2021
ANNUAL REPORT TO SHAREHOLDERS
Idaho AgCredit, ACA and its wholly owned subsidiaries,
Idaho AgCredit, FLCA and Idaho AgCredit, PCA
188 W Judicial, PO Box 985,
Blackfoot, ID 83221
(208)785-1510
Celebrating 88 years:
Idaho AgCredit, ACA, chartered January 1, 2015
(formerly known as Idaho Agricultural Credit Association)
Idaho AgCredit, FLCA and Idaho AgCredit, PCA chartered July 1, 2002 as wholly
owned subsidiaries of Idaho Agricultural Credit Association
Idaho Agricultural Credit Association chartered January 1, 2000
Eastern Idaho Agricultural Credit Association chartered August 6, 1991
Eastern Idaho Production Credit Association chartered January 6, 1934
Idaho AgCredit
1
2021 ANNUAL REPORT TO SHAREHOLDERS
TABLE OF CONTENTS
Table of Contents and Directors, Officers, and Staff ............................1
Report of Management .........................................................................2
Audit Committee Report .......................................................................3
Five-year Summary of Selected Consolidated Financial Data .............4
Management's Discussion and Analysis
of Financial Condition and Results of Operations ................... 5-19
Independent Auditor’s Report ....................................................... 20-21
Consolidated Statements of Financial Condition ............................... 22
Consolidated Statements of Income and Comprehensive Income ... 23
Consolidated Statements of Changes in Shareholders’ Equity ......... 24
Consolidated Statements of Cash Flows ........................................... 25
Notes to Consolidated Financial Statements ................................ 26-45
Disclosure Information Required by
Farm Credit Administration Regulations ............................... 46-51
BOARD OF DIRECTORS
Ken Black, Chairman .................................................... Burley
Twain S. Hayden, Vice Chairman .................................. Arbon
Scott R. Giltner ............................................................ Jerome
Ryan Mathews .......................................................... Blackfoot
Wendy Pratt .............................................................. Blackfoot
Bruce Ricks ............................................................. Sugar City
Dennis W. Snarr .................................................... Idaho Falls
OFFICERS
Marc Fonnesbeck .................................... President and CEO
Jim Chase ................................................ Secretary and CFO
Adam C. Jensen ............. Executive Vice President and CCO
Kirk Powell ......................... Vice President of Capital Markets
Katie Wallace ................ Vice President of Human Resources
Dana Wood ................................Vice President of Operations
Ryan Funk. ........................................ Vice President and CIO
HEADQUARTERS STAFF
Jan Gamble ................................ Senior Operations Assistant
Echo Wren ............................................. Operations Assistant
Travis Crook....................................................... IT Technician
(Job titles are as of January 1, 2022)
BRANCH STAFF
Blackfoot Branch Office (208)785-1510
Katie Wallace ............................................... Branch Manager
Avery Robertson............................Assistant Branch Manager
Carson Jacobs .................................................... Loan Officer
Jenny Callison ................................. Credit Support Specialist
Tenaia Giannini ...................................... Operations Assistant
Hallie Mickelsen ..................................... Operations Assistant
Rexburg Branch Office (208)356-5479
Nick Bazil ...................................................... Branch Manager
Doug Eck .......... Evaluation Manager and Senior Loan Officer
Jared Ashcraft ..................................................... Loan Officer
Maguel Sommer ................................................ Credit Analyst
Sam Erickson ......................................... Operations Assistant
Tina Morton ...................... Senior Loan Processing Specialist
American Falls Branch Office (208)226-5251
Dana Wood .................................................. Branch Manager
Dylan Orr ............................................................. Loan Officer
Rob Acevedo ..................................................... Credit Analyst
Cyndi Campbell ...................................... Operations Assistant
Maxine Olson ......................................... Operations Assistant
Meagan Reed .............................................. Audit Coordinator
Twin Falls Branch Office (208)734-0635
Tianna Fife ................................................... Branch Manager
Sean Zaugg .............................................. Senior Loan Officer
Dave Scott ........................................................... Loan Officer
Kaylie Collins ................................... Credit Support Specialist
Nicolette Mikesell ................................... Operations Assistant
Idaho AgCredit
2
REPORT OF MANAGEMENT
The consolidated financial statements of Idaho AgCredit, ACA and its wholly owned subsidiaries Idaho AgCredit, FLCA and
Idaho AgCredit, PCA (collectively Association) are prepared by management, which is responsible for their integrity and
objectivity, including amounts that must necessarily be based on judgments and estimates. The consolidated financial
statements have been prepared in conformity with generally accepted accounting principles appropriate under the circumstances
and under the oversight of the Audit Committee (composed of all board members) and in the opinion of management fairly
present the financial condition and results of operations of the Association. Other financial information included in the 2021
annual report is consistent with the financial statements.
To meet its responsibility for reliable financial information, management depends on the Association's accounting and internal
control systems, which have been designed to provide reasonable, but not absolute, assurance that assets are safeguarded
and transactions are properly authorized and recorded. To monitor compliance, the Association, its contract auditors, CoBank
and an independent accounting firm perform reviews of the accounting records, review accounting systems and internal controls,
and recommend improvements as appropriate.
The activities of the Association are also reviewed by the Farm Credit Administration (FCA) and certain actions of the Association
are subject to approval by CoBank. Certain actions of CoBank are also subject to FCA approval.
The consolidated financial statements of the Association were audited by Wipfli LLP, certified public accountants (CPAs), who
also conducted a review of the accounting records and such other auditing procedures as they considered necessary to comply
with auditing standards generally accepted in the United States of America. A copy of their report is presented later in this annual
report.
The Board of Directors and Audit Committee have overall responsibility for the Association's systems of internal control and
financial reporting. In connection with this obligation, each consults regularly with management and periodically reviews the
scope and results of work performed by the CPAs and other auditors. The CPAs and other auditors also have direct access to
the Board of Directors and Audit Committee.
The undersigned certify that this annual report has been reviewed and prepared in accordance with all applicable statutory or
regulatory requirements and that the information contained herein is true, accurate and complete to the best of their knowledge and
belief.
Ken Black Marc Fonnesbeck Jim Chase
Board Chairman President and CEO Secretary and CFO
February 16, 2022
Idaho AgCredit
3
AUDIT COMMITTEE REPORT
The Audit Committee (Committee) includes the entire Board of Directors of Idaho AgCredit, ACA (Association). In 2021, ten
Committee meetings were held. The Committee oversees the scope of the Association's internal audit program, the
independence of the outside auditors, the adequacy of the Association's system of internal controls and procedures, and the
adequacy of management's action with respect to recommendations arising from those auditing activities. The Committee's
responsibilities are described more fully in the Internal Control Policy and the Audit Committee Charter. The Committee approved
the appointment of Wipfli LLP (CPAs) as the Association's independent auditors for 2021.
The fees for professional services from the CPAs during 2021 were $34,000 for audit services and $7,200 for tax and non-audit
services. All audit and non-audit services with the CPAs were contracted by and approved by the Audit Committee. Non-audit services
included calculation of current and deferred income taxes, preparation of income taxes and consulting on future accounting
requirements. The Committee reviewed the non-audit services provided by the CPAs and concluded these services were not
incompatible with maintaining the independent auditor's independence.
Management is responsible for the Association's internal controls and the preparation of the consolidated financial statements
in accordance with accounting principles generally accepted in the United States of America. The CPAs are responsible for
performing an independent audit of the Association's consolidated financial statements in accordance with auditing standards
generally accepted in the United States of America and to issue a report thereon. The Committee's responsibilities include
monitoring and overseeing these processes.
In this context, the Committee reviewed and discussed the Association's Quarterly Reports and the audited consolidated financial
statements for the year ended December 31, 2021 (the “Audited Financial Statements”) with management and the CPAs. The
Committee also reviews with the CPAs the matters required to be discussed by Statements on Auditing Standards and both the
CPAs and the Association's internal auditors (including staff and contract auditors) provide reports directly to the Committee on
significant matters.
The Committee received the written disclosures and the letter from the CPAs in accordance with Independence Standards Board
Standard No. 1 (Independence Discussion with Audit Committees) and discussed with the CPAs their independence from the
Association. The Committee has discussed with management and the CPAs such other matters and received such assurances
from them as the Committee deemed appropriate.
Based on the foregoing review and discussions and relying thereon, the Committee recommended that the Board of Directors
include the Audited Financial Statements in the Association's Annual Report to Shareholders for the year ended December 31,
2021 and for filing with the FCA.
Dennis Snarr
Chairman of the Audit Committee
Ken Black Scott R. Giltner
Twain S. Hayden Ryan Mathews, Vice Chairman
Wendy Pratt Bruce Ricks
Audit Committee Members
February 16, 2022
Idaho AgCredit
FIVE-YEAR SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands)
4
December 31
Consolidated Statements of Condition Data
2021
2020
2019
2018
2017
Loans
$
$
$
$
$
Less allowance for loan losses
1,523
1,584
1,573
1,193
1,179
Net loans
Cash and investment securities
3,394
2,984
1,453
1,957
0
Accrued interest receivable
4,340
4,576
4,901
4,859
4,575
Investment in CoBank, ACB
10,966
10,966
10,963
10,953
10,943
Other property owned
0
0
0
0
0
Other assets
4,159
3,633
3,058
2,765
2,672
Total assets
$
$
$
$
$
Obligations with maturities of one year or less 293,149$ 268,573$ 244,009$ 251,740$ 223,464$
Obligations with maturities longer than one year
292
296
252
237
225
Total liabilities
$
$
$
$
$
Capital stock and participation certificates
504
481
434
428
425
Allocated retained earnings
24,304
22,381
20,882
18,435
16,639
Unallocated retained earnings
41,554
41,025
39,695
40,171
39,059
Accumulated other comprehensive income/(loss)
0
0
0
0
0
Total shareholders' equity
66,362
$
63,887
$
61,011
$
59,034
$
56,123
$
Total liabilities and shareholders' equity
$
$
$
$
$
For the Year Ended December 31
Consolidated Statements of Income Data
2021
2020
2019
2018
2017
Net interest income
8,955
$
8,174
$
8,188
$
7,651
$
7,120
$
Patronage distribution from Farm Credit Institutions
1,453
1,187
1,044
1,216
1,020
(Provision for) or Reversal of loan losses
111
(35)
(390)
(14)
(52)
Noninterest expense, net
(4,194)
(3,550)
(3,892)
(3,447)
(3,532)
(Provision for) or Benefit from income taxes
(167)
(138)
(95)
(143)
(256)
Cumulative effect of change(s) in accounting principles
0
0
0
0
0
Net income/(loss)
6,158
$
5,638
$
4,855
$
5,263
$
4,300
$
Comprehensive Income
6,158
$
5,638
$
4,855
$
5,263
$
4,300
$
Consolidated Key Financial Ratios
2021
2020
2019
2018
2017
For The Year
Return on average assets
1.83%
1.81%
1.61%
1.88%
1.61%
Return on average shareholders' equity
9.18%
8.85%
7.89%
8.96%
7.66%
Net interest income as % of average earning assets
2.84%
2.80%
2.93%
2.93%
2.87%
Net charge-offs/(recoveries) as % of avg net loans
(0.02%)
0.00%
0.00%
0.00%
0.00%
At Year End
Shareholders' equity as a percentage of total assets
18.44%
19.20%
19.99%
18.98%
20.06%
Debt as a ratio to shareholders' equity
4.42:1
4.21:1
4.00:1
4.27:1
3.99:1
Allowance for loan losses as a percentage of loans
0.45%
0.51%
0.55%
0.41%
0.45%
Common Equity Tier 1 (CET1) Capital
15.56%
16.46%
16.93%
16.21%
17.21%
Tier 1 Capital
15.56%
16.46%
16.93%
16.21%
17.21%
Total Regulatory Capital
16.02%
16.98%
17.49%
16.63%
17.68%
Tier 1 Leverage
15.57%
16.20%
16.84%
15.93%
16.76%
Unallocated retained or equivalents Leverage (UREE)
15.42%
16.05%
16.69%
15.79%
16.60%
Permanent capital ratio
15.96%
17.21%
17.72%
17.14%
18.43%
Net Income Distribution
2021
2020
2019
2018
2017
Cash patronage distributions paid
2,812
$
2,884
$
2,355
$
2,134
$
2,081
$
Cash patronage declared
3,702
$
2,809
$
2,884
$
2,355
$
2,134
$
Stock dividends declared 0$ 0$ 0$ 0$ 0$
Idaho AgCredit
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands except as noted)
5
INTRODUCTION
The following discussion summarizes the financial position and results of operations of Idaho AgCredit, ACA for the year ended
December 31, 2021. Comparisons with prior years are included. We have emphasized material known trends, commitments,
events, or uncertainties that have impacted or are reasonably likely to impact our financial condition and results of operation.
The discussion and analysis should be read in conjunction with the accompanying consolidated financial statements, footnotes
and other sections of this report. The accompanying consolidated financial statements were prepared under the oversight of our
Audit Committee. The Management's Discussion and Analysis includes the following sections:
• Business Overview
• Economic Overview
• Loan Portfolio
• Credit Risk Management
• Results of Operations
• Liquidity
• Capital Resources
• Regulatory Matters
• Litigation
• Governance
• Forward-Looking Information
• Critical Accounting Policies and Estimates
• Customer Privacy
The Association's quarterly reports to shareholders are available approximately 40 days after the calendar quarter end and
annual reports are available approximately 75 days after the calendar year end. The reports may be obtained free of charge on
the Association's website, www.IdahoAgCredit.com, or upon request. We are located at 188 West Judicial, PO Box 985,
Blackfoot, ID 83221 or may be contacted by calling (208)785-1510.
BUSINESS OVERVIEW
Farm Credit System Structure and Mission
We are one of 67 associations in the Farm Credit System (System), which was created by Congress in 1916 and has served
agricultural producers for over 100 years. The System mission is to provide sound and dependable credit to American farmers,
ranchers, and producers or harvesters of aquatic products, and farm-related businesses through a member-owned cooperative
system. This is done by making loans and providing financial services. Through its commitment and dedication to agriculture,
the System continues to have the largest portfolio of agricultural loans of any lender in the United States. The Farm Credit
Administration (FCA) is the System's independent safety and soundness federal regulator and was established to supervise,
examine and regulate System institutions.
Our Structure and Focus
As a cooperative, we are owned by the members we serve. Our territory served extends across a diverse agricultural region of
25 counties in south and east Idaho and two counties in Wyoming. The counties in our territory are listed in Note 1, Organization
and Operations, of the Notes to Consolidated Financial Statements. We make long-term real estate mortgage loans to farmers,
ranchers, rural residents and agribusinesses and we make production and intermediate-term loans for agricultural production or
operating purposes. Additionally, we provide other related services to our borrowers, such as credit life insurance. Our success
begins with our extensive agricultural experience and knowledge of the market and is dependent on the level of satisfaction we
provide to our borrowers.
As part of the System, we obtain the funding for our lending and operations from a Farm Credit Bank. Our funding bank, CoBank,
ACB (CoBank), is a cooperative of which we are a member. We, along with the borrower’s investment in our Association are
materially affected by CoBank's financial condition and results of operations. The CoBank quarterly and annual reports are
available free of charge on CoBank's web site, www.cobank.com, or may be obtained at no charge by contacting us at Idaho
AgCredit, 188 W Judicial, PO Box 985, Blackfoot, ID 83221 or by calling (208)785-1510. Annual reports are available within 75
days after year end and quarterly reports are available within 40 days after the calendar quarter end.
We purchase technology and other operational services from AgVantis, which is a technology service corporation. We purchase
payroll and other human resources services from Farm Credit Foundations, which is a human resource service provider for a
number of Farm Credit institutions.
ECONOMIC OVERVIEW
Production agriculture is a cyclical business that is heavily influenced by commodity prices. Commodity prices for 2019 and 2020
were generally near breakeven or slightly above. Commodity prices in 2021 were generally improved and most operations were
profitable. The impact to the Association from the negative portion of these cycles that agriculture has and always will experience
is somewhat lessened by geographic and commodity diversification and the generally strong financial condition of our agricultural
borrowers.
Economic conditions in most sectors of our region during 2021 were generally positive as prices for major commodities financed
Idaho AgCredit
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands except as noted)
6
including wheat, barley, alfalfa and beef cattle were generally a little above breakeven. Open potato prices for the 2021 crop are
generally favorable to very favorable. Open potato prices for the 2019 and 2020 crops were generally above breakeven with
some receiving excellent returns. Contracted potatoes are generally a little above breakeven. Sugar beet prices are generally
above breakeven depending on the operation’s debt load. Milk prices have improved during the year with most producers above
breakeven prices depending on their feed sources and milk components. The costs for energy, fertilizers and related items
generally remained moderate through 2021, but these costs are generally expected to rise significantly in 2022.
The Covid-19 pandemic brought with it significant uncertainty in market prices at the beginning of 2020, but most prices had
stabilized by mid summer in 2020 and remained relatively stable in 2021. The Association’s customers largely benefitted from
Covid-19 programs like Small Business Administration (SBA) Paycheck Protection Program (PPP) and the Farm Service
Agency’s (FSA) Coronavirus Food Assistance Program (CFAP). Labor supplies were adequate and production inputs for rural
agriculture in the Association’s territory were mostly unaffected by the Covid-19 pandemic.
Irrigation supplies during 2019, 2020 and 2021 were generally adequate. The 2021 year end reservoir levels were below
average, and an above average snowpack will be needed to ensure adequate water in 2022. Ongoing water rights issues and
litigation between pumpers and surface water users continue to highlight the importance of water management. The State of
Idaho Department of Water Resources annually assesses whether some pumping may be cut off or reduced. Given initial
snowpack, it is likely most regions should have adequate water for 2022 crops, but these projections largely depend on
precipitation received through the rest of the winter and spring. The Idaho Legislature is also considering options for building
more long-term stability into how water is made available.
Prime rate remained unchanged in 2021, but it is likely Prime rate will increase between .75% and 1.25% in 2022 due to growing
concern over inflation. Prime rate decreased twice in 2020 to 3.25% at year end, compared to 4.75% at year end 2019. The
interest rate changes in 2020 represented significant concerns over the economy, largely due to the Covid-19 pandemic. Rate
increases in the next few years will tighten customer margins, which could present challenges to lenders and producers.
Real estate prices and land rents have remained strong in the Association's territory. Any downward pressure on land rents due
to low commodity prices could move land prices lower. The prices of smaller parcels of land adjoining larger farming operations
may continue to see a premium above general land sales. No specific weaknesses in general land prices have been seen yet.
The Association's mortgage portfolio increased in 2020 and 2021. Mortgage interest rates remained low in the last year and
several operations refinanced at lower rates.
The Association’s net income was good and primarily reflects the strong economic success of the Association's customers and
the growth in average Association loan volume. Cash patronage from CoBank increased in 2020 and 2021, and is expected to
remain relatively stable in 2022.
The Agricultural Improvement Act of 2018 (Farm Bill) was signed into law on December 20, 2018. This Farm Bill governs an
array of federal farm and food programs, including commodity price support payments, farm credit, conservation programs,
research, rural development and foreign and domestic food programs for five years through 2023. The Farm Bill continues to
provide support for crop insurance programs and commodity support programs, strengthen livestock disaster programs, and
provides dairy producers with an updated voluntary margin protection program that will provide more flexibility to dairy
operations. The Farm Bill also authorizes the production and marketing of industrial hemp in accord with state or federal
regulations. The Farm Bill also clarifies the Insurance Corporation’s authority, role and procedures for acting as a conservator
or receiver of a troubled System institution. The Farm Bill provides a range of statutory options to the Insurance Corporation
including, but not limited to, marshalling and liquidating assets, satisfying claims of creditors and using interim devices such as
bridge banks.
LOAN PORTFOLIO
Total loans outstanding were $338,467 at December 31, 2021, which was an increase of $26,287 or 8.4% from $312,180 at
December 31, 2020, and an increase of $51,997 or 18.2% from $286,470 in the two year period at December 31, 2019. The
increase in loans from 2020 to 2021 reflects substantial growth in mortgage loans as a result of marketing and low interest rates,
and a slight increase in commercial loans due to marketing and low interest rates. The increase in loans from 2019 to 2020
reflects substantial growth in mortgage loans as a result of marketing and low interest rates, and a moderate reduction in
commercial loans generally due to weak economic conditions and conservative borrowing in response to the Covid-19 pandemic.
The types of loans outstanding at December 31 are reflected in the following table.
Idaho AgCredit
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands except as noted)
7
2021
2020
2019
Type of Loan
Oustanding
Percent
Oustanding
Percent
Oustanding
Percent
Real estate mortgage loans
$
64.9%
$
64.1%
$
60.3%
Production and intermediate-term loans
30.7%
96,714
31.0%
36.7%
Agribusiness:
Processing and marketing loans
7,726
2.3%
5,649
1.8%
5,300
1.9%
Farm related business loans
4,538
1.3%
6,181
2.0%
3,035
1.1%
Rural residential real estate loans
0
0.0%
0
0.0%
0
0.0%
Communication loans
2,624
0.8%
1,645
0.5%
0
0.0%
Energy loans
0
0.0%
1,980
0.6%
0
0.0%
Total
$
100.00%
$
100.00%
$
100.00%
The Association may have loans in the categories of real estate mortgage loans, production and intermediate-term loans,
Agribusiness loans (including loans to cooperatives, processing and marketing loans and farm related business loans), rural
residential real estate loans, rural infrastructure loans (including loans for communications, energy, water and waste water),
mission related loans, and other loans. Each chart or table within this annual report which breaks out volume by any of these
categories will identify all reportable categories for the years shown.
