank, FCB. The LLP paid us a fee for originating
these loans. Additional loans have been sold to the LLP as they
were originated, and the LLP has sold a like amount of loan
participations to AgriBank, FCB. Total participations sold to the
LLP at December 31, 2012, were $2.017 billion. AgriBank, FCB, at
the discretion of its Board of Directors, pays patronage on these
loan participations to AgDirect, LLP. Any patronage declared is
accrued quarterly and paid by AgriBank, FCB in the first month of
the subsequent quarter. AgDirect, LLP distributes any patronage
paid by AgriBank, FCB as partnership distributions to the AgDirect,
LLP partners.
In the fall of 2011, construction was completed on an additional
77,500-square-foot office building immediately north of our currently
owned corporate headquarters. The new facility replaced leased
office space at a second Omaha, Nebraska, location under a lease
that expired in 2012. The new additional office building makes space
available for future growth and allows all Omaha-based employees
to be at the same location. The new facility’s cost, including land,
building, furniture and equipment, totaled approximately $25 million
and was funded by our direct loan from AgriBank, FCB.
Report of Management
We prepare the consolidated financial statements of Farm Credit
Services of America, ACA (Association) and are responsible for their
integrity and objectivity, including amounts that must be necessarily
based on judgments and estimates. The consolidated financial
statements have been prepared in conformity with accounting
principles generally accepted in the United States of America. The
consolidated financial statements, in our opinion, fairly present the
financial condition of the Association. Other financial information
included in the annual report is consistent with that in the consolidated
financial statements.
To meet our responsibility for reliable financial information, we
depend on accounting and internal control systems designed
to provide reasonable, but not absolute, assurance that assets
are safeguarded and transactions are properly authorized and
recorded. Costs must be reasonable in relation to the benefits
derived when designing accounting and internal control systems.
Financial operations audits are performed to monitor compliance.
PricewaterhouseCoopers LLP, our independent auditors, audit the
consolidated financial statements. They also conduct a review of
internal controls to the extent necessary to comply with generally
accepted auditing standards in the United States of America. The
Farm Credit Administration also performs examinations for safety
and soundness, as well as compliance with applicable laws and
regulations.
The Board of Directors has overall responsibility for our system of
internal control and financial reporting. The Board of Directors and its
Audit Committee consult regularly with us and meet periodically with
the independent auditors and other auditors to review the scope and
results of their work. The independent auditors have direct access to
the Board of Directors, which is composed solely of directors who
are not officers or employees of the Association.
The undersigned certify that we have reviewed the Association’s
annual report and it has been prepared in accordance with all
applicable statutory or regulatory requirements, and the information
contained herein is true, accurate and complete to the best of our
knowledge and belief.
Douglas R. Stark
President and CEO
March 6, 2013
Craig P. Kinnison
Senior Vice President – CFO
March 6, 2013
Robert D. Bruxvoort
Chairperson, Board of Directors
March 6, 2013
pg.
33
Report on Internal Control Over Financial Reporting
Farm Credit Services of America, ACA’s (Association) principal
executives and principal financial officers, or persons performing
similar functions, are responsible for establishing and maintaining
adequate internal control over financial reporting for the
Association’s consolidated financial statements. For purposes of
this report, “internal control over financial reporting” is defined as a
process designed by, or under the supervision of, the Association’s
principal executives and principal financial officers, or persons
performing similar functions, and effected by its Board of Directors,
management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting information and the
preparation of the consolidated financial statements for external
purposes in accordance with accounting principles generally
accepted in the United States of America and includes those policies
and procedures that: (1) pertain to the maintenance of records that
in reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the Association, (2) provide reasonable
assurance that transactions are recorded as necessary to permit
preparation of financial information in accordance with accounting
principles generally accepted in the United States of America, and
that receipts and expenditures are being made only in accordance
with authorizations of management and directors of the Association,
and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of
the Association’s assets that could have a material effect on its
consolidated financial statements.
The Association’s management has completed an assessment
of the effectiveness of internal control over financial reporting as
of December 31, 2012. In making the assessment, management
used the framework in Internal Control – Integrated Framework,
promulgated by the Committee of Sponsoring Organizations of the
Treadway Commission, commonly referred to as the “COSO” criteria.
Based on the assessment performed, the Association concluded
that as of December 31, 2012, the internal control over financial
reporting was effective based upon the COSO criteria. Additionally,
based on this assessment, the Association determined that there
were no material weaknesses in the internal control over financial
reporting as of December 31, 2012.
Douglas R. Stark
President and CEO
March 6, 2013
Craig P. Kinnison
Senior Vice President – CFO
March 6, 2013
Report of Audit Committee
The consolidated financial statements of Farm Credit Services
of America, ACA (Association) were prepared under the oversight
of the Audit Committee. The Audit Committee is composed of four
individuals from the Association Board of Directors. In 2012, the
Audit Committee met seven times. The Audit Committee oversees
the scope of the Association’s internal audit program, the approval
and independence of PricewaterhouseCoopers LLP (PwC) as our
independent auditors, the adequacy of the Association’s system of
internal controls and procedures, and the adequacy of management’s
action with respect to recommendations arising from those auditing
activities. The Audit Committee’s responsibilities are described more
fully in the Internal Control Policy and the Audit Committee Charter.
Management is responsible for internal controls and the
preparation of the consolidated financial statements in accordance
with accounting principles generally accepted in the United States of
America. PwC is responsible for performing an independent audit of
the consolidated financial statements in accordance with generally
accepted auditing standards in the United States of America and
to issue their report based on their audit. The Audit Committee’s
responsibilities include monitoring and overseeing these processes.
In this context, the Audit Committee reviewed and discussed
the audited consolidated financial statements for the year ended
December 31, 2012, with management. The Audit Committee
also reviewed with PwC the matters required to be discussed
by Statement on Auditing Standards No. 114, The Auditor’s
Communication With Those Charged With Governance, and both
PwC and the internal auditors directly provided reports on significant
matters to the Audit Committee.
The Audit Committee had discussions with and received written
disclosures from PwC confirming its independence. The Audit
Committee also reviewed the non-audit services, if any, provided
by PwC and concluded these services were not incompatible with
maintaining PwC’s independence. The Audit Committee discussed
with management and PwC such other matters and received such
assurances from them as the Audit Committee deemed appropriate.
Based on the foregoing review and discussions, and relying
thereon, the Audit Committee recommended that the Board of
Directors include the audited consolidated financial statements in
the annual report for the year ended December 31, 2012.
Jennifer L. Zessin
Chair, Audit Committee
March 6, 2013
Audit Committee Members:
Robert Joki
Jon Van Beek
Steve Henry
pg.
35
Independent Auditor’s Report
To the Board of Directors and Members of Farm Credit Services of America, ACA,
We have audited the accompanying consolidated financial statements of Farm Credit Services of America, ACA (the Association)
and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 2012, 2011 and 2010, and the related
consolidated statements of income, changes in capital and cash flows for the years then ended.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance
of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits
in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of
the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control
relevant to the Association’s preparation and fair presentation of the consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Association’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Farm Credit Services of America, ACA and its subsidiaries at December 31, 2012, 2011 and 2010, and the results of its operations
and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States
of America.
March 6, 2013
PricewaterhouseCoopers LLP, Suite 1400, 225 South Sixth Street, Minneapolis, MN 55402
T: (612) 596 6000, F: (612) 373 7160, www.pwc.com/us
Consolidated Balance Sheet
December 31,
2012
2011
2010
$18,489,616
$15,890,986
$15,545,238
60,000
58,000
84,000
18,429,616
15,832,986
15,461,238
Cash
216,109
157,260
92,169
Accrued interest receivable
247,919
249,435
253,142
455,203
426,735
437,729
Assets
Loans
Net loans
82,388
65,412
122,287
117,115
4,800
4,330
Deferred tax asset, net
5,348
3,420
AgDirect, LLP investment in AgriBank, FCB
Premises and equipment, net
Other assets
Total assets
–
104,134
6,495
–
46,494
49,014
62,956
$19,610,164
$16,905,707
$16,417,863
Liabilities
$16,060,763
$13,720,771
$13,623,203
Accrued interest payable
57,942
60,135
63,629
Deferred tax liability, net
–
–
Notes payable
Patronage payable
Reserve for unfunded lending commitments
Other liabilities
Total liabilities
460
130,000
130,000
13,000
10,000
124,805
110,585
70,913
16,386,510
14,031,491
13,868,205
110,000
–
Commitments and contingencies (Note 12)
Members’ Equity
Protected members’ equity:
Class B common stock
–
1,728
2,351
Participation certificates
–
6
14
At-risk capital:
Class D common stock
45,980
46,203
47,327
Class E common stock
998
913
800
(188)
73
3,176,676
2,825,554
2,499,093
3,223,654
2,874,216
2,549,658
$19,610,164
$16,905,707
$16,417,863
Accumulated other comprehensive (loss) gain
Retained earnings
Total members’ equity
Total liabilities and members’ equity
–
The accompanying notes are an integral part of these consolidated financial statements.
pg.
Consolidated Statement of Income
Year Ended December 31,
2012
2011
2010
Interest income
$742,715
$729,548
$703,968
Interest expense
233,028
246,928
272,329
509,687
482,620
431,639
Net Interest Income
Net interest income
15,051
(9,775)
17,504
494,636
492,395
414,135
Patronage income from AgriBank, FCB
77,567
75,349
95,237
Loan fees
22,570
19,791
23,230
Insurance services
41,508
38,226
42,973
AgDirect program fees
31,958
28,734
Net interest income after provision for credit losses
Noninterest Income
–
AgDirect, LLP patronage income from AgriBank, FCB
5,875
Servicing fee income from AgriBank, FCB
2,177
2,595
3,030
20,260
1,461
16,079
201,915
166,156
180,549
142,022
128,025
122,011
18,041
Other noninterest income
Total noninterest income
–
–
Noninterest Expense
Salaries and employee benefits
19,170
20,310
Insurance fund premiums
7,380
8,264
6,688
Other operating expenses
40,585
34,858
30,603
(3,742)
Occupancy and equipment expense
291
(113)
Capital transaction expense
1,197
1,396
1,626
Total noninterest expense
210,645
192,740
175,227
Income before income taxes
485,906
465,811
419,457
4,820
9,407
308
$481,086
$456,404
$419,149
Losses (gains) on other property owned
Provision for income taxes
Net income
37
Consolidated Statement of Changes in Capital
Protected Members’ Equity
Capital Stock and
Participation Certificates
Balance at December 31, 2009
$3,013
Accumulated Other
Comprehensive
Gain (Loss)
$111
At-Risk Capital
Capital
Stock
Retained
Earnings
Total Members’
Equity
$47,922
$2,189,878
$2,240,924
Net income
419,149
419,149
Patronage declared
(110,000)
(110,000)
66
66
Patronage accrual adjustment
Change in other
comprehensive (loss)
(38)
(38)
Capital stock and
participation certificates:
Issued
Retired
(648)
2,365
73
5,353
5,353
(5,148)
(5,796)
48,127
2,499,093
2,549,658
Net income
456,404
456,404
Patronage declared
(130,000)
(130,000)
57
57
Change in other
comprehensive (loss)
(261)
(261)
Capital stock and
Issued
Retired
4,552
(631)
1,734
(5,563)
(188)
47,116
Net income
Patronage declared
Change in other
comprehensive gain
4,552
(6,194)
2,825,554
2,874,216
481,086
481,086
(130,000)
(130,000)
36
36
188
188
Capital stock and
5,496
Issued
Retired
(1,734)
$ –
5,496
(5,634)
$ –
$46,978
(7,368)
$3,176,676
$3,223,654
pg.
39
Consolidated Statement of Cash Flows
2012
2011
2010
$481,086
$456,404
$419,149
15,051
(22,646)
132
(1,015)
–
10
10,233
1,516
(2,193)
(1,928)
2,520
–
3,445
10,963
16,088
497,174
(9,775)
(26,648)
(261)
(660)
1,905
59
10,327
3,707
(3,494)
(3,420)
13,942
(460)
1,492
37,919
24,633
481,037
17,504
(18,418)
(3,126)
(154)
–
639
10,249
(14,898)
(10,680)
–
(13,632)
(538)
–
(16,201)
(49,255)
369,894
(2,610,848)
(5,822)
(16,976)
(16,735)
1,555
2,345
(2,646,481)
(354,187)
37,642
(65,412)
(25,824)
4,581
1,271
(401,929)
(2,084,285)
2,708
–
(22,825)
9,653
1,082
(2,093,667)
Cash Flows from Financing Activities:
Increase in notes payable, net
Patronage paid in cash
Protected capital stock and participation certificates retired
At-risk capital stock and participation certificates issued
At-risk capital stock and participation certificates retired
Net cash (used in) provided by financing activities
2,339,992
(129,964)
(1,734)
5,496
(5,634)
2,208,156
97,568
(109,943)
(631)
4,552
(5,563)
(14,017)
1,738,798
(51,934)
(648)
5,353
(5,148)
1,686,421
Net increase (decrease) in cash
Cash at beginning of year
Cash at end of year
58,849
157,260
$216,109
65,091
92,169
$157,260
(37,352)
129,521
$ 92,169
$2,167
$130,000
$2,214
$130,000
$7,131
$110,000
$(188)
$ –
$261
$(1,337)
$38
$(703)
$235,221
$13,836
$250,422
$10,593
$283,009
$11,005
Cash Flows from Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Increase in stock patronage received from AgriBank, FCB
Loss (gain) on sales of other property owned
Gain on sales of premises and equipment
Carrying value write-downs on premises and equipment
Carrying value write-downs on other property owned
Depreciation on premises and equipment
Decrease (increase) in accrued interest receivable
Decrease in accrued interest payable
Increase in deferred tax asset
Decrease (increase) in other assets
Decrease in deferred tax liability
Income recognized on deferred AgDirect program fees
Increase (decrease) in other liabilities
Total adjustments
Net cash provided by operating activities
Cash Flows from Investing Activities:
Increase in loans, net
(Purchases) redemptions of investment in AgriBank, FCB
AgDirect, LLP purchase of investment in AgriBank, FCB
Purchases of premises and equipment, net
Proceeds from sales of other property owned
Proceeds from sales of premises and equipment
Net cash used in investing activities
Supplemental Schedule of Non-Cash Investing and Financing Activities:
Loan amounts transferred to other property owned
Cash patronage distribution declared
Non-Cash Changes Related to Other Liabilities:
(Increase) decrease in postretirement benefits liability
Change in tax contingency reserve
Supplemental Cash Flow Information:
Interest paid on notes payable
Income taxes paid
Note 1 – Organization and Operations
Credit Insurance Fund is used:
Farm Credit System and District
• t o ensure the timely payment of principal and interest on Farm
Credit Systemwide debt obligations,
• to ensure the retirement of protected borrower capital at par or
stated value, and
• for other specified purposes.
