September 25-27, 2000
Atlanta, Georgia
By: Bill Melton

District Structure
AgFirst
Farm Credit Bank
(including wholly-owned subsidiary Farm Credit
Finance Corp. of Puerto Rico)
27 District Associations
Provide credit and related services to borrowers in
15 states and Puerto Rico
Borrowers
82,000 farmers, agribusinesses and rural homeowners

AgFirst Farm Credit Bank
Today, AgFirst is the largest single provider of credit to agriculture in its 15 state region (and
Puerto Rico) through its 27 (1) affiliated Associations, which are in turn owned by approximately
82,000 farmers, agribusinesses, and rural homeowners
1993
1994
1995
1916
1933
1988
The Federal Land Bank of Columbia was one of 12 banks established by Congress to provide a dependable source of long-term credit to American agriculture
By another act of Congress, the Federal Intermediate Credit Bank of Columbia was formed as a vehicle to fund short- and intermediate-term credit to agriculture. See 1
The Federal Land Bank of Columbia and Federal Intermediate Credit Bank of
Columbia merged to form the Farm Credit Bank of Columbia
The Federal Intermediate Credit Bank of Jackson merged into the Farm Credit Bank of
Columbia. See 2
Four associations, formerly affiliated with the Farm Credit Bank of Louisville, reaffiliated to the Farm Credit Bank of Columbia. See 3
The Farm Credit Banks of Columbia and Baltimore consolidated to form AgFirst Farm
Credit Bank. See 4
CHATTANOOGA
AgFirst’s growth has led to greater geographic, customer, and commodity diversification
(1) To be consolidated to 23 Associations as of January 1, 2001

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AgFirst FCB Business Profile
Total earning assets: $11.1 billion as of 6/30/00
Direct Lending
Line of credit extended to member associations under General Financing
Agreement (GFA) Secondary
Investments
20.4%
Direct
Lending
67.2%
Investments
Liquidity reserve
Diversify income source
Mortgage
2.4%
Participations
10.0%
Participations
Provide overlines to member associations
Provide a national reach
Diversify income source
Secondary Mortgage Marketing Unit
(SMMU)
Facilitates loans through the FNMA and FAMC
Total earning assets: $8.9 billion as of 12/31/95
Participations
Diversify income source
8.0%
Investments
17.0%
Support Services
Appraisal review, Portfolio Management,
Credit Policy Guidance, Information Services,
Accounting, Marketing, Human Resources, &
Insurance Services
Direct
Lending
75.0%

Association Portfolio Borrower Profile
AgFirst's credit exposure is widely dispersed through 27 associations that serve 82,000 borrowing entities

Association customers, while primarily rural and rooted in farming, are also predominantly part-time farmers and rural homeowners

Full-time farmers' incomes are significantly supported by off-farm income

Customer size for both full-time and part-time farmers indicates a large number of small balance loans, which significantly mitigates agricultural commodity/industry credit risk
Customer Segment
Number of Borrowers
Median Off-Farm Income
Median Farm Credit Loan
Median Total Liabilities
Median Net Worth
Median Debt: Net Worth
Median Spread on Loan
Source: AgFirst Marketing Department
Full-Time Farmer
32,000
$28,000
$66,000
$202,000
$473,000
.43:1.00
1.90%
Part-Time Farmer
38,000
$55,000
$36,000
$100,000
$230,000
.43:1.00
2.00%
Rural Home Owner
12,000
$45,000
$32,000
$61,000
$74,000
.82:1.00
1.30%

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Combined Income of AgFirst and Affiliated
Associations as of December 31, 1999 $218.2 Million

Almost identical to previous year’s earnings
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Combined income as of June 30, 2000…$110.5 million
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An increase of $10 million from the previous year

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11th Consecutive Year Where Earnings Have
Been Stable or Increasing Over Previous Year
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Despite $11.5 million in merger expenses year to date, we expect 2000 earnings to exceed the 1999 level
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Anticipate an additional $2 million in merger/consolidation before year end

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Paid Patronage of $1.2 billion to Our
Stockholders/Borrowers in the last ten years
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Gross Loans of $10.1 Billion as of 8/31/00
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2.8% average growth for the past 4 years
Growth in loan volume was flat during the past 12 months but is beginning to rebound

As of August 31, 2000, rate of growth is 2.23%
Total Assets of $13.0 Billion as of 8/31/00

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Permanent capital levels at June 30, 2000, averaged 17.6%.
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The allowance for loan losses total $261.3 million and represent 2.85% of total loans.
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Asset quality has remained stable through
August 31, 2000.

