2024 ANNUAL REPORT
LIQUIDITY
IN ACTION
Accelerating Rural
Opportunities
$$$
Loans
$$$
Loans
FINANCIAL
INSTITUTIONS
RURAL
INFRASTRUCTURE
FARMER MAC’S SECONDARY MARKET
FARMERS &
RANCHERS
Debt & Equity
Financing
Debt Service
& Dividends
CAPITAL
MARKETS
AGRIBUSINESS
BRADFORD T. NORDHOLM
President and
Chief Executive Officer
LOWELL L. JUNKINS
Board Chair
LETTER FROM OUR CEO AND OUR BOARD CHAIR
To all of Farmer Mac’s valued stakeholders:
As we reflect on 2024, it has been another strong
year for Farmer Mac—one marked by resilience,
growth, and, as always, an unwavering commitment
to our mission to increase the accessibility of
financing to provide vital liquidity to American
agriculture and rural infrastructure.
Since our founding in 1988, America’s agriculture
and infrastructure sectors have evolved dramatically—
modernizing, innovating, and adapting to new
economic realities. Through these winds of change,
Farmer Mac has remained a champion for and
an integral part of this nation’s rural economy.
We have met every challenge and opportunity
with a focus on innovation, integrity, excellence,
relationships, and passion for our mission—our
core values that guide everything we do.
It is an honor to once again report on our strong,
mission-focused results that reinforce the critical
role we have served for nearly four decades in
helping to ensure the stability of American
agricultural and infrastructure finance.
These results are only possible because of the
people and institutions that together contribute
to our mission—our employees, agricultural and
infrastructure lenders, farmers and ranchers,
food and agribusinesses, rural electric generation,
transmission, and distribution cooperatives,
telecommunications and infrastructure providers,
renewable energy projects, policymakers, and
investors. Together, we continue to build a future
where credit flows efficiently to rural communities.
Farmer Mac’s disciplined, long-term strategic
initiatives continue to drive real impact, helping
lenders and borrowers navigate uncertainty while
expanding opportunities. In this letter, we share
highlights of our 2024 results, the steps we took
to achieve them, and the tangible impact we are
making in accelerating rural opportunities.
LETTER FROM OUR CEO AND CHAIR
1
FARMER MAC
2
ANNUAL REPORT 2024
THE YEAR IN REVIEW
DELIVERING STRONG, STABLE
PERFORMANCE
In 2024, the agriculture and infrastructure
finance sectors faced contrasting economic
conditions. Agriculture broadly experienced
financial headwinds, with net farm income
declining 22.6% from its 2022 peak,
primarily driven by crop commodity prices.
Farmers navigated tighter margins as
lower revenues, particularly in the grain
sector, weighed on profitability. In contrast,
the infrastructure sector expanded as
interest rates stabilized and demand
continued to grow for the power and
connectivity needed to support an
increasing population, manufacturing
brought onshore, and new data centers
in rural America.
Against this backdrop, Farmer Mac
remained a reliable financial partner,
helping stakeholders navigate volatility
while expanding opportunity. In 2024,
Farmer Mac provided $7.0 billion in
liquidity and lending capacity, achieving
record business volume of $29.5 billion at
year-end, demonstrating the resilience of
our business model against market volatility
and a changing credit environment.
A RELIABLE SOURCE OF
LOW-COST LIQUIDITY
Our 2024 results once again highlight
our consistent financial and operational
execution, coupled with proactive
management of our balance sheet and
funding sources. Our diversified streams
of business revenue and our funding
and hedging capabilities allow us to fulfill
our mission and generate competitive
shareholder returns across market cycles,
while staying in alignment with our long-
term strategic initiatives.
We ended 2024 with $1.5 billion in core
capital, exceeding our minimum capital
requirement by $584 million and
positioning us to remain a stable, long-
term growth partner for our stakeholders.
Throughout the year, we took deliberate
steps to enhance our funding strategy to
allow us to deploy essential capital while
safeguarding financial stability.
Our diversified business model, supported
by disciplined asset liability management,
enabled us to drive net effective spread
(NES, a non-GAAP measure) to increase
$12.6 million year-over-year to $339.6
million. Record NES, in turn, supported
$171.6 million in core earnings (also a
non-GAAP measure), a modest increase
over our record-breaking 2023 financial
performance. As of December 31, 2024,
our Tier 1 Capital Ratio was 14.2%. Our
strong capital position has allowed us to
continue to grow and diversify our revenue
streams, remain resilient in volatile credit
environments, and offer a source of
low-cost liquidity for our customers and
borrowers even in difficult times.
In consideration of our strong capital
position and the consistency of and
outlook for earnings, the Board of
Directors raised our quarterly dividend to
$1.50 per share of common stock for first
quarter 2025, reflecting a 7% year-over-
year increase—our fourteenth consecutive
annual increase. Over the past five years,
our total shareholder return has been
nearly 2.5 times the average of the S&P
Financials index with less than a quarter
of the earnings volatility.
Farmer Mac’s disciplined, long-term
strategic initiatives continue to drive
real impact, helping lenders and
borrowers navigate uncertainty
while expanding opportunities.
LETTER FROM OUR CEO AND CHAIR
3
FARMER MAC
4
ANNUAL REPORT 2024
STRATEGIES FOR SUCCESS
Our consistently strong results showcase the steady
execution of our long-term strategic growth objectives.
At Farmer Mac, success is built on a foundation of
deliberate strategy, disciplined execution, and a
steadfast commitment to continuous improvement. In
2024, we reinforced this philosophy through continued
measured expansion, operational enhancements, and
investments in both our people and technology.
We continue to focus on diversifying our business model,
expanding the number of customers and counterparties
we do business with across our business lines while
building expertise throughout our five operating
segments. We are broadening our reach in the sectors
we serve, developing and deepening relationships with
customers and counterparties from our Farm & Ranch
and Corporate AgFinance segments to our Power &
Utilities, Broadband Infrastructure, and Renewable Energy
segments. This diversification provides vital stability
to our business model while enabling the fulfillment
of our mission.
We believe that maintaining an exceptional workplace
culture is central to our success. In 2024, we were honored
with regional and national Top Workplaces awards—
marking a dozen such awards that we have earned through
this national employer recognition program. We believe
that a key factor enabling the success of our mission is
the workforce of dedicated and passionate professionals
who drive it forward every day. By cultivating a culture
that prioritizes our corporate values of innovation,
integrity, excellence, relationships, and passion for
our mission, we support a team that is both empowered
and aligned in accelerating rural opportunities.
2022
2023
2024
$0.0
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$100.0
$150.0
$200.0
$250.0
$300.0
$350.0
$339.6
$327.0
$171.2
$171.6
$255.5
$124.3
Net Effective Spread
Core Earnings
$ in Millions
Outstanding Business Volume
$23.0
$24.0
$25.0
$26.0
$27.0
$28.0
$29.0
$30.0
2022
2023
2024
$ in Billions
$25.9
$28.5
$29.5
OUTSTANDING
BUSINESS VOLUME
CORE EARNINGS &
NET EFFECTIVE SPREAD**
*CAGR is Compound Annual Growth Rate.
**Core earnings and net effective spread are non-GAAP measures. For a reconciliation of core earnings to GAAP net income and of net effective spread to GAAP net interest income, please refer to “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in Farmer Mac’s 2024 Annual Report on Form 10-K filed with the SEC.
7% CAGR* (2022-2024)
15% CAGR* (2022-2024) 18% CAGR* (2022-2024)
2022
2023
2024
$1,452.0
$1,501.2
$0.0
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
$200.0
$400.0
$600.0
$800.0
$1,000.0
$1,200.0
$1,400.0
$1,600.0
$ in Millions
Tier 1 Capital Ratio
Total Capital
Core Capital Above Statutory Minimum
Minimum Statutory Core Capital
Tier 1 Capital Ratio
$805.9
14.9%
15.4%
14.2%
$862.6
$917.6
$516.9
$589.4
$583.5
$1,322.8
2022
2023
2024
2025****
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
$ per Share per Quarter
Quarterly Dividends
First Quarter 2025 Dividends
$0.95
$1.10
$1.40
$1.50
ENHANCED
CAPITAL POSITION***
COMMON STOCK
QUARTERLY DIVIDENDS
For farmers, the land they work isn’t just property—for many, it’s a
legacy, built over generations. But as farmland prices rise, passing
that legacy from one generation to the next can be a challenge.
When Missouri farmer Neil Kostelecky had the opportunity to purchase
his grandfather’s 360-acre farm, he turned to HNB National Bank
for financing. Farmer Mac enabled a more efficient transaction by
purchasing Neil’s loan from HNB, helping to keep this family farm
in the family. Across the country, the secondary market liquidity
we offer through our Farm & Ranch segment is helping agricultural
lenders offer the kind of long-term, stable financing that keeps
generational farms thriving for years to come.
Keeping Family Farms in the Family
SUCCESS STORY
*CAGR is Compound Annual Growth Rate.
***Chart may not sum to total due to rounding.
****Chart shows dividend paid for first quarter 2025. The level of future quarterly dividends is subject to change.
7% Total Capital CAGR* (2022-2024)
16% CAGR* (2022-2025)
LETTER FROM OUR CEO AND CHAIR
5
FARMER MAC
6
ANNUAL REPORT 2024
“America’s farmers and ranchers have experienced
historically high input costs and volatile market
conditions in recent years. Having a reliable and stable
secondary market for agriculture loans is critical for
them to gain access to competitive financing options that
keep producers growing and our rural communities
vibrant. Farmer Mac has played a vital role in ensuring
the resiliency and stability of American agriculture, and
will continue to be key to the long-term success of many
family farming operations and the communities they call
home. I look forward to working with Farmer Mac to
strengthen the tools necessary for rural lenders to
continue providing competitive financing solutions
needed to keep American agriculture productive
domestically and competitive globally.”
SENATOR JOHN BOOZMAN (R-ARK.)
CHAIRMAN – SENATE COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
We have remained focused on strengthening our
technology infrastructure. Recognizing the increasing
importance of cybersecurity and legacy technology
remediation, we took proactive steps to modernize
architecture, enhance risk management, and support
more scalable and secure systems. These efforts not
only support the safety and integrity of our platform but
also allow us to better serve the evolving needs of our
customers and investors.
In 2024, we completed the largest systems and process
implementation project in our company’s history. The
resulting product, a system we refer to as STARS (the
Securities Treasury Accounting Reporting System)
streamlines operations and provides capabilities
supporting the entire organization. Accomplishments
like these demonstrate our expertise and ongoing
dedication in bringing complex technology projects to
fruition and strengthening our competitive advantage
in the marketplace.
Our securitization program is an important strategic
initiative for Farmer Mac, allowing us to diversify our
funding and optimize our balance sheet through efficient
capital deployment. Securitization supports our growth
strategy by targeting new asset opportunities into our
conduit. In 2024, we executed two FARM series
securitization transactions—one for $308.1 million in
April and a second for $318.8 million in November.
Securitization is a key mechanism for executing our
mission, providing liquidity, and connecting Wall Street
to rural America by channeling investment capital to rural
borrowers and communities. We appreciate the support
from customers and investors for this program and remain
committed to being a regular issuer in the market.
In 2024, we enhanced our capital position and diversified
funding sources while maintaining a commitment to
sound risk management. Our disciplined approach to
asset liability and equity capital management, combined
with uninterrupted access to the capital markets and
a strong capital base, contributes significantly to our
ability to operate safely and soundly. We believe that a
key factor in Farmer Mac’s ability to deliver competitive
liquidity is the confidence and commitment of our
investors. The stronger and more diverse investor
demand is for our debt, common and preferred equity,
and securitization offerings, the more efficiently we can
fund secondary market activities—ultimately lowering
our cost of capital and expanding our capacity to serve
rural America.
In today’s world, access to high-speed internet is more than just
a convenience—it’s a necessity for education, healthcare, and
economic opportunities. In many rural communities, however,
broadband infrastructure remains limited.
Our Broadband Infrastructure segment is helping to bridge the digital
divide. In a recent transaction, we provided $20 million in financing
to Ritter Communications, a leading telecommunications provider in
the Mid-South, to support the expansion of fiber-optic broadband in
rural Arkansas. This investment is helping to bring high-speed internet
to homes, schools, and businesses, where it can enable telehealth
access for rural healthcare providers, empower students with online
learning tools, and create new opportunities for local entrepreneurs.
By supporting projects like these, we’re helping rural America remain
connected, competitive, and equipped for the future.
Connecting Rural Communities
SUCCESS STORY
LETTER FROM OUR CEO AND CHAIR
7
FARMER MAC
8
ANNUAL REPORT 2024
“Farmer Mac’s mission to increase access to capital for
our rural communities creates opportunities for farmers,
ranchers and agribusinesses. Farmer Mac is a critical
partner for farmers and producers as they navigate
uncertainties and invest in the future of rural America.
The company’s work to finance critical infrastructure
projects promotes economic growth in our rural
communities and gives agribusinesses the foundation
they need to remain profitable for generations to come.”
REPRESENTATIVE ANGIE CRAIG (D-MINN.)
RANKING MEMBER – HOUSE COMMITTEE ON AGRICULTURE
1Small farms are defined as those that generate less than $350,000 in annual gross sales of agricultural or aquatic products; this figure includes loans
in Farm & Ranch loan purchase product only. A family farm is any farm where the majority of the business is owned by the operator and individuals
related to the operator by blood or marriage, including relatives who do not reside in the operator’s household; family farms include our Farm & Ranch
and USDA Guaranteed Loan purchase products.
LIQUIDITY IN ACTION: THE IMPACT OF OUR MISSION
FOR RURAL AMERICA
Our mission is more than a financial objective—it’s
about delivering vital liquidity to help drive economic
opportunity and prosperity by strengthening and
connecting rural America. The results we achieved in
2024 were not just numbers on a balance sheet; they
were real resources fueling rural businesses, sustaining
family farms, expanding critical infrastructure, and
strengthening entire communities.
In this year’s annual report letter, we’ve included several
success stories showcasing the impact of our mission—
demonstrating liquidity in action across the country.
These stories are only a small sampling of the thousands
of ways that our mission has impacted rural America
over the last several decades.
Throughout the year, we deployed strategic liquidity that
helped lenders manage risk, navigate interest rate
fluctuations, and extend reliable, long-term financing
to rural borrowers. As of year-end 2024, Farmer Mac
has facilitated $93 billion in cumulative business volume
since our founding—demonstrating our sustained role in
strengthening agricultural and rural markets.
By leveraging our secondary market, 1,613 sellers have
been able to serve nearly 100,000 borrowers across
America—supporting everything from keeping
generational farms in the family to financing rural
broadband expansion.
Our impact has also been visible in rural infrastructure,
where our financing played a key role in the development
of large-scale facilities and essential projects. These
investments don’t just benefit individual borrowers—they
contribute to the long-term economic vitality and
connectivity of rural America.
Through it all, we’ve remained focused on our mission,
which includes promoting the inclusion of loans to small
and family farms in the agricultural mortgage secondary
market. In our core Farm & Ranch segment, small farms
represented 76% of loans purchased in 2024, and
family farms represented 96%.1
BRADFORD T. NORDHOLM
President and
Chief Executive Officer
LOWELL L. JUNKINS
Board Chair
RESILIENCE FOR THE FUTURE
The future always brings change—economic shifts, new
challenges, and new opportunities. But if the past 37
years have proven anything, it is that Farmer Mac
remains a steadfast partner to our stakeholders
through headwinds and tailwinds alike.
Since our founding, the agriculture and infrastructure
sectors have modernized, innovated, and transformed
multiple times over. Through every cycle of change, we
have adapted, evolved, and remained a reliable source
of liquidity—helping to provide access to the financing
that rural America needs to grow and thrive.
As we look to 2025 and beyond, one thing remains
certain: We remain deeply committed to our mission,
our values, and the people, institutions, and industries
we proudly serve. The future always holds opportunities
and uncertainties, but through it all, we will strive to
continue to be a stable, reliable partner—providing
liquidity in action and accelerating rural opportunities.
Thank you for your continued trust in Farmer Mac and
your support of our mission.
LETTER FROM OUR CEO AND CHAIR
9
FARMER MAC
10
ANNUAL REPORT 2024
SEGMENTS
FARM & RANCH
Through its Farm & Ranch segment, Farmer Mac works
with customers varying from small community banks to
large financial institutions and nonbank lenders. Farmer
Mac’s innovative products and solutions help these
customers reduce interest rate risk and credit risk, manage
their capital efficiency, and offer more competitive and
efficient products and terms to better support lending
initiatives to farmers and ranchers across the country.
A tightening agricultural economy is creating the need for
additional liquidity and working capital needs for borrowers
managing through this agricultural cycle, while persistently
elevated market interest rates slowed portfolio loan
repayments. New loan purchases in 2024 significantly
outpaced the prior year, although this growth was offset
by scheduled maturities with several large AgVantage
(Wholesale Finance) counterparties. This activity primarily
reflected slower loan growth, resulting in less liquidity
needs from our AgVantage counterparties than in previous
years. The net effect of these forces contributed to positive
Farm & Ranch loan purchase portfolio growth in 2024.
This operating segment is core to our mission. While the
agricultural economy may continue to tighten, Farmer Mac
remains committed to serving this market as a reliable
partner, helping to alleviate liquidity, capital, and
concentration challenges faced by agricultural lenders of
all sizes while providing access to products they can use
to support their borrowers throughout market cycles. We
expect to see this positive momentum continue in 2025.
CORPORATE AGFINANCE
Farmer Mac’s Corporate AgFinance segment provides
financing solutions through a secondary market that
reaches across a broad portion of the agricultural supply
chain and the institutional investor community. This
segment serves a diverse set of customers ranging from
commercial banks and large financial institutions to
institutional investors and funds. They turn to Farmer Mac
for a reliable source of financial solutions to help finance
large, complex agribusinesses, vertically integrated
farming operations, and institutional investment vehicles.
For these capital-intensive needs, Farmer Mac provides
flexible and competitive debt financing solutions tailored
to meet borrowers’ varied needs, including direct loan
purchase, participation in syndicated transactions, and
wholesale financing.
We were able to purchase over $900 million in new loans
and unfunded commitments in 2024, reflecting our
continued efforts to build a strong brand in this
marketplace. Farmer Mac is prepared to continue to serve
the needs of financial institutions and their borrowers
across the agricultural supply chain.
AGRICULTURAL FINANCE
Farmer Mac’s Agricultural Finance line of business comprises the Farm & Ranch
and Corporate AgFinance operating segments. Across both segments, Farmer Mac
provides a secondary market to a diverse customer base, offering a wide range of
products and innovative solutions that assist with capital, liquidity, and portfolio
diversification needs. This business line helps agricultural lenders and financial
institutions support their customers by providing better and more efficient access
to financing solutions across American agriculture.
$20.0
$18.0
$16.0
$14.0
$12.0
$10.0
$8.0
$6.0
$4.0
$2.0
$0.0
2022
$129.1M
2023
$132.9M
2024
2022
2023
2024
$17.7B
$18.8B
$18.6B
$135.3M
$150.0
$145.0
$140.0
$135.0
$130.0
$125.0
$120.0
$115.0
$110.0
$105.0
$100.0
VOLUME ($ in Billions)
$2.0
$1.8
$1.6
$1.4
$1.2
$1.0
$0.8
$0.6
$0.4
$0.2
$0.0
VOLUME ($ in Billions)
NET EFFECTIVE SPREAD ($ in Millions)
$40.0
$36.0
$32.0
$28.0
$24.0
$20.0
$16.0
$12.0
$8.0
$4.0
$0.0
NET EFFECTIVE SPREAD ($ in Millions)
Total Business Volume
Guaranteed Securities, Loans Held in Trusts, & Other**
Long-Term Standby Purchase Commitments
AgVantage Securities (Wholesale Finance)
Loans and USDA Securities
Net Effective Spread
Total Business Volume
Loans & Unfunded Commitments
AgVantage Securities (Wholesale Finance)
Net Effective Spread
$1.6B
$29.2M
$31.2M
$30.1M
$1.7B
$1.9B
CORPORATE AGFINANCE BUSINESS
VOLUME & NET EFFECTIVE SPREAD*
FARM & RANCH BUSINESS VOLUME
& NET EFFECTIVE SPREAD*
*Net effective spread is a non-GAAP measure. For a reconciliation of net effective spread to GAAP net interest income, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in Farmer Mac’s 2024 Annual Report on Form 10-K filed with the SEC.
**“Other” Includes IO-FMGS and loans serviced for others.
A strong and stable food supply chain starts with the agricultural
businesses that keep it moving, especially in times of volatility.
America’s cattle feeders help ensure a steady supply of beef to
markets across the country—but with cattle prices surging in 2024,
many required significant capital to keep feedlots full.
When the lead lending partner to a large cattle feeder needed
incremental financing given these industry dynamics, securing
additional liquidity became essential. Farmer Mac provided incremental
liquidity through a $30 million commitment, alongside incremental
liquidity from other lending partners, to provide increased lending
capacity to help keep operations running smoothly. Through our
Corporate AgFinance segment, we help lending institutions provide
reliable financing to their customers through changing market cycles,
providing long-term support to the resilience of American agriculture.
Supporting America’s Food Supply
SUCCESS STORY
11
FARMER MAC
SEGMENTS
POWER & UTILITIES
Reliable power infrastructure is crucial in the modern age,
especially for America’s rural communities. In its Power
& Utilities segment, Farmer Mac offers a wide range of
competitively priced, flexible solutions that support the
ability of financial institutions to provide financing to a variety
of rural infrastructure borrowers. This funding is used for
electric generation, transmission, and distribution systems
to deliver safe, affordable, and reliable power to homes,
farms, businesses, and schools across rural America.
The $0.2 billion net decrease in Power & Utilities during
2024 resulted from $0.9 billion of scheduled maturities
and repayments, principally from a net decrease in
wholesale finance of $0.4 billion, partially offset by
$0.7 million of new loan purchases and unfunded loan
commitments. Investments in America’s power infrastructure
are expected to continue at or above historical levels, and
Farmer Mac is committed to being a reliable partner to
this vital sector.
BROADBAND INFRASTRUCTURE
The importance of telecommunication and data connectivity
has become increasingly evident over the last decade.
Households and agricultural enterprises require more data
and connectivity than ever to thrive. In its Broadband
Infrastructure operating segment, Farmer Mac provides a
diverse array of flexible and competitively priced solutions
that can help fund broadband projects delivering high-speed
data and telecommunications services across rural America.
Farmer Mac’s broadband portfolio grew over $300 million
during 2024, fueled by significant investments to extend
and upgrade the country’s rural broadband coverage. The
rapid growth in digital technologies will require significantly
more computing and storage capabilities and investment in
additional fiber network capacity. Our 2025 pipeline within
the Broadband Infrastructure segment remains strong, as
our robust efforts and investments to grow this portfolio
remain one of our top priorities over the foreseeable future.
RENEWABLE ENERGY
The renewable energy sector has become a cornerstone
in supporting critical energy infrastructure across rural
America. The industry has boomed in recent years, as
costs have declined and with government policies
incentivizing additional development. With its Renewable
Energy segment, Farmer Mac provides the competitive
benefits of a secondary market for financial institutions
to help finance renewable energy projects generating
and distributing energy across rural America.
In 2024, Farmer Mac’s Renewable Energy portfolio more
than tripled, reaching a total of $1.4 billion in outstanding
business volume, reflecting the continued strong demand
for renewable energy power generation and storage. We
introduced this segment in 2020 and have successfully
doubled our volume in it every year since.
Despite the potential for future policy changes that may
impact the growth of this sector, our strong competitive
advantages as a secondary market means we still see
room for continued growth. The Renewable Energy team
will strive to continue to serve as a reliable secondary
market partner to provide competitive financing solutions
to help deliver affordable renewable power to rural
communities and further the development of
infrastructure critical to the future of all Americans.
Capital-intensive investments are required to generate and deliver reliable electric
power and communications services to communities across rural America. Farmer
Mac’s Power & Utilities, Broadband Infrastructure, and Renewable Energy operating
segments help lenders finance these important expansion and improvement projects
through our efficient and competitive secondary market. Farmer Mac saw tremendous
growth across Infrastructure Finance in 2024, steadily increasing the extent to which
we help to connect rural communities by supporting the crucial access to these
services that millions of rural residents and businesses rely on.
INFRASTRUCTURE FINANCE
12
ANNUAL REPORT 2024
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
2022
2023
2024
$0.0
$3.0
$6.0
$9.0
$12.0
$15.0
$18.0
$21.0
$24.0
VOLUME ($ in Billions)
NET EFFECTIVE SPREAD ($ in Millions)
Total Business Volume
Long-Term Standby Purchase Commitments and Guaranteed Securities
Power & Utilities Loans
AgVantage Securities (Wholesale Finance)
Net Effective Spread
2022
2023
2024
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
VOLUME ($ in Billions)
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$14.0
NET EFFECTIVE SPREAD ($ in Millions)
Renewable Energy Loans & Unfunded Commitments
Net Effective Spread
$20.0M
$16.2M
$11.7M
$1.4B
$7.0B
$6.0B
$0.5B
$0.2B
$2.5M
$4.7M
$13.7M
$6.8B
$0.0
$0.1
$0.2
$0.3
$0.4
$0.5
$0.6
$0.7
$0.8
$0.9
2022
2023
2024
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
$11.0
$12.0
VOLUME ($ in Billions)
NET EFFECTIVE SPREAD ($ in Millions)
Broadband Infrastructure Loans & Unfunded Commitments
Net Effective Spread
$4.4M
$8.8M
$10.9M
$0.3B
$0.5B
$0.8B
RENEWABLE ENERGY BUSINESS VOLUME
& NET EFFECTIVE SPREAD*
POWER & UTILITIES BUSINESS VOLUME
& NET EFFECTIVE SPREAD*
BROADBAND INFRASTRUCTURE
BUSINESS VOLUME & NET EFFECTIVE SPREAD*
*Net effective spread is a non-GAAP measure. For a reconciliation of net effective spread to GAAP net interest income, please refer to “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in Farmer Mac's 2024 Annual Report on Form 10-K filed with the SEC.
13
FARMER MAC
It all starts with our employees. As Farmer Mac continues to pursue its mission
for rural America, our main engine will always be a workforce passionate about
driving positive change. Farmer Mac strives to support our employees in all aspects
of their lives, which includes, in no small part, identifying ways we can serve rural
America that go above and beyond the daily work we do in pursuit of our mission.
Brendan Walker, a student at University of Arizona’s College of Veterinary Medicine, is a
member of the second cohort of TAF Fellows. Farmer Mac is a founding funder of the
program. Brendan is pursuing mixed animal medicine to fill a critical gap in his hometown
community, where a lack of veterinary doctors means people often drive two hours for
any kind of animal care, and longer for large animals. “TAF inspired me to take more
risks, especially in my professional journey—leading me to become a founding member
of the Native American Veterinary Association (NAVA). I’m excited to complete my
education and begin practicing mixed medicine back home on the Navajo reservation.”
2024 SO OTHERS MIGHT EAT (SOME)
PHILANTHROPIC EVENT
During our 2024 All-Hands meeting, we partnered with So Others
Might Eat (SOME), a D.C.-based organization offering essential
assistance to some of our most vulnerable neighbors. About 30
employees gathered to assemble 1,400 sanitary kits for those in
need. This initiative not only provided critical support to our
community but also exemplified the spirit of integrity and
relationships that are among Farmer Mac’s core values.
THE FABRIC OF FARMER MAC
To learn more about TAF, please visit taffellows.org.
MAKING MEANINGFUL CHANGE THAT’S ROOTED IN GIVING
We welcome the opportunity to give back to our
communities and our country. Demonstrating the heart
of Farmer Mac’s mission in action, our philanthropic efforts
focus on volunteering in the communities where we live
and work, providing aid and relief for natural disasters
that impact agricultural and rural areas, and supporting
programs that help small operations, new farmers and
ranchers, and family operations grow and prosper.
From disaster relief partnerships with AgFirst, CoBank,
and others to supporting programs like the Tribal
Agricultural Fellows (TAF) initiative and the Native
Agriculture Education Fellowship Program (NAEFP), our
contributions have reached far and wide. Whether helping
Feeding America combat hunger or supporting Common
Good City Farm, every partnership has been carefully
aligned with our goal of supporting communities across
the country and bolstering the industries we work in.
14
ANNUAL REPORT 2024
We are committed to fostering a strong
workplace and are proud to be recognized
for our efforts on the national stage.
THE FABRIC OF FARMER MAC: OUR EMPLOYEES
At Farmer Mac, our dual goals—providing liquidity in pursuit of our mission and generating strong financial results—
are not contradictory but part of a united focus. Our continued strong results in both areas could not be possible
without our dedicated employees who draw on their expertise, innovation, and passion for our mission to make
Farmer Mac a pillar of stability for rural America through winds of change. Our employees make our company and
our mission come to life—they are the fabric of Farmer Mac.
Dylan Holloway,
Senior Manager
– Credit Risk,
exemplifies a
passion for rural
America both at
work and at home,
where he lives with his
wife and children on a Bethany,
Mo., farm that has been in his
family for over 100 years.
Dylan cites Farmer Mac’s strong
culture and commitment to a
“Presence with Purpose” hybrid
work model as key reasons that
have made Farmer Mac a great
place for him to work. Dylan says
that it’s “a pleasure to come to work
every day, knowing I’m helping to
deliver liquidity to rural America.
The team at Farmer Mac, made
up of some of the smartest people
I know, work at Farmer Mac because
it’s one of the best workplaces in
America. They, in turn, want to be
the best in their roles—and it shows.”
2024
2024
2024
2024
2024
2024
2024
2024
15
FARMER MAC
16
ANNUAL REPORT 2024
EXECUTIVE ROUNDTABLE
As of March 26, 2025
BOARD OF DIRECTORS & CEO
As of March 26, 2025
LOWELL L. JUNKINS, CHAIR1
Political Affairs Consultant
Lowell Junkins & Associates
Gravette, Arkansas
LAJUANA S. WILCHER, VICE CHAIR1
Owner – Scuffle Hill Farm
Partner – English, Lucas, Priest & Owsley, LLP
Bowling Green, Kentucky
CHESTER J. CULVER1
Founder
Chet Culver Group
West Des Moines, Iowa
RICHARD H. DAVIDSON3
President
Davidson Farms, Inc.
Washington Court House, Ohio
JAMES R. ENGEBRETSEN2
Retired Professor, Finance
Marriott School of Management
Brigham Young University
Provo, Utah
SARA L. FAIVRE1
Founder and General Manager
Wild Type Ranch, LLC
Dane County, Wisconsin
AMY H. GALES3
Retired Executive Vice President
CoBank
Bonita Springs, Florida
MITCHELL A. JOHNSON2
Financial Consultant
Miami, Florida
ERIC T. MCKISSACK2
Former CEO
Channing Capital Management, LLC
Chicago, Illinois
JEFFREY L. PLAGGE2
Director
Northwest Financial Corporation
and Northwest Bank
Arnolds Park, Iowa
KEVIN G. RIEL3
President
Double ‘R’ Hop Ranches, Inc.
Yakima, Washington
ROBERT G. SEXTON3
President
Oslo Citrus Growers Association
Vero Beach, Florida
DANIEL L. SHAW3
Owner and Operator
Shaw Farms, LLC
Edgar, Nebraska
CHARLES A. STONES1
Former President
Kansas Bankers Association
Topeka, Kansas
TODD P. WARE2
President and Chief Executive Officer
Licking Rural Electrification –
The Energy Cooperative
Newark, Ohio
1 Presidential Appointee
2 Director elected by holders of Class A Common Stock
3 Director elected by holders of Class B Common Stock
From Left: James Engebretsen, Amy Gales,
Richard Davidson, Robert Sexton, Charles
Stones, LaJuana Wilcher, Chester Culver, Lowell
Junkins, Mitchell Johnson, Bradford Nordholm,
Todd Ware, Sara Faivre, Jeffrey Plagge, Kevin
Riel, Eric McKissack
Not Pictured: Daniel Shaw
TODD A. BATTA
Vice President –
Government Affairs
LISA MEYER
Vice President –
Marketing and Corporate
Communications
CATHERINE D. BIRR
Chief of Staff
ZACHARY N. CARPENTER
Executive Vice President –
Chief Business Officer
STEPHEN P. MULLERY
Executive Vice President –
General Counsel and Secretary
APARNA RAMESH
Executive Vice President –
Chief Financial Officer
and Treasurer
BRADFORD T. NORDHOLM
President and
Chief Executive Officer
BRIAN M. BRINCH
Executive Vice President –
Chief Risk Officer
MARC J. CRADY
Senior Vice President –
Chief Credit Officer
SEAN T. DATCHER
Senior Vice President –
Chief Information Officer
ROBERT J. MAINES
Senior Vice President –
Operations
KERRY T. WILLIE
Senior Vice President –
Chief Human Resources Officer
As filed with the Securities and Exchange Commission on February 21, 2025
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2024
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____.
Commission File Number 001-14951
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
(Exact name of registrant as specified in its charter)
Federally chartered instrumentality
of the United States
52-1578738
(State or other jurisdiction of
incorporation or organization)
(I.R.S. employer identification number)
2100 Pennsylvania Avenue N.W., Suite 450 N,
Washington, DC
20037
(Address of principal executive offices)
(Zip code)
(202) 872-7700
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol
Exchange on which registered
Class A voting common stock
AGM.A
New York Stock Exchange
Class C non-voting common stock
AGM
New York Stock Exchange
5.700% Non-Cumulative Preferred Stock, Series D
AGM.PRD
New York Stock Exchange
5.750% Non-Cumulative Preferred Stock, Series E
AGM.PRE
New York Stock Exchange
5.250% Non-Cumulative Preferred Stock, Series F
AGM.PRF
New York Stock Exchange
4.875% Non-Cumulative Preferred Stock, Series G
AGM.PRG
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: Class B voting common stock
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.
Yes
o
No
x
1
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.
Yes o No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer,"
"accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange
Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to Section
13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment
of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act
(15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial
statements of the registrant included in the filing reflect the correction of an error to previously issued financial
statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of
incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery
period pursuant to §240.10D-1(b) ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
The aggregate market value of the Class A voting common stock and Class C non-voting common stock held by
non-affiliates of the registrant was $1,754,045,827 as of June 30, 2024, the last business day of the registrant's most
recently completed second fiscal quarter, based upon the closing prices for the respective classes on June 30, 2024
reported by the New York Stock Exchange. For purposes of this information, the outstanding shares of Class A
voting common stock and Class C non-voting common stock held by directors, executive officers, and significant
stockholders of the registrant, as applicable, as of June 30, 2024 were deemed to be held by affiliates. The aggregate
market value of the Class B voting common stock is not ascertainable due to the absence of publicly available
quotations or prices for the Class B voting common stock as a result of the limited market for, and infrequency of
trades in, Class B voting common stock and the fact that any such trades are privately negotiated transactions.