Farm Credit System Lending Institutions
The Farm Credit System is a nationwide system of cooperatively
owned banks and associations established by Congress to meet
the credit needs of American agriculture. At December 31, 2012,
the Farm Credit System consisted of three Farm Credit Banks,
one Agricultural Credit Bank and 82 customer-owned cooperative
lending institutions (associations). The Farm Credit System serves
all 50 states, Washington, D.C., and Puerto Rico. This network of
financial cooperatives is owned and operated by the rural customers
the Farm Credit System serves – the American farmer and rancher.
AgriBank, FCB and its affiliated associations are collectively
referred to as the AgriBank Farm Credit Bank District. At December
31, 2012, the AgriBank Farm Credit Bank District consisted of
17 Agricultural Credit Associations that each has wholly owned
Federal Land Credit Association and Production Credit Association
subsidiaries. Federal Land Credit Associations are authorized to
originate long-term real estate mortgage loans. Production Credit
Associations are authorized to originate short-term and intermediateterm loans. Agricultural Credit Associations are authorized to
originate long-term real estate mortgage loans and short-term and
intermediate-term loans either directly or through their subsidiaries.
Associations are also authorized to provide lease financing options
for agricultural purposes. AgriBank, FCB provides funding to all
associations chartered within the AgriBank Farm Credit Bank District.
Associations are authorized to provide, either directly or in
participation with other lenders, credit and related services to
eligible borrowers. Eligible borrowers may include farmers, ranchers,
producers or harvesters of aquatic products, rural residents and farmrelated service businesses. In addition, associations can participate
with other lenders in loans to similar entities. Similar entities are
parties that are not eligible for a loan from a Farm Credit System
lending institution but have operations that are functionally similar to
the activities of eligible borrowers. Associations are also authorized
to purchase and hold certain types of investments including missionrelated investments.
Farm Credit System Regulator
The Farm Credit Administration is authorized by Congress to
regulate the Farm Credit System banks and associations. We are
examined by the Farm Credit Administration, and certain association
actions are subject to the prior approval of the Farm Credit
Administration and/or AgriBank, FCB.
Farm Credit Insurance Fund
The Farm Credit Act established the Farm Credit System Insurance
Corporation to administer the Farm Credit Insurance Fund. The Farm
At the discretion of the Farm Credit System Insurance Corporation,
the Farm Credit Insurance Fund is also available to provide
assistance to certain troubled Farm Credit System institutions and
for the operating expenses of the Farm Credit System Insurance
Corporation. Each Farm Credit System bank has been required to
pay premiums into the Farm Credit Insurance Fund until the assets
in the Farm Credit Insurance Fund equal 2 percent of the aggregated
insured obligations adjusted to reflect the reduced risk on loans
or investments guaranteed by federal or state governments. This
percentage of aggregate obligations can be changed by the Farm
Credit System Insurance Corporation, at its sole discretion, to a
percentage it determines to be actuarially sound.
The basis for assessing premiums is debt outstanding with
adjustments made for nonaccrual loans and impaired investment
securities, which are assessed a surcharge, while guaranteed loans
and investment securities are deductions from the premium base.
AgriBank, FCB, in turn, assesses premiums to us each year based
on similar factors.
Association
Farm Credit Services of America, ACA (ACA) and its subsidiaries,
Farm Credit Services of America, FLCA (FLCA) and Farm Credit
Services of America, PCA (PCA) are lending institutions of the Farm
Credit System. We are a member-owned cooperative providing
credit and credit-related services to, or for the benefit of, eligible
shareholders for qualified agricultural purposes in the states of Iowa,
Nebraska, South Dakota and Wyoming. We borrow from AgriBank,
FCB and provide financing and related services to our members.
Our ACA holds all the stock of the FLCA and PCA subsidiaries.
The FLCA makes secured long-term agricultural real estate and
rural home mortgage loans, and provides lease financing options
in collaboration with Farm Credit Leasing Services and CoBank,
ACB. The PCA makes short-term and intermediate-term loans for
agricultural production or operating purposes, and provides lease
financing options in collaboration with Farm Credit Leasing Services
and CoBank, ACB. We offer risk management services, including
crop insurance and crop-hail insurance, for borrowers and those
eligible to borrow.
In the fall of 2011, construction was completed on an additional
77,500-square-foot office building immediately north of our currently
owned corporate headquarters. The new facility replaced leased
office space at a second Omaha, Nebraska, location under a lease
that expired in 2012. The new additional office building makes space
available for future growth and allows all Omaha-based employees
to be at the same location. The new facility’s cost, including land,
building, furniture and equipment, totaled approximately $25 million
and was funded by our direct loan from AgriBank, FCB.
pg.
41
Note 2 – Summary of Significant Accounting Policies
Our accounting and reporting policies conform to accounting
principles generally accepted in the United States of America and
prevailing practices within the financial services industry.
Preparing financial statements in conformity with accounting
principles generally accepted in the United States of America requires
us to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and
the reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates. We have reclassified
certain amounts in prior years’ financial statements to conform to
current financial statement presentation. The consolidated financial
statements present the consolidated financial results of Farm Credit
Services of America, ACA (the parent) and Farm Credit Services
of America, FLCA and Farm Credit Services of America, PCA (the
subsidiaries). All material intercompany transactions and balances
have been eliminated in consolidation.
The following are our significant accounting policies:
Loans
Mortgage loan terms range from 5–35 years at origination. Almost
all commercial loans are made for agricultural production or operating
purposes with original terms of 10 years or less.
Loans are carried at their principal amount outstanding net of
any unearned income, cumulative charge-offs and unamortized
premiums or discounts on purchased loans. Loan interest is accrued
and credited to interest income based upon the daily principal
amount outstanding.
We place loans in nonaccrual status when:
• p
rincipal or interest is delinquent for 90 days or more (unless the
loan is well-secured and in the process of collection), or
• circumstances indicate that full collection is not expected.
When a loan is placed in nonaccrual status, we reverse accrued
interest to the extent principal plus accrued interest before the transfer
exceeds the net realizable value of the collateral. Any unpaid interest
accrued in a prior year is capitalized to the recorded investment of
the loan. Any cash received on nonaccrual loans is applied to reduce
the recorded investment in the loan, except in those cases where the
collection of the recorded investment is fully expected and the loan
does not have any unrecovered prior charge-offs. Nonaccrual loans
may be returned to accrual status when:
• principal and interest are current,
• prior charge-offs have been recovered,
• the ability of the borrower to fulfill the contractual repayment terms
is fully expected, and
• the loan is not classified as doubtful or loss.
A restructured loan constitutes a troubled debt restructuring if for
economic or legal reasons related to the debtor’s financial difficulties
we grant a concession to the debtor that we would not otherwise
consider. A concession is generally granted in order to minimize
economic loss and avoid foreclosure. Concessions vary by program
and are borrower-specific and may include interest rate reductions,
term extensions, payment deferrals or the acceptance of additional
collateral in lieu of payments. In limited circumstances, principal may
be forgiven.
Loans are charged off at the time they are determined to be
uncollectible.
Allowance for Loan Losses and Reserve for
Unfunded Lending Commitments
evaluation of factors such as:
•
•
•
•
•
loan loss history,
changes in credit risk classifications,
changes in collateral values,
changes in risk concentrations, and
changes in economic and environmental conditions.
Loans in our portfolio that are considered impaired are analyzed
individually to establish a specific allowance for impaired loans or
are analyzed on a pool basis if they have similar risk characteristics.
A loan is impaired when it is probable that all amounts due under
the contractual terms of the loan agreement will not be collected.
We measure impairment based on the net realizable value of the
collateral. All risk loans are considered to be impaired loans. Risk
loans include:
• nonaccrual loans,
• formally restructured loans, and
• loans that are 90 days or more past due and still accruing interest.
We record a specific allowance to reduce the carrying amount of
the risk loan to the lower of book value or the net realizable value of
collateral. When collection is unlikely, we charge the loan principal
and prior year(s) accrued interest against the allowance for loan
losses. Subsequent recoveries, if any, are added to the allowance for
loan losses.
An allowance is recorded for probable and estimable credit losses
as of the financial statement date for loans that are not individually
assessed as impaired.
Changes in the allowance for loan losses consist of provision
activity, recorded as “Provision for (reversal of) credit losses” on the
Consolidated Statement of Income, and charge-offs and recoveries.
During the third quarter of 2011, a study was completed to further
assess the risk of potential losses related to unfunded commitments.
The reserve for unfunded lending commitments is based on our
best estimate of losses inherent in lending commitments made
to customers but not yet disbursed. Factors such as likelihood of
disbursal and likelihood of losses given disbursement were utilized
in determining this contingency. Changes in the reserve for unfunded
commitments consist of provision activity, recorded as “Provision for
(reversal of) credit losses” on the Consolidated Statement of Income.
Accounting for the AgDirect, LLP investment in AgriBank, FCB is
on a cost basis.
agreements are included in “Loans” on the Consolidated Balance
Sheet and totaled $147.6 million at December 31, 2012, $169.7 million
at December 31, 2011, and $134.8 million at December 31, 2010.
Beginning January 1, 2012, we operate under an agreement with
CoBank, ACB, where we purchase a participation in loans made by
CoBank, ACB to Farm Credit Leasing Services to fund agricultural
equipment leases that are originated under the AgDirect trade credit
financing program. Under provisions of this agreement, Farm Credit
Leasing Services participates approximately 50 percent funding
for these leases to CoBank, ACB and CoBank, ACB participates a
similar amount to us. We participate a similar amount to AgDirect,
LLP and AgDirect, LLP participates a similar amount to AgriBank,
FCB. Farm Credit Leasing Services pays us a fee for the portion
of the funding they retain and AgDirect, LLP pays us a fee for the
portion of the funding we participate to them. Loans participated
to AgDirect, LLP under this program at December 31, 2012, totaled
$66.4 million.
Other Property Owned
Advanced Conditional Payments
Accounting for our investment in AgriBank, FCB is on a cost plus
allocated equities basis.
AgDirect, LLP Investment in AgriBank, FCB
We record other property owned, consisting of real and personal
property acquired through a collection action, at fair value, less
estimated selling costs at the time of acquisition. Revised estimates
of the fair value, less estimated selling costs are reported as
adjustments to the carrying amount of the asset, provided that the
adjusted value is not in excess of the carrying amount at acquisition.
Income and expenses from operations, carrying value adjustments
and realized losses (gains) on sales are recorded as “Losses (gains)
on other property owned” on the Consolidated Statement of Income.
Premises and Equipment
The carrying amount of premises and equipment is at cost, less
accumulated depreciation. Calculation of depreciation is generally
on the straight-line method over the estimated useful lives of the
assets, which are normally 5–40 years for building and improvements,
and 3–10 years for furniture and equipment. Gains and losses on
premises and equipment dispositions are reflected in current-year
income. Maintenance and repairs are included in operating expense
and improvements are capitalized.
Leases
Beginning August 1, 2011, we operate under an agreement with
CoBank, ACB, where we purchase a participation in loans made
by CoBank, ACB to Farm Credit Leasing Services to fund capital
markets leases, agricultural equipment leases and agricultural
facilities leases that we originate. Under provisions of this
agreement, Farm Credit Leasing Services participates approximately
50 percent funding for these leases to CoBank, ACB and CoBank,
ACB participates a similar amount to us. Prior to August 1, 2011, we
operated under an agreement with Farm Credit Leasing Services,
where they served as the lessor for capital markets leases, agricultural
equipment leases and agricultural facilities leases that we originate.
Under provisions of this agreement, Farm Credit Leasing Services
participated approximately 50 percent of the lease cash flows for
these leases to us. Lease participations purchased under these
We are authorized under the Farm Credit Act to accept advanced
conditional payments from customers. We net the advanced
conditional payments against the customer’s related loan balance
to the extent the real estate customer’s loan balance exceeds the
advance payments. Real estate funds held balances totaled $4.9
million at December 31, 2012, $4.5 million at December 31, 2011,
and $3.7 million at December 31, 2010. The amount of commercial
advance conditional payments accepted cannot exceed the
commitment amount of the customer’s note. We classify commercial
advance conditional payments as “Other liabilities” on the
Consolidated Balance Sheet since the limit on commercial advance
conditional payments is based on note commitments. Commercial
advance conditional payments totaled $1.3 million at December
31, 2012, $1.5 million at December 31, 2011, and $1.2 million at
December 31, 2010. We pay interest on advanced conditional
payments and they are not insured. Advanced conditional payments
are primarily for customers who are required to maintain them as part
of their loan agreement.
Employee Benefit Plans
Our employees may participate in a defined contribution plan.
Benefit plans are described in Note 9, “Employee Benefit Plans.”
The costs of the defined contribution plan are funded as accrued. In
addition, we provide postretirement medical benefits to employees
who meet specific hire-date and years-of-service requirements.
Income Taxes
The ACA and PCA accrue federal and state income taxes. Deferred
tax assets and liabilities are recognized for future tax consequences
of temporary differences between the carrying amounts and tax
basis of assets and liabilities. Deferred tax assets are recorded if
the deferred tax asset is more likely than not to be realized. If the
realization test cannot be met, the deferred tax asset is reduced by
a valuation allowance. The expected future tax consequences of
uncertain income tax positions are accrued.
pg.
43
The FLCA is exempt from federal and other taxes to the extent
provided in the Farm Credit Act.
Patronage Program
We accrue patronage distributions as declared by the Board of
Directors, normally in December of each year. We pay the accrued
patronage during the first quarter of each subsequent year. Cash
patronage distributions are referred to as cash-back dividends.
value is determined using pricing models, discounted cash flow
methodologies or similar techniques, as well as instruments for
which the determination of fair value requires significant management
judgment or estimation.
