CapitalFarmCredit.com 877-944-5500 Dear Stockholder: It has been said of Capital Farm Credit that we have roots as deep as Texas. With the recent state of the economy, those roots have served us well and have been vital to our success. Because of the worldwide financial crisis and volatile ag markets last year, Capital Farm Credit, along with its member- borrowers, faced many challenges. Following a long period in a positive lending environment marked by steady growth and consistent earnings, we faced deteriorating credit conditions, negatively pressuring our earnings. Fortunately, we’ve had experience in weathering the ups and downs in the economy. We held steady, thanks in large part to our strong capital base and solid, conservative lending decisions made by our board and management. The cooperative business model upon which Capital Farm Credit was founded also proved to be resilient during tough times. As a result, Capital Farm Credit continued its long tradition of paying a significant patronage distribution to our stockholders. Thankfully, several months into 2010, parts of the economy are showing signs of im- provement. Industries such as livestock feeding operations, dairies and ethanol, whose profits can vary widely depending on grain prices, suffered from a tight financial squeeze caused by extremely volatile input prices over the past two years. Now, input costs have stabilized at manageable levels, and market prices have increased, bring- ing some much-needed relief for many producers. The outlook for pork, cattle and poultry is looking up right now. Unfortunately, much of this relief may come at the expense of grain producers; however, we hope commodity prices will remain at profit- able levels for all. Abundant moisture throughout most of Texas has increased optimism in the farming and ranching community. This optimism, along with the projected improvement in the overall economy, has bolstered our expectations for a successful 2010. At Capital Farm Credit, we also look forward to better days ahead. As always, we thank you for your business, and we will continue to be here to meet all of your rural financ- ing needs. Capital Farm Credit — “We’re the answer.” Sincerely, Ben R. Novosad Chief Executive Officer ASSOCIATION SUPPLEMENT – SUMMER 2010 If you’ve ever watched Texas Jason Anderson Country Reporter, you’ll Stories understand why Tanya Bishop, Capital Farm Credit advertising director, calls the show’s host, From the Bob Phillips, “the poster boy for rural Texas.” Every week, for 38 years, Phil- BACK lips has taken viewers to places around the state, introducing them to people from all walks of life who have interesting ROADS talents and hobbies. From the quirky to the heartfelt, he has covered all kinds of stories, each one featuring ordinary, everyday individuals. Many, perhaps most, of the stories are found in rural areas. “We do stories all over Texas, in the big city and the inner city, but most of the stories are on the back roads,” Phillips says. Bob Phillips “We’ve thought about why that is, and the best reason we can come up with is that people who want to do unique things don’t want to gather together with other people. They want their own space.” His evident appreciation for rural people and communities was the main reason Bishop considered him as a possible Farm Credit spokesperson in 2003. “It seemed like a good fit,” Bishop says. “He has a great follow- ing. Plus, his demographic keeps getting younger. We thought he would be a good spokesman for us.” Phillips agrees that the partnership was a natural fit. He has been the star of Capital Farm Credit television commercials for almost seven years now. “When they first approached us about a sponsorship, we did a little research,” Phillips recalls. “What we found was that their customers are our viewers, and many of our viewers are their customers. They are one and the same.” City Roots, Country Roots With his easygoing storytelling style and his affinity for what he calls the “back roads,” Phillips could easily be mistaken for a country kid. That’s not the full picture, though. He actually grew up in the big city of Dallas, but spent many holidays, weekends and summers outside of the city on a family farm. He did not own rural land of his own, however, until the late 1990s, when he purchased a ranch in the Texas Hill Country. A CAPITAL FARM CREDIT, ACA few years later, after he became the Farm “They [RFD-TV] air our recent shows and Reporter, and stories had to come from Credit spokesperson, he realized where he also TCR Classics with shows that are 20 within 100 miles of Dallas. As the show should go for financing. years old, sometimes even older. That’s grew, so did the geographic area. When where you’ll see skinny Bob with dark it became syndicated in 1986, he and his “I really didn’t know about the organiza- hair,” he says. “I don’t even recognize him production team started covering the tion until the sponsorship,” Phillips says anymore,” he says with a laugh. entire state. His audience broadened again of First Ag Credit, which later merged to in 2000 with the introduction of the new become Capital Farm Credit. “I did some Although his style has matured, much of satellite/cable network RFD-TV, which research on them and realized that these what he does has been constant through Phillips Productions helped to launch. are the people we should be going to, and the years. I’ve been a customer since then.” Given the show’s huge territory, it takes a “We’re just doing stories on real people, talented team of hardworking people to and telling their stories in an entertaining A Unique Hill Country Getaway produce the show. Fortunately, Phillips has way,” Phillips says. “Charles [Kuralt] pio- Phillips bought the ranch primarily as an a core team of longtime employees who neered that, and I was lucky enough that investment, but frequent requests from have each worked with him for more than he shared it with me early in my career. I other people to go and stay there prompt- 20 years. Together, they rack up a lot of wanted to do something similar in Texas.” ed him to see it as a business opportunity. driving time. In 2006, he opened Escondida, a beauti- Now, with almost four decades of success “Texas is a big place. We’re on the road a ful hacienda-style boutique hotel with a and more than 2,000 episodes under his lot. I bought two new vehicles on June 1, world-class spa. belt, Phillips is not even close to slowing 2009, and they both already have more down. A national version, called On the Visitors to Escondida come from across than 30,000 miles on them,” Phillips says. Road with Bob Phillips, will soon air on the country. About half of the guests find RFD-TV. It will be in addition to Texas With so much area to cover and so many out about the getaway from watching Country Reporter. people to talk to, he never worries about Texas Country Reporter, either on a local running out of stories. channel from one of the 22 Texas media “What I found was that people have dif- markets that pick up the show in syndica- ferent accents and cultures, but people are “As long as people keep having babies in tion or on the nationwide RFD-TV satel- people everywhere we go,” Phillips says. Texas, we won’t run out of stories,” he says. lite/cable network. The other half find the “We were going to interview a 21-year-old, destination through other means, particu- Miles and Miles of Texas and I realized that he was born since we’ve larly the Internet, and are not aware of the When Phillips first started the show in started the show. New and interesting well-known owner. 1972, it was a package of stories for a lo- people are being born all the time. We just cal affiliate, KDFW Channel 4 in Dallas. have to wait for them to get old enough to Guests enjoy luxurious amenities and the At that time, it was known as 4 Country talk to them.” most scenic and restful activities the Texas Hill Country has to offer. No matter how they find out about Escondida, as Phillips says in his advertisements, “The hard part isn’t getting here. It’s leaving.” Growing Up on Television Jason Anderson For Phillips, owning a ranch and a hotel was unplanned and unexpected; it was just one of life’s curious twists and turns. Making a career in television was less of a surprise. Once he got started, at the age of 18, he was hooked. “I’ve been doing this since 1970,” Phillips says. “I don’t know what else I’d do if I had to find a real job.” People have literally seen him grow up on television, a fact he remembers when he sees old episodes. Courtyard at Escondida CAPITAL FARM CREDIT, ACA A Farm Credit Success Story 62 Years in the Making In 1948, Truman was president, transistor radios were invented, a gallon of gas cost 16 Jason Fuchs cents, and Calvin Cobb became a member of the Production Credit Association. Even though times have changed, some things just keep going. This year, Cobb is planting his 65th crop, and he has been a member of Capital Farm Credit for 62 of those years. “It is not really a success story, but more of a perseverance story,” quips Cobb, as he recalls the many changes over the years.