As of February 7, 2025, the registrant had outstanding 1,030,780 shares of Class A voting common stock,
500,301 shares of Class B voting common stock, and 9,360,484 shares of Class C non-voting common stock.
2
DOCUMENTS INCORPORATED BY REFERENCE
Certain information contained in the registrant's Proxy Statement for the 2025 Annual Meeting of Stockholders is
incorporated herein by reference in Part III of this Annual Report on Form 10-K. The Proxy Statement will be filed
with the Securities and Exchange Commission within 120 days after the end of the registrant's fiscal year to which
this report relates.
Auditor Firm ID: 238
Auditor Name: PricewaterhouseCoopers LLP
Auditor Location: Washington DC, USA
3
Table of Contents
Forward-Looking Statements
6
PART I
Item 1.
Business
8
General
8
Farmer Mac's Lines of Business
10
Competition
20
Capital and Corporate Governance
21
Human Capital
23
Available Information
26
Funding of Guarantee and LTSPC Obligations
26
Financing
27
Debt Issuance
27
Equity Issuance
27
Farmer Mac's Authority to Borrow from the U.S. Treasury
31
Government Regulation of Farmer Mac
32
General
32
Office of Secondary Market Oversight
32
Capital Standards
33
Liquidity Requirements
36
Item 1A.
Risk Factors
37
Item 1B.
Unresolved Staff Comments
51
Item 1C.
Cybersecurity
51
Item 2.
Properties
53
Item 3.
Legal Proceedings
53
Item 4.
Mine Safety Disclosures
53
PART II
54
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of
Equity Securities
54
Item 6.
[Reserved]
56
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
57
Overview
57
Critical Accounting Estimates
61
Use of Non-GAAP Measures
62
Results of Operations
64
Outlook
82
Balance Sheet Review
89
Risk Management
90
Liquidity and Capital Resources
106
Other Matters
109
Supplemental Information
110
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
114
Item 8.
Financial Statements
115
Consolidated Balance Sheets
119
4
Consolidated Statements of Operations
120
Consolidated Statements of Comprehensive Income
121
Consolidated Statements of Equity
122
Consolidated Statements of Cash Flows
123
Notes to Consolidated Financial Statements
124
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
192
Item 9A.
Controls and Procedures
192
Item 9B.
Other Information
193
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
193
PART III
194
Item 10.
Directors, Executive Officers, and Corporate Governance
194
Item 11.
Executive Compensation
194
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
194
Item 13.
Certain Relationships and Related Transactions and Director Independence
194
Item 14.
Principal Accountant Fees and Services
194
PART IV
194
Item 15.
Exhibits
194
Item 16.
Form 10-K Summary
197
Signatures
197
5
FORWARD-LOOKING STATEMENTS
In this report, the words "Farmer Mac," "we," "our," and "us" refer to the Federal Agricultural Mortgage
Corporation unless otherwise stated or unless the context otherwise requires.
Some statements made in this report, such as in the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" section, are "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995 about management's current expectations for Farmer Mac's
future financial results, business prospects, and business developments. Forward-looking statements
include, without limitation, any statement that may predict, forecast, indicate, or imply future results,
performance, or achievements. These statements typically include terms such as "anticipates," "believes,"
"continues," "estimates," "expects," "forecasts," "intends," "outlook," "plans," "potential," "project,"
"target," and similar terms, and future or conditional tense verbs like "could," "may," "might," "should,"
"will," and "would." This report includes forward-looking statements addressing Farmer Mac's:
•
prospects for earnings;
•
prospects for growth in business volume;
•
trends in net interest income and net effective spread;
•
trends in portfolio credit quality, delinquencies, substandard assets, credit losses, and
provisions for expected credit losses;
•
assessment of economic and market trends;
•
trends in expenses;
•
trends in investment securities;
•
prospects for asset impairments and allowance for losses;
•
changes in capital position;
•
future dividend payments; and
•
other business and financial matters.
Management's expectations for Farmer Mac's future necessarily involve assumptions, estimates, and the
evaluation of risks and uncertainties. Various factors or events, both known and unknown, could cause
Farmer Mac's actual results to differ materially from the expectations as expressed or implied by the
forward-looking statements, including the factors discussed under "Risk Factors" in Part I, Item 1A of this
report, as well as uncertainties about:
•
the availability to Farmer Mac of debt and equity financing and, if available, the
reasonableness of rates and terms;
•
legislative or regulatory developments that could affect Farmer Mac, its sources of business, or
agricultural or infrastructure industries;
•
fluctuations in the fair value of assets held by Farmer Mac and its subsidiaries;
•
the level of lender interest in Farmer Mac's products and the secondary market provided by
Farmer Mac;
•
the general rate of growth in agricultural mortgage and infrastructure indebtedness;
•
the effect of economic conditions stemming from disruptive global events or otherwise on
agricultural mortgage or infrastructure lending, borrower repayment capacity, or collateral
values, including inflation, fluctuations in interest rates, changes in U.S. trade policies,
fluctuations in export demand for U.S. agricultural products and foreign currency exchange
6
rates, supply chain disruptions, increases in input costs, labor availability, and volatility in
commodity prices;
•
the degree to which Farmer Mac is exposed to interest rate risk resulting from fluctuations in
Farmer Mac's borrowing costs relative to market indexes;
•
developments in the financial markets, including possible investor, analyst, and rating agency
reactions to events involving government-sponsored enterprises, including Farmer Mac;
•
the effects of the Federal Reserve’s efforts to achieve monetary policy normalization to
respond to inflation and employment levels; and
•
other factors that could hinder agricultural mortgage lending or borrower repayment capacity,
including the effects of severe weather, flooding and drought, or fluctuations in agricultural
real estate values.
Considering these potential risks and uncertainties, no undue reliance should be placed on any forward-
looking statements expressed in this report. Farmer Mac undertakes no obligation to release publicly the
results of revisions to any forward-looking statements to reflect new information or any future events or
circumstances, except as otherwise required by applicable law. The information in this report is not
necessarily indicative of future results.
7
PART I
Item 1.
Business
GENERAL
Farmer Mac is a stockholder-owned, federally chartered corporation that combines private capital and
public sponsorship to serve a public purpose. Congress has charged Farmer Mac, in its charter, with the
mission of providing a secondary market for a variety of loans made to borrowers in rural America. A
secondary market is an economic arrangement in which the owners of financial assets, such as the
originators of loans, may sell all or part of those assets or pay a fee to offset some or all of the inherent
risks of holding the assets. To fulfill Farmer Mac's mission to increase the accessibility of financing to
provide vital liquidity for American agriculture and rural infrastructure, its secondary market activities
include:
•
purchasing eligible loans directly from lenders (including participation interests, syndicated notes,
revolving and non-revolving credit facilities, and unfunded commitments to make advances on
loans);
•
guaranteeing and purchasing securities issued by lenders and other financial institutions that are
secured by pools of eligible loans (Farmer Mac refers to these securities as "AgVantage," a
registered trademark of Farmer Mac);
•
issuing and guaranteeing securities that represent interests in, or obligations secured by, pools of
eligible loans (together with AgVantage, Farmer Mac refers to these securities as "Farmer Mac
Guaranteed Securities");
•
servicing (including as master servicer) eligible loans, including loans that have been purchased or
securitized by Farmer Mac or that would be eligible for purchase by Farmer Mac but are owned by
a third party; and
•
providing long-term standby purchase commitments ("LTSPCs") for eligible loans.
Farmer Mac Guaranteed Securities may be retained by the seller of the underlying loans, retained by
Farmer Mac, or sold to third-party investors.
Farmer Mac was established under federal legislation first enacted in 1988 and amended most recently in
2018 – Title VIII of the Farm Credit Act of 1971 (12 U.S.C. §§ 2279aa et seq.), which is referred to as
Farmer Mac's charter. Farmer Mac is a government-sponsored enterprise ("GSE") by virtue of the status
conferred by its charter. The charter provides that Farmer Mac has the power to establish, acquire, and
maintain affiliates under applicable state law to carry out any activities that Farmer Mac otherwise would
perform directly. Farmer Mac established its two existing subsidiaries – Farmer Mac II LLC and Farmer
Mac Mortgage Securities Corporation – under that power.
Farmer Mac is an institution of the Farm Credit System ("FCS"), which is composed of the banks,
associations, and related entities, including Farmer Mac and its subsidiaries, regulated by the Farm Credit
Administration ("FCA"), an independent agency in the executive branch of the United States
government. Although Farmer Mac is an institution of the FCS, it is not liable for any debt or obligation of
any other institution of the FCS. None of FCA, the FCS, or any other individual institution of the FCS is
liable for any debt or obligation of Farmer Mac or its subsidiaries. The debts and obligations of Farmer
Mac and its subsidiaries are not guaranteed by the full faith and credit of the United States of America.
8
Farmer Mac's two primary sources of revenue are:
•
interest income earned on assets held on balance sheet, net of related funding costs and interest
payments and receipts on financial derivatives; and
•
guarantee and commitment fees received for outstanding guaranteed securities and LTSPCs.
Farmer Mac funds its purchases of eligible loans and securities primarily by issuing debt obligations of
various maturities in the public capital markets. Farmer Mac also uses the proceeds of debt issuance to
fund liquidity investments that must comply with policies adopted by Farmer Mac's board of directors and
with FCA regulations, which establish limitations on asset class, dollar amount, issuer concentration, and
credit quality. Those regulations can be found at 12 C.F.R. §§ 652.1-652.45 ("Liquidity and Investment
Regulations"). Farmer Mac's regular debt issuance supports its access to the capital markets, and Farmer
Mac's liquidity investments provide an alternative source of funds should market conditions become
unfavorable. As of December 31, 2024, Farmer Mac had $2.2 billion of discount notes and $25.4 billion
of medium-term notes outstanding. For more information about Farmer Mac's eligible loans, securities,
and liquidity investments, as well as its financial performance and sources of capital and liquidity, see
"Management's Discussion and Analysis of Financial Condition and Results of Operations." For more
information about Farmer Mac's debt issuance, see "Business—Financing—Debt Issuance."
Secondary Market
Farmer Mac's activities are intended to provide lenders with an efficient and competitive secondary market
that enhances these lenders' ability to offer competitively-priced financing solutions to borrowers. This
secondary market is designed to increase the accessibility of financing at competitive interest rates to
America's rural communities and agricultural sectors, as well as to provide borrowers with the benefits of
capital markets pricing and product innovation. The secondary market provided by Farmer Mac functions
as a bridge between the public capital markets and the U.S. agricultural and rural credit markets to provide
vital liquidity by attracting additional capital sources for financing rural America and agricultural
borrowers.
Farmer Mac's purchases of loans and securities and its sale of guaranteed securities to investors increase
lenders' liquidity and lending capacity and provide a stable source of funding for lenders that extend credit
to the agricultural and rural credit markets. Farmer Mac's issuance of LTSPCs for loans held by lenders
and its issuance of guaranteed securities to lenders in exchange for the related securitized loans could
result in lower regulatory capital requirements and reduced borrower or commodity concentration
exposure for many lenders, thereby expanding their lending capacity. By providing efficient and
competitive financing solutions, Farmer Mac has the potential to increase lending flexibility for rural
credit markets, which may result in lower interest rates paid on loans made by lenders to rural and
agricultural borrowers.
Farmer Mac markets a mix of products to lenders who may need capital, liquidity, portfolio
diversification, and/or access to a wide variety of loan products, including those with long-term fixed
rates. As part of its outreach strategy, Farmer Mac engages with current and prospective lenders to identify
how their use of Farmer Mac's secondary market could further support their origination efforts and drive
efficient capital deployment to agricultural communities and rural America. Farmer Mac also provides
wholesale funding for institutional investors in agricultural assets that qualify as eligible collateral under
Farmer Mac's charter. For these potential issuers, Farmer Mac directs its outreach efforts through its
business relationships within the agricultural community and through outreach to institutions whose
9
profile may benefit from wholesale funding. Farmer Mac seeks to maximize the use of technology to
support these business development efforts.
FARMER MAC'S LINES OF BUSINESS
Farmer Mac engages in a variety of secondary market activities across its two lines of business—
Agricultural Finance and Infrastructure Finance. Within those two lines of business are five operating
segments: Farm & Ranch, Corporate AgFinance, Power & Utilities, Broadband Infrastructure, and
Renewable Energy, as shown in the table below:
Agricultural Finance
Infrastructure Finance
Farm &
Ranch
Corporate
AgFinance
Power &
Utilities
Broadband
Infrastructure
Renewable
Energy
Interest-earning assets
Loans
X
X
X
X
X
Loans held in securitization trusts
(single-class)1
X
AgVantage Securities1
X
X
X
Interest-only portions of agricultural
mortgage-backed securities ("IO")1
X
USDA Securities
X
Products and services that earn fee
income
LTSPCs
X
X
Unfunded loan commitments
X
X
X
X
X
Structured securitization
transactions1
X
Loan servicing
X
Other Farmer Mac Guaranteed
Securities1
X
1 These categories comprise "Farmer Mac Guaranteed Securities."
The loans (and interests in those loans) eligible for Farmer Mac's secondary market activities in each of
Farmer Mac's lines of business include:
•
mortgage loans secured by first liens on real estate used in agricultural production or processing,
including part-time farms and rural housing loans, as well as agricultural and rural development
loans guaranteed by the United States Department of Agriculture ("USDA") in the Agricultural
Finance line of business; and
•
loans by lenders organized as cooperatives to finance electrification and telecommunications
systems and renewable energy providers or projects in rural areas in the Infrastructure Finance line
of business.
As of December 31, 2024, the total outstanding business volume in Farmer Mac's two lines of business
(Agricultural Finance and Infrastructure Finance) was $29.5 billion. The following table presents the
outstanding balances under Farmer Mac's two lines of business as of December 31, 2024 and 2023:
10
Lines of Business - Outstanding Business Volume
On or Off
Balance Sheet
As of December 31,
2024
As of December 31,
2023
(in thousands)
Agricultural Finance:
Farm & Ranch:
Loans
On-balance sheet
$
5,414,732
$
5,133,450
Loans held in consolidated trusts:
Beneficial interests owned by third-party investors (single-
class)(1)
On-balance sheet
885,295
870,912
Beneficial interests owned by third-party investors (structured)(1)
On-balance sheet
1,152,988
561,349
IO-FMGS(2)
On-balance sheet
8,710
9,409
USDA Securities
On-balance sheet
2,402,423
2,368,872
AgVantage Securities(1)
On-balance sheet
4,720,000
5,835,000
LTSPCs and unfunded loan commitments
Off-balance sheet
3,070,554
2,999,943
Other Farmer Mac Guaranteed Securities(3)
Off-balance sheet
426,310
452,602
Loans serviced for others
Off-balance sheet
525,956
577,264
Total Farm & Ranch
$
18,606,968
$
18,808,801
Corporate AgFinance:
Loans
On-balance sheet
$
1,381,674
$
1,259,723
AgVantage Securities(1)
On-balance sheet
280,297
288,879
Unfunded loan commitments
Off-balance sheet
225,734
145,377
Total Corporate AgFinance
$
1,887,705
$
1,693,979
Total Agricultural Finance
$
20,494,673
$
20,502,780
Infrastructure Finance:
Power & Utilities:
Loans
On-balance sheet
$
2,886,576
$
2,616,359
AgVantage Securities(1)
On-balance sheet
3,521,143
3,898,468
LTSPCs and unfunded loan commitments
Off-balance sheet
401,647
464,743
Total Power & Utilities
$
6,809,366
$
6,979,570
Broadband Infrastructure:
Loans
On-balance sheet
$
622,207
$
478,118
Unfunded loan commitments
Off-balance sheet
180,259
23,035
Total Broadband Infrastructure
$
802,466
$
501,153
Renewable Energy:
Loans
On-balance sheet
$
1,265,700
$
440,286
Unfunded loan commitments
Off-balance sheet
150,825
47,235
Total Renewable Energy
$
1,416,525
$
487,521
Total Infrastructure Finance
$
9,028,357
$
7,968,244
Total
$
29,523,030
$
28,471,024
(1)
A type of Farmer Mac Guaranteed Security.
(2)
An interest-only Farmer Mac Guaranteed Security retained as part of a structured securitization.
(3)
Other categories of Farmer Mac Guaranteed Securities that were sold by Farmer Mac to third parties.
11
Farmer Mac conducts its business within two lines of business that consist of seven operating segments:
Farm & Ranch, Corporate AgFinance, Power & Utilities, Broadband Infrastructure, Renewable Energy,
Funding, and Investments. Prior to fourth quarter 2024 the Power & Utilities segment was reported as the
Rural Utilities segment that also included the financial results of Broadband Infrastructure loans. Starting
in fourth quarter 2024, Farmer Mac renamed the Rural Utilities segment as Power & Utilities and
separately reported the results of Broadband Infrastructure. All prior period information has been recast to
reflect this new alignment of Farmer Mac's operating segments. For more financial information about
Farmer Mac's reportable operating segments, see Note 2(q) and Note 14 to the consolidated financial
statements. The following sections describe Farmer Mac's activities under the Agricultural Finance and
Infrastructure Finance lines of business.
Agricultural Finance
The operations and financial results of the Farm & Ranch and Corporate AgFinance segments are within
our Agricultural Finance line of business. The Farm & Ranch segment includes the financial results of the
USDA Securities portfolio and Farm & Ranch loans and AgVantage securities. The Corporate AgFinance
segment includes loans and AgVantage securities to larger and more complex farming operations,
agribusinesses focused on food and fiber processing, and other supply chain production.
Farmer Mac provides a secondary market for eligible loans in Farmer Mac's Agricultural Finance line of
business by (1) purchasing and retaining eligible loans and securities, (2) guaranteeing the payment of
principal and interest on securities that represent interests in, or obligations secured by, pools of eligible
loans, (3) servicing (including as master servicer) eligible loans, and (4) issuing LTSPCs for designated
eligible loans. Farmer Mac is compensated for these activities through net interest income on loans and
securities held on balance sheet, guarantee fees earned on securities issued to third parties, servicing fees
on securitized loans and loans serviced for others, and commitment fees earned on loans in LTSPCs and
on unfunded loan commitments.
Loan Eligibility
To be eligible for the Agricultural Finance line of business, a loan must either:
•
be an agricultural mortgage loan (referred to as "Agricultural Finance mortgage loans") that is
◦
secured by a fee simple mortgage or a leasehold mortgage with status as a first lien on
agricultural real estate (including part-time farms and rural housing) located within the
United States; and
◦
an obligation of a citizen or national of the United States, an alien lawfully admitted for
permanent residence in the United States, or a private corporation or partnership that is
majority-owned by U.S. citizens, nationals, or legal resident aliens that, in each case, has
training or farming experience that is sufficient to ensure a reasonable likelihood that the
loan will be repaid according to its terms; or
•
be the guaranteed portion of a loan guaranteed by the USDA under the Consolidated Farm and
Rural Development Act (7 U.S.C. § 1921 et seq.) (referred to as "USDA Securities").
Farmer Mac's charter authorizes a maximum loan size (adjusted annually for inflation) for an eligible
Agricultural Finance mortgage loan secured by more than 2,000 acres of agricultural real estate. That
12
maximum loan size was $17.4 million as of December 31, 2024. The charter does not prescribe a
maximum loan size or a total borrower exposure for an eligible Agricultural Finance mortgage loan
secured by 2,000 acres or less of agricultural real estate. However, an internal policy approved by Farmer
Mac's board of directors limits the cumulative direct credit exposure to any one borrower or group of
related borrowers on loans secured by 2,000 acres or less of agricultural real estate to 10% of Farmer
Mac's Tier 1 capital ($150.1 million as of December 31, 2024). For Agricultural Finance mortgage loans,
eligible agricultural real estate consists of one or more parcels of land, which may be improved by
permanently affixed buildings or other structures, that (i) is used for the production of one or more
agricultural commodities or products and (ii) either consists of a minimum of five acres or generates
minimum annual receipts of $5,000.
As required by Farmer Mac's charter, Farmer Mac has established underwriting, security appraisal, and
repayment standards for eligible loans that consider the nature, risk profile, and other differences between
different categories of eligible loans. The charter prescribes that the following minimum standards must be
applied to all Agricultural Finance mortgage loans:
•
provide that no loan with a loan-to-value ratio ("LTV") more than 80% may be eligible;
•
require each borrower to demonstrate sufficient cash flow to adequately service the loan;
•
require sufficient documentation standards;
•
protect the integrity of the appraisal process for any loan; and
•
confirm that the borrower is or will be actively engaged in agricultural production.
Underwriting and Collateral Standards - Farm & Ranch
Farmer Mac accepts direct credit exposure to borrowers on Agricultural Finance mortgage loans in its
Farm & Ranch reportable operating segment (referred to as "Farm & Ranch loans") through its loan
purchases, unfunded loan commitments, LTSPCs, and Farmer Mac Guaranteed Securities that represent
interests in, or obligations secured by, pools of eligible Farm & Ranch loans but that are not AgVantage
securities ("Farm & Ranch Guaranteed Securities"). Farmer Mac applies credit underwriting standards and
methodologies to help assess exposures to Farm & Ranch loans, which may include collateral valuation,
financial metrics, and other appropriate borrower financial and credit information.
Farm & Ranch loans typically are required to meet specific underwriting criteria established by Farmer
Mac or demonstrate compensating strengths in one or more other underwriting criteria. Farmer Mac relies
on the combined expertise of experienced internal agricultural credit underwriters and loan servicers,
along with external agricultural loan servicing and collateral valuation contractors, to perform the
necessary underwriting, servicing, and collateral valuation functions on Farm & Ranch loans.
USDA Securities are exempted from the credit underwriting, collateral valuation, documentation, and
other standards that other loans must meet to be eligible for the secondary market provided by Farmer
Mac and are exempted from any diversification and internal credit enhancement that may be required of
pools of other eligible loans. Prior to 2024, Farmer Mac purchased nearly all of its USDA Securities
through Farmer Mac II LLC, a subsidiary of Farmer Mac that had operated substantially all of the business
related to Farmer Mac's USDA Securities since 2010. Beginning in January 2024, Farmer Mac resumed its
direct purchase of USDA Securities, leaving the Farmer Mac II LLC subsidiary's portfolio in a "run-off"
mode with no new USDA Securities being purchased in the subsidiary's name.
13
Underwriting and Collateral Standards - Corporate AgFinance
Farmer Mac accepts direct credit exposure to borrowers on Agricultural Finance mortgage loans in Farmer
Mac’s Corporate AgFinance reportable operating segment (referred to as “Corporate AgFinance loans”)
through its loan purchases and unfunded commitments. Farmer Mac applies credit underwriting standards
and methodologies to help assess exposures to Corporate AgFinance loans, which may include cash flow,
leverage, and liquidity assessment, financial metrics analysis, collateral valuation, and other appropriate
borrower financial and credit information.
Corporate AgFinance loan borrowers tend to be larger and more complex operations than Farm & Ranch
loan borrowers (generally loan sizes more than $10 million) and typically are agribusinesses focused on
agriculture production, food and fiber processing, and other supply chain production. The underwriting for
loans to agribusinesses typically relies upon enterprise value, meaning the debt is generally secured by all
business assets and common stock (in addition to first lien mortgages) of the borrower and the value of the
borrowing entity depends on its ability to generate recurring positive cash flow. Enterprise value is the
estimated value of the borrower as a going concern, which is estimated using one or more valuation
techniques such as: discounted cash flow, cash flow multiples, asset liquidation, or other valuation
techniques. Thus, Corporate AgFinance loans often have a different credit risk profile than Farm & Ranch
loans. Farmer Mac has implemented methodologies and parameters to help assess credit risk and has
established specific underwriting criteria for Corporate AgFinance loans based on the sector, borrower
construct, and transaction complexity. Due to the larger loan sizes and different credit risk profiles, Farmer
Mac thoroughly analyzes each prospective Corporate AgFinance loan, including assessing the borrower's
leverage, cash flows, liquidity, revenue and margin trends, as well as evaluating the borrower's suppliers,
customers, market share, and competition. Any underlying weaknesses are assessed and analyzed in
conjunction with any compensating strengths. Corporate AgFinance loans also typically require ongoing
monitoring of reporting requirements and financial and non-financial covenants. Farmer Mac relies on the
experience of internal underwriters with the expertise to analyze large, complex farming operations and
agribusiness loans, along with collateral valuation contractors, and legal counsel to perform the necessary
diligence to assess the overall credit risk and loan structures of these transactions. Farmer Mac has
developed business operating processes and skill sets to source, underwrite, close, and service Corporate
AgFinance loans. Those processes and skill sets are different than those required for Farm & Ranch loans
and, accordingly, have a higher operating expense profile than for Farm & Ranch loans.
Lenders
Farmer Mac approves lenders into its network of Farm & Ranch loan sellers based on an assessment of the
lender's credit profile, which may include factors such as the institution's credit rating, origination history,
or financial profile. Most lenders that participate in Farmer Mac's secondary market for Farm & Ranch
loans meet prescribed criteria that Farmer Mac establishes for loan-selling counterparties, which typically
include the requirement to:
•
own a requisite amount of Farmer Mac common stock according to a schedule prescribed for the
size and type of institution;
•
have, in the judgment of Farmer Mac, the ability and experience to make or purchase and sell
Farm & Ranch loans and service those loans in accordance with Farmer Mac's requirements either
through the lender's own staff or through contractors and originators, as well as have appropriate
internal controls, policies, and procedures;
•
maintain a minimum amount of net liquidity or appropriate credit enhancements; and
14
•
enter into a Seller/Servicer Agreement, which requires compliance with the terms of Farmer
Mac's Seller/Servicer Guide, including providing representations and warranties about the
eligibility of the loans and accuracy of loan data provided to Farmer Mac.
Any lender authorized by the USDA to obtain a USDA guarantee on a loan may participate in Farmer
Mac's secondary market for USDA Securities.
Farmer Mac purchases Corporate AgFinance loans and unfunded commitments from a diverse set of
lenders that support financing of the agriculture sector. Lenders may be existing Farm & Ranch lenders
that have larger, more complex borrowers in their territories, as well as larger financial and non-bank
institutions, such as national and regional banks, insurance companies, Farm Credit System institutions,
and other non-traditional lending organizations, that structure and originate transactions for larger, more
complex farming operations and agribusinesses.
Farmer Mac evaluates each lender that originates Corporate AgFinance loans to assess the experience and
capabilities of the lender’s ability to originate, structure, distribute, and monitor Corporate AgFinance
transactions. In many instances, Farmer Mac will purchase loans and unfunded commitments from lenders
that structure and arrange large, syndicated transactions involving numerous lenders that are necessary to
support the larger transaction loan size. In these cases, Farmer Mac typically assesses each arranger’s
capabilities and experience in arranging syndicated loans. Because Corporate AgFinance loans are
typically offered to Farmer Mac without or with few representations and warranties, Farmer Mac places a
greater emphasis on underwriting and legal documentation due diligence in connection with its purchase
of these loans to mitigate risks associated with the transaction, including loan documentation, borrower
eligibility, and loan data.
Loan Servicing
Farmer Mac services a sizeable portion of its Agricultural Finance mortgage loan and USDA Securities
portfolios, as well as a smaller portfolio of eligible agricultural mortgage loans that are held by an
unrelated third party. Farmer Mac also continues to contract with other institutions to undertake most of
the servicing responsibilities for the remaining portion of its Agricultural Finance mortgage loans in
accordance with Farmer Mac's specified servicing requirements or in accordance with the servicing
standards established by the servicing institution if the institution's standards are acceptable to Farmer
Mac. For these loans, the servicer may or may not be the same entity as the lender that sold the loans to
Farmer Mac. For Farm & Ranch loans for which the servicer is not the originating lender, the originating
lender often retains some servicing responsibility, particularly with direct borrower contact, which is
referred to as "field servicing." Field servicers may enter into contracts with Farmer Mac's servicers that
specify their field servicing responsibilities.
For Farmer Mac's USDA Securities, the lender on each USDA-guaranteed loan is required by regulation
to retain the unguaranteed portion of the guaranteed loan, to service the entire underlying guaranteed loan
(including the USDA-guaranteed portion of that loan), and to remain mortgagee and/or secured party of
record, if applicable. The USDA-guaranteed portion and the unguaranteed portion of the loan are to be
secured by the same collateral with equal lien priority. The USDA-guaranteed portion of a loan cannot be
paid later than, or in any way be subordinated to, the related unguaranteed portion.
15
Other Products - Agricultural Finance
AgVantage Securities
Under the AgVantage securities product line, Farmer Mac guarantees and purchases securities issued by
lenders and other financial institutions (including financial funds and real estate investment funds) that are
secured by pools of eligible loans. Typically, Farmer Mac retains AgVantage securities in its portfolio.
Most of the AgVantage securities in Farmer Mac's Agricultural Finance line of business are securities
issued by agricultural lenders that are secured by pools of Farm & Ranch loans. The AgVantage securities
in the Agricultural Finance line of business also include securities issued by other financial institutions
(including financial funds and institutional real estate investors) secured by mortgage loans that generally
have different credit profiles, structural characteristics, and loan terms than typical Farm & Ranch loans.
The loans serving as collateral for these AgVantage securities require a more comprehensive underwriting
that more closely approximates Farmer Mac's underwriting for Corporate AgFinance loans.
Farmer Mac has direct credit exposure to the general credit of the issuers of AgVantage securities and
assumes the ultimate credit risk of an issuer default on the AgVantage securities. Before approving an
institution as an issuer in an AgVantage transaction, Farmer Mac assesses the issuer's creditworthiness as
well as the credit quality and performance of the issuer's loan portfolio and loan underwriting
standards. Farmer Mac continues to monitor the counterparty risk assessment on an ongoing basis after the
AgVantage security is issued. In addition to being a general obligation of the issuer, all AgVantage
securities must be secured by eligible loans or eligible securities guaranteed by Farmer Mac in an amount
at least equal to the outstanding principal amount of the issuer's AgVantage securities. As a result, Farmer
Mac has indirect credit exposure to the loans or guaranteed securities that are pledged to secure the
AgVantage securities, which comprise collateral for Farmer Mac in the event of a default by the issuer.
Loans pledged under AgVantage securities are serviced by the issuers of the securities (or their affiliated
servicing institutions) in accordance with these institutions' servicing procedures. Farmer Mac reviews
these servicing procedures before purchasing AgVantage securities from the issuer. In AgVantage
transactions, the issuer is generally required to remove from the pool of pledged collateral any loan that
becomes and remains delinquent in the payment of principal or interest and to replace the delinquent loan
with another eligible loan that is current in payment or to pay down the AgVantage securities to maintain
the minimum required collateralization level.
For AgVantage securities secured by loans eligible for Farmer Mac's Agricultural Finance line of
business, Farmer Mac currently requires the general obligation to be over-collateralized, either by more
eligible loans or any of the following types of assets:
•
cash;
•
securities issued by the U.S. Treasury or guaranteed by an agency or instrumentality
of the United States;
•
other highly-rated securities; or
•
other instruments approved by Farmer Mac.
The required collateralization level for the AgVantage securities secured by Agricultural Finance
mortgage loans currently ranges from 103% to 125%. The required collateralization level is determined
based on credit factors related to the issuer and the credit profile of the loans serving as collateral, is
established when the AgVantage facility is entered into with the counterparty, and does not change during
16
the life of the AgVantage securities issued under the facility unless mutually agreed by Farmer Mac and
the counterparty.
For AgVantage securities that are secured by eligible Agricultural Finance mortgage loans, Farmer Mac
requires that the loans meet the minimum standards set forth in the charter for those types of loans with a
maximum limit of $75.0 million in cumulative exposure to any one borrower or related borrowers on the
loans pledged as collateral by an AgVantage issuer.
Purchase Commitments and Guarantees
Farmer Mac offers two credit enhancement alternatives to direct loan purchases for Farm & Ranch loans
that allow approved lenders the ability to retain the cash flow benefits of their loans and increase their
liquidity and lending capacity: (1) LTSPCs and (2) Farm & Ranch Guaranteed Securities. In LTSPCs and
Farm & Ranch Guaranteed Securities, the lender effectively transfers the credit risk on their eligible loans
because, through Farmer Mac's commitment to purchase the loan (in the case of LTSPCs) or Farmer Mac's
guarantee (in the case of Farm & Ranch Guaranteed Securities), Farmer Mac assumes the ultimate credit
risk of borrower defaults on the related loans.
An LTSPC permits the lender to retain loans in its portfolio until such time, if ever, as the lender elects to
deliver some or all of the loans covered by the LTSPC to Farmer Mac for purchase. Loans subject to an
LTSPC must meet Farmer Mac's standards for eligible loans at the commencement of the LTSPC when
Farmer Mac assumes the credit risk on the loans and are serviced by the holders of those loans in
accordance with those lenders' servicing procedures, which Farmer Mac reviews before entering into those
transactions. As consideration for its assumption of the credit risk on loans covered by an LTSPC, Farmer
Mac receives commitment fees payable monthly in arrears. Some LTSPCs contain risk sharing
arrangements for pools of loans that provide for the counterparty to absorb up to a specified amount
(typically between one percent and three percent of the original principal balance of the loan pool) of any
losses incurred on the loans in the pool. At a lender's request, Farmer Mac purchases loans subject to an
LTSPC at:
•
par if the loans become delinquent for either 90 days or 120 days (depending on the agreement) or
are in material non-monetary default, with accrued and unpaid interest on the defaulted loans
payable out of any future loan payments or liquidation proceeds; or
•
fair value or in exchange for cash or Farm & Ranch Guaranteed Securities (if the loans are not
delinquent), in accordance with the applicable agreement.
In Farm & Ranch Guaranteed Securities transactions, Farmer Mac guarantees securities representing
interests in eligible Farm & Ranch loans held by a trust or other entity. Farmer Mac guarantees principal
and interest payments on the securities in the event of a payment shortfall due to default and either retains
these securities or arranges for their sale to third parties. As consideration for its assumption of credit risk
on the assets underlying the Farm & Ranch Guaranteed Securities, Farmer Mac receives guarantee fees
based on the outstanding principal balance of the securities it guarantees. Some Farm & Ranch Guaranteed
Securities transactions include a smaller, subordinate tranche of securities issued to third parties that are
not guaranteed by Farmer Mac, which helps to offset Farmer Mac's credit risk on these transactions.
Farmer Mac is obligated under its guarantee on the securities to make payments to investors of interest
and principal (including balloon payments), regardless of whether Farmer Mac or the related trust has
actually received those scheduled payments. Farmer Mac's guarantee fees typically are collected out of
17
installment payments made on the underlying loans until those loans have been repaid, purchased out of
the trust, or otherwise liquidated (generally as a result of default). The aggregate amount of guarantee fees
received on Farm & Ranch Guaranteed Securities depends on the amount of those securities outstanding
and on the applicable guarantee fee rate, which Farmer Mac's charter caps at 50 basis points (0.50%) per
year.