We currently have no material financial statement items required
to be accounted for within the consolidated financial statements at
fair value.
Recently Issued Accounting Pronouncements
Statement of Cash Flows
For purposes of reporting cash flow, cash includes cash on hand
and on deposit at commercial banks.
Derivative Instruments and Hedging Activity
The Financial Accounting Standards Board guidance on Derivative
Instruments and Hedging requires derivatives to be recorded on
the balance sheet as assets and liabilities, measured at fair value.
Changes in the values of those derivatives are accounted for as
gains or losses, or as a component of other comprehensive income,
depending on the use of the derivative and whether it qualifies
for hedge accounting. We have entered into short-term foreign
exchange transactions under agreements to fund loans to certain
customers that are denominated in foreign currency. The effects of
any foreign currency-related derivative instruments were not material
to our financial position or results of operations for any year included
in the consolidated financial statements.
Fair Value Measurement
The Financial Accounting Standards Board guidance on Fair Value
Measurements describes three levels of inputs that may be used to
measure fair value.
Level 1: Quoted prices in active markets for identical assets or
liabilities that the reporting entity has the ability to access at the
measurement date.
Level 2: Observable inputs other than quoted prices included
within Level 1 that are observable for the asset or liability either
directly or indirectly. Level 2 inputs include the following:
• quoted prices for similar assets or liabilities in active markets;
• quoted prices for identical or similar assets or liabilities in markets
that are not active so that they are traded less frequently than
exchange-traded instruments, the prices are not current or
principal market information is not released publicly;
• inputs that are observable such as interest rates and yield curves,
prepayment speeds, credit risks and default rates; and
• inputs derived principally from, or corroborated by, observable
market data by correlation or other means.
Level 3: Unobservable inputs that are supported by little or no
market activity and that are significant to the fair value of the assets
or liabilities. These unobservable inputs reflect our own assumptions
that market participants would use in pricing the asset or liability.
Level 3 assets and liabilities include financial instruments whose
In December 2011, the Financial Accounting Standards Board
issued guidance entitled, Balance Sheet – Disclosures about
Offsetting Assets and Liabilities. In January 2013, the Financial
Accounting Standards Board issued clarifying guidance surrounding
the scope of financial instruments covered under this guidance. The
offsetting disclosures are only applied to derivatives, repurchase
agreements and securities lending transactions. The guidance
requires an entity to disclose information about offsetting and
related arrangements to enable users of its financial statements to
understand the effect of those arrangements on its financial position.
This includes the effect or potential effect of rights of setoff associated
with an entity’s recognized assets and recognized liabilities. The
requirements apply to in scope financial instruments that are offset in
accordance with the rights of offset set forth in accounting guidance and
for those financial instruments that are subject to an enforceable master
netting arrangement or similar agreement, irrespective of whether
they are offset or not. This guidance is to be applied retroactively
for all comparative periods and is effective for annual and interim
reporting periods beginning on or after January 1, 2013. The
adoption of this guidance will have no impact on our consolidated
financial condition or consolidated results of operations.
In September 2011, the Financial Accounting Standards Board
issued guidance entitled, Compensation – Retirement Benefits
– Multiemployer Plans. The guidance is intended to provide
more information about an employer’s financial obligations to
multiemployer pension and postemployment benefit plans which
should help financial statement users better understand the financial
health of significant plans in which the employer participates. For
nonpublic entities, the disclosures are effective for annual reporting
periods ending on or after December 15, 2012. The adoption of this
guidance did not have any impact on our consolidated financial
condition or consolidated results of operations and did not result in
additional disclosures.
In June 2011, the Financial Accounting Standards Board issued
guidance entitled, Presentation of Comprehensive Income. The
guidance eliminates the current option to report other comprehensive
income and its components in the statement of changes in equity.
An entity can elect to present items of net income and other
comprehensive income in one continuous statement – referred to
as the Statement of Comprehensive Income – or in two separate,
but consecutive, statements. The guidance is intended to improve
the comparability, consistency and transparency of financial
reporting and to increase the prominence of items reported in
other comprehensive income. For nonpublic entities, the guidance
is effective for fiscal years ending after December 15, 2012, and
interim and annual periods thereafter. The adoption of the guidance
did not have any impact on our consolidated financial condition or
consolidated results of operations. If, in future periods, we have
material other comprehensive income, expanded financial statement
presentation will be required.
In May 2011, Financial Accounting Standards Board issued
guidance entitled, Fair Value Measurement – Amendments to Achieve
Common Fair Value Measurements and Disclosure Requirements in
U.S. GAAP and International Financial Reporting Standards (IFRS).
The guidance results in a consistent definition of fair value and
common requirements for measurement of and disclosure about
fair value between United States Generally Accepted Accounting
Principles and International Financial Reporting Standards. The
amendments include the following:
• A
pplication of the highest and best use valuation premise is only
relevant when measuring the fair value of nonfinancial assets.
• An exception to the requirement for measuring fair value when a
reporting entity manages its financial instruments on the basis of
its net exposure, rather than its gross exposure, to market risks
such as interest rate risk and credit risk of counterparties.
• E
xpansion of the disclosures about fair value measurements. New
disclosures are required about the use of a nonfinancial asset
measured or disclosed at fair value if its use differs from its highest
and best use.
The amendments are to be applied prospectively. For nonpublic
entities, the amendments are effective for annual periods beginning
after December 15, 2011. The adoption of this guidance did not have
any impact on our consolidated financial condition or consolidated
results of operations and did not result in additional disclosures at
this time.
In April 2011, the Financial Accounting Standards Board
issued guidance entitled, A Creditor’s Determination of Whether
a Restructuring Is a Troubled Debt Restructuring. The guidance
provides additional clarification to creditors for evaluating whether
a modification or restructuring of a receivable is a troubled debt
restructuring. The guidance is effective for nonpublic entities for
annual periods ending on or after December 15, 2012, including
interim periods within those annual periods. The adoption of this
guidance did not have a significant impact on our consolidated
financial condition or consolidated results of operations and did not
result in additional disclosures.
Note 3 – Loans and Allowance for Loan Losses
Loans, including participations purchased and nonaccruals, consisted of the following (in thousands):
December 31,
2012
Long-term agricultural mortgage
2011
2010
Amount
Percentage
Amount
Percentage
Amount
Percentage
$10,581,998
57.2%
$ 8,523,447
53.6%
$ 7,512,555
48.3%
Production and intermediate term
5,003,590
27.1
4,885,960
30.8
5,544,592
35.7
Processing and marketing
1,163,255
6.3
1,016,492
6.4
1,201,136
7.7
Rural residential real estate
1,068,317
5.8
901,536
5.7
766,087
4.9
Farm-related business
361,747
2.0
278,262
1.7
248,588
1.6
Government-guaranteed loans
116,135
0.6
110,380
0.7
70,846
0.5
Energy
101,457
0.5
73,588
0.5
86,526
0.6
Communications
75,005
0.4
86,004
0.5
94,038
0.6
Loans to cooperatives
14,237
0.1
11,442
0.1
20,870
0.1
3,875
–
3,875
–
–
–
100.0%
$15,545,238
100.0%
Mission-related investments
Total loans
$18,489,616
100.0%
$15,890,986
pg.
45
We may purchase or sell participation interests with other parties in order to diversify risk, manage loan volume or comply with Farm Credit
Administration regulations. The following table presents information regarding participations purchased and sold (in thousands):
AgriBank, FCB
Other Farm Credit
Institutions
Non-Farm Credit
Institutions
Total
Participations
Participations
Participations
Participations
Purchased
Sold
Purchased
Sold
Purchased
–
$1,043,114
$ 250,152
$175,989
–
30,847
557,931
304,627
1,937,552
–
55,248
540,172
316,132
722,325
–
Sold
Purchased
Sold
4,599
$ 306,346
$1,223,702
1,975,033
2,495,483
2,310,507
5,595
1,262,497
376,975
As of December 31, 2012
Long-term agricultural
mortgage
$
Production and
intermediate term
–
–
–
–
163,480
Communications
–
–
75,012
$
502
56,194
$
–
6,675
–
61,844
–
–
–
–
225,324
–
75,012
502
6,675
–
Energy
–
–
101,453
–
–
–
101,453
–
–
–
14,237
–
–
–
14,237
–
Government-guaranteed
loans
–
–
–
–
$
–
$1,129,209
$1,702,437
$803,925
$2,894,050
$1,985,227
$4,596,487
$3,918,361
$
–
$1,244,495
$ 215,675
$133,962
$
$
7,758
$ 262,870
$1,386,215
–
26,007
468,298
126,518
1,361,881
1,328,034
1,830,179
1,480,559
–
37,071
441,748
151,175
506,176
15,449
947,924
203,695
–
Total
116,135
–
116,135
–
Long-term agricultural
mortgage
Production and
intermediate term
–
–
525
47,195
–
–
525
–
–
98,628
–
–
140,796
–
Communications
–
–
86,024
–
–
–
86,024
–
Energy
–
–
73,571
–
–
–
73,571
–
–
–
11,441
–
–
–
11,441
–
Government-guaranteed
loans
–
–
–
–
–
110,380
–
–
$1,307,573
$1,395,385
$412,180
Total
$
Participations purchased increased $1.1 billion in 2012, while
participations sold increased by $847.4 million. The changes are
primarily due to increases in our AgDirect agricultural equipment
financing program as described in Note 5, “AgDirect, LLP Investment
in AgriBank, FCB,” and loan participations purchased and sold by
our AgriBusiness Finance and Capital Markets teams, partially offset
by a reduction in the pool of real estate loans sold to AgriBank, FCB.
At December 31, 2012, participations purchased under the AgDirect
program were $1.7 billion, while participations sold were $2.0 billion.
42,168
–
110,380
$2,067,800
$1,351,241
$3,463,185
$3,070,994
On October 1, 2008, we sold a pool of approximately $1.9 billion of
real estate loans to AgriBank, FCB. The sale is intended to enhance
our regulatory capital ratios and reduce credit risk. AgriBank, FCB
has established a separate patronage pool for these assets and
intends to pay the net earnings on the pool to us as patronage. We
anticipate our net income after patronage from the pool will not be
materially affected. Patronage declared on this pool is solely at the
discretion of the AgriBank, FCB Board of Directors. We will continue
to provide servicing for the loans in the pool, and AgriBank, FCB
will pay us a fee for this servicing. As part of this transaction, we
purchased additional common stock in AgriBank, FCB equal to
8 percent of the pool assets. The volume in this pool of assets at
December 31, 2011, was $1.0 billion. We have received $32.0 million
of asset pool patronage in 2012, $34.5 million in 2011 and $43.9
million in 2010 related to this participation.
We have concentrations with individual borrowers within various
agricultural commodities. At December 31, 2012, loans outstanding
plus commitments to our 10 largest borrowers, net of participations
sold, totaled an amount equal to 21.7 percent of members’ equity.
No single borrower’s loans outstanding plus commitments exceeds
5 percent of members’ equity.
Our credit risk concentration in various agricultural commodities
is shown in the following table. While the amounts represent our
maximum potential credit risk related to recorded loan principal, a
substantial portion of our lending activities is collateralized, which
reduces our exposure to credit loss associated with lending activity.
We include an estimate of our credit risk exposure in determining the
allowance for loan losses.
December 31,
2012
2011
2010
47.0%
45.9%
45.4%
Landlords/investors
9.9
9.4
8.3
Beef feedlot
9.2
9.5
8.6
Swine
7.1
7.1
7.3
Cow-calf
6.6
7.4
7.6
Dairy
4.3
4.3
4.8
General livestock
1.8
2.0
2.2
Poultry
1.7
1.8
1.8
Farm supply
1.3
1.5
2.5
Meat/proteins-processing
1.2
1.4
1.2
Renewable fuels
1.1
1.1
1.8
Forest products
0.9
0.7
0.7
Other
7.9
7.9
7.8
100.0%
100.0%
100.0%
Grain
Total
The amount of collateral obtained, if deemed necessary
upon extension of credit, is based on our credit evaluation of the
borrower. Collateral held varies but typically includes farmland
and income-producing property, such as crops and livestock, as
well as receivables. Long-term real estate loans are secured by a
first lien on the underlying real property. Federal regulations state
that long-term real estate loans are not to exceed 85 percent (97
percent if guaranteed by a government agency) of the property’s
appraised value. However, internal lending procedures require a
more conservative loan-to-value ratio, which results in an average
loan-to-value ratio in the real estate portfolio of less than 50 percent
of current market values.
Impaired loans are loans for which it is probable that all principal
and interest will not be collected according to the contractual terms.
The following table presents information concerning the recorded
investment in impaired loans. The recorded investment includes
accrued interest receivable for accrual loans (in thousands).
December 31,
2012
2011
2010
$59,357
$ 93,524
$135,007
Nonaccrual loans:
urrent as to principal
C
and interest
12,823
25,309
30,320
72,181
118,833
165,327
Restructured
9,085
8,925
3,111
90 days or more past due
2,652
149
771
$83,918
$127,907
$169,209
Past due
Total nonaccrual loans
Impaired accrual loans:
Total impaired loans
The decline in total risk loans is primarily due to payments
received on nonaccrual accounts and net charge-offs. Based on our
analysis, loans 90 days or more past due and still accruing interest
were adequately secured and in the process of collection.
At December 31, 2012, there were approximately $8.7 million in
commitments to lend additional funds to customers whose loans
were classified impaired.
Interest income is recognized and cash payments are applied
on nonaccrual impaired loans as described in Note 2, “Summary
of Significant Accounting Policies.” The following table sets forth
interest income recognized on impaired loans (in thousands):
Interest income recognized
on nonaccrual loans
Interest income on impaired
accrual loans
Interest income recognized
on impaired loans
2012
2011
2010
$6,533
$4,919
$9,534
710
619
237
$7,243
$5,538
$9,771
The following table presents information concerning impaired
loans (in thousands):
December 31,
Impaired loans with
related allowance
Impaired loans with no
related allowance
Total impaired loans
Allowance on impaired loans
Average impaired loans
2012
2011
2010
$18,897
$ 40,961
$ 59,432
65,021
86,946
109,777
$83,918
$127,907
$169,209
$5,639
$10,633
$16,769
$111,646
$149,700
$209,147
pg.
