The Farm Credit System

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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


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