From time to time, Farmer Mac issues and guarantees securities backed by USDA Securities that it has
purchased and has also guaranteed securities issued by Farmer Mac II LLC backed by USDA Securities
that it has purchased. Farmer Mac II LLC does not guarantee any USDA Securities it holds or any Farmer
Mac Guaranteed USDA Securities issued by Farmer Mac or Farmer Mac II LLC.
Infrastructure Finance
The Power & Utilities, Broadband Infrastructure, and Renewable Energy segments are within our
Infrastructure Finance line of business through the provision in Farmer Mac's charter that authorizes the
purchase of, and guarantee of securities backed by, loans for electric (including renewable electric energy)
or telecommunications facilities by lenders organized as cooperatives to borrowers that have received or
are eligible to receive loans under the Rural Electrification Act of 1936 ("REA"). The REA is
administered by the Rural Utilities Service ("RUS"), an agency of the USDA.
The Power & Utilities segment includes loans to rural electric generation and transmission cooperatives
and distribution cooperatives (referred to as "Power & Utilities loans"), as well as AgVantage securities
secured by those types of loans. Farmer Mac refers to eligible loans to telecommunications facilities
included in the Broadband Infrastructure segment (e.g., for rural fiber, cable/broadband, tower, wireless,
local exchange carrier, and data center projects) as "Broadband Infrastructure loans." Prior to fourth
quarter 2024, the financial results of all Broadband Infrastructure loans were included within the Rural
Utilities segment (renamed as the Power & Utilities segment starting in fourth quarter 2024). Farmer Mac
refers to the eligible loans to rural electric solar and wind energy projects and renewable gas projects
included in the Renewable Energy segment as "Renewable Energy loans."
Farmer Mac's Infrastructure Finance line of business encompasses purchases of Power & Utilities,
Broadband Infrastructure, and Renewable Energy loans and guarantees of securities backed by those
loans, as well as LTSPCs for pools of eligible Power & Utilities loans. The vast majority of Farmer Mac's
business to date under the Infrastructure Finance line of business has involved Power & Utilities loans
made to electric facilities (primarily electric distribution cooperatives and electric generation and
transmission cooperatives).
Underwriting and Collateral Standards
Farmer Mac's charter does not specify minimum underwriting criteria for eligible Power & Utilities,
Broadband Infrastructure, or Renewable Energy loans. To manage Farmer Mac's credit risk, to mitigate
the risk of loss from borrower defaults, and to provide guidance for the management, administration, and
conduct of underwriting to participants in the Infrastructure Finance line of business, Farmer Mac has
adopted credit underwriting standards that vary by loan product and by loan type. These standards are
based on industry practices for similar Power & Utilities, Broadband Infrastructure, or Renewable Energy
loans and are designed to assess the creditworthiness of the borrower, as well as the risk to Farmer Mac.
18
For Power & Utilities loans, Farmer Mac reviews lenders' credit submissions and analyzes borrowers'
audited financial statements and financial and operating reports to confirm that loans meet Farmer Mac's
underwriting standards for Power & Utilities loans. It is customary with these loans for the lender or
lender group to take a security interest in substantially all of the borrower's assets. When Farmer Mac
purchases a Power & Utilities loan with a pledge of all assets and a lender also has a lien on all assets,
Farmer Mac verifies that a lien accommodation will result in either a shared first lien or a first lien in favor
of Farmer Mac. When debt indentures are used, Farmer Mac determines if available collateral is adequate
to support the loan program and Farmer Mac's investment. Farmer Mac also purchases unsecured Power
& Utilities loans (primarily electric generation and transmission loans) that meet Farmer Mac's
underwriting standards for unsecured Power & Utilities loans.
Broadband Infrastructure loans tend to be larger operations focused on providing communication and data
services to rural areas, including fiber, cable/broadband, tower, wireless, local exchange carrier, and data
centers. The underwriting for Broadband Infrastructure loans typically relies on enterprise value, meaning
that the value of the borrowing entity depends on its ability to generate recurring positive cash flow. The
debt is generally secured by all business assets and common stock of the borrower; however, on occasion
Farmer Mac purchases unsecured debt of the highest quality borrowers. Enterprise value is the estimated
value of the borrower as a going concern, which is estimated using one or more valuation techniques such
as: discounted cash flow, cash flow multiples, asset liquidation, or other valuation techniques. Farmer Mac
has implemented methodologies and parameters to help assess credit risk and has established specific
underwriting criteria for Broadband Infrastructure loans based on the sector, borrower construct, and
transaction complexity. Due to the larger loan sizes and different credit risk profiles, Farmer Mac
thoroughly analyzes each prospective Broadband Infrastructure loan, including assessing the borrower's
leverage, cash flows, liquidity, revenue, and margin trends, as well as evaluating the borrower's capital
expenditures, customer/subscriber growth, market share, and competition. Any underlying weaknesses are
assessed and analyzed in conjunction with any compensating strengths. Broadband Infrastructure loans
also typically require ongoing monitoring of reporting requirements and financial and non-financial
covenants. Farmer Mac relies on the experience of internal underwriters with the expertise to analyze
Broadband Infrastructure loans and engages legal counsel to perform the necessary diligence to assess the
overall credit risk and loan structures of these transactions.
For Renewable Energy loans, Farmer Mac has direct credit exposure to the related standalone renewable
energy project. These projects are typically financed on a non-recourse or limited recourse basis and
underwritten on a projection basis with significant reliance placed on assumptions used in each project’s
analysis. Farmer Mac has implemented methodologies and parameters to assess credit risk and has
established specific underwriting criteria based on the project and transaction construct and complexity.
Farmer Mac thoroughly analyzes each prospective Renewable Energy loan. Farmer Mac performs
quantitative assessments typically focused on projected debt service requirements, term and amortization
review, interest rate sensitivity, and collateral analysis. Farmer Mac also performs qualitative assessments
typically focused on the project sponsor's credentials and experience, off-take (cash flow) considerations,
and concentration and other market considerations. Farmer Mac also typically reviews the project
contracts and agreements for each Renewable Energy loan. Renewable Energy loans are typically secured
by a first lien on the borrower's project assets, an assignment of the project contracts and agreements, a
land or leasehold interest, and in certain cases, a pledge of the equity interests in the borrower entity.
Farmer Mac's enforcement rights in any collateral securing a Renewable Energy loan may be subject to
tax equity interests in the borrower's renewable energy project.
19
Lenders and Loan Servicing
Farmer Mac's charter requires loans in Farmer Mac's Infrastructure Finance line of business to involve a
lender organized as a cooperative. Farmer Mac does not directly service the Power & Utilities, Broadband
Infrastructure, or Renewable Energy loans held in its portfolio. Typically, these loans are serviced by the
lender or other organization designated by Farmer Mac that has experience in servicing loans to utilities
and renewable energy providers and in the context of project finance, as applicable.
Other Products - Infrastructure Finance
AgVantage Securities
Farmer Mac's portfolio of AgVantage securities in its Infrastructure Finance line of business includes
securities issued by cooperative lenders that are secured by pools of Power & Utilities loans. For these
AgVantage securities, Farmer Mac requires:
•
the counterparty issuing the general obligation to have a credit rating from a nationally-recognized
statistical rating organization ("NRSRO") that is at least investment grade, or be of comparable
creditworthiness as determined through Farmer Mac's analysis; and
•
the collateralization (consisting of current, performing loans) to be maintained at the contractually
prescribed level, in an amount at least equal to the outstanding principal amount of the security.
Although Farmer Mac has only indirect credit exposure on the Power & Utilities loans pledged to secure
AgVantage securities, the same underwriting standards that apply to loans made to Power & Utilities
borrowers on which Farmer Mac assumes direct credit exposure also apply to loans made to Power &
Utilities borrowers that secure the AgVantage securities. Farmer Mac's charter does not prescribe a
maximum loan size or a total borrower exposure for an eligible Power & Utilities loan, but Farmer Mac's
current limit for AgVantage transactions is $75.0 million for cumulative loan exposure to any one
borrower or related borrowers (with the amount of any direct exposure of Farmer Mac to a borrower not
counting towards the $75.0 million limit).
COMPETITION
Farmer Mac is the only federally-chartered corporation established to provide a secondary market for
agricultural mortgage loans, infrastructure loans, and USDA Securities, but faces competition from other
entities that purchase, retain, securitize, or provide financing for the types of assets eligible for Farmer
Mac's secondary market activities. These entities include commercial and investment banks, insurance
companies, other FCS institutions, financial funds, and certain government programs. Farmer Mac also
competes indirectly with originators of eligible loans that would prefer to retain the loans they originate
rather than sell them into the secondary market. Farmer Mac is able to compete to acquire eligible loans
due to the variety of products it offers and its ability to offer competitive funding structures and pricing to
its customers. This enables Farmer Mac to provide flexible financing options and products designed to
meet the varied needs of lending institutions related to capital requirements, liquidity, credit risk, and
management of sector and geographic concentrations and borrower exposure limits. The relative
competitiveness of Farmer Mac's loan rates and Farmer Mac's ability to develop business with lending
institutions are affected by many factors, including:
20
•
the overall supply of capital available to agricultural and infrastructure borrowers;
•
the types and variety of products offered by Farmer Mac's competitors to meet the needs of Farmer
Mac's customer base;
•
changes in the levels of available capital and liquidity of lending institutions;
•
the existence of alternative sources of funding and credit enhancement for lending institutions;
•
the rate of growth in the market for eligible loans; and
•
demand for Farmer Mac's products.
Because Farmer Mac's charter limits Farmer Mac's business to secondary-market activities, Farmer Mac's
competitive position is affected by the willingness of originators to offer eligible loans for sale in the
secondary market or to utilize Farmer Mac for funding syndicated or participated loans. The charter's
limits on loan size for some Agricultural Finance mortgage loans, as well as the types of loans that are
eligible for Farmer Mac's lines of business, also affect Farmer Mac's competitive position. For more
information on government regulation of Farmer Mac, see "Business—Government Regulation of Farmer
Mac."
Farmer Mac's ability to obtain competitive funding in the debt markets is essential to its ability to maintain
its relative position with its customers. As a result, competition for debt investors with other debt-issuing
institutions, such as the FCS, Federal Home Loan Banks, Fannie Mae, Freddie Mac, and highly-rated
financial institutions, can affect the price and volume at which Farmer Mac issues debt and therefore its
ability to offer savings to customers in the form of competitive products.
CAPITAL AND CORPORATE GOVERNANCE
Farmer Mac's charter prescribes the company's basic capital and corporate governance structure, as
described below. The charter authorizes Farmer Mac to issue two classes of voting common stock, each of
which elects one-third of Farmer Mac's 15-person board of directors. The charter also authorizes Farmer
Mac to issue non-voting common stock.
•
Presidential appointments. Five members of Farmer Mac's 15-member board of directors are
individuals who meet the qualifications specified in the charter and are appointed by the President
of the United States with the advice and consent of the United States Senate (one of whom is
designated as the chair of the board of directors). These appointed directors serve at the pleasure of
the President of the United States with no set term.
•
Class A voting common stock. The charter restricts ownership of Farmer Mac's Class A voting
common stock to banks, insurance companies, and other financial institutions or similar entities
that are not institutions of the FCS. The charter also provides that five members of Farmer Mac's
15-member board of directors are elected by a plurality of the votes of the Class A stockholders
each year. The charter limits the amount of Class A voting common stock that any one holder may
own to no more than 33% of the outstanding shares of Class A voting common stock. Farmer Mac
is not aware of any regulation applicable to non-FCS financial institutions that requires a minimum
investment in Farmer Mac's Class A voting common stock or that prescribes a maximum
investment amount lower than the 33% limit set forth in the charter. Farmer Mac's Class A voting
common stock is listed on the New York Stock Exchange under the symbol AGM.A.
•
Class B voting common stock. The charter restricts ownership of Farmer Mac's Class B voting
common stock to FCS institutions and also provides that five members of Farmer Mac's 15-
21
member board of directors are elected by a plurality of the votes of the Class B stockholders each
year. The charter contains no restrictions on the maximum number or percentage of outstanding
shares of Class B voting common stock that any one holder may own, and Farmer Mac is not
aware of any regulation applicable to FCS institutions that requires a minimum investment in its
Class B voting common stock or that prescribes a maximum amount. Farmer Mac's Class B voting
common stock, which has a limited market and trades infrequently, is not listed or quoted on any
exchange or other quotation system, and Farmer Mac is not aware of any publicly available
quotations or prices for this class of common stock.
•
Class C non-voting common stock. The charter does not impose any ownership restrictions on
Farmer Mac's Class C non-voting common stock, so shares of this class are freely
transferable. Farmer Mac uses Class C non-voting common stock for awards of equity-based
compensation to officers, directors, and employees as part of the company's compensation
programs. Holders of the Class C non-voting common stock do not vote on the election of
directors or any other matter. Farmer Mac's Class C non-voting common stock is listed on the New
York Stock Exchange under the symbol AGM.
The dividend and liquidation rights of all three classes of Farmer Mac's common stock are the same.
Dividends may be paid on Farmer Mac's common stock only when, as, and if declared by Farmer Mac's
board of directors in its sole discretion, subject to compliance with applicable capital requirements and the
payment of dividends on any outstanding preferred stock issued by Farmer Mac. Upon liquidation,
dissolution, or winding up of the business of Farmer Mac, after payment and provision for payment of
outstanding debt of Farmer Mac, the holders of shares of Farmer Mac's currently outstanding 5.700%
Non-Cumulative Preferred Stock, Series D ("Series D Preferred Stock"), 5.750% Non-Cumulative
Preferred Stock, Series E ("Series E Preferred Stock"), 5.250% Non-Cumulative Preferred Stock, Series F
("Series F Preferred Stock"), 4.875% Non-Cumulative Preferred Stock, Series G ("Series G Preferred
Stock"), and any other preferred stock then outstanding, would be paid at par value out of assets available
for distribution, plus all declared and unpaid dividends, before the holders of shares of common stock
received any payment. See also "Market for Registrant's Common Equity, Related Stockholder Matters,
and Issuer Purchases of Equity Securities" for more information about Farmer Mac's common stock, and
"Business—Financing—Equity Issuance" for more information about Farmer Mac's common stock and
preferred stock.
Unlike some other GSEs such as other FCS institutions and the Federal Home Loan Banks, Farmer Mac is
not structured as a cooperative owned exclusively by member institutions and established to provide
services exclusively to its members. Rather, Farmer Mac, as a publicly-traded corporation, has a broader
base of stockholders, including those who do not directly participate in the secondary market provided by
Farmer Mac. Farmer Mac therefore seeks to fulfill its mission of serving the financing needs of rural
America in a way that is consistent with providing a return on the investment of its stockholders.
Farmer Mac generally requires financial institutions to own a requisite amount of Farmer Mac common
stock, based on the size and type of institution, to sell Agricultural Finance mortgage loans to Farmer
Mac. As a result of this requirement, coupled with the ability of holders of Class A and Class B voting
common stock to elect two-thirds of Farmer Mac's board of directors, Farmer Mac regularly conducts
business with "related parties," including institutions affiliated with members of Farmer Mac's board of
directors and institutions that own large amounts of Farmer Mac's voting common stock. Farmer Mac has
adopted a Code of Business Conduct and Ethics and related corporate policies that govern any conflicts of
interest that may arise in these transactions. Farmer Mac also requires that any transactions with related
22
parties be conducted in the ordinary course of business, with terms and conditions comparable to those
available to any other counterparty not related to Farmer Mac. For more information about related party
transactions, see "Management's Discussion and Analysis of Financial Condition and Results of
Operations—Results of Operations—Related Party Transactions" and Note 3 to the consolidated financial
statements.
Capital
Farmer Mac's charter establishes three capital standards for Farmer Mac – minimum capital, critical
capital, and risk-based capital. Farmer Mac must comply with the higher of the minimum capital
requirement and the risk-based capital requirement. Also, in accordance with the applicable FCA
regulation on capital planning, Farmer Mac's board of directors oversees a policy that requires Farmer
Mac to maintain a sufficient level of Tier 1 capital and restricts dividends and bonus payments if Farmer
Mac's Tier 1 capital falls below specified thresholds. For a discussion of Farmer Mac's capital
requirements and its actual capital levels, as well as FCA's role in the establishment and monitoring of
those requirements and levels, see "Business—Government Regulation of Farmer Mac—Capital
Standards," "Management's Discussion and Analysis of Financial Condition and Results of Operations—
Balance Sheet Review—Equity," and "Management's Discussion and Analysis of Financial Condition and
Results of Operations—Liquidity and Capital Resources—Capital Requirements."
Regulatory Oversight
Farmer Mac's charter assigns to FCA, acting through the separate Office of Secondary Market Oversight
("OSMO") within FCA, the responsibility for the examination of Farmer Mac and the general supervision
of the safe and sound performance of the powers, functions, and duties vested in Farmer Mac by the
charter. The charter also authorizes FCA, acting through OSMO, to apply its general enforcement powers
to Farmer Mac. Farmer Mac's charter requires an annual examination of the financial transactions of
Farmer Mac and authorizes FCA to assess Farmer Mac for the cost of FCA's regulatory activities,
including the cost of any examination. Farmer Mac is also required to file quarterly reports of condition
with OSMO. As a publicly-traded corporation, Farmer Mac also must comply with the periodic reporting
requirements of the SEC. For a more detailed discussion of Farmer Mac's regulatory and governmental
relationships, see "Business—Government Regulation of Farmer Mac."
HUMAN CAPITAL
As of December 31, 2024, Farmer Mac employed 191 people, with 18 new employees hired during the
year resulting in a net increase of 6 employees (3.24%) compared to year-end 2023. Farmer Mac primarily
employs full-time employees to meet its business needs as it grows and evolves while supplementing
human capital needs with part-time employees (including interns) and independent contractors and
consultants as needed.
Farmer Mac has experienced a geographic evolution in its workforce since 2020 and now employs
personnel in 26 states across the United States. As of December 31, 2024, 91 full-time employees were
located in the Washington, D.C. area, 30 full-time employees were located in the Johnston, Iowa area, and
70 full-time employees worked on a fully remote basis in other parts of the United States.
23
Workplace Culture
Farmer Mac remains committed to optimizing how and where people work. Our new flexible office space
and "Presence With Purpose" hybrid model have enhanced employee engagement. Our innovative office
and hybrid work approach, which are grounded in the three core principles of community, collaboration,
and communication, empowers managers and leaders to consider their unique team circumstances and
determine an appropriate cadence for purposeful in-person presence. We introduced "Collaboration
Tuesday" to serve as a foundation for these workplace connection opportunities. This has allowed
leadership to leverage the collaborative benefits that cannot be fully replicated remotely while still being
flexible with the unique needs of each team and employee. To ensure continuity in regular
communication, Farmer Mac has continued to reinforce employees' access to secure digital meeting
platforms, and its senior executive team has continued to lead regular meetings of all employees to share
pertinent information on Farmer Mac's business and operations and to provide a forum for discussing
issues. In 2024, Farmer Mac was awarded the USA Today Top Workplaces national award, Washington
Post Top Workplaces, and a Top Workplaces industry award in financial services. Farmer Mac also
received eight Top Workplaces USA cultural excellence awards in 2024 in the categories of innovation,
employee appreciation, leadership, compensation & benefits, employee well-being, and professional
development, appreciation, purpose & values, and work-life flexibility.
Compensation & Benefits
As a financial services organization, Farmer Mac must attract and retain a highly skilled workforce in an
often competitive employment environment. Farmer Mac uses traditional methods to attract and retain
talent, such as competitive salaries and benefits that include:
•
a robust paid time off program (up to 5 weeks of vacation, 2 weeks of sick leave, 11 paid
holidays, 6 weeks of pregnancy leave, 6 weeks of parental leave, and 8 hours of leave to
volunteer for community or charitable service activities);
•
an "equity for all" program in which all employees are eligible to receive annual grants of
equity-based compensation;
•
a group health plan with all premiums paid by Farmer Mac;
•
a 401(k) plan that provides for both voluntary employee contributions and employer
contributions at the levels described in Note 11 to the consolidated financial statements;
•
a self-funded short-term disability benefit that provides varying percentages of base salary
payments through the time of eligibility for long-term disability insurance coverage;
•
group term life insurance and long-term disability insurance with all premiums paid by
Farmer Mac;
•
pre-tax dependent care reimbursement;
•
partially-funded health savings accounts;
•
access to group rates for legal services insurance, additional life and disability insurance,
and pet insurance; and
•
professional and career development opportunities and programs.
Talent Acquisition and Development
Farmer Mac is committed to the professional and career development of all employees. "Farmer Mac
LEARN" is Farmer Mac's strategic learning and development program that is designed to provide a
comprehensive suite of learning and development services to maximize the learning effectiveness in the
24
business. Farmer Mac LEARN is deployed in a blended learning fashion and is structured around six
strategic LEARN Academies to enable effective learning and career development. The LEARN
Academies include:
•
New Hire Academy
•
Skills Academy
•
Leadership Academy
•
Business Academy
•
Ethics & Compliance Academy
•
IT and Cybersecurity Academy
Each Academy is structured around learning paths aligned to each employee’s professional level, role, and
career trajectory. A core focus for 2024 was the deployment of the Farmer Mac LEARN Leadership
Academy across the organization. All Farmer Mac employees have started the Leadership Academy
journey within a cohort structure that will span four phases of leadership development. Farmer Mac
continues to invest in digital learning platforms to support the learning needs of the employees and
business, while also leveraging internal subject matter expertise to elevate learning offerings. Farmer Mac
also continues to offer an education assistance plan for employees with at least one year of full-time
employment.
As part of its workforce strategy, Farmer Mac has deployed an early career strategy to further establish a
talent pipeline for the future. The early career strategy includes a robust internship program and the
Farmer Mac Associate program that will be piloted in 2025. These early career talent pipelines are
developed through partnership with academic institutions, community organizations, and business
partners. Farmer Mac also places strategic focus on succession planning. Detailed succession plans are
crafted in partnership with key leaders in the business to identify and develop high potential leaders to
promote career readiness for expanded responsibilities and roles in Farmer Mac.
Farmer Mac experienced a 6.8% turnover rate in 2024 compared to 6.4% in 2023.
Philanthropy
Farmer Mac's mission to serve agricultural and rural communities, as well as philanthropic activities
undertaken in support of its mission, provide Farmer Mac an advantage in its effort to attract and retain
talent. Farmer Mac's philanthropic philosophy centers on supporting agriculture and rural communities
and supporting the next generation of farmers and ranchers and financial professionals.
Code of Business Conduct and Ethics
Farmer Mac's onboarding program includes a mandatory compliance session for every new hire and
contract consultant within their first week. All employees also take annual training on and recertification
of Farmer Mac's Code of Business Conduct and Ethics, which encompasses the following core principles:
(1) promoting a safe workplace and a respectful and inclusive culture, (2) conducting business lawfully,
fairly, and objectively, (3) communicating responsibly and protecting information, (4) conducting business
diligently and being a good corporate citizen, and (5) how to report actual or suspected misconduct.
Farmer Mac's Code of Business Conduct and Ethics was refreshed in May 2024 while maintaining this
principles-based approach. Farmer Mac's Code of Business Conduct and Ethics is available at
www.farmermac.com and is not incorporated by reference into this report.
25
AVAILABLE INFORMATION
Farmer Mac makes available free of charge, through the "Investors" section of its internet website at
www.farmermac.com, copies of materials it files with, or furnishes to, the SEC, including its Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements,
and any amendments to those filings, as soon as reasonably practicable after electronically filing those
materials with, or furnishing those materials to, the SEC. All references to www.farmermac.com in this
report are inactive textual references only. The information contained on Farmer Mac's website is not
incorporated by reference into this report.
FUNDING OF GUARANTEE AND LTSPC OBLIGATIONS
The main sources of funding for the payment of Farmer Mac's obligations under its guarantees and
LTSPCs are the fees Farmer Mac receives for its guarantees and commitments, net effective spread,
proceeds of debt issuances, loan repayments, and maturities of AgVantage securities. Farmer Mac has
traditionally satisfied its obligations under LTSPCs and its guarantees by purchasing defaulted loans out of
the LTSPCs or from related securitization trusts under the terms of the respective agreements governing
the LTSPC or guaranteed securities. Farmer Mac typically recovers a significant portion of the value of
defaulted loans purchased either through borrower payments, loan payoffs, payments by third parties, or
foreclosure and sale of the property securing the loans. Net credit losses/(gains) arising from Farmer Mac's
guarantees and commitments include charge-offs/(recoveries) against its allowance for losses, gains and
losses on the sale of real estate acquired through foreclosure (known as "real estate owned" or "REO"),
and fair value adjustments of REOs held.
Farmer Mac's charter requires Farmer Mac to maintain in its accounts a portion of the guarantee fees it
receives from its guarantee activities as a reserve against losses. As of December 31, 2024, this reserve
against losses arising from Farmer Mac's guarantee activities was $138.7 million. Farmer Mac calculates
the amount of this statutorily required reserve against losses arising from its guarantee activities based on
the credit risk component of guarantee fees received on all securities it guarantees, including AgVantage
securities. This amount does not represent expected credit losses and does not directly relate to either the
allowance for loan losses or the reserve for losses in Farmer Mac's consolidated balance sheets. Rather,
this is the amount of capital that must be exhausted before Farmer Mac may issue obligations to the
U.S. Treasury against the $1.5 billion that Farmer Mac is statutorily authorized to borrow from the U.S.
Treasury to fulfill its guarantee obligations. That borrowing authority is not intended to be a routine
funding source and has never been used. For a more detailed discussion of Farmer Mac's borrowing
authority from the U.S. Treasury, see "Business—Farmer Mac's Authority to Borrow from the U.S.
Treasury."
Farmer Mac's total outstanding guarantees and LTSPCs exceed the total of: (1) the amount held as an
allowance for losses, (2) the amount maintained as a reserve against losses arising from guarantee
activities, and (3) the amount Farmer Mac may borrow from the U.S. Treasury. However, Farmer Mac
does not expect its future payment obligations under its guarantees and LTSPCs to exceed amounts
available to satisfy those obligations, which includes access to the underlying collateral in the event of
default. For information about Farmer Mac's allowance for losses, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk – Loans and
Guarantees" and Note 2(h), Note 8, and Note 12 to the consolidated financial statements.
26
FINANCING
Debt Issuance
Farmer Mac's charter authorizes Farmer Mac to issue debt obligations to purchase eligible loans and
securities, USDA Securities, and to maintain reasonable amounts of liquid investments to maintain an
adequate supply of liquidity. Farmer Mac funds its purchases of eligible program assets and liquidity
investment assets primarily by issuing debt obligations of various maturities in the public capital
markets. Farmer Mac also issues debt obligations to obtain funds to finance its obligations under
guarantees and LTSPCs. Farmer Mac's debt obligations include discount notes and medium-term notes,
including callable medium-term notes, all of which are unsecured general obligations of Farmer Mac.
Discount notes have original maturities of 1 year or less. Medium-term notes generally have maturities of
0.5 years to 25.0 years.
The interest and principal on Farmer Mac's debt obligations are not guaranteed by, and do not constitute
debts or obligations of, FCA, the United States, or any agency or instrumentality of the United States other
than Farmer Mac. Farmer Mac is an institution of the FCS but is not liable for any debt or obligation of
any other institution of the FCS. Likewise, neither the FCS nor any other individual institution of the FCS
is liable for any debt or obligation of Farmer Mac. Income to the purchaser of a Farmer Mac discount note
or medium-term note is not exempt under federal law from federal, state, or local taxation. Farmer Mac's
discount notes and medium-term notes are not currently rated by an NRSRO.
Farmer Mac invests the proceeds of its debt issuances in eligible program asset purchases, Farmer Mac
Guaranteed Securities, and liquidity investment assets in accordance with policies established by its board
of directors that comply with Farmer Mac's Liquidity and Investment Regulations, which establish
limitations on asset class, dollar amount, issuer concentration, and credit quality. Farmer Mac's regular
debt issuance supports its access to the capital markets, and Farmer Mac's liquidity investment assets
provide an alternative source of funds should market conditions be unfavorable.
For more information about the Liquidity and Investment Regulations, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources." For more
information about Farmer Mac's outstanding investments and indebtedness, see Note 4 and Note 7 to the
consolidated financial statements.
Equity Issuance
Farmer Mac's charter authorizes Farmer Mac to issue voting common stock, non-voting common stock,
and non-voting preferred stock. Farmer Mac may obtain additional capital from future issuances of
common stock and preferred stock.
Common Stock
Only banks, other financial entities, insurance companies, and institutions of the FCS may hold voting
common stock. No holder of Class A voting common stock may directly or indirectly be a beneficial
owner of more than 33% of the outstanding shares of Class A voting common stock. There are no
restrictions on the maximum number or percentage of outstanding shares of Class B voting common stock
27
that may be held by an eligible stockholder. No ownership restrictions apply to Class C non-voting
common stock, and those securities are freely transferable.
As of December 31, 2024, the following shares of Farmer Mac common stock were outstanding:
•
1,030,780 shares of Class A voting common stock;
•
500,301 shares of Class B voting common stock; and
•
9,360,083 shares of Class C non-voting common stock.
Except for the period from March 16, 2020 to March 10, 2021, Farmer Mac has had a common stock
repurchase program in place since third quarter 2015. In February 2023, Farmer Mac's board of directors
extended the expiration date of the repurchase program to February 2025 on the same terms and with a
remaining authorization of up to $9.8 million in stock repurchases. Farmer Mac's board of directors is
expected to extend the expiration date of the program to February 2027 at an upcoming board meeting. As
of December 31, 2024, Farmer Mac had repurchased approximately 673,000 shares of Class C non-voting
common stock at a cost of approximately $19.8 million under the share repurchase program since 2015.
The following table presents the dividends declared on Farmer Mac's common stock during and after
2024:
Date
Dividend
Declared
Per
Share
Amount
For
Holders Of
Record As Of
Date
Paid
February 21, 2024
$1.40
March 15, 2024
March 28, 2024
May 15, 2024
$1.40
June 14, 2024
June 28, 2024
August 7, 2024
$1.40
September 16, 2024
September 30, 2024
November 6, 2024
$1.40
December 16, 2024
December 31, 2024
February 20, 2025
$1.50
March 14, 2025
*
* The dividend declared on February 20, 2025 is scheduled to be paid on March 31, 2025.
Farmer Mac's ability to declare and pay common stock dividends could be restricted if it were to fail to
comply with applicable capital requirements. See Note 9 to the consolidated financial statements and
"Business—Government Regulation of Farmer Mac—Capital Standards."
Preferred Stock
No ownership restrictions apply to any preferred stock issued by Farmer Mac, and those securities are
freely transferable. As of December 31, 2024, the following shares of Farmer Mac preferred stock were
outstanding:
•
4,000,000 shares of Series D Preferred Stock, all of which were issued in May 2019;
•
3,180,000 shares of Series E Preferred Stock, all of which were issued in May 2020;
•
4,800,000 shares of Series F Preferred Stock, all of which were issued in August 2020; and
•
5,000,000 shares of Series G Preferred Stock, all of which were issued in May 2021.
On July 18, 2024, Farmer Mac redeemed all outstanding shares of its 6.000% Fixed-to-Floating Rate Non-
Cumulative Series C Preferred Stock, plus any declared and unpaid dividends through and including the
28
redemption date. As a result of this redemption, Farmer Mac recognized $1.6 million of loss on retirement
of preferred stock in third quarter 2024, which was related to deferred issuance costs.
The Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, and Series G Preferred
Stock (collectively, "Outstanding Preferred Stock") each has a par value of $25.00 per share and an initial
liquidation preference of $25.00 per share. Since each of their respective issuances, Farmer Mac has not
issued any more shares of any series of Outstanding Preferred Stock. Each series of Outstanding Preferred
Stock ranks senior to Farmer Mac's outstanding Class A voting common stock, Class B voting common
stock, Class C non-voting common stock, and any other common stock of Farmer Mac issues in the future.
The Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, and Series G Preferred
Stock pay an annual dividend rate fixed at 5.700%, 5.750%, 5.250%, and 4.875%, respectively, for the life
of the securities. Dividends on all series of Outstanding Preferred Stock are non-cumulative, so if the
board of directors has not declared a dividend before the applicable dividend payment date for any
dividend period, the dividend will not be paid or accumulate, and Farmer Mac will not be obligated to pay
dividends for that dividend period, whether or not dividends on any series of Outstanding Preferred Stock
are declared for any future dividend period. Farmer Mac may pay dividends on the Outstanding Preferred
Stock without paying dividends on any class or series of stock Farmer Mac may issue in the future that
ranks junior to the Outstanding Preferred Stock.
The Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, and Series G Preferred
Stock rank equally with each other and will rank equally with any other class or series of stock Farmer
Mac may issue in the future of equal priority as to dividends and upon liquidation. Farmer Mac has the
right, but not the obligation, to redeem some or all of the issued and outstanding shares of Series D
Preferred Stock on and after July 17, 2024, the Series E Preferred Stock on and after July 17, 2025, the
Series F Preferred Stock on and after October 17, 2025, and the Series G Preferred Stock on and any time
after July 17, 2026, all at a price equal to the then-applicable liquidation preference. Any redemption date
for the Series D, Series E, Series F, or Series G Preferred Stock must be a scheduled quarterly dividend
payment date. The Outstanding Preferred Stock is considered Tier 1 capital for Farmer Mac. For more
information on Farmer Mac's capital requirements, see "Business—Government Regulation of Farmer
Mac—Capital Standards."
The following table presents the dividends declared and paid on Series C Preferred Stock during and after
2024:
Date
Dividend
Declared
Per
Share
Amount
For
Period
Beginning
For
Period
Ending
Date
Paid
February 21, 2024
$0.3750
January 18, 2024
April 17, 2024
April 17, 2024
May 15, 2024
$0.3750
April 18, 2024
July 17, 2024
July 17, 2024
29
The following table presents the dividends declared and paid on Series D Preferred Stock during and after
2024:
Date
Dividend
Declared
Per
Share
Amount
For
Period
Beginning
For
Period
Ending
Date
Paid
February 21, 2024
$0.35625
January 18, 2024
April 17, 2024
April 17, 2024
May 15, 2024
$0.35625
April 18, 2024
July 17, 2024
July 17, 2024
August 7, 2024
$0.35625
July 18, 2024
October 17, 2024
October 17, 2024
November 6, 2024
$0.35625
October 18, 2024
January 17, 2025
January 17, 2025
February 20, 2025
$0.35625
January 18, 2025
April 17, 2025
*
* The dividend declared on February 20, 2025 is scheduled to be paid on April 17, 2025.
