Press release (FCSIC)

McLEAN, Va., April 12, 2024 — The Farm Credit System Insurance Corporation board of directors has approved a payment of approximately $122.8 million in excess insurance funds to Farm Credit System banks.

By law, the Farm Credit Insurance Fund, which FCSIC administers, must maintain a “secure base amount” equal to 2% of the adjusted outstanding insured obligations of the Farm Credit System. At the end of each year, FCSIC is required to transfer any amount over the secure base amount (after deducting its operating expenses and current insurance obligations) to “allocated insurance reserves accounts” — one for each bank that pays premiums into the Farm Credit Insurance Fund. However, the FCSIC board has the authority to hold the excess funds if conditions warrant doing so.

Premium accrual rates for 2024 were previously set by the board in February at 10 basis points, which is below the maximum premium rate of 20 basis points. FCSIC estimates that the 10 basis points will allow the System to grow up to 9% in 2024 and still allow the Insurance Fund to end 2024 above the secure base amount. Since premiums will accrue at a level below the maximum and the board will review premium rates later in the year, the board believes that the Insurance Fund will likely stay above the secure base amount in 2024. It has also determined that there are no current insurance obligations and that losses to the Insurance Fund are unlikely at this time.

The total amount over the secure base amount at December 31, 2023, was $127.9 million. After subtracting $5.1 million for the corporation’s 2024 operating funds, FCSIC transferred approximately $122.8 million to the allocated insurance reserves accounts, and the FCSIC board has now voted to return the $122.8 million in excess funds to the System banks.

Year-end audit results

Sikich, FCSIC’s independent audit firm, recently completed its year-end review of the corporation’s financial statements and has issued an unqualified or clean opinion. The auditor found no material weaknesses or deficiencies. This is the 34^th consecutive year FCSIC has received an unqualified or unmodified opinion on its financial statements.

Sikich also conducted testing on the effectiveness of FCSIC’s internal control over financial reporting and issued an opinion that it was effective.

FCSIC is managed by a three-member board of directors. In addition to Chairman Jeffery Hall, Glen Smith and Vincent Logan serve as members of the board.