Real estate mortgage loans outstanding increased to $219,630 compared to $200,011 at year end 2020, primarily due to
marketing efforts. These loans are used to purchase, refinance or improve real estate and have maturities ranging from 5 to 40
years. Real estate mortgages are also made to non-farm rural homeowners. By federal regulation, real estate mortgage loans
must be secured by first liens and may be made only in amounts up to 85% of the original appraised value of the property or up
to 97% of the appraised value if guaranteed by certain state, federal, or other governmental agencies. Under our current
underwriting standards, we loan less than the regulatory limit of 85% of the appraised value of the property.
Production and intermediate-term loans increased to $103,949 compared to $96,714 at year end 2020 due to improving
economic conditions. Production loans are used to finance the ongoing operating needs of agricultural producers. Production
loans generally match the borrower's normal production and marketing cycle, which is typically 12 months. Intermediate-term
loans are generally used to finance depreciable capital assets of a farm or ranch and are written for a specific term of 1 to 15
years with most loans not exceeding 10 years.
At December 31, 2021, agribusiness and communication loan volume of $14,888 comprised about 4.4% of total loan volume,
including $8,714 or 2.6% of total loan volume as a result of purchased loan participations in these categories.
Loan Portfolio Diversification
While we make loans and provide financially related services to qualified borrowers in agricultural and rural sectors and to certain
related entities, our loan portfolio is diversified by loan participations purchased and sold, geographic locations served,
commodities financed, and loan size as illustrated in the following four tables.
We purchase loan participations from other System entities to generate additional earnings and in some cases diversify risk
related to existing commodities financed and our geographic area served. In addition, we sell a portion of certain large loans to
other System entities to reduce risk and comply with lending limits we have established. Our volume of participations purchased
and sold as of December 31 follows.
2021
2020
2019
Participations purchased
52,029
$
47,122
$
45,065
$
Participations sold
23,525
$
15,625
$
19,783
$
We have no purchased loans, loans sold with recourse, retained subordinated participation interests in loans sold, or interests
in pools of subordinated participation interests that are held in lieu of retaining a subordinated participation interest in the loans
sold.
The geographic distribution of loans by county are shown below as of December 31 (loans we purchase from outside our territory
are shown in “Other”).
Idaho AgCredit
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands except as noted)
8
County
(in Idaho unless denoted)
2021
2020
2019
Bannock
1.5%
1.7%
0.8%
Bear Lake
0.6%
0.7%
0.1%
Bingham
16.6%
16.3%
17.0%
Blaine
0.2%
0.2%
0.2%
Bonneville
2.8%
1.5%
0.8%
Butte
1.8%
1.9%
1.7%
Camas
0.1%
0.1%
0.1%
Canyon
0.0%
0.0%
0.0%
Caribou
4.0%
4.4%
3.4%
Cassia
2.3%
2.4%
3.4%
Clark
0.0%
0.0%
0.0%
Custer
2.4%
2.1%
2.2%
0.0%
0.0%
0.0%
Fremont
4.0%
4.4%
4.1%
Gooding
3.5%
3.1%
2.4%
Jefferson
11.2%
12.0%
13.3%
Jerome
3.8%
3.4%
2.4%
Lemhi
0.3%
0.4%
1.9%
Lincoln
0.6%
0.6%
0.2%
Madison
6.5%
7.4%
8.4%
Minidoka
2.9%
2.7%
2.7%
Oneida
1.8%
1.5%
0.6%
Owyhee
0.0%
0.0%
0.0%
Power
8.5%
10.0%
11.0%
Teton
0.5%
0.4%
0.5%
Twin Falls
9.5%
7.7%
8.3%
Lincoln and Teton counties, Wyoming
0.2%
0.0%
0.0%
Other (California)
8.4%
8.0%
8.8%
Other (Other states)
6.0%
7.1%
5.7%
Total
100.0%
100.0%
100.0%
Bingham County has a large concentration of potatoes and sugar beets, which require extensive capital. Fremont and Madison
Counties also have a large concentration of potato acreage. Power County has large concentrations of potatoes, grain and sugar
beet acreages. Jefferson County has large concentrations of potatoes, grain, hay and cattle. Twin Falls County has large
concentrations of milk and dairy cattle.
The following table shows the Association's percentage of average loan volume attributable to the gross sales of the primary
agricultural commodities produced by our borrowers as of December 31 (all results are shown net of participations sold). The
categories shown are based on the Standard Industrial Classification (SIC) system published by the federal government.
SIC Category 2021 2020 2019
Potatoes 12.8% 13.7% 15.0%
Grain (wheat, malt and feed barley) 18.6% 15.0% 15.4%
Cash Rent 10.2% 9.3% 10.4%
Beef cattle and calves 12.3% 11.7% 11.3%
Hay 10.9% 10.0% 9.9%
Milk and dairy cattle 8.6% 9.2% 8.8%
Sugar beets 4.8% 5.0% 4.7%
Outside income (mostly wages) 5.5% 4.2% 2.9%
Other 16.3% 21.9% 21.6%
Total 100.0% 100.0% 100.0%
Our loan portfolio contains concentrations of approximately 5% or more of potatoes, grain (wheat and barley), cash rent, milk
and dairy cattle, beef cattle and calves, hay, and sugar beets. Cash rent operators are generally reliant on similar ratios of
commodities as our lending portfolio, although most receive a portion of rent upfront, which reduces sensitivity to market price
risk. Repayment ability of our borrowers is closely related to the production and the profitability of the commodities they raise. If
a loan fails to perform, restructuring and/or other servicing alternatives are influenced by the underlying value of the collateral
which is impacted by the industry economics. Our future performance would be negatively impacted by adverse agricultural
Idaho AgCredit
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands except as noted)
9
conditions. The degree of the adverse impact would be correlated to the commodities negatively affected and the magnitude
and duration of the adverse agricultural conditions to our borrowers.
In addition to commodity diversification noted in the previous table, further diversification is also achieved from loans to rural
residents and part-time farmers which typically derive most earnings from nonagricultural sources. These borrowers are less
subject to agricultural cycles and would likely be more affected by weaknesses in the general economy. The percentage of loan
volume derived from nonagricultural sources for the years 2019 through 2021 is insignificant and is included as outside income
(mostly wages) in the table above.
The principal balance outstanding at December 31, 2021 for loans $250 thousand or less accounted for 19.7% of loan volume
and 81.9% of the number of loans. Credit risk on small loans, in many instances, may be reduced by non-farm income sources.
The table below details loans by dollar size of principal outstanding as of December 31.
Amount
Outstanding
Number of
Loans
Amount
Outstanding
Number of
Loans
Amount
Outstanding
Number of
Loans
$1 - $250
66,655
$
1,656
63,126
$
1,595
60,325
$
1,496
$251 - $500
63,491
180
55,073
157
50,419
142
$501 - $1,000
76,690
110
75,674
107
54,534
79
$1,001 - $5,000
131,631
75
118,307
65
116,167
64
$5,001 - $25,000
0
0
0
0
5,025
1
$25,001 - $100,000
0
0
0
0
0
0
Total
338,467
$
2,021
312,180
$
1,924
286,470
$
1,782
2021
2020
2019
Approximately 80% of our loans outstanding is attributable to 130 borrowers. Due to the size of their loans, the loss of any of
these borrowers or the failure of any of these borrowers to perform would adversely affect the portfolio and our future operating
results.
The credit risk of some long-term real estate loans has been reduced by entering into agreements that provide long-term standby
commitments by Federal Agricultural Mortgage Corporation (Farmer Mac) to purchase the loans in the event of default. The
amount of loans subject to these Farmer Mac credit enhancements was $8,490 as of December 31, 2021, $8,896 as of
December 31, 2020 and $9,276 as of December 31, 2019. Included in other operating expenses were fees paid for these Farmer
Mac commitments totaling $34 for 2021, $36 for 2020 and $38 for 2019. Under the Farmer Mac long-term standby commitment
to purchase agreements, we continue to hold the loans in our portfolio and we pay commitment fees to Farmer Mac for Farmer
Mac's commitment to purchase each such loan at par in the event the loan becomes significantly delinquent (typically four
months past due). If the borrower cures the default, we must repurchase the loan and the commitment remains in place. Farmer
Mac long-term standby commitments to purchase agreements are further described in Note 3, Loans and Allowance for Loan
Losses, of the Notes to Consolidated Financial Statements. Other than the contractual obligations arising from these business
transactions with Farmer Mac, Farmer Mac is not liable for any debt or obligation of ours and we are not liable for any debt or
obligation of Farmer Mac. For more information on Farmer Mac, refer to their website at www.farmermac.com.
Credit guarantees with government agencies of $26.5 million, $26.7 million and $22.4 million were outstanding at year end 2021,
2020 and 2019 respectively. The credit guarantees outstanding include Small Business Administration Paycheck Protection
Program (PPP) loans related to the Covid-19 pandemic of $83.9 thousand at year end 2021 and $1.1 million at year end 2020.
Credit Commitments
We may participate in financial instruments with off-balance-sheet risk to satisfy the financing needs of our borrowers. These
financial instruments include commitments to extend credit. The instruments involve, to varying degrees, elements of credit risk
in excess of the amount recognized in our consolidated financial statements. Commitments to extend credit are agreements to
lend to a borrower as long as there is not a violation of any condition established in the contract. Commitments and letters of
credit generally have fixed expiration dates or other termination clauses and may require payment of a fee by the borrower. The
following table summarizes the commitment expiration distribution of unfunded and contractual credit commitments on loans at
December 31, 2021.
Idaho AgCredit
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands except as noted)
10
Less than
1 Year 1-3 years 4-5 years
Over 5
years Total
Real estate mortgage loans
1,923
$
7
$
4,003
$
337
$
6,270
$
Production & intermediate-term loans
23,680
41,737
697
262
66,376
Agribusiness
1,950
1,479
0
4
3,433
Communication
1,607
0
0
0
1,607
Commitments to extend credit
29,160
43,223
4,700
603
77,686
Standby letters of credit
0
0
0
0
0
Commercial letters of credit
0
0
0
0
0
Total commitments
29,160
$
43,223
$
4,700
$
603
$
77,686
$
Since many of these commitments are expected to expire without being drawn upon, the total commitments do not necessarily
represent future cash requirements. However, these credit-related financial instruments have off-balance-sheet credit risk
because their amounts are not reflected on the Consolidated Statement of Financial Condition until funded or drawn upon. The
credit risk associated with issuing commitments and letters of credit is substantially the same as that involved in extending loans
to borrowers and we apply the same credit policies to these commitments. The amount of collateral obtained, if deemed
necessary upon extension of credit, is based on our credit evaluation of the borrower. No material losses are anticipated as a
result of these credit commitments and not all commitments will result in loan volume. We accrue reserves for losses on unfunded
commitments separately from the underlying loans and the amounts of such reserves are shown on the Consolidated Statements
of Financial Condition as a separate liability line item.
High Risk Assets
Nonperforming loan volume is composed of nonaccrual loans, restructured loans, and loans 90 days past due still accruing
interest and are referred to as impaired loans. High risk assets consist of impaired loans and other property owned. Comparative
information regarding high risk assets in the portfolio, including accrued interest, follows.
2021
2020
2019
Nonaccrual loans:
Real estate mortgage loans
184
$
2
$
576
$
Production & intermediate-term loans
432
835
1,604
Agribusiness
0
0
0
Total nonaccrual loans
616
837
2,180
Accruing restructured loans
0
0
0
Accruing loans 90 days past due
0
0
0
Total impaired loans
616
837
2,180
Other property owned
0
0
0
Total high risk assets
616
$
837
$
2,180
$
Nonaccrual loans to total loans
0.18%
0.27%
0.75%
High risk assets to total loans
0.18%
0.27%
0.75%
High risk assets to total shareholders' equity
1.22%
1.31%
3.57%
Total high risk assets decreased $221 to $616 as of December 31, 2021 compared with year end 2020. The decrease was a
result of collection of guaranteed and nonguaranteed amounts. Nonaccrual loans represent all loans where there is a reasonable
doubt as to collection of all principal and/or interest. At December 31, 2021, two customers had nonaccrual loans, compared to
three in the prior year. The following table provides additional information on nonaccrual loans as of December 31.
2021
2020
2019
Nonaccrual loans current as to principal and interest
616
$
467
$
668
$
Cash basis nonaccrual loans
0
0
0
Restructured loans in nonaccrual status
0
0
0
For the years presented in the preceding two tables, there were no cash basis nonaccrual loans, restructured loans in nonaccrual
status, or other property owned. High risk asset volume is anticipated to increase in the future because the volume of such loans
is relatively low in comparison to total loans and cyclical economic conditions in agriculture will likely lead to more nonaccrual
loans in the future.
Credit Quality
We review the credit quality of the loan portfolio on an on-going basis as part of our risk management practices. Each loan is
classified according to the Uniform Classification System (UCS), which is used by all System institutions. Below are the
classification definitions.
• Acceptable – Assets are expected to be fully collectible and represent the highest quality.
Idaho AgCredit
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands except as noted)
11
• Other Assets Especially Mentioned (OAEM) – Assets are currently collectible but exhibit some potential weakness.
• Substandard – Assets exhibit some serious weakness in repayment capacity, equity, and/or collateral pledged on the
loan.
• Doubtful – Assets exhibit similar weaknesses as substandard assets. However, doubtful assets have additional
weaknesses in existing facts, conditions and values that make collection in full highly questionable.
• Loss – Assets are not considered collectible.
The following table presents statistics based on the UCS related to the credit quality of the loan portfolio, including accrued
interest at December 31.
2021
2020
2019
Acceptable
97.7%
96.7%
97.1%
OAEM
1.5%
2.2%
1.6%
Substandard
0.7%
1.0%
1.2%
Doubtful
0.1%
0.1%
0.1%
Loss
0.0%
0.0%
0.0%
Total
100.0%
100.0%
100.0%
During 2021, overall credit quality improved slightly compared to the prior year. Loans classified as “Acceptable” or “OAEM”
were 99.2% at December 31, 2021, 98.9% at December 31, 2020 and 98.7% at December 31, 2019. "Substandard" loans
decreased from 1.0% to 0.7% in 2021, and from 1.2% to 1.0% in 2020. “Doubtful” loans remained at 0.1%. The financial position
of most agricultural producers strengthened during the past decade and most of our borrowers have maintained generally strong
financial positions. As such, our credit quality is anticipated to remain sound in the near term. However, agriculture remains a
cyclical business that is heavily influenced by production, operating costs and commodity prices. Each of these can be
significantly impacted by uncontrollable events. Loan delinquencies (accruing loans 30 days or more past due) as a percentage
of accruing loans (both including interest) decreased slightly, with .10% at December 2021 compared with .40% at December
2020 and .70% at December 2019.
Allowance for Loan Losses
We maintain an allowance for loan losses at a level consistent with the probable losses identified by management. The allowance
for loan losses at each period end was considered to be adequate to absorb probable losses existing in the loan portfolio.
Because the allowance for loan losses considers factors such as current agricultural and economic conditions, loan loss
experience, portfolio quality and loan portfolio composition, there will be a direct impact to the allowance for loan losses and our
income statement when there is a change in any of those factors. The following table provides relevant information regarding
the allowance for loan losses as of December 31.
2021 2020 2019
Allowance balance at beginning of the year 1,584$ 1,573$ 1,193$
(Charge-offs:)
Production and intermediate-term loans 0 (14) 0
Total charge-offs 0$ (14)$ 0$
Recoveries:
Production and intermediate-term loans 49$ 0$ 0$
Total recoveries 49$ 0$ 0$
Net (Charge-offs) and Recoveries 49$ (14)$ 0$
Provision for loan losses/(Loan loss reversal) (110) 25 380
Balance at December 31 1,523$ 1,584$ 1,573$
Net charge-offs/(Recoveries) to average loans 0.00% 0.00% 0.00%
Allowance for loan loss by loan type:
Real estate mortgage 557$ 589$ 554$
Production & intermediate-term loans 916 949 998
Agribusiness 35 37 21
Rural residential real estate 0 0 0
Communication 15 7 0
Energy 0 2 0
Total allowance for loan loss
1,523
$
1,584$ 1,573$
Idaho AgCredit
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands except as noted)
12
The allowance for loan losses decreased $61 from December 31, 2020 to $1,523 at December 31, 2021. The decrease in
allowance for loan losses was primarily due to calculated net increases in allowances related to overall financial conditions and
loan volume changes, and a recovery of $49. During 2020, the allowance for loan loss increased $11 net of charge-offs primarily
due to overall financial conditions and loan volume changes. Overall, charge-off activity remains low relative to the size of the
loan portfolio. Comparative allowance for loan losses coverage as a percentage of loans and certain other credit quality
indicators as of December 31 are presented in the following table.
2021
2020
2019
Allowance as a percentage of:
Loans
0.45%
0.51%
0.55%
Total impaired loans
247.24%
189.25%
72.16%
Nonaccrual loans
247.24%
189.25%
72.16%
We also maintain a reserve for credit losses for unfunded commitments. The reserve for credit losses is subject to substantially
the same risk factors as the allowance for loan losses. The following is a summary of the changes in the reserve for credit losses
as of December 31.
2021 2020 2019
Reserve balance at beginning of the year 63$ 52$ 42$
Provision for loan losses/(Loan loss reversal) (2) 11 10
Balance at December 31 61$ 63$ 52$
Reserve for credit losses by loan type:
Real estate mortgage 2$ 1$ 4$
Production & intermediate-term loans 53 60 46
Agribusiness 5 2 2
Rural residential real estate 0 0 0
Communication 1 0 0
Energy 0 0 0
Total allowance for loan loss 61$ 63$ 52$
Young, Beginning and Small Farmers and Ranchers Program
As part of the Farm Credit System, we are committed to providing sound and dependable credit to young, beginning and small
(YBS) farmers and ranchers. Our YBS Mission Statement is “To reliably, consistently and constructively serve the credit and
related needs of young, beginning and small farmers and ranchers, including socially disadvantaged farmers and ranchers that
fit the YBS criteria, through specifically designed credit programs and services. When necessary, private or governmental
guarantees will be used to expand the number of young, beginning and small farmers and ranchers that the Association serves.
The Association will provide sound constructive credit to enable YBS farmers to begin, grow, or remain in agricultural production
and facilitate the transfer of agricultural operations from one generation to the next." The FCA regulatory definitions for YBS
farmers and ranchers are shown below.
• Young Farmer: A farmer, rancher, or producer or harvester of aquatic products who was age 35 or younger as of the
date the loan was originally made.
• Beginning Farmer: A farmer, rancher, or producer or harvester of aquatic products who had 10 years or less farming
or ranching experience as of the date the loan was originally made.
• Small Farmer: A farmer, rancher, or producer or harvester of aquatic products who normally generated less than $250
thousand in annual gross sales of agricultural or aquatic products at the date the loan was originally made.
The following table outlines our percentage of YBS customers (farm operators) as a percentage of the number of farm operators
in our loan portfolio while the USDA column represents the percentage of farmers and ranchers (farm operators) classified as
YBS within our territory per the 2017 USDA Agricultural Census, which is the most current data available. Due to FCA regulatory
definitions, a farmer/rancher may be included in multiple categories as they would be included in each category in which the
definition was met.
USDA
2021
2020
2019
Young
10.81%
19.30%
19.79%
21.22%
Beginning
25.79%
23.12%
25.88%
25.99%
Small
80.57%
28.18%
33.94%
34.70%
Our percentages are generally based on the number of loans in our portfolio, while the USDA percentages are based on the
number of farmers and ranchers.
We establish annual marketing goals to increase market share of loans to YBS farmers and ranchers. Our 2021 goals were as
Idaho AgCredit
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands except as noted)
13
follows:
• Offer related services either directly or in coordination with others that are responsive to the needs of YBS farmers and
ranchers in our territory;
• Take full advantage of opportunities for coordinating credit and services offered with other system institutions in the
territory and other governmental and private sources of credit who offer credit and services to those who qualify as
YBS farmers and ranchers in our territory; and,
• Implement effective outreach programs to attract YBS farmers and ranchers.
Status report on above goals:
• The Association offered life insurance products to meet the needs of YBS farmers and ranchers.
• The Association maintained an excellent relationship with the Farm Service Agency (FSA). At year end 2021 7.8% of
the loan portfolio was FSA or Small Business Administration (SBA) guaranteed. The FSA guaranteed loan program
has proven to be very effective in allowing the Association to serve YBS farmers and ranchers.
• Association utilized private guarantees when available to assist YBS applicants.
• Association representatives met with FFA classes, 4H participants and other Young Farmer groups.
• The Association supported youth through livestock purchases and provided additional sponsorships at county and state
fairs.
• The Association had agricultural scholarship programs totaling $12,000 (whole dollars).
• The Association had special loan underwriting standards for lending to YBS borrowers.
• The Association supported additional community youth activities to develop relationships with future producers.
Quarterly reports are provided to the Board of Directors detailing the number, volume and credit quality of YBS customers. The
Association developed quantitative targets in the following areas to monitor progress.
• Loan volume and loan number goals for YBS farmers and ranchers in its territory.