The following table presents the dividends declared and paid on Series E Preferred Stock during and after
2024:
Date
Dividend
Declared
Per
Share
Amount
For
Period
Beginning
For
Period
Ending
Date
Paid
February 21, 2024
$0.359375
January 18, 2024
April 17, 2024
April 17, 2024
May 15, 2024
$0.359375
April 18, 2024
July 17, 2024
July 17, 2024
August 7, 2024
$0.359375
July 18, 2024
October 17, 2024
October 17, 2024
November 6, 2024
$0.359375
October 18, 2024
January 17, 2025
January 17, 2025
February 20, 2025
$0.359375
January 18, 2025
April 17, 2025
*
* The dividend declared on February 20, 2025 is scheduled to be paid on April 17, 2025.
The following table presents the dividends declared and paid on Series F Preferred Stock during and after
2024:
Date
Dividend
Declared
Per
Share
Amount
For
Period
Beginning
For
Period
Ending
Date
Paid
February 21, 2024
$0.3281250
January 18, 2024
April 17, 2024
April 17, 2024
May 15, 2024
$0.3281250
April 18, 2024
July 17, 2024
July 17, 2024
August 7, 2024
$0.3281250
July 18, 2024
October 17, 2024
October 17, 2024
November 6, 2024
$0.3281250
October 18, 2024
January 17, 2025
January 17, 2025
February 20, 2025
$0.3281250
January 18, 2025
April 17, 2025
*
* The dividend declared on February 20, 2025 is scheduled to be paid on April 17, 2025.
The following table presents the dividends declared and paid on Series G Preferred Stock during and after
2024:
Date
Dividend
Declared
Per
Share
Amount
For
Period
Beginning
For
Period
Ending
Date
Paid
February 21, 2024
$0.3046875
January 18, 2024
April 17, 2024
April 17, 2024
May 15, 2024
$0.3046875
April 18, 2024
July 17, 2024
July 17, 2024
August 7, 2024
$0.3046875
July 18, 2024
October 17, 2024
October 17, 2024
November 6, 2024
$0.3046875
October 18, 2024
January 17, 2025
January 17, 2025
February 20, 2025
$0.3046875
January 18, 2025
April 17, 2025
*
* The dividend declared on February 20, 2025 is scheduled to be paid on April 17, 2025.
30
FARMER MAC'S AUTHORITY TO BORROW FROM THE U.S. TREASURY
Farmer Mac is authorized to borrow up to $1.5 billion from the U.S. Treasury through the issuance of debt
obligations to the U.S. Treasury. Any funds borrowed from the U.S. Treasury may be used solely to fulfill
Farmer Mac's guarantee obligations. Farmer Mac's charter provides that the U.S. Treasury is required to
purchase Farmer Mac's debt obligations up to the authorized limit if Farmer Mac certifies that:
•
a portion of the guarantee fees assessed by Farmer Mac has been set aside as a reserve against
losses arising out of Farmer Mac's guarantee activities in an amount determined by Farmer Mac's
board of directors to be necessary and such reserve has been exhausted (that amount was
$138.7 million as of December 31, 2024); and
•
the proceeds of such obligations are needed to fulfill Farmer Mac's guarantee obligations.
Any debt obligations issued by Farmer Mac under this authority would bear interest at a rate determined
by the U.S. Treasury, taking into consideration the average rate on outstanding marketable obligations of
the United States as of the last day of the last calendar month ending before the date of the purchase of the
obligations from Farmer Mac. Farmer Mac would be required to repurchase any of its debt obligations
held by the U.S. Treasury within a "reasonable time." As of December 31, 2024, Farmer Mac had not used
this borrowing authority and does not expect to use this borrowing authority in the future.
The United States government does not guarantee payments due on securities guaranteed by Farmer Mac,
funds invested in the equity or debt securities of Farmer Mac, any dividend payments on shares of Farmer
Mac stock, or the profitability of Farmer Mac.
31
GOVERNMENT REGULATION OF FARMER MAC
General
Farmer Mac was created by federal statute in 1988 in the aftermath of the collapse of the agricultural
credit delivery system. Farmer Mac's primary committees of jurisdiction in Congress – the Committee on
Agriculture of the U.S. House of Representatives and the U.S. Senate Committee on Agriculture, Nutrition
and Forestry – added requirements for Farmer Mac that had not been included in any of the other statutes
establishing other GSEs. Unlike the other existing GSEs at the time, Farmer Mac was required to be
regulated by an independent regulator, FCA, which has the authority to regulate Farmer Mac's safety and
soundness. The statute creating Farmer Mac expressly requires that eligible Farm & Ranch loans meet
minimum credit and appraisal standards that represent sound loans to profitable businesses. The enabling
legislation also did not contain a specific federal securities law exemption, which had the effect of
requiring Farmer Mac to comply with the periodic reporting requirements of the SEC, including filing
annual and quarterly reports on the financial status of Farmer Mac and current reports when there are
significant developments. Farmer Mac's charter also requires offerings of securities backed by eligible
loans and guaranteed by Farmer Mac to be registered under the Securities Act of 1933 and related
regulations (collectively, "Securities Act"), unless an exemption for an offering is available that is not
based on Farmer Mac's status as an instrumentality of the United States.
Since Farmer Mac's creation, Congress has amended Farmer Mac's charter five times:
•
in 1990 to authorize Farmer Mac to purchase, and guarantee securities backed by, USDA
Securities;
•
in 1991 to clarify Farmer Mac's authority to purchase its guaranteed securities, establish OSMO as
Farmer Mac's financial regulator, and set minimum regulatory capital requirements for Farmer
Mac;
•
in 1996 to remove certain barriers to and restrictions on Farmer Mac's operations to be more
competitive (e.g., allowing Farmer Mac to buy loans directly from lenders and issue guaranteed
securities representing 100% of the principal of the purchased loans and modifying capital
requirements);
•
in 2008 to authorize Farmer Mac to purchase, and guarantee securities backed by, loans or interests
in loans by lenders organized as cooperatives to borrowers to finance electrification and
telecommunications systems in rural areas; and
•
in 2018 to expand the acreage exception to agricultural mortgage loan amount limitation from
1,000 acres to 2,000 acres, subject to FCA's feasibility assessment (which was completed in June
2019), and to repeal obsolete provisions and make technical corrections.
Farmer Mac's authorities and regulatory structure were not revised by legislation adopted in 2008 to
regulate other GSEs.
Office of Secondary Market Oversight (OSMO)
As an institution of the FCS, Farmer Mac (including its subsidiaries) is subject to the regulatory authority
of FCA. Farmer Mac's charter assigns to FCA, acting through OSMO within FCA, the responsibility for
the examination of Farmer Mac and the general supervision of the safe and sound performance of the
powers, functions, and duties vested in Farmer Mac by its charter. The charter also authorizes FCA, acting
32
through OSMO, to apply its general enforcement powers to Farmer Mac. Farmer Mac (including its
subsidiaries) is the only entity regulated by OSMO, which was created as a separate office in recognition
of the different role that Farmer Mac plays in providing a secondary market, as compared to the roles of
other FCS institutions as primary lenders. The Director of OSMO is selected by and reports to the FCA
board.
Farmer Mac's charter requires an annual examination of the financial transactions of Farmer Mac and
authorizes FCA to assess Farmer Mac for the cost of its regulatory activities, including the cost of any
examination. Each year, OSMO conducts an examination of Farmer Mac to evaluate its safety and
soundness, compliance with applicable laws and regulations, and mission achievement. The examination
includes a review of Farmer Mac's capital adequacy, asset quality, management performance, earnings,
liquidity, and sensitivity to interest rate risk. OSMO may also conduct additional oversight and
examination activities unrelated to its annual examination of Farmer Mac at any other time it determines
necessary. Farmer Mac is also required to file quarterly reports of condition with FCA.
Capital Standards
General Requirements. Farmer Mac's charter establishes three capital standards for Farmer Mac:
•
Statutory minimum capital requirement. Farmer Mac's minimum capital level is an amount of core
capital (stockholders' equity less accumulated other comprehensive income) equal to the sum of
2.75% of Farmer Mac's aggregate on-balance sheet assets, as calculated for regulatory purposes,
plus 0.75% of Farmer Mac's aggregate off-balance sheet obligations, specifically including:
◦
the unpaid principal balance of outstanding loan-backed securities guaranteed by Farmer Mac;
◦
instruments issued or guaranteed by Farmer Mac that are substantially equivalent to securities
guaranteed by Farmer Mac, including LTSPCs; and
◦
other off-balance sheet obligations of Farmer Mac.
•
Statutory critical capital requirement. Farmer Mac's critical capital level is an amount of core
capital equal to 50% of the total minimum capital requirement at that time.
•
Risk-based capital. The charter directs FCA to establish a risk-based capital stress test for Farmer
Mac, using specified stress-test parameters.
Farmer Mac must comply with the higher of the minimum capital requirement and the risk-based capital
requirement.
The risk-based capital stress test promulgated by FCA is intended to determine the amount of regulatory
capital (core capital plus the allowance for losses) that Farmer Mac would need to maintain positive
capital during a ten-year period in which:
•
annual losses occur at a rate of default and severity "reasonably related" to the rates of the highest
sequential two years in a limited U.S. geographic area; and
•
interest rates are shocked by the lesser of 600 basis points or 50% of the ten-year U.S. Treasury
rate, and interest rates remain at such level for the remainder of the period.
33
The risk-based capital stress test then adds an additional 30% to the resulting capital requirement for
management and operational risk. Farmer Mac's risk-based capital requirement as of December 31, 2024
was $175.1 million, and Farmer Mac's regulatory capital of $1.5 billion exceeded that amount by
approximately $1.4 billion. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations—Liquidity and Capital Resources—Capital Requirements" for a presentation of
Farmer Mac's current regulatory capital position.
Enforcement Levels. Farmer Mac's charter directs FCA to classify Farmer Mac within one of four
enforcement levels to determine compliance with the capital standards established by Farmer Mac's
charter. As of December 31, 2024, Farmer Mac was classified as within level I – the highest compliance
level.
Failure to comply with the applicable required capital level in the charter would result in Farmer Mac
being classified as within level II (below the applicable risk-based capital level, but above the minimum
capital level), level III (below the minimum capital level, but above the critical capital level) or level IV
(below the critical capital level). If Farmer Mac were classified as within level II, III or IV, the charter
requires the Director of OSMO to take specified mandatory supervisory measures and provides the
Director with discretionary authority to take various optional supervisory measures depending on the level
in which Farmer Mac is classified. The mandatory measures applicable to level II and level III include:
•
requiring Farmer Mac to submit and comply with a capital restoration plan;
•
prohibiting the payment of dividends if the payment would result in Farmer Mac being reclassified
as within a lower level and requiring the pre-approval of any dividend payment even if the
payment would not result in reclassification as within level IV; and
•
reclassifying Farmer Mac as within one level lower if it does not submit a capital restoration plan
that is approved by the Director, or the Director determines that Farmer Mac has failed to make, in
good faith, reasonable efforts to comply with such a plan and fulfill the schedule for the plan
approved by the Director.
If Farmer Mac were classified as within level III, then, in addition to the mandatory supervisory measures
described above, the Director of OSMO could take any of the following discretionary supervisory
measures:
•
imposing limits on any increase in, or ordering the reduction of, any obligations of Farmer Mac,
including off-balance sheet obligations;
•
limiting or prohibiting asset growth or requiring the reduction of assets;
•
requiring the acquisition of new capital in an amount sufficient to provide for reclassification as
within a higher level;
•
terminating, reducing, or modifying any activity the Director determines creates excessive risk to
Farmer Mac; or
•
appointing a conservator or a receiver for Farmer Mac.
Farmer Mac's charter does not specify any supervisory measures, either mandatory or discretionary, to be
taken by the Director if Farmer Mac were classified as within level IV.
The Director of OSMO has the discretionary authority to reclassify Farmer Mac to a level that is one level
below its then current level (for example, from level I to level II) if the Director determines that Farmer
34
Mac is engaging in any action not approved by the Director that could result in a rapid depletion of core
capital or if the value of property subject to mortgages backing securities guaranteed by Farmer Mac has
decreased significantly.
Capital Adequacy Requirements. Under FCA's rule on capital planning, Farmer Mac must develop and
submit to OSMO for approval annually a plan for capital that considers the sources and uses of Farmer
Mac's capital, addresses capital projections under stress scenarios, assesses Farmer Mac's overall capital
adequacy, and incorporates a Farmer Mac board-approved policy on capital adequacy. In accordance with
this regulation, Farmer Mac's board of directors oversees a policy that requires Farmer Mac to maintain an
adequate level of "Tier 1" capital, consisting of retained earnings, paid-in-capital, common stock,
qualifying preferred stock, and accumulated other comprehensive income allocable to "non-program"
investments that are not included in the Agricultural Finance and Infrastructure Finance lines of business.
Under this policy, Farmer Mac must maintain at all times a Tier 1 capital ratio of at least 7.0% of risk-
weighted assets, calculated using an advanced internal ratings based asset risk weighting regime that is
consistent with current Basel-based principles.
The policy also requires Farmer Mac to maintain a "capital conservation buffer" of additional Tier 1
capital of more than 2.5% of risk-weighted assets. If the capital conservation buffer drops to various levels
at or below 2.5%, as shown in the table below, the policy requires Farmer Mac to restrict distributions of
current quarter Tier 1-eligible dividends and any discretionary bonus payments to an amount not to exceed
the corresponding payout percentage specified in the table below, which represents the percentage of the
cumulative core earnings for the four quarters immediately preceding the distribution date:
Capital Conservation Buffer
Payout Percentage
(percentage of risk-weighted assets)
(percentage of four quarters' accumulated core earnings)
greater than 2.5%
No limitation
greater than 1.875% to and including 2.5%
60%
greater than 1.25% to and including 1.875%
40%
greater than 0.625% to and including 1.25%
20%
equal to or less than 0.625%
0% (no payout permitted)
These distribution restrictions would remain for so long as the Tier 1 capital conservation buffer remains
at or below the minimum level of 2.5%, and Farmer Mac's board of directors may consider other factors,
such as earnings presented in accordance with generally accepted accounting principles in the United
States ("GAAP") and other regulatory requirements, in determining whether to restrict capital
distributions, including dividends and bonus payments. As of December 31, 2024, Farmer Mac's Tier 1
capital ratio was 14.2%. The calculation of Farmer Mac's Tier 1 capital ratio does not include certain
interest rate risk components of the risk weighting of assets, which reflects the fact that Farmer Mac
pursues an approach to funding its assets with liabilities of similar duration and convexity characteristics
and therefore does not bear material interest rate risk in its portfolio. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital
Requirements" for more information on Farmer Mac's Tier 1 capital ratio.
35
Liquidity Requirements
Liquidity Reserve Requirement and Supplemental Liquidity. Farmer Mac's Liquidity and Investment
Regulations require that Farmer Mac maintain at all times a liquidity reserve sufficient to fund at least
90 days of the principal portion of maturing obligations and other borrowings. Farmer Mac may also
maintain supplemental liquidity to fund obligations and borrowings maturing after 90 days. The
investments that Farmer Mac holds as its liquidity reserve and as supplemental liquidity must consist of
unencumbered and readily marketable assets that are diversified in accordance with categories prescribed
by FCA, including limitations on asset class, dollar amount, issuer concentration, and credit quality.
Farmer Mac must report, in writing, to OSMO no later than the next business day following the discovery
of any breach of Farmer Mac's minimum liquidity reserve requirement.
Liquidity Management. Under the Liquidity and Investment Regulations, Farmer Mac must develop and
approve annually a liquidity policy that outlines Farmer Mac's purpose and objectives for liquidity
reserves, diversification requirements for liquidity reserves, target liquidity levels, maximum investment
amounts as a percentage of Farmer Mac's program assets, exception parameters (and approval
requirements), delegations of investment authority, and reporting requirements to Farmer Mac's board of
directors and to OSMO. The regulations also require Farmer Mac to develop a liability maturity
management plan and a contingency funding plan, each of which must be reviewed and approved annually
by Farmer Mac's board of directors.
See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity
and Capital Resources" for more information about Farmer Mac's liquidity and "Management's Discussion
and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk—Other
Investments" for more information about Farmer Mac's eligible investments.
36
Item 1A.
Risk Factors
Farmer Mac's business activities, financial performance, and results of operations are, by their nature,
subject to risks and uncertainties, including those related to the agricultural industry, infrastructure
industries, access to the capital markets, the political and regulatory environment, the level of prevailing
interest rates, and overall market conditions. The following risk factors should be considered along with
"Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of
this report, including the risks and uncertainties described in the "Forward-Looking Statements" section.
Because new risk factors likely will emerge from time to time, management can neither predict all
potential risk factors nor assess the effects of those factors on Farmer Mac's business, operating results,
and financial condition or how much any factor, or combination of factors, may affect Farmer Mac's actual
results and financial condition. If any of the following risks materialize, Farmer Mac's business, financial
condition, or results of operations could be materially and adversely affected. Farmer Mac undertakes no
obligation to update or revise this risk factor discussion, unless required by applicable law.
Credit and Counterparty Risk
Economic stress caused by disruptive global events, such as geopolitical instability, and natural or
human-caused disasters, may materially and adversely affect Farmer Mac's business, operations,
operating results, financial condition, liquidity, or capital levels and may heighten other risk factors in
this report.
In a tightly-linked global economy, recent or continuing disruptive global events have contributed and
may continue to contribute to economic stress on America’s agricultural producers and infrastructure by
disrupting or transforming markets, systems, or resources that America’s farmers, ranchers, and rural
service providers rely on to remain profitable. This includes supply chain disruptions that prevent
producers from accessing critical resources or that inhibit exports, inflationary effects that put downward
pressure on demand for agricultural products or that may increase production expenses, and higher interest
rates that may increase the risk that Farmer Mac’s borrowers may default on their loans. Depending on the
severity and frequency of these types of disruptive events, as well as the capability of governments and
global markets to effectively mitigate the resulting negative effects, a prolonged period of economic stress,
including a broader economic downturn or recession, could ensue from these events, which could increase
stress on Farmer Mac’s borrowers and their ability to remain profitable and make payments on their loans.
Farmer Mac assumes the ultimate credit risk of borrower defaults on its agricultural mortgage and
infrastructure loan assets, and Farmer Mac's earnings, which come from net interest income, guarantee
fees, and commitment fees on those assets, depend significantly on their performance. Widespread and
sustained repayment shortfalls on loans in Farmer Mac's portfolio could result in losses, particularly if the
value of the available collateral does not cover Farmer Mac's exposure, and could materially and adversely
affect Farmer Mac’s business, operations, operating results, financial condition, liquidity, or capital levels.
The occurrence of these disruptive events and resulting negative economic effects may also heighten other
risk factors described in this report.
Weather-related events or other natural or environmental disasters could have a material adverse effect
on Farmer Mac’s business, operating results, or financial condition.
In addition to the general risks posed by adverse weather conditions, Farmer Mac’s exposure to credit risk
and the market value of loan collateral is potentially subject to risks associated with farmers and ranchers
37
facing increasing, as well as increasingly-severe, weather incidents. The U.S. experienced 27 separate
billion-dollar weather disasters in 2024, surpassed only by the 28 billion-dollar weather disasters in 2023,
both of which significantly exceeded the previous high set in 2020 (which had 22 billion-dollar weather
disasters) as the highest level in the more than 40 years tracked by the National Oceanic and Atmospheric
Administration ("NOAA"). Many climatologists predict increases in average temperatures, more extreme
temperatures, and increases in volatile weather over time. These physical changes may prompt changes in
regulations or consumer preferences, which in turn could have negative consequences for the business
models of borrowers, such as increasing costs, reducing the value of assets, and increasing operating
expenses. At the end of 2024, approximately 70% of the United States is classified as experiencing some
level of drought or dryness according to the National Drought Mitigation Center, USDA, and NOAA. The
effects of severe weather events could make some agricultural properties less suitable for farming or for
other alternative uses. Extended periods of drought and dryness can reduce agricultural productivity, cause
lasting damage to permanent crops like fruit and tree nuts, and result in producers leaving some fields
fallow due to lack of water. These and other effects of severe weather could have an adverse impact on
farming operations and the value of loan collateral, which could have a material adverse effect on Farmer
Mac’s business, operating results, or financial condition.
Political and other external factors outside of Farmer Mac's or borrowers' control may impair
borrowers' profitability and ability to repay their loans in Farmer Mac's portfolio, which could have a
material adverse effect on Farmer Mac's financial condition, results of operations, liquidity, or capital
levels.
Potential shifts in U.S. trade policies, tax policies, environmental regulations, and immigration laws with
the change in U.S. political leadership could result in significant impacts on agricultural producers and the
broader agricultural sector, as well as the infrastructure sector. These changes could lead to both favorable
and unfavorable conditions, influencing trade dynamics, the strength of the U.S. dollar, labor costs and
availability, and regulatory frameworks. Infrastructure borrowers (particularly those involved in renewable
energy projects) may experience delays in completing current projects or future investments in renewable
energy and battery storage projects as well as deployment of fiber and broadband infrastructure in rural
areas. The agricultural and infrastructure sectors may experience varying degrees of disruption and
adaptation in response to these evolving policies, and these changes could increase the uncertainty and
volatility of profitability in the agriculture and infrastructure sectors in the near-term.
Other external factors beyond Farmer Mac's or borrowers' control could impair borrowers' profitability,
such as volatility in demand for agricultural products or electricity in rural areas; variability in borrowers'
input costs; increased competition among producers due to oversupply or available alternatives; and
adverse changes in interest rates and land values. Any of these factors could put downward pressure on the
value and profitability of a farming, agribusiness, or rural utilities operation, which could then inhibit the
related borrower's repayment capacity on one or more loans that Farmer Mac may have from that
borrower in its portfolio. A significant number of defaults, or a single default from a large borrower
exposure, stemming from one or more of these factors could have a material adverse effect on Farmer
Mac's financial condition, results of operations, liquidity, or capital levels.
38
A decline in the value of collateral securing loans in Farmer Mac's portfolio or a decline in the value of
Farmer Mac's borrowers could increase the probability of loss in the event of default, which could have
a material adverse effect on Farmer Mac's financial condition, results of operations, liquidity, or
capital levels.
Farmer Mac's credit risk may increase due to a decline in the collateral values securing the loans in Farmer
Mac's portfolio. Specialized or highly improved collateral, such as storage and processing facilities,
permanent plantings, rural utilities, broadband, and renewable energy facilities, increase the risk of
undercollateralization in a default scenario because producers requiring specialized or highly improved
collateral are generally less able to adapt their operations or switch functional production when faced with
adverse conditions. Highly improved properties also face higher risk of loss in a default scenario, as the
pool of potential purchasers in a sale or foreclosure action may be smaller for a highly improved property
than for a property that is adaptable to multiple uses. If a borrower defaults and Farmer Mac forecloses on
a loan secured by property that is specialized or highly improved, Farmer Mac has experienced, and may
in the future experience, losses if the value of the property has dropped significantly since origination or
if there is a limited pool of potential purchasers willing to purchase the property at the price necessary for
Farmer Mac to recoup its investment. Farmer Mac's credit risk may also increase due to a decline in the
enterprise value of borrowers whose loans have been underwritten based on the estimated value of the
borrower as a going concern. External market factors outside of the borrower's control may cause stress in
the related industry, such as decrease in market demand, disruptions in supply chain, geopolitical or
regulatory action, or increased market competition. A borrower's management decisions, such as poorly
executed acquisitions or growth strategies or inability to adapt to changing market conditions, may also
adversely affect that borrower's ability to repay its loan. In these scenarios, the borrower may experience
downward pressure on cash flows and liquidity, which not only may contribute to an increased risk of
default, but also could decrease the borrower's enterprise value. Farmer Mac has incurred, and may in the
future incur, losses if the value of the collateral securing a loan or the enterprise value of a borrower is less
than the outstanding principal balance of Farmer Mac's loan at the time of foreclosure or sale, liquidation,
or other disposition of the business. If losses caused by declines in collateral value or borrower enterprise
value occur across a large number of loans, or across loans with large principal balances in the aggregate,
this could have a material adverse effect on Farmer Mac's financial condition, results of operations,
liquidity, or capital levels.
Concentrations in Farmer Mac's loan or investment portfolios, or to one or more borrowers or
counterparties, may increase Farmer Mac's exposure to credit risk, which could materially and
adversely affect its business, operating results, and financial condition.
Farmer Mac's exposure to credit risk may increase due to concentrations in its loan portfolio, which can
include concentrated exposure to particular commodities, geographic regions, or collateral types, as well
as concentrations in processing and manufacturing segments of agricultural supply chains or in rural
utilities or renewable energy industries. Widespread weakening in the financial condition of borrowers
within a particular geographic region that produce particular commodities or rely on particular collateral,
that engage in processes or production that depend on a fluid supply chain, or that produce or provide a
specialized infrastructure service or product could negatively affect Farmer Mac’s financial condition if
sufficient diversity in these areas does not successfully mitigate concentration risk.
Farmer Mac's exposure to credit risk may also increase due to concentrated exposure to a particular
borrower or counterparty. Farmer Mac’s portfolio consists of loans varying in size and by borrower,
including large exposures ($25 million or more) to individual borrowers. The default of any one of these
39
borrowers could negatively affect Farmer Mac's financial condition. Farmer Mac also has concentrated
exposures to individual business counterparties on AgVantage securities, which are general obligations of
institutional counterparties secured by eligible loans held by the issuing institution. Although AgVantage
securities are collateralized by eligible loans in a principal amount equal to or greater than the principal
amount of the securities outstanding, Farmer Mac could suffer losses if the market value of the loan
collateral declines and the counterparty defaults. Taking possession of the loan collateral upon a default by
the AgVantage counterparty could also result in higher current expected credit losses for Farmer Mac's
loans held on balance sheet, as well as increased capital requirements. As of December 31, 2024, $7.6
billion of the $8.5 billion of AgVantage securities outstanding had been issued by three counterparties.
A default by any of these counterparties could have a significant adverse effect on Farmer Mac's business,
operating results, and financial condition.
Farmer Mac's exposure to credit risk may also increase due to concentrated exposure to one or more
investment types or counterparties in the investment portfolio Farmer Mac maintains for liquidity. This
investment portfolio consists primarily of cash and cash equivalents, U.S. Treasury securities, investment
securities guaranteed by U.S. Government agencies and GSEs, and asset-backed securities backed
primarily by U.S. Government-guaranteed loans. Farmer Mac regularly reviews concentration limits to
ensure that its investments are appropriately diversified and comply with policies approved by Farmer
Mac's board of directors and with applicable FCA regulations, but Farmer Mac is still exposed to credit
risk from issuers of the investment securities it holds, particularly to issuers to whom Farmer Mac may
have a higher concentration of exposure relative to the rest of Farmer Mac's investment portfolio. For
example, as of December 31, 2024, Farmer Mac held at fair value $4.3 billion of investment securities
guaranteed by GSEs. A default by multiple issuers of investment securities held by Farmer Mac or by a
single issuer of investment securities in which Farmer Mac is more heavily concentrated could have an
adverse effect on Farmer Mac's business, operating results, and financial condition.
Farmer Mac Guaranteed Securities and LTSPCs expose Farmer Mac to significant contingent
liabilities, and Farmer Mac's ability to fulfill its obligations under its guarantees and LTSPCs may be
limited.
Farmer Mac's guarantee and purchase commitment obligations to third parties, including LTSPCs and
securities guaranteed by Farmer Mac, are obligations of Farmer Mac only and are not backed by the full
faith and credit of the United States, FCA, or any other agency or instrumentality of the United States
other than Farmer Mac. As of December 31, 2024, Farmer Mac had $4.5 billion of contingent liabilities
related to LTSPCs and securities issued to third parties and guaranteed by Farmer Mac, which represents
Farmer Mac's exposure if all loans underlying these LTSPCs and guarantees defaulted and Farmer Mac
recovered no value from the related collateral. If this were to occur, the funds available for payment on
these guarantees and LTSPCs could be substantially less than the aggregate amount of the corresponding
liabilities. As of December 31, 2024, Farmer Mac held cash, cash equivalents, and other investment
securities with a fair value of $7.0 billion that could be used as a source of funds for payment on its
obligations, including its guarantee and LTSPC obligations. Although Farmer Mac believes that it remains
well-collateralized on the assets underlying its guarantee and LTSPC obligations to third parties and that
the estimated probable losses for these obligations remain low relative to the amount available for
payment of claims on these obligations, Farmer Mac's total contingent liabilities for these obligations
could exceed the amount it may have available for payment of Farmer Mac's obligations, including claims
on Farmer Mac's contingent obligations. See "Management's Discussion and Analysis—Risk Management
—Credit Risk – Loans and Guarantees" for more information on Farmer Mac's management of credit risk.
40
Farmer Mac is exposed to counterparty risk on both its cleared and non-cleared swaps transactions that
could materially and adversely affect its business, operating results, and financial condition.
Farmer Mac uses interest rate swap contracts and hedging arrangements to manage its interest rate risk.
Farmer Mac clears a significant portion of its interest rate swaps through a swap clearinghouse and uses
the services of a futures commission merchant to post and receive mark-to-market margin amounts.
Farmer Mac also transacts non-cleared (bilateral) derivative contracts directly with swap counterparties
and posts and receives collateral to secure the market value of those contracts. A failure of any of these
counterparties could cause intra-day disruption for Farmer Mac's swap operations if the failure were to
prompt a termination of all or part of Farmer Mac's swap positions or if Farmer Mac were unable to
quickly access margin or collateral amounts. These conditions could be exacerbated in volatile market
conditions, in which the market could move against Farmer Mac's position before Farmer Mac had time to
reposition its swaps. These events could have a negative effect on Farmer Mac's operations and liquidity
and could expose Farmer Mac to more interest rate risk, which could materially and adversely affect its
business, operating results, and financial condition. As of December 31, 2024, the aggregate notional
balance of Farmer Mac's cleared swaps was $19.1 billion, and the aggregate notional balance of Farmer
Mac's non-cleared swaps was $5.7 billion.
Strategic and Business Risk
Farmer Mac's business, operating results, financial condition, and capital levels may be materially and
adversely affected by external factors that may affect the demand for Farmer Mac's secondary market,
the price or marketability of Farmer Mac's products, or Farmer Mac's ability to offer its products and
services.
Farmer Mac's business, operating results, financial condition, and capital levels may be materially and
adversely affected by external factors that may affect the price or marketability of Farmer Mac's products
and services or Farmer Mac's ability to offer its products and services, including, but not limited to:
•
disruptions in the debt or equity capital markets;
•
competitive pressures in Farmer Mac's loan purchase and guarantee activities or in the issuance of
its debt securities;
•
changes in interest rates that may increase Farmer Mac's funding costs;
•
market or customer perception of Farmer Mac's reputation;
•
legislative or regulatory developments adversely affecting Farmer Mac's ability to offer new
products, the ability or motivation of lenders to participate in Farmer Mac's lines of business, or
the cost of related corporate activities;
•
reduced demand for agricultural real estate loans or infrastructure loans due to regional, domestic,
or global economic conditions; and
•
expanded funding alternatives available to agricultural and infrastructure borrowers.
An inability to access the equity and debt capital markets could have a material adverse effect on
Farmer Mac's business, operating results, financial condition, liquidity, and capital levels.
Farmer Mac's ability to operate its business, meet its obligations, generate asset volume growth, and fulfill
its statutory mission depends on Farmer Mac's continued access to the U.S. financial markets at favorable
rates and terms to remain adequately capitalized through the issuance of equity and with adequate access
to liquidity through the issuance of debt securities. The issuance of debt securities is Farmer Mac's
41
primary source for repaying or refinancing existing debt and to fund contingent liabilities, as needed.
Farmer Mac's ability to access the debt and equity markets to raise capital, fund its assets, repay debt, and
earn net interest income depends on market perception of Farmer Mac. If Farmer Mac were unable to
access the U.S. financial markets to issue equity or debt securities at favorable rates and terms, Farmer
Mac's business, operating results, liquidity, or financial condition could be adversely affected.
The loss of business from key business counterparties or customers, including AgVantage
counterparties, could weaken Farmer Mac's business and decrease its revenues and profits.
Farmer Mac's business and ability to generate revenues and profits largely depends on its ability to
purchase eligible loans or place eligible loans under guarantees or LTSPCs and to purchase or guarantee
AgVantage securities. Farmer Mac conducts a significant portion of its business with a few business
counterparties. This concentration of business could potentially result in increased variability in Farmer
Mac's business as existing assets pay down or mature and the status and needs of Farmer Mac's customers
evolve. In 2024, ten institutions generated approximately 65% of loan purchase volume in the Agricultural
Finance line of business. Between December 31, 2023 and December 31, 2024, the outstanding balance of
Farmer Mac's AgVantage securities decreased by approximately $1.5 billion. As of December 31, 2024,
approximately 89.1% of the $8.5 billion outstanding principal amount of AgVantage securities (of which
$1.6 billion and $1.2 billion will be maturing in 2025 and 2026, respectively) were issued by three
institutions. As of December 31, 2024, transactions with two institutions represented nearly all of the
business volume under Farmer Mac's Infrastructure Finance line of business. Farmer Mac's ability to
maintain the current relationships with its business counterparties or customers and the business generated
by those business counterparties or customers is significant to Farmer Mac's business. As a result, the loss
of business from any one of Farmer Mac's key business counterparties could decrease Farmer Mac's
revenues and profitability. Farmer Mac may be unable to replace the loss of business of a key business
counterparty or customer with alternate sources of business due to limitations on the types of assets
eligible for Farmer Mac's secondary market, which could adversely affect Farmer Mac's business and
decrease its revenues and profits.
Operational Risk
The inadequacy or failure of Farmer Mac's operational systems, cybersecurity program, internal
controls or processes, or infrastructure, or those of third parties, could have a material adverse effect
on Farmer Mac's business, operating results, or financial condition.
Farmer Mac is exposed to operational risk due to the complex nature of its business operations and the
processes and systems used to undertake its business activities and comply with regulatory requirements.
Operational risk includes the risk of loss to Farmer Mac resulting from:
•
inadequate or failed internal processes, systems, cybersecurity program, or infrastructure;
•
Farmer Mac's inability to successfully implement enhancements to any of these or migrate to new
systems or infrastructure;
•
any cybersecurity incident or compromise of Farmer Mac's information systems or security
measures (including of its third parties), or the unauthorized access and/or acquisition of data;
•
failed execution of system implementations and upgrades;
•
human error, malfeasance, or other misconduct;
•
undetected or unknown errors, defects, or vulnerabilities in third party software or cybersecurity
incidents related to third party software;
42
•
inadequate or failed internal controls or processes to detect or prevent fraud or other violations of
law or regulations; or
•
external events, including a disruption involving physical site access, catastrophic events, natural
disasters, terrorist activities, or disease pandemics.
