The Farm Credit System
Community based
-FCS knows the business, community, and market. -don't take deposits instead raise $ by selling system wide bonds on wall street. - FCS owned by borrowers
Farm Credit System (FCS)
-a national network of lending institutions that provides agricultural financing and credit -established by congress in 1916 -privately owned, government-sponsored enterprise that raises loanable funds through the sale of Farm Credit Securities to investors
Agricultural credit Associations (ACAs)
-formed around the country through the merger of PCAs & FLCAs -offer both long & short term
US Ag Bank, FCB:
-formed in 2003 -result of the merging of FCB of Wichita & western FCB
Federal Land Credit Association (FLCA)
-long term -like real estate mortgages, refinance existing mortgages, other debts
Production Credit Association (PCA)
-short or intermediate loans -like operating expenses, farm equipment, livestock, farm buildings, capital improvements
Basis Point
1/100 of 1%
How many banks & lending in 1980?
37 banks; 1,000 lending
How many banks & lending now?
4 banks; 69 lending
cooperative
A business that is owned by the members it serves and is managed in their interest.
Depreciation
A decrease or loss in value
deed
A document that transfers ownership of property from one party to another.
Balance Sheet
A financial statement that reports assets, liabilities, and owner's equity on a specific date.
lien
A legal claim or hold on property, as security for a debt or charge.
Federal Land Bank (FLB)
A part of the Federal Farm Credit System. It provides long term loans to farmers and ranchers for various agricultural purposes
Calculate Current Ratio
Current Assets / Current Liabilities
Federal Agricultural Mortgage Corporation
Federal agency established in 1988 to provide a secondary market for farm mortgage loans. Informally called Farmer Mac.
Capital
Financial position & progress
Contingent Liabilities
Liabilities that may arise from past transactions if certain events occur in the future.
Who planted the seeds of the FCS?
President Theodore Roosevelt in 1908
Calculate Debt-to-Equity Ratio
Total liabilities / Net worth
Gross Loan
Total liability including that advanced for FC stock
mortgage
a long-term loan extended to someone who buys property
Calculate Net Worth
add up assets. add up liabilities. Then Total Assets- Total liabilities
Equity
amount of capital invested or earned in an entity (partnership)
long term assets
assets that are expected to be used in business operations for longer than ten years
Intermediate Term Assets
assets which have Economic lives between 1-10 years
conditions
basis of approval
collateral
collateral
Calculate working capital
current assets - current liabilities
Farm Credit Administration (FCA)
examine & ensure safety & soundness of all system institutions
Who are the customers?
farmers, ranchers, and agribusinesses
Character
individual or entity
Current Assets
items that can or will be converted into cash within one year
Current Liabilities
liabilities due within a short time, usually within a year
long-term liabilities
liabilities owed for more than 10 years
Calculate Farm Credits current collateral basis on the FLCA farm real estate loan
loan balance/ property value
Federal Farm Credit Banks Funding Corporation
manages sale of system wide bonds& motes in capital markets
Assets
money you have
liabilities
money you owe
Intermediate Term Liabilities
obligations due & payable between 1-10 years
CoBank
only ACB
Farm Credit Administration (FCA)
provided low-interest farm loans and mortgages to prevent foreclosures on the property of indebted farmers
Farm Credit Leasing Services Corporation
provides equipment
Farm credit Foundations
provides human resources
Farm credit financial partners Inc. (FPI)
provides info technology & financial services
Bank for Cooperatives (BC)
provides lending & other financial Services to farmer-owned cooperatives, rural utility, rural water/sewer systems
Farm Credit Bank (FCB)
provides services & funds to local associations
Capacity
repayment capacity
Farm Credit Council (FCC)
represents interest & provides wide range of business services
Agricultural Credit Bank (ACB)
result of the merging of Bank for cooperatives (BC) & FCB
agricultural credit association (ACA)
result of the merging of FLBA & production credit association
cash flow
the total amount of money being transferred into and out of a business, especially as affecting liquidity.
Gross Income
the total amount of money made in one year by a person, household, or family unit
calculate the debt coverage ratio
total funds available- income taxes- living costs/ debt service+ capital replacement
