INVESTED IN RURAL AMERICA
ANNUAL REPORT
2017
WHO WE ARE
Farmer Mac® is the premier secondary market for U.S. agricultural credit and
has been a champion for and an integral part of this nation’s rural economy
for 30 years. Guided by our mission—to help build a strong and vital rural
America by increasing the availability and affordability of credit for the
benefit of American agriculture and rural communities—we provide lenders
access to flexible, low-cost financing and effective risk management tools to
help their farm, ranch, and rural utilities customers.
INVESTED IN RURAL AMERICA
Farmer Mac’s dedicated
team works tirelessly
to deliver on our mission
and help bolster the
financial strength
of agriculture and rural
communities nationwide.
We help ensure an even brighter future for rural America by spending countless
hours traveling the countryside and visiting customers to better understand
the financial challenges facing today’s rural communities. The more time we spend
with our customers, the better we can customize and tailor our solutions to help
meet their financing needs. The respect we have for the hard work that defines
these communities runs deep, and our appreciation for all that farming and rural
communities contribute to our society is unwavering. By every measure,
Farmer Mac is firmly and proudly invested in rural America.
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2017 ANNUAL REPORT OUR CONTINUED VITALITY
In 2017, Farmer Mac’s strong financial performance underscored our commitment to build a strong and vital rural America.
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FARMER MAC | INVESTED IN RURAL AMERICA 2017
TOTAL OUTSTANDING BUSINESS VOLUME
($ IN BILLIONS)
$19.0
$15.9
$17.4
STRONGER THAN EVER
During the past year,
Farmer Mac’s business
development efforts resulted
in broad-based portfolio
growth across most of
our solutions.
2015
2016
2017
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80
70
60
50
40
80
70
60
50
40
$53.0 $47.0 $53.8 $65.6
2017 ANNUAL REPORT ILLUMINATING THE
HEARTLAND
Farmer Mac’s remarkable growth in outstanding business volume is attributable to faithfully listening to our
customers and shining a light on their needs with our innovative and customizable solutions year after year,
generation after generation.
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Since our founding in 1988, more than
1,500 lenders have benefited from
OUR SOLUTIONS
WHOLESALE FINANCING
Our customizable wholesale
financing solutions allow
ag lenders, agribusinesses,
mortgage funds, and
investment firms access
to efficient and flexible low-
cost funding.
LOAN PURCHASE
We provide lenders with
mortgage products at
attractive rates to enable
them to confidently serve
their farm, ranch, and
rural utilities customers.
CREDIT PROTECTION
We provide credit
guarantees for loans
that help manage
concentration limits and
provide capital relief.
USDA GUARANTEED
LOAN PURCHASE
Designed to enhance a USDA
guarantee, this solution
helps lenders preserve
capital and offer America’s
farmers and ranchers our
attractive rates and terms.
FARMER MAC | INVESTED IN RURAL AMERICA SUPPORTING SMALL AND FAMILY FARMS
97%
OF OUR CURRENT FARM & RANCH AND USDA GUARANTEED
LOANS ARE TO SMALL OR FAMILY FARMS.
DEDICATED TO RURAL COMMUNITIES
PURCHASED NEARLY
$2.4 BILLION
AGVANTAGE SECURITIES IN 2017
PURCHASED MORE THAN
$1 BILLION
FARM & RANCH LOANS IN 2017
PURCHASED MORE THAN
$500 MILLION
USDA GUARANTEES IN 2017
INVESTED IN RURAL UTILITIES
ENSURING LEGACIES
COMMITTED TO AGRICULTURE
30 YEARS SERVING FARM FAMILIES
NEARLY
80,000
RURAL BORROWERS
Our long-standing relationship with National
In the 30 years since our founding, we have
Tens of thousands of rural borrowers
Rural Utilities Cooperative Finance Corporation
had the opportunity to serve as many as three
(CFC) helps to ensure that more than 900 not-
generations within a single family farm, which
for-profit electric cooperatives can deliver safe,
demonstrates the importance of our mission
affordable, and reliable electricity to 18 million
and our enduring drive to serve all the
farms, homes, businesses, and schools in
generations to come.
have benefited from Farmer Mac’s
products and solutions since 1988.