Farmer Mac relies on business processes that largely depend on people, technology, and the use of
complex systems and models to manage its business, process a high volume of daily transactions, and
generate the records on which Farmer Mac's financial statements are based. Inadequacies or failures in
Farmer Mac's internal processes, personnel, systems, cybersecurity program, or infrastructure could lead
to a significant disruption to business operations; unauthorized access to, or acquisition, destruction,
alteration, release, theft, or loss of, confidential, proprietary, or personal data; fraud on Farmer Mac's
business and customers; extortion; financial and economic loss or costs; errors in its financial statements;
impairment of its liquidity; harm to its employees, customers, or vendors; liability or service interruptions
to its customers; loss of customers or vendors; violation of data protection laws and other litigation and
legal risk; increased regulatory or legislative scrutiny; or reputational damage.
The potential for operational risk exposure also exists as a result of Farmer Mac's interactions with, and
reliance on, third parties. Farmer Mac's business relies on its ability to process, evaluate, and interpret
significant amounts of information, much of which third parties provide or process. Yet Farmer Mac's
ability to implement safeguards preventing disruption or unauthorized access to third-party systems or
infrastructure is more limited than for its own systems or infrastructure. If the financial, accounting, data
processing, backup, information technology, or other operating systems and infrastructure of third parties
with whom Farmer Mac interacts or upon whom it relies fail to operate properly, are subject to
unauthorized access or improper use, or are disrupted, then Farmer Mac may be impacted in the same
manner as it would be due to inadequacies or failures in Farmer Mac's own internal processes, personnel,
systems, cybersecurity program, or infrastructure.
Farmer Mac’s internal loan servicing function and reliance on third-party servicers exposes Farmer
Mac to operational risks that could adversely affect its business, operating results, or financial
condition.
Effective and reliable loan servicing is essential for Farmer Mac to successfully operate its business.
Starting in 2021, Farmer Mac expanded its internal loan servicing function through two strategic
acquisitions that included the loan servicing rights for a sizeable portion of Farmer Mac’s Agricultural
Finance mortgage loan and USDA Securities portfolios, as well as servicing rights for eligible agricultural
mortgage loans that are held by an unrelated third party. Farmer Mac has also acquired experienced
servicing personnel and an operational servicing platform during that time. This expansion of servicing
responsibilities and personnel has required Farmer Mac to implement processes and controls for a business
function that Farmer Mac has previously not operated and still has limited experience executing and
managing. Farmer Mac also continues to rely on experienced third-party servicers to service the portion of
Farmer Mac’s Agricultural Finance mortgage loan portfolio not serviced directly by Farmer Mac.
Although Farmer Mac has established servicing standards and requirements to which these third-party
servicers are required by contract to adhere and on which they must report to Farmer Mac, Farmer Mac
does not manage the processes and controls of these third-party servicers. The ineffective implementation,
operation, or oversight of one or more of the servicing processes or controls employed by Farmer Mac or
any of its third-party servicers could expose Farmer Mac to operational risk that could adversely affect
Farmer Mac’s business, operating results, or financial condition.
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A deficiency, failure, interruption, or breach in Farmer Mac's or its service providers' technology and
information systems, infrastructure, or cybersecurity program, including the occurrence of a
cybersecurity incident, could adversely affect Farmer Mac's business, operating results, or financial
condition.
To conduct and manage its business operations, Farmer Mac relies heavily on technology and information
systems, including from third parties, for the secure collection, processing, transmission, and storage of
confidential, proprietary, and personal information in its information systems (and those of third parties).
These technology and information systems encompass an integrated set of hardware, software,
infrastructure, and personnel organized to facilitate the planning, control, coordination, operations, and
decision-making processes within Farmer Mac. Risks to Farmer Mac's information systems and data as a
result of cybersecurity attacks has increased as the importance and complexity of Farmer Mac’s
technology and information systems has increased, and as new technologies are developed that are used by
its customers, Farmer Mac, and its service providers to support its business and operations. Like many
other financial institutions, Farmer Mac and its third-party service providers, vendors, and suppliers face
regular attacks by threat actors attempting to gain unauthorized access to, or disrupt, its information
systems and access or acquire its data, including from organized criminal groups, hackers, nation states,
activists, insiders, and others. These threats come from a variety of different sources, including cyber-
attacks, computer viruses, malware, exploits of system and network vulnerabilities, human error, phishing,
ransomware, and distributed denial of service attacks. The threats Farmer Mac and its third-party service
providers face and the methods used to gain unauthorized access to or disrupt their information systems
and data are evolving. Farmer Mac is not always able to prevent or recognize attacks, its existing
cybersecurity defenses may not be sufficient to detect attacks in a timely manner or to fully investigate an
attack, and it may be unable to implement effective preventive measures or proactively address these
threats until after a cybersecurity incident has been discovered. Farmer Mac also may have limited or no
control over its service providers' handling of cybersecurity incidents, including their recognition and
prevention practices. Any employees or agents of Farmer Mac’s (or its third-party customers or vendors)
who have authorized access to confidential, proprietary, or personal information could also intentionally,
inadvertently, or erroneously disseminate the information to unauthorized third parties.
Farmer Mac’s current information security program with cybersecurity procedures, policies, practices, and
controls, may not be sufficient to prevent unauthorized access to its information technology assets or data,
which could lead to a significant disruption to business operations; unauthorized access to or acquisition,
destruction, alteration, release, theft, or loss of confidential, proprietary, or personal data; fraud (on Farmer
Mac and/or its customers); extortion; financial and economic loss or costs; errors in its financial
statements; impairment of its liquidity; harm to employees, customers, or vendors; liability or service
interruptions to its customers; loss of customers or vendors; violation of data protection laws and other
litigation and legal risk; increased regulatory or legislative scrutiny; or reputational damage. Even when an
attempted cybersecurity attack or other security breach is successfully avoided or thwarted, Farmer Mac
may need to expend substantial resources in doing so, may be required to take actions that could adversely
affect customer satisfaction or behavior, or may be exposed to reputational damage. Farmer Mac also
could be subject to litigation and government enforcement actions as a result of any failure in its
procedures, policies, practices, and controls. Any such claim or proceeding could cause us to incur
significant unplanned expenses in excess of Farmer Mac's insurance coverage, which could adversely
affect Farmer Mac's financial condition and results of operations. The amount and scope of insurance
Farmer Mac maintains may not cover all expenses related to those claims. Also, the risk of unauthorized
access to confidential, proprietary, or personal information through information system breaches or
inadvertent dissemination may be heightened in a remote-working environment, which is currently more
44
prevalent at Farmer Mac.
Failure by Farmer Mac's third-party loan servicers, third-party applications, information systems
providers (including artificial intelligence systems), and other service providers to protect confidential
information from unauthorized access and dissemination could have a negative effect on Farmer Mac's
business, operating results, or financial condition.
Farmer Mac relies on third parties, including loan servicers, information systems providers, software-as-a-
service (SaaS) providers, cloud computing service providers, law firms, and other service providers, to
perform various functions that support Farmer Mac’s business and operations. Farmer Mac depends on
these third parties to collect, process, transmit, and store a variety of confidential, proprietary, or personal
information, including sensitive financial information and customer information. Just as Farmer Mac is
subject to numerous cyber-attacks from a variety of actors, so too are these third parties. Farmer Mac
requires third parties who collect, process, or store confidential, proprietary, or personal data to adhere to
security policies, processes, and controls. However, the control systems, cybersecurity program,
infrastructure, and personnel associated with third parties with which Farmer Mac does business or obtains
services are beyond its control. Farmer Mac is aware of cybersecurity incidents involving its third party
service providers in the past. Although Farmer Mac has not experienced a material loss of data or
disruption of its operations due to a breach of third party systems, unauthorized access to a third party
service provider's information technology assets or data may significantly impact Farmer Mac's operations
in the same manner as incidents on its own systems.
Farmer Mac relies upon a variety of third-party applications, services, and tools that are not developed by
Farmer Mac, including artificial intelligence systems and cloud-based platforms and related data centers,
to host data and support and operate certain aspects of its services and business operations. The effective
adoption, integration, and leveraging of existing and emerging technologies, including artificial
intelligence and machine learning systems into our operations, presents operational and market risks,
including system failures, inaccuracies with artificial intelligence outputs, and the investment of time and
resources to develop and implement successful artificial intelligence solutions in a rapidly changing
competitive market.
The unauthorized access to, acquisition, misuse, mishandling, unavailability, or destruction of Farmer
Mac's data or confidential information stored by these third parties or on their applications and systems,
including artificial intelligence systems, or unauthorized access to or disruption of these third party
applications, services, or tools could result in: unauthorized access to Farmer Mac's own systems;
significant disruption to its business operations; fraud (on Farmer Mac and/or its customers); extortion;
financial and economic losses or costs; errors in financial statements; impairment of its liquidity; harm to
its employees, customers, or vendors; liability or service interruptions to its customers; loss of customers
or vendors; violation of data protection laws and other litigation and legal risk; increased regulatory or
legislative scrutiny; reputational damage; or litigation and government enforcement actions.
If Farmer Mac's management of risk associated with its loan assets and investment securities based on
model assumptions and output is not effective, its business, operating results, financial condition, or
capital levels could be materially adversely affected.
Farmer Mac continually develops and adapts profitability and risk management models to adequately
address a wide range of possible market developments. Some of Farmer Mac's qualitative tools and
metrics for managing risk are based on its use of observed historical market behavior. Farmer Mac applies
45
statistical and other tools to these observations to quantify its risks. These tools and metrics may fail to
predict future or unanticipated risks or may not be effective in mitigating its risk exposure in all economic
market environments or against all types of risk, which could expose Farmer Mac to material
unanticipated losses. The inability of Farmer Mac to effectively identify and manage the risks inherent in
its business could have a material adverse effect on its business, operating results, financial condition, or
capital levels.
Farmer Mac's efforts to expand product offerings and services to its customers exposes Farmer Mac to
operational risk that could materially and adversely affect its business, operating results, or financial
condition.
As the needs of Farmer Mac's customer base and rural America evolve, Farmer Mac seeks to respond by
offering new products and services to meet these needs. As Farmer Mac expands its product offerings and
services, it is exposed to operational risk in implementing these new products and services. New products
and services may require new operational processes, which often require new internal controls to manage
new risks that these new processes present. If these controls are insufficient or ineffective to manage the
risks inherent in these new processes, or if there is human error in executing these new controls either due
to their novelty or otherwise, Farmer Mac could face financial loss, reputational damage, or regulatory
enforcement, which could materially and adversely affect Farmer Mac's business, operating results, or
financial condition.
Market Risk
Farmer Mac is exposed to interest rate risk that could materially and adversely affect its operating
results or financial condition.
Farmer Mac is subject to interest rate risk due to the timing differences in the cash flows of the assets it
holds and the liabilities issued to fund those assets. Farmer Mac's primary strategy for managing interest
rate risk is to fund asset purchases with debt together with financial derivatives that have similar duration
and convexity characteristics to help mitigate impacts from interest rate changes across the yield curve.
However, the ability of borrowers to prepay their loans before the scheduled maturities increases the
likelihood of asset and liability cash flow mismatches. In a changing interest rate environment, these cash
flow mismatches affect Farmer Mac's earnings if assets repay sooner than expected and the resulting cash
flows must be reinvested in lower-yielding investments, particularly if Farmer Mac's related funding costs
cannot be correspondingly repaid. Conversely, if assets repay more slowly than anticipated and the
associated debt issued to fund the assets must be reissued at a higher interest rate, Farmer Mac's earnings
could be adversely affected. In addition, rapid changes in interest rates could have a negative effect on
Farmer Mac's net interest income across quarters. Although Farmer Mac has benefited from higher
nominal interest rates in its investment portfolio, if those nominal interest rates decline, Farmer Mac may
earn less interest income on its investments in future periods. A future period of rapid increase or decline
in interest rates may create or exacerbate periods of market volatility that could adversely affect Farmer
Mac's ability to manage interest rate risk, which could have a material adverse effect on Farmer Mac's
operating results or financial condition. See "Management's Discussion and Analysis—Risk Management
—Interest Rate Risk" for more information on Farmer Mac's management of interest rate risk.
Farmer Mac is also subject to repricing risk, which is the risk that Farmer Mac's funding cost relative to a
benchmark index (for example, the Secured Overnight Financing Rate known as "SOFR") will increase
from the time the initial funding was issued and the time the liabilities are re-funded. This repricing risk
46
arises from a funding strategy whereby Farmer Mac issues floating rate debt across a variety of maturities
to fund floating or synthetically floating rate assets that on average may have longer maturities. A
significant increase in the difference between Farmer Mac's funding cost relative to the benchmark index,
including SOFR, may compress spread income on the assets Farmer Mac holds and seeks to re-fund with
the higher cost funding. Widespread compression within a short timeframe could adversely affect Farmer
Mac's operating results or financial condition.
Changes in interest rates relative to Farmer Mac's management of interest rate risk through derivatives
may cause volatility in financial results and capital levels and may adversely affect Farmer Mac's net
income, liquidity position, or operating results.
Farmer Mac enters into financial derivatives transactions to hedge interest rate risks inherent in its
business and carries its financial derivatives at fair value in its consolidated financial statements. Although
Farmer Mac's financial derivatives provide economic hedges of interest rate risk, changes in the fair values
of financial derivatives can cause volatility in net income and in capital, particularly if those financial
derivatives are not designated in hedge accounting relationships or if there is any ineffectiveness in a
hedge accounting relationship. As interest rates increase or decrease, the fair values of Farmer Mac's
derivatives change based on the position Farmer Mac holds relative to the specific characteristics of the
derivative. Farmer Mac's core capital available to meet its statutory minimum capital requirement can be
affected by changes in the fair values of financial derivatives, as noted above. Adverse changes in the fair
values of Farmer Mac's financial derivatives that are not designated in hedge accounting relationships and
any hedge ineffectiveness that results in a loss would reduce the amount of core capital available to meet
this requirement. In 2024 and 2023, Farmer Mac recorded gains of $3.3 million and $5.1 million,
respectively, from changes in the fair values of its financial derivatives as a result of movements in interest
rates during those years. Farmer Mac recorded gains of $11.5 million and losses of $5.4 million in 2024
and 2023, respectively, related to ineffectiveness in hedge accounting relationships.
Changes in interest rates have required, and in the future may require, Farmer Mac to post cash or
investment securities to collateralize its derivative exposures due to corresponding changes in the fair
market values of these derivatives. If changes in interest rates were to result in a significant decrease in the
fair value of Farmer Mac's derivatives, Farmer Mac would be required to post cash, cash equivalents, or
investment securities, possibly within a short period of time, to satisfy its obligations under its derivatives
contracts. As of December 31, 2024, Farmer Mac posted $46.9 million of cash and $213.4 million of
investment securities as collateral for its derivatives in net liability positions. If Farmer Mac is required to
fully collateralize a significant portion of its derivatives in an adverse interest rate environment, it could
have a material adverse effect on Farmer Mac's liquidity position or operating results.
Financial Risk
Incorrect estimates and assumptions by management in preparing financial statements could adversely
affect Farmer Mac's business, operating results, reported assets and liabilities, financial condition,
reputation, or capital levels.
Farmer Mac's accounting policies and methods are fundamental to how it records and reports its financial
condition and results of operations. Some of these policies and methods require management to make
estimates and assumptions in preparing Farmer Mac's consolidated financial statements. Incorrect
estimates and assumptions by management in connection with preparing Farmer Mac's consolidated
financial statements could adversely affect the reported amounts of assets and liabilities and the reported
47
amounts of income and expenses. For example, as of December 31, 2024, Farmer Mac's assets and
liabilities recorded at fair value included financial instruments valued at $5.5 billion whose fair values
management estimated in the absence of readily observable fair values (in other words, level 3). These
financial instruments measured with significant unobservable inputs represented 17.7% of total assets and
47.8% of financial instruments measured at fair value as of December 31, 2024. See "Management's
Discussion and Analysis—Critical Accounting Estimates" for more information about fair value
measurement. If management makes incorrect assumptions or estimates that result in understating or
overstating reported financial results, it could materially and adversely affect Farmer Mac's business,
operating results, reported assets and liabilities, financial condition, reputation, or capital levels.
Changes in the value or composition of Farmer Mac's investment securities could adversely affect
Farmer Mac's business, operating results, financial condition, liquidity or capital levels.
Deterioration in financial or credit market conditions could reduce the fair value of Farmer Mac's
investment securities, particularly those securities that are less liquid and more subject to market
variability. Some securities owned by Farmer Mac, including auction-rate certificates, do not have well-
established secondary trading markets, making it more difficult to estimate current fair values for those
securities. This requires Farmer Mac to rely on market observations and internal models to estimate the
fair values of its investment securities and to determine whether credit losses exist. However, available
market data may not reflect the actual sale conditions Farmer Mac may face when selling its investment
securities, particularly in adverse financial market conditions. Internal models require Farmer Mac to
exercise judgment about estimates and assumptions used in the models. If Farmer Mac uses unreliable
market data or incorrect estimates or assumptions in its internal models to estimate the fair value of its
investment securities, those estimates could adversely affect results of operations during the reporting
period. And if Farmer Mac decides to sell securities in its investment portfolio, the price ultimately
realized will depend on the demand and liquidity in the market at the time of sale, which could be
significantly less than Farmer Mac's estimates for fair value. Failure to accurately estimate the fair value
of Farmer Mac's investment securities could adversely affect Farmer Mac's business, operating results,
financial condition, liquidity or capital levels.
The trading price for Farmer Mac's Class C non-voting common stock may be volatile due to market
influences, trading volume, the effects of equity awards for Farmer Mac's officers, directors, and
employees, or sales of significant amounts of the stock by large holders.
The trading price of Farmer Mac's Class C non-voting common stock ("Class C stock") has at times
experienced substantial price volatility and may remain volatile. For example, the trading price of the
Class C stock ranged from $169.46 per share to $216.45 per share during 2024. The trading price may
fluctuate in response to various factors, including short sales, hedging, the presence or absence of a share
repurchase program, stock market influences in general that are unrelated to Farmer Mac's operating
performance, or sales of significant amounts of the stock by large holders. Farmer Mac typically grants
equity awards each year that are based on the Class C stock, including grants that vest over time or upon
the achievement of specified performance goals. Sales of stock acquired upon vesting or the exercise of
equity awards by Farmer Mac's officers, directors, or employees, whether under an established trading
plan or otherwise, could adversely affect the trading price of the Class C stock. All of these factors may be
exacerbated during periods of low trading volume for Farmer Mac's Class C stock, which averaged 52,650
shares daily during 2024 and may have a prolonged negative effect on its trading price or increase price
volatility.
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Regulatory and Compliance Risk
Farmer Mac and many of its business counterparties are subject to comprehensive government
regulation, and changes to those laws and regulations could adversely affect Farmer Mac's business,
operating results, reputation, or financial condition.
Farmer Mac was established under a statutory charter that the U.S. Congress may amend at any time and
is regulated by various government agencies, including the FCA and the SEC. Future legislative or
regulatory actions affecting Farmer Mac's statutory charter or its business activities, including increased
regulatory supervision, and any required changes to Farmer Mac's business or operations resulting from
such actions, could result in a financial loss for Farmer Mac or otherwise reduce its profitability, impose
more compliance and other costs on Farmer Mac, limit the products offered by Farmer Mac or its ability
to pursue business opportunities in which it might otherwise consider engaging, curtail business activities
in which it is currently engaged, affect the value of assets that Farmer Mac holds, or otherwise adversely
affect Farmer Mac's business, results of operations, reputation, or financial condition.
The financial services industry, in which most of Farmer Mac's business counterparties and customers
operate, is subject to significant legislation and regulations. To the extent that current or future legislation,
regulations, or supervisory activities affect the activities of banks, insurance companies, other rural
lenders, derivatives counterparties, clearinghouses, securities dealers, or other regulated entities that
constitute a large portion of Farmer Mac's business counterparties or customers, Farmer Mac could
experience loss of business or business opportunities, increased compliance costs, disadvantageous
business terms in its dealings with counterparties, and unfavorable changes to its business practices or
activities. As a result, Farmer Mac's business, operating results, reputation, or financial condition could be
adversely affected.
The legal and regulatory environment related to data privacy and cybersecurity is constantly changing.
Privacy and cybersecurity are currently areas of considerable legislative and regulatory attention, with new
or modified laws, regulations, rules, and standards being frequently adopted and potentially subject to
divergent interpretation or application in different jurisdictions in a manner that may create inconsistent or
conflicting requirements for businesses. The uncertainty and compliance risks created by these legislative
and regulatory developments are compounded by the rapid pace of technology development, such as
artificial intelligence and advances in data science, that affect the use or security of data, including
personal information. Privacy and cybersecurity laws and regulations often impose strict requirements on
the collection, storage, handling, use, disclosure, transfer, security, and other processing of personal
information. These laws and regulations may increase Farmer Mac’s compliance costs and require
changes to its business and operations. An actual or perceived failure by Farmer Mac, lenders, servicers,
vendors, service providers, counterparties, or other third parties to comply with privacy, data protection,
and information security laws, regulations, standards, policies, and contractual obligations could result in
legal liabilities, fines, regulatory action, and reputational harm that have a material adverse impact on
Farmer Mac’s business, financial results, and financial condition.
Farmer Mac's capital requirements may change, and failure to meet those requirements could result in
supervisory measures or the inability of Farmer Mac to declare dividends, or otherwise materially and
adversely affect Farmer Mac's business, operating results, or financial condition.
Farmer Mac is required by statute and regulation to maintain certain capital levels. Any inability by
Farmer Mac to meet these capital requirements could result in supervisory measures by FCA, adversely
49
affect Farmer Mac's ability to declare dividends on its common and preferred stock, or otherwise
materially and adversely affect Farmer Mac's business, operating results, or financial condition. As
required by an FCA regulation on capital planning, Farmer Mac has adopted a policy to maintain a
sufficient level of Tier 1 capital and to restrict paying Tier 1-eligible dividends if Tier 1 capital falls below
specified thresholds. For more information about Farmer Mac's capital requirements, including the Tier 1
capital requirement, see "Business—Government Regulation of Farmer Mac—Regulation—Capital
Standards." Factors that could adversely affect the adequacy of Farmer Mac's capital levels in the future,
and which may be beyond Farmer Mac's control, include:
•
credit losses;
•
adverse changes in interest rates or credit spreads;
•
the need to increase the level of the allowance for losses on loans;
•
legislative or regulatory actions that increase Farmer Mac's capital requirements; and
•
changes in GAAP.
Other Risks
Farmer Mac is a GSE that may be materially and adversely affected by legislative or political
developments.
Farmer Mac is a GSE with a statutory charter that may be amended by Congress at any time, and is also
regulated by government agencies, including the FCA and the SEC. Although Farmer Mac is not aware of
any pending legislative or regulatory proposals that would materially impact its business or operations,
Farmer Mac's ability to effectively conduct its business is subject to risks and uncertainties related to
political developments that could affect Farmer Mac or GSEs generally. These political risks and
uncertainties generally are heightened under a newly-elected Congress and Presidential administration.
For example, five members of Farmer Mac's board of directors serve at the pleasure of the President of the
United States. Also, the organization and operation of Farmer Mac's federal safety and soundness
regulator, the Farm Credit Administration, could be affected by efforts to consolidate or otherwise
reorganize federal financial regulatory agencies. Farmer Mac cannot predict whether or when legislative
or regulatory initiatives may commence that, if successful, could negatively affect the status of Farmer
Mac as a GSE or how Farmer Mac operates, and which could have a material and adverse effect on
Farmer Mac's business, operating results, financial condition, or capital levels. See "Business—
Government Regulation of Farmer Mac" for more information about the rules and regulations governing
Farmer Mac's activities.
Farmer Mac's ability to attract and retain motivated and qualified employees is critical to the success of
its business, and significant or sustained disruption in the continuity of Farmer Mac's employees or
executive leaders may materially adversely affect Farmer Mac's business performance, operations,
financial condition, or reputation.
Farmer Mac relies on its employees' breadth and depth of knowledge of Farmer Mac and related industries
to run its business operations successfully. If Farmer Mac cannot continue to retain and attract motivated
and qualified employees or does not have adequate human capital to achieve its business objectives,
Farmer Mac's business performance, operations, financial condition, or reputation could be materially
adversely affected. A significant disruption in the continuity of Farmer Mac's employees or any significant
executive leadership change could also result in a loss of productivity and affect Farmer Mac's ability to
successfully execute business strategies by creating uncertainty or instability or requiring Farmer Mac to
50
divert or expend more resources to replace personnel. Loss of key leadership personnel could also damage
the public or market perception of Farmer Mac or result in the departure of other executives or key
employees. Any of these factors could materially adversely affect Farmer Mac's business performance,
operations, financial condition, or reputation.
Any of the risks described in this section could materially and adversely affect Farmer Mac's business,
operating results, financial condition, reputation, capital levels, and future earnings. For more information
about Farmer Mac's risk management, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations—Risk Management" in Item 7 of this report.
Item 1B.
Unresolved Staff Comments
None.
Item 1C.
Cybersecurity
Risk Management and Strategy
Farmer Mac recognizes the importance of assessing, identifying, and managing risks associated with
cybersecurity threats. Farmer Mac’s process to identify and assess material risks from cybersecurity
threats operates alongside Farmer Mac’s broader overall risk assessment process that contemplates all
company risks. As part of this process, appropriate personnel collaborate with subject matter specialists, as
necessary, to gather information to identify and assess material cybersecurity threat risks, their severity,
and potential mitigations.
Farmer Mac has implemented a variety of processes, technologies, and controls to aid in its efforts to
identify, assess, and manage cybersecurity risks. Farmer Mac’s approach includes:
•
an enterprise risk management program that includes an annual cybersecurity risk assessment and
management and is periodically refreshed;
•
security reviews designed to identify risks from many new features, software, and vendors,
including a security operations center to monitor our systems;
•
a team of trained and experienced security professionals to investigate and remediate cybersecurity
incidents;
•
regular cybersecurity training for all employees and network users to raise and maintain awareness
of cybersecurity risks and best practices;
•
a vulnerability management program designed to identify vulnerabilities in the systems and
software Farmer Mac uses;
•
regular cybersecurity testing, including third-party penetration testing on a periodic basis to allow
security researchers to help identify vulnerabilities in Farmer Mac’s systems before they mature
into real-world cybersecurity threats;
•
a third-party service provider risk management program designed to identify and mitigate risks
associated with third-party vendors and business partners, which includes pre-engagement
diligence, risk assessments, contractual security and notification provisions, and ongoing
monitoring, as appropriate;
•
a threat intelligence program designed to model and research potential cybersecurity threat actors
to identify vulnerabilities and anticipate attack vectors before they are exploited;
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•
cybersecurity controls designed to segment access to systems and to limit access to sensitive data,
which controls are tested and updated regularly;
•
patch management controls aimed at reducing system vulnerabilities; and
•
a generative artificial intelligence policy that describes how users may utilize generative artificial
intelligence tools in alignment with Farmer Mac's values, ethical standards, and legal requirements,
while also safeguarding sensitive information.
These processes vary in maturity across the business, and Farmer Mac works continually to improve them.
Farmer Mac also maintains a privacy and security incident response program to prepare for, detect,
respond to, and recover from cybersecurity incidents. That program includes processes to triage, assess
severity for, escalate, contain, investigate, and remediate any cybersecurity incident, as well as to comply
with any applicable legal obligations (including to preserve evidence) and to mitigate brand and
reputational damage. Farmer Mac also conducts regular tabletop exercises to test and fortify the controls
of its cybersecurity incident response program. Farmer Mac’s security operations center and incident
response team assesses the severity and priority of incidents on a rolling basis, with escalations of
cybersecurity incidents provided to Farmer Mac’s management team and board as appropriate. If a
cybersecurity incident is determined to be a material cybersecurity incident, Farmer Mac’s incident
response plan defines the process for any required regulatory disclosures.
Farmer Mac’s risk management approach is supplemented by external and internal enterprise risk
management audits, which are designed to test the effectiveness of Farmer Mac’s security controls. Prior
cybersecurity incidents have not materially affected Farmer Mac's business strategy, results of operations,
or financial condition. Farmer Mac does not believe that there are currently any known risks from
cybersecurity threats that are reasonably likely to materially affect its business strategy, results of
operations, or financial condition, although the occurrence of both intentional and unintentional incidents
could cause a variety of adverse business impacts in the future. For more information on Farmer's Mac's
cybersecurity risks see "Operational Risks" in "Risk Factors" in Part I, Item 1A of this report. Those
disclosures are incorporated by reference in this section.
Governance
Farmer Mac’s board of directors is actively involved in overseeing the company's cybersecurity risk
management. At least once a year, the full board of directors meets with Farmer Mac’s Chief Information
Security Officer (“CISO”) to discuss and approve Farmer Mac’s programs and policies related to
cybersecurity and risk initiatives and considers them closely both from a risk management perspective and
as part of Farmer Mac’s business strategy.
The board has created a dedicated cybersecurity subcommittee of the enterprise risk committee to oversee
Farmer Mac’s cybersecurity programs and practices, including the identification and mitigation of security
and privacy risks. The cybersecurity subcommittee consists of three members of the enterprise risk
committee. The cybersecurity subcommittee typically meets on a monthly basis with the CISO and other
members of Farmer Mac's management team to discuss the performance and effectiveness of Farmer
Mac's cyber program and to receive updates on cybersecurity risks, any cybersecurity incidents, and major
cybersecurity initiatives. The materials provided to Farmer Mac’s cybersecurity subcommittee and
discussed in the meetings may include updates about cybersecurity risks, controls, and assessments,
including those from third parties. At each regular quarterly meeting of the board enterprise risk
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committee, the cybersecurity subcommittee reviews a summary of the information discussed in the most
recent cybersecurity subcommittee meetings.
Farmer Mac’s CISO manages Farmer Mac’s cybersecurity program, which aligns to industry standards
and is reviewed by the cybersecurity subcommittee and approved by the board enterprise risk committee
annually, and which includes the identification, evaluation, and prioritization of security risks, as well as
the company’s response to security incidents. The CISO has more than 20 years of experience in
cybersecurity and information technology and holds a Master’s degree in Business Administration with a
focus on Information Technology. The CISO also holds a Certified Information Security Manager (CISM)
certification, which is an advanced certification indicating that an individual possesses the knowledge and
experience required to develop and manage an enterprise information security program. The CISO reports
to Farmer Mac's Senior Vice President – Enterprise Risk Officer, who in turn reports to the Chief
Executive Officer.
Members of senior management have regular meetings with the CISO and other members of Farmer Mac's
information technology team to discuss and monitor the prevention, mitigation, detection, and remediation
of cybersecurity incidents. The participants in these meetings also discuss their management of, and
participation in, the cybersecurity risk management and strategy processes described in this report,
including the operation of Farmer Mac’s incident response plan.
Item 2.
Properties
Farmer Mac maintains its principal office at 2100 Pennsylvania Avenue, N.W., Washington, D.C. 20037,
under a lease that began on September 1, 2024 and ends on April 30, 2036. Farmer Mac also maintains
another office location at 9169 Northpark Drive, Johnston, Iowa 50131, under an amended lease that
began on October 1, 2017 and ends on August 31, 2027. Farmer Mac believes that its offices are suitable
and adequate for its current and anticipated needs for the near future.
Item 3.
Legal Proceedings
None.
Item 4.
Mine Safety Disclosures
Not applicable.
53
PART II
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer
Purchases of Equity Securities
(a)
Farmer Mac has three classes of common stock outstanding – Class A voting common stock,
Class B voting common stock, and Class C non-voting common stock. Ownership of Class A voting
common stock is restricted to banks, insurance companies, and other financial institutions or similar
entities that are not institutions of the FCS. Ownership of Class B voting common stock is restricted to
institutions of the FCS. There are no ownership restrictions on the Class C non-voting common stock. In
the original public offering of the Class A and Class B voting common stock, Farmer Mac reserved the
right to redeem at book value any shares of either class held by an ineligible holder.
Farmer Mac's Class A voting common stock and Class C non-voting common stock are listed on the New
York Stock Exchange under the symbols AGM.A and AGM, respectively. The Class B voting common
stock, which has a limited market and trades infrequently, is not listed or quoted on any exchange or other
quotation system, and Farmer Mac is not aware of any publicly available quotations or prices for that class
of common stock.
As of February 7, 2025, Farmer Mac had 819 registered owners of the Class A voting common stock,
72 registered owners of the Class B voting common stock, and 774 registered owners of the Class C non-
voting common stock.
The dividend rights of all three classes of Farmer Mac's common stock are the same, and dividends may
be paid on common stock only when, as, and if declared by Farmer Mac's board of directors in its sole
discretion, subject to compliance with applicable capital requirements and payment of dividends on any
outstanding preferred stock. On February 22, 2023, Farmer Mac's board of directors declared a dividend
of $1.10 per share on Farmer Mac's common stock payable for first quarter 2023. That dividend was paid
quarterly through fourth quarter 2023. On February 21, 2024, Farmer Mac's board of directors declared a
dividend of $1.40 per share on Farmer Mac's common stock payable for first quarter 2024. That dividend
was paid quarterly through fourth quarter 2024. On February 20, 2025, Farmer Mac's board of directors
declared a dividend of $1.50 per share on Farmer Mac's common stock payable for first quarter 2025.
See "Business—Financing—Equity Issuance" for more information on Farmer Mac's common stock.
The quarterly dividend of $1.50 per share on all three classes of common stock for first quarter 2025
represents an increase of $0.10 per common share, or 7%, over the quarterly dividend payout in 2024. In
deciding to increase Farmer Mac's common stock dividend payout, the board of directors considered
Farmer Mac's strong capital position and the consistency of and outlook for earnings, balanced against the
need for capital to fund the significant growth objectives identified in the company's strategic plan and to
meet regulatory requirements and metrics established by the board of directors. These actions are also
consistent with Farmer Mac's goal of providing a competitive return on its common stockholders'
investments through the payment of cash dividends.
The declaration and payment of future dividends to holders of Farmer Mac's common stock are, however,
at the discretion of Farmer Mac's board of directors and depend on many factors, including Farmer Mac's
financial condition, actual results of operations and earnings, the capital needs of Farmer Mac's business,
regulatory requirements, and other factors that Farmer Mac's board deems relevant. Farmer Mac's ability
to pay dividends on its common stock is also subject to the payment of dividends on its outstanding
preferred stock. Applicable FCA regulations also require Farmer Mac to provide FCA with 15 days'
54
advance notice of certain capital distributions. Farmer Mac's ability to declare and pay dividends could be
restricted if it were to fail to comply with applicable capital requirements. See Note 9 to the consolidated
financial statements for more information about Farmer Mac's capital position and see "Business—
Government Regulation of Farmer Mac—Regulation—Capital Standards" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—
Capital Requirements" for more information on the capital requirements applicable to Farmer Mac.