• Percentage goals representative of the demographics of YBS and socially disadvantaged farmers and ranchers in its
territory.
• Percentage goals for loans made to new borrowers qualifying as YBS farmers and ranchers in its territory.
The Association met its loan activity goals by both number and volume in all categories. It met its number and volume goals for
first time loans to YBS producers in all categories. It met its demographic goals by number for all categories, and met its
demographic goals by volume goals for beginning and small producers, but not for young producers.
To ensure that credit and services offered to our YBS farmers and ranchers are provided in a safe and sound manner and within
our risk-bearing capacity, we utilize customized loan underwriting standards, loan guarantee programs, fee waiver programs, or
other credit enhancement programs. Additionally, we are actively involved in developing and sponsoring educational
opportunities, leadership training, business financial training and insurance services for YBS and socially disadvantaged farmers
and ranchers.
CREDIT RISK MANAGEMENT
Credit risk arises from the potential failure of a borrower to meet repayment obligations that result in a financial loss to the lender.
Credit risk exists in our loan portfolio and also in our unfunded loan commitments. Credit risk is actively managed on an individual
and portfolio basis through application of sound lending and underwriting standards, policies and procedures.
Underwriting standards are utilized to determine an applicant's operational, financial, and managerial resources available for
repaying debt within the term of the note and loan agreement. Underwriting standards include among other things, an evaluation
of:
• character – borrower integrity and credit history;
• capacity – repayment capacity of the borrower based on cash flows from operations or other sources of income;
• capital – ability of the operation to survive unanticipated risks;
• collateral – to protect the lender in the event of default and also serve as a secondary source of loan repayment; and
• conditions – intended use of the loan funds, terms, restrictions, etc.
Processes for information gathering, balance sheet and income statement verification, loan analysis, credit approvals,
disbursements of proceeds, and subsequent loan servicing actions are established and followed. Underwriting standards vary
by industry and are updated periodically to reflect market and industry conditions.
By regulation, we cannot have loan commitments to one borrower for more than 15% of our permanent capital. Additionally, we
set our own lending limits to manage loan concentration risk. We have adopted an individual lending limit of 14.5% of permanent
capital for our highest quality borrowers, and have established lending limits for commodity types and special lending programs,
including purchased participation loans.
We have established internal lending delegations to control the loan approval process. Delegations to staff are based on our
risk-bearing ability, loan size, complexity, type and risk, as well as the expertise and position of the credit staff. Larger and more
complex loans or loans perceived to have higher risk are typically approved by our loan committee with the most experienced
Idaho AgCredit
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands except as noted)
14
and knowledgeable credit staff serving as members. All loans, including those approved under delegated authority, are reviewed
by our loan committee.
The majority of our lending is for first mortgage real estate loans which must be secured by a first lien on real estate. Production
and intermediate-term lending accounts for most of the remaining volume and is typically secured by livestock, crops and
equipment. Collateral evaluations are completed in compliance with FCA and Uniform Standards of Professional Appraisal
Practices requirements. All property is appraised at market value. All collateral evaluations must be performed by a qualified
evaluator. Certain appraisals must be performed by individuals with a state certification or license.
We use a two-dimensional risk rating model (Model) based on the Farm Credit System’s Combined System Risk Rating
Guidance. The Model estimates each loan’s probability of default (PD) and loss given default (LGD). PD estimates the probability
that a borrower will experience a default within twelve months from the date of determination. LGD provides an estimation of the
anticipated loss with respect to a specific financial obligation of a borrower assuming a default has occurred or will occur within
the next twelve months. The Model uses objective and subjective criteria to identify inherent strengths, weaknesses, and risks
in each loan. PDs and LGDs are utilized in loan and portfolio management processes and are utilized for the allowance for loan
losses estimate. This Model also serves as the basis for economic capital modeling.
The Model's 14-point probability of default scale provides for nine acceptable categories, one OAEM category, two substandard
categories, one doubtful category and one loss category; each carrying a distinct percentage of default probability. The Model’s
LGD scale provides 6 categories, A through F, that have the following anticipated principal loss and range of economic loss
expectations:
• A 0% anticipated principal loss; 0% to 5% range of economic loss
• B >0% to 3% anticipated principal loss; >5% to 15% range of economic loss
• C >3% to 7% anticipated principal loss; >15% to 20% range of economic loss
• D >7% to 15% anticipated principal loss; >20% to 25% range of economic loss
• E >15% to 40% anticipated principal loss; >25% to 50% range of economic loss
• F above 40% anticipated loss; above 50% range of economic loss
The Association purchases participation loan interests from other Farm Credit institutions to diversify risk, utilize capital, improve
earnings and to meet other operational objectives. The Association applies the same underwriting standards, investigation and
analysis requirements to participation purchases as it does to its originated loans and has established limits in the individual and
collective volume of such loans.
RESULTS OF OPERATIONS
Earnings Summary
In 2021, we recorded net income of $6,158, compared with $5,638 in 2020 and $4,855 in 2019. The increase in net income of
$520 in 2021 compared to the prior year was primarily due to higher net interest income due to higher loan volume and favorable
interest rates, and higher patronage income from CoBank due to higher direct loan volume.. The following table presents the
changes in the significant components of net income at year end.
2021 vs. 2020
2020 vs. 2019
Net income, prior year
5,638
$
4,855
$
Increase/(Decrease) from changes in:
Interest income
(168)
(1,388)
Interest expense
949
1,374
Net interest income
781
(14)
Provision for loan losses and commitment reserves
146
355
Noninterest income
178
702
Noninterest expense, net
(556)
(217)
Provision for income taxes
(29)
(43)
Total (decrease)/increase in net income
520
783
Net income, current year
6,158
$
5,638
$
Return on average assets increased to 1.83% from 1.81% in 2020 and return on average shareholders' equity increased to
9.18% from 8.85% in 2020 primarily due to an increase in net income in relation to average equity.
Net Interest Income
Net interest income for 2021 was $8,955 compared to $8,174 in 2020 and $8,188 in 2019. Net interest income is our principal
source of earnings and is impacted by interest earning asset volume, yields on assets and cost of debt. The increase in net
interest income was largely due to higher average volume and more favorable interest expense conditions. The table below
provides an analysis of the individual components of the change in net interest income during the years shown.
Idaho AgCredit
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands except as noted)
15
2021 vs. 2020
2020 vs. 2019
Net interest income, prior year
8,174
$
8,188
$
Increase/(Decrease) in net interest income from changes in:
Interest rates earned and paid
108
(752)
Volume of accruing assets and interest bearing liabilities
518
642
Interest income on nonaccrual loans
155
96
Total (decrease)/increase in net interest income
781
(14)
Net interest income, current year
8,955
$
8,174
$
The following table illustrates net interest margin and the average interest rates on loans and debt cost and interest rate spread.
2021
2020
2019
Net interest margin
2.84%
2.81%
2.93%
Interest rate on:
Average loan volume
4.22%
4.68%
5.41%
Average debt
1.74%
2.33%
2.90%
Interest rate spread
2.48%
2.35%
2.51%
The 13 basis point increase in interest rate spread resulted from a 46 basis point decrease in interest rates on average loan
volume and a 59 basis point decrease in interest rates on average debt. The 3 basis point decrease in net interest margin (net
interest income as a percentage of average earnings assets) was due to impact of decreasing interest rates which decreased
the earnings on the Association's capital, offset by the increase in spread.
Provision for Loan Losses and Reserves/(Loan Loss and Reserve Reversals)
We monitor our loan portfolio on a regular basis to determine if any increase through provision for loan losses and reserves or
decrease through a loan loss and reserve reversal in our allowance for loan losses and reserves for losses on loan commitments
is warranted based on our assessment of the probable losses in our loan portfolio. We recorded a net reversal in the provision
for loan losses and reserves of $110 compared to a net provision of $35 for the year ended December 31, 2020 and $390 in
2019. The net reversal in the provision in 2021 was primarily due to changes in loan volume and credit quality and a net recovery
on nonaccrual loans. The net provision in 2020 was primarily due to changes in loan volume and credit quality. The net provision
in 2019 was primarily due to changes in loan volume and credit quality, including the addition of a specific allowance on a
nonaccrual loan. The portion of the provisions related to reserves for losses on credit commitments was $2 in 2021, $11 in 2020
and $10 in 2019.
Noninterest Income
During 2021, we recorded noninterest income of $2,138 compared to $1,960 compared in 2020 and $1,257 in 2019. Patronage
distributions from CoBank were our primary source of noninterest income. Patronage is accrued in the year earned and then
received from CoBank in the following year. CoBank patronage is distributed in cash and stock. Patronage earned from CoBank
was $1,351 in 2021, $1,042 in 2020 and $944 in 2019. The amount of CoBank patronage depends upon CoBank’s net income
on its patronage eligible portfolio, which is affected by the Association’s average loan balance with CoBank and other factors.
Noninterest income also includes patronage from other Farm Credit institutions, loan fees, mineral income and financially related
services income. Patronage from other Farm Credit institutions was $102 in 2021, $145 in 2020 and $100 in 2019. Loan fee
income was $676 in 2021, $764 in 2020 and $200 in 2019. The change in patronage from other Farm Credit institutions is
primarily due to an increase in patronage eligible loan volume and variations in patronage rates, and the change in loan fee
income is due to more new loans and loan rate conversions, in addition to Small Business Administration Paycheck Protection
Program (PPP) loans. Other sources of noninterest income did not change materially in these years.
Noninterest Expense
Noninterest expense for the year ended December 31, 2021 increased $554 or 12.8% compared to 2020 and increased $772
or 18.8% in the two year period since year end 2019. Noninterest expense for each of the three years ended December 31 is
summarized below.
Idaho AgCredit
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands except as noted)
16
2021
2020 2019
2021/2020
2020/2019
Salaries and employee benefits
3,388$
3,235$ 2,905$
4.7%
11.4%
Occupancy & equipment
145
146 161
(0.7%)
(9.3%)
Supervisory & examination costs
123
119 114
3.4%
4.4%
Data processing services
10
10 10
0.0%
0.0%
Other, net
862
679 794
27.0%
(14.5%)
Total operating expense
4,528$
4,189$ 3,984$
8.1%
5.1%
Losses(Gains) on other property owned, net
0
0 0
0.0%
0.0%
Farm Credit Insurance Fund Premium
351
135 123
(160.0%)
9.8%
Total noninterest expense
4,879$
4,324$ 4,107$
12.8%
5.3%
Percent of Change
Salaries and benefits in 2021 were $153 higher due to additional employees, salary increases and growth incentives. Occupancy
and equipment decreased $1 due to minor changes in equipment expense. Other expenses increased $183 due to a return to
more normal travel and training expenses and member relation expenses and higher purchased services. The Farm Credit
Insurance Fund premium increased $216 to $351 in 2021 primarily due to higher loan volume an increase in the premium rate.
Provision for income taxes
We recorded $167 in provision for income taxes during 2021, compared with $138 in 2020 and $95 in 2019 for the taxable
earnings of Idaho AgCredit, PCA. The increase was primarily due to a higher estimate of net taxable earnings on the PCA. Tax
expense was also impacted by our patronage program. We operate as a Subchapter T cooperative for tax purposes and thus
may deduct from taxable income certain amounts that are distributed from net earnings to borrowers. See Note 2, Summary of
Significant Accounting Policies, of the Notes to Consolidated Financial Statements for additional details.
LIQUIDITY
Liquidity is necessary to meet our financial obligations. Liquidity is needed to pay our note with CoBank, fund loans and other
commitments and fund business operations in a cost-effective manner. Our liquidity policy is intended to manage short-term
cash flow, maximize debt reduction and liquidate nonearning assets. Our direct loan with CoBank, cash on hand and borrower
loan repayments provide adequate liquidity to fund our ongoing operations and other commitments.
Funding Sources
Our primary source of liquidity is the ability to obtain funds for our operations through a borrowing relationship with CoBank. Our
note payable to CoBank is collateralized by a pledge to CoBank of substantially all of our assets. Substantially all cash received
is applied to the note payable and all cash disbursements are drawn on the note payable. The indebtedness is governed by a
General Financing Agreement (GFA) with CoBank which matures on May 31, 2023. The annual average principal balance of
the note payable to CoBank was $255,648 in 2021, $239,758 in 2020 and $232,720 in 2019.
We plan to continue to fund lending operations through the utilization of our funding arrangement with CoBank, retained earnings
from current and prior years and from borrower stock investments. CoBank's primary source of funds is the ability to issue
System-wide Debt Securities to investors through the Federal Farm Credit Bank Funding Corporation. This access has
traditionally provided a dependable source of competitively priced debt that is critical for supporting our mission of providing
credit to agriculture and rural America. Financial markets were much more stable in the last few years and we continued to
obtain sufficient funding to meet the needs of our customers.
Interest Rate Risk
The interest rate risk inherent in our loan portfolio is substantially mitigated through our funding relationship with CoBank which
allows for loans to be match-funded. Borrowings from CoBank match the pricing, maturity, and option characteristics of our loans
to borrowers. CoBank manages interest rate risk through the direct loan pricing and asset/liability management processes.
Although CoBank incurs and manages the primary sources of interest rate risk, we may still be exposed to interest rate risk
through the impact of interest rate changes on earnings generated from our loanable funds. To stabilize earnings from loanable
funds, we may commit a portion of excess loanable funds with CoBank at a fixed rate for a specified term as a part of CoBank's
Association Equity Positioning Program (AEPP), although no funds were committed to this program at year end 2021, 2020 or
2019. This program potentially enables us to reduce our overall cost of funds with CoBank without significantly increasing our
overall interest rate risk position. We may also be exposed to interest rate risk on variable rate loans when the timing of loan
rate changes does not closely align with the timing of changes to the underlying interest expenses. The ability to change the
interest rate on variable rate loans substantially mitigates this risk. We also have a small portfolio of London Interbank Offered
Rate (LIBOR) indexed loans, PPP loans and one sales contract which are not match-funded. These loans could become match-
funded at the option of the Association.
Funds Management
We offer variable, fixed, adjustable, prime-based, SOFR and LIBOR-based rate loans to borrowers. Our Board of Directors
Idaho AgCredit
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands except as noted)
17
determines the interest rate charged based on the following factors: 1) the interest rate charged by CoBank; 2) our existing rates
and spreads; 3) the competitive rate environment; and 4) our profitability objectives.
LIBOR was used by CoBank in determining and match funding a portion of our administrative variable rate cost of funds in 2020
and 2019. Some LIBOR rates were discontinued at the end of 2021 and no new lending should occur based on LIBOR. Some
LIBOR rates will continue to be published until June 30, 2023 for use with existing LIBOR loans. In the United States, rate
indexes based on SOFR (Secured Overnight Financing Rates) are expected to take the place of LIBOR rate indexes. We
established a transition plan with CoBank beginning in January 2020 to replace the LIBOR portion of funding costs with SOFR
by the end of 2020. We are also monitoring the few loans we have that are tied to LIBOR and expect to transition those loans
before the discontinuation of LIBOR. We do not expect this change to materially impact our variable rates.
CAPITAL RESOURCES
Capital supports asset growth and provides protection for unexpected credit and operating losses. Capital is also needed for
investments in new products and services. We believe a sound capital position is critical to our long-term financial success due
to the volatility and cycles in agriculture. Over the past several years, we have been able to build capital primarily through net
income retained after patronage. Shareholders’ equity at year end totaled $66,362 in 2021, $63,887 in 2020 and $61,011 in
2019. The annual increases in shareholders' equity reflects net income and net stock issuances partially offset by patronage
dividends paid. Our capital position is reflected in the following ratio comparisons as of December 31.
2021
2020
2019
Debt to shareholders' equity
4.42:1
4.21:1
4.00:1
Shareholders' equity as a percent of net loans
19.70%
20.57%
21.42%
Shareholders' equity as a percent of total assets
18.44%
19.20%
19.99%
Debt to shareholders' equity increased and shareholders' equity as a percentage of loans and of total assets decreased from
2020 primarily due to retained net income which was retained at a lower rate in relation to increases in loan volume. There are
no material trends or changes in the mix and cost of debt and capital resources, there are no material favorable or unfavorable
trends in capital resources, and there are no trends, commitments, contingencies or events that are reasonably likely to have a
material adverse effect upon the adequacy of available funds.
Retained Earnings
Our retained earnings increased at year end from the prior year by $2,452 to $65,858 in 2021, $2,829 to $63,406 in 2020 and
$1,971 to $60,577 in 2019. The 2021 increase was a result of net income of $6,158, partially offset by $3,702 of patronage
distributions declared.
Patronage Program
We have a patronage program that allows us to distribute our available net earnings to our shareholders. This program provides
for the application of net earnings in the manner described in our Bylaws. In addition to determining the amount and method of
patronage to be distributed, the Bylaws address increasing surplus to meet capital adequacy standards established by
Regulations; increasing surplus to a level necessary to support competitive pricing at targeted earnings levels; and increasing
surplus for reasonable reserves. Patronage dividends are based on business done with us during the year. We paid cash
patronage of $2,812 in 2021, $2,884 in 2020 and $2,355 in 2019. During 2021, we declared cash patronage distributions of
$3,702 to be paid in February 2022.
Stock
Our total stock and participation certificates increased $23 at year end to $504 and was $481 in 2020 and $434 in 2019. The
change in stock and participation certificates each year is a result of net issuances and retirements. We require a stock or
participation certificate investment for each borrower, with the exception of Sales Contracts and Participations Purchased. We
have a Borrower Level Stock Program which allows stock to be assigned to each borrower instead of each loan. This reduces
the stock requirements for borrowers with multiple loans. The current stock requirement for each borrower is the lesser of one
thousand dollars or 2.0% of the amount of the borrower's combined loan volume.
Capital Plan and Regulatory Requirements
Our Board of Directors establishes a formal capital adequacy plan that addresses capital targets in relation to risks. The capital
adequacy plan assesses the capital level necessary for financial viability and to provide for growth. Our plan is updated annually
and approved by our Board of Directors. FCA regulations require the plan consider the following factors in determining optimal
capital levels, including:
• Regulatory capital requirements;
• Asset quality;
• Needs of our customer base; and
• Other risk-oriented activities, such as funding and interest rate risks, contingent and off-balance sheet liabilities and
other conditions warranting additional capital.
Idaho AgCredit
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands except as noted)
18
As shown in the following table, at December 31 of each year end, our capital and leverage ratios exceeded regulatory
minimums. If these capital standards are not met, the FCA can impose restrictions, including limiting our ability to pay patronage
distributions, retire equities and pay preferred stock dividends.
(ratios at period end) 2021 2020 2019
Regulatory
Minimum
Common equity tier 1 capital ratio
15.56%
16.46%
16.93%
7.00%
Tier 1 capital ratio
15.56%
16.46%
16.93%
8.50%
Total regulatory capital ratio
16.02%
16.98%
17.49%
10.50%
Tier 1 leverage ratio
15.57%
16.20%
16.84%
5.00%
URE and Equivalents (UREE) Leverage ratio
15.42%
16.05%
16.69%
1.50%
Permanent capital ratio
15.96%
17.21%
17.72%
7.00%
The minimum ratios established were not meant to be adopted as the optimum capital level, so we have established goals in
excess of the regulatory minimum. As of December 31, 2021, we exceeded our ratio goals but not our dollar goal. The Board
has established a plan of retaining an amount of earnings each year until the dollar goal is reached. Due to our strong capital
position, we will continue to be able to retire at-risk stock. Refer to Note 9 Shareholders' Equity for additional information related
to our capital and related requirements and restrictions.
On July 8, 2021, the FCA announced a proposed rule that would amend the Tier 1/Tier 2 capital framework to define and
establish a risk weight for high-volatility commercial real estate exposures by assigning a 150% risk-weighting to such exposures,
instead of the current 100% risk-weighting. The proposed rule focuses on changes that are comparable with the capital rules of
other federal banking regulatory agencies and recognize the increased risk posed by high-volatility commercial real estate
exposures. The public comment period on the proposed rule ends on January 24, 2022.
On September 9, 2021, the FCA adopted a final rule that amends, corrects and clarifies certain provisions of the Tier 1/Tier 2
capital framework approved by the FCA in March 2016. The final rule includes amendments that do not change the minimum
capital requirements or capital buffers, but focus on clarifying and improving other provisions to ensure application of the capital
rules as intended, reduce burden to the Farm Credit System, and assist the FCA in better determining compliance with the Tier
1/Tier 2 capital framework. The final rule will become effective on January 1, 2022. We do not expect this regulation to have a
material impact on our regulatory capital and leverage ratios.
REGULATORY MATTERS
As of December 31, 2021, we had no enforcement actions in effect and FCA took no enforcement actions on us during the year.
LITIGATION
There are no legal actions pending against the Association in which claims for money damages are asserted.
GOVERNANCE
Governance disclosures, including Board of Directors, Director Independence, Audit Committee, Compensation Committee and
Other Governance are presented in the Governance section of the section titled “Disclosure Information Required by Farm Credit
Administration Regulations” following the Notes to Consolidated Financial Statements.
FORWARD-LOOKING INFORMATION
Our discussion contains forward-looking statements. These statements are not guarantees of future performance and involve
certain risks, uncertainties and assumptions that are difficult to predict. Words such as “anticipates,” “believes,” “could,”
“estimates,” “may,” “should,” and “will” or other variations of these terms are intended to identify forward-looking statements.