Risk assets by loan type (accruing volume includes accrued interest receivable) are as follows (in thousands):
December 31,
2012
2011
2010
$28,404
$ 45,767
$ 50,378
35,647
61,176
97,763
3
22
6,522
5,472
8,913
7,621
Nonaccrual loans:
438
1,224
992
2,217
1,731
2,051
$72,181
$118,833
$165,327
$ 3,577
$
$
Total nonaccrual loans
Accruing restructured loans:
1,332
4,398
4,514
213
Total accruing restructured loans
3,079
897
2,126
985
–
–
–
$ 9,085
$
8,925
$
$
$
–
$
3,111
Accruing loans 90 days or more past due:
Total accruing loans 90 days or more past due
Total risk loans
Total risk assets
826
1,376
149
167
–
283
$ 2,652
26
–
$
86
482
177
149
$
771
83,918
127,907
169,209
4,800
4,330
6,495
$88,718
$132,237
$175,704
47
All risk loans are considered to be impaired loans. The following table provides additional impaired loan information (in thousands):
For the period ended
December 31, 2012
Recorded
Investment (1)
Unpaid Principal
Balance (2)
Related
Allowance
Average Impaired
Loans
Interest Income
Recognized
Impaired loans with a related allowance for credit losses:
$
58
$–
16,532
61
27,199
5,374
20,854
43
82
84
10
35
–
–
Total
63
$
23
$
5
5
3
1
2,217
2,217
229
1,278
$18,897
$29,568
$5,639
$22,226
$43
$
–
Impaired loans with no related allowance for credit losses:
$32,746
$ 44,079
$ –
$45,793
$2,826
21,389
47,251
–
30,425
3,663
4,568
8,804
–
4,598
275
5,885
6,450
–
7,185
255
433
764
–
1,137
132
–
282
49
$89,420
$7,200
23
$ 45,851
$2,826
5,374
51,279
3,706
4,598
275
10
7,220
255
132
–
–
$65,021
$107,348
$ –
$32,807
$ 44,142
$
37,921
74,450
4,568
8,804
5,967
6,534
Total
Total impaired loans:
Total
–
438
769
3
1,138
2,217
2,217
229
1,560
49
$83,918
$136,916
$5,639
$111,646
$7,243
he recorded investment in the receivable is the face amount increased or decreased by applicable accrued interest and unamortized premium, discount,
T
finance charges or acquisition costs, and may also reflect a previous write-down of the investment.
(2) Unpaid principal balance represents the contractual principal balance of the loan.
(1)
pg.
49
For the Period Ended
December 31, 2011
Recorded
Investment (1)
Unpaid Principal
Balance (2)
Related
Allowance
Average Impaired
Loans
Interest Income
Recognized
Impaired loans with a related allowance for credit losses:
$ 2,099
$ 2,156
36,728
57,888
Total
$
306
$ 2,095
$ (2)
9,824
38,709
146
21
21
3
10
2,113
2,112
500
1,271
–
$40,961
$62,177
$10,633
$42,085
$144
–
Impaired loans with no related allowance for credit losses:
$46,747
$ 57,345
$ –
$ 49,041
$2,247
25,170
31,718
–
42,608
2,753
4,515
10,379
–
6,079
162
6,800
7,250
–
6,561
258
1,224
1,563
–
933
759
759
–
1,142
Lease participations purchased
Communications
–
305
–
1,731
1,731
–
946
(24)
$86,946
$110,745
$ –
$107,615
$5,394
$ 48,846
$ 59,501
$
306
$ 51,136
$2,245
61,898
89,606
9,824
81,317
2,899
4,536
10,400
3
6,089
162
8,913
9,362
500
7,832
258
1,224
1,563
–
933
759
759
–
1,142
Total
–
–
(2)
–
Total impaired loans:
Lease participations purchased
Communications
Total
–
–
1,731
1,731
$127,907
$172,922
(2)
–
–
305
–
–
946
(24)
$149,700
$5,538
$10,633
he recorded investment in the receivable is the face amount increased or decreased by applicable accrued interest and unamortized premium, discount,
T
finance charges or acquisition costs, and may also reflect a previous write-down of the investment.
(2) Unpaid principal balance represents the contractual principal balance of the loan.
(1)
One credit quality indicator we utilize is the Farm Credit
Administration Uniform Loan Classification System that categorizes
loans into five categories. The categories are defined as follows:
• a
cceptable – assets are expected to be fully collectible and
represent the highest quality;
• other assets especially mentioned (OAEM) – assets are currently
collectible but exhibit some potential weakness;
• s ubstandard – assets exhibit some serious weakness in repayment
capacity, equity and/or collateral pledged on the loan;
• doubtful – assets exhibit similar weaknesses to substandard
assets; however, doubtful assets have additional weaknesses in
existing factors, conditions and values that make collection in full
highly questionable; and
• loss – assets are considered uncollectible.
The following table shows loans and related accrued interest classified under the Farm Credit Administration Uniform Loan Classification
System as a percentage of total loans and related accrued interest receivable by loan type:
Acceptable
OAEM
Substandard/Doubtful
97.43%
0.99%
1.58%
95.03%
1.27%
3.70%
92.57%
4.50%
2.93%
97.12%
0.86%
2.02%
97.35%
1.98%
0.67%
Communications
91.45%
–
8.55%
Energy
94.03%
–
5.97%
98.10%
–
1.90%
36.08%
–
63.92%
100.00%
–
–
96.37%
1.28%
2.35%
95.26%
1.94%
2.80%
92.30%
3.13%
4.57%
89.36%
8.62%
2.02%
96.32%
1.27%
2.41%
96.58%
2.37%
1.05%
8.48%
Total
Communications
91.52%
Energy
91.22%
Total
–
–
8.78%
98.44%
–
1.56%
–
100.00%
100.00%
93.96%
–
2.78%
–
–
3.26%
pg.
51
The following table provides an age analysis of past due loans by loan type (in thousands; accruing volume includes accrued interest receivable):
30–89 Days
Past Due
90 Days or
More Past Due
Total
Past Due
Not Past Due
or Less Than
30 Days
Past Due
$ 4,121
$ 3,429
$ 7,550
$10,731,767
$10,739,317
$ 826
11,107
5,296
16,403
5,061,701
5,078,104
1,376
170
170
1,168,074
1,168,244
167
3,257
813
4,070
1,072,607
1,076,677
165
63
228
363,404
363,632
–
75,133
75,133
–
Total
Loans
90 Days or
More Past Due
and Accruing
Communications
–
–
Energy
–
–
–
–
–
–
2,217
2,217
283
101,664
101,664
–
114,341
116,558
–
–
–
–
14,307
14,307
–
–
–
–
3,899
3,899
–
$18,650
$11,988
$30,638
$18,706,897
$18,737,535
$ 7,514
$ 6,245
$13,759
$ 8,661,006
$ 8,674,765
19,470
11,227
30,697
4,937,765
4,968,462
21
1
22
1,020,908
1,020,930
–
3,363
2,947
6,310
903,085
909,395
–
217
280,255
280,472
–
86,142
86,142
–
Total
$2,652
Communications
217
–
Energy
–
–
–
–
–
1,731
–
–
1,731
149
73,968
73,968
–
109,161
110,892
–
–
–
–
–
11,496
11,496
–
–
–
3,899
3,899
$30,585
$22,151
$52,736
$16,087,685
$16,140,421
Total
$–
–
$149
A restructuring of a loan constitutes a troubled debt restructuring
if the creditor for economic or legal reasons related to the debtor’s
financial difficulties grants a concession to the debtor that it would not
otherwise consider. Concessions vary by program and are borrowerspecific and may include interest rate reductions, term extensions,
payment deferrals or the acceptance of additional collateral in lieu
of payments. In limited circumstances, principal may be forgiven. As
a restructured loan constitutes a troubled debt restructuring, these
loans are included within our risk loans. All risk loans are analyzed
within our allowance for loan losses. The following tables present
information regarding troubled debt restructurings that occurred
during the year ended December 31 (in thousands):
The following table presents information regarding troubled debt
restructurings that occurred within the previous 12 months and for
which there was a subsequent payment default during the respective
reporting period (in thousands):
Recorded Investment
December 31, 2012
Troubled debt restructurings that subsequently defaulted:
December 31, 2011
Troubled debt restructurings that subsequently defaulted:
$1,568
$1,531
2,962
2,955
$4,530
$4,486
2011
Troubled debt restructurings:
Long-term
agricultural
mortgage
Production and
intermediate term
Rural residential
real estate
Total
237
Total
Troubled debt restructurings:
Total
$191
2012
Production and
intermediate term
$395
Total
Premodification
Postmodification
Outstanding
Outstanding
Recorded Investment Recorded Investment
Long-term
agricultural
mortgage
$395
$2,701
$428
Troubled debt restructurings outstanding at December 31, 2012,
totaled $27.2 million, of which $17.3 million were in nonaccrual status,
compared to a total of $37.0 million at December 31, 2011, of which
$28.0 million were in nonaccrual status. Additional commitments to
lend to borrowers whose loans have been modified in a troubled debt
restructuring were $5.8 million at December 31, 2012.
The “Provision for (reversal of) credit losses” on the Consolidated
Statement of Income includes a provision for (reversal of) loan losses
and a provision for unfunded lending commitments. A summary of
changes in the allowance for credit losses follows (in thousands):
$2,689
1,740
1,672
112
112
$4,553
$4,473
December 31,
Allowance for Loan Losses
2012
2011
2010
Balance at beginning of year
$58,000
$84,000
$102,000
12,051
(19,775)
17,504
(11,934)
(10,416)
(39,636)
Provision for (reversal of)
loan losses
Loans charged off
Premodification represents the recorded investment just prior
to restructuring, and postmodification represents the recorded
investment immediately following the restructuring. The recorded
investment is the face amount of the receivable increased or
decreased by applicable accrued interest and unamortized premium,
discount, finance charges or acquisition costs, and may also reflect a
previous direct write-down of the investment.
Recoveries
Balance at end of year
Reserve for Unfunded
Lending Commitments
Balance at beginning of year
1,883
4,191
4,132
$60,000
$58,000
$ 84,000
December 31,
2012
$10,000
2011
$
–
2010
$ –
Provision for unfunded
lending commitments
3,000
10,000
–
Balance at end of year
$13,000
$10,000
$ –
pg.
53
The credit quality of our portfolio continued to improve during
2012. Adversely classified assets decreased from 3.3 percent of
the portfolio at December 31, 2011, to 2.3 percent of the portfolio
at December 31, 2012. Adversely classified assets are assets we
have identified as showing some credit weakness outside our credit
standards. We have considered portfolio credit quality in assessing
the reasonableness of our allowance for loan losses.
evaluation of factors such as loan loss history, portfolio quality, and
current economic and environmental conditions.
We recorded a $15.1 million provision for credit losses for 2012
compared to a $9.8 million provision for credit losses reversal for
2011. The provision for credit losses includes the provision for loan
losses and the provision for unfunded lending commitments. The
increase in the provision for credit losses is due to establishment
of a specific general reserve for the impact of the 2012 drought, an
industry-specific reserve for the poultry industry and net chargeoffs, partially offset by elimination of the industry-specific reserves
for Missouri River flooding and the energy/electric industry. Total
industry-specific and specific general reserves comprise $11.3
million of the $60.0 million allowance for loan losses balance at
December 31, 2012.
We recorded $10.1 million of net charge-offs in 2012 (0.06 percent
of average loans), primarily in the dairy industry. We recorded net
charge-offs of $6.2 million in 2011 (0.04 percent of average loans)
and $35.5 million in 2010 (0.25 percent of average loans).
During February 2008, we entered into a credit default swap
with Omaha 2008-A LLC (2008 LLC). The balance of the loans
and accrued interest under the credit default swap was $417.7
million at December 31, 2012. Pursuant to the credit default swap,
following the occurrence of a known loss, the 2008 LLC will be
required to pay us an amount equal to the principal amount of the
defaulted loan, plus covered interest and costs, less any recoveries.
However, the 2008 LLC is not required to pay us until the Retained
Subordinate Notional Amount we hold is reduced to zero. In addition
to loss events, proportionate reductions in the Retained Subordinate
Notional Amount will occur due to reductions of the Aggregate
Notional Amount of the Reference Obligations associated with
nonloss events such as repayment of loan principal. The balance of
the Retained Subordinate Notional Amount at December 31, 2012,
was $3.7 million. The credit default agreement will remain in place
over the life of the loans under the credit default swap. The maximum
amount of losses the 2008 LLC will be required to pay under the
credit default swap as of December 31, 2012, is $16.8 million. As of
December 31, 2012, no losses had been incurred by the 2008 LLC or
us. We capitalized costs of $1.6 million relating to the establishment
of the credit default swap. The capitalized costs are included in other
assets and amortized over the expected remaining life of the loans
under the agreement. Fees related to the credit default swap are
paid based on the volume of loans under the agreement over the
life of the agreement. “Capital transaction expense” presented in
the Consolidated Statement of Income includes fees and amortized
costs for each year presented.
The 2008 LLC is a variable-interest entity created to acquire
eligible securities, which are used as collateral to secure the Failure
to Pay Credit Event payment of the LLC under a credit default
swap with us. The securities are limited to direct obligations of, and
obligations fully guaranteed as to timely payment of principal and
interest by, the United States of America or obligations of any agency
or instrumentality of the United States of America, the obligations
of which are backed by the full faith and credit of the United States
of America. Eligible securities, however, will not include “real estate
mortgages” (or interest therein) as defined in Section 7701(i) of
the Internal Revenue Code and the accompanying United States
Treasury regulations. We are not the primary beneficiary of the
variable-interest entity.
A summary of changes in the allowance for loan losses and period-end recorded investments in loans by loan type is as follows (in thousands):
Allowance for Loan Losses:
Balance at
December 31, 2011
Provision for
(Reversal of)
Loan Losses
$
796
$18,592
25,087
8,077
5,492
3,180
Loan Recoveries
$
72
Loan Charge-Offs
$
1,749
(527)
(10,724)
–
–
5,807
(1,876)
2
(384)
843
150
60
(106)
Communications
475
755
–
–
1,281
460
–
–
Energy
22
525
–
(193)
345
(27)
–
–
56
11
–
–
$58,000
$12,051
$1,883
$(11,934)
Total
Allowance for Loan Losses:
Balance at
December 31, 2010
Provision for
(Reversal of)
Loan Losses
$29,875
$(11,344)
Loan Recoveries
$
473
Loan Charge-Offs
$
(412)
42,235
(12,672)
3,411
(7,887)
7,501
(2,201)
216
(204)
2,593
3,215
2
796
12
35
Communications
258
217
Energy
422
2,706
55
(24)
–
265
80
–
56
–
–
$4,191
$(10,416)
Total
–
$84,000
$(19,775)
–
(3)
–
–
54
(1,901)
(9)
–
pg.
