Page 38 - February 2018 Disruption Report Flip Book

FARM CREDIT SYSTEM / FARMER MAC JAN.U-FAERBY. 2018
FARM CREDIT SYSTEM / FARMER MAC
The Farm Credit System pushes its effective tax rate down to 3.48% in 2016
In the American Budget Analytical Perspectives for Fiscal Year 2019, the Office of Budget and Management wrote:
...The financial condition of the [Farm Credit] System’s banks and associations remains fundamentally sound. The ratio of capital to assets has remained stable at 17.3 percent on September 30, 2017, compared with 16.7 percent on September 30, 2016. Capital consisted of $50.8 billion in unrestricted capital and $4.7 billion in restricted capital in
the Farm Credit Insurance Fund, which is held by the Farm Credit System Insurance Corporation (FCSIC). For the first nine months of calendar year 2017, net income equaled $3.7 billion compared with $3.6 billion for the same period of the previous year.
Over the 12-month period ending September 30, 2017, nonperforming loans as a percentage of total loans outstanding increased from 0.81 percent to 0.82 percent. System assets grew 2.3 percent during the year ending September 30, 2017, primarily due to increases in real estate mortgage loans and agribusiness loans. Real estate mortgage loans increased due to continued demand from new and existing customers.
Over the 12-month period ending September 30, 2017, the System’s loans outstanding grew by $9.0 billion, or 3.7 percent, while over the past three years they grew by $43.1 billion, or 20.7 percent. As required by law, borrowers are also stockholder-owners of System banks and associations. As of September 30, 2017, System institutions had 525,309 of these stockholders-owners.
The number of FCS institutions continues to decrease because of consolidation. As of September 30, 2017, the System consisted of four banks and 70 associations, compared with seven banks and 104 associations in September 2002. Of the 73 FCS banks and associations rated (one association was not rated because it merged into another association on Oct 1, 2017), 69 of them had one of the top two examination ratings (1 or 2 on a 1 to 5 scale) and accounted for 98.5 percent of gross Systems assets. Four FCS institutions had a rating of 3.
...The System, while continuing to record strong earnings and capital growth, remains exposed to a variety of risks associated with its portfolio concentration in agriculture
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