1. Prepared by Aon Hewitt Consulting | Retirement Update on Retirement Glide Path Strategy AgriBank District Retirement Plan John Hanson and Ron Kalvoda August 2015

2. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 2 Agenda  Purpose of Call  Background on glide path strategy  Current position on glide path – AgriBank District Retirement Plan  Reason for current position on glide path  Review glide path projections  Opportunity for Q&A

3. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 3 Remove financial risk to the employers Close funding deficit Reduce risk of further funding ratio volatility Prepare and manage portfolio toward settlement or sustainability Sources of Growth  Contributions  Stock market rising  Interest rates rising Pension De-Risking Objectives

4. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 4 Farm Credit Foundations—Timeline of Primary Events Late Summer–2012 Review of risk/return tradeoffs—managing contributions and pension risk strategy through glide path April–2013 The preliminary Risk Study from Aon Hewitt Investment Consulting (AHIC) within finals presentation June–2013 Risk Study Questionnaire is delivered—responses for modeling Risk Study September–2013 The Risk Study is finalized and presented to the Plan Sponsor / Coordinating / Trust Committees and PSC/CCs accept findings November 2013 Trust Committee adopts Investment Policy Statements to implement Study findings January 2014 Asset transitions to new structure executed throughout the month to minimize market impact and costs February 2014 New portfolios and weightings in place

5. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 5 Farm Credit—Risk Study Portfolio Construction Key Elements of Portfolio Construction Return-Seeking Portfolio  Reflection of global equity market capitalization  Broad diversification now available more efficiently  High liquidity to support a glide path and de-risking approach Liability-Hedging Portfolio (i.e., duration-matched fixed income)  Primary objective is to decrease surplus volatility  “Liability-hedging” assets are defined as those that move in tandem with liabilities, which include core and long-duration bonds and Treasury STRIPS  Active management required to overcome headwind associated with defaults and downgrades which leads to asymmetric impact on fixed income and traditional liabilities  Hedge path provides a structured approach to extend duration of portfolio as interest rates rise  Government / credit and yield curve positioning decisions influenced by current market environment and medium term views Active and Passive Management  Active management in less efficient markets: –Blend of U.S. and Non-U.S. Large Cap active and passive, –Active U.S. Small/Mid Cap Equities –Active High Yield, Global REITS, Credit Bonds –Hedge Funds  Active management in liability hedging portfolio to overcome defaults and downgrades headwind

6. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 6 Farm Credit Foundations—Pension Risk Concepts and Strategies  Investment Policy for the Plan incorporates the glide path and the hedge path. The investment policy implements the allocation strategies through two sub-portfolios  Return-Seeking Assets (RSA): Designed to deliver performance in excess of the underlying liability growth rate. Equities are the primary producers of excess returns but also introduce the greatest level of volatility. The strategy calls for equities and other return-seeking assets that do not track to the plan’s liabilities to be liquidated gradually through the glide path policy.  Liability Hedging Assets (LHA): Intended to hedge interest rate risk. “Liability-hedging” assets move in tandem with liabilities, which include core and long-duration bonds and Treasury STRIPS. They are intended to be investment grade and low risk. The sub-portfolio will progressively increase in size as the plan’s funded ratio improves. The strategy calls for liability hedging assets to represent the primary portion for the plan.

7. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 7 Glide Path and Hedge Path  FCF has a two-dimensional dynamic investment program 1.Glide Path −Determines the allocation between return-seeking and liability-hedging assets −Dependent on the plan’s funded ratio 2.Hedge Path −Determines the investment of liability-hedging assets −Dependent on the plan’s funded ratio and the level of interest rates  Hedge Path Review –Primary goal is to reduce the interest rate risk as the funded ratio improves or interest rates increase –Hedge ratio increases as the funded ratio improves –Adds structure to duration extension in a low interest environment  Three primary drivers to closing the funding status gap 1.Employer contributions 2.Interest rate increase with unhedged exposure 3.Return-seeking assets outperform pension liabilities

8. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 8 Glide Path and Hedge Path Risk Budgeting A two-dimensional dynamic investment program (Glide Path + Hedge Path) offers:  A way to manage a pension plan out of the current low interest rate environment  Risk budgeting framework for adjusting duration exposure First Dimension—Glide Path Funded Ratio Return Needs Return-Seeking Allocation Hedge Ratio Interest Rate Level Desired Duration Second Dimension—Hedge Path How much to allocate to Return-Seeking and Liability-Hedging Assets How to invest Liability- Hedging Assets

9. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 9 Farm Credit Foundations—Pension Risk Concepts and Strategies E.g. AgriBank Plan’s Current Funded Ratio of 64% calls for 75% in Return Seeking Assets  Glide Path—Refers to the target asset allocation mixes based on the funded ratio (assets ÷ liabilities = funded ratio). The glide path creates an asset allocation mix that invests more heavily in return seeking assets initially but gradually reduces the target as the plan becomes better funded. Reduces volatility created from equities. Funded Ratio Return-Seeking Assets LowTargetHigh up to 80%69%75%81% 66%72%78% 82%63%69%75% 83%60%66%72% 84%58%63%68% 85%55%60%65% 86%52%57%62% 87%50%55%60% 88%47%52%57% 89%45%50%55% 90%42%47%52% 91%41%45%49% 92%40%44%48% 93%38%42%46% 94%37%41%45% 95%36%39%42% 96%33%37%41% 97%32%35%38% 98%31%34%37% 99%29%32%35% 100%27%30%33% At 100% funded ratio, the policy allocation calls for 30% in Return Seeking Assets

10. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 10 Farm Credit Foundations Hedge Path Strategy and Policy Framework Target Hedge Ratio Funded Ratio Advisor Assessment of Market Interest Rates Liability Hedging Allocation<-150 bp-120 bp-90 bp-60 bp-30 bpTarget <= 60%25%15% 18%22%25% 65%25%15% 16%20%24%27% 70%25%15% 17%21%25%29% 75%25%15% 18%23%27%32% 80%25%15%18%22%26%30%34% 85%40%30%35%41%46%52%57% 90%53%50%55%60%66%71%76% 95%61%70%73%75%78%80%83% 100%+70%89% Hedge Ratio with a funded ratio of 64%  Hedge Path—Expresses the relationship between the plan’s funded ratio, market interest rates and the level of interest rate duration hedged. The objective is to reduce interest rate risk as funded ratio improves or as interest rates increase. While the Glide Plan defines the basic allocation, the Hedge Plan complements and refines the allocation within the Liability Hedging portfolio. The Target is our estimate of where interest rates should be without Fed intervention.

11. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 11 As plan becomes better funded in dynamic policy, we reduce Return Seeking (primarily equity) exposure and increase liability hedging assets Farm Credit Dynamic Glide Path Implementation

12. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 12 Funding Policy  Under current funding policy, annual contributions to the plan are set based on current funding interest rate (i.e., 7.25%)  Long-term goal is to slowly de-risk plan as market-based funded status improves ‒ Market-based liabilities would reflect a lower interest rate (higher liabilities) and therefore a lower funded status  De-risking events occur at certain thresholds—for example, the first one is scheduled to occur when plan is 80% funded on a market-based measure (liability and assets)  Given current funding policy, it is possible that the plan is fully funded on a funding based measure (7.25%) in the very near future ‒ This would require little to no contributions into the plan ‒ While this is completely acceptable and funding levels eventually reach de-risking trigger points, it may take longer than expected to make progress down the glide-path ‒ Accelerating the closing of the funding status gap will trigger asset de-risking sooner

13. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 13 Glide Path Projection—AgriBank 1/1/20151/1/20161/1/20171/1/20181/1/20191/1/20201/1/20211/1/20221/1/20231/1/2024 Plan Funded Ratio64%65%68%70% 71% Funding Interest Rate7.25% Cash Contributions ($ millions)$63$56$37$19$18$17$16$15$14$13 Return-Seeking Asset Allocation75%

14. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 14 Alternate Glide Path Projections  As shown on prior pages, very little progress is made on glide path under given scenario  From January 1, 2014 to January 1, 2015 funded status of plan decreased for various reasons ‒ Updated mortality assumption ‒ Decrease in interest rates (almost 100 basis points) ‒ Updated actuarial assumptions to reflect recent plan experience  Increasing the funded status will accelerate movement along the glide path ‒ Graphs on following pages reflect two scenarios for illustration only 1)Additional annual discretionary contributions beginning in 2016 of 2% of funding liability 2)Additional annual discretionary contributions and interest rates increase 100 basis points over next 4 years

15. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 15 Glide Path Projection—AgriBank: Additional Discretionary Contribution 1/1/20151/1/20161/1/20171/1/20181/1/20191/1/20201/1/20211/1/20221/1/20231/1/2024 Plan Funded Ratio64%65%70%72%73%75%77%79%82%84% Funding Interest Rate7.25% Cash Contributions ($ millions)$63$74$38 $37 $36$35$34$32 Return-Seeking Asset Allocation75% 69%63%

16. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 16 Glide Path Projection—AgriBank: Additional Discretionary Contribution and Rising Interest Rates 1/1/20151/1/20161/1/20171/1/20181/1/20191/1/20201/1/20211/1/20221/1/20231/1/2024 Plan Funded Ratio64%67%74%78%83%85%87%89%92%94% Funding Interest Rate7.25% 7.00% 6.75% Cash Contributions ($ millions)$63$74$38 $37 $36$35$34 Return-Seeking Asset Allocation75% 66%60%55%50%44%41%

17. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 17 Key Takeaways  Pension de-risking strategy and Investment Policy Statements constructed based on risk profile of pension plan and risk tolerance of participating employers  Investment Policy Statement incorporates both a glide path (determines how much liability-hedging assets) and a hedge path (determines how to invest those liability-hedging assets)  While goal is to improve funded status of the plan in the long run, recognition of short-term fluctuations due to external reasons (e.g., general mortality improvements, decrease in interest rates) is possible/likely  Actual timing of de-risking “events” is dependent on many variables, including: ‒ Capital markets Asset returns Interest rates ‒ Cash contributions to plan

18. Aon Hewitt Proprietary & Confidential | 014710722.pptx/014-Z5-68786 07/2015 18 QUESTIONS?