55
Recorded Investments in Loans Outstanding:
Balance at
December 31, 2012
$18,933
Ending Balance
Individually Evaluated
for Impairment
$
Ending Balance
Collectively Evaluated
for Impairment
Ending Balance at
December 31, 2012
Ending Balance for
Loans Individually
Evaluated for
Impairment
Ending Balance for
Loans Collectively
Evaluated for
Impairment
23
$18,910
$10,739,317
$32,806
$10,706,511
24,189
4,746
19,443
5,078,104
34,870
5,043,234
8,672
–
8,672
1,168,244
4,568
1,163,676
3,549
10
3,540
1,076,677
5,967
1,070,710
947
3
943
363,632
438
363,194
1,230
–
1,230
75,133
–
75,133
1,741
–
1,741
101,664
–
101,664
354
229
62
116,558
318
–
318
14,307
–
14,307
67
–
130
3,899
–
3,899
$54,989
$18,737,535
$60,000
$5,011
2,217
$80,866
114,341
$18,656,669
Recorded Investments in Loans Outstanding:
Ending Balance at
December 31, 2011
Ending Balance for
Loans Individually
Evaluated for
Impairment
Ending Balance for
Loans Collectively
Evaluated for
Impairment
$18,286
$ 8,674,765
$ 48,845
$ 8,625,920
8,819
16,268
4,968,462
57,830
4,910,632
–
5,492
1,020,930
4,537
1,016,393
500
5,307
909,395
8,913
900,482
843
280,472
1,223
279,249
Balance at
December 31, 2011
Ending Balance
Individually Evaluated
for Impairment
Ending Balance
Collectively Evaluated
for Impairment
$18,592
$ 306
25,087
5,492
5,807
843
–
475
–
475
86,142
–
1,281
–
1,281
73,968
–
22
–
22
110,892
345
–
345
11,496
–
56
–
56
3,899
–
$48,375
$16,140,421
$58,000
$9,625
1,731
$123,079
86,142
73,968
109,161
11,496
3,899
$16,017,342
Note 4 – Investment in AgriBank, FCB
We are required to invest in the capital stock of AgriBank, FCB
as a condition for maintaining a readily available source of funds.
The minimum investment required by AgriBank, FCB is based on our
quarterly average notes payable. At December 31, 2012, the required
investment is 2.50 percent. AgriBank, FCB’s current bylaws allow the
required investment to increase to 4.00 percent. Effective in 2009,
our required investment in AgriBank, FCB includes an additional 1.00
percent on growth that exceeds a targeted rate set by AgriBank,
FCB. The required investment is subject to change quarterly and
increased by $45.4 million in 2012 to $375.5 million at December 31,
2012. At the sole discretion of the AgriBank, FCB Board of Directors,
they may make quarterly equalization payments to us based on the
investment that is in excess of the required investment. In addition,
the investment in AgriBank, FCB makes us eligible for patronage
income paid by AgriBank, FCB. The patronage is paid quarterly at the
sole discretion of the AgriBank, FCB Board of Directors. Patronage
amounts paid on a quarterly basis may be reversed by AgriBank,
FCB at any time during the year should unforeseen events occur
that, had they been known, would have reduced or eliminated the
amount of patronage paid.
In addition to the investment described earlier, as disclosed in
Note 3, “Loans and Allowance for Loan Losses,” we sold a pool
of real estate loans to AgriBank, FCB in the fourth quarter of 2008.
AgriBank, FCB requires us to maintain a stock investment equal to
8 percent of this loan pool. At December 31, 2012, the investment
required by the loan pool was $79.7 million.
described earlier. The LLP subsequently sold a like amount of
loan participations to AgriBank, FCB. The LLP paid us a fee for
originating these loans. Additional loans have been sold to the LLP
as they were originated, and the LLP has sold a like amount of loan
participations to AgriBank, FCB. Total participations sold to the LLP
at December 31, 2012, were $2.017 billion. AgriBank, FCB, at the
discretion of its Board of Directors, pays patronage on these loan
participations to AgDirect, LLP. Any patronage declared is accrued
quarterly and paid by AgriBank, FCB in the first month of the
subsequent quarter. AgDirect, LLP distributes any patronage paid by
AgriBank, FCB as a partnership distribution to the AgDirect, LLP partners.
Also, in April and December 2011 and December 2012, we entered
into agreements with additional Farm Credit System associations
inside and outside of the AgriBank, FCB District to provide access
to our AgDirect trade credit financing program. The Farm Credit
Administration approved requests from these associations to invest
in the AgDirect, LLP. At December 31, 2012, AgDirect, LLP assets
primarily consist of a $129.3 million investment in AgriBank, FCB
to capitalize the loan participations sold to AgriBank, FCB. We hold
$82.4 million of this investment, and other Farm Credit System
entities hold the remaining investment. At December 31, 2012,
AgDirect, LLP had liabilities of $1.6 million consisting of a distribution
payable to LLP partners from patronage declared by AgriBank, FCB
for the fourth quarter of 2012. AgDirect, LLP had no liabilities at
December 31, 2011. AgDirect, LLP had net income of $6.8 million
for the year ended 2012 from patronage paid by AgriBank, FCB and
had no net income for the year ended December 31, 2011.
Note 6 – Premises and Equipment
Note 5 – AgDirect, LLP Investment in AgriBank, FCB
Premises and equipment consisted of the following (in thousands):
We entered into agreements with two other Farm Credit System
associations in the AgriBank, FCB District during 2010 to provide
access to our AgDirect trade credit financing program. The AgDirect
program includes origination and refinancing of agricultural
equipment loans through independent equipment dealers. In
February 2011, the Farm Credit Administration approved a request
from the three associations to invest in a limited liability partnership
(LLP) that will facilitate this collaborative AgDirect trade credit
financing program and allow us to leverage the AgDirect program
for the mutual benefit of our associations and the farmers and
ranchers we serve. The LLP was established in the second quarter
of 2011. Our investment is reflected as “AgDirect, LLP investment
in AgriBank, FCB” on our Consolidated Balance Sheet. In April
2011, the LLP purchased participations of $858.7 million in AgDirect
loans from us that were originated subsequent to the agreements
December 31,
Land, buildings and
improvements
Construction/
improvements in progress
Furniture and equipment
Less accumulated
depreciation
Premises and
equipment, net
2012
2011
2010
$136,899
$130,901
$102,799
3,348
3,467
17,177
63,638
61,056
56,468
203,885
195,424
176,444
81,598
78,309
72,310
$122,287
$117,115
$104,134
pg.
57
Note 7 – Notes Payable
The notes payable to AgriBank, FCB represents borrowings to
fund our net assets. This indebtedness is collateralized by a pledge
of substantially all of our assets and is governed by a General
Financing Agreement. The interest rate is periodically adjusted by
AgriBank, FCB and at December 31, 2012, was 1.53 percent for the
ACA, 1.86 percent for the FLCA and 0.66 percent for the PCA. The
consolidated notes payable balance is presented in the following
table (in thousands):
December 31,
Notes payable to
AgriBank, FCB
2012
2011
2010
$16,060,763
$13,720,771
$13,623,203
Funding from AgriBank, FCB is provided under a General
Financing Agreement. AgriBank, FCB has established a $19.0 billion
revolving line of credit for us that is renegotiated annually.
Under the Farm Credit Act, we are obligated to borrow only from
AgriBank, FCB unless AgriBank, FCB approves borrowing from
other funding sources. AgriBank, FCB, consistent with Farm Credit
Administration regulations, has established limitations on our ability
to borrow funds based on specified factors or formulas relating
primarily to credit quality and financial condition. At December 31,
2012, we were within the specified limitations.
Note 8 – Members’ Equity
A description of our capitalization requirements, protection
mechanisms, regulatory capitalization requirements and restrictions,
and equities are provided below.
whichever is less. Our Board of Directors may increase the amount of
investment, if necessary, to meet capital needs. A customer acquires
ownership of the capital stock at the time the loan is made, but
usually does not make a cash investment. The aggregate par value
is added to the principal amount of the related loan obligation. We
retain a first lien on the stock or participation certificates owned by
customers. Retirement of equities will generally be at the lower of par
or book value, and repayment of a loan does not automatically result
in retirement of the corresponding stock or participation certificates.
Each customer purchasing capital stock is entitled to one vote as
a stockholder regardless of the number of shares held. The customer
acquires ownership of the capital stock at the time the loan is made.
Regulatory Capitalization Requirements and Restrictions
The Farm Credit Administration’s capital adequacy regulations
require us to accumulate and maintain permanent capital of at least 7
percent of risk-adjusted assets and off-balance-sheet commitments.
Failure to meet the 7 percent capital requirement can initiate certain
mandatory and possibly additional discretionary actions by the Farm
Credit Administration that, if undertaken, could have a direct material
effect on our consolidated financial statements. We are prohibited
from reducing permanent capital by retiring stock or making certain
other distributions to stockholders unless the prescribed permanent
capital standards are met and maintained. Farm Credit Administration
regulations also require that additional minimum standards for
capital be achieved. These standards require all Farm Credit System
institutions to achieve and maintain ratios of total surplus as a
percentage of risk-adjusted assets of 7 percent and of core surplus
(generally retained earnings less investment in AgriBank, FCB) as a
percentage of risk-adjusted assets of 3.5 percent.
At December 31, 2012, our regulatory capital ratios were:
• 14.86 percent for permanent capital,
• 14.60 percent for total surplus, and
• 14.60 percent for core surplus.
Protected Members’ Equity
Protection of certain members’ equity is provided under the Farm
Credit Act of 1971. We are required to retire protected members’
equity at par value or stated value regardless of its book value.
Protected members’ equity includes capital stock and participation
certificates that were issued or allocated prior to October 6, 1988.
If an association is unable to retire protected members’ equity at par
value or stated value, amounts required to retire this stock would
be obtained from the Farm Credit Insurance Fund. All protected
members’ equity had been retired at December 31, 2012.
Capital Stock and Participation Certificates
In accordance with the Farm Credit Act of 1971, as amended,
each borrower is required to invest in us as a condition of obtaining
a loan. Our capitalization bylaws require a customer to invest in
capital stock equal to $1,000 or 2 percent of the amount of the loan,
We are not aware of any reason why the regulatory capital
requirements would not be met during 2013.
Effective January 1, 2003, we executed an Allotment Agreement
with AgriBank, FCB that provides the methodology used to
determine the amount of our investment in AgriBank, FCB that
we count for regulatory permanent capital and total surplus
ratio calculations. The amount is subject to change quarterly. At
December 31, 2012, all of our investment in AgriBank, FCB is
counted by AgriBank, FCB.
A Farm Credit Administration regulation empowers it to direct a
transfer of funds or equities by one or more Farm Credit System
institutions to another institution of the Farm Credit System under
specified circumstances. We have not been called upon to initiate
any transfers and are not aware of any proposed action under this
regulation.
Description of Equities
The following table presents information regarding the classes and
number of shares of stock outstanding as of December 31, 2012.
All shares are at-risk and have a par or stated value of $5 per share.
Shares Outstanding
Class D common stock
9,196,084
Class E common stock
199,553
Our bylaws authorize us to issue up to 4,980,885 shares of
Class B common stock, an unlimited number of shares of Class D
common stock and Class E common stock, and up to 141,641 units
of participation certificates with a par or face value of $5 per share.
Since Class B common stock and participation certificates were
issued to qualified customers prior to October 6, 1988, no additional
shares or units will be issued. At December 31, 2012, all shares
of Class B common stock and all participation certificates have
been retired.
Class B common stock is voting and was issued solely to qualified
customers before October 6, 1988. Class B common stock may
be retired at the discretion of the Board and, if retired, is retired at
its par or stated value as described earlier. Class D common stock
is voting and is issued solely to a farmer, rancher, or producer or
harvester of aquatic products who obtains a loan after October 5,
1988. Class E common stock has no voting rights and is issued to
customers to capitalize rural home and farm-related business loans
or to become eligible for financial services after October 5, 1988.
Class D common stock and Class E common stock may be retired at
the discretion of the Board, at book value not to exceed par, provided
we meet minimum capital adequacy standards under Farm Credit
Administration regulations.
Participation certificates were issued prior to October 6, 1988, to
capitalize rural home and farm-related business loans. Participation
certificates have no voting rights and may be retired at the discretion
of the Board, at par or stated value. Subject to our policies, stock
and participation certificates are transferable to any person eligible to
hold the respective class of stock. Class D common stock and Class
E common stock cannot be transferred when we do not meet capital
adequacy standards under Farm Credit Administration regulations.
At any time within two years after the loan of a customer is repaid
in full, any voting stock held by the customer is converted to
nonvoting stock. The nonvoting stock may be converted back to
voting stock if the owner of the stock borrows additional funds.
As determined by the Board of Directors, we may declare
dividends in stock, cash or any combination provided we meet capital
adequacy standards under Farm Credit Administration regulations
and no stock is impaired. Losses that result in impairment of stock
and participation certificates will be allocated ratably to stock and
participation certificates. In the event we would liquidate or dissolve,
any assets remaining after payment or retirement of all liabilities
would be distributed to the holders of stock in the following order of
priority:
• fi
rst, to the holders of common stock and participation certificates,
equally and pro rata in proportion to the number of shares or
units of common stock and participation certificates issued and
outstanding, until an amount equal to the aggregate par value of all
common stock and participation certificates has been distributed;
• second, to the holders of allocated surplus pro rata, on the basis of
oldest allocations first, until an amount equal to the total account
has been distributed; and
• third, any remaining assets would be distributed among current
and former stockholders in the proportion which the aggregate
patronage of each stockholder bears to the total patronage of all
current and former stockholders, to the extent practicable and as
determined by the Board unless otherwise provided by law.
Stock and participation certificates issued prior to October 6,
1988, were protected under the Farm Credit Act.