Information about securities authorized for issuance under Farmer Mac's equity compensation plans
appears under "Equity Compensation Plans" in Farmer Mac's definitive proxy statement to be filed on or
about April 16, 2025. That portion of the definitive proxy statement is incorporated by reference into this
Annual Report on Form 10-K.
Farmer Mac is a federally chartered instrumentality of the United States, and its common stock is exempt
from registration under Section 3(a)(2) of the Securities Act. One type of transaction related to Farmer
Mac's common stock occurred during fourth quarter 2024 that was not registered under the Securities Act
and not otherwise reported on a Current Report on Form 8-K:
•
In October 2024, consistent with Farmer Mac's policy that permits directors of Farmer Mac to elect
to receive shares of Class C non-voting common stock in lieu of their cash retainers, Farmer Mac
issued an aggregate of 421 shares of Class C non-voting common stock to the eight directors who
elected to receive such stock in lieu of a portion of their cash retainers. The number of shares
issued to the directors was calculated based on a price of $187.41 per share, which was the closing
price of the Class C non-voting common stock on September 30, 2024, the last business day of the
previous quarter, as reported by the New York Stock Exchange.
Performance Graph. The following graph compares the performance of Farmer Mac's Class A voting
common stock and Class C non-voting common stock with the performance of the New York Stock
Exchange Composite Index ("NYSE Comp") and the Standard & Poor's 500 Financial Services Index
("S&P 500 Financial Services Index") over the period from December 31, 2019 to December 31,
2024. The S&P 500 Financial Services Index was renamed in 2023 and was formerly known as the
Standard & Poor's 500 Diversified Financials Index. The graph assumes that $100 was invested on
December 31, 2019 in each of: Farmer Mac's Class A voting common stock; Farmer Mac's Class C non-
voting common stock; the NYSE Composite Index; and the S&P 500 Financial Services Index. The graph
also assumes that all dividends were reinvested into the same securities throughout the past five
years. Farmer Mac obtained the information in the performance graph from S&P Global Market
Intelligence.
55
Index Value
Total Return Performance
Farmer Mac Class C (AGM)
Farmer Mac Class A (AGM.A)
S&P 500 Financial Services
NYSE Comp
12/31/19
12/31/20
12/31/21
12/31/22
12/31/23
12/31/24
50
100
150
200
250
300
This performance graph shall not be deemed to be "soliciting material" or to be "filed" with the SEC, and
this performance graph shall not be incorporated by reference into any of Farmer Mac's filings under the
Securities Act or the Securities Exchange Act of 1934 and related regulations, or any other document,
whether made before or after the date of this report and despite any general incorporation language
contained in a filing or document (except to the extent Farmer Mac specifically incorporates this section
by reference into a filing or document).
(b)
Not applicable.
(c)
None.
Item 6.
[Reserved].
56
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
The objective of this section of the report is to provide a discussion and analysis, from management’s
perspective, of the material information necessary to assess Farmer Mac's financial condition and results
of operations for the year ended December 31, 2024. Financial information included in this report is
consolidated to include the accounts of Farmer Mac and its two subsidiaries – Farmer Mac Mortgage
Securities Corporation and Farmer Mac II LLC. This discussion and analysis of financial condition and
results of operations should be read together with Farmer Mac's consolidated financial statements and the
related notes to the consolidated financial statements for the fiscal year ended December 31, 2024, 2023,
and 2022.
Overview
Farmer Mac is driven by its mission to increase the accessibility of financing to provide vital liquidity for
American agriculture and infrastructure. Our secondary market provides liquidity to our nation's
agricultural and infrastructure businesses, supporting a vibrant and strong rural America. We offer a wide
range of solutions to help meet financial institutions’ growth, liquidity, risk management, and capital relief
needs across diverse markets, including agriculture, agribusiness, broadband infrastructure, power and
utilities, and renewable energy. We are uniquely positioned to facilitate competitive access to financing
that fuels growth, innovation, and prosperity in America's rural and agricultural communities. Farmer Mac
also serves as a critical investment tool for a number of entities – such as states, counties, municipalities,
pension funds, banks, public trust funds, and credit unions – by offering investment opportunities that may
diversify their investment portfolios and provide possibilities to earn a competitive return on their
investment dollars.
During 2024, Farmer Mac:
•
provided $7.0 billion in liquidity and lending capacity to lenders serving rural America;
•
issued over $0.6 billion in FARM securitization certificates;
•
maintained strong liquidity in our investment portfolio well above regulatory requirements;
•
maintained our strong capital position, well above regulatory requirements, and uninterrupted
access to the debt capital markets; and
•
redeemed all $75.0 million of our Series C Preferred Stock.
The discussion below of Farmer Mac's financial information includes "non-GAAP measures," which are
measures of financial performance not presented in accordance with generally accepted accounting
principles in the United States ("GAAP"). For more information about the non-GAAP measures Farmer
Mac uses, see "Management's Discussion and Analysis of Financial Condition and Results of Operations
—Use of Non-GAAP Measures."
57
Net Income and Core Earnings
The following table shows our net income attributable to common stockholders and core earnings for the
periods presented. Core earnings and core earnings per share are non-GAAP measures that differ from net
income attributable to common stockholders and earnings per common share, respectively, by excluding
the effects of fair value fluctuations and specified infrequent or unusual transactions.
Table 1
For the Years Ended December 31,
2024
2023
2022
(in thousands)
Net income attributable to common stockholders
$
180,428 $
172,838 $
150,979
Core earnings
171,630
171,156
124,314
The $7.6 million year-over-year increase in net income attributable to common stockholders was primarily
attributable to a $20.8 million after-tax increase in net interest income, a $2.6 million federal income tax
benefit from the purchase of renewable energy investment tax credits, and a $2.0 million decrease in
preferred stock dividends. These factors were partially offset by an $8.2 million after-tax increase in the
provision for credit losses, a $6.6 million after-tax increase in operating expenses, and the $1.6 million
loss on retirement of the Series C Preferred Stock related to deferred issuance costs.
The $21.9 million year-over-year increase in net income attributable to common stockholders for 2023
compared to 2022 was due to a $44.7 million after-tax increase in net interest income and a $2.9 million
after-tax increase in guarantee fees. These factors were partially offset by a $15.6 million after-tax
decrease in the fair value of undesignated financial derivatives and a $12.1 million after-tax increase in
operating expenses.
The $0.5 million year-over-year increase in core earnings was primarily attributable to a $9.9 million
after-tax increase in net effective spread, a $2.6 million federal income tax benefit from the purchase of
renewable energy investment tax credits, a $2.0 million decrease in preferred stock dividends, and a
$1.1 million after-tax increase in guarantee and commitment fees. These factors were partially offset by an
$8.2 million after-tax increase in the provision for credit losses and a $6.6 million after-tax increase in
operating expenses.
The $46.8 million year-over-year increase in core earnings for 2023 compared to 2022 was due to a $56.4
million after-tax increase in net effective spread, partially offset by a $12.1 million after-tax increase in
operating expenses.
For more information about net income attributable to common stockholders, the composition of core
earnings, and a reconciliation of net income attributable to common stockholders to core earnings, see
"Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of
Operations." For more information about the non-GAAP measures Farmer Mac uses, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP
Measures."
58
Net Interest Income and Net Effective Spread
The following table shows our net interest income and net effective spread in both dollars and percentage
yield or spread for the periods presented. Farmer Mac uses net effective spread, a non-GAAP measure, as
an alternative to net interest income because management believes it is a useful metric that reflects the
economics of the net spread between all the assets owned by Farmer Mac and all related funding,
including any associated derivatives, some of which may not be included in net interest income.
Table 2
For the Years Ended December 31,
2024
2023
2022
(in thousands)
Net interest income
$
353,867
$
327,547
$
270,940
Net interest yield %
1.16 %
1.15 %
1.04 %
Net effective spread
$
339,564
$
326,980
$
255,529
Net effective spread %
1.15 %
1.18 %
1.02 %
The $26.3 million year-over-year increase in net interest income was primarily due to an increase of
$20.2 million from the shift in the composition of new business volume toward higher yielding loans and a
$16.9 million increase in the fair value of derivatives designated in fair value hedge accounting
relationships (designated financial derivatives). That increased yield was partially offset by a $6.6 million
decrease in cash-basis interest income and a $4.6 million increase in funding costs. In percentage terms,
the year-over-year increase was 0.01%.
The $56.6 million year-over-year increase in net interest income for 2023 compared to 2022 was primarily
due to a $48.9 million decrease in funding costs and a $19.9 million increase related to net new business
volume. The decrease in funding costs was primarily due to our disciplined funding strategies and higher
nominal interest rates that have led to an upward repricing of our excess long-term capital that we raised
when interest rates were at historical lows and is held in our investment portfolio. The factors that
contributed to the increase in net interest income were partially offset by an $11.2 million decrease in the
fair value of derivatives designated in fair value hedge accounting relationships (designated financial
derivatives). In percentage terms, the 0.11% increase was primarily attributable to a decrease of 0.16% in
funding costs and a decrease of 0.04% in net fair value changes from designated financial derivatives.
The $12.6 million year-over-year increase in net effective spread was primarily due to a $20.2 million
increase from a shift in the composition of new business volume towards higher-yielding loans. This
factor was partially offset by a $6.6 million decrease in cash-basis interest income and a $1.3 million
increase in funding costs. In percentage terms, the year-over-year decrease of 0.03% was primarily
attributable to an increase of 0.04% related to the increases in funding costs and a decrease of 0.02% in
cash-basis interest income, which were partially offset by an increase of 0.03% on the shift in the
composition of new business volume towards higher-yielding loans.
The $71.5 million year-over-year increase in net effective spread for 2023 compared to 2022 was
primarily due to a $54.6 million decrease in funding costs, due to the same factors mentioned above that
decreased our funding costs, and a $20.6 million increase related to net new business volume. In
percentage terms, the year-over-year increase of 0.16% was primarily attributable to a decrease in funding
costs.
59
For more information about Farmer Mac's use of net effective spread as a financial measure, see
"Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-
GAAP Measures." For a reconciliation of net interest income to net effective spread, see Table 10 in
"Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of
Operations—Net Interest Income."
Business Volume
Our outstanding business volume was $29.5 billion as of December 31, 2024, a net increase of $1.1 billion
from December 31, 2023 after taking into account all new business, maturities, sales, and paydowns on
existing assets. The net increase was primarily attributable to a net increase of $1.1 billion in the
Infrastructure Finance line of business.
For more information about Farmer Mac's business volume, see "Management's Discussion and Analysis
of Financial Condition and Results of Operations—Results of Operations—Business Volume."
Capital
Table 3
As of
December 31, 2024
December 31, 2023
(in thousands)
Core capital
$
1,501,173 $
1,452,008
Capital in excess of minimum capital level required
583,527
589,399
The decrease in capital in excess of the minimum capital level required was primarily due to the
redemption of the Series C Preferred Stock, partially offset by an increase in retained earnings.
Credit Quality
The following table presents Agricultural Finance on- and off-balance sheet substandard assets, in dollars
and as a percentage of the respective portfolio as of December 31, 2024 and 2023:
Table 4
On-Balance Sheet
Off-Balance Sheet
Substandard Assets
% of Portfolio
Substandard Assets
% of Portfolio
(dollars in thousands)
December 31, 2024
$
367,012
4.2 % $
31,240
0.9 %
December 31, 2023
152,865
2.0 %
33,086
1.0 %
Increase/(decrease) from prior year-ending
214,147
2.2 %
(1,846)
(0.1) %
The increase of $214.1 million in on-balance sheet substandard assets during 2024 was primarily driven
by credit downgrades in permanent plantings, crops, livestock, part-time farms, and agricultural storage
and processing.
There were two substandard assets with a cumulative outstanding balance of $42.5 million in the
Infrastructure Finance portfolio as of December 31, 2024. There was one substandard asset with an
outstanding balance of $29.4 million in the Infrastructure Finance portfolio as of December 31, 2023.
60
For an analysis of current loan-to-value ratios across substandard and other internally assigned risk
ratings, see Table 25 in "Management's Discussion and Analysis of Financial Condition and Results of
Operations—Risk Management—Credit Risk—Loans and Guarantees."
The following table presents 90-day delinquencies for the on- and off-balance sheet Agricultural Finance
portfolios in dollars and as a percentage of the respective balance sheet category as of December 31, 2024
and 2023:
Table 5
On-Balance Sheet
Off-Balance Sheet
90-Day
Delinquencies
% of Portfolio
90-Day
Delinquencies
% of Portfolio
(dollars in thousands)
December 31, 2024
$
101,340
1.15 % $
7,604
0.22 %
December 31, 2023
32,893
0.42 %
1,784
0.05 %
Increase/(decrease) from prior year-ending
68,447
0.73 %
5,820
0.17 %
On-balance sheet Agricultural Finance assets 90 or more days delinquent increased in permanent
plantings, crops, livestock, and part-time farms. Off-balance sheet Agricultural Finance assets 90 days or
more delinquent increased in permanent plantings and crops. The top ten borrower exposures over 90 days
delinquent in either the on- or off-balance sheet Agricultural Finance portfolio represented over half of the
aggregate 90-day delinquencies as of December 31, 2024.
As of both December 31, 2024 and 2023, there were no 90-day delinquencies in Farmer Mac's portfolio of
Infrastructure Finance loan purchases and loans underlying LTSPCs.
For more information about Farmer Mac's credit metrics, including 90-day delinquencies, the total
allowance for losses, and substandard assets, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations—Risk Management—Credit Risk—Loans and Guarantees."
Critical Accounting Estimates
The preparation of Farmer Mac's consolidated financial statements in conformity with GAAP requires the
use of estimates and assumptions that affect the amounts reported in the consolidated financial statements
and related notes for the periods presented. Farmer Mac considers an accounting estimate made in
accordance with GAAP to be critical when it involves a significant level of estimation uncertainty and it
has had or is likely to have a material impact on our financial condition or results of operations.
The accounting estimate that Farmer Mac considers to be critical in the preparation of its consolidated
financial statements is the estimation of the fair value of AgVantage Securities (AgVantage). Farmer Mac
considers the fair value of AgVantage Securities that are classified as held-to-maturity (AgVantage HTM)
to be a critical estimate because of their impact on the company's fair value disclosures in Note 5 to the
consolidated financial statements – Farmer Mac Guaranteed Securities and USDA Securities and Note 13
to the consolidated financial statements – Fair Value Disclosures. Farmer Mac considers the fair value of
AgVantage Securities that are classified as available-for-sale (AgVantage AFS) to be a critical estimate
due to the significance of the periodic measurement of mark-to-market adjustments relative to the
company's total assets, comprehensive income, and equity. Farmer Mac also considers the fair value of
AgVantage to be a critical accounting estimate because Farmer Mac applies a discount rate in calculating
61
the net present value of future expected cash flows that is both significant to the estimate of their fair value
and unobservable in the market. Farmer Mac relies upon this significant unobservable input to estimate the
fair value of AgVantage because there are no observable transactions in these securities in the market.
Farmer Mac's AgVantage HTM amortized cost was $2.7 billion and $4.2 billion as of December 31, 2024
and 2023, respectively. The fair value of AgVantage HTM had net unrealized losses in the amount of
$15.6 million and $34.8 million as of December 31, 2024 and 2023, respectively. See Note 5 to the
consolidated financial statements – Farmer Mac Guaranteed Securities and USDA Securities for more
information.
Farmer Mac's AgVantage AFS fair value was $5.5 billion as of both December 31, 2024 and 2023. The
fair value of AgVantage AFS had accumulated net unrealized losses in the amount of $321.2 million and
$293.0 million as of December 31, 2024 and 2023, respectively. See Note 5 to the consolidated financial
statements – Farmer Mac Guaranteed Securities and USDA Securities for more information.
Farmer Mac applies discount rates that are commensurate with the risks involved to estimate the fair value
measurement of both AgVantage AFS and HTM. As of December 31, 2024, Farmer Mac applied
discount rates that ranged from 5.0% to 5.5% (with a weighted average of 5.1%) for AgVantage AFS and
5.0% to 6.8% (with a weighted average of 5.3%) for AgVantage HTM. As of December 31, 2023, Farmer
Mac applied discount rates that ranged from 4.7% to 5.4% (with a weighted average of 5.0%) for
AgVantage AFS and 4.8% to 8.6% (with a weighted average of 5.5%) for AgVantage HTM.
Use of different discount rates than those selected by Farmer Mac may result in materially different
estimates of fair value for AgVantage AFS and HTM. Farmer Mac selects the discount rate for each
AgVantage AFS and HTM security by analyzing credit default swap levels and the long-term credit
outlook of Farmer Mac's major counterparties and estimating an appropriate credit spread relative to U.S.
Treasury yields. The periodic measurement of fair value and underlying discount rate methodology is
subject to Farmer Mac’s internal controls and review by management. As of December 31, 2024, a 0.50%
increase in the discount rates used to determine the fair value of AgVantage AFS and HTM would
decrease the overall GAAP carrying value by approximately 1.8% and 1.3%, respectively. See Note 13 to
the consolidated financial statements – Fair Value Disclosures for more information.
For a description of Farmer Mac’s accounting policy for fair value measurements, see Note 2(n) to the
consolidated financial statements – Significant Accounting Policies, Fair Value Measurements.
Use of Non-GAAP Measures
In the accompanying analysis of its financial information, Farmer Mac uses "non-GAAP measures," which
are measures of financial performance that are not presented in accordance with GAAP. Specifically,
Farmer Mac uses the following non-GAAP measures: "core earnings," "core earnings per share," and "net
effective spread." Farmer Mac uses these non-GAAP measures to measure corporate economic
performance and develop financial plans because, in management's view, they are useful alternative
measures in understanding Farmer Mac's economic performance, transaction economics, and business
trends.
The non-GAAP financial measures that Farmer Mac uses may not be comparable to similarly labeled non-
GAAP financial measures disclosed by other companies. Farmer Mac's disclosure of these non-GAAP
measures is intended to be supplemental in nature and is not meant to be considered in isolation from, as a
62
substitute for, or as more important than, the related financial information prepared in accordance with
GAAP.
Core Earnings and Core Earnings Per Share
The main difference between core earnings and core earnings per share (non-GAAP measures) and net
income attributable to common stockholders and earnings per common share (GAAP measures) is that
those non-GAAP measures exclude the effects of fair value fluctuations. These fluctuations are not
expected to have a cumulative net impact on Farmer Mac's financial condition or results of operations
reported in accordance with GAAP if the related financial instruments are held to maturity, as is expected.
Another difference is that these two non-GAAP measures exclude specified infrequent or unusual
transactions that we believe are not indicative of future operating results and that may not reflect the
trends and economic financial performance of Farmer Mac's core business. For example, in third quarter
2024, we excluded the loss on the retirement of the Series C Preferred Stock from core earnings and core
earnings per share, which is consistent with Farmer Mac's historical treatment of any losses on the
retirement of preferred stock. For a reconciliation of Farmer Mac's net income attributable to common
stockholders to core earnings and of earnings per common share to core earnings per share, see
"Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of
Operations."
Net Effective Spread
Farmer Mac uses net effective spread to measure the net spread Farmer Mac earns between its interest-
earning assets and the related net funding costs of those assets. As further explained below, net effective
spread differs from net interest income and net interest yield by excluding certain items from net interest
income and net interest yield and including certain other items that net interest income and net interest
yield do not contain.
Farmer Mac excludes from net effective spread the interest income and interest expense associated with
the consolidated trusts and the average balance of the loans underlying these trusts to reflect management's
view that the net interest income Farmer Mac earns on the related Farmer Mac Guaranteed Securities
owned by third parties is effectively a guarantee fee. Accordingly, the excluded interest income and
interest expense associated with consolidated trusts is reclassified to guarantee and commitment fees in
determining Farmer Mac's core earnings. Farmer Mac also excludes from net effective spread the fair
value changes of financial derivatives and the corresponding assets or liabilities designated in fair value
hedge accounting relationships because they are not expected to have an economic effect on Farmer Mac's
financial performance, as we expect to hold the financial derivatives and corresponding hedged items to
maturity.
Net effective spread also differs from net interest income and net interest yield because it includes the
accrual of income and expense related to the contractual amounts due on financial derivatives that are not
designated in hedge accounting relationships ("undesignated financial derivatives"). Farmer Mac uses
interest rate swaps to manage its interest rate risk exposure by synthetically modifying the interest rate
reset or maturity characteristics of certain assets and liabilities. The accrual of the contractual amounts due
on interest rate swaps designated in hedge accounting relationships is included as an adjustment to the
yield or cost of the hedged item and is included in net interest income. For undesignated financial
derivatives, Farmer Mac records the income or expense related to the accrual of the contractual amounts
due in "Gains on financial derivatives" on the consolidated statements of operations. However, the accrual
63
of the contractual amounts due for undesignated financial derivatives are included in Farmer Mac's
calculation of net effective spread.
Net effective spread also differs from net interest income and net interest yield because it includes the net
effects of terminations or net settlements on financial derivatives, which consist of: (1) the net effects of
cash settlements on agency forward contracts on the debt of other GSEs and U.S. Treasury security futures
that we use as short-term economic hedges on the issuance of debt; and (2) the net effects of initial cash
payments that Farmer Mac receives upon the inception of certain swaps. The inclusion of these items in
net effective spread is intended to reflect our view of the complete net spread between an asset and all of
its related funding, including any associated derivatives, whether or not they are designated in a hedge
accounting relationship.
For a reconciliation of net interest income and net interest yield to net effective spread, see Table 10 in
"Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of
Operations—Net Interest Income."
Results of Operations
Reconciliations of Farmer Mac's net income attributable to common stockholders to core earnings and
core earnings per share are presented in the following tables along with information about the composition
of core earnings:
64
Table 6
Reconciliation of Net Income Attributable to Common Stockholders to Core Earnings
For the Years Ended December 31,
2024
2023
2022
(in thousands, except per share amounts)
Net income attributable to common stockholders
$
180,428
$
172,838 $
150,979
Less reconciling items:
Gains on undesignated financial derivatives due to fair value changes (see
Table 13)
3,344
5,142
13,495
Gains/(losses) on hedging activities due to fair value changes
11,548
(5,394)
5,343
Unrealized (losses)/gains on trading securities
(85)
1,979
(917)
Net effects of amortization of premiums/discounts and deferred gains on assets
consolidated at fair value
45
175
39
Net effects of terminations or net settlements on financial derivatives
(1,666)
227
15,794
Issuance costs on the retirement of preferred stock
(1,619)
—
—
Income tax effect related to reconciling items
(2,769)
(447)
(7,089)
Sub-total
8,798
1,682
26,665
Core earnings
$
171,630
$
171,156 $
124,314
Composition of Core Earnings:
Revenues:
Net effective spread(1)
$
339,564
$
326,980 $
255,529
Guarantee and commitment fees(2)
20,321
18,928
18,144
Gain on sale of investment securities (GAAP)
1,052
—
—
Loss on sale of mortgage loan (GAAP)
(1,147)
—
—
Other(3)
2,200
3,299
1,684
Total revenues
361,990
349,207
275,357
Credit related expense (GAAP):
Provision for losses
11,490
1,136
806
REO operating expenses
196
—
819
Total credit related expense
11,686
1,136
1,625
Operating expenses (GAAP):
Compensation and employee benefits
63,975
58,914
48,766
General and administrative
38,236
34,963
29,772
Regulatory fees
3,175
3,222
3,269
Total operating expenses
105,386
97,099
81,807
Net earnings
244,918
250,972
191,925
Income tax expense(4)
48,142
52,651
40,446
Preferred stock dividends (GAAP)
25,146
27,165
27,165
Core earnings
$
171,630
$
171,156 $
124,314
Core earnings per share:
Basic
$
15.78
$
15.80 $
11.52
Diluted
$
15.64
$
15.65 $
11.42
Weighted-average shares:
Basic
10,874
10,829
10,791
Diluted
10,975
10,937
10,883
(1)
Net effective spread is a non-GAAP measure. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of
Non-GAAP Measures—Net Effective Spread" for an explanation of net effective spread. See Table 10 for a reconciliation of net interest income to net
effective spread.
65
(2)
Includes interest income and interest expense related to consolidated trusts owned by third parties reclassified from net interest income to guarantee and
commitment fees to reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee on the consolidated Farmer
Mac Guaranteed Securities.
(3)
Reflects reconciling adjustments for the reclassification to exclude expenses related to interest rate swaps not designated as hedges and terminations or net
settlements on financial derivatives, and reconciling adjustments to exclude fair value adjustments on financial derivatives and trading assets and the
recognition of deferred gains over the estimated lives of certain Farmer Mac Guaranteed Securities and USDA Securities.
(4)
Includes the tax impact of non-GAAP reconciling items between net income attributable to common stockholders and core earnings.
Table 7
Reconciliation of GAAP Basic Earnings Per Share to Core Earnings - Basic Earnings Per Share
For the Years Ended December 31,
2024
2023
2022
(in thousands, except per share amounts)
GAAP - Basic EPS
$
16.59 $
15.97 $
14.00
Less reconciling items:
Gains on undesignated financial derivatives due to fair value changes (see Table
13)
0.31
0.49
1.25
Gains/(losses) on hedging activities due to fair value changes
1.06
(0.50)
0.50
Unrealized (losses)/gains on trading securities
(0.01)
0.18
(0.08)
Net effects of amortization of premiums/discounts and deferred gains on assets
consolidated at fair value
—
0.02
—
Net effects of terminations or net settlements on financial derivatives
(0.15)
0.02
1.47
Issuance costs on the retirement of preferred stock
(0.15)
—
—
Income tax effect related to reconciling items
(0.25)
(0.04)
(0.66)
Sub-total
0.81
0.17
2.48
Core Earnings - Basic EPS
$
15.78 $
15.80 $
11.52
Shares used in per share calculation (GAAP and Core Earnings)
10,874
10,829
10,791
Reconciliation of GAAP Diluted Earnings Per Share to Core Earnings - Diluted Earnings Per Share
For the Years Ended December 31,
2024
2023
2022
(in thousands, except per share amounts)
GAAP - Diluted EPS
$
16.44 $
15.81 $
13.87
Less reconciling items:
Gains on undesignated financial derivatives due to fair value changes (see Table
13)
0.30
0.47
1.24
Gains/(losses) on hedging activities due to fair value changes
1.05
(0.49)
0.49
Unrealized (losses)/gains on trading securities
(0.01)
0.18
(0.08)
Net effects of amortization of premiums/discounts and deferred gains on assets
consolidated at fair value
—
0.02
—
Net effects of terminations or net settlements on financial derivatives
(0.14)
0.02
1.45
Issuance costs on the retirement of preferred stock
(0.15)
—
—
Income tax effect related to reconciling items
(0.25)
(0.04)
(0.65)
Sub-total
0.80
0.16
2.45
Core Earnings - Diluted EPS
$
15.64 $
15.65 $
11.42
Shares used in per share calculation (GAAP and Core Earnings)
10,975
10,937
10,883
66
The non-GAAP reconciling items between net income attributable to common stockholders and core
earnings are:
1. Gains on financial derivatives due to fair value changes are presented by two reconciling items in Table
6 above: (a) Gains on undesignated financial derivatives due to fair value changes; and (b) Gains/(losses)
on hedging activities due to fair value changes.
2. Unrealized (losses)/gains on trading securities. The unrealized (losses)/gains on trading securities are
reported on Farmer Mac's consolidated statements of operations, which represent changes during the
period in fair values for trading assets remaining on Farmer Mac's balance sheet as of the end of the
reporting period.
3. The net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair
value. The amount of this non-GAAP reconciling item is the recorded amount of premium, discount, or
deferred gain amortization during the reporting period on those assets for which the premium, discount, or
deferred gain was based on the application of an accounting principle (e.g., consolidation of variable
interest entities) rather than on a cash transaction (e.g., a purchase price premium or discount).
4. The net effects of terminations or net settlements on financial derivatives. These terminations or net
settlements relate to:
•
Forward contracts on the debt of other GSEs and futures contracts on U.S. Treasury securities.
These contracts are used as a short-term economic hedge of the issuance of debt. For GAAP
purposes, realized gains or losses on settlements of these contracts are reported in the consolidated
statements of operations in the period in which they occur. For core earnings purposes, these
realized gains or losses are deferred and amortized as net yield adjustments over the term of the
related debt, which generally ranges from 3 to 15 years.
5. The recognition of deferred issuance costs on the retirement of the Series C Preferred Stock in July
2024 has been excluded from core earnings because they are not frequently occurring transactions, nor are
they indicative of future operating results. This is consistent with Farmer Mac's previous treatment of
deferred issuance costs associated with the retirement of preferred stock.
The following sections provide more detail about specific components of Farmer Mac's results of
operations.
Net Interest Income. The following table provides information about interest-earning assets and funding
for the years ended December 31, 2024, 2023, and 2022. The average balance of non-accruing loans is
included in the average balance of loans, Farmer Mac Guaranteed Securities, and USDA Securities
presented, though the related income is accounted for on a cash basis. Therefore, as the average balance of
non-accruing loans and the income received increases or decreases, the net interest income and yield will
fluctuate accordingly. The average balance of loans in consolidated trusts with beneficial interests owned
by third parties (single-class) and for which Farmer Mac guarantees all classes of securities issued is
disclosed in the net effect of consolidated trusts and is not included in the average balances of interest-
earning assets and interest-bearing liabilities. The interest income and expense associated with these trusts
are shown in the net effect of consolidated trusts.
67
Table 8
December 31, 2024
December 31, 2023
December 31, 2022
Average
Balance
Income/
Expense
Average
Rate
Average
Balance
Income/
Expense
Average
Rate
Average
Balance
Income/
Expense
Average
Rate
(dollars in thousands)
Interest-earning assets:
Cash and investments
$ 6,453,407
$ 345,501
5.35 %
$ 5,894,515
$ 287,144
4.87 % $ 5,236,118
$ 82,659
1.58 %
Loans, Farmer Mac Guaranteed
Securities and USDA Securities(1)
23,054,069
1,219,664
5.29 %
21,739,403
1,070,932
4.93 % 19,882,489
602,537
3.03 %
Total interest-earning assets
29,507,476
1,565,165
5.30 %
27,633,918
1,358,076
4.91 % 25,118,607
685,196
2.73 %
Funding:
Notes payable due within one year
3,100,823
159,792
5.15 %
3,274,799
150,666
4.60 %
2,876,452
48,481
1.69 %
Notes payable due after one year(2)
24,453,238
1,055,983
4.32 %
22,631,904
884,034
3.91 % 20,987,990
370,014
1.76 %
Total interest-bearing
liabilities(3)
27,554,061
1,215,775
4.41 %
25,906,703
1,034,700
3.99 % 23,864,442
418,495
1.75 %
Net non-interest-bearing funding
1,953,415
—
1,727,215
—
1,254,165
—
Total funding
29,507,476
1,215,775
4.12 %
27,633,918
1,034,700
3.74 % 25,118,607
418,495
1.67 %
Net interest income/yield prior to
consolidation of certain trusts
29,507,476
349,390
1.18 %
27,633,918
323,376
1.17 % 25,118,607
266,701
1.06 %
Net effect of consolidated trusts(4)
882,708
4,477
0.51 %
873,181
4,171
0.48 %
850,916
4,239
0.50 %
Net interest income/yield
$ 30,390,184
$ 353,867
1.16 %
$ 28,507,099
$ 327,547
1.15 % $ 25,969,523
$ 270,940
1.04 %
For the Years Ended
(1)
Excludes interest income of $38.4 million, $34.2 million, and $31.7 million in 2024, 2023, and 2022 respectively, related to consolidated trusts with
beneficial interests owned by third parties (single-class).
(2)
Includes current portion of long-term notes.
(3)
Excludes interest expense of $33.9 million, $30.0 million, and $27.4 million in 2024, 2023, and 2022 respectively, related to consolidated trusts with
beneficial interests owned by third parties (single-class).
(4)
Includes the effect of consolidated trusts with beneficial interests owned by third parties (single-class).
The $26.3 million year-over-year increase in net interest income was primarily due to an increase of
$20.2 million from the shift in the composition of new business volume toward higher yielding loans and a
$16.9 million increase in the fair value of derivatives designated in fair value hedge accounting
relationships (designated financial derivatives). That increased yield was partially offset by a $6.6 million
decrease in cash-basis interest income and a $4.6 million increase in funding costs. In percentage terms,
the year-over-year increase was 0.01%.
For 2023 compared to 2022, the $56.6 million year-over-year increase in net interest income was
primarily due to a $48.9 million decrease in funding costs and a $19.9 million increase related to net new
business volume. The decrease in funding costs was due to our disciplined funding strategies and higher
nominal interest rates that have led to an upward repricing of our excess long-term capital that we raised
when interest rates were at historical lows and is held in our investment portfolio. The factors that
contributed to an increase in net interest income were partially offset by an $11.2 million decrease in the
fair value of derivatives designated in fair value hedge accounting relationships (designated financial
derivatives). In percentage terms, the 0.11% increase was primarily attributable to a decrease of 0.16% in
funding costs and a decrease of 0.04% in net fair value changes from designated financial derivatives.
The following table sets forth information about changes in the components of Farmer Mac's net interest
income prior to consolidation of certain trusts for the periods indicated. For each category, information is
provided on changes attributable to changes in volume (change in volume multiplied by prior rate), and
changes in rate (change in rate multiplied by old volume), and then allocated based on the relative size of
rate and volume changes from the prior period.
68
Table 9
2024 vs. 2023
2023 vs. 2022
Increase/(Decrease) Due to
Increase/(Decrease) Due to
Rate
Volume
Total
Rate
Volume
Total
(in thousands)
Income from interest-earning assets:
Cash and investments
$
29,813
$
28,544
$
58,357 $
192,859 $
11,626 $
204,485
Loans, Farmer Mac Guaranteed Securities and
USDA Securities
81,814
66,918
148,732
407,548
60,847
468,395
Total
111,627
95,462
207,089
600,407
72,473
672,880
Expense from other interest-bearing liabilities
112,677
68,398
181,075
577,519
38,686
616,205
Change in net interest income prior to
consolidation of certain trusts(1)
$
(1,050) $
27,064
$
26,014 $
22,888 $
33,787 $
56,675
(1)
Excludes the effect of debt in consolidated trusts with beneficial interests owned by third parties (single-class).
The following table presents a reconciliation of net interest income and net interest yield to net effective
spread. Net effective spread is measured by: including (1) expenses related to undesignated financial
derivatives, which consists of income or expense related to contractual amounts due on financial
derivatives not designated in hedge relationships (the income or expense related to financial derivatives
designated in hedge accounting relationships is already included in net interest income), and (2) the
amortization of losses due to terminations or net settlements of financial derivatives; and excluding (1) the
amortization of premiums and discounts on assets consolidated at fair value, (2) the net effects of
consolidated trusts with beneficial interests owned by third parties (single-class), and (3) the fair value
changes of financial derivatives and corresponding financial assets or liabilities in fair value hedge
relationships. See "Management's Discussion and Analysis of Financial Condition and Results of
Operations—Use of Non-GAAP Measures—Net Effective Spread" for more information about net
effective spread.