4,000 2017
IN
47 states, benefitting the 42 million Americans
their members serve.
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2017 ANNUAL REPORT FUELING A RESILIENT AMERICA
Agriculture plays an essential role in the broader U.S. economy, making it one of
our nation’s most critical industries. Our range of innovative financial solutions
illustrates our unwavering commitment to pursuing our mission by doing right
by America’s farmers, ranchers, and rural communities.
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FARMER MAC | INVESTED IN RURAL AMERICA FARMER MAC HAS HELPED FUND LOANS TO NEARLY
80,000
RURAL BORROWERS IN ALL 50 STATES,
WHICH HAS RESULTED IN MORE THAN
$48 BILLION
OF INVESTMENT IN RURAL AMERICA.
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2017 ANNUAL REPORT OUR SHARED SUCCESS
Farmer Mac continues to find ways to enhance shareholder value, as evidenced by our financial performance and our dividend increase.
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FARMER MAC | INVESTED IN RURAL AMERICA 2017 PERFORMANCE
23%ANNUAL CORE EARNINGS GROWTH
38%COMMON DIVIDEND GROWTH
ANNUAL CORE EARNINGS*
($ IN MILLIONS)
$53.5
$47.0
2015
2016
$65.6
$70.0
$60.0
$50.0
$40.0
2017
*Core Earnings is a non-GAAP measure. For a reconciliation of core earnings
to GAAP net income attributable to common stockholders, see the “Non-GAAP
Performance Measures” section in this Annual Report.
2017 marked another year of financial success at Farmer Mac, highlighted by record outstanding business
volume, double-digit core earnings growth, and the sixth consecutive year of dividend increases.
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2017 ANNUAL REPORT OUR 2017 RESULTS DEMONSTRATE OUR COMMITMENT
TO PRODUCT INNOVATION AND TO SERVING NEW AND
EXISTING CUSTOMERS, ALL WHILE DELIVERING VALUE
TO OUR SHAREHOLDERS.
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FARMER MAC | INVESTED IN RURAL AMERICA 15%CORE EARNINGS RETURN ON EQUITY
96.8%
PERFORMING ASSETS IN
FARM & RANCH PORTFOLIO
12.6%TIER 1 CAPITAL RATIO
$1.6B
NET NEW BUSINESS VOLUME
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2017 ANNUAL REPORT HERE FOR THE LONG HAUL
We’ve invested in people, infrastructure, and technology to effectively meet the burgeoning demand for our solutions,
a result of our successful business development efforts, brand awareness initiatives, and growing position as an
industry thought leader.
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FARMER MAC | INVESTED IN RURAL AMERICA INVESTING IN OUR PEOPLE IS INVESTING IN THE FUTURE
APPROX.
10% INCREASE IN TOTAL HEADCOUNT
TO 88 IN 2017.
OUR NATIONWIDE REACH
WE ARE WHERE OUR CUSTOMERS NEED US TO BE
Hitting the road is one of the many ways we reach new and existing customers, broaden
brand awareness, and highlight the value of our solutions.
Farmer Mac headquarters
Farmer Mac office locations
APPROX.
24% INCREASE IN OUR OFFICE SPACE,
WHICH INCLUDES THE ADDITION
OF TWO NEW OFFICES ACROSS
THE COUNTRY.
DELIVERING BROAD-BASED AG INSIGHTS VIA THE FEED
In 2015, Farmer Mac launched The Feed, a free quarterly
report focused on the U.S. farm economy that combines
the most relevant research from trusted ag resources
with the insightful commentary and analysis from our
own team of experts into a single and succinct source.
The Feed serves not only our lenders, but also the
broader community: producers, agribusinesses, investors,
media, and more. It is our goal to make this report an
indispensable resource for anyone with a stake in the
American rural economy.
Farmer Mac investor road shows
Farmer Mac lender road shows
THE FEED HAS BEEN DOWNLOADED MORE THAN
Presented at conferences
10,000
TIMES IN LESS THAN THREE YEARS
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2017 ANNUAL REPORT OUR MISSION
Farmer Mac is committed to help build a strong and vital rural America
by increasing the availability and affordability of credit for the benefit of
American agriculture and rural communities.
At Farmer Mac, business is shaped by our mission and values.
