The Farm Credit System

[Pages:32]November 2021

Farm Credit System

Investor Presentation

The Farm Credit System at a Glance

Mission

The Farm Credit System (`System', `Farm Credit') was created in 1916 to support rural communities and agriculture with reliable, consistent credit and financial services.

Cooperative Structure

Farm Credit is a network of cooperatives owned by its borrowers (farmers, ranchers, agricultural cooperatives and rural customers).

Broad Loan Diversification

Farm Credit's loan portfolio is geographically diversified across all 50 states, U.S. territories, and Puerto Rico, supporting approximately 44% 1 of all U.S. farm business debt.

The portfolio is also diversified by commodity and loan size.

Regulatory and Congressional

Oversight

Farm Credit is regulated and examined by an independent Federal agency, the Farm Credit Administration (FCA).

The System is under the Jurisdiction of the House and Senate Agriculture Committees.

1. Source: USDA Economic Research Service, Sep. 2, 2021.

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Structure and Ownership

Member-

1

Borrowers

Congressional Oversight

Farm Credit Administration (Regulator)

LOAN

$

Farm Credit Associations

Farm Credit System Banks 2

Farm Credit Funding Corporation 3

Farm Credit Council 4 | Farm Credit System Insurance Corp. 5

Dealers

Key Loans Funds Repayment

Institutional Investors

1. Farmers, ranchers, rural homeowners, rural utility systems and agribusinesses. 2. AgFirst Farm Credit Bank, AgriBank FCB, Farm Credit Bank of Texas, CoBank ACB. CoBank has lending authority to Associations within its District as well as national lending

authorities to agricultural cooperatives, rural utilities and other eligible borrowers. 3. The Farm Credit Funding Corporation is responsible for Systemwide debt issuance and financial disclosure. 4. The Farm Credit Council is the national trade association for the Farm Credit System. 5. The Farm Credit System Insurance Corporation is an independent U.S. Government-controlled corporation which insures the timely payment of principal and interest on debt

obligations issued by the Farm Credit Banks.

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Loan Portfolio - Overview

A variety of loan types is available to qualified borrowers.

Underwriting standards are based on credit, repayment capacity/cash flow and collateral.

Loan volume increased 3.3% since year-end 2020, driven by an increase in real estate mortgage and rural power loans, offset in part by a decrease in loans to cooperatives.

Gross Loans

($ billions)

249.8 17.0 27.4 39.6

50.3

259.9 17.4 28.0 42.2

51.7

273.4 18.4 29.2 46.1

53.4

287.0 18.9 29.7 50.1

56.1

315.5 19.0 34.5 56.4

58.0

325.8 18.8 36.2 53.4

58.3

Rural Residential RE, Ag. Export Finance & Other Loans Rural Infrastructure

Agribusiness Loans

Production & Intermediate-term Loans

115.5

120.6

126.3

132.2

147.6

159.1

General Ag. Loans (Collateralized by Land)

YE 2016

YE 2017

YE 2018

YE 2019

YE 2020

3Q 21

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Loan Portfolio - Credit Quality

Credit quality remains strong with loans classified1 as Acceptable and Other Assets Especially Mentioned (OAEM) at 97.9% at September 30, 2021, compared to 97.5% at December 31, 2020.

Nonaccrual loans as a percentage of total loans outstanding was 0.41% at September 30, 2021 and 0.48% at December 31, 2020. Credit risk of certain loans is reduced by off-farm income sources and crop insurance.

61.3% of nonaccrual loans were current as to principal and interest at September 30, 2021, as compared with 58.9% at December 31, 2020.

Nonperforming Loans

0.91% ($ millions)

0.81%

0.79%

0.76%

0.71%

0.61% 0.51%

1,962

1,967

0.80% 2,198

0.79% 2,275

0.41%

0.31%

0.21%

0.11%

0.01%

YE 2016

YE 2017

YE 2018

YE 2019

1. Farm Credit Administration's Uniform Loan Classification System.

0.59% 1,860

YE 2020

3,500

3,000

2,500

0.54% 1,746

2,000 Accruing - 90 days+ Past Due Restructured Loans

1,500 Nonaccrual Loans Nonperforming Loans to Total Loans

1,000

500

3Q 21

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Loan Portfolio - Credit Quality (cont'd)

The System recognized a loan loss reversal of $142 million for the nine months ended September 30, 2021, as compared with provisions for loan losses of $165 million for the nine months ended September 30, 2020.

Net loan recoveries of $4 million were recorded during the first nine months of 2021, as compared with net loan charge-offs of $81 million for the same period of the prior year.

Provision for Loan Losses

($ millions)

266

197

194

169

107

YE 2016

YE 2017

Net Charge-offs to Average Loans 1

0.02%

0.03%

YE 2018 0.03%

YE 2019 0.02%

YE 2020 0.03%

YE 2016

YE 2017

YE 2018

YE 2019

1. Annualized ratio of net charge-offs during the period to average loans outstanding during the period.

YE 2020

(142) 3Q 21

0.00% 3Q 21

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Loan Portfolio - Product and Sector Diversification

General farms, primarily livestock

2%

Agricultural export finance 2%

Rural communication Hogs

3%

2%

Horticulture 1%

Rural home loans, farm landlords and part-time farms 6%

Poultry and eggs 3%

Cash grains (includes corn, wheat and soybeans) 16%

Other livestock 1%

Agricultural services and fish 4%

Biofuels, primarily ethanol 1%

Farm supplies and marketing 5%

Cattle 9%

General farms, primarily crop 3%

Tree fruits, nuts and grapes 6%

Rural power 7%

Field crops (includes sugar beets,

potatoes and vegetables)

5%

Forestry

6%

Rural water/waste water Dairy farms Cotton

1%

6%

1%

Other 3%

Food products (includes meat, dairy and bakery

products) 8%

Data at Dec. 31, 2020.

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Loan Portfolio - Geographical Diversification

Farm Credit System lends in all 50 states, the Commonwealth of Puerto Rico and U.S. territories. Geographic diversification supports the System's strong credit performance.

Alaska ................
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