Patronage Distributions
Subject to the Farm Credit Act and Farm Credit Administration
regulations, and provided that at the time of declaration no class
of stock is impaired, patronage distributions may be declared and
paid in amounts determined by the Board of Directors. Patronage
distributions may be paid in any class of stock that the recipient
is eligible to hold, in allocated surplus, in cash, in qualified or
nonqualified notices of allocation, or in any combination, and must
be paid on an equitable and nondiscriminatory basis as determined
by the Board of Directors.
The Board of Directors declared cash patronage distributions,
referred to as cash-back dividends, of $130 million in 2012, $130
million in 2011 and $110 million in 2010. In addition, the 2012, 2011
and 2010 patronage programs provided for nonqualified patronage
distributions that are not intended to be redeemed except in the
unlikely event of liquidation.
We are prohibited from distributing earnings on a patronage basis
to the extent they would reduce our permanent capital ratio below the
Farm Credit Administration’s minimum permanent capital adequacy
requirements. We do not foresee any events that would result in this
prohibition in 2013.
Note 9 – Employee Benefit Plans
We participate in the benefits plans administered by Farm
Credit Foundations, a service corporation for Farm Credit System
entities. The Farm Credit Foundations Plan Sponsor and Trust
Committees provide consideration and oversight of the benefit
plans. The governance committees are either elected or appointed
representatives (senior leadership or Board of Director members)
from the participating organizations. The Plan Sponsor Committee
is responsible for decisions regarding benefits at the direction of
the participating employers. The Trust Committee is responsible for
fiduciary and plan administration functions. We have representation
on both committees.
pg.
59
Employer expense for the retirement savings plans outlined below
is included in “Salaries and employee benefits” on the Consolidated
Statement of Income and was $10.5 million for 2012, $9.6 million
for 2011 and $9.0 million for 2010.
Note 10 – Income Taxes
Our provision for income taxes follows (in thousands):
Defined Contribution Plan
We participate in a defined contribution plan for benefits eligible
employees. Employee contributions are matched dollar for dollar
up to a maximum of 6 percent of the employee’s compensation on
both pre-tax and post-tax contributions. We also contribute a fixed
3 percent of the employee’s compensation to the plan. For employees
hired prior to January 1, 1991, the percentage is based on the
employee’s years of service and is a fixed contribution that does
not change from year to year. The plan is a qualified plan under the
Internal Revenue Code up to the limits provided under the Internal
Revenue Code.
For employees hired prior to January 1, 2007, an additional amount
known as the Integrated Employer Non-Elective Contribution is
contributed to the plan for the portion of compensation exceeding the
Federal Insurance Contribution Act tax base (Social Security tax limit).
Nonqualified Deferred Compensation Plan
The Nonqualified Deferred Compensation Plan serves two
purposes. The plan provides for employer matching or fixed
contributions that exceed the Internal Revenue Code limits. In
addition, eligible employees may defer a portion of his/her salary,
variable pay and other compensation. Under the plan, eligible
participants include the Chief Executive Officer (CEO) and other
individuals who must meet certain qualifications.
2012
2011
$5,297
$11,203
$(180)
1,451
2,084
1,026
6,748
13,287
846
(1,827)
(3,691)
(466)
(101)
(189)
(72)
(1,928)
(3,880)
(538)
$4,820
$ 9,407
$ 308
2010
Current:
Federal
State
Deferred:
Federal
State
Total provision for
income taxes
The decrease in provision for taxes for 2012 is primarily due to
2011 differences between estimated deductions used in provision
calculations and actual tax deductions per the tax returns. These
differences created an adjustment to the 2011 provision and had a
similar effect on the 2012 provision.
The following table calculates the differences between the
provision for income taxes and income taxes at the statutory rates
(in thousands):
2012
2011
2010
Pre-409A Frozen Nonqualified Deferred
Federal tax at statutory rate $170,067
$163,034
$146,810
Compensation Plan
State tax, net
526
1,441
748
We also participate in the Pre-409A Frozen Nonqualified Deferred
Compensation Plan. This plan serves the same purposes as the
Nonqualified Deferred Compensation Plan. However, the plan was
frozen effective January 1, 2007. As such, no additional participants
are eligible to enter the plan and no additional employer contributions
are made to the plan.
Tax effect of:
Retiree Health Care
Provision for income taxes
We provide a health care subsidy to retired employees under the
age of 65 who meet certain age and service requirements. Employees
hired January 1, 2002, or later are not eligible for the subsidy. The
subsidy is not considered material to our financial position.
Defined Benefit Pension Plan
We do not have any defined benefit pension plan or supplemental
pension plans for the Chief Executive Officer, senior officers or any
employees; therefore, we have no current or future liability for such
a plan.
(129,705)
(112,095)
(108,533)
eferred tax valuation
D
allowance
1,903
(3,114)
(992)
Patronage distribution
(35,725)
(37,448)
(31,097)
(2,246)
(2,411)
Exempt FLCA earnings
Other
$
4,820
$
9,407
(6,628)
$
308
The following table provides the components of deferred tax
assets and liabilities (in thousands):
2012
2011
2010
$13,354
$11,979
$16,331
Nonaccrual loan interest
3,638
3,014
1,801
AgDirect servicing fee
4,488
3,161
Postretirement benefit
liability
195
195
166
Other
946
980
781
22,621
19,329
19,079
(17,273)
(15,370)
(18,485)
(539)
(1,054)
Allowance for loan losses
Deferred tax asset
Deferred tax asset valuation
allowance
Short-term incentive expense
Net deferred tax asset
(liability)
–
$ 5,348
$ 3,420
–
$
Note 11 – Related Party Transactions
In the ordinary course of business, we may enter into loan
transactions with our employees, directors and other organizations
with whom such persons may be associated. These loans are
subject to special approval requirements contained in the Farm
Credit Administration regulations and/or our policy, and are made
on the same terms, including interest rates and collateral, as those
prevailing at that time for comparable transactions with unrelated
customers. Total loans to these persons at December 31, 2012,
amounted to $104.1 million compared to $98.5 million at December
31, 2011, and $77.0 million at December 31, 2010. In our opinion,
these loans outstanding at December 31, 2012, did not involve more
than a normal risk of collectibility.
Note 12 – Commitments and Contingencies
(460)
We adopted an annual patronage program beginning in 2004.
Since the qualified cash distributions are estimated to substantially
reduce our taxable income, a valuation reserve has been established
beginning December 31, 2004, for the portion of the net deferred tax
asset for which timing reversals are uncertain.
Deferred income taxes have not been provided on patronage
distributions from AgriBank, FCB prior to January 1, 1993, the
adoption date of the Financial Accounting Standards Board guidance
on income taxes. Our intent is:
• t o permanently invest these and other undistributed earnings in
AgriBank, FCB, which indefinitely postpones their conversion to
cash, or
• to pass through any distribution related to pre-1993 earnings to
our borrowers through qualified patronage allocations.
We have also not recorded deferred income taxes on amounts
allocated to us that relate to AgriBank, FCB’s post-1992 earnings
to the extent that these earnings will be passed through to our
borrowers through qualified patronage allocations. Additionally,
deferred income taxes have not been provided on AgriBank, FCB’s
post-1992 unallocated earnings. AgriBank, FCB currently has
no plans to distribute unallocated earnings to us, and we do not
contemplate circumstances that, if distributions were made under
our current structure, would result in taxes being paid.
We have also not recorded deferred income taxes on accumulated
FLCA earnings of $2.4 billion, as it is our intent to permanently
maintain this investment in the FLCA subsidiary or to distribute the
earnings to stockholders in a manner that results in no additional
tax liability.
We recognize interest and penalties related to unrecognized tax
benefits as an adjustment to income tax expense. There were no
unrecognized tax benefits at December 31, 2012.
In the normal course of business, we have various outstanding
commitments and contingent liabilities, such as commitments
to extend credit, which are not reflected in the accompanying
consolidated financial statements. Commitments to extend credit are
agreements to lend to a customer as long as there is not a violation
of any condition established in the contract. Commitments generally
have fixed expiration dates or other termination clauses and may
require payment of a fee. Since some of the commitments may expire
without being drawn upon, the total commitments do not necessarily
represent future cash requirements. We evaluate each customer’s
credit worthiness on a case-by-case basis using the same credit
policies as for on-balance-sheet financial instruments. The amount
of collateral obtained, if deemed necessary upon extension of credit,
is based on our credit evaluation of the counterparty. Collateral held
upon exercise of commitments varies, but may include accounts
receivable, inventory, property, plant and equipment, and incomeproducing property. We had remaining commitments for additional
borrowing at December 31, 2012, of approximately $5.3 billion.
We also participate in standby letters of credit to satisfy
the financing needs of customers. These letters of credit are
irrevocable agreements to guarantee payments of specified financial
obligations. At December 31, 2012, $131.4 million of standby letters
of credit were outstanding. Outstanding standby letters of credit
have expiration dates ranging to 2028. The maximum potential
amount of future payments we are required to make under
the guarantees is equal to the total amount of the letters of
credit outstanding.
Actions are pending against us in which claims for money
damages are asserted. In our opinion, based on current information,
the ultimate liability, if any, would not have a material impact on our
financial position.
pg.
61
Note 13 – Fair Value Measurements
The Financial Accounting Standards Board guidance on Fair Value
Measurements and Disclosures defines fair value as the exchange
price that would be received for an asset or paid to transfer a liability
in an orderly transaction between market participants in the principal
or most advantageous market for the asset or liability. The guidance
also establishes a fair value hierarchy, with three levels of inputs
that may be used to measure fair value. See Note 2, “Summary of
Significant Accounting Policies,” for a more complete description of
the three input levels.
We do not have any assets or liabilities measured at fair value on
a recurring basis. We may be required, from time to time, to measure
certain assets at fair value on a nonrecurring basis. The following
tables provide information on assets measured at fair value on a
nonrecurring basis (in thousands):
As of
December
31, 2012
Fair Value
Measurement Using
Total
Losses
(Gains)
Level 1
Level 2
Level 3
Fair
Value
Loans
–
–
$16,552
$16,552
$(4,994)
Other
property
owned
–
–
$4,951
$4,951
$291
As of
December
31, 2011
Fair Value
Measurement Using
Level 1
Level 2
Level 3
Fair
Value
Total
(Gains)
Loans
–
–
$33,571
$33,571
$(6,136)
Other
property
owned
–
–
$4,429
$4,429
$(113)
As of
December
31, 2010
Fair Value
Measurement Using
Level 1
Level 2
Level 3
Loans
–
–
$44,342
Other
property
owned
–
–
$6,901
Fair
Value
Total
(Gains)
$44,342 $(16,747)
$6,901
$(3,742)
The amount of loans in the previous tables represents the fair
value of certain loans that were evaluated for impairment based
on the estimated appraised value of the underlying collateral. The
fair value measurement process uses independent appraisals and
other market-based information, but in many cases, it also requires
significant input based on our knowledge of and judgment about
current market conditions, specific issues relating to the collateral
and other matters. As a result, these fair value measurements fall
within Level 3 of the hierarchy. When the value of the collateral, less
estimated costs to sell, is less than the carrying value of the loan, a
specific reserve is established.
The amount of other property owned represents the fair value
and related losses/(gains) of foreclosed assets that were measured
at fair value based on the collateral value. Costs to sell represent
transaction costs and are not included as a component of the asset’s
fair value.
Note 14 – Fair Value of Financial Instruments
Quoted market prices are generally not available for our financial
instruments. Accordingly, we base fair values on:
•
•
•
•
•
judgments regarding future expected loss experience,
current economic conditions,
risk characteristics of various financial instruments,
credit risk, and
other factors. These estimates involve uncertainties and matters of judgment
and cannot be determined with precision. Changes in assumptions
could significantly affect the estimates.
Estimating the fair value of our investment in AgriBank, FCB is
not practical because the stock is not traded. As discussed in
Note 2, “Summary of Significant Accounting Policies,” and Note 7,
“Notes Payable,” the investment is a requirement of borrowing from
AgriBank, FCB.
Estimating the fair value of the AgDirect, LLP investment in
AgriBank, FCB is also not practical because the stock is not traded.
Details of this investment are discussed in Note 2, “Summary
of Significant Accounting Policies,” and Note 5, “AgDirect, LLP
Investment in AgriBank, FCB.”
A description of the methods and assumptions used to estimate
the fair value of each class of our financial instruments, for which it is
practicable to estimate that value, follows:
Loans: The estimate of the fair value of loan assets is determined
by discounting the expected future cash flows using current interest
rates. Current interest rates are estimated based on similar loans
made or loans repriced to borrowers with similar credit risk. This
methodology is used because no active market exists for the vast
majority of these loans. Since the discount rates are based upon
internal pricing mechanisms and other estimates, we cannot
determine whether the fair values presented would equal the exit
price negotiated in an actual sale. Furthermore, certain statutory or
regulatory factors not considered in the valuation, such as the unique
statutory rights of Farm Credit System borrowers, could render our
portfolio unmarketable outside the Farm Credit System.
We segregate the loan portfolio into pools of loans with
homogenous characteristics for purposes of determining the impact
of interest rate movements on the fair value of accruing loans.
The expected future cash flows and interest rates are separately
determined for each individual pool. The expected future cash
flows of the entire accruing loan portfolio are then discounted at
interest rates adjusted for the impact of changes in credit quality to
determine the impact of movements in credit quality on the fair value
of accruing loans.
Fair value of nonaccrual loans, current as to principal and interest,
are discounted with appropriately higher rates, reflecting the
uncertainty of continued cash flows. We assume that for noncurrent
nonaccrual loans, collection will result only from the sale of the
underlying collateral. Fair value is estimated to equal the total net
realizable value of the underlying collateral, discounted at an interest
rate that appropriately reflects the uncertainty of the expected
future cash flows over the average disposal period. We use the legal
obligation if the net realizable value of the collateral exceeds the legal
obligation for a particular loan.
Notes Payable: Estimating the fair value of the notes payable
to AgriBank, FCB is determined by segregating the note into pricing
pools according to the types and terms of the underlying loans
funded. We discount the estimated cash flows from these pools
using the current rate charged by AgriBank, FCB for additional
borrowings with similar characteristics.