These statements are based on assumptions and analyses made in light of experience and other historical trends, current
conditions, and expected future developments. However, actual results and developments may differ materially from our
expectations and predictions due to a number of risks and uncertainties, many of which are beyond our control. These risks and
uncertainties include, but are not limited to:
• political, legal, regulatory and economic conditions and developments in the United States and abroad;
• economic fluctuations in the agricultural, rural utility, international, and farm-related business sectors;
• weather, disease, and other adverse climatic or biological conditions that periodically occur that impact agricultural
productivity and income;
• changes in United States government support of the agricultural industry and/or the Farm Credit System; and
• actions taken by the Federal Reserve System in implementing monetary policy.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our consolidated financial statements are based on accounting principles generally accepted in the United States of America.
Our significant accounting policies are critical to the understanding of our results of operations and financial position because
some accounting policies require us to make complex or subjective judgments and estimates that may affect the value of certain
assets or liabilities. We consider these policies critical because we have to make judgments about matters that are inherently
uncertain. For a complete discussion of significant accounting policies, see Note 2, Summary of Significant Accounting Policies,
Idaho AgCredit
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands except as noted)
19
of the Notes to Consolidated Financial Statements. The development and selection of critical accounting policies, and the related
disclosures, have been reviewed by our Audit Committee. A summary of critical policies relating to determination of the allowance
for loan losses follows.
Allowance for Loan Losses
The allowance for loan losses is our best estimate of the amount of probable loan losses existing in and inherent in our loan
portfolio as of the balance sheet date. The allowance for loan losses is increased through provisions for loan losses and loan
recoveries and is decreased through loan loss reversals and loan charge-offs. We determine the allowance for loan losses based
on a periodic evaluation of the loan portfolio, which generally considers recent historical charge-off experience adjusted for
relevant factors.
Loans are evaluated based on the borrower's overall financial condition, resources, and payment record; the prospects for
support from any financially responsible guarantor; and, if appropriate, the estimated net realizable value of any collateral. The
allowance for loan losses attributable to these loans is established by a process that estimates the probable loss inherent in the
loans, taking into account various historical and projected factors, internal risk ratings, regulatory oversight, and geographic,
industry and other factors.
Changes in the factors we consider in the evaluation of losses in the loan portfolios could occur for various credit related reasons
and could result in a change in the allowance for loan losses, which would have a direct impact on the provision for loan losses
and results of operations. See Note 2, Summary of Significant Accounting Policies, and Note 3, Loans and Allowance for Loan
Losses, of the accompanying Notes to Consolidated Financial Statements for detailed information regarding the allowance for
loan losses.
CUSTOMER PRIVACY
FCA regulations require that borrower information be held in confidence by Farm Credit institutions, their directors, officers and
employees. FCA regulations and our Standards of Conduct Policies specifically restrict Farm Credit institution directors and
employees from disclosing information not normally contained in published reports or press releases about the institution or its
borrowers or members. These regulations also provide Farm Credit institutions clear guidelines for protecting their borrowers'
nonpublic information.
20
Independent Auditor’s Report
Audit Committee and Stockholders of Idaho AgCredit, ACA
Idaho AgCredit, ACA and Subsidiaries
Blackfoot, Idaho
Opinion
We have audited the consolidated financial statements (the “Financial Statements”) of Idaho AgCredit, ACA and
its Subsidiaries (the "Association"), which comprise the consolidated statements of financial condition as of
December 31, 2021, 2020, and 2019, and the related consolidated statements of income and comprehensive
income, changes in shareholders' equity, and cash flows for the years then ended and the related notes to the
financial statements.
In our opinion, the accompanying financial statements referred to above present fairly, in all material respects,
the financial position of Idaho AgCredit, ACA and Subsidiaries as of December 31, 2021, 2020, and 2019 and the
changes in financial position and its cash flows for the years then ended in accordance with accounting
principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of
America ("GAAS"). Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. We are required to be
independent of Idaho AgCredit ACA and Subsidiaries and to meet our other ethical responsibilities, in
accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with accounting principles generally accepted in the United States of America, and for the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about Idaho AgCredit ACA and Subsidiaries
ability to continue as a going concern for one year after the date the financial statements are available to be
issued.
Auditor's Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee
that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control. Misstatements are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users made on the basis of these financial statements.
21
In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, and design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of Idaho AgCredit ACA and Subsidiaries internal control. Accordingly, no such opinion is
expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the financial
statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that
raise substantial doubt about Idaho AgCredit ACA and Subsidiaries ability to continue as a going concern
for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control–related matters
that we identified during the audit.
Report on Supplementary Information
Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a
whole. The Five-Year Summary of Selected Consolidated Financial Data and Management’s Discussion and
Analysis of Financial Condition and Results of Operations on pages 4-19 and the Disclosure Information
appearing on pages 46–51, which is the responsibility of management, is presented for purposes of additional
analysis and is not a required part of the consolidated financial statements, but is supplementary information
required by Farm Credit Administration Regulations. Such information has not been subjected to auditing
procedures applied in the audits of the financial statements and, accordingly, we do not express an opinion or
provide any assurance on it.
Wipfli LLP
Idaho Falls, Idaho
February 16, 2022
Idaho AgCredit
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
The accompanying notes are an integral part of these consolidated financial statements
22
December 31
2021 2020 2019
ASSETS
Loans
338,466,936$
312,180,361$ 286,470,251$
Less allowance for loan losses 1,523,288 1,583,542 1,572,793
Net loans
336,943,648
310,596,819 284,897,458
Cash 3,394,015 2,984,233 1,453,133
Accrued interest receivable 4,339,675 4,576,338 4,901,371
Investment in CoBank, ACB 10,966,466 10,966,466 10,963,123
Premises and equipment, net 1,284,981 1,357,424 1,358,241
Other property owned 0 0 0
Prepaid pension expense 1,355,394 911,426 485,271
Deferred tax asset, net (65,000) 32,000 101,000
Other assets 1,583,529 1,330,994 1,112,853
Total assets
359,802,708
$
332,755,700
$
305,272,450
$
LIABILITIES
Note payable to CoBank, ACB
277,580,124
$
257,350,434
$
235,808,464
$
Advance conditional payments
10,820,485
7,517,043
4,290,453
Accrued interest payable
417,866
456,339
615,942
Patronage distributions payable
3,702,198
2,808,643
2,884,335
Reserve for losses on loan commitments
61,232
62,883
52,127
Other liabilities
858,684
672,955
610,284
Total liabilities
293,440,589
268,868,297
244,261,605
Commitments and Contingencies (See Notes)
SHAREHOLDERS' EQUITY
Capital stock and participation certificates
504,265
481,320
433,760
Allocated retained earnings (Memo Nonqualified)
24,303,750
22,380,647
20,882,039
Unallocated retained earnings
41,554,104
41,025,436
39,695,046
Accumulated other comprehensive income/(loss)
0
0
0
Total shareholders' equity
66,362,119
63,887,403
61,010,845
Total liabilities and shareholders' equity
359,802,708
$
332,755,700
$
305,272,450
$
Idaho AgCredit
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
The accompanying notes are an integral part of these consolidated financial statements
23
For the Year Ended December 31
2021 2020 2019
INTEREST INCOME
Loans 13,575,316$ 13,742,546$ 15,131,425$
Total interest income 13,575,316 13,742,546 15,131,425
INTEREST EXPENSE
Note payable to CoBank, ACB 4,573,872 5,503,772 6,820,561
Advance conditional payments 46,007 64,810 122,503
Total interest expense 4,619,879 5,568,582 6,943,064
Net interest income 8,955,437 8,173,964 8,188,361
(Provision for) or Reversal of loan losses and reserves 110,542 (35,293) (389,508)
Net interest income after loss (provision)/reversal 9,065,979 8,138,671 7,798,853
NONINTEREST INCOME
Patronage distributions from CoBank 1,351,115 1,042,299 944,285
Patronage distributions from Other Farm Credit Institutions 102,161 144,914 100,177
Loan fees 676,063 764,320 200,038
Financially related services income 3,128 3,696 3,263
Other noninterest income 5,125 5,263 9,733
Total noninterest income 2,137,592 1,960,492 1,257,496
NONINTEREST EXPENSE
Salaries and employee benefits 3,387,641 3,235,265 2,905,430
Occupancy and equipment 144,796 146,022 161,189
Farm Credit Insurance Fund premium/(net rebate) 351,000 135,336 123,110
Supervisory and examination costs 123,407 118,586 114,186
Data processing services 9,720 9,720 9,720
Losses/(Gains) on other property owned, net 0 0 0
Other noninterest expense 862,303 678,871 792,875
Total noninterest expense 4,878,867 4,323,800 4,106,510
Income/(loss) before income taxes 6,324,704 5,775,363 4,949,839
(Provision for)/Benefit from income taxes (166,898) (137,723) (94,728)
Net income/Comprehensive income 6,157,806$ 5,637,640$ 4,855,111$
Idaho AgCredit
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
The accompanying notes are an integral part of these consolidated financial statements
24
Capital
Stock and
Allocated
Unallocated
Total
Participation
Retained
Retained
Shareholders'
Certificates
Earnings
Earnings
Equity
Balance at December 31, 2018
$
18,435,269
$
40,171,041
$
59,033,760
$
Net Income/Comprehensive income
2,446,770
2,408,341
4,855,111
Stock issued
Stock retired
(154,970)
(154,970)
Patronage distributions:
Cash
(2,884,335)
(2,884,335)
Allocated retained earnings
0
Other (rounding)
(1)
(1)
Balance at December 31, 2019
$
20,882,039
$
39,695,046
$
61,010,845
$
Net Income/Comprehensive income
1,498,608
4,139,032
5,637,640
Stock issued
Stock retired
(145,880)
(145,880)
Patronage distributions:
Cash
(2,808,643)
(2,808,643)
Allocated retained earnings
0
Other (rounding)
1
1
Balance at December 31, 2020
$
22,380,647
$
41,025,436
$
63,887,403
$
Net Income/Comprehensive income
1,923,103
4,234,703
6,157,806
Stock issued
Stock retired
(159,425)
(159,425)
Patronage distributions:
Cash
(3,706,035)
(3,706,035)
Allocated retained earnings
0
Other (rounding)
0
Balance at December 31, 2021
$
24,303,750
$
41,554,104
$
66,362,119
$
Idaho AgCredit
CONSOLIDATED STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of these consolidated financial statements
25
For the Year Ended December 31
CASH FLOWS FROM OPERATING ACTIVITIES: 2021 2020 2019
Net income 6,157,806$ 5,637,640$ 4,855,111$
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation 102,443 94,890 109,940
Provision for (reversal of) loan losses and reserves (110,542) 35,293 389,508
Other, net (5,536) 0 (2,205)
Change in assets and liabilities:
(Increase)/Decrease in CoBank stock patronage receivable (316,236) (99,534) 65,757
(Increase)/Decrease in deferred tax asset, net 97,000 69,000 (92,000)
(Increase)/Decrease in accrued interest receivable 236,663 325,031 (42,706)
(Increase)/Decrease in prepaid benefits asset (443,968) (426,155) (166,876)
(Increase)/Decrease in other assets 63,702 (118,605) 94,271
Increase/(Decrease) in accrued interest payable (38,473) (159,605) (11,111)
Increase/(Decrease) in accrued benefits liability 0 0 0
Increase/(Decrease) in other liabilities 185,728 48,883 82,633
Net cash provided by/(used in) operating activities 5,928,587 5,406,838 5,282,322
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase)/Decrease in loans, net (26,286,575) (25,710,108) 5,200,110
Purchases of premises and equipment (30,000) (94,072) (303,305)
Proceeds from sales of premises and equipment 5,536 0 2,205
(Increases) in CoBank stock 0 (3,343) (9,782)
Recoveries of loans charged off 48,637 0 0
Proceeds from sales of other property owned 0 0 0
Net cash provided by/(used in) investing activities (26,262,402) (25,807,523) 4,889,228
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayment of)/draw on note payable to CoBank 20,229,690 21,541,970 (9,607,595)
Increase/(Decrease) in advance conditional payments 3,303,442 3,226,589 1,280,756
Capital stock and participation certificates retired (159,425) (145,880) (154,970)
Capital stock and participation certificates issued 182,370 193,440 161,280
Cash patronage distributions paid (2,812,480) (2,884,334) (2,355,234)
Net cash provided by/(used in) financing activities 20,743,597 21,931,785 (10,675,763)
Net (decrease)/increase in cash 409,782 1,531,100 (504,213)
Cash at beginning of year 2,984,233 1,453,133 1,957,346
Cash at end of year
3,394,015
$
2,984,233$ 1,453,133$
SUPPLEMENTAL CASH INFORMATION:
Cash paid/(received) during the year for:
Interest 4,658,352$ 5,728,186$ 6,954,175$
Income taxes 166,898 176,337 172,829
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Stock Patronage from CoBank 0$ 3,343$ 9,782$
Financed sales of other property owned 0 0 0
Loans transferred to other property owned 0 0 0
Net charge-offs/(recoveries) (48,637) 0 0
Premises and equipment acquired under capital leases 0 0 0
Patronage distributions payable 3,702,198 2,808,643 2,884,335
Changes in unrealized losses/gains in other comprehensive income 0 0 0
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
26
NOTE 1 – ORGANIZATION AND OPERATIONS
A. Organization: Idaho AgCredit, ACA and its subsidiaries Idaho AgCredit, PCA and Idaho AgCredit, FLCA, (collectively
“Association”) are member-owned cooperatives which provide credit and credit-related services to or for the benefit of
eligible borrowers/shareholders for qualified agricultural purposes in the Idaho counties of Bannock, Bear Lake, Blaine,
Bingham, Bonneville, Butte, Camas, Caribou, Cassia, Clark, Custer, Franklin, Fremont, Gooding, Jefferson, Jerome, Lemhi,
Lincoln, Madison, Minidoka, Oneida, Power, Teton, Twin Falls, and that part of Owyhee County commencing at the
southwest corner of Twin Falls County, Idaho, thence west along the north boundary line of the state of Nevada, to the
southwest corner of Section Thirty-four, Township Sixteen South, Range Seven East, Boise Meridian, thence north to the
northwest corner of Section Three, Township Ten South, Range Seven East, Boise Meridian, thence east to the boundary
line of Twin Falls County, Idaho, thence south to the point of beginning; and in the state of Wyoming, all of Teton county
and that portion of Lincoln county north of the forty-second parallel.
The Association is a lending institution of the Farm Credit System (System), a nationwide system of cooperatively owned
Banks and Associations which was established by Acts of Congress to meet the credit needs of American agriculture and
is subject to the provisions of the Farm Credit Act of 1971, as amended (Farm Credit Act). At December 31, 2021, the
System was composed of three Farm Credit Banks, one Agricultural Credit Bank and 67 associations.
CoBank, ACB (funding bank or the "Bank"), its related associations and AgVantis, Inc. (AgVantis) are collectively referred
to as the District. CoBank provides the funding to associations within the District and is responsible for supervising certain
activities of the District associations. AgVantis, which is owned by the entities it serves, provides technology and other
operational services to certain associations and to CoBank. The CoBank District consists of CoBank, 20 Agricultural Credit
Associations (ACA) which each have two wholly owned subsidiaries (a Federal Land Credit Association (FLCA) and a
Production Credit Association (PCA)) and AgVantis.
ACA parent companies provide financing and related services through their FLCA and PCA subsidiaries. Generally, the
FLCA makes secured long-term agricultural real estate and rural home mortgage loans and the PCA makes short- and
intermediate-term loans for agricultural production or operating purposes.
The Farm Credit Administration (FCA) is delegated authority by Congress to regulate the System Banks and Associations.
The FCA examines the activities of System institutions to ensure their compliance with the Farm Credit Act, FCA regulations
and safe and sound banking practices.
The Farm Credit Act established the Farm Credit System Insurance Corporation (Insurance Corporation) to administer the
Farm Credit Insurance Fund (Insurance Fund). The Insurance Fund is required to be used (1) to ensure the timely payment
of principal and interest on System-wide debt obligations (Insured Debt), (2) to ensure the retirement of protected stock at
par or stated value and (3) for other specified purposes. The Insurance Fund is also available for discretionary use by the
Insurance Corporation to provide assistance to certain troubled System institutions and to cover the operating expenses of
the Insurance Corporation. Each System Bank has been required to pay premiums, which may be passed on to the
Association, into the Insurance Fund based on its annual average adjusted outstanding insured debt until the monies in the
Insurance Fund reach the “secure base amount,” which is defined in the Farm Credit Act as 2.0% of the aggregate insured
obligations (adjusted to reflect the reduced risk on loans or investments guaranteed by federal or state governments or such
other percentage of the aggregate obligations as the Insurance Corporation, in its sole discretion, determines to be
actuarially sound. When the amount in the Insurance Fund exceeds the secure base amount, the Insurance Corporation is
required to reduce premiums, as necessary to maintain the Insurance Fund at the 2.0% level. As required by the Farm
Credit Act, as amended, the Insurance Corporation may return excess funds above the secure base amount to System
institutions.
B. Operations: The Farm Credit Act sets forth the types of authorized lending activity, persons eligible to borrow and financial
services which can be offered by the Association. The Association is authorized to provide, either directly or in participation
with other lenders, credit, credit commitments, advance conditional payment accounts and related services to eligible
borrowers. Eligible borrowers include farmers, ranchers, producers or harvesters of aquatic products, their cooperatives,
rural residents and farm-related businesses. The Association also serves as an intermediary in offering credit life insurance
and crop insurance.
Upon request, stockholders of the Association will be provided with a CoBank Annual Report to Stockholders, which includes
the combined financial statements of the Bank and its related Associations. The Association’s financial condition may be
impacted by factors that affect the Bank. The CoBank Annual Report discusses the material aspects of the District’s financial
condition, changes in financial condition, and results of operations. The CoBank Annual Report also identifies favorable and
unfavorable trends, significant events, uncertainties and the impact of activities of the Insurance Corporation. In addition,
the Farm Credit Council acts as a full-service federated trade association, which represents the System before Congress,
the Executive Branch and others, and provides support services to System institutions on a fee basis. The CoBank Annual
Report to Stockholders is available free of charge as described in the Business Overview section of Management’s
Discussion and Analysis.
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
27
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of the Association conform to accounting principles generally accepted in the United
States of America (GAAP) and prevailing practices within the banking industry. The preparation of financial statements in
conformity with GAAP requires Association management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent liabilities at the date of the consolidated financial statements. Actual results
may differ from these estimates. Significant estimates are discussed in these footnotes as applicable.
The consolidated financial statements include the accounts of Idaho AgCredit, ACA and its wholly owned subsidiaries, Idaho
AgCredit, PCA and Idaho AgCredit, FLCA and reflect the investments in, and allocated earnings of, the service organizations in
which CoBank and Associations have partial ownership interests in for the years ended December 31, 2021, 2020 and 2019. All
significant inter-company transactions have been eliminated in consolidation. Recently issued accounting pronouncements
follow.
In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which provides relief from certain
requirements under GAAP, was signed into law. Section 4013 of the CARES Act gives entities temporary relief from the
accounting and disclosure requirements for troubled debt restructurings (TDRs) and if certain criteria are met these loan
modifications may not need to be classified as TDRs. The relief related to TDRs under the CARES Act was extended by the
Consolidated Appropriations Act, 2021 (CAA), which was signed into law on December 27, 2020. Under the CAA, such relief
will continue until the earlier of (1) 60 days after the date the COVID-19 national emergency comes to an end or (2) January 1,
2022. The Association adopted this relief for qualifying loan modifications.
In March 2020, the Financial Accounting Standards Board (FASB) issued guidance entitled “Facilitation of the Effects of
Reference Rate Reform on Financial Reporting.” The guidance provides optional expedients and exceptions for applying GAAP
to contracts, hedging relationships and other transactions affected by reference rate reform. The guidance simplifies the
accounting evaluation of contract modifications that replace a reference rate affected by reference rate reform and
contemporaneous modifications of other contracts related to the replacement of the reference rate. With respect to hedge
accounting, the guidance allows amendment of formal designation and documentation of hedging relationships in certain
circumstances as a result of reference rate reform and provides additional expedients for different types of hedges, if certain
criteria are met. The optional amendments are effective as of March 12, 2020, through December 31, 2022. The Association
applied the optional accounting expedients available under the guidance to debt and derivative contract modifications related to
the LIBOR transition in the fourth quarter of 2020. The Impact of adoption was not material to the Association’s financial condition
or results of operations. In addition, the Association adopted the optional expedient as it relates to loans during the first quarter
of 2021 and the impact of adoption was not material to the Association’s financial condition or results of operations. In January
2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848): Scope.” The update allows certain derivative
instruments to be modified to change the rate used for margining, discounting, or contract price alignment. An entity may elect
to apply the optional amendments on a full retrospective basis from March 12, 2020 to December 31, 2022. These amendments
do not apply to contract modifications made or new hedging relationships entered into after December 31, 2022, and existing
hedging relationships evaluated for effectiveness in periods after December 31, 2022. The Association adopted the guidance in
the first quarter of 2021 and the impact was not material to the Association’s financial condition or its results of operations.
