Farm Credit of North Florida

February 2007

Here at Farm Credit of North Florida our corporate mission is, “To enhance the economic well being of our North Florida community by providing high quality financial services to all customers and above market returns to our stockholders”. We believe the association’s 2006 performance allows us to say with confidence “Mission Accomplished”. This will be the eighteenth consecutive year the association has declared, and will pay our patrons, a patronage refund, resulting in a lower cost of credit for our customers and placing capital back into our North Florida community.

Farm Credit of North Florida, the AgFirst Farm Credit Bank and other member institutions, form a cooperative system that truly carries out the mission established by Congress in 1916. Our directors and staff are proud to be part of that system.

2006 Performance

We are pleased to present our 2006 annual report. The association met or exceeded our business plan goals in almost every area. Asset volume, asset quality, service quality, earnings, capital, all exceeded our expectations. One component of earnings, fee income, closed out the year lower than projected, mainly because of the downturn in the housing market. In total, 2006 performance was another record year for the association. We invite you to review the report and invite your comments or questions.

2007 Goals and Challenges

We have all witnessed significant change in our community, and while there may currently be a brief lull in the economy, there is no reason to believe the change and transition will not continue. Our market in rural North Florida is changing. Large farmers have become larger. Middle size farmers have grown, become smaller, or transitioned into other businesses. People who do not consider themselves farmers or ranchers have chosen to become lifestyle farmers and rural residents. Farm Credit has been changing our structure, systems, and practices to adapt to the economic and demographic changes in our market place. Rural North Florida still exists. Vast amounts of timberland and agriculture still exist (thank goodness), its just that we have many new neighbors and what was $1000 to $2000 per acre land not long ago, is now $3000 to $15,000 per acre land. Our goals for 2007 are to continue to provide high quality service and returns to our market and stockholders while efficiently and effectively managing the association’s assets. Our challenges for 2007 are to continuously improve our skills, systems, and processes while effectively managing our costs and risks. Technology will continue to help us achieve our goals and meet challenges. Our people will make the difference.

Our Values, Our Dedication

Our directors, staff, and stockholders have made Farm Credit of North Florida the involved and caring organization it is today, providing hours upon hours of service to our community. The March of Dimes, 4H, FFA, CMN/Shands Children’s Hospital, and many more have been the focus of our corporate outreach for many years. We will continue these programs and more throughout 2007.

With the declaration of patronage in 2006 the association will be approaching $90 million declared since 1988. These funds go back to our stockholders adding a much needed in-flow of capital to our communities. No other lender does that.

Through hours given and patronage returned we are dedicated to giving back to our community. That’s our culture. Our plan is to continue to earn both your trust and your business throughout 2007. We thank you very much for the business opportunities you provide and other efforts you make to keep the organization strong.