Formal Lines of Authority .Formal Relationships 1 Created by Farm Credit Amendments Act of 1985. 2 Five-member board with three representatives elected by the Farm Credit System and two members appointed by FCA. 3 Federal Land Bank Associations are credit outlets for the primary lender Federal Land Banks. 4 Production Credit Associations are primary lenders and obtain discounted funds from the Federal Intermediate Credit Banks. 5 Members of the Farm Credit Corporation of America board and The Farm Credit Council board are the same. Farm Credit System The Farm Credit System is a nationwide network of agricultural lending institutions and their service organizations. The System's lending institutions are: the Federal Land Banks, which make long-term farm mortgage loans through local Federal Land Bank Associations; the Federal Intermediate Credit Banks, which provide discounted loan funds to Production Credit Associations, the System's short- and intermediate-term lenders; and the Banks for Cooperatives, which make loans to agricultural-related cooperatives. All System institutions and service organizations are federally chartered by the Farm Credit Administration. District Boards of Directors Policy direction for each of the 12 Farm Credit Districts is provided by the district boards of directors. In addition to serving as the district board of directors to deal with matters affecting all three banks, the board also serves as the board of directors for each bank individually. Two directors are elected by the district's Federal Land Bank Associations, two by its Production Credit Associations and two by cooperatives that own stock in the district's Bank for Cooperatives. The seventh member is elected by the borrowers at large in the district. District board members serve three-year terms and may be reelected. Federal Land Banks The System's 12 Federal Land Banks (FLBs) make long-term loans secured by first mortgages on farm and rural real estate. FLB loans have maturities ranging from 5 to 40 years. Most are made on variable interest rate plans, although a variety of interest rate programs may be available in various districts. Loans can be made in amounts up to 85 percent of the value of the property taken as security, valued at the time the loan is made; 97 percent if guaranteed by a state or federal agency. Federal Land Bank Associations The Federal Land Banks make long-term loans through 232 Federal Land Bank Associations (FLBAs) nationwide. Most of the FLBAs have branch offices. Many of the Federal Land Bank Associations now have common management with the Production Credit Association serving the same or similar territory. Loans are made for a variety of purposes, including the purchase of farms, farmland, machinery, equipment and livestock; refinancing existing mortgages and paying other debts; constructing and repairing buildings; improving land and financing other farm, farm home or farm family needs. Loans also can be made for the purchase or construction of rural homes, for real estate needed for aquatic operations, for processing and marketing facilities and to certain farm related businesses. When ob taining a loan, a borrower must purchase stock in the FLBA equal to at least 5 percent of the total amount borrowed. Federal Intermediate Credit Banks The 12 Federal Intermediate Credit Banks (FICBs) provide short- and intermediate-term loan funds to Production Credit Associations (PCAs) and to other financing institutions (OFIs) serving agricultural producers. PCAs and OFIs that receive loan funds from the FICB invest in the banks through the purchase of capital stock and participation certificates. PCAs and OFIs also receive capital stock and participation certificates of the FICB as a distribution of bank earnings. Production Credit Associations The 154 Production Credit Associations are primary lenders of short- and intermediate-term funds. In making loans, PCAs may participate with the FICB, with one another or with commercial banks. PCAs make loans to farmers, ranchers, rural homeowners, producers and harvesters of aquatic products and to certain farmrelated businesses. Loans are also made to finance processing and marketing activities of farmers, ranchers and commercial fishermen. Most loans are made for production or operating purposes and mature within one year. However, farm and rural home loans may have terms of up to 10 years and loans to producers or harvesters of aquatic products may be made for up to 15 years. Most loans are made on variable interest rate plans, although a variety of interest rate programs may be available in various districts. During the last several years, a significant number of PCAs have merged and a growing number now have common management with Federal Land Bank Associations serving the same or similar territory. When obtaining loans, borrowers are required to purchase capital stock in the association amounting to at least 5 percent of the loan. Association Boards of Directors Member-borrowers of Federal Land Bank Associations and Production Credit Associations elect their boards of directors from among themselves. The boards hire management and establish local policies. Banks for Cooperatives The 12 Banks for Cooperatives (BCs) make loans to agricultural, aquatic and public utility cooperatives within their respective territories. To be eligible to borrow from a BC, 80 percent of the voting control of the cooperative must be in the hands of agricultural or aquatic producers. Federations of cooperatives where (continued on back page) |