The 1980's was a decade of unprecedented distress and change for the Farm Credit System (FCS). This research documents the changes in financial performance of district aggregates of FCS institutions from midyear 1986 through the end of 1989. The FCS experienced substantial, although unevenly distributed, improvements in most areas. Profitability rose and riskiness fell for the system as a whole, although results were uneven across districts. This improved financial performance arose primarily because interest income per asset dollar rose faster than noninterest operating expenses per asset dollar. However, the system has failed to control its operating expenses relative to its assets. Thus, cost control should be a primary focus of FCS management to attain near-term increases in operating results.