45%
40%
35%
30%
65%
60%
55%
50%
25%
20%
15%
10%
5%
0%
100%
95%
90%
85%
80%
75%
70%
Loan Classification Trend
Acceptable OAEM Substandard
Baltimore merger

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Earnings remain strong averaged 10.08%.
. As of June 30,
2000, ROA averaged 1.99% and ROE
Loan growth increased to 2.23% as of
August 31, 2000. The growth trend expected to flatten out in 2001.
is
Drought conditions were the deep South states.
most severe in

Loan Size Dist.
4,000
3,500
3,000
2,500
2,350
2,994
3,732 3,823
2,000
1,500
1,000
500
0
$0 - $100,000 $100,000 -
$500,000
Loan Size Distribution by Dollar Volume
1,138
6/30/1996
Total Volum e= $8,616m m
6/30/2000
Total Volum e= $9,624m m
900
$500,000 -
$1 million
1,182 1,079
$1 million -
$5 million
214
828
>$5 million
70,000
60,000
50,000
40,000
30,000
20,000
10,000
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Loan Size Distribution by Number of Relationships
60,602
18,930
0
$0 - $100,000 $100,000 -
$500,000
2,082
$500,000 -
$1 million
6/30/2000
Total Relationships = 82,532
852
$1 million -
$5 million
66
>$5 million
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In the district, there are 77 loans that exceed 10% of the holding Association’s capital
The 77 loans are classified:
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66 Acceptable
10 Special Mention
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Only 2 Associations have more than 1
Special Mention
1 Substandard
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Loan size tracks agricultural demographics
Significant number of part-time farmers
Reliance for repayment on non-farm income

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AgFirst District Market Position
Dominant lender to agriculture, agribusiness and rural residents in the eastern US
Successfully increased market share through several agricultural credit cycles while improving credit quality
A balance between full-time and parttime farmers – consistent with demographics
Association originated loan portfolio at
6/30/00 has a weighted average maturity of 7 years
Weighted average maturity has declined over time, indicative of focus on growing the non-real estate portfolio
40%
35
15
10
5
0
30
25
20
27.8%
1993
AgFirst District
Source: USDA
Market Share of
Non-Real Estate Agricultural Debt
27.8% 30.7%
32.8%
34.0%
1994 1995 1996
Commercial Banks
1997
FSA
35.9%
1998
Others
Association Originated Loan Portfolio
Real Estate Portfolio
Non-Real Estate Portfolio
Weighted Average Maturity (yrs)
1995 1996 1997 1998 1999
54% 52% 50% 46% 47%
46%
8.7
48%
8.1
50%
7.7
54%
7.3
53%
7.0

Commodity Diversification
Field Crops
6.6%
Total Portfolio: $9.6 billion
Country Home Loans
6.3%
Fruits/Citrus/Vegs
6.5%
Tobacco
5.7%
Landlords
5.2%
Nursery
4.5%
Other Animals
4.4%
Dairy
7.3%
Grain
8.9%
Swine
4.3%
Other
4.2%
Cotton
3.3%
Poultry
14.7%
Timber
9.1%
Beef
9.1%
As of June 30, 2000.

Geographic Distribution by State
25%
20%
15%
10%
5%
0%
12/31/95
12/31/96
12/31/97
12/31/98
12/31/99

o a s w t I c a g c i d o !
S a p c

Farmers now have a new crop . . .
Its called “Mailbox Farming”!
Check is in the mail!

U.S. Farmers’ Net Cash Income
$52.8
9.3
$50.4
8.2
$55.2
$59.3
9.2
13.4
$51.1
7.9
$52.6
7.3
$57.5
$58.5
7.3
7.5
$54.9
12.2
$59.1
22.7
$56.8
24.3
$55.3
43.5
42.2
46.0
45.9
43.2
45.3
50.2
51.0
42.7
36.4
32.5
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999*
2000**
Direct Government Payments ($ billions)
Net Cash Income, excluding Direct Government Payments
* Preliminary
Source: USDA 1998
** Forecasted Average of 1990-1998

Government payments as a % of Farm Net
Income by Territory
20
15
10
5
0
45%
40
35
30
25
8% 8%
13%
CoBank Western AgFirst
30%
Texas
40%
41%
43%
22%
Wichita AgAmerica AgriBank US
Composite
Source: USDA 1998

80%
70%
60%
50%
40%
30%
20%
10%
0%
74%
8.2%
7% 8% 6%
18.9%
10%
15%
34.7%
5%
22.9%
15%
2%
15%
10.6%
1%
42%
4.7%
Less than
$50,000
50,000 -
$99,999
$100,000 -
$249,999
$250,000 -
$499,999
$500,000 -
$999,999
$1 Million and Over
% of Farm % of Gross Sales % of Government Payment

8 Principal Crops
30
($ Billions)
25
20
15
10
Without Government
Payment
5
0
1988 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2002
Crop Year

Average Effective Prices, 1999/2000
Crop Forecast Farm Price Avg. Effective Price 1/
Corn ($/bu)
Wheat ($/bu)
Soybeans ($/bu)
Cotton ($/lb)
Rice ($/ewt)
1.90
2.55
4.75
0.46 2/
6.00
2.70
4.27
5.83
0.79
11.95
1/ Production value plus government payments divided by production.
2/ August-November average upland cotton price.