Commitments to Extend Credit: The fair value of commitments
and letters of credit is estimated by determining the change in the
inherent credit loss in such instruments since their origination and
by an estimation of the compensation that an external party would
require to assume the potential liability on letters of credit.
The estimated fair values of our financial instruments are as follows
(in thousands):
December 31, 2011
Carrying
Amount
Fair Value
Financial assets:
Loans
Loans, net
$15,890,986
58,000
$15,832,986
$16,257,124
$13,720,771
$13,984,838
Financial liabilities:
Notes payable
Unrecognized financial
instruments:
Commitments to extend credit
and letters of credit
$(6,111)
December 31, 2010
Carrying
Amount
Fair Value
Financial assets:
Loans
Loans, net
$15,545,238
84,000
$15,461,238
$15,588,845
$13,623,203
$13,652,431
Notes payable
instruments:
Commitments to extend credit
$(6,325)
December 31, 2012
Carrying
Amount
Fair Value
Financial assets:
Loans
Loans, net
$18,489,616
60,000
$18,429,616
$18,797,644
$16,060,763
$16,283,838
Notes payable
instruments:
C
ommitments to extend credit
$(5,755)
Note 15 – Subsequent Events
We have evaluated subsequent events through March 6, 2013,
which is the date the financial statements were available to be
issued. There have been no material subsequent events that would
require recognition in our 2012 consolidated financial statements or
disclosure in the notes to those financial statements.
pg.
63
Disclosure Information
Required by Farm Credit Administration Regulations (Unaudited)
Description of Business
Description of Liabilities
The description of the territory served, persons eligible to borrow,
types of lending activities engaged in, financial services offered and
related Farm Credit System institutions required to be disclosed in
this section are incorporated herein by reference from Note 1 to the
consolidated financial statements, “Organization and Operations,”
included in this annual report to stockholders.
The description of significant developments that had, or could
have, a material impact on earnings, interest rates to customers,
acquisitions or dispositions of material assets, and material changes
in the manner of conducting the business, if any, required to be
disclosed in this section are incorporated herein by reference from
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” included in this annual report to stockholders.
The description of debt outstanding required to be disclosed in
Description of Property
Our corporate office is located in Omaha, Nebraska, and is owned.
The locations of our retail offices are incorporated herein by reference
to the last page of this annual report to stockholders. The location in
Columbus, Nebraska, is leased and all other retail office locations are
owned.
Construction was completed in O’Neill, Nebraska, and Huron,
South Dakota, in 2012. Construction is in progress in Columbus,
Nebraska, and Watertown, South Dakota. These projects will be
completed in 2013.
Legal Proceedings
Information required to be disclosed in this section is incorporated
herein by reference from Note 12 to the consolidated financial
statements, “Commitments and Contingencies,” included in this
annual report to stockholders.
this section is incorporated herein by reference from Note 7 to the
consolidated financial statements, “Notes Payable,” included in this
annual report to stockholders.
The description of contingent liabilities required to be disclosed
in this section is incorporated herein by reference from Note 12
to the consolidated financial statements, “Commitments and
Contingencies,” included in this annual report to stockholders.
Customer Privacy
Customer privacy is important to us. We hold customer financial
and other personal information in strict confidence. We do not sell
or trade customers’ personal information to marketing companies
or information brokers for their use. By Farm Credit Administration
regulations, we are required to provide a list of current stockholders to
any stockholder who requests such information for defined purposes.
Additional information regarding this Farm Credit Administration rule
governing the disclosure of customer information can be obtained
by contacting the Farm Credit Administration or our Legal team at
PO Box 2409, Omaha, NE 68103-2409.
Financial and Supervisory Relationship with
the Association’s Funding Bank
herein by reference from the “Relationship with AgriBank, FCB”
section of “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and from Note 7 to the
consolidated financial statements, “Notes Payable.”
Selected Financial Data
Description of Capital Structure
herein by reference from Note 8 to the consolidated financial
statements, “Members’ Equity,” included in this annual report to
stockholders.
The selected financial data for the five years ended December 31,
2012, required to be disclosed in this section is incorporated herein
by reference from the “Consolidated Five-Year Summary of Selected
Financial Data” included in this annual report to stockholders.
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
“Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” which appears in this annual report
to stockholders and is required to be disclosed in this section, is
incorporated herein by reference.
Directors and Compensation of Directors
The listing of directors, term of office, business experience during
the past five years, principal occupation and employment during the
past five years, and any other business interests, which are required
to be disclosed in this section, are incorporated herein by reference
from the “FCSAmerica ACA Directors” section in this annual report
to stockholders.
Our bylaws permit compensation of directors for service at board
and committee meetings, special assignments and travel time
associated with those meetings. Per diem and monthly retainers
were as follows for 2012:
Period
Per Diem Monthly Retainer
January 1, 2012 –
June 30, 2012
$400
Board Chairperson – $2,000
Board First and Second
Vice-Chairpersons and
Committee Chairpersons – $1,700
All other directors – $1,500
July 1, 2012 –
December 31, 2012
$500
Board Chairperson – $2,300
Board First and Second
Vice-Chairpersons and
Committee Chairpersons – $2,000
All other directors – $1,800
Compensation information for each director who served in 2012 follows:
Number of Days At
Name
2012 Board
Committee Assignment(s)
Board
Meetings
Other
Official Duties
Committee
Compensation**
Total 2012
Compensation
Robert Bruxvoort,
Board Chairperson
Executive*
7.5
47.5
$1,350
$ 49,900
Margaret Doyle
Compensation/
Human Resources*
7.5
27.5
$1,650
38,100
Jim Ehlers
Compensation/
Human Resources
7.5
36.5
$1,650
39,400
Richard Hall
Business Risk*
7.5
27.0
$1,400
37,250
Jeremy Heitmann,
Board First Vice-Chairperson
Executive, Compensation/
Human Resources
7.5
36.5
$2,100
41,950
Steve Henry
Audit
7.5
23.5
$1,150
34,150
Nicholas Hunt,
Board Second Vice-Chairperson
Executive, Business Risk
7.5
38.5
$2,100
42,350
Robert Joki
Audit
7.5
45.5
$1,350
43,500
Cris Miller
Business Risk
7.5
32.0
$1,400
37,750
Randy Peters
Governance
7.5
29.5
$1,150
36,500
John Reisch
Business Risk
7.5
37.5
$1,400
40,050
Dan Shaw
Compensation/
Human Resources
7.5
40.5
$1,650
42,200
Nancy Tarver
Governance*
7.5
50.5
$1,150
47,750
Jon Van Beek
Audit
7.5
37.0
$1,350
39,650
Nick Vande Weerd
Governance
7.5
34.5
$1,150
38,300
Kim Vanneman
Governance
7.5
46.0
$1,150
44,850
Jennifer Zessin
Audit*
7.5
45.0
$1,350
45,200
Total Compensation
*Denotes committee chair.
**Included in total compensation.
Total compensation is rounded to the nearest dollar and includes retainers and all per diems paid in 2012.
$698,850
pg.
65
Compensation of CEO and Senior Officers
The CEO and senior officers as of December 31, 2012, are shown below.
Name
Current Position
Date Started in
Current Position
Douglas Stark
President and CEO
March 2005
Michael Barrett
Senior Vice President –
Insurance
April 2007
Robert Campbell
Senior Vice President
April 1999
–
Scott Coziahr*
General Counsel
February 2006
–
Frank W. (Bill) Davis
Chief Credit Officer
July 2005
–
Ann Finkner
Chief Administrative Officer
July 2005
–
James M. (Mark) Jensen
Enterprise Risk Management
July 2005
–
Kenneth Keegan
Executive Vice President –
Chief Risk Officer
January 2012
Craig Kinnison
Chief Financial Officer
November 2006
–
Jim Knuth
September 2001
–
David Martin
Chief Strategy Officer
December 2008
Neil Olsen
Executive Vice President
January 1998
James Roberge
Commercial Lending
March 2012
Robert Schmidt
May 1999
*Scott Coziahr is also managing member of JDI Properties, LLC, a residential rental property company.
Previous Position(s) During
Past Five Years
–
Vice President – Lending
Senior Vice President – Chief Risk Officer
Chief Information Officer
–
CoBank – Regional Manager, Minneapolis
Banking Center, 2009 to March 2012;
CoBank/Farm Credit Leasing –
Senior Vice President Capital Markets and
Transportation, 2007 to 2009
–
Compensation Overview: The Association’s compensation
programs are designed to provide competitive pay opportunities,
including base salary and incentives, that attract, retain and motivate
a specialized, actively engaged and diverse workforce while
achieving desired business results aligned with the best interests of
our shareholders.
The design and governance of our CEO and senior officer
compensation program is consistent with prudent risk management
standards and provides total compensation that promotes our
mission to ensure a safe, sound and dependable source of credit
and related services for agriculture and rural America. The design
of the compensation program supports our risk management goals
through a set of checks and balances, including (1) a competitive mix
of base salary and variable pay, (2) a balanced use of performance
measures that are risk-adjusted where appropriate, (3) a pay-forperformance process that allocates individual awards based on
individual performance and contributions, and (4) a long-term
portion of variable pay to encourage retention and alignment with
shareholder interests.
Compensation for the CEO and senior officers includes base
salary, short-term incentive plan opportunity and long-term incentive
plan opportunity. Compensation for all other employees includes
base salary and short-term incentive plan opportunity.
Base Salaries: Base salaries for all employees, including the
CEO and senior officers, are determined based upon position and
responsibilities, performance and competitive market compensation
data. CEO and senior officers’ base salaries are reviewed and
approved by the Board of Directors. Employer expense for base
salaries is included in “Salaries and employee benefits” on the
Consolidated Statement of Income.
Short-Term Incentive: Each year the Board of Directors
approves the short-term incentive plan, including the performance
measures. The senior officers participate in the annual short-term
incentive plan along with the other eligible Association employees.
Select employees must sign an assignment, nonsolicitation and
nondisclosure agreement to participate in the short-term incentive
plan. Payouts under the short-term incentive plan are based on
financial and business results, company initiatives and credit
performance measures, and approved by the Board of Directors.
Payouts are not provided unless specific levels of performance are
achieved. No more than one-half of the short-term incentive plan
award opportunity may be paid in the fourth quarter of the plan year
(first award payout), and the remainder of the award payout (final
award payout) is paid no later than two and one-half months into
the next year. The first award payout is based on the actual results
achieved as of September 30 for select performance measures.
The final award payout is based upon the year-end results net of
the first award payout. The first payout under the 2012 short-term
incentive plan occurred in November 2012. The second and final
payout occurred in February 2013 and was net of the November
2012 payout.
The CEO’s short-term incentive opportunity is established by the
Board of Directors. The Board has full discretion as to the amount
of any payout to the CEO under the short-term incentive plan and
has historically used the results from the short-term incentive plan to
determine the payout amount.
Employer expense for the annual short-term incentive plan is
included in “Salaries and employee benefits” on the Consolidated
Statement of Income. Expense was $22.5 million for 2012, $18.9
million for 2011, and $20.2 million for 2010.
Long-Term Incentive: The CEO and senior officers are eligible
for long-term senior officer incentive plans. The long-term incentive
plans were approved by the Board of Directors to align CEO and
senior officer compensation with the strategic business plan and
the goals of the Association while providing the opportunity for
competitive market-based compensation at a level that will attract,
retain and reward key staff for the accomplishment of Association
goals. The CEO and senior officers must sign an assignment,
nonsolicitation and nondisclosure agreement to participate.
The plans are nonqualified performance unit plans that are
effective January 1, 2010, through December 31, 2012; January 1,
2011, through December 31, 2013; and January 1, 2012, through
December 31, 2014.
The plans have independent performance goals measured
over the three-year term of the plans that include core return on
assets, customer loyalty/experience index, employee engagement,
adverse assets to risk funds and nonaccrual loans to total classified
assets. Payments are made within 75 days after the end of each
three-year plan’s term. The Board of Directors approves the total
dollars available for the long-term incentive plans, which are then
converted into units. The value of each unit is determined by the
results achieved toward the established goals.
The CEO has discretion as to the distribution of the units
to the senior officers for each three-year plan and is based on
consideration of market compensation and individual contributions
and performance. The CEO’s long-term incentive opportunity is
established by the Board of Directors. The Board has full discretion
as to the amount of any payout to the CEO under the long-term
incentive plan and has historically used the results from the long-term
senior officer incentive plan to determine the payout amount.
A liability and salary and benefits expense of $2.2 million in 2012,
$2.3 million in 2011, and $1.5 million in 2010 were recorded for the
estimated long-term incentive payouts attributable to these years.
The payout for the 2010–2012 plan occurred in February 2013 and
is reflected in the Summary Compensation Table in the “Long-Term
Incentive” column for the calendar year 2012. The payouts for the
2008–2010 and the 2009–2011 plans were paid in the first quarter of
2011 and first quarter of 2012 respectively, and are reflected in the
Summary Compensation Table in the “Long-Term Incentive” column
for the calendar years 2010 and 2011.
The following Summary Compensation Table includes
compensation paid to the CEO and the senior officers during
fiscal years 2012, 2011, and 2010, and includes short-term and
long-term incentive compensation earned during the respective
fiscal year.
pg.
67
Summary Compensation Table
Name of CEO
Year
Salary
Short-Term
Incentive(1)
Long-Term
Incentive(2)
Other
Total
Douglas Stark, CEO
2012
$525,000
$257,463
$297,000
–
$1,079,463
Douglas Stark, CEO
2011
$475,000
$233,535
$280,000
–
$988,535
Douglas Stark, CEO
2010
$440,000
$246,910
$210,316
–
$897,226
Aggregate No. of Sr. Officers
in Year Excluding CEO(3)
Year
Salary
Short-Term
Incentive(1)
Long-Term
Incentive(2)
Other(4)
Total
13
2012
$3,066,119
$1,637,292
$1,481,625
$15,000
$6,200,036
13
2011
$2,947,607
$1,592,796
$1,157,206
–
$5,697,609
13
2010
$2,875,500
$1,819,942
$819,448
–
$5,514,890
Incentive earned in the fiscal year.
Incentive earned at the end of the respective three-year long-term incentive plan.
(3) Includes employees designated as senior officers at any time during the fiscal year.
(4) One-time bonus.