We remain focused on building a stronger rural America through
an innovative and mission-based culture that fosters integrity
and principled action from every employee, at every turn.
OUR CORE VALUES
STEWARDSHIP
UNPARALLELED SERVICE
INNOVATIVE THINKING
COLLEGIAL COLLABORATION
UNRELENTING EXCELLENCE
ABSOLUTE INTEGRITY
PASSION FOR RURAL AMERICA
ONE FARMER MAC
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FARMER MAC | INVESTED IN RURAL AMERICA “
Farmer Mac’s culture is built on
the cornerstones of commitment,
collaboration, innovation, and integrity.
I am proud to see these qualities
demonstrated in the office on a daily
basis. Together, we share a commitment
to serving our important mission and
to promoting individual and corporate
integrity, as we collaborate and innovate
to deliver flexible financial tools to
our customers.”
LOWELL L. JUNKINS
CHAIRMAN OF THE BOARD AND
ACTING PRESIDENT AND CHIEF EXECUTIVE OFFICER
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2017 ANNUAL REPORT ON BEHALF OF FARMER MAC’S
BOARD OF DIRECTORS
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FARMER MAC | INVESTED IN RURAL AMERICA TO THE SHAREHOLDERS
OF FARMER MAC:
Throughout my 22 years of service on Farmer Mac’s
board of directors, this company has remained
steadfast in our mission to meet the financial
needs of customers and, ultimately, the needs of
rural America. This past year was no exception.
We achieved record financial results and further
cemented our central position as the nation’s leading
secondary market for agricultural credit.
It is an honor to address you, our valued
shareholders, as Farmer Mac’s acting president
and chief executive officer. It is also a pleasure to
reflect on the past year’s accomplishments and
to recognize the diligence and successes of
our employees, who make those achievements
possible. The title of this year’s annual report,
“Invested in Rural America,” embodies our core
mission of increasing the availability and affordability
of credit for America’s farmers and ranchers, and
our commitment to the continued vitality of
America’s rural communities. To strengthen this
investment, Farmer Mac remains committed to
innovation and dedicated to successfully meeting
tomorrow’s needs.
By any measure, 2017 was a remarkable year
for Farmer Mac. We produced record business
volumes and double-digit core earnings growth
and maintained a strong capital base and low
credit expenses. As in previous years, our success
in 2017 was driven by the disciplined execution
of our strategy, as we strengthened long-standing
relationships with existing customers and increased
our business development efforts to attract new
customers. We grew core earnings by 23% and
added more than $4.7 billion of new business
volume in 2017, which resulted in a net growth of
$1.6 billion after maturities and repayments. We
increased our common stock dividend by 38% last
year and recently announced a 61% increase to
$0.58 per share for first quarter 2018. This marks
the seventh consecutive year that Farmer Mac has
raised its quarterly dividend, further illustrating our
commitment to delivering shareholder value.
Farmer Mac’s strong financial performance over
the past year also reflects our success in achieving
our strategic objectives to increase capacity
and efficiency, maintain our leadership position
in financing rural America, and expand customer
connectivity and brand awareness. These efforts
require significant investments in people,
infrastructure, and technology to ensure sustained
growth. We increased our workforce by approximately
10% last year, and we expect to hire more key
employees in 2018 and to expand our investments
in technology and business infrastructure as we
seek to achieve our long-term goals. We also began
a search in late 2017 to identify and select a new
CEO. That process has involved soliciting shareholder
feedback, developing a CEO profile and position
description, and selecting an executive search firm.
This is an important decision for Farmer Mac’s
future, and we will dedicate the time and effort
required to make the right one.
During my long tenure on Farmer Mac’s board
and my short time as acting CEO, it has been
a privilege to work with such outstanding and
passionate colleagues. Farmer Mac’s culture is
built on the cornerstones of commitment,
collaboration, innovation, and integrity. I am proud
to see these qualities demonstrated in the office
on a daily basis. Together, we share a commitment
to serving our important mission and to promoting
individual and corporate integrity, as we collaborate
and innovate to deliver flexible financial tools to
our customers. In this way, we build a workplace
that creates opportunities, drives success, and
inspires excellence.