“Southern States hardest hit by drought represent barely 2% of the U.S. corn average and less than 9% of the U.S. soybean.”
Source: AgWeb.com

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Rising Interest Rates
Weather Pattern with Extremes
Low Prices for Many Commodities
Uncertain Farm Policy for the Long Term
Loan Demand is Weakening in Some Areas
Energy Cost have Soared
Massive Transfer of Wealth Occurring
IDEAL TIME for Making Poor Decisions!

Overview by Commodity Type
Commodity or
Industry
Meat Complex
Significant segments:
Pork, Broilers, Eggs,
Dairy
Significant company consolidation; vertical integration; drive to compete worldwide
Grain Complex
No significant segment
Production units consolidating. Biotech boosts yields. Genetic modification will regain momentum.
Green Complex
Significant segments,
Nursery, Greenhouse, Sod,
Recreational Property,
Timber
Economic growth stimulates demand at double digit rate.
Fruits/Vegetables
Significant segments,
Citrus, Fresh Vegetables
Globalization of production and distribution. NAFTA shifting production.
Sugar
General Trend
Less U.S. Producer protection
Government
Support/
Regulations
Outlook
Direct support very limited absent dairy. Regulations as to food safety and environment becoming more stringent; cash basis accounting is key.
Near term – very large production in U.S., expansion based on cheap grain. Long term – growth in exports is key.
Support is fueled by midwest dominance in grains and political factors and will continue.
No support. Limited regulations.
Near term – over production and price pressure. Long term –
U.S. competitiveness wins out.
U.S. economic growth to slow sooner rather than later. Sector growth is geographically driven on East Coast and will outperform the economy
Little impact directly.
New crop insurance is available. Food safety concerns continue.
Very important – support of prices since same is true worldwide.
Consolidation of production units. More fresh consumption vs. processed.
Near term – difficult market. Long term – huge integrated producers are globally competitive.
Growth in
Loan Demand
+
Neutral
++
–
Neutral

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Impact of Stress in Ag Economy Will Not Be Borne Equally
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Generally some commodities will always be in its down cycle
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This year it is broilers, eggs and dairy
Regional, the Eastern U.S. is more diverse in its production agriculture and less dependent on Government support
Free Trade is Critical to a Healthy Ag Economy
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NAFTA taking hold with Canada and Mexico, our best trading partners
A very positive sign for Ag was the permanent “Most Favored
Nation” trading status voted for China
The brightest spots to point to in 2000
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A robust general economy that producers a Government surplus
$24.3 billion in Government assistance already approved

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Continuation of Consolidations within the
Production Side & Processing/Marketing Sector
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Poultry & Livestock
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Continuation of Strategic Alliances and Long
Term Contracts Between Producers and Food
Companies
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Tobacco . . . Finally!
Nursery/Greenhouse Production

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Continued Consolidation in Banking including the Farm Credit System
Significant merger activity among associations
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23 associations by year end; down from 40 two years ago

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Difficult to impossible to get large confined livestock & poultry facilities permitted
Environmental, Land Use, and Food Safety Regulations
Strictly Enforced
Interest rates have risen sharply since June 1999
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Energy prices will be a large factor in subsequent adjustments
The Fed appears to have achieved a “Soft Landing”

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Low Delinquencies
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Normal Charge-Offs
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Few Foreclosures
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Stable Asset Quality

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Net Farm Income buoyed by Government Payments
 Creates a false Ag Economy
Ag Real Estate Has Held its Value or Risen in Value
 Dilemma is that higher land values make price of product uncompetitive. Example: 4 to 1 difference in price of acre in Iowa and Brazil.
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Level of Debt Held by Farmers Not Substantially Higher, but
Becoming Increasingly Dependent on Government Assistance for Repayment Capacity

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East Coast Agriculture Will Fare Better Than the
Midwest
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Prices for Broilers, Eggs, Dairy and Timber Are
All Being Negatively Impacted by Supply
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Over-Production Will Again Hurt Hog Prices and Keep Dairy
Profitability Very Low
Over-Production will Continue to be a Problem for U.S.
Agriculture

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Another Round Of Shake-Out For Farmers and Ag
Lenders
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Advances in Biotechnology will Ensure Food Supply is
Not Diminished by Departing Producers
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Consumers may “pay up” for GMO free products
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In the Long View, Agriculture will Remain Viable &
Profitable for the Low Cost Producers