In June 2016, the FASB issued guidance entitled “Measurement of Credit Losses on Financial Instruments.” The guidance
replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires
consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Credit losses relating
to available-for-sale securities would also be recorded through an allowance for credit losses. For public business entities that
are not U.S. Securities and Exchange Commission filers, this guidance was to become effective for interim and annual periods
beginning after December 15, 2020, with early application permitted. In October 2019, the FASB approved deferral of the
effective date for certain entities for this guidance by two years, which will result in the new credit loss standard becoming
effective for interim and annual reporting periods beginning after December 15, 2022 with early adoption permitted. The
Association qualifies for the delay in the adoption date. The Association continues to evaluate the impact of adoption on its
financial condition and its results of operations.
Below is a summary of our significant accounting policies.
A. Loans and Allowance for Loan Losses: Long-term real estate mortgage loans generally have maturities ranging
from five to 40 years. Substantially all short- and intermediate-term loans made for agricultural production or operating
purposes have maturities of ten years or less. Loans are carried at their principal amount outstanding adjusted for charge-
offs and deferred loan fees or costs. Interest on loans is accrued and credited to interest income based upon the daily
principal amount outstanding. Loan origination fees and direct loan origination costs are expensed as incurred. This
treatment does not result in a material difference versus capitalizing such costs where the net fee or cost is amortized over
the life of the related loan as an adjustment to yield.
Impaired loans are loans for which it is probable that principal and interest will not be collected according to the contractual
terms of the loan and are generally considered substandard or doubtful, which is in accordance with the loan rating model,
as described below. Impaired loans include nonaccrual loans, restructured loans and loans past due 90 days or more and
still accruing interest. A loan is considered contractually past due when any principal repayment or interest payment required
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
28
by the loan contract is not received on or before the due date. A loan shall remain contractually past due until it is formally
restructured or until the entire amount past due, including principal, accrued interest, and penalty interest incurred is
collected or otherwise discharged in full.
A restructured loan constitutes a troubled debt restructuring if for economic or legal reasons related to the debtor’s financial
difficulties the Association grants a concession to the debtor that it would not otherwise consider. A concession is generally
granted in order to minimize the Association’s economic loss and avoid foreclosure. Concessions vary by program and are
borrower-specific and may include interest rate reductions, term extensions, payment deferrals or the acceptance of
additional collateral in lieu of payments. In limited circumstances, principal may be forgiven. A loan restructured in a trouble
debt restructuring is an impaired loan.
Impaired loans are generally placed in nonaccrual status when principal or interest is delinquent for 90 days or more (unless
adequately collateralized and in the process of collection) or when circumstances indicate that collection of principal and/or
interest is in doubt or legal action, including foreclosure or other forms of collateral conveyance, have been initiated to collect
the outstanding principal and interest. When a loan is placed in nonaccrual status, accrued interest deemed uncollectible is
reversed (if accrued in the current year) and/or included in the recorded nonaccrual balance (if accrued in prior years).
Loans are charged-off at the time they are determined to be uncollectible.
When loans are in nonaccrual status, loan payments are generally applied against the recorded nonaccrual balance. A
nonaccrual loan may, at times, be maintained on a cash basis. As a cash basis nonaccrual loan, the recognition of interest
income from cash payments received is allowed when the collectability of the recorded investment in the loan is no longer
in doubt and the loan does not have a remaining unrecovered charge-off associated with it. Nonaccrual loans may be
returned to accrual status when all contractual principal and interest is current, the borrower has demonstrated payment
performance and collection of future payments is no longer in doubt. If previously unrecognized interest income exists at
the time the loan is transferred to accrual status, cash received at the time of or subsequent to the transfer is first recorded
as interest income until such time as the recorded balance equals the contractual indebtedness of the borrower. In cases
where a borrower experiences financial difficulties and the Association makes certain monetary concessions to the borrower
through modifications to the contractual term of the loan, the loan is classified as a troubled debt restructuring. If the
borrower’s ability to meet the revised payment schedule is uncertain, the loan is classified as a nonaccrual loan.
The Association purchases loan and lease participations from other System entities to generate additional earnings and
diversify risk related to existing commodities financed and the geographic area served. Additionally, the Association sells a
portion of certain large loans to other System entities to reduce risk and comply with established lending limits. When loans
are sold, the sale terms comply with requirements under ASC 860 "Transfers and Servicing".
The Association uses a two-dimensional loan rating model based on internally generated combined System risk rating
guidance that incorporates a 14-point risk-rating scale to identify and track the probability of borrower default and a separate
scale addressing loss given default over a period of time. Probability of default is the probability that a borrower will
experience a default within 12 months from the date of the determination of the risk rating. A default is considered to have
occurred if the lender believes the borrower will not be able to pay its obligation in full or the borrower is past due more than
90 days. The loss given default is management’s estimate as to the anticipated economic loss on a specific loan assuming
default has occurred or is expected to occur within the next 12 months.
Each of the probability of default categories carries a distinct percentage of default probability. The 14-point risk rating scale
provides for granularity of the probability of default, especially in the acceptable ratings. There are nine acceptable
categories that range from a borrower of the highest quality to a borrower of minimally acceptable quality. The probability
of default between 1 and 9 is very narrow and would reflect almost no default to a minimal default percentage. The probability
of default grows more rapidly as a loan moves from a “9” to other assets especially mentioned and grows significantly as a
loan moves to a substandard (viable) level. A substandard (non-viable) rating indicates that the probability of default is
almost certain.
The credit risk rating methodology is a key component of the Association’s allowance for loan losses evaluation, and is
generally incorporated into its loan underwriting standards and internal lending limit. The allowance for loan losses is
maintained at a level considered adequate by management to provide for probable and estimable losses inherent in the
loan portfolio. The allowance is increased through provision for loan losses and loan recoveries and is decreased through
reversals of provisions for loan losses and loan charge-offs. The allowance is based on a periodic evaluation of the loan
portfolio by management in which numerous factors are considered, including economic conditions, environmental
conditions, loan portfolio composition, collateral value, portfolio quality, current production conditions and prior loan loss
experience. The allowance for loan losses encompasses various judgments, evaluations and appraisals with respect to the
loans and their underlying collateral that, by their nature, contain elements of uncertainty, imprecision and variability.
Changes in the agricultural economy and environment and their impact on borrower repayment capacity will cause various
judgments, evaluations and appraisals to change over time. Accordingly, actual circumstances could vary significantly from
the Association’s expectations and predictions of those circumstances. Management considers the following macro-
economic factors in determining and supporting the level of allowance for loan losses: the concentration of lending in
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
29
agriculture, combined with uncertainties associated with farmland values, commodity prices, exports, government
assistance programs, regional economic effects and weather-related influences.
The allowance for loan losses includes components for loans individually evaluated for impairment, loans collectively
evaluated for impairment and loans acquired with deteriorated credit quality. Generally, for loans individually evaluated the
allowance for loan losses represents the difference between the recorded investment in the loan and the present value of
the cash flows expected to be collected discounted at the loan’s effective interest rate, or at the fair value of the collateral,
if the loan is collateral dependent. For those loans collectively evaluated for impairment, the allowance for loan losses is
determined using the risk rating model as previously discussed.
The amount of current loan balance is used for calculating the allowance for loan losses. In addition to the allowance
calculated using the customer's probability of default and expected loss given default ratings, a portion is calculated to
reflect management's estimate of additional allowance required by other factors considered in determining the allowance
for loan losses. A summary of these amounts as of December 31 are as follows.
2021
2020
2019
Allowance evaluated collectively
654,125
$
707,888
$
680,208
$
Allowance evaluated individually
269,163
275,654
292,585
Allowance evaluated by management estimate
600,000
600,000
600,000
Total Allowance
1,523,288
$
1,583,542
$
1,572,793
$
B. Cash: Cash, as included in the consolidated financial statements, represents cash on hand and on deposit at financial
institutions. At December 31, 2021, 2020 and 2019, the carrying value of the Association’s cash adjusted for outstanding
checks and deposits in transit totaled $3,394,015, $2,984,233 and $1,453,133. Bank balances totaled $4,790,689,
$3,090,457 and $1,621,692 respectively. Of these bank balances, only $250,000 was covered by standard federal
depository insurance. The daily balance of depository accounts varies throughout the year since the Association must wait
for deposited funds to become collected funds before it can use the funds to reduce its note payable to CoBank.
C. Investment in CoBank: The Association’s required investment in CoBank is in the form of Class A Stock. The minimum
required investment is 4.00% of the prior five year’s average direct loan volume. The investment in CoBank is composed of
patronage based stock and purchased stock. The requirement for capitalizing patronage-based participation loans sold to
CoBank is 8.00% of the prior ten-year average of such participations sold to CoBank.
D. Premises and Equipment: Land is carried at cost. Premises and equipment are carried at cost less accumulated
depreciation. Depreciation is provided on the straight-line method over the estimated useful lives of the assets. The useful
life for buildings is 39 years and ranges from 3 to 10 years for furniture, equipment and automobiles. Gains and losses on
dispositions are reflected in current operating results. Maintenance and repairs are expensed and improvements above
certain thresholds are capitalized. The institution purchases, as well as internally develops and customizes, certain software
to enhance or perform internal business functions. Software development costs, as well as costs for software that is part of
a cloud computing arrangement incurred in the preliminary and post-implementation project stages are charged to
noninterest expense. Nominal costs associated with designing software configuration, installation, coding programs and
testing systems as part of ongoing operational activities are included in noninterest expense. Material costs associated with
designing software configuration, installation, coding programs and testing systems, if applicable, would be capitalized and
amortized in accordance with accounting guidelines. Long-lived assets are reviewed for impairment whenever events or
circumstances indicate the carrying amount of an asset group may not be recoverable.
E. Other Assets and Other Liabilities: Other assets are composed primarily of accounts receivable, prepaid expenses, and
investment in Farm Credit institutions other than CoBank. Significant components of other liabilities primarily include
accounts payable and employee benefits.
F. Advance Conditional Payments: The Association is authorized under the Farm Credit Act to accept advance payments
from borrowers. To the extent the borrower's access to such advance payments is restricted, the advance conditional
payments are netted against the borrower's related loan balance. Unrestricted advance conditional payments are included
in liabilities. Restricted advance conditional payments are primarily associated with mortgage loans, while non-restricted
advance conditional payments are primarily related to production and intermediate-term loans and insurance proceeds on
mortgage loans. Advance conditional payments are not insured. Interest is generally paid by the Association on advance
conditional payments.
G. Employee Benefit Plans: Substantially all employees of the Association participate in the Farm Credit Foundations Defined
Contribution/401(k) Plan (Defined Contribution Plan). Some former employees participate in the Eleventh District Defined
Benefit Retirement Plan (Defined Benefit Plan). The Defined Benefit Plan is a noncontributory plan, and benefits are based
on compensation and years of service. The Association recognizes its proportional share of expense and contributes its
proportional share of funding to the Defined Benefit Plan. The Defined Benefit Plan was closed to employees hired after
December 31, 1997.
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
30
The Defined Contribution Plan has two components. Employees may receive benefits through the Employer Contribution
portion of the Defined Contribution Plan. In this plan, the Association provides a monthly contribution based on a defined
percentage of the employee's salary. Employees may also participate in a Salary Deferral Plan governed by Section 401(k)
of the Internal Revenue Code. The Association matches a certain percentage of employee contributions. Employees hired
on or after January 1, 1998 are eligible to participate only in the Defined Contribution Plan and Salary Deferral Plan. All
defined contribution costs are expensed in the same period that participants earn employer contributions.
The Association also provides certain health and life insurance benefits to eligible current and retired employees through
the Farm Credit Foundations Retiree Medical and Retiree Life Plans. Substantially all employees may become eligible for
those benefits if they reach normal retirement age while working for the Association. The anticipated costs of these benefits
are accrued during the period of the employee's active service. The authoritative accounting guidance requires the accrual
of the expected cost of providing postretirement benefits during the years that the employee renders service necessary to
become eligible for these benefits.
H. Patronage Distribution from CoBank: Patronage distributions from CoBank are accrued by the Association in the year
earned.
I. Income Taxes: As previously described, the ACA holding company conducts its business activities through two wholly
owned subsidiaries. Long-term mortgage lending activities are operated through a wholly-owned FLCA subsidiary, which is
exempt from federal and state income tax. Short- and intermediate-term lending activities are operated through a wholly-
owned PCA subsidiary. Operating expenses are allocated to each subsidiary based on estimated relative service. All
significant transactions between the subsidiaries and the parent company have been eliminated in consolidation. The ACA,
along with the PCA subsidiary, are subject to income taxes. The Association accounts for income taxes under the liability
method. Accordingly, deferred taxes are recognized for estimated taxes ultimately payable or recoverable based on federal,
state or local laws.
The Association elected to operate as a cooperative that qualifies for tax treatment under Subchapter T of the Internal
Revenue Code. Accordingly, under specified conditions, the Association can exclude from taxable income amounts
distributed as qualified patronage refunds in the form of cash, stock or allocated retained earnings. Provisions for income
taxes are made only on those earnings that will not be distributed as qualified patronage distributions. Deferred taxes are
recorded on the tax effect of all temporary differences based on the assumption that such temporary differences are retained
by the Association and will therefore impact future tax payments. A valuation allowance is provided against deferred tax
assets to the extent that it is more likely than not (over 50% probability), based on management's estimate, the deferred tax
assets will not be realized. The consideration of valuation allowances involves various estimates and assumptions as to
future taxable earnings, including the effects of the Association's expected patronage program, which reduces taxable
earnings.
Deferred income taxes have not been recorded by the Association on approximately $7,344,200 of stock patronage
distributions received from the Bank prior to January 1, 1993, the adoption date of accounting guidance on income taxes.
Association management’s intent is to permanently invest these and other undistributed earnings in the Bank, or if converted
to cash, to pass through any such earnings to Association borrowers through qualified patronage allocations.
CoBank changed its direct note average investment requirement from one year to five years and eliminated excess stock
for 2022. The stock retirement from CoBank to be received in March 2022 as a result of this change is $1,726,792. Idaho
AgCredit, ACA’s patronage dividends declared at year end 2021 includes this amount to be passed through to Association
borrowers, which will reduce the remaining stock patronage distributions prior to January 1, 1993 from $7,344,200 to
$5,617,408. For income tax purposes, Idaho AgCredit ACA has elected to reflect both the income from patronage retirement
as well as the patronage distribution deduction of $1,726,792 in 2021.
The Association has not provided deferred income taxes on amounts allocated to the Association which relate to the Bank's
post-1992 earnings to the extent that such earnings will be passed through to Association borrowers through qualified
patronage allocations. Deferred income taxes have not been provided on approximately $2,119,080 of patronage refunds
distributed to the taxable PCA by U.S. AgBank, FCB after December 31, 1992 and prior to December 2011 or on additional
distributions on December 31, 2011 of $755,815 to the taxable PCA and $668,105 to the tax exempt FLCA. Additionally,
deferred income taxes have not been provided on the Bank's post-1992 unallocated earnings.
The Association has not provided deferred income taxes on amounts allocated to the Association which relate to the Bank's
participations purchased program. The Association has $53,087 in accumulated stock distributions to the tax exempt FLCA
and $5,179 in accumulated stock distributions to the taxable PCA allocated from this program.
In 1995, the Idaho State Tax Commission made a declaratory ruling for Northwest Farm Credit Services ACA, indicating
that it was not subject to Idaho income taxes. However, in 2013 the Idaho State Tax Commission revoked this ruling on a
prospective basis. In 2014 the Association received a ruling that its ACA and PCA entities are taxable and that taxes would
be due on a prospective basis beginning with the 2013 tax year. The FLCA entity is exempt from federal and other income
taxes as provided in the Farm Credit Act.
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
31
J. Other Comprehensive Income/Loss: Other comprehensive income/(loss) refers to revenue, expenses, gains and losses
that under GAAP are recorded as an element of shareholders' equity and comprehensive income but are excluded from net
income. Accumulated other comprehensive income/loss refers to the balance of these transactions.
K. Fair Value Measurement: Accounting guidance defines fair value, establishes a framework for measuring fair value and
expands disclosures about fair value measurements. The Association did not have any significant assets or liabilities on the
Consolidated Statements of Financial Condition measured at fair value.
L. Off-balance-sheet credit exposures: Commitments to extend credit are agreements to lend to customers, generally
having fixed expiration dates or other termination clauses that may require payment of a fee. Commercial letters of credit
are conditional commitments issued to guarantee the performance of a customer to a third party. These letters of credit are
issued to facilitate commerce and typically result in the commitment being funded when the underlying transaction is
consummated between the customer and a third party. The credit risk associated with commitments to extend credit and
commercial letters of credit is essentially the same as that involved with extending loans to customers and is subject to
normal credit policies. Collateral may be obtained based on management's assessment of the customer's creditworthiness.
M. Regulatory Capital: The Association is regulated by the FCA. Failure to meet minimum capital requirements can initiate
certain mandatory and/or discretionary actions by the FCA that could have a direct material effect on the Association's
financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the
Association must meet specific capital guidelines that involve quantitative measures of the Association's assets, liabilities
and certain off-balance sheet items as calculated under regulatory accounting practices. The Association's capital amounts
and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other
factors. Regulations prohibit extending the total credit to one borrower or group of related borrowers in excess of 15% of
permanent capital and policies further limit the maximum credit available based on various risk factors. Management
believes the Association meets all capital adequacy requirements to which it is subject as of December 31, 2021.
NOTE 3 – LOANS AND ALLOWANCE FOR LOAN LOSSES
A summary of loans follows as of December 31.
2021
2020
2019
Real estate mortgage
219,630,216
$
200,010,999
$
172,849,056
$
Production and intermediate-term
103,949,119
96,714,053
105,286,151
Agribusiness
12,263,818
11,830,430
8,335,044
Rural residential real estate
0
0
0
Rural infrastructure
2,623,783
3,624,879
0
Total loans
338,466,936
$
312,180,361
$
286,470,251
$
The Association makes variable, capped variable, fixed, adjustable, prime-based, SOFR and London Interbank Offered Rate
(LIBOR)-based rate loans to borrowers. Substantially all of the Association's fixed and capped variable rate loans are funded
through CoBank to match the pricing, maturity and option characteristics of loans to borrowers. A small portfolio of primarily
LIBOR indexed loans are not match-funded. The Board has established guidance for pricing all loans, and can change
variable rates as necessary. As of December 31, the Association had the following loan volume by interest rate program.
2021
2020
2019
Variable
94,488,700
$
100,804,576
$
113,866,850
$
LIBOR
2,053,223
2,824,136
879,733
Fixed
240,582,147
207,169,114
170,167,289
Other (capped variable, adjustable, prime)
1,342,866
1,382,535
1,556,379
Total loans
338,466,936
$
312,180,361
$
286,470,251
$
The Association purchases or sells loan participations with other parties in order to diversify risk, manage loan volume and
comply with FCA regulations. The following table presents information regarding all participations purchased and sold as of
December 31, 2021.
Purchased
Sold
Real estate mortgage
41,715,205
$
17,290,137
$
Production and intermediate term
1,599,391
6,234,881
Agribusiness
6,090,223
0
Rural infrastructure
2,623,783
0
Total
52,028,602
$
23,525,018
$
Other Farm Credit Institutions
The Association currently has no loans to cooperatives and no water/waste water, mission-related, agricultural export, or lease
receivable loans. All of the Association's participation loans are with other Farm Credit Institutions.
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
32
A significant source of liquidity for the Association is the repayment and maturities of loans. The following table presents the
contractual maturity distribution of loans by type at December 31, 2021 and indicates that approximately 15.0% of loans had
maturities of one year or less.
Due in 1 year or
less
Due after 1
through 5 years Due after 5 years Total
Real estate mortgage
$
7,614,873
$
211,094,257
$
219,630,216
$
Production & intermediate-term
47,816,821
49,892,229
6,240,071
103,949,121
Agribusiness
1,880,671
3,703,312
6,679,833
12,263,816
Rural infrastructure
0
1,552,354
1,071,429
2,623,783
Total Loans
50,618,578
$
62,762,768
$
225,085,590
$
338,466,936
$
The Association's concentration of credit risk in various agricultural commodities is shown in the following table as of December
31.
Amount
Percent
Amount
Percent
Amount
Percent
Potatoes
43,324
$
12.8%
42,769
$
13.7%
42,971
$
15.0%
Grain (wheat, malt and feed barley)
62,955
18.6%
46,827
15.0%
44,116
15.4%
Cash rent
34,524
10.2%
29,033
9.3%
29,793
10.4%
Beef cattle
41,631
12.3%
36,525
11.7%
32,371
11.3%
Hay
36,893
10.9%
31,218
10.0%
28,361
9.9%
Milk and dairy cattle
29,108
8.6%
28,721
9.2%
25,209
8.8%
Sugar beets
16,246
4.8%
15,609
5.0%
13,464
4.7%
Outside income (mostly wages)
18,616
5.5%
13,112
4.2%
8,308
2.9%
Other
55,170
16.3%
68,366
21.9%
61,877
21.6%
Total
$
100.0%
$
100.0%
$
100.0%
2021
Commodity
(dollars in thousands) 20192020
While the percentages shown in the previous table represent the relative amounts of the Association's potential credit risk as it
relates to recorded loan principal, a substantial portion of the Association's loans are collateralized. Accordingly, the
Association's exposure to credit loss associated with lending activities is considerably less than the recorded balances.
Approximately 80% of the Association’s loans outstanding balance is attributable to 130 borrowers. Due to the size of their loans,
the loss of any of these borrowers or the failure of any of these borrowers to perform would adversely affect the portfolio and the
Association’s future operating results.