Together, we continue to deliver low-cost capital to
the rural and agricultural communities we so proudly
serve, investing in their future and in ours.
LOWELL L. JUNKINS
Chairman of the Board and
Acting President and Chief Executive Officer
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2017 ANNUAL REPORT
EXECUTIVE OFFICERS
As of April 2, 2018
BOARD OF DIRECTORS
As of April 2, 2018
LOWELL L. JUNKINS
Acting President and Chief Executive Officer
R. DALE LYNCH
Executive Vice President –
Chief Financial Officer and Treasurer
JOHN C. COVINGTON
Senior Vice President –
Agricultural Finance
STEPHEN P. MULLERY
Senior Vice President –
General Counsel and Secretary
LOWELL L. JUNKINS, CHAIRMAN1
Political Affairs Consultant
Lowell Junkins & Associates
Donnellson, Iowa
MYLES J. WATTS, VICE CHAIRMAN1
Professor Emeritus, Agricultural Economics
Montana State University
Bozeman, Montana
DENNIS L. BRACK 2
Director
Bath State Bank and Bath State Bancorp
Bath, Indiana
CHESTER J. CULVER1
Founder
Chet Culver Group
Des Moines, Iowa
RICHARD H. DAVIDSON3
Director
AgriBank, FCB
St. Paul, Minnesota
CORPORATE INFORMATION
CORPORATE HEADQUARTERS
1999 K Street, N.W.
Fourth Floor
Washington, DC 20006
Phone: 202.872.7700
800.879.3276
Website: www.farmermac.com
ANNUAL MEETING OF STOCKHOLDERS
Thursday, May 3, 2018
8:00 a.m.
The Town Hall
1999 K Street, N.W.
First Floor
Washington, DC 20006
STOCK EXCHANGE
Farmer Mac’s Class A voting common stock and
Class C non-voting common stock trade on the
New York Stock Exchange under the symbols
AGM.A and AGM, respectively.
Formal notice of the meeting, the proxy
statement, and the proxy card are being mailed
to each stockholder of record entitled to vote at
the meeting simultaneously with the mailing of
this Annual Report.
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JAMES R. ENGEBRETSEN2
Retired Professor, Finance
Marriott School of Management
Brigham Young University
Provo, Utah
DENNIS A. EVERSON2
Director
First Dakota National Bank
Yankton, South Dakota
SARA L. FAIVRE1
Founder and President
Sara Faivre Executive Mentoring
Cameron, Texas
DOUGLAS A. FELTON3
President and Owner
D&T Enterprises of Minnesota, Inc.
Northfield, Minnesota
DOUGLAS L. FLORY3
Former Farm Credit Administration
Board Member
Former Farm Credit System Insurance
Corporation Board Chairman
McLean, Virginia
THOMAS W. HILL3
Former Chief Financial and
Operations Officer
Farm Credit Bank of Texas
Austin, Texas
MITCHELL A. JOHNSON2
Financial Consultant
Washington, District of Columbia
CLARK B. MAXWELL2
Chief Operating Officer
Chatham Financial Corp.
Kennett Square, Pennsylvania
BRUCE J. SHERRICK1
Professor, Agricultural and Applied Finance
University of Illinois
Champaign, Illinois
DOUGLAS E. WILHELM3
Former Chief Risk Officer
CoBank, ACB
Denver, Colorado
1 Presidential Appointee
2 Director elected by holders of Class A Common Stock
3 Director elected by holders of Class B Common Stock
TRANSFER AGENT AND REGISTRAR
Continental Stock Transfer &
Trust Company
1 State Street
30th Floor
New York, NY 10004
Phone: 212.509.4000
800.509.5586
Website: www.continentalstock.com
CERTIFICATION
Farmer Mac has included as Exhibit 31 to its
Annual Report on Form 10-K for the fiscal year
ended December 31, 2017 filed with the SEC
the certifications of the Acting Chief Executive
Officer and Chief Financial Officer certifying the
quality of Farmer Mac’s financial disclosures.
FORM 10-K
Stockholders may obtain, without charge, a
copy of Farmer Mac’s 2017 Annual Report
on Form 10-K, as filed with the SEC on
March 8, 2018, from Farmer Mac’s website
or by contacting Farmer Mac’s Secretary at
Farmer Mac’s Corporate Headquarters.