Table 10
For the Years Ended December 31,
2024
2023
2022
Dollars
Yield
Dollars
Yield
Dollars
Yield
(dollars in thousands)
Net interest income/yield
$ 353,867
1.16 % $ 327,547
1.15 % $ 270,940
1.04 %
Net effects of consolidated trusts
(4,477)
0.02 %
(4,171)
0.02 %
(4,239)
0.02 %
Expense related to undesignated financial derivatives
(1,377)
— %
(4,845)
(0.02) %
(7,756)
(0.03) %
Amortization of premiums/discounts on assets consolidated at
fair value
(29)
— %
(175)
— %
(24)
— %
Amortization of losses due to terminations or net settlements on
financial derivatives
3,128
0.01 %
3,230
0.01 %
2,413
0.01 %
Fair value changes on fair value hedge relationships
(11,548)
(0.04) %
5,394
0.02 %
(5,805)
(0.02) %
Net effective spread
$ 339,564
1.15 % $ 326,980
1.18 % $ 255,529
1.02 %
The $12.6 million year-over-year increase in net effective spread was primarily due to a $20.2 million
increase from a shift in the composition of new business volume towards higher-yielding loans. This
factor was partially offset by a $6.6 million decrease in cash-basis interest income and a $1.3 million
increase in funding costs. In percentage terms, the year-over-year decrease of 0.03% was primarily
attributable to an increase of 0.04% related to the increases in funding costs and a decrease of 0.02% in
69
cash-basis interest income, which were partially offset by an increase of 0.03% on the shift in the
composition of new business volume towards higher-yielding loans.
For 2023 compared to 2022, the $71.5 million year-over-year increase in net effective spread was
primarily due to a $54.6 million decrease in funding costs, due to our disciplined funding strategies and
higher nominal interest rates that have led to an upward repricing of our excess capital that is held in our
short-term investment portfolio, and a $20.6 million increase related to net new business volume. In
percentage terms, the year-over-year increase of 0.16% was primarily attributable to a decrease in funding
costs.
See Note 14 to the consolidated financial statements for more information about net interest income and
net effective spread from Farmer Mac's individual business segments. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations—Supplemental Information" for quarterly net
effective spread by line of business.
Provision for and Release of Allowance for Losses and Reserve for Losses. The following table
summarizes the components of Farmer Mac's total allowance for losses for the three-year period ended
December 31, 2024:
Table 11
Allowance
for
Losses
Reserve
for Losses
Total
Allowance
for Losses
(in thousands)
Balance as of December 31, 2021
$
14,492
$
1,950
$
16,442
Provision for/(release of) losses
1,323
(517)
806
Charge-offs
(84)
—
(84)
Balance as of December 31, 2022
$
15,731
$
1,433
$
17,164
Provision for losses
858
278
1,136
Balance as of December 31, 2023
$
16,589
$
1,711
$
18,300
Provision for/(release of) losses
11,579
(89)
11,490
Charge-offs
(4,498)
—
(4,498)
Balance as of December 31, 2024
$
23,670
$
1,622
$
25,292
See Notes 8 and 12 to the consolidated financial statements and "Management's Discussion and Analysis
of Financial Condition and Results of Operations—Risk Management—Credit Risk—Loans and
Guarantees."
During 2024, we recorded a $11.5 million net provision to the total allowance for losses primarily as a
result of one permanent planting borrower relationship, risk rating downgrades in Agricultural Finance,
and new loan volume in Infrastructure Finance.
Guarantee and Commitment Fees. The following table presents guarantee and commitment fees, which
compensate Farmer Mac for assuming the credit risk on loans underlying off-balance sheet Farmer Mac
Guaranteed Securities and LTSPCs, for the years ended December 31, 2024, 2023, and 2022:
70
Table 12
For the Years Ended December 31,
2024
2023
2022
(dollars in thousands)
Contractual guarantee and commitment fees
$
15,952 $
15,084 $
14,235
Guarantee obligation amortization
5,273
4,331
5,913
Guarantee asset fair value changes
(5,487)
(2,703)
(7,108)
Guarantee and commitment fee income
$
15,738 $
16,712 $
13,040
Guarantee and commitment fee income decreased for the year ended December 31, 2024 compared to
2023, which was due to a decrease in the fair value of our retained beneficial interest in our off-balance
sheet securitization. As adjusted for the non-GAAP core earnings presentation, guarantee and commitment
fees were $20.3 million for the year ended December 31, 2024, compared to $18.9 million and $18.1
million for the years ended December 31, 2023 and 2022, respectively.
In Farmer Mac's presentation of non-GAAP core earnings, guarantee and commitment fees include
interest income and interest expense related to consolidated trusts owned by third parties to reflect
management's view that the net interest income Farmer Mac earns is effectively a guarantee fee on those
consolidated Farmer Mac Guaranteed Securities. Farmer Mac has also excluded changes in the fair values
of guarantee assets from the presentation of core earnings because management does not expect these
fluctuations to have a cumulative net impact on Farmer Mac's financial condition, results of operations, or
cash flows if Farmer Mac fulfills its guarantee obligation throughout the term of the guaranteed securities,
as is expected.
For more information about net income attributable to common stockholders, the composition of non-
GAAP core earnings, and a reconciliation of net income attributable to common stockholders to core
earnings, see Table 6 in "Management's Discussion and Analysis of Financial Condition and Results of
Operations—Results of Operations." For more information about the non-GAAP measures Farmer Mac
uses, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use
of Non-GAAP Measures."
Gains on financial derivatives. The components of gains and losses on financial derivatives for the years
ended December 31, 2024, 2023, and 2022 are summarized in the following table:
Table 13
For the Years Ended December 31,
2024
2023
2022
(dollars in thousands)
Gains due to fair value changes
$
3,344 $
5,142 $
13,495
Accrual of contractual payments
(1,377)
(4,845)
(7,756)
Gains due to terminations or net settlements
669
2,585
16,892
Gains on financial derivatives
$
2,636 $
2,882 $
22,631
These changes in fair value are primarily the result of fluctuations in long-term interest rates. The accrual
of periodic cash settlements for interest paid or received from Farmer Mac's interest rate swaps that are
undesignated financial derivatives is shown as income or expense related to financial derivatives.
Payments or receipts to terminate undesignated derivative positions or net cash settled forward sales
contracts on the debt of other GSEs and undesignated U.S. Treasury security futures and initial cash
71
payments received upon the inception of certain undesignated swaps are included in "Gains due to
terminations or net settlements" in the table above. See Note 6 to the consolidated financial statements for
more information about Farmer Mac's financial derivatives.
Operating Expenses. The components of operating expenses for the years ended December 31, 2024,
2023, and 2022 are summarized in the following table:
Table 14
For the Years Ended December 31,
2024
2023
2022
(dollars in thousands)
Compensation and employee benefits
$
63,975 $
58,914 $
48,766
General and administrative
38,236
34,963
29,772
Regulatory fees
3,175
3,222
3,269
Total Operating Expenses
$
105,386 $
97,099 $
81,807
Compensation and Employee Benefits. The increase in compensation and employee benefits
expenses for the year ended December 31, 2024 compared to 2023 was largely due to increased
headcount and increased stock compensation expense. The increase in compensation and employee
benefits expenses for the year ended December 31, 2023 compared to 2022 was largely due to
increased headcount.
General and Administrative Expenses (G&A). The increase in G&A expenses for the year ended
December 31, 2024 compared to 2023 was primarily due to an increase in licensing fees and
information technology infrastructure costs from the deployment of our modernized treasury and
cash management systems in fourth quarter 2024. We also saw an increase in transactional legal
fees as we continue to grow our Broadband Infrastructure and Renewable Energy portfolios.
Income Tax Expense. The following table presents income tax expense and the effective income tax rate
for the years ended December 31, 2024, 2023, and 2022:
Table 15
For the Years Ended December 31,
2024
2023
2022
(dollars in thousands)
Income tax expense
$
50,910
$
53,098
$
47,535
Effective tax rate
19.7 %
21.0 %
21.1 %
The decrease in Farmer Mac's effective tax rate in 2024 is primarily attributable to renewable energy
investment tax credits that Farmer Mac purchased during 2024.
Business Volume.
The following table sets forth the net growth or decrease in Farmer Mac's lines of business for the years
ended December 31, 2024 and 2023:
72
Table 16
Net New Business Volume
For the Years Ended
On or Off
Balance Sheet
December 31, 2024
December 31, 2023
Net Growth/(Decrease)
Net Growth/(Decrease)
(in thousands)
Agricultural Finance:
Farm & Ranch:
Loans
On-balance sheet
$
281,282 $
(17,300)
Loans held in consolidated trusts:
Beneficial interests owned by third-party investors
(single-class)(1)
On-balance sheet
14,383
(44,006)
Beneficial interests owned by third-party investors
(structured)(1)
On-balance sheet
591,639
264,691
IO-FMGS(2)
On-balance sheet
(699)
(1,213)
USDA Securities
On-balance sheet
33,551
(38,430)
AgVantage Securities(1)
On-balance sheet
(1,115,000)
230,000
LTSPCs and unfunded loan commitments
Off-balance sheet
70,611
177,634
Other Farmer Mac Guaranteed Securities(3)
Off-balance sheet
(26,292)
(48,351)
Loans serviced for others
Off-balance sheet
(51,308)
556,984
Total Farm & Ranch
$
(201,833) $
1,080,009
Corporate AgFinance:
Loans
On-balance sheet
$
121,951 $
93,470
AgVantage Securities(1)
On-balance sheet
(8,582)
(70,721)
Unfunded loan commitments
Off-balance sheet
80,357
67,723
Total Corporate AgFinance
$
193,726 $
90,472
Total Agricultural Finance
$
(8,107) $
1,170,481
Infrastructure Finance:
Power & Utilities:
Loans
On-balance sheet
$
270,217 $
124,167
AgVantage Securities(1)
On-balance sheet
(377,325)
854,312
LTSPCs and unfunded loan commitments
Off-balance sheet
(63,096)
(40,736)
Other Farmer Mac Guaranteed Securities(3)
Off-balance sheet
—
(1,169)
Total Power & Utilities
$
(170,204) $
936,574
Broadband Infrastructure:
Loans
On-balance sheet
$
144,089 $
168,614
Unfunded loan commitments
Off-balance sheet
157,224
15,922
Total Broadband Infrastructure
$
301,313 $
184,536
Renewable Energy:
Loans
On-balance sheet
$
825,414 $
220,716
Unfunded loan commitments
Off-balance sheet
103,590
36,635
Total Renewable Energy
$
929,004 $
257,351
Total Infrastructure Finance
$
1,060,113 $
1,378,461
Total
$
1,052,006 $
2,548,942
(1)
Categories of Farmer Mac Guaranteed Securities.
(2)
An interest-only Farmer Mac Guaranteed Security retained as part of a structured securitization.
(3)
Other categories of Farmer Mac Guaranteed Securities that were sold by Farmer Mac to third parties.
73
Farmer Mac's outstanding business volume was $29.5 billion as of December 31, 2024, a net increase of
$1.1 billion from December 31, 2023 after taking into account all new business, maturities, sales, and
paydowns on existing assets.
The $0.2 billion net decrease in Farm & Ranch during 2024 resulted from $3.4 billion of scheduled
maturities and repayments, partially offset by $3.2 billion of new purchases, commitments, and
guarantees. Included in the $3.2 billion is the purchase of $1.5 billion of Farm & Ranch loans. Scheduled
loan maturities and repayments in the aggregate amount of $0.6 billion partially offset those purchases.
Those purchases include $179.2 million related to Farmer Mac's purchase of two pools of loans from a
single agricultural lender. During 2024, Farmer Mac also securitized $0.7 billion loans in on-balance sheet
securitizations, which transferred them from loans held for investment to loans held in securitized trusts.
During 2024, a total of $2.0 billion in Farm & Ranch AgVantage Securities matured or were repaid while
Farmer Mac purchased $0.9 billion. This activity primarily reflected slower loan growth resulting in less
liquidity needs from Farmer Mac's AgVantage counterparties than in previous years.
The $0.2 billion net increase in Corporate AgFinance during 2024 primarily resulted from $1.2 billion of
new purchases and unfunded loan commitments, which was partially offset by $1.0 billion of scheduled
maturities, repayments, sales, and paydowns on revolving commitments.
The $0.2 billion net decrease in Power & Utilities during 2024 resulted from $0.9 billion of scheduled
maturities and repayments, partially offset by $0.7 million of new purchases, unfunded loan commitments,
and guarantees.
The $0.3 billion net increase in Broadband Infrastructure during 2024 resulted from new purchases of
$0.5 billion in loans and unfunded commitments, partially offset by $0.2 billion in scheduled maturities
and repayments.
The $0.9 billion net increase in Renewable Energy during 2024 primarily resulted from $1.5 billion in
loan purchases and unfunded commitments, partially offset by $0.5 billion in repayments. The net increase
in Renewable Energy loan purchases and unfunded commitments primarily reflects the continued strong
demand for renewable power generation and storage.
Farmer Mac's outstanding business volume was $28.5 billion as of December 31, 2023, a net increase of
$2.5 billion from December 31, 2022 after taking into account all new business, maturities, and paydowns
on existing assets.
The $1.1 billion net increase in Farm & Ranch during 2023 resulted from $5.0 billion of new purchases,
commitments, and guarantees, partially offset by $3.9 billion of scheduled maturities and repayments.
Included in the $5.0 billion of new volume is newly purchased servicing rights on $0.6 billion of loans
(i.e., loans serviced for others). Loans serviced for others earn servicing fee income rather than interest
income and are a component of outstanding business volume because they are assets under our
management.
Farmer Mac also purchased a total of $2.7 billion in Farm & Ranch AgVantage Securities during 2023,
which primarily reflected the refinancing of maturing securities. The $2.7 billion in gross purchases was
partially offset by $2.5 billion in scheduled maturities.
74
The $0.1 billion net increase in Corporate AgFinance during 2023 resulted from $0.9 billion of new
purchases and unfunded loan commitments, which was partially offset by $0.8 billion of scheduled
maturities, repayments, and paydowns on revolving commitments. Farmer Mac purchased a total of
$578.1 million in loans, including draws on revolving commitments, which was partially offset by $484.6
million in scheduled maturities, repayments, and paydowns on revolving commitments. The increase in
loan purchases was primarily due to Farmer Mac's continued focus to support loans to larger and more
complex agribusinesses focused on food and fiber processing and other food supply chain production.
The $0.9 billion net increase in Power & Utilities during 2023 resulted from $1.8 billion of new purchases,
unfunded loan commitments, and guarantees, which was partially offset by $0.8 billion of scheduled
maturities and repayments. Farmer Mac purchased a total of $1.5 billion in AgVantage Securities and
$297.6 million in electric distribution and generation and transmission loans. The $297.6 million in loan
purchases was partially offset by $173.4 million in scheduled maturities and repayments. The net increase
in loan purchases primarily reflected borrowers' normal-course capital expenditures related to maintaining
and upgrading utility infrastructure.
The $0.2 billion net increase in Broadband Infrastructure during 2023 resulted from $0.3 billion of new
purchases and unfunded loan commitments, which was partially offset by $0.1 in repayments.
The $0.3 billion net increase in Renewable Energy during 2023 primarily reflects $273.5 million in loan
purchases, partially offset by $52.7 million in repayments.
The level and composition of Farmer Mac’s outstanding business volume is based on the relationship
between new business, loan sales, scheduled maturities, and repayments on existing assets from year to
year. This relationship in turn depends on a variety of factors both internal and external to Farmer Mac.
The external factors include general market forces, competition, and our counterparties’ liquidity needs,
access to alternative funding, desired products, and assessment of strategic factors. The internal factors
include our assessment of profitability, mission fulfillment, credit risk, and customer relationships. For
more information about potential growth opportunities in Farmer Mac's lines of business, see
"Management's Discussion and Analysis of Financial Condition and Results of Operations—Outlook" in
this report.
The following table sets forth information about the Farmer Mac Guaranteed Securities issued during the
periods indicated:
Table 17
For the Years Ended December 31,
2024
2023
2022
(dollars in thousands)
AgVantage securities
$
1,362,720 $
4,284,405 $
4,990,483
Loans securitized and held in consolidated trusts with beneficial interests owned
by third parties (structured and single-class)
673,451
317,524
460,588
Total Farmer Mac Guaranteed Securities Issuances
$
2,036,171 $
4,601,929 $
5,451,071
Farmer Mac either retains the loans it purchases or securitizes them and retains or sells Farmer Mac
Guaranteed Securities backed by those securitized loans. During 2024, Farmer Mac executed two
structured securitization transactions, whereby it sold and securitized agricultural mortgage loans resulting
in $624.1 million of Farmer Mac Guaranteed Securities. In this transaction, Farmer Mac transferred
75
selected loans to a depositor which then deposited the loans into a trust, at which time the loans became
assets of the trust. Farmer Mac concluded that it was the primary beneficiary of the trust because Farmer
Mac retained significant interest and has power over the activities most significant to the economic
performance of the Variable Interest Entity in its role as Master Servicer. Therefore, Farmer Mac
consolidates the assets and liabilities of the trust for this structured securitization. Farmer Mac does not
consider the assets held by the related securitization trust to be available to satisfy the claims of the
creditors of Farmer Mac and/or the depositor.
During 2024, 2023, and 2022, Farmer Mac realized no gains or losses from the securitization of loans that
it holds in consolidated trusts. Farmer Mac consolidates these loans and presents them as "Loans held for
investment in consolidated trusts, at amortized cost" on the consolidated balance sheets.
During 2024, 2023, and 2022, Farmer Mac realized no gains or losses from the issuance of Farmer Mac
Guaranteed USDA Securities or AgVantage Securities.
76
The following table sets forth information about outstanding volume in each of Farmer Mac's lines of
business as of the dates indicated:
Table 18
Outstanding Business Volume
On or Off
Balance Sheet
As of December 31,
2024
2023
2022
(in thousands)
Agricultural Finance:
Farm & Ranch:
Loans
On-balance sheet
$
5,414,732
$
5,133,450 $
5,150,750
Loans held in consolidated trusts:
Beneficial interests owned by third-party investors
(single-class)(1)
On-balance sheet
885,295
870,912
914,918
Beneficial interests owned by third-party investors
(structured)(1)
On-balance sheet
1,152,988
561,349
296,658
IO-FMGS(2)
On-balance sheet
8,710
9,409
10,622
USDA Securities
On-balance sheet
2,402,423
2,368,872
2,407,302
AgVantage Securities(1)
On-balance sheet
4,720,000
5,835,000
5,605,000
LTSPCs and unfunded loan commitments
Off-balance sheet
3,070,554
2,999,943
2,822,309
Other Farmer Mac Guaranteed Securities(3)
Off-balance sheet
426,310
452,602
500,953
Loans serviced for others
Off-balance sheet
525,956
577,264
20,280
Total Farm & Ranch
$
18,606,968
$
18,808,801 $
17,728,792
Corporate AgFinance:
Loans
On-balance sheet
$
1,381,674
$
1,259,723 $
1,166,253
AgVantage Securities(1)
On-balance sheet
280,297
288,879
359,600
Unfunded loan commitments
Off-balance sheet
225,734
145,377
77,654
Total Corporate AgFinance
$
1,887,705
$
1,693,979 $
1,603,507
Total Agricultural Finance
$
20,494,673
$
20,502,780 $
19,332,299
Infrastructure Finance:
Power & Utilities:
Loans
On-balance sheet
$
2,886,576
$
2,616,359 $
2,492,192
AgVantage Securities(1)
On-balance sheet
3,521,143
3,898,468
3,044,156
LTSPCs and unfunded loan commitments
Off-balance sheet
401,647
464,743
505,479
Other Farmer Mac Guaranteed Securities(3)
Off-balance sheet
—
—
1,169
Total Power & Utilities
$
6,809,366
$
6,979,570 $
6,042,996
Broadband Infrastructure:
Loans
On-balance sheet
$
622,207
$
478,118 $
309,504
Unfunded loan commitments
Off-balance sheet
180,259
23,035
7,113
Total Broadband Infrastructure
$
802,466
$
501,153 $
316,617
Renewable Energy:
Loans
On-balance sheet
$
1,265,700
$
440,286 $
219,570
Unfunded loan commitments
Off-balance sheet
150,825
47,235
10,600
Total Renewable Energy
$
1,416,525
$
487,521 $
230,170
Total Infrastructure Finance
$
9,028,357
$
7,968,244 $
6,589,783
Total
$
29,523,030
$
28,471,024 $
25,922,082
(1)
A type of Farmer Mac Guaranteed Security.
(2)
An interest-only Farmer Mac Guaranteed Security retained as part of a structured securitization.
(3)
Other categories of Farmer Mac Guaranteed Securities that were sold by Farmer Mac to third parties.
77
The following table summarizes by maturity date the scheduled principal amortization of loans held, loans
underlying off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities) and
LTSPCs, USDA Securities, and Farmer Mac Guaranteed USDA Securities as of December 31, 2024:
Table 19
Schedule of Principal Amortization as of December 31, 2024
Loans
Loans Underlying Off-
Balance Sheet Farmer
Mac Guaranteed
Securities and LTSPCs
USDA Securities
and Farmer Mac
Guaranteed
USDA Securities
Total
(in thousands)
2025
$
824,025
$
422,103
$
116,709
$
1,362,837
2026
712,891
436,220
117,466
1,266,577
2027
803,181
304,487
119,147
1,226,815
2028
995,547
254,443
118,173
1,368,163
2029
1,051,739
386,820
118,964
1,557,523
Thereafter
9,221,789
2,463,446
1,999,774
13,685,009
Total
$
13,609,172
$
4,267,519
$
2,590,233
$
20,466,924
Of Farmer Mac's $29.5 billion outstanding principal balance of business volume as of December 31, 2024,
$8.5 billion were AgVantage securities included in the Agricultural Finance and Infrastructure Finance
lines of business. Unlike business volume in the form of purchased loans, USDA Securities, and loans
underlying LTSPCs and non-AgVantage Farmer Mac Guaranteed Securities, most AgVantage securities
do not require periodic payments of principal based on amortization schedules and instead have fixed
maturity dates when the secured general obligation is due. Changes in quarterly AgVantage securities
volume are primarily driven by the generally larger transaction sizes for that product, scheduled maturity
amounts for a particular quarter, the liquidity needs of Farmer Mac’s AgVantage counterparties, and
changes in the pricing and availability of wholesale funding. Based on these factors, Farmer Mac expects
its business volumes in AgVantage securities to continue to be volatile. The following table summarizes
by maturity date the outstanding principal amount of both on- and off-balance sheet AgVantage securities
as of December 31, 2024:
Table 20
AgVantage Balances by Year of Maturity
As of
December 31, 2024
(in thousands)
2025
$
2,028,275
2026
1,353,490
2027
1,091,393
2028
673,300
2029
1,061,019
Thereafter(1)
2,313,963
Total
$
8,521,440
(1)
Includes various maturities ranging from 2030 to 2044.
The weighted-average remaining maturity of the outstanding AgVantage securities shown in the table
above was 4.7 years as of December 31, 2024.
78
Related Party Transactions. As provided by Farmer Mac's statutory charter, only banks, insurance
companies, and other financial institutions or similar entities may hold Farmer Mac's Class A voting
common stock, and only institutions of the FCS may hold Farmer Mac's Class B voting common
stock. Farmer Mac's charter also provides that holders of Class A voting common stock elect five
members of Farmer Mac's 15-member board of directors and that holders of Class B voting common stock
elect five members of the board of directors. The ownership of Farmer Mac's two classes of voting
common stock is currently concentrated in a small number of institutions. Approximately 47% of the
Class A voting common stock is held by three financial institutions, with 31% held by one institution.
Approximately 97% of the Class B voting common stock is held by five FCS institutions (two of which
are related to each other through a parent-subsidiary relationship).
Unlike some other GSEs, specifically other FCS institutions and the Federal Home Loan Banks, Farmer
Mac is not structured as a cooperative owned exclusively by member institutions and established to
provide services exclusively to its members. Farmer Mac, as a stockholder-owned, publicly-traded
corporation, seeks to fulfill its mission of serving the financing needs of rural America in a way that is
consistent with providing a return on the investment of its stockholders, including those who do not
directly participate in the secondary market provided by Farmer Mac. Farmer Mac generally requires most
financial institutions that participate in Farmer Mac's Agricultural Finance line of business to own a
requisite amount of common stock, based on the size and type of institution. As a result of this
requirement, coupled with the ability of holders of Class A and Class B voting common stock to elect two-
thirds of Farmer Mac's board of directors, Farmer Mac regularly conducts business with "related parties,"
including institutions affiliated with members of Farmer Mac's board of directors and institutions that own
large amounts of Farmer Mac's voting common stock. Farmer Mac has adopted a Code of Business
Conduct and Ethics and other related corporate policies that govern any conflicts of interest that may arise
in these transactions, and Farmer Mac's policy is to require that any transactions with related parties be
conducted in the ordinary course of business, with terms and conditions comparable to those available to
any other counterparty not related to Farmer Mac.
The following table summarizes the material relationships between Farmer Mac and certain related
parties. The related parties listed in the table below consist of (1) all holders of at least five percent of a
class of Farmer Mac voting common stock as of December 31, 2024 and (2) other institutions that are
considered "related parties" through an affiliation with a Farmer Mac director and that have conducted
business with Farmer Mac during the two years ended December 31, 2024. The table below does not
specify any relationships based on the ownership of Farmer Mac's non-voting common stock or any series
of preferred stock.
Table 21
AgFirst Farm Credit
Bank
84,024 shares of Class B
voting common stock
(16.79% of outstanding
Class B stock and 5.49%
of total voting common
stock outstanding)
None
In 2024 and 2023, Farmer Mac earned
approximately $1.3 million and $1.4 million,
respectively, in fees attributable to
transactions with AgFirst, primarily
commitment fees for LTSPCs.
Name of Institution
Ownership of
Farmer Mac
Voting Common Stock
Affiliation with Any
Farmer Mac Directors
Primary Aspects of Institution's
Business Relationship with Farmer Mac
79
AgriBank, FCB
201,621 shares of Class
B voting common stock
(40.30% of outstanding
Class B stock and
13.17% of total voting
common stock
outstanding)
None
Farmer Mac did not conduct any business
with AgriBank during 2024 or 2023.
Bath State Bank
Less than 5% ownership
Former Farmer Mac
director Dennis L. Brack
(retired in May 2024) serves
as a director of Bath State
Bank and Bath State
Bancorp, the holding
company of Bath State
Bank.
Farmer Mac purchased $6.5 million and
$1.3 million USDA Securities from Bath
State Bank in 2024 and 2023, respectively.
Farmer Mac also purchased $3.0 million and
$0.3 million in Agricultural Finance
mortgage loans from Bath State Bank in
2024 and 2023, respectively.
CoBank, ACB
163,253 shares of Class
B voting common stock
(32.63% of outstanding
Class B stock and
10.66% of total voting
common stock
outstanding)
Former Farmer Mac
director Everett M.
Dobrinski (retired in May
2024) served on CoBank's
independent nominating
committee until December
2023.
Farmer Mac purchased $442.7 million and
$438.8 million in loans from CoBank in
2024 and 2023, respectively.
In 2024 and 2023, CoBank retained $4.0
million and $3.6 million of servicing fees
related to the loan participations sold to
Farmer Mac, respectively.
Farm Credit of
Florida
Less than 5% ownership
Farmer Mac director Robert
Sexton serves as a director
of Farm Credit of Florida.
Farmer Mac purchased $1.7 million
Agricultural Finance mortgage loans from
Farm Credit of Florida in 2024. Farmer
Mac did not purchase any mortgage loans
from Farm Credit of Florida in 2023.
In 2024 and 2023, Farm Credit of Florida
retained $16,000 and $11,000 in servicing
fees for its work as a Farmer Mac servicer,
respectively.
Farm Credit Bank of
Texas (FCBT)
38,503 shares of Class B
voting common stock
(7.70% of outstanding
Class B stock and 2.51%
of total voting common
stock outstanding)
None
In 2024 and 2023, Farmer Mac earned
approximately $3.6 million and $3.4 million,
respectively, in fees attributable to
transactions with FCBT, primarily
commitment fees for LTSPCs.
In both 2024 and 2023, FCBT retained
approximately $0.1 million in servicing fees
for its work as a Farmer Mac servicer.
Matthew 25
Management Corp.
79,484 shares of Class A
voting common stock
(7.71% of outstanding
Class A stock and 5.19%
of total voting common
stock outstanding)
None
Farmer Mac did not conduct any business
with Matthew 25 Management Corp. during
2024 and 2023.
Name of Institution
Ownership of
Farmer Mac
Voting Common Stock
Affiliation with Any
Farmer Mac Directors
Primary Aspects of Institution's
Business Relationship with Farmer Mac
80
National Rural
Utilities Cooperative
Finance Corporation
(CFC)
81,500 shares of Class A
voting common stock
(7.91% of outstanding
Class A stock and 5.32%
of total voting common
stock outstanding)
None
Transactions with CFC represented 27.9%
and 37.1% of loans under the Infrastructure
Finance line of business during 2024 and
2023, respectively.
In 2024 and 2023, Farmer Mac earned
commitment fees of approximately $0.9
million and $1.0 million, respectively,
attributable to transactions with CFC.
In 2024 and 2023, Farmer Mac earned
interest income of $158.4 million and
$143.5 million, respectively, attributable to
AgVantage transactions with CFC.
In 2024 and 2023, CFC retained
approximately $4.1 million and $3.7 million
in servicing fees for its work as a Farmer
Mac servicer, respectively.
Zions
Bancorporation,
National Association
(Zions)
322,100 shares of Class
A voting common stock
(31.25% of outstanding
Class A stock and
21.04% of total voting
common stock
outstanding)
None
In 2024 and 2023, Farmer Mac purchased
$173.9 million and $160.1 million of
Agricultural Finance mortgage loans from
Zions, respectively. In 2024 and 2023,
Farmer Mac purchased $0.4 million and
$0.2 million, of USDA Securities from
Zions, respectively. Transactions with Zions
represented 3.1% of Farmer Mac's total
outstanding business volume (excluding
loans serviced for others) as of both
December 31, 2024 and 2023.
In both 2024 and 2023, Zions retained
approximately $11.2 million in servicing
fees for its work as a Farmer Mac servicer.
Name of Institution
Ownership of
Farmer Mac
Voting Common Stock
Affiliation with Any
Farmer Mac Directors
Primary Aspects of Institution's
Business Relationship with Farmer Mac
As discussed in more detail in Note 2(o) to the consolidated financial statements, Farmer Mac’s
consolidated financial statements include the accounts of variable interest entities ("VIEs") in which
Farmer Mac determines itself to be the primary beneficiary, including securitization trusts where Farmer
Mac shares the power to make decisions about default mitigation with a related party. If that related party
status changes, consolidation or deconsolidation of securitization trusts may occur. For more information
about related party transactions, see Note 3 to the consolidated financial statements.
81
Outlook
Business Outlook
Products and Portfolio
Farmer Mac serves a vital role in serving rural America by offering liquidity, capital, and risk
management tools as a secondary market to help increase the accessibility of financing for American
agriculture and rural infrastructure. The growth trajectory of Farmer Mac is closely tied to the capital and
liquidity needs of the lending institutions serving agriculture and infrastructure businesses and the overall
financial health of borrowers in these sectors. Even with continued high market interest rates and global
and economic volatility, Farmer Mac's outstanding business volume and net effective spread increased
3.7% and 3.8% in 2024 versus 2023, respectively. The increase in business volume and net effective
spread primarily reflects the diversification of Farmer Mac’s business model and the resiliency of the
agriculture and infrastructure sectors.
Several factors continue to influence business volume growth dynamics. The persistently elevated market
interest rates have had a direct effect on Farmer Mac’s Farm & Ranch product interest rates, and there
generally exists an inverse correlation between Farm & Ranch new loan purchase volumes and changes in
Farm & Ranch product interest rates, with higher product interest rates slowing portfolio loan
prepayments. Also, a tightening agricultural economy is creating the need for additional liquidity and
working capital needs for borrowers managing through this agricultural cycle. The net effect of these
forces contributed to positive Farm & Ranch loan purchase portfolio growth in 2024. Future changes in
monetary policy, sustained elevated product interest rates, and the financial health of borrowers are
anticipated to influence the demand for Agricultural Finance mortgage loans and the pace of repayments.
Farmer Mac experienced a decrease in wholesale finance volume during 2024, driven by slower market
loan growth and a tightening of market credit spreads that resulted in less liquidity and diversification
needs from our counterparties. Any future growth will likely be influenced by market interest rates and
credit spreads, overall economic conditions and loan growth opportunities, and the relative value of
Farmer Mac’s products versus the broader market. Corporate AgFinance loan purchases and unfunded
commitments increased 14.4% in 2024 versus 2023. The Infrastructure Finance segments showed
significant business volume growth in 2024, increasing over $1 billion, or 13.3%, to $9.0 billion in 2024
versus 2023. Business volume in Infrastructure Finance was strong across most products and segments in
2024, primarily driven by increased financing activity for renewable energy projects and broadband
infrastructure in response to continued strong demand for renewable power generation and storage and
data center investments.
Opportunities for profitable future growth include Farmer Mac's potential role in alleviating liquidity,
capital, and return-on-equity capital challenges faced by agricultural and infrastructure lenders. The suite
of Farmer Mac's offerings encompasses loan and loan portfolio purchases, participations, guarantees,
LTSPCs, wholesale funding, and securitizations. In 2024, Farmer Mac purchased from a single
agricultural lender two pools of Farm & Ranch loans with an aggregate outstanding principal balance of
$179.2 million. Ongoing business and product development efforts continue to attract institutional
investors and nontraditional lenders, resulting in the diversification of Farmer Mac's customer base and
product set, potentially generating increased product demand from new sources. Farmer Mac’s expanded
loan servicing capabilities enhance our loan portfolio purchase value proposition, adding new product
offerings to an increasingly diverse customer base.
82
Growing relationships with larger agriculture lenders, financial industry consolidation, interest rates and
market volatility, as well as financial institutions' focus on capital efficiency and liquidity continue to
provide increased opportunities for Farmer Mac, influencing the demand for loan purchases, risk
management solutions, and wholesale funding. Any such growth may lead to an increase in the average
transaction size within Farmer Mac’s lines of business. The financing needs arising from mergers,
acquisitions, consolidation, and vertical integration in the agricultural and infrastructure industries present
further opportunities for Farmer Mac’s loan purchase products and other financing solutions. And
investments supporting consumer and food supply demand may increase financing needs in the food and
agriculture supply chain, potentially requiring incremental capital support through the secondary market.