The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management's credit evaluation
of the borrower. Collateral held varies, but typically includes farmland, machinery and equipment and income-producing property,
such as crops and livestock, as well as receivables. Long-term real estate loans are secured by first liens on the underlying real
property. Federal regulations state that long-term real estate loans are not to exceed 85% (97% if guaranteed or enhanced by
a government agency) of the property's appraised value. However, a decline in a property's market value subsequent to loan
origination or advances, or other actions necessary to protect the financial interest of the Association in the collateral, may result
in loan to value ratios in excess of the regulatory maximum.
The Association has obtained credit enhancements by entering into Standby Commitment to Purchase Agreements
(Agreements) with the Federal Agricultural Mortgage Corporation (Farmer Mac), covering loans with principal balance
outstanding of $8,489,744, $8,895,536 and $9,276,204 at December 31, 2021, 2020 and 2019. Under the Agreements, Farmer
Mac agrees to purchase loans from the Association in the event of default (typically four months past due), subject to certain
conditions, thereby mitigating the risk of loss from covered loans. In return, the Association pays Farmer Mac commitment fees
based on the outstanding balance of loans covered by the Agreements. Such fees, totaling $34,365, $35,963 and $37,581 for
2021, 2020 and 2019 are reflected in noninterest expense.
In addition to Farmer Mac, credit enhancements with federal government agencies of $26,493,877, $26,667,139 and
$22,390,660 were outstanding at year ends 2021, 2020 and 2019.
The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, is an economic stimulus bill signed into
law on March 27, 2020, in response to the economic fallout of the Covid-19 pandemic in the United States. The creation of the
Paycheck Protection Program (PPP) enacted under the CARES Act provides forgivable loans to small businesses for payroll
obligations, emergency grants to cover immediate operating costs, and a mechanism for loan forgiveness by the Small Business
Administration should all criteria be met. Included in commercial loans at year end 2021 are $83,897 and at year end 2020 are
$1,064,924 of loans granted under the PPP. These loans are fully guaranteed by the Small Business Administration, and these
loan amounts are also included in the totals for the credit enhancements with federal government agencies above.
One credit quality indicator utilized by the Association is the Farm Credit Administration Uniform Loan Classification System that
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
33
categorizes loans into five categories. The categories are defined as follows:
Acceptable – assets are expected to be fully collectible and represent the highest quality,
Other assets especially mentioned (OAEM) – assets are currently collectible but exhibit some potential weakness.
Substandard – assets exhibit some serious weakness in repayment capacity, equity, and/or collateral pledged on the
loan,
Doubtful – assets exhibit similar weaknesses to substandard assets; however, doubtful assets have additional
weaknesses in existing factors, conditions and values that make collection in full highly questionable, and
Loss – assets are considered uncollectible.
The following table shows loans and related accrued interest classified under the FCA Uniform Loan Classification system as a
percentage of total loans and related accrued interest receivable by loan type as of December 31.
2021
2020
2019
Real estate mortgage
Acceptable 98.1% 97.0% 97.1%
OAEM 1.3% 1.8% 1.4%
Substandard 0.6% 1.2% 1.5%
Doubtful 0.0% 0.0% 0.0%
100.0% 100.0% 100.0%
Production and intermediate term
Acceptable 96.2% 96.2% 96.8%
OAEM 2.3% 2.5% 2.0%
Substandard 1.2% 1.0% 0.9%
Doubtful 0.3% 0.3% 0.3%
100.0% 100.0% 100.0%
Agribusiness
Acceptable 100.0% 93.9% 100.0%
OAEM 0.0% 6.1% 0.0%
Substandard 0.0% 0.0% 0.0%
Doubtful 0.0% 0.0% 0.0%
100.0% 100.0% 100.0%
Rural infrastructure
Acceptable 100.0% 100.0% 100.0%
OAEM 0.0% 0.0% 0.0%
Substandard 0.0% 0.0% 0.0%
Doubtful 0.0% 0.0% 0.0%
100.0% 100.0% 100.0%
Total loans
Acceptable 97.7% 96.7% 97.1%
OAEM 1.5% 2.2% 1.6%
Substandard 0.7% 1.0% 1.2%
Doubtful 0.1% 0.1% 0.1%
100.0% 100.0% 100.0%
Impaired loans are loans for which it is probable that all principal and interest will not be collected according to the contractual
terms. The following table presents information relating to impaired loans including accrued interest as of December 31.
Nonaccrual loans:
2021
2020 2019
Current as to principal and interest
616,215
$
466,615
$
668,280
$
Past due
0
370,787
1,511,282
Total nonaccrual loans
616,215
837,402
2,179,562
Impaired accrual loans:
90 days or more past due
0
0
0
Total impaired accrual loans
0
0
0
Total impaired loans
616,215
$
837,402
$
2,179,562
$
There were no loans classified as accruing restructured or accruing loans 90 days or more past due for the years presented.
There were no material commitments to lend additional funds to debtors whose loans were classified as impaired for the years
presented.
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
34
High risk assets consist of impaired loans and other property owned. The following table presents these in a more detailed
manner than the previous table. These nonperforming assets (including related accrued interest) as of December 31 are as
follows:
2021
2020 2019
Nonaccrual loans:
Real estate mortgage 183,960$ 2,000$ 576,175$
Production and Intermediate term 432,255 835,402 1,603,387
Total nonaccrual loans 616,215 837,402 2,179,562
Accruing restructured loans:
Total accruing restructured loans 0 0 0
Accruing loans 90 days or more past due:
Total accruing loans 90 days or more past due 0 0 0
Total impaired loans 616,215 837,402 2,179,562
Other property owned 0 0 0
Total high risk assets 616,215$ 837,402$ 2,179,562$
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
35
Additional impaired loan information is as follows:
At December 31 For Year Ended December 31
Impaired Loans
Recorded
Investment
Contractual
Principal
Balance
Related
Specific
Allowance
Average
Impaired
Loans
Interest
Income
Recognized
2021
Production and intermediate term 291,453$ 312,378$ 269,163$ 297,303$ 0$
Total 291,453$ 312,378$ 269,163$ 297,303$ 0$
Real estate mortgage 183,959$ 191,275$ 0$ 172,836$ 0$
Production and intermediate term 140,803 150,778 0 201,197 178,427
Agribusiness 0 0 0 0 0
Total 324,762$ 342,053$ 0$ 374,033$ 178,427$
Total Impaired Loans:
Real estate mortgage 183,959$ 191,275$ 0$ 172,836$ 0$
Production and intermediate term 432,256 463,156 269,163 498,500 178,427
Agribusiness 0 0 0 0 0
Total 616,215$ 654,431$ 269,163$ 671,336$ 178,427$
2020
Production and intermediate term 302,253$ 312,378$ 275,654$ 304,780$ 0$
Total 302,253$ 312,378$ 275,654$ 304,780$ 0$
Real estate mortgage 2,000$ 72,522$ 0$ 335,230$ 55,431$
Production and intermediate term 533,149 708,450 0 1,150,888 40,299
Agribusiness 0 0 0 0 0
Total 535,149$ 780,972$ 0$ 1,486,118$ 95,730$
Total Impaired Loans:
Real estate mortgage 2,000$ 72,522$ 0$ 335,230$ 55,431$
Production and intermediate term 835,402 1,020,828 275,654 1,455,668 40,299
Agribusiness 0 0 0 0 0
Total 837,402$ 1,093,350$ 275,654$ 1,790,898$ 95,730$
2019
Production and intermediate term 309,184$ 312,378$ 292,585$ 585,594$ 0$
Total 309,184$ 312,378$ 292,585$ 585,594$ 0$
Real estate mortgage 576,175$ 643,777$ 0$ 517,629$ 0$
Production and intermediate term 1,294,203 1,475,803 0 1,865,813 0
Agribusiness 0 0 0 0 0
Total 1,870,378$ 2,119,580$ 0$ 2,383,442$ 0$
Total Impaired Loans:
Real estate mortgage 576,175$ 643,777$ 0$ 517,629$ 0$
Production and intermediate term 1,603,387 1,788,181 292,585 2,451,407 0
Agribusiness 0 0 0 0 0
Total 2,179,562$ 2,431,958$ 292,585$ 2,969,036$ 0$
With a Related Allowance
With a Related Allowance
With No Related Allowance
With No Related Allowance
With a Related Allowance
With No Related Allowance
Interest income is recognized and cash payments are applied on nonaccrual impaired loans as described in Note 2, Summary
of Significant Accounting Policies. The following table presents interest income recognized on impaired loans for the year ended
December 31.
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
36
2021
2020
2019
Interest income recognized on nonaccrual loans
$
95,735
$
0
$
Interest income on impaired accrual loans
0
964
0
Interest income recognized on impaired loans
$
96,699
$
0
$
Interest income on nonaccrual and accruing restructured loans that would have been recognized under the original terms of the
loans follows for the year ended December 31.
2021
2020 2019
Interest income which would have been
recognized under the original loan terms
40,141
$
109,565
$
188,536
$
Less: interest income recognized
250,792
95,735
0
Foregone (additional nonaccrual) interest income
(210,651)
$
13,830
$
188,536
$
The following table provides an age analysis of past due loans (including accrued interest) as of December 31.
(Dollars in Thousands)
30-89 Days
Past Due
90 Days
or More
Past Due
Total
Past Due
Not Past
Due or
<30 Days
Past Due
Recorded
Investment in
Loans
Outstanding
Recorded
Investment
>90 Days and
Accruing
2021
Real estate mortgage 242$ 0$ 242$ 222,487$ 222,729$ 0$
Production and intermediate term 91 0 91 104,919 105,010 0
Agribusiness 0 0 0 12,424 12,424
Rural infrastructure 0 0 0 2,644 2,644 0
Total 333$ 0$ 333$ 342,474$ 342,807$ 0$
2020
Real estate mortgage 702$ 0$ 702$ 202,730$ 203,432$ 0$
Production and intermediate term 174 371 545 97,135 97,680 0
Agribusiness 0 0 0 11,997 11,997
Rural infrastructure 0 0 0 3,648 3,648 0
Total 876$ 371$ 1,247$ 315,510$ 316,757$ 0$
2019
Real estate mortgage 0$ 468$ 468$ 175,753$ 176,221$ 0$
Production and intermediate term 462 1,043 1,505 105,256 106,761 0
Agribusiness 61 0 61 8,329 8,390
Rural infrastructure 0 0 0 0 0 0
Total 523$ 1,511$ 2,034$ 289,338$ 291,372$ 0$
The recorded investment in the loan receivable is the face amount increased or decreased by applicable accrued interest and
unamortized premium, discount, finance charges, or acquisitions costs and may also reflect a previous direct write-down of the
investment.
A restructuring of a debt constitutes a troubled debt restructuring if the creditor for economic or legal reasons related to the
debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider. The Association had no
troubled debt restructurings that occurred during the years 2021, 2020 or 2019.
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
37
A summary of changes in the allowance for loan losses and period end recorded investment in loans including accrued
interest is as follows:
Prior year End
Balance Charge-offs Recoveries
Provision for
Loan Losses/
(Loan Loss
Reversals)
Ending
Balance
2021
Real estate mortgage
589,497
$
0
$
0
$
(32,395)
$
557,102
$
Production and intermediate-term
947,231
0
48,637
(80,018)
915,850
Agribusiness
37,036
0
0
(1,957)
35,079
Rural infrastructure
9,778
0
0
5,479
15,257
Total
1,583,542
$
0
$
48,637
$
(108,891)
$
1,523,288
$
2020
Real estate mortgage
554,147
$
0
$
0
$
35,350
$
589,497
$
Production and intermediate-term
997,319
0
0
(50,088)
947,231
Agribusiness
21,327
0
0
15,709
37,036
Rural infrastructure
0
0
0
9,778
9,778
Total
1,572,793
$
0
$
0
$
10,749
$
1,583,542
$
2019
Real estate mortgage
545,968
$
0
$
0
$
8,179
$
554,147
$
Production and intermediate-term
623,434
0
0
373,885
997,319
Agribusiness
24,072
0
0
(2,745)
21,327
Rural infrastructure
0
0
0
0
0
Total
1,193,474
$
0
$
0
$
379,319
$
1,572,793
$
Individually
evaluated for
impairment
Collectively
evaluated for
impairment
Individually
evaluated for
impairment
Collectively
evaluated for
impairment
2021
Real estate mortgage
0
$
557,102
$
183,960
$
222,544,385
$
Production and intermediate-term
269,163
646,687
432,255
104,577,742
Agribusiness
0
35,079
0
12,423,877
Rural infrastructure
0
15,257
0
2,644,393
Total
269,163
$
1,254,125
$
616,215
$
342,190,397
$
2020
Real estate mortgage
0
$
589,497
$
2,000
$
203,429,750
$
Production and intermediate-term
275,654
671,577
835,402
96,844,620
Agribusiness
0
37,036
0
11,996,901
Rural infrastructure
0
9,778
0
3,648,026
Total
275,654
$
1,307,888
$
837,402
$
315,919,297
$
2019
Real estate mortgage
0
$
554,147
$
576,175
$
175,644,709
$
Production and intermediate-term
292,585
704,734
1,603,387
105,157,267
Agribusiness
0
21,327
0
8,390,084
Rural infrastructure
0
0
0
0
Total
292,585
$
1,280,208
$
2,179,562
$
289,192,060
$
Allowance for Credit Losses
Recorded Investments in
Loans Outstanding
The Association maintains a separate reserve for losses on loan commitments, which is included as a separate line item in
liabilities on the Consolidated Statements of Financial Condition. The related provision for the reserve for loss on loan
commitments is included as part of the provision for loan losses and reserves on the Consolidated Statements of Comprehensive
Income. A summary of changes in the reserve follows:
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
38
2021
2020
2019
Reserve balance at beginning of year
62,883
$
52,127
$
41,938
$
Provision (reversal of provision)
(1,651)
10,756
10,189
Reserve balance at end of year
61,232
$
62,883
$
52,127
$
NOTE 4 – INVESTMENT IN COBANK
At December 31, 2021, the Association’s investment in CoBank is in the form of Class A stock with a par value of $100 per
share. The Association is required to own stock in CoBank to capitalize its direct loan balance and participation loans sold to
CoBank. The current requirement for capitalizing its direct loan from CoBank is 4.00% of the Association’s prior five-year average
direct loan balance. The requirement for capitalizing patronage-based participation loans sold to CoBank is 8.00% of the
Association’s prior ten-year average balance of such participations sold to CoBank. Under the current CoBank capital plan
applicable to such participations sold, patronage from CoBank related to these participations sold is paid 75% cash and 25%
Class A stock. The capital plan is evaluated annually by CoBank’s board of directors and management and is subject to change.
CoBank may require the holders of its equities to subscribe for such additional capital as may be needed to meet its capital
requirements for its joint and several liability under the Farm Credit Act and regulations. In making such a capital call, CoBank
shall take into account the financial condition of each such holder and such other considerations, as it deems appropriate. The
Association owned approximately .27% of the outstanding common stock of CoBank at December 31, 2021.
NOTE 5 – PREMISES AND EQUIPMENT
Premises and equipment consisted of the following as of December 31.
2021
2020
2019
Land
112,360
$
112,360
$
112,360
$
Buildings and improvements
1,796,315
1,796,315
1,796,315
Furniture and equipment
406,173
422,424
414,968
Automobiles
315,356
326,065
239,722
2,630,204
$
2,657,164
$
2,563,365
$
Less: accumulated depreciation
1,345,223
1,299,740
1,205,124
Total
1,284,981
$
1,357,424
$
1,358,241
$
As of year ends 2021, 2020 and 2019, the Association has no premise or equipment leases.
NOTE 6 – OTHER PROPERTY OWNED
There was no other property owned (property acquired through loan collection activities) in 2021, 2020 or 2019 and therefore
no impact on the Consolidated Statements of Comprehensive Income for these periods.
NOTE 7 – OTHER ASSETS AND OTHER LIABILITIES
A summary of other assets follows.
2021
2020
2019
Patronage receivable (CoBank)
1,352,000
$
1,042,000
$
944,000
$
Patronage receivable (Other)
13,837
7,601
6,067
Accounts receivable (Other)
10,920
8,200
10,400
Prepaid expenses
300
300
300
Prepaid taxes
50,419
120,317
13,040
Investments in FCS Institutions
156,052
152,575
139,046
Other
1
1
0
Total
1,583,529
$
1,330,994
$
1,112,853
$
A summary of other liabilities follows.
2021
2020 2019
Taxes payable
0$
0$ 337$
Accrued salaries and benefits
502,347
469,405 413,855
FCSIC insurance premium payable
350,000
197,000 183,000
Accounts payable
6,337
3,639 13,092
Other
0
2,911 0
Total
858,684$
672,955$ 610,284$
NOTE 8 – NOTES PAYABLE TO COBANK
The Association's indebtedness to CoBank represents borrowings by the Association to fund its loan portfolio. This indebtedness
is collateralized by a pledge of substantially all of the Association's assets to CoBank and is governed by a General Financing
Agreement (GFA), which provides a variable line-of-credit subject to the lesser of a line of credit limit or a borrowing base
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
39
calculation. At December 31, 2021, $278.0 million had been drawn against the credit limit of $295 million, compared to $257.8
million against the credit limit of $275 million at December 31, 2020 and $236.4 million drawn against the borrowing base of
$280.7 million at December 31, 2019. The GFA and promissory note are subject to periodic renewals in the normal course of
business. The GFA matures on May 31, 2023. Management expects renewal of the GFA at that time. The Association was in
compliance with the terms and conditions of the GFA as of December 31, 2021. Substantially all borrower loans are match-
funded with CoBank. Payments and disbursements are made on the note payable to CoBank on the same basis the Association
collects payments from and disburses on borrower loans. The interest rate may periodically be adjusted by CoBank based on
the terms and conditions of the GFA. The weighted average interest rate was 1.72%, 2.30% and 2.85% for the years ended
December 31, 2021, 2020 and 2019.
The Association has the opportunity to commit loanable funds with CoBank under a variety of programs at either fixed or variable
rates for specified timeframes. Participants in the program receive a credit on the committed funds balance classified as a
reduction of interest expense. These committed loanable funds are netted against the note payable to CoBank. There were no
committed loanable funds as of December 31, 2021, 2020 or 2019.
Under the Farm Credit Act, the Association is obligated to borrow only from CoBank, unless CoBank gives approval to borrow
elsewhere. We maintain a $500,000 line of credit with a commercial bank but did not borrow on that line of credit in 2021, 2020
or 2019. CoBank, consistent with FCA regulations, has established limitations on the Association's ability to borrow funds based
on specified factors or formulas relating primarily to credit quality and financial condition. At December 31, 2021, the
Association's notes payable are within the specified limitations.
NOTE 9 – SHAREHOLDERS' EQUITY
Descriptions of the Association's capitalization, protection mechanisms, regulatory capitalization requirements and restrictions,
and equities are provided below.
A. Capital Stock and Participation Certificates: In accordance with the Farm Credit Act, each borrower is required to invest
in the Association as a condition of borrowing. The borrower normally acquires ownership of the stock or participation
certificates at the time the loan is made, but usually does not make a cash investment. Generally, the aggregate par value
of the stock is added to the principal of the related loan obligation. The Association has a first lien on the stock or participation
certificates owned by its borrowers. At the discretion of the Board of Directors, retirement of such equities will generally be
at the lower of par or book value, and repayment of a loan does not automatically result in retirement of the corresponding
stock or participation certificates.
Capitalization bylaws allow stock requirements to range from the lesser of one thousand dollars or 2.00% of the amount of
the loan to 8.00% of the loan. The Board of Directors has the authority to change the minimum required stock level of a
shareholder as long as the change is within this range. The Association’s current stock requirement of the lesser of one
thousand dollars or 2.00% of the borrower's combined loan volume did not change during any of the years presented.
B. Regulatory Capitalization Requirements and Restrictions: The Farm Credit Administration sets minimum regulatory
capital requirements for Banks and Associations. Effective January 1, 2017, regulatory capital requirements for Banks and
Associations were adopted. These requirements replaced the core surplus and total surplus requirements with Common
Equity Tier 1, Tier 1 Capital and Total Capital (aka Total Regulatory Capital) risk-based capital ratio requirements. The new
requirements also replaced the existing net collateral ratio for System Banks with a Tier 1 Leverage ratio and an Unallocated
Retained Earnings (URE) and URE Equivalents Leverage ratio that are applicable to both the Banks and Associations. The
Permanent Capital Ratio continues to remain in effect; however, the risk-adjusted assets are calculated differently than in
the past. The following sets forth the regulatory capital ratio requirements and ratios at December 31:
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
40
Ratio Numerator Denominator 2021 2020 2019
Minimum
with
Buffer Minimum
Common Equity Tier
1 (CET1 Capital)
Unallocated retained earnings
(URE) and common cooperative
equities (qualifying capital stock
and allocated equity)
1
Risk-weighted
assets
15.56%
16.46% 16.93% 7.00% 4.50%
Tier 1 Capital
CET1 Capital and non-
cumulative perpetual preferred
stock
Risk-weighted
assets
15.56%
16.46% 16.93% 8.50% 6.00%
Total Regulatory
Capital
Tier 1 Capital, allowance for loan
losses
2
, other common
cooperative equities
3
, and term
preferred stock and subordinated
debt
4
Risk-weighted
assets
16.02%
16.98% 17.49% 10.50% 8.00%
Tier 1 Leverage
Tier 1 Capital (at least 1.5%
must be URE and URE
equivalents) Total assets
15.57%
16.20% 16.84% 5.00% 4.00%
Unallocated Retained
Earnings and URE
Equivalents (UREE
Leverage) URE and URE Equivalents Total assets
15.42%
16.05% 16.69% 1.50% 1.50%
Permanent Capital
Retained earnings, common
stock, non-cumulative perpetual
preferred stock and subordinated
debt subject to certain limits
Risk-weighted
assets
15.96%
17.21% 17.72% 7.00% 7.00%
1
Equities subject to a minimum redemption or revolvement period of 7 or more years
2
Capped at 1.25% of risk-weighted assets and inclusive of the reserve for unfunded commitments
3
Equities subject to a minimum redemption or revolvement period of 5 or more, but less than 7 years
4
Equities subject to a minimum redemption or revolvement period of 5 or more years
If the capital ratios fall below the total requirements, including the buffer amounts, capital distributions (equity redemptions,
dividends and patronage) and discretionary senior executive bonuses are restricted or prohibited without prior FCA
approval. The Association ratios meet FCA requirements for all years presented. The Association is unaware of any reason
it might be under any regulatory restrictions to retire stock or distribute earnings during the fiscal year subsequent to the
fiscal year just ended.