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE YEAR ENDED
DECEMBER 31, 2017
PricewaterhouseCoopers LLP
1800 Tysons Boulevard
McLean, VA 22102
FARMER MAC | INVESTED IN RURAL AMERICA
NON-GAAP PERFORMANCE MEASURES
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS TO CORE EARNINGS
For the Year Ended December 31,
($ in thousands)
Net income attributable to common stockholders
Less reconciling items:
Gains on financial derivatives and hedging activities due to fair value changes
Unrealized (losses)/gains on trading assets
Amortization of premiums/discounts and deferred gains on assets consolidated at fair value
Net effects of terminations or net settlements on financial derivatives and hedging activities 1
Loss on retirement of Farmer Mac II LLC Preferred Stock2
Re-measurement of net deferred tax asset due to enactment of new tax legislation
Income tax effect related to reconciling items
Core earnings
2017
$71,300
9,499
(24)
(1,327)
2,674
-
(1,365)
(3,788)
$65,631
2016
$64,152
13,628
1,460
(849)
2,178
-
-
(5,746)
$53,481
2015
$47,371
10,924
1,220
(1,319)
(699)
(8,147)
-
(1,643)
$47,035
Farmer Mac reports its financial results in
or as more important than, the related financial
believes are not indicative of future operating
consolidated balance sheets as “Loans held
accordance with accounting principles generally
information prepared in accordance with GAAP.
results and that may not reflect the trends and
for investment in consolidated trusts, at
accepted in the United States (“GAAP”). In
economic financial performance of Farmer
amortized cost;” and includes (3) the accrual of
addition to GAAP measures, Farmer Mac uses
Core earnings and core earnings per share
Mac’s core business.
the following non-GAAP financial measures:
principally differ from net income attributable
income and expense related to the contractual
amounts due on financial derivatives that
core earnings, core earnings per share, and net
to common stockholders and earnings per
Farmer Mac uses net effective spread to
are not designated in hedge accounting
effective spread. Farmer Mac uses these non-
common share, respectively, by excluding
measure the net spread Farmer Mac earns
relationships; and (4) the net effects of
GAAP measures to measure corporate economic
the effects of fair value fluctuations. These
between its interest-earning assets and the
terminations or net settlements on financial
performance and develop financial plans
fluctuations are not expected to have a
related net funding costs of these assets.
derivatives and hedging activities.
because, in management’s view, they are useful
cumulative net impact on Farmer Mac’s
Net effective spread differs from net interest
alternative measures in understanding Farmer
financial condition or results of operations
income and net interest yield because it:
Mac’s economic performance, transaction
reported in accordance with GAAP if the related
excludes (1) the amortization of premiums
economics, and business trends. These non-
financial instruments are held to maturity, as
and discounts on assets consolidated at fair
GAAP financial measures that Farmer Mac uses
is expected.
may not be comparable to similarly labeled non-
value that are amortized as adjustments to
yield in interest income over the contractual
GAAP financial measures disclosed by other
Core earnings and core earnings per share also
or estimated remaining lives of the underlying
companies. Farmer Mac’s disclosure of these
differ from net income attributable to common
assets; and (2) interest income and interest
non-GAAP financial measures is intended to be
supplemental in nature, and is not meant to be
considered in isolation from, as a substitute for,
stockholders and earnings per common share,
respectively, by excluding specified infrequent
or unusual transactions that Farmer Mac
expense related to consolidated trusts with
beneficial interests owned by third parties,
which are presented on Farmer Mac’s
1
2
Effective in fourth quarter 2017, Farmer Mac revised
its methodology for calculating net effective spread,
which is a component of core earnings, to also include
the net effects of terminations or net settlements on
financial derivatives and hedging activities. All prior
period information above has been recast to reflect
the revised methodology.
Relates to the write-off of deferred issuance costs
as a result of the retirement of Farmer Mac II LLC
Preferred Stock.
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2017 ANNUAL REPORT
®
1999 K Street, N.W.
Fourth Floor
Washington, DC 20006
Phone: 202.872.7700 or
800.879.3276
www.farmermac.com
Financing Rural America ®
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FARMER MAC | INVESTED IN RURAL AMERICA