(1)
(2)
Disclosure of the total compensation paid during 2012 to any
senior officer included in the Summary Compensation Table is
available to stockholders upon written request to Farm Credit
Services of America, PO Box 2409, Omaha, NE 68103-2409.
Farm Credit Administration regulations require a nonbinding vote
by the voting stockholders, also referred to as an advisory vote, to be
held if compensation, as reported in the December 31, 2013, annual
report, for either the CEO or the aggregate senior officer group
increased 15 percent or more from December 31, 2012. Additionally,
in accordance with Farm Credit Administration regulations, an
advisory vote on CEO and/or senior officer compensation is required
when 5 percent of the voting stockholders petition for such vote.
Although the advisory votes are nonbinding, our Board of Directors
will take into consideration the outcome of the vote when making
future CEO and senior officer compensation decisions.
Travel, Subsistence and Other Related Expenses
Director reimbursements for travel, subsistence and related
expenses are set forth in the Board’s Governance Guidelines. The
policy regarding employee reimbursements is set forth in the Human
Resources Manual. Each provides authority for and control over
reimbursement of travel and subsistence expenses for authorized
individuals traveling on official business. Copies of the related
Governance Guidelines and Human Resources Manual provisions
are available to our stockholders upon written request to Farm Credit
Services of America, PO Box 2409, Omaha, NE 68103-2409.
The aggregate amount of reimbursement for travel, subsistence
and other related expenses for all our directors was $375,544 in
2012, $344,705 in 2011 and $253,098 in 2010.
Transactions with Directors, Senior Officers
and Employees
Directors and certain employees may obtain loans from us,
provided they meet all eligibility requirements and provided that such
loans are made on the same terms available to other customers.
Approval of AgriBank, FCB is required for loans to our directors and
employees, and for loans to any customer if a director or employee is
to receive more than $100,000 of the loan proceeds, has a significant
personal interest in the loan or its security, may exercise control over
the customer, or guarantees or cosigns a loan in excess of $100,000.
Further, directors and employees are required to refrain from taking
any part in the consideration or decision on any loan in which they or
their relatives have an interest.
Our bylaws and policies require that directors’ loans be maintained
at a high level of credit quality. Any director whose loan is classified
“substandard” must prepare and obtain approval of a plan to
improve and upgrade the loan within a specified period of time. For
directors, failure to comply with our bylaws and policies would result
in the director’s position being vacated. Directors whose loans are
classified “doubtful” or “loss,” or have any portion of a loan charged
off, must resign immediately.
The Farm Credit Act and Farm Credit Administration regulations
require certain disclosures to stockholders concerning loans to
directors and employees, their relatives, organizations with which
they are affiliated or entities that they may control. Disclosure is
required where such loans were made on terms other than those
available to other customers, or where such loans are considered to
have more than a normal risk of collectibility. None of our loans made
to directors or employees, their relatives, affiliated organizations
or entities they may control were made on terms other than those
available to all customers, nor were any such loans considered to
have more than a normal risk of collectibility.
Director, senior officer and employee nonloan transactions with us
are regulated by our policy.
Concerning property acquired in satisfaction of debt, this policy:
• prohibits lease or purchase by senior officers and employees;
• permits lease or purchase by directors, with prior approval,
provided that the transaction is on the same terms available to
others and is accomplished in a manner ensuring an “arm’s-length”
transaction.
Financial Statements
The “Consolidated Financial Statements,” “Notes to Consolidated
Financial Statements,” “Report of Management,” “Report on Internal
Control Over Financial Reporting,” “Report of Audit Committee”
and “Independent Auditor’s Report” required to be disclosed in this
section are incorporated herein by reference from this annual report
to stockholders.
Credit and Services to Young, Beginning and
Small Producers
Concerning other transactions, the policy:
• r equires prior reporting and approval for the purchase of property,
which, within 12 months, was mortgaged to any Farm Credit
System institution;
• permits directors, senior officers and employees to purchase
premises and equipment owned by us, provided no undue
advantage is accorded them in connection with such purchase.
The Farm Credit Act and Farm Credit Administration regulations
also require certain disclosures to stockholders concerning nonloan
transactions a director or senior officer, or any of his or her relatives,
affiliated organizations or entities he or she may control have with
us. Such disclosure is required if such transactions did not involve
competitive bidding, involved amounts over $5,000 or provided a
special benefit to the director or senior officer. No such transactions
took place during 2012.
Involvement in Certain Legal Proceedings
There were no material legal proceedings or enforcement actions
involving Farm Credit Services of America, our directors or senior
officers that require disclosure in this section.
Relationship with Qualified Public Accountant
PricewaterhouseCoopers LLP serves as our qualified public
accountant. There were no changes in our qualified public
accountant since the prior annual report to stockholders, and
there were no material disagreements on any matter of accounting
principles or financial statement disclosures during this period.
Expenses recognized in the 2012 consolidated financial statements
for services provided by PricewaterhouseCoopers LLP were
approved by the Board Audit Committee and include $195,607 for
audit services.
We have specific programs in place to serve the credit and related
needs of young, beginning and small producers in our territory. The
definitions of young, beginning and small producers follow:
Definitions
• Young – producers age 35 and under.
• Beginning – any producer with 10 years or less of production
agriculture as his or her primary source of income.
• Small – any producer who generates less than $250,000 in annual
gross sales of agricultural products.
Program Elements
There are several key elements to our standard loan programs, as
well as the Young & Beginning Program, which allow us to serve the
needs within the young-, beginning- and small-producer segments:
Conventional Loans: Producers age 35 and under, or with 10
years or less farming or ranching experience, who have sufficient
capacity, credit history or financial backing to meet our traditional
loan approval standards.
AgStart Loans: Producers age 35 and under, or with 10 years or
less experience, can benefit from modified credit approval standards
to help get them started.
Youth in Agriculture Loans: Individual student project loans, up
to $2,500, offer future producers firsthand experience in business
planning agriculture financing.
Breeding Livestock Loans: The breeding livestock loan program
for youth provides loans for terms of 1–5 years, up to $10,205 plus
the stock, for the purpose of purchasing breeding livestock. These
loans require a cosigner of legal age and are approved based on the
strength and credit scores of the cosigner.
pg.
69
Educational and Finance Sponsorships: We provide donations
and sponsor state and local Future Farmers of America (FFA) activities
and conventions, state 4-H activities and conventions, and agricultural
leadership programs.
College Scholarships: Each year, we offer twelve $2,000
scholarships to qualified students studying agriculture at land-grant
universities within our four-state territory. In addition, we will also
offer twenty-two $500 scholarships to qualified students studying
agriculture at selected junior colleges within our four-state territory.
Small-Producer Financing: Small producers are served primarily
through three loan programs: Country Home Loans, AgDirect and our
retail office underwriting. All of these programs are designed to meet
the needs of small producers, part-time farmers or rural residents
with a convenient and efficient delivery of financial services. Small
producers who also meet the definition of young or beginning are
eligible for the Young & Beginning Program.
data, 67,408 operations have gross farm income of less than $10,000,
representing less than 1 percent of the total farm sales of the small
producers. We believe that farm income in these operations is
incidental to total income and that our services are likely not needed
or may not even be eligible under the Farm Credit Administration
regulations. As of December 31, 2012, 37.81 percent of our new
customers were considered small producers or those with less than
$250,000 in gross farm income.
Potential
Customers*
FCSAmerica
Customers
2012 Percentage
of New
Customers
Young
12,601
4,692
19.83%
Beginning
36,902
6,475
29.01%
144,918
19,775
37.81%
Small
*2007 United States Department of Agriculture Census of Agriculture.
Market Share**
Credit Underwriting Standards
Young and beginning producers who do not meet traditional credit
standards are considered under an outreach loan program called
AgStart. Through this program, applicants’ requests are analyzed
and assessed based primarily on the character and capacity credit
factors. Farm Service Agency guarantees are utilized, as deemed
necessary, with additional support provided by our payment of the
first $2,500 of external fees. As of December 31, 2012, AgStart
customers account for 3,421 loans to 1,602 customers with an
outstanding commitment of more than $407 million. Nearly $7.3
million was guaranteed by the Farm Service Agency and an additional
$62.6 million in loan commitments associated with other Farm Service
Agency programs. The AgStart program grew by 19.1 percent volume
in 2012.
Results and Goals
Young and Beginning Segment: Our young and beginning
definitions result in 12,601 potential young customers and 36,902
potential beginning customers in our territory, according to the 2007
United States Department of Agriculture Census of Agriculture. As
of December 31, 2012, we had 4,692 young customers and 6,475
beginning customers, some of whom are accounted for in both
categories. This equates to a young market share of 37.24 percent
and a beginning market share of 17.55 percent. Total loan volume to
young and beginning customers was just over $2 billion.
Small-Producer Segment: According to 2007 United States
Department of Agriculture Census of Agriculture data, 144,918
producers representing 87 percent of all producers in our four-state
territory meet the definition of small (less than $250,000 in annual
gross sales of agricultural products). The 2007 United States
Department of Agriculture Census of Agriculture includes any
operation with farm income in its definition of a farm. In the census
2012 Actual*
2013 Goals**
2014 Goals**
Young
37.24%
38.00%
39.00%
Beginning
17.55%
17.00%
18.00%
Small
13.65%
17.00%
18.00%
*In 2012, market share was computed by comparing the number of producers
in the young, beginning or small categories maintaining a loan relationship
with FCSAmerica to the total number of producers in those categories,
according to the 2007 United States Department of Agriculture Census of
Agriculture.
**
For 2013, market share goals are computed by comparing 2007 data.
Market share percentage goals have been adjusted for 2013 and 2014.
Special Program Goal (AgStart): This program goal will positively
affect all three young, beginning and small categories. Utilization
of this outreach loan program is seen as a critical component of
long-term success in the marketplace.
The Association’s goal for years one, two and three is to increase
AgStart customers at the rate of 115 per year.
Related Services
Young and Beginning Producer Conference: A Side-by-Side
Young and Beginning Conference was held in Omaha, Nebraska, on
August 7, 8 and 9, 2012. There were 42 young and beginning producers
from across the four-state territory invited to the conference.
The producers benefited from the opportunity to network with each
other, from the information they received from the speakers, and by
learning more about the Association and its leadership. The conference
provided benefits to our Association by creating an opportunity for
participants to become better-informed business managers and by
building customer loyalty.
Education and Finance Sponsorships: We awarded $36,500 in
college scholarships at land-grant universities, community colleges
and agriculture vocational-technical schools. Total use of the
2012 Youth in Agriculture Program was 56 loans with a balance of
$146,803. In addition, more than $225,000 was donated to support
FFA activities and conventions, state 4-H activities and conventions,
agricultural leadership programs and funding of scholarships.
Awareness
Young and Beginning Team: We maintain a standing team of
8–10 employees who meet periodically to monitor, review and modify
our Young & Beginning Program to most effectively meet the needs
of the segment and the goals of the organization. The team continues
to periodically rotate members as a way to bring new, innovative
ideas to the team.
Young and Beginning Producer Appointed to Board of
Directors: In 2008, the Board of Directors established an Appointed
Customer Director position. Jeremy Heitmann of Byron, Nebraska,
was the first director to fill this Appointed Customer Director
position, representing the young and beginning producer customer
segment. As a successful candidate in 2010, he was elected to the
Board effective January 1, 2011, and his current term will end
March 31, 2014. To fill a vacancy of a young producer representing
the agribusiness customer segment, the Board of Directors
appointed Nick Vande Weerd of Brookings, South Dakota, to the
Board effective November 1, 2011, and his current term will end
March 31, 2016.
pg.
Farm Credit Services of America Retail Office Locations
4835 6th Avenue SE
Aberdeen, SD 57401
81 33rd Street SW
Huron, SD 57350
507 E. Highway 20
O’Neill, NE 68763
2390 Highway 2
Alliance, NE 69301
513 Court Street
Imperial, NE 69033
700 Farm Credit Drive
Ottumwa, IA 52501
4101 N. 6th Street
Beatrice, NE 68310
4715 Second Avenue
Kearney, NE 68847
105 Theater Circle
Perry, IA 50220
535 S. 10th Avenue
Broken Bow, NE 68822
855 Fallbrook Blvd.
Lincoln, NE 68524
123 W. Missouri Avenue
Pierre, SD 57501
919 Bella Vista Drive
Carroll, IA 51401
1301 W. Main Street
Manchester, IA 52057
2510 N. Plaza Drive
Rapid City, SD 57702
1401 Wilkins Circle
Casper, WY 82601
203 W. Merle Hibbs Blvd.
Marshalltown, IA 50158
700 Senate Avenue
Red Oak, IA 51566
7419 Nordic Drive
Cedar Falls, IA 50613
4056 4th Street SW
Mason City, IA 50401
411 Valley View Drive
Scottsbluff, NE 69361
1740 Bill Babka Drive
Columbus, NE 68601
1700 N. Highway 83
McCook, NE 69001
3000 E. Park Street
Sheldon, IA 51201
2328 Millennium Road
Decorah, IA 52101
401 Cabela Drive
Mitchell, SD 57301
4512 S. Lakeport Street
Sioux City, IA 51106
1621 11th Street
DeWitt, IA 52742
322 First Avenue E.
Mobridge, SD 57601
5011 S. Broadband Lane
Sioux Falls, SD 57108
3675 450th Avenue
Emmetsburg, IA 50536
2216 James Avenue
Mount Pleasant, IA 52641
1015 590th Street
Storm Lake, IA 50588
3333 W. Faidley Avenue
Grand Island, NE 68803
2125 W. 20th Street S.
Newton, IA 50208
1323 Ninth Avenue SW
Watertown, SD 57201
1812 Hawkeye Avenue
Harlan, IA 51537
207 N. 34th Street
Norfolk, NE 68701
345 Fairmeadow Drive
Webster City, IA 50595
1525 Boyson Road
Hiawatha, IA 52233
3021 E. Philip Avenue
North Platte, NE 69101
124 Walnut Street
Yankton, SD 57078
800-884-FARM // fcsamerica.com
AgDirect®, Agriculture Works Here®, AgriPoint® and Country Home Loans® are trademarks of Farm Credit Services of America.
71
Farm Credit Services of America
//
5015 South 118th Street
//
Omaha, NE 68137
//
800-884-FARM
//
fcsamerica.com
AW-MKT 2012

2012 Annual Report - Farm Credit Services of America

Transcription

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