The Association has a formal written Capital Adequacy Plan which has the following objectives:
• Maintain adequate Association capital to meet all regulatory and System requirements;
• Provide protection against risks inherent in the Association's operations;
• Provide sufficient capital for future asset growth;
• Allow the Association to operate profitably over the long-term;
• Maintain a competitive market position; and
• Increase Association surplus, thereby reducing the reliance on borrower stock for capitalization needs.
Further information regarding the Capital Adequacy Plan is included under the heading of Capital Resources in the
Management's Discussion and Analysis of Financial Condition and Results of Operations.
An existing regulation empowers FCA to direct a transfer of funds or equities by one or more System institutions to another
System institution under specified circumstances. This regulation has not been utilized to date. The Association has not
been called upon to initiate any transfers and is not aware of any proposed action under this regulation.
C. Description of Equities: Each owner of class C capital stock is entitled to a single vote. Other classes of borrower equities
do not provide voting rights to their owners. Voting stock may not be transferred to another person unless such person is
eligible to hold voting stock.
At December 31, 2021, the Association had the following classes of equity outstanding, all at par value of $5.00 per
share/unit, and all at risk.
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
41
Class Number of Shares Voting Protected
A - common stock 0 no no
C - common stock 98,133 yes no
F - participation certificates 2,720 no no
Although the Association is authorized by its bylaws to issue other classes of stock as listed below, no shares are
outstanding. The voting rights, duties, and liabilities of such classes of stock are similar to those discussed above.
Class Number of Shares Voting Protected
C - preferred stock 0 no no
D - stock 0 no yes
E - participation certificates 0 no yes
Assistance preferred stock 0 no no
As discussed above in this note under the section titled Regulatory Capitalizations Requirements and Restrictions, if capital
ratios fall below the total requirements, equity redemptions are prohibited without FCA approval. The Association is currently
not prohibited from retiring capital stock and presently foresees no realistic situation why retirement would be prohibited in
the future. All distributions to the holders of any class of stock or participation certificate shall be made pro-rata in proportion
to the number of shares or units of such class of stock or participation certificate held.
Losses that result in impairment of capital stock and participation certificates will be allocated to the classes of equity
described above as follows: First, to the holders of class C preferred stock until an amount equal to the aggregate par value
of all shares of said Stock then issued and outstanding has been distributed to such holders; Second, to the holders of class
A common stock, class C common stock, Participation Certificates, and Class D Stock, pro-rata, in proportion to the number
of shares or units of each such class of Stock then issued and outstanding, until an amount equal to the aggregate par or
face value of all such shares or units has been distributed to such holders; Third, to the holders of allocated surplus
evidenced by qualified written notices of allocation, in the order of year of issuance and pro rata by year of issuance, until
the total amount of such allocated surplus has been distributed; Fourth, to the holders of allocated surplus evidenced by
nonqualified written notices of allocation, in the order of year of issuance and pro rata by year of issuance, until the total
amount of such allocated surplus has been distributed; and Fifth, any remaining assets of the Association after such
distributions shall be distributed to past and present Patrons on a patronage basis, to the extent practical. Upon liquidation
of the Association, any assets remaining after the settlement of all liabilities will be distributed first to redeem the par value
of equities. Any assets remaining after such distribution will be distributed to past and present Patrons on a patronage basis,
to the extent practical.
D. Patronage and/or Dividends: Consistent with the Association's bylaws and Subchapter T of the Internal Revenue Code,
the Association adopted a patronage program beginning in 2007. At each year end, the Board of Directors evaluates
whether to retain the Association's net income to strengthen its capital position or to distribute a portion of the net income
to customers by declaring a qualified/cash patronage refund. For 2021, the Association allocated 98.7% of its patronage
sourced net income to its patrons. That portion of patronage-sourced net income not distributed in cash is also allocated to
patrons. Allocated, but not distributed patronage refunds, are included in the unallocated retained earnings account. Such
allocations may provide a future basis for a distribution of capital. In accordance with Internal Revenue Service
requirements, each customer is sent a nonqualified written notice of allocation for patronage sourced net income which is
not distributed as cash. A portion of patronage sourced income may be ineligible for cash distribution or noncash allocation
to patrons in accordance with the terms of the patronage program and such amounts are also added to unallocated retained
earnings. The Board of Directors considers unallocated retained earnings from both patronage sourced and non-patronage
sourced earnings to be permanently invested in the Association. As such, there is no current plan to revolve or redeem
these amounts. No express or implied right to have such capital retired or revolved at any time is granted.
NOTE 10 – PATRONAGE DISTRIBUTIONS FROM FARM CREDIT INSTITUTIONS.
Patronage income recognized from Farm Credit institutions to the Association follows for the year ended December 31.
2021
2020
2019
CoBank
1,351,115
$
1,042,299
$
944,285
$
Other
102,161
144,914
100,177
Total
1,453,276
$
1,187,213
$
1,044,462
$
Patronage distributed from CoBank was in cash and stock. The amount earned in 2021 was accrued and will be paid by CoBank
in March 2022. The amount earned and accrued in 2020 was paid by CoBank in March of 2021. The amount earned in 2019
was paid by CoBank in March 2020. Most patronage from other Farm Credit institutions was accrued and paid in cash in the
year it was declared, although a small amount was accrued in the year shown and was or will be paid in cash in the following
year.
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
42
NOTE 11 – INCOME TAXES
The provision for/(benefit from) income taxes follows for the year ended December 31.
2021
2020
2019
Current federal tax provision
51,602
$
53,466
$
137,891
$
Current state tax provision
18,296
15,257
48,837
Deferred federal tax provision(benefit)
71,000
50,000
(67,000)
Deferred state tax provision(benefit)
26,000
19,000
(25,000)
Provision for income taxes
166,898
$
137,723
$
94,728
$
The provision for/(benefit from) income taxes differs from the amount of income tax determined by applying the applicable U.S.
statutory federal income tax rate to pretax income as follows for the year ended December 31.
2021
2020
2019
Federal tax at statutory rate
1,328,188
$
1,212,826
$
1,039,467
$
State tax, net
86,866
54,463
38,333
Effect of non-taxable FLCA subsidiary
(994,744)
(997,159)
(901,765)
Patronage distributions to borrowers
(200,463)
(103,390)
(80,240)
Other, net
(52,949)
(29,017)
(1,067)
Provision for income taxes
166,898
$
137,723
$
94,728
$
Deferred tax assets and liabilities result from the following as of December 31.
2021
2020
2019
Deferred income tax assets
Allowance for loan losses
260,000
$
279,000
$
284,000
$
Nonaccrual loan interest
8,000
39,000
37,000
Pension expense
16,000
19,000
20,000
Gross deferred tax asset
284,000
$
337,000
$
341,000
$
Less: valuation allowance
(33,000)
(36,000)
(37,000)
Gross def. tax assets, net valuation allowance
251,000
$
301,000
$
304,000
$
Deferred income tax liabilities
Pensions
(201,000)
(165,000)
(93,000)
Depreciation
(5,000)
(11,000)
(15,000)
Other
(110,000)
(93,000)
(95,000)
Gross deferred tax liability
(316,000)
$
(269,000)
$
(203,000)
$
Net deferred tax asset (liability)
(65,000)
$
32,000
$
101,000
$
The calculation of deferred tax assets and liabilities involves various management estimates and assumptions as to future
taxable earnings, including the amount of non-patronage income and patronage income retained. The expected future tax rates
are based upon enacted tax laws. The Association recorded a valuation allowance of $33,000 during 2021, $36,000 during 2020
and $37,000 during 2019. The Association will continue to evaluate the likely realization of these deferred tax assets and adjust
the valuation allowance accordingly.
The Association has no uncertain tax positions to be recognized as of December 31, 2021, 2020 or 2019. The Association
recognizes interest and penalties related to unrecognized tax benefits as an adjustment to income tax expense. The Association
accounts for income taxes in accordance with ASC 740, which provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. ASC 740 requires the evaluation of tax positions
taken or expected to be taken in the course of preparing the Association’s tax returns to determine whether the tax positions are
more-likely-than-not of being sustained upon examination by the applicable tax authority, based on the technical merits of the
tax position, and then measuring the tax benefit that is more-likely-than-not to be realized. Tax positions not deemed to meet
the more-likely-than-not threshold would be recorded as a tax expense in the current reporting period. The tax years that remain
open for federal and major state income tax jurisdictions are 2018 and forward.
NOTE 12 – EMPLOYEE BENEFIT PLANS
Certain former employees participate in the Eleventh Retirement Plan, a multi-employer defined benefit retirement plan. The
Department of Labor has determined the plan to be a governmental plan; therefore, the plan is not subject to the provisions of
the Employee Retirement Income Security Act of 1974, as amended (ERISA). As the plan is not subject to ERISA, the plan’s
benefits are not insured by the Pension Benefit Guaranty Corporation. Accordingly, the amount of accumulated benefits that
participants would receive in the event of the plan’s termination is contingent on the sufficiency of the plan’s net assets to provide
benefits at that time. This Plan is noncontributory and covers eligible employees. The assets, liabilities, and costs of the plan are
not segregated by participating entities. As such, plan assets are available for any of the participating employers’ retirees at any
point in time. Additionally, if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
43
borne by the remaining participating employers. Further, if the Association chooses to stop participating in the plan, it may be
required to pay an amount based on the underfunded status of the plan, referred to as a withdrawal liability. Because of the
multi-employer nature of the plan, an individual employer is not able to unilaterally change the provisions of the plan. If an
employee moves to another employer within the same plan, the employee benefits under the plan transfer. Benefits are based
on salary and years of service. There is no collective bargaining agreement in place as part of this plan.
The defined benefit pension plan reflects an unfunded liability totaling $7.8 million at December 31, 2021. The pension benefits
funding status reflects the net of the fair value of the plan assets and the projected benefit obligation at the date of these
consolidated financial statements. The projected benefit obligation is the actuarial present value of all benefits attributed by the
pension benefit formula to employee service rendered prior to the measurement date based on assumed future compensation
levels. The projected benefit obligation of the plan was $298.8 million at December 31, 2021, $318.4 million at December 31,
2020 and $299.3 million at December 31, 2019. The fair value of the plan assets was $291.1 million at December 31, 2021,
$271.7 million at December 31, 2020 and $228.4 million at December 31, 2019. The amount of the pension benefits funding
status is subject to many variables including performance of plan assets and interest rate levels. Therefore, changes in
assumptions could significantly affect these estimates.
Costs are determined for each individual employer based on costs directly related to its current employees as well as an
allocation of the remaining costs based proportionately on the estimated projected liability of the employer under this plan. The
Association recognizes its proportional share of expense and contributes a proportional share of funding. Total plan expense for
participating employers was $1.3 million in 2021, $1.3 million in 2020 and $3.6 million in 2019. The Association’s allocated share
of plan expenses included in salaries and employee benefits was ($54,578) in 2021, ($8,705) in 2020 and $48,164 in 2019.
Participating employers contributed $23.0 million in 2021, $23.0 million in 2020 and $16.0 million in 2019 to the plan. The
Association’s allocated share of these pension contributions was $389,390 in 2021, $417,450 in 2020 and $215,040 in 2019.
While the plan is a governmental plan and is not subject to minimum funding requirements, the employers contribute amounts
necessary on an actuarial basis to provide the plan with sufficient assets to meet the benefits to be paid to participants. The
amount of the total employer contributions expected to be paid into the pension plan during 2022 is $23.0 million. The
Association's allocated share of these pension contributions is expected to be $396,750. The amount ultimately to be contributed
and the amount ultimately recognized as expense as well as the timing of those contributions and expenses are subject to many
variables including performance of plan assets and interest rate levels. These variables could result in actual contributions and
expenses being greater than or less than anticipated.
Postretirement benefits other than pensions are also provided through the Farm Credit Foundations Retiree Medical and Retiree
Life Plans to eligible current and retired employees of the Association. Benefits provided are determined on a graduated scale,
based on years of service. The anticipated costs of these benefits are accrued during the period of the employee's active service.
Postretirement benefits expense (primarily health care benefits and life insurance) included in salaries and employee benefits
were $3,871 for 2021, $2,681 for 2020 and $3,052 for 2019. These expenses are equal to the Association's cash contributions
for each year.
The Association also participates in the Farm Credit Foundations Defined Contribution/401(k) Plan (Contribution Plan). The
Contribution Plan has two components. Employees who do not participate in the Pension Plan may receive benefits through the
Employer Contribution portion of the Contribution Plan. In this plan, the Association provides a monthly contribution based on a
defined percentage of the employee's salary. Employees may also participate in a Salary Deferral Plan governed by Section
401(k) of the Internal Revenue Code. The Association matches a certain percentage of employee contributions. Employer
contributions to the Contribution Plan and Salary Deferral Plan were $231,377 for 2021, $212,674 for 2020 and $190,300 for
2019.
NOTE 13 – RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Association enters into loan transactions with officers and directors of the Association,
their immediate families and other organizations with which such persons may be associated. Such loans are subject to special
approval requirements contained in the FCA regulations and are made on the same terms, including interest rates, amortization
schedules and collateral, as those prevailing at the time for comparable transactions with unrelated borrowers.
The Association has a policy that loans to directors and senior officers must be maintained at an Acceptable or Other Assets
Especially Mentioned (OAEM) credit classification. If the loan falls below the OAEM credit classification, corrective action must
be taken and the loan brought back to either Acceptable or OAEM within a year. If not, the director or senior officer must resign
from the Board or employment. Loan information to related parties for the years ended December 31 is shown below.
2021
2020
2019
Beginning Balance
16,284,123
$
17,210,337
$
16,834,124
$
Advances
11,493,207
13,222,116
13,200,709
Repayments
(12,896,556)
(14,148,330)
(12,824,496)
Ending Balance
14,880,774
$
16,284,123
$
17,210,337
$
Participations Sold
(4,229,092)
(4,184,127)
(5,620,588)
Net Ending Balance
10,651,682
$
12,099,996
$
11,589,749
$
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
44
In the opinion of management, none of these loans outstanding to officers and directors at December 31, 2021, involved more
than a normal risk of collectability.
The Association also has business relationships with other System entities for insurance, technology and benefit services. The
Association paid $9,720 in 2021, $9,720 in 2020 and $9,720 in 2019 to AgVantis for technology services. The Association paid
$15,480 in 2021, $15,498 in 2020 and $15,519 in 2019 to CoBank for operational services. The Association paid $79,607 in
2021, $71,365 in 2020 and $66,412 in 2019 to Farm Credit Foundations for human resource services.
NOTE 14 – REGULATORY ENFORCEMENT MATTERS
There are no regulatory enforcement actions in effect for the Association.
NOTE 15 – COMMITMENTS AND CONTINGENCIES
The Association has various commitments outstanding and contingent liabilities. With regard to contingent liabilities, there are
no actions pending against the Association in which claims for monetary damages are asserted.
The Association may participate in financial instruments with off-balance sheet risk to satisfy the financing needs of its borrowers
and to manage their exposure to interest-rate risk. These financial instruments include commitments to extend credit. The
instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated financial
statements. Commitments to extend credit are agreements to lend to a borrower as long as there is not a violation of any
condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may
require payment of a fee by the borrower. At December 31, commitments to extend credit outstanding were $77.7 million in
2021, $75.0 million in 2020 and $65.6 million in 2019.
Since many of these commitments are expected to expire without being drawn upon, the total commitments do not necessarily
represent future cash requirements. However, these credit-related financial instruments have off-balance-sheet credit risk
because their amounts are not reflected on the Consolidated Statements of Financial Condition until funded or drawn upon. The
credit risk associated with issuing commitments and letters of credit is substantially the same as that involved in extending loans
to borrowers and management applies the same credit policies to these commitments. Upon fully funding a commitment, the
credit risk amounts are equal to the contract amounts, assuming that borrowers fail completely to meet their obligations and the
collateral or other security is of no value. The amount of collateral obtained, if deemed necessary upon extension of credit, is
based on management's credit evaluation of the borrower.
The Association maintains an unsecured line of credit with its depository bank for $500,000 as part of its depository relationship
and as a secondary source of local funds. This line of credit was not used in 2021, 2020 or 2019.
NOTE 16 – QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly results of operations for the years ended December 31 follow (dollars in thousands).
2021
First
Third
Fourth
Total
Net Interest Income
2,207
$
2,181
$
2,279
$
2,288
$
8,955
$
(Provision for) or Reversal of losses
134
(65)
18
24
111
Noninterest expense, net
(708)
(529)
(829)
(842)
(2,908)
Net income/(loss)
1,633
$
1,587
$
1,468
$
1,470
$
6,158
$
2020
First
Second
Third
Fourth
Total
Net Interest Income
1,896
$
1,951
$
2,131
$
2,195
$
8,173
$
(Provision for) or Reversal of losses
12
(35)
(15)
3
(35)
Noninterest expense, net
(732)
(459)
(768)
(541)
(2,500)
Net income/(loss)
1,176
$
1,457
$
1,348
$
1,657
$
5,638
$
2019
First
Second
Third
Fourth
Total
Net Interest Income
1,978
$
2,024
$
2,139
$
2,047
$
8,188
$
(Provision for) or Reversal of losses
(11)
(114)
(252)
(13)
(390)
Noninterest expense, net
(739)
(721)
(711)
(772)
(2,943)
Net income/(loss)
1,228
$
1,189
$
1,176
$
1,262
$
4,855
$
NOTE 17 – PATRONAGE PROGRAM
Under Section 840 of the Association’s bylaws, the Board has adopted an obligating resolution to pay patronage to patrons with
voting stock or nonvoting participation certificates with eligible patronage business on the basis of average daily principal or
contractual balance of each Patronage Transaction (account) during the period for which the distribution is calculated. The
distribution shall not exceed the net income that was earned on the Patronage Transaction, or if the Patronage Transaction is
participated, shall not exceed the net income that would have been earned if the Patronage Transaction was not participated.
Patronage is solely based on current year eligibility, and in no event will any patron whose account in a prior year was ineligible
Idaho AgCredit
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
45
receive any patronage amount for a prior period once the account returns to eligible patronage status. “Patronage Business”
encompasses the following transactions (each a “Patronage Transaction”): (i) loan accounts originated by the Association with
an outstanding principal balance during the year and (ii) loan account participations acquired by the Association under a
participation contract that specifically provides for the payment of patronage. Net earnings from transactions that are not
Patronage Business shall constitute non-patronage earnings and shall not be available for distribution. Patronage Business shall
not include accounts specified in advance as not eligible for patronage due to special pricing and/or risk factors and for which
the borrower has waived patronage, sales contracts, fee-based services, related services and insurance sales, and secondary
market activities.
Patronage distributions may be in the form of cash, qualified written notices of allocation and/or nonqualified written notices of
allocation. Patronage paid in cash will not include any amount which the Board has determined is required to be retained in
accordance with meeting capital adequacy requirements necessary for sound financial management and future planning, and
any retained earnings may be either allocated or unallocated to patrons.
NOTE 18 – SUBSEQUENT EVENTS
The Audit Committee approved the report on February 16, 2022 subject to management's review of subsequent events through
the report release date. Association management has evaluated subsequent events through February16, 2022, which is the
date the financial statements were available to be issued, and no material subsequent events were identified.
Idaho AgCredit
DISCLOSURE INFORMATION REQUIRED BY FARM CREDIT ADMINISTRATION REGULATIONS
46
Disclosure Information Section
This section is required as per Farm Credit Administration requirements. See Independent Auditor’s Report with respect to
supplemental information.
Description of Business
The Association’s territory served, persons eligible to borrow, types of lending activities engaged in and financial services offered
and related Farm Credit organizations are described in Note 1, Organization and Operations. The description of significant
developments that had or could have a material impact on earnings or interest rates to borrowers, acquisitions or dispositions
of material assets, material changes in the manner of conducting the business, seasonal characteristics and concentrations of
assets, if any, are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Unincorporated Business Entities
The Association did not have any Unincorporated Business Entities for the years shown in the consolidated financial statements.
