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We have attached a copy of a chart comparing the number of loans obligated and dollar amount obligated during the last two fiscal years and a comparison of numbers at approximately this same time period the last two years compared to this year. Last year's total obligations and total dollar amount exceeded prior years' obligation and dollar amount. This was done with a shortage of personnel and at the same time we provided training to legacy ASCS employees.

Current reports indicate we are processing 85.5% of the Direct Loan applications within the required time frame with the average processing time of 45 days.

These reports indicate 70.4% of the guaranteed loans from eligible lenders are processed within the required time frame with an average processing time of 21 days from date of receipt of a complete application. These reports indicate that only 35.4% of applications from certified and approved lenders are processed within the required 15 day time frame with an average processing time of 24 days. We have recently provided training to all Ag Credit Managers and Officers on guaranteed loan processing. We will be monitoring the processing of guaranteed loans from Certified Lenders in the State to assure that loan requests from Certified Lenders are processed more timely.

Exhibit 3-4

Some of the reasons guaranteed loans are not processed timely are listed below.

This past year we had an increase in the number of guaranteed applications that had a direct emergency loan request or other direct assistance included in the proposal for the guaranteed loan. This increases the processing time because the guaranteed loan is normally contingent upon the emergency loan being approved. Therefore, the guaranteed loan cannot be approved until the emergency loan is processed. Emergency loans require more involvement and time of the Ag Credit Manager and typically cannot be processed within the time limits set for guaranteed loans, particularly the time limits for Certified Lenders.

We are aware of several cases that exceeded the time limit due to the Credit Manager or District Director working with the bank and their customer to develop a plan that would overcome obstacles to our being able to approve the loan. Although we exceeded the time frame, we believe this was preferable in these cases to denying the loan initially.

Certified Lenders are allowed to use some of their own forms in loan processing. We find in some cases the lender has failed to complete all the information on their form or the information does not agree with other information in the file. More training is needed so that all of us will understand what is needed in a properly completed application.

We also have some Credit Managers and other employees who would benefit from additional training in analyzing a guaranteed loan request. We have recently provided training and will continue to provide training as needed.

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Shows number of borrowers that are one payment, two payments, and three payments delinquent.

The one payment delinquencies have dropped from 1,641 to 649. This is a significant reduction in those borrowers still active with possible viable operations.

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