Description of Property
The Association has the following properties:
Description Location Ownership
Blackfoot Branch and Headquarters 188 W Judicial, Blackfoot, ID 83221 Owned
American Falls Branch 2883 Hwy 39, American Falls, ID 83211 Owned
Rexburg Branch 1586 N 2 E, Rexburg, ID 83440 Owned
Twin Falls Loan Office 1096 Eastland Drive N, Suite 100A, Twin Falls, ID 83301 Owned
Enforcement Actions and Legal Proceedings
The status of any regulatory enforcement actions is described in Note 14, Regulatory Enforcement Matters, and the status of
legal actions pending against the Association are described in Note 15, Commitments and Contingencies.
Description of Capital Structure
The Association's capital structure is described in Note 9, Shareholders' Equity.
Description of Liabilities
The Association's liabilities are described in Note 7, Other Assets and Other Liabilities, Note 8, Notes Payable to CoBank and
Note 15, Commitments and Contingencies.
Selected Financial Data
Selected financial data for the five years ended December 31, 2021 is described in the Five-Year Summary of Selected
Consolidated Financial Data.
Management's Discussion and Analysis of Financial Condition and Results of Operations
The Management's Discussion and Analysis of Financial Condition and Results of Operations section provides required
disclosures about the Association's consolidated financial condition and operations.
Governance
Board of Directors
We are governed by a seven member board that provides direction and oversees our management. Of these directors, five are
elected by the shareholders and two are appointed by the elected directors. Our Board of Directors represents the interests of
our shareholders. The Board of Directors meets regularly to perform the following functions, among others:
• selects, evaluates and compensates the chief executive officer;
• approves the strategic plan, capital plan, financial plan and the annual operating budget;
• oversees the lending operations;
• directs management on significant issues; and
• oversees the financial reporting process, communications with shareholders and our legal and regulatory compliance.
Director Independence
All directors must exercise sound judgment in deciding matters in our interest. All our directors are independent from the
perspective that none of our management or staff serve as Board members. However, we are a financial services cooperative,
and the Farm Credit Act and FCA Regulations require our elected directors to have a loan relationship with us.
Directors who are borrowers have a vested interest in ensuring our Association remains strong and successful. However, our
borrowing relationship could be viewed as having the potential to compromise the independence of a director. For this reason,
the Board has established independence criteria to ensure that a loan relationship does not compromise the independence of
our Board. Annually, in conjunction with our independence analysis and reporting on our loans to directors, each director
provides financial information and any other documentation and/or assertions needed for the Board to determine the
independence of each Board member.
Idaho AgCredit
DISCLOSURE INFORMATION REQUIRED BY FARM CREDIT ADMINISTRATION REGULATIONS
47
Audit Committee
The Audit Committee reports to the Board of Directors. The Audit Committee is composed of all members of the Board. During
2021, ten meetings were held. The Audit Committee responsibilities generally include, but are not limited to:
• the oversight of the financial reporting risk and the accuracy of the quarterly and annual shareholder reports;
• the oversight of the system of internal controls related to the preparation of quarterly and annual shareholder reports;
• the review and assessment of the impact of accounting and auditing developments on the consolidated financial
statements;
• the establishment and maintenance of procedures for the receipt, retention and treatment of confidential and
anonymous submission of concerns regarding accounting, internal accounting controls or auditing matters; and
• oversight of the Association's internal audit program, the independence of the outside auditors, the adequacy of the
Association's system of internal controls and procedures, and the adequacy of management's action with respect to
recommendations arising from those auditing services.
Compensation Committee
The Compensation Committee is responsible for the oversight of employee and director compensation. The Compensation
Committee is composed of all members of the Board. The Committee annually reviews, evaluates and approves the
compensation policies, programs and plans for senior officers and employees including benefits programs and applicable
compensation disclosures.
Other Governance
The Board has monitored the requirements of public companies under the Sarbanes-Oxley Act. While we are not subject to the
requirements of this law, we are striving to implement steps to strengthen governance and financial reporting. We strive to
maintain strong governance and financial reporting through the following actions:
• a system for the receipt and treatment of whistleblower complaints;
• a code of ethics for our President/CEO, Chief Financial Officer and Chief Credit Officer;
• open lines of communication between the independent auditors, management, and the Audit Committee;
• “plain English” disclosures;
• oversight of management's review of the internal controls over financial reporting;
• officer certification of accuracy and completeness of the consolidated financial statements; and
• information disclosure through our website.
Directors and Senior Officers
The following represents certain information regarding the directors and senior officers of the reporting entity.
Senior and Other Officers
Marc Fonnesbeck, President and Chief Executive Officer since June 16, 2015 and also Chief Credit Officer until January 1,
2017. Previously served as Senior Vice President and Chief Credit Officer since January 1, 2012, Vice President and Branch
Manager since June 1, 2006, Assistant Vice President and Branch Manager since April 1998, and prior to that as Branch
Manager. He has been employed by the Association since January 1994.
Jim Chase, Secretary and Chief Financial Officer since May 16, 2006. Previously served as Assistant Vice President and Data
Systems Administrator since January 2005, and prior to that as Assistant Vice President and Assistant Branch Manager. He has
been employed by the Association since January 1991.
Adam C. Jensen, Executive Vice President and Chief Credit Officer since January 1, 2021. Previously served as Vice President
and Chief Credit Officer since January 1, 2017, Vice President since January 1, 2015 and Assistant Vice President and Branch
Manager since March 15, 2007. He has been employed by the Association since March 2007.
Kirk Powell, Vice President of Capital Markets since January 1, 2021. Previously served as Assistant Vice President and Branch
Manager since March 1, 2012. He has been employed by the Association since October 1998 and was previously employed by
the Association from 1990 to 1992.
Katie Wallace, Vice President of Human Resources since January 1, 2021. Previously served as Assistant Vice President and
Branch Manager since January 1, 2019, Branch Manager since December 1, 2014, Assistant Branch Manager since January 1,
2014, as Loan Officer since June 1, 2007 and as Operations Assistant since March 16, 2006. She has been employed by the
Association since March 2006.
Dana Wood, Vice President of Operations since January 1, 2021. Previously served as Assistant Vice President and Branch
Manager since January 1, 2019, Branch Manager since January 1, 2015, and Loan Officer since July 14, 2008. He has been
employed by the Association since July 2008.
Ryan Funk, Vice President and Chief Information Officer since January 1, 2021. Previously served as Chief Information Officer
since July 1, 2016 and IT Administrator and Programmer since June 2003. He has been employed by the Association since
June 2003.
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DISCLOSURE INFORMATION REQUIRED BY FARM CREDIT ADMINISTRATION REGULATIONS
48
Board of Directors
Ken Black, Chairman, Burley, Idaho. Elected term expires in 2022. Engaged in ranching and cattle feeding. He has been an
Association member since 1993 and served as a board member since March 2013. He previously served as a board member
from 1999 to 2011. Business interests in which he serves on the board of directors or as a senior officer include: Black Livestock
LLC, (Manager and member) a farming and ranching entity; West Cassia Soil Conservation District Committee (director).
Twain S. Hayden, Vice Chairman, Arbon, Idaho. Also serves as Chairman of the Compensation Committee and as IT
Coordinator. Elected term expires in 2022. Engaged in farming. He has been an Association member since 1982 and a board
member since March 3, 2004. Business interests in which he serves on the board of directors or as a senior officer include: a
partner in Mid Crystal Farms, a Partnership whose principal business is farming.
Scott R. Giltner, Jerome, Idaho. Appointed term expires in 2021. Engaged in dairy farming and trucking. He has been an
Association member since 1996 and a board member since November 14, 2007. Business interests in which he serves on the
board of directors or as a senior officer include: Giltner Trucking, LLC, (Secretary, Treasurer and member) a short haul trucking
company; Giltner Milk Transportation, LLC (President and member) a long haul trucking company; GMT Logistics, LLC,
(President and member) a truck brokerage company; C7 Farms, LLC, (member) dairy and farming; Pittock & Sons Dairy, LLC,
(member) dairy and farming; and CJATZ Leasing, LLC, (President and member) a truck leasing company.
Ryan Mathews, Blackfoot, Idaho. Also serves as Vice Chairman of the Audit Committee and as the board’s designated financial
expert. Appointed term expires in 2024. He has been a board member since March 17, 2021. He is a partner and director of
assurance services for the accounting firm of Cooper Norman and is not involved in agricultural production. He has a bachelor’s
degree in accounting and a Master of Accountancy degree.
Wendy Pratt, Blackfoot, Idaho. Also serves as Training Coordinator. Elected term expires in 2023. Engaged in farming and
ranching. Has been an Association member since 1999 and a board member since March 15, 2017. She serves as
Secretary/Treasurer of the Eastern Idaho Grazing Association, Idaho Soil and Water Conservation Commission (Commissioner),
and Central Bingham Soil Conservation District (supervisor).
Bruce Ricks, Sugar City, Idaho. Also serves as Vice Chairman of the Compensation Committee. Elected term expires in 2024.
Engaged in farming. He has been an Association member since 1982 and a board member since March 4, 2015. Business
interests in which he services on the board of directors or as a senior officer include: BR Ricks Farms, Inc.; Teton Island Canal
Board (member) and North Fork Protection Association (member).
Dennis W. Snarr, Idaho Falls, Idaho. Also serves as Chairman of the Audit Committee. Elected term expires in 2023. Engaged
in farming and ranching. He has been an Association member since 1980 and a board member since March 9, 2011. Business
interests in which he serves on the board of directors or as a senior officer include: Dean Snarr & Son, LLC (Manager and
member) a farm operating entity; Snarr Family Management, LLC, (Manager and member), a real estate holding company; and
Gold Emblem Produce, Inc. (director).
Mike Virtue, Blackfoot, Idaho. Served on the board as the Audit Committee Chairman and designated financial expert from
March 12, 2009 until March 17, 2021. Served as mayor of Blackfoot from 2006 until January 2014. Previously held auditing and
accounting positions with Idaho State University and Idaho National Laboratory contractors.
Director Compensation
Association board members were paid $450 per day for board meetings and certain official acts and were paid between $100
and $200 per day for certain meetings, activities and phone calls as compensation for services rendered, which totaled $36,800
in 2021. In addition to cash compensation, directors are reimbursed for direct travel and training expenses incurred. Aggregated
reimbursements to directors for travel, subsistence and other related expenses were $16,175 in 2021, $6,052 in 2020 and
$16,983 in 2019. De minimis amounts or gifts to directors, if any, are not included in compensation. A copy of the expense
reimbursement policy is available to shareholders upon written request. Honoraria for each director in 2021 was as follows:
Idaho AgCredit
Board Member
Days Served at
Board Meetings
Days Served at
Other Official Acts
Days served at
Other Acts
Total
Honoraria
Ken Black, Chairman
11
1
3
5,900
$
Twain S. Hayden, Vice Chairman
10
0
2
4,900
$
Scott Giltner
10
0
1
4,700
$
Ryan Mathews
7
0
0
3,150
$
Wendy Pratt
9
0
6
5,150
$
Bruce Ricks
10
0
1
4,700
$
Dennis W. Snarr
11
0
9
6,750
$
Mike Virtue
3
0
1
1,550
$
Total
71
1
23
36,800
$
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DISCLOSURE INFORMATION REQUIRED BY FARM CREDIT ADMINISTRATION REGULATIONS
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Transactions with Senior Officers and Directors and/or their Immediate Families
There were no transactions other than loans to directors or their immediate families and no transactions with senior officers other
than employment. The reporting entity's policies on loans to and transactions with its officers and directors, required to be
disclosed in this section, are incorporated herein by reference from the consolidated financial statements, Note 13, Related Party
Transactions.
Senior Officer Compensation
The Compensation Committee of the board of directors follows a comprehensive compensation philosophy where the objectives
of the Compensation Plans (Plans) are to:
• Provide market based compensation through base salary, and annual and long-term incentive components that will allow
the Association to attract, motivate and retain superior executive talent;
• Place a portion of total compensation for the executive at risk and contingent upon the Association remaining sound
financially and meeting established performance goals; and
• Ensure that long-term financial stability of the Association is emphasized over short-term results and decisions.
The Plans were designed to:
• Reward successful business year results through an Annual Incentive Plan;
• Foster long-term financial stability through competitive benefits and incentives; and
• Significantly contribute to the retention of the CEO and other Senior Officers.
The Compensation Committee annually reviews market information related to the level and mix of salaries, benefits, and
incentive plans for the CEO and other Senior Officers. The CEO participated in an Executive Incentive Plan, which included an
Annual Incentive Plan component. The Compensation Committee considers an Executive Incentive Plan on an annual basis.
Due to the cooperative business structure of the Association, the Plans do not contain stock-based compensation components.
Compensation earned by our President and CEO and aggregate compensation with other senior officers and highly
compensated employees for the years ended December 31, 2021 is disclosed in the accompanying table. Our current Board
policy regarding reimbursements for travel, subsistence and other related expenses states that all employees, including senior
officers, shall be reimbursed for actual reasonable travel and related expenses that are necessary and that support our business
interests. A copy of our policy is available to shareholders upon request.
Summary Compensation Table
1
(dollars in thousands)
No. in
Group
2
Year
Salary
3
Change in
Pension
Value
4
Deferred/
Perquisites
5
Other
6
Total
President and CEO Marc Fonnesbeck
1 2021 177$ 31$ 0$ 0$ 8$ 23$ 239$
1 2020 170 35 0 0 8 21 234
1 2018 158 23 0 0 6 18 205
5 Aggregate senior officers and highly compensated employees (including CEO)
5
2021
692
$
123
$
0
$
0
$
34
79
928
$
5
2020
666
116
0
0
26
73
881
5
2018
615
79
0
0
24
64
745
Annual Incentive
Compensation
3
Long-Term
Incentive
Compensation
3
1.
Disclosure of the total compensation paid during 2021 to any designated senior officer or highly compensated employee is
available to our shareholders upon request. Compensation amounts do not include earnings on nonqualified deferred
compensation, as such earnings are not considered above-market or preferential.
2.
The senior officers and highly compensated employees included above are those officers defined by FCA regulations Section
619.9310 and Section 620.6. The Association has three senior officers including the President.
3.
Salary represents the base salary amounts including any base salary increases during the year. Annual incentive
compensation amounts represent incentive and vacation accrual payout amounts earned in the reported fiscal year, some of
which are paid during the current fiscal year and some of which are paid in the first quarter of the subsequent year. The
Association did not have a Long-Term Incentive for any of the years shown. All salary and incentive amounts include all amounts
earned during the year, regardless of whether a portion of such compensation was paid in the following year or was deferred
pursuant to the Farm Credit Foundations Defined Contribution/401(k) Plan (401(k) Plan).
In addition to base salary, substantially all employees and executives could earn additional compensation under the
Association's incentive plans, which are plans tied to the overall business performance and to the employee’s performance. The
incentive plans were based on the fiscal year and were designed to motivate employees and executives to exceed annual
performance targets established by the Board of Directors. Performance targets were established for the following factors:
Earnings, Operating Efficiency, Asset Quality, and Service Quality. In addition, the plans included provisions for the Board to
Idaho AgCredit
DISCLOSURE INFORMATION REQUIRED BY FARM CREDIT ADMINISTRATION REGULATIONS
50
evaluate the Association’s performance in other important but subjective areas of operations through a discretionary rating
component.
4.
There were no active participants in the Pension Plan at the end of 2021, 2020 or 2019.
5.
The Deferred/Perquisites Compensation amounts are primarily composed of certain travel benefits, wellness benefits,
company contributions to benefit plans, taxable group term life insurance premiums, and long-term disability premiums.
6
.
Other amounts include the Association’s base and matching contributions to the 401(k) Plan.
Some amounts have been rounded up or down so that the total amounts are accurate.
Pension Benefits, Pension Plan Overview and Valuation
There were no active employees in the 11
th
Farm Credit District Employee’s Retirement Plan (Pension Plan) in 2021, 2020 or
2019. The plan for former employees is described in Note 12, Employee Benefit Plans.
401(k) Plan
Substantially all employees participate in the 401(k) Plan. The Association's 401(k) Plan is a defined contribution plan available
to all employees on the same basis by eligible retirement plan, as described in Note 12, Employee Benefit Plans. Employees
eligible under the defined contribution plan received defined contributions up to 9% with a 6% or more employee contribution.
Employees vest in Association contributions at a rate of 25% per year until 100% vested for current and future Association
contributions. Employees are always 100% vested in their own contributions.
Incentive Compensation Programs
The general employee incentive plan included all employees hired before April 1, 2021 (except as described below) and still
employed as of the end of 2021 except for the CEO. The first part of this plan included a 5% of salary incentive for making the
ROA goal of 1.25%, maintaining a Contractual Interbank Performance Agreement (CIPA) score high enough to avoid cost of
funds penalties, and maintaining credit quality of at least 90% Acceptable and OAEM. Employees hired after April 1, 2021 were
eligible for this first incentive on a pro-rata basis. Additionally, this plan provided for an incentive pool which is paid out 25%
equally among all employees and 75% pro-rata based on salary paid during the year. That incentive pool included a percentage
for an overall increase in average volume, all new mortgage loans and all new commercial loans to borrowers who had not
borrowed during the preceding plan year. Payout of this additional incentive also had to meet the same plan requirements as
the 5% incentive payout. The maximum combined incentive under these plans is capped at 15%. The Board determined in its
October 2021 meeting that the Association would meet the plan requirements and approved payout of 5% to eligible employees
prior to 2021 year end. The Association met the plan requirements and the payout of additional incentive amounts earned
(included in 2021 expenses) will be in 2022.
The loan officer incentive plan included all loan officers and specifically excluded the CEO, CCO, CFO and other employees.
Incentives included a percentage earned for average new commercial volume and new mortgage note volume up to a maximum
per customer. The plan included reduction of future incentives under the plan for any loans which do not maintain adequate
credit quality. The plan provides for controlled quality growth and has dollar limits per customer, but total incentives possible are
not capped. Payouts under the loan officer incentive plan were made prior to 2021 year end.
The CEO incentive plan included a 5% of salary payout for making the same plan requirements as required in the general
employee incentive plan. The CEO incentive plan also included additional incentives for meeting volume and credit quality goals.
The maximum combined incentive under these plans is capped at 15%. The 5% incentive was paid out at the same time as the
general employee incentive plan 5% incentive. The CEO met the plan requirements and goals and the payout of this additional
incentive (included in 2021 expenses) will be in 2022.
Payments under all incentive plans are made only if plan requirements are met, and payment of the incentive would not cause
the Association earnings to fall short of the earnings goal. If the Board can determine, prior to year end, that plan requirements
will be met, it can approve a partial payout of the incentive, with the remaining amount payable after year end figures can be
affirmed. Some of these incentives may require FCA approval if capital ratios fall below certain regulatory requirements as
described in Note 9, Shareholders' Equity.
Employee or Director Involvement in Certain Legal Proceedings
There were no matters required to be disclosed in this section which came to the attention of management or the Board of
Directors regarding involvement of current directors or senior officers in specified legal proceedings.
Consolidated Financial Statements
The consolidated financial statements, together with the report thereon of Wipfli LLP and the Report of Management are
incorporated herein by reference.
Relationship with Independent Public Accountants
There has been no change in the firm contracted as independent public accountants and there have been no material
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DISCLOSURE INFORMATION REQUIRED BY FARM CREDIT ADMINISTRATION REGULATIONS
51
disagreements on any matters of accounting principle or financial statement disclosures during the period.
Whistleblower Notices
Idaho AgCredit has established a whistleblower program to encourage reporting by any employee, customer or member of the public
about any improper accounting or other activity to the Association's Audit Committee. Details about the whistleblower program and
contact information for making whistleblower complaints are listed on the Association website at www.idahoagcredit.com.
Borrower Privacy
The Association holds the financial and other personal information of its customers in strict confidence. Since 1972, Farm Credit
Administration regulations have forbidden the directors and employees of Farm Credit institutions from disclosing personal
borrower information to others without the borrower's consent. We do not sell or trade our customers' personal information to
marketing companies or information brokers.
FCA rules allow us to disclose customer information to others only in these situations:
• We may give it to another Farm Credit institution with whom our customer does business.
• We can be a credit reference for our customers with other lenders and provide information to a credit bureau or other
consumer reporting agency.
• We can provide information in certain types of legal or law enforcement proceedings.
• We may provide information to auditors for the purpose of confirming loan balances and terms.
• FCA and other third-party examiners may review loan files during regular examinations of our association.
• If one of our employees applies to become a licensed real estate appraiser, we may give copies of real estate appraisal
reports to the state agency that licenses appraisers when required. We will first remove as much personal information
from the appraisal report as possible.
CoBank, ACB Financial Data
The shareholders' investment in the Association is materially affected by the financial condition and the results of operation of
the CoBank. The CoBank quarterly and annual reports are available on CoBank's web site, www.cobank.com, or may be
obtained at no charge by contacting Idaho AgCredit, 188 W Judicial, PO Box 985, Blackfoot, Idaho 83221 or calling (208)785-
1510.
Association Financial Data
The Association's quarterly reports to shareholders are available approximately 40 days after the calendar quarter end and
annual reports are available approximately 75 days after the calendar year end. Shareholders are provided a copy of the annual
report within 90 days after year end. The reports may be obtained free of charge on the Association's website,
www.IdahoAgCredit.com, or upon request. We are located at 188 W Judicial, PO Box 985, Blackfoot, ID 83221 or may be
contacted by calling (208)785-1510.