Deepening relationships with eligible infrastructure counterparties are expected to continue to create
opportunities to support fiber and broadband-related transactions, including significant market activity and
investments in wholesale data centers, as well as renewable energy projects. Changes associated with
governmental policies, including but not limited to fiscal, monetary, tax, and regulatory policies
implemented by the new federal executive administration, have the potential to impact the primary
business sectors served by Farmer Mac, which could affect business volume growth and opportunities.
Funding
Unlike depository institutions, Farmer Mac's funding sources do not rely on deposits, allowing us to
navigate beyond short-term liquidity disruptions and to potentially take advantage of increased
opportunities in a competitive lending environment. This is because our debt has a contractual term to
maturity and because we have the ability to redeem our callable debt before its original maturity date
when market conditions are beneficial to Farmer Mac. In contrast, depository institutions largely rely on
demand deposit accounts in which the depositors hold the right to withdraw at any time. During the
second half of 2024, we began to see some benefit from calling fixed-rate debt and may continue to see
this benefit subject to market conditions.
Farmer Mac's business may benefit from natural business hedges that help mitigate vulnerability to effects
from interest rate volatility. When interest rates rise, prepayments tend to decline, but interest earned on
excess cash and capital could increase. Conversely, when interest rates decline, loan purchase volume
often increases, but prepayments tend to rise as well. Although these natural business dynamics may not
be perfect offsets, they tend to provide some counterbalance to mitigate volatility from changes in short-
term interest rates.
Operations
Farmer Mac anticipates ongoing increases in operating expenses over the next several years, aligned with
our planned expansion of investments in human capital, technology, and business infrastructure. These
investments are designed to enhance capacity and efficiency in support of growth opportunities and long-
term strategic objectives. By investing in infrastructure and funding platforms, Farmer Mac aims to scale
more efficiently in tandem with future portfolio and earnings growth. These initiatives are expected to
improve product delivery and funding efficiency, potentially generating more benefits for future growth.
Another focus of our planned infrastructure investments is a continued effort to expand our servicing
capabilities and to enhance the efficiency of processes associated with loan onboarding and servicing.
Farmer Mac expects to continue to leverage technology enhancements and servicing standardization
efforts to drive scalability and consistency. Technology enhancements are planned for 2025 to continue to
83
incorporate all Farmer Mac loan portfolios onto our servicing platform and to provide flexibility in
accessing loan portfolio information, as well as streamlining operational workflows.
Agricultural Finance Industry Outlook
Farm Incomes
Overall farm profitability has compressed in the last two years. According to the USDA, net cash farm
income peaked at $210.1 billion in 2022, a record for both nominal and inflation-adjusted farm profits.
The primary driver of profitability in 2022 was higher cash revenues, in contrast to 2019 and 2020, when
elevated government support payments supported farm incomes. The USDA currently estimates that
annual net cash farm income decreased 25% in 2023 but rebounded 2% higher in 2024. Looking ahead to
2025, the USDA forecasts an additional 22% increase in net cash farm income, fueled by a $33 billion
increase in government support payments from the American Relief Act enacted in 2024. If realized, 2025
net cash farm income would reach the third-highest inflation-adjusted level in history. Ad-hoc and
supplemental government support payments are not guaranteed annually, but can help offset poor market
conditions for producers.
Commodity prices may see increased volatility in 2025 due to a rebound in global supply levels. Annual
grain crop prices, which had faced pressure for much of 2024, stabilized in fourth quarter 2024, and even
increased modestly for some crops. Prices were also modestly higher for tree nuts in fourth quarter 2024.
Tree nut producers have reduced new plantings in recent years, which, combined with robust exports this
marketing year, has provided moderate support for prices. Tree nut prices, including almonds and walnuts,
had faced similar pressure in recent years from rising production. However, production was relatively
stable in 2024, helping limit and even partially alleviate the buildup in inventories. Within the livestock
and animal protein sector, producers benefited from lower feed costs in 2024, particularly the cattle sector.
Broadly speaking, farm expenses could also abate somewhat into 2025, with lower expected feed,
fertilizer, interest, and fuel costs partially offset by higher expected livestock, labor, and rental rates.
Demand for corn and soybean by-products could see a boost in 2025 as renewable diesel and sustainable
aviation fuel markets continue to mature.
The change in U.S. political leadership may introduce both opportunities and challenges for the
agricultural sector. Shifts in trade policies, environmental regulations, and immigration laws could result
in significant impacts on agricultural producers and the sector as a whole. These changes could lead to
both favorable and unfavorable conditions, influencing trade dynamics, the strength of the U.S. dollar,
labor costs and availability, and regulatory frameworks. The agricultural sector may experience varying
degrees of disruption and adaptation in response to these evolving policies, and these changes could
increase the volatility of sector profitability in the near-term.
Lower prices for several agricultural commodities could have multiple competing effects on loan
performance and agricultural credit demand. Constraints on cash flow can cause loan delinquency rates to
rise back to and surpass historical averages. This reversion is most likely in commodities experiencing
negative market conditions like some grain and permanent crops. Simultaneously, cash flow constraints
can increase demand for debt capital to reorganize balance sheets and replace lost incomes. Farmer Mac
believes that its portfolio and market strategy is sufficiently diversified by borrower, industry, and region
to maintain robust portfolio performance through the current cycle to be positioned to support any
expansion of the farm mortgage market that may arise in the coming quarters.
84
Land Values
Record-setting farm incomes in 2021 and 2022, combined with historically low interest rates in 2020 and
2021, drove a rapid rise in land values and a decrease in farm delinquencies and bankruptcies. Momentum
for farmland values persisted throughout 2023 due to high levels of farm liquidity and a constrained
supply of farmland for sale. Land values slowed in some markets in 2024 due to higher interest rates and
lower profitability for some agricultural sectors. Land value survey data from the USDA shows a 5%
increase in average farm real estate values from June 2023 to June 2024. Annual farm real estate value
gains were highest in the Southeast (9.4%) and the Southern Plains (7.5%) and still strong but slowing in
the Lake states (4.3%), the Corn Belt (3.7%), and the Southeast (2.4%).
Farmland value growth rates moderated in the second half of 2024 in the face of continued higher market
interest rates and stagnating price for some commodities. The Federal Reserve Bank of Chicago AgLetter
reported no change in farmland values in the Seventh District (primarily Iowa, Indiana, Illinois, and
Wisconsin) between October 2023 and October 2024. This was down from a 5% increase over the
previous 12-month period. Data from the Federal Reserve Bank of Kansas City showed that land values
continued to grow in the Tenth District (primarily Kansas, Missouri, Nebraska, and Oklahoma), increasing
5.5% from third quarter 2023 to third quarter 2024. However, the growth rate in both regions has trended
consistently lower in the last several years, and growth rates in land values could continue to moderate in
2025. Lower prices for some commodities and an elevated interest rate environment represent headwinds
to farmland values, particularly in states like California. A relatively low supply of available farmland in
many regions and persistent demand for the asset class across a wide variety of investors could help
maintain balance in the farmland transaction markets.
While regional averages for farmland values generally provide a good barometer for the overall changes in
U.S. farmland values, economic forces affecting land markets are highly localized, and some markets may
experience greater volatility in farmland values than state or national averages indicate. Based on our
robust collateral underwriting standards, we believe that our loan collateral is well-positioned to endure
reasonably foreseeable volatility in farmland values that could result from external factors.
Markets and Weather
Exogenous factors facing farm and food producers can create uncertainty and market instability within the
sector. Some of the external market conditions that could adversely affect the farm and food sectors into
2025 include foreign trade and trade policy, supply chain disruptions, and weather and environmental
conditions. The U.S. agricultural sector has become increasingly dependent on foreign markets as a source
of demand, making trade policy an important consideration for farms and food. The USDA projects that
U.S. agriculture exports will drop to $170.0 billion in 2025, 3% lower than 2024 and down 13% relative to
peak levels in 2022. Through November 2024, agricultural export values were roughly even in 2024
compared to 2023. One challenge for U.S. exports has been the value of the U.S. dollar relative to
competing exporters of agricultural goods. The USDA projects this headwind to continue in 2025. Slower
global growth could also be a headwind for consumer-oriented products like animal proteins, dairy, fruits,
and nuts. Ukrainian corn and wheat export shipments continue to rebound and have approached pre-2022
levels in recent months. Looking ahead, economic and geopolitical uncertainties could lead to higher
volatility for the U.S. dollar during 2025.
Severe weather conditions continue to shape agricultural sectors. In 2024, the U.S. experienced 27
separate billion-dollar weather disasters, as tracked by the National Oceanic and Atmospheric
Administration. Many of those events affected agriculture, including midwestern storms, flooding,
western wildfires, excessive heat, and drought. Through December 31, 2024, Farmer Mac's portfolio had
85
not experienced any material performance degradation as a result of these events. Federal crop insurance
provides a strong mitigator against this risk, but farmers and ranchers face increasingly severe weather
incidents and production volatility.
Drought conditions increased modestly in intensity and prevalence in fourth quarter 2024 after a sizable
improvement in conditions in 2023 for large portions of the West Coast. Drought conditions intensified in
several western states in the second half of 2024. Nearly one-third of California was classified as in severe
drought to start 2025, up from 0% at the beginning of 2024. Farmer Mac had minimal exposure to the
areas affected by the southern California wildfires in early 2025. As of January 21, 2025, 17% of the
continental U.S. was classified as being in moderate to exceptional drought according to data from the
National Center for Environmental Information, which is slightly higher than the same period of 2024. At
the end of 2024, approximately 70% of the United States is classified as experiencing some level of
drought or dryness according to the National Drought Mitigation Center, USDA, and NOAA. .
For loans in areas that commonly experience exceptional drought (primarily in California), Farmer Mac's
underwriting standards include an assessment of anticipated long-term water availability for the related
property and how water availability impacts the collateral value and the borrower's liquidity position to
mitigate that risk.
Agricultural Processing and Food Supply Chain
The production of food, feed, fiber, and biofuels has been economically viable in the past few years, but
some factors continued to evolve into 2025. Rising consumer inflation boosted the profitability of the food
processing and supply chains in 2021 and 2022. Moderating consumer prices in 2023 and 2024 increased
the volume of consumer spending but also limited the profit expansion of food and fiber businesses.
Biofuels have gained demand due to low-carbon regulations in several states and incremental tax benefits
for the production of renewable diesel and sustainable aviation fuel. A large number of planned biofuel
projects and new facilities for 2025 could provide support for raw materials such as corn and soybeans,
but markets for these fuels are nascent and could evolve or erode rapidly in the coming quarters. A strong
U.S. dollar, trade issues, labor availability, changes to consumer demand due to health policy and
pharmaceuticals, and a high risk of global economic stress could pose challenges for these sectors in 2025
and 2026. Nonetheless, consumer spending held steady throughout 2024, providing stable conditions for
value-added food, feed, fiber, and biofuel consumption. Credit demand in these sectors could grow in the
next few quarters if interest rate policy maintains course, inflation rises again, mergers and acquisitions
activity increases, or economic uncertainty clears up.
Infrastructure Finance Industry Outlook
Power & Utilities
Economic conditions affecting rural power and electricity markets typically follow those in the general
economy. According to data from the U.S. Energy Information Administration, sales and the revenue from
the sale of electricity to customers advanced in 2024, with an annual increase in sales of 1.1% and an
increase in revenue of 3.5%, respectively, in the last 12 months through November 2024 compared to
November 2023. This increase was the result of higher residential and commercial electricity sales
combined with slightly higher average prices paid for electricity relative to 2023. Higher energy input
prices, such as natural gas and coal, became a headwind in 2022. After two years of increased prices and
heightened volatility, oil and natural gas prices moderated throughout much of 2023 and 2024. Continued
geopolitical uncertainty in the Middle East and Eastern Europe could increase energy price volatility, but
power producers are generally able to pass higher input costs through to retail electricity prices as
86
evidenced by higher retail electricity prices in 2022 and parts of 2023. Through December 31, 2024,
Farmer Mac had not observed material degradation in the financial performance of its Power & Utilities
loans, and that portfolio has never had a serious delinquency or default since its inception. Credit demand
for electric cooperatives will likely be tied to ongoing normal-course capital expenditures related to
maintaining and upgrading utility infrastructure. These growth opportunities may be affected by the
demand for electric power in rural areas, increased power demand from regional data centers, capital
expenditures by electric cooperatives driven by regulatory or technological changes, the changing interest
rate environment, increased policy initiatives to support rural connectivity, and competitive dynamics
within the rural utilities cooperative finance industry. Generally, these investments are expected to
continue at, or above, historical levels based on the replacement and modernization of existing and new
infrastructure.
Renewable Energy
Growth in renewable energy generation and deployment of energy storage technologies has the potential
to continue to deepen Farmer Mac's relationships with existing customers through new business
opportunities. According to data from the U.S. Energy Information Administration, renewable electricity
capacity is expected to grow by 167% in the next ten years, compared to total electric capacity growth of
43%. The rising cost of fossil fuel-based inputs combined with the falling costs of renewable power
generation may hasten this increase in capacity along with recently enacted legislation, such as the
Inflation Reduction Act of 2022 that incentivizes domestic production in clean energy technologies such
as solar and wind. Because of these policy tailwinds, analysis from Bloomberg New Energy Finance
(BNEF) estimates that investors will put $3.2 trillion into renewable projects between 2021 and 2050. If
realized, growth in renewable energy capacity has the potential to broaden Farmer Mac's customer base
focused on financing renewable energy projects and companies. In response to this expected growth,
Farmer Mac has hired industry-specialized staff and deployed new financing products tailored to the
renewable energy sector, which represents a new and growing market opportunity for Farmer Mac.
Broadband Infrastructure
Rural telecommunication and data connectivity has proven to be of vital economic importance in the last
decade, as more households and agricultural enterprises require more data and connectivity to thrive. The
rapid growth in digital technologies, including the ongoing interest and investment in artificial
intelligence, advancements in cloud computing, and wireless network densification, will require
significantly more computing and storage capabilities as well as investment in additional fiber network
capacity. These industry tailwinds are creating additional investments in rural telecommunications
infrastructure by cooperative and non-cooperative providers, which is aided by access to many federally
funded programs, such as USDA's Broadband Equity Access and Deployment Program (BEAD), the
Federal Communications Commission's Rural Digital Opportunity Fund (RDOF), the USDA’s ReConnect
program, and the USDA’s Telecommunications Infrastructure Loan and Loan Guarantee program. In
addition to capital projects spurred by these programs, Farmer Mac could see an increase in financing
opportunities for other telecommunications providers in rural areas, with fiber line expansion, wireless
broadband deployment, industry consolidation and efficiency through mergers and acquisitions, and data
processing center buildouts all increasingly important to rural economic opportunity and the constant
connectivity required by the food and agriculture industries.
The recent change in U.S. political leadership may introduce both opportunities and challenges for the
infrastructure sector. Potential changes in tax policy as well as trade and immigration laws could result in
significant impacts to infrastructure borrowers, especially for renewable energy projects. These changes
could lead to delays in completing current projects and slow future investments in renewable energy and
87
battery storage projects as well as the deployment of fiber and broadband infrastructure in rural areas. The
infrastructure sector may experience varying degrees of disruption and adaptation in response to these
evolving policies, and these changes could increase the volatility of sector profitability in the near-term.
The potential for disruption in these sectors due to policy changes may be somewhat mitigated by the
historically strong market demand for electrification, the ongoing diversification of power generating
assets from electricity producers, and continued strong investments in data centers and fiber infrastructure.
Legislative and Regulatory Outlook
Farmer Mac continues to closely monitor potential legislative and regulatory changes that could
significantly impact the organization or its stakeholders, including:
•
The 2024 elections have resulted in single-party control over both the executive and legislative
branches of government. Some recent executive branch actions have the potential to influence
Farmer Mac's regulatory environment:
◦
President Trump has designated Jeffery Hall, who had already been serving on the board of
the Farm Credit Administration (FCA), as the board chairman and CEO of FCA, the safety
and soundness regulator of Farmer Mac. Chairman Hall will oversee FCA’s regulatory
agenda while serving in that role. Any new rules proposed by FCA would not be subject to
President Trump's "regulatory freeze" executive order issued on January 20, 2025 because
that freeze does not apply to rules approved by a department or agency head appointed or
designated by President Trump. FCA's latest regulatory projects plan published in Fall
2024 includes a review of Farmer Mac's regulatory capital framework, with a notice of
proposed rulemaking targeted for May 2025. This timeline may change, and Farmer Mac's
management team will continue to monitor and engage with this regulatory process as it
develops.
◦
President Trump has designated Mark Uyeda as the Acting Chairman of the Securities and
Exchange Commission (SEC). Similar to any new rules proposed by FCA, any new rules
proposed by the SEC would not be subject to President Trump's "regulatory freeze"
executive order issued on January 20, 2025 because the Acting Chairman was designated
by President Trump.
•
Two of the three members of the FCA board, including Chairman Hall, are currently serving in a
"holdover status," meaning that their terms have expired. These board members will continue to
serve until the President nominates and the Senate confirms their replacements.
•
FCA's final rule on cyber risk management became effective on January 1, 2025. Farmer Mac does
not expect this new rule to have a significant effect on its business practices or operations, as most
of the rule's requirements had already been implemented by Farmer Mac before the rule's effective
date.
•
Congress is expected to consider a number of significant issues during 2025, including the expiring
provisions of the Tax Cuts and Jobs Act of 2017, the debt ceiling, annual spending bills, and the
reauthorization or extension of the farm bill. The farm bill, an omnibus legislative bill supporting
farmers' profitability, rural community vitality, and infrastructure modernization, is typically
updated by Congress every five years. However, the 2018 farm bill has been extended twice for
88
one year each to allow Congress more time to develop new policies included in farm bill
reauthorization. The current one-year extension of the 2018 farm bill will expire on September 30,
2025. If Congress does not pass a new farm bill or extend the 2018 farm bill by December 31,
2025, federal agricultural policy will revert to 1930s-era policy, which provides no price support
for many key commodities.
•
Farmer Mac continues to work with stakeholders and Congress on changes to its charter in the
farm bill reauthorization to better support lenders serving rural areas. Any changes would require
Congressional approval and the President's signature.
•
Farmer Mac will continue to monitor Congress’s consideration of tax policy in 2025. Several
provisions of the Tax Cuts and Jobs Act of 2017 are scheduled to expire in 2025. Congress is
likely to address the expiration of these policies and possibly address other tax policies that may
directly affect Farmer Mac, such as the corporate tax rate and potential exemptions for income
generated from loans secured by agricultural real estate.
Balance Sheet Review
The following table summarizes Farmer Mac's balance sheet as of the periods indicated:
Table 22
As of
Change
December 31, 2024
December 31, 2023
$
%
(in thousands)
Assets
Cash and cash equivalents
$
1,024,007 $
888,707
$
135,300
15 %
Investment securities
5,973,301
4,979,504
993,797
20 %
Farmer Mac Guaranteed Securities
8,232,234
9,745,548
(1,513,314)
(16) %
USDA Securities
2,371,352
2,355,412
15,940
1 %
Loans, net of allowance
11,166,984
9,607,531
1,559,453
16 %
Loans held in trusts
2,037,654
1,431,818
605,836
42 %
Other
519,210
515,862
3,348
1 %
Total assets
$
31,324,742 $
29,524,382
$ 1,800,360
6 %
Liabilities
Notes Payable
$
27,371,174 $
26,336,542
$ 1,034,632
4 %
Debt securities of consolidated trusts held by third parties
1,929,628
1,351,069
578,559
43 %
Other
534,914
424,908
110,006
26 %
Total liabilities
$
29,835,716 $
28,112,519
$ 1,723,197
6 %
Total equity
1,489,026
1,411,863
77,163
5 %
Total liabilities and equity
$
31,324,742 $
29,524,382
$ 1,800,360
6 %
Assets. The increase in total assets was primarily attributable to new loan volume, including those held in
consolidated trusts, and a larger investment portfolio.
Liabilities. The increase in total liabilities was primarily due to an increase in total notes payable to fund
the acquisition of loan volume, including those held in consolidated trusts.
89
Equity. The increase in total equity was primarily due to an increase in retained earnings and an increase
in accumulated other comprehensive income, which was partially offset by the redemption of the Series C
Preferred Stock.
Risk Management
Credit Risk – Loans and Guarantees.
Agricultural Finance - Direct Credit Exposure
Farmer Mac's direct credit exposure to Agricultural Finance mortgage loans as of December 31, 2024 was
$12.4 billion across 48 states. Farmer Mac applies credit underwriting standards and methodologies to
help assess exposures to loan purchases, which may include collateral valuation, financial metrics, and
other appropriate borrower financial and credit information. For Corporate AgFinance loans, which are
often larger loan exposures to agriculture production and agribusinesses that support agriculture
production, food and fiber processing, and other supply chain production, and which may have risk
profiles that differ from smaller agricultural mortgage loans, Farmer Mac has implemented methodologies
and parameters that help assess credit risk based on the appropriate sector, borrower construct, and
transaction complexity. For more information about Farmer Mac's underwriting and collateral valuation
standards for Agricultural Finance mortgage loans, see "Business—Farmer Mac's Lines of Business—
Agricultural Finance—Underwriting and Collateral Standards—Farm & Ranch" and "Business—Farmer
Mac's Lines of Business—Agricultural Finance—Underwriting and Collateral Standards—Corporate
AgFinance."
Farmer Mac's 90-day delinquency measure includes loans 90 days or more past due, as well as loans in
foreclosure and non-performing loans where the borrower is in bankruptcy. For Agricultural Finance
mortgage loans to which Farmer Mac has direct credit exposure, Farmer Mac's 90-day delinquencies as of
December 31, 2024, were $108.9 million (0.88% of the Agricultural Finance mortgage loan portfolio to
which Farmer Mac has direct credit exposure), compared to $34.7 million (0.31% of the Agricultural
Finance mortgage loan portfolio) as of December 31, 2023. Those 90-day delinquencies consisted of 62
delinquent loans as of December 31, 2024, compared to 23 delinquent loans as of December 31, 2023. The
increase in the number of 90-day delinquencies was primarily driven by increased delinquencies in
permanent plantings and crops and was concentrated in the Southwest region. The increase in loans 90
days or more delinquent as of December 31, 2024 compared to December 31, 2023 reflects the continued
decrease in U.S. farm income driven by weak agricultural commodity prices and elevated input costs.
$37.6 million of the increase in 90-day delinquent loans was related to a single permanent planting
borrower relationship. The top ten borrower exposures over 90 days delinquent represented over half of
the 90-day delinquencies as of December 31, 2024. Farmer Mac believes that it remains adequately
collateralized on its delinquent loans.
Farmer Mac's 90-day delinquency rate as of December 31, 2024 was slightly below Farmer Mac's
historical average. In the near-term, our delinquency rate may exceed our historical average due to the
current agricultural cycle or changes in the general economy or unforeseen and idiosyncratic events like
adverse weather events. Farmer Mac's average 90-day delinquency rate as a percentage of its Agricultural
Finance mortgage loan portfolio over the last 15 years is approximately 1%. The highest 90-day
delinquency rate observed during that period occurred in 2009 at approximately 2%, which coincided with
increased delinquencies in loans within Farmer Mac's ethanol loan portfolio.
90
The following table presents historical information about Farmer Mac's 90-day delinquencies in the
Agricultural Finance mortgage loan portfolio compared to the unpaid principal balance of all Agricultural
Finance mortgage loans to which Farmer Mac has direct credit exposure:
Table 23
Agricultural Finance
Mortgage Loans
90-Day
Delinquencies
Percentage
(dollars in thousands)
As of:
December 31, 2024
$
12,369,477
$
108,944
0.88 %
September 30, 2024
11,466,670
144,407
1.26 %
June 30, 2024
11,409,396
62,063
0.54 %
March 31, 2024
11,184,817
76,825
0.69 %
December 31, 2023
11,223,276
34,677
0.31 %
September 30, 2023
11,014,678
42,443
0.39 %
June 30, 2023
10,826,201
45,368
0.42 %
March 31, 2023
10,680,419
70,646
0.66 %
December 31, 2022
10,719,571
43,498
0.41 %
Across all of Farmer Mac's lines of business, 90-day delinquencies represented 0.37% of total outstanding
business volume as of December 31, 2024, compared to 0.12% as of December 31, 2023 and 0.17% as of
December 31, 2022.
The following table presents outstanding Agricultural Finance mortgage loans and 90-day delinquencies
as of December 31, 2024 by year of origination, geographic region, commodity/collateral type, original
loan-to-value ratio, and range in the size of borrower exposure:
91
Table 24
Agricultural Finance Mortgage Loans 90-Day Delinquencies as of December 31, 2024
Distribution of
Agricultural
Loans
Agricultural
Loans
90-Day
Delinquencies(1)
Percentage
(dollars in thousands)
By year of origination:
2014 and prior
7 % $
815,515
$
2,697
0.33 %
2015
2 %
274,556
789
0.29 %
2016
4 %
443,004
13,230
2.99 %
2017
4 %
498,919
2,449
0.49 %
2018
5 %
573,941
5,914
1.03 %
2019
6 %
764,448
17,627
2.31 %
2020
16 %
1,938,280
23,540
1.21 %
2021
20 %
2,541,473
5,138
0.20 %
2022
13 %
1,652,620
18,774
1.14 %
2023
9 %
1,143,957
14,656
1.14 %
2024
14 %
1,722,764
4,130
0.24 %
Total
100 % $
12,369,477
$
108,944
0.88 %
By geographic region(2):
Northwest
12 % $
1,448,007
$
5,343
0.37 %
Southwest
29 %
3,600,482
75,818
2.11 %
Mid-North
26 %
3,187,263
14,864
0.47 %
Mid-South
18 %
2,268,942
7,407
0.33 %
Northeast
5 %
563,737
2,157
0.38 %
Southeast
10 %
1,301,046
3,355
0.26 %
Total
100 % $
12,369,477
$
108,944
0.88 %
By commodity/collateral type:
Crops
49 % $
6,045,187
$
43,972
0.73 %
Permanent plantings
21 %
2,569,068
50,058
1.95 %
Livestock
19 %
2,334,660
8,988
0.38 %
Part-time farm
4 %
508,536
5,926
1.17 %
Ag. Storage and Processing
7 %
873,439
—
— %
Other
— %
38,587
—
— %
Total
100 % $
12,369,477
$
108,944
0.88 %
By original loan-to-value ratio:
0.00% to 40.00%
17 % $
2,080,179
$
6,710
0.32 %
40.01% to 50.00%
21 %
2,644,189
30,834
1.17 %
50.01% to 60.00%
33 %
4,043,522
61,165
1.51 %
60.01% to 70.00%
21 %
2,552,281
9,307
0.36 %
70.01% to 80.00%(3)
2 %
262,695
928
0.35 %
80.01% to 90.00%(3)
— %
26,817
—
— %
Enterprise Value(4)
6 %
759,794
—
— %
Total
100 % $
12,369,477
$
108,944
0.88 %
By size of borrower exposure(5):
Less than $1,000,000
26 % $
3,245,032
$
12,737
0.39 %
$1,000,000 to $4,999,999
39 %
4,754,341
46,796
0.98 %
$5,000,000 to $9,999,999
14 %
1,769,013
11,807
0.67 %
$10,000,000 to $24,999,999
13 %
1,654,391
—
— %
$25,000,000 and greater
8 %
946,700
37,604
3.97 %
Total
100 % $
12,369,477
$
108,944
0.88 %
(1)
Includes loans held and loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs that are 90 days or more past due, in
foreclosure, or in bankruptcy with at least one missed payment, excluding loans performing under either their original loan terms or a court-approved
bankruptcy plan.
(2)
Geographic regions: Northwest (AK, ID, MT, OR, WA, WY); Southwest (AZ, CA, CO, HI, NM, NV, UT); Mid-North (IA, IL, IN, MI, MN, NE, ND,
SD, WI); Mid-South (AR, KS, LA, MO, OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NH, NJ, NY, OH, PA, RI, VA, VT, WV); Southeast (AL, FL,
GA, MS, NC, SC, TN).
(3)
Primarily part-time farm loans. Loans with an original loan-to-value ratio of greater than 80% are required to have private mortgage insurance.
92
(4)
"Enterprise Value" loans are generally secured by all business assets and common stock (in addition to first lien mortgages) of the borrower and the value
of the borrowing entity depends on its ability to generate recurring positive cash flow. Enterprise Value is the estimated value of the borrower as a going
concern, which is estimated using one or more valuation techniques such as discounted cash flow, cash flow multiples, asset liquidation, or other
valuation techniques.
(5)
Includes aggregated loans to single borrowers or borrower-related entities.
Another indicator that Farmer Mac considers in analyzing the credit quality of its Agricultural Finance
mortgage loans is the level of internally-rated "substandard" assets, both in dollars and as a percentage of
the outstanding portfolio. Assets categorized as "substandard" have a well-defined weakness or
weaknesses, and there is a distinct possibility that some loss will be sustained if deficiencies are not
corrected. As of December 31, 2024, Farmer Mac's Agricultural Finance mortgage loans (to which it has
direct credit exposure) comprising substandard assets were $398.3 million (3.2% of the portfolio),
compared to $186.0 million (1.7% of the portfolio) as of December 31, 2023. Those substandard assets
comprised 336 loans as of December 31, 2024 and 206 loans as of December 31, 2023.
The increase of $212.3 million in Agricultural Finance substandard assets during 2024 was primarily
attributable to credit risk rating downgrades in permanent plantings and crops. Most of the increase in
substandard permanent planting loans were in the Corporate AgFinance segment of the portfolio. Credit
performance within the crops and livestock commodities have begun to revert toward historical averages
after those commodities were supported by higher commodity prices and federal government support
payments in previous years. Overall, Agricultural Finance substandard assets increased as a percentage of
our on- and off-balance sheet Agricultural Finance portfolios during 2024.
The percentage of Agricultural Finance substandard assets within the portfolio as of December 31, 2024
was below the historical average. Farmer Mac's average Agricultural Finance substandard assets as a
percentage of its Agricultural Finance mortgage loans over the last 15 years is approximately 4%. The
highest substandard asset rate observed during the last 15 years occurred in 2010 at approximately 8%,
which coincided with an increase in substandard loans within Farmer Mac's ethanol portfolio. If Farmer
Mac's substandard asset rate increases from current levels on a sustained basis, it is likely that Farmer
Mac's provision to the allowance for loan losses and the reserve for losses would also increase.
Although some credit losses are inherent to the business of agricultural lending, Farmer Mac believes that
losses associated with the current agricultural credit cycle will be moderated by the strength and diversity
of its Agricultural Finance portfolio, which Farmer Mac believes is adequately collateralized.
Within Agricultural Finance, Farmer Mac considers a Farm & Ranch loan's original loan-to-value ratio as
one of many factors in evaluating loss severity. Loan-to-value ratios depend on the market value of a
property, as determined in accordance with Farmer Mac's collateral valuation standards. As of
December 31, 2024 and 2023, the average unpaid principal balances for Farm & Ranch loans outstanding
and to which Farmer Mac has direct credit exposure was $817,000 and $804,000, respectively. Farmer
Mac calculates the "original loan-to-value" ratio of a loan by dividing the original loan principal balance
by the original appraised property value. This calculation does not reflect any amortization of the original
loan balance or any adjustment to the original appraised value to provide a current market value. The
original loan-to-value ratio of any cross-collateralized loans is calculated on a combined basis rather than
on a loan-by-loan basis. The weighted-average original loan-to-value ratio for Farm & Ranch mortgage
loans purchased during 2024 was 49%, compared to 51% for loans purchased during 2023. The weighted-
average original loan-to-value ratio for Farm & Ranch mortgage loans and loans underlying off-balance
sheet Farmer Mac Guaranteed Securities and LTSPCs was 52% as of both December 31, 2024 and 2023.
The weighted-average original loan-to-value ratio for all 90-day delinquencies was 53% and 56% as of
December 31, 2024 and 2023, respectively.
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The weighted-average current loan-to-value ratio (the loan to-value ratio based on original appraised value
and current outstanding loan amount adjusted to reflect amortization) for Agricultural Finance mortgage
loans and loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs was 46%
and 47% as of December 31, 2024 and 2023, respectively.
The following table presents the current loan-to-value ratios for the Agricultural Finance mortgage loans
to which Farmer Mac has direct credit exposure, as disaggregated by internally assigned risk ratings:
Table 25
Agricultural Finance Mortgage Loans current loan-to-value ratio by internally assigned risk rating as of December 31, 2024
Acceptable
Special Mention
Substandard
Total
(in thousands)
Current loan-to-value ratio(1):
0.00% to 40.00%
$
3,410,214
$
87,789
$
90,478
$
3,588,481
40.01% to 50.00%
2,744,769
153,869
68,337
2,966,975
50.01% to 60.00%
2,912,634
90,581
133,328
3,136,543
60.01% to 70.00%
1,503,368
128,850
83,316
1,715,534
70.01% to 80.00%
143,100
24,348
4,857
172,305
80.01% and greater
15,748
3,815
10,282
29,845
Enterprise Value(2)
735,479
16,661
7,654
759,794
Total
$
11,465,312
$
505,913
$
398,252
$
12,369,477
(1)
The current loan-to-value ratio is based on original appraised value (or most recently obtained valuation, if available) and current outstanding loan amount
adjusted to reflect loan amortization.
(2)
"Enterprise Value" loans are generally secured by all business assets and common stock (in addition to first lien mortgages) of the borrower and the value
of the borrowing entity depends on its ability to generate recurring positive cash flow. Enterprise Value is the estimated value of the borrower as a going
concern, which is estimated using one or more valuation techniques such as discounted cash flow, cash flow multiples, asset liquidation, or other
valuation techniques.
94
The following table presents Farmer Mac's cumulative net credit losses relative to the cumulative original
balance for all Agricultural Finance mortgage loans as of December 31, 2024 by year of origination,
geographic region, and commodity/collateral type. The purpose of this table is to present information
about realized credit losses relative to original Farm & Ranch purchases, guarantees, and commitments.
Table 26
Agricultural Finance Mortgage Loans Credit Losses Relative to Cumulative
Original Loans, Guarantees, and LTSPCs as of December 31, 2024
Cumulative Original Loans,
Guarantees and LTSPCs
Cumulative Net
Credit Losses/
(Recoveries)
Cumulative Loss
Rate
(dollars in thousands)
By year of origination:
2014 and prior
$
19,926,348
$
33,785
0.17 %
2015
1,268,863
(516)
(0.04) %
2016
1,621,501
903
0.06 %
2017
1,742,186
4,311
0.25 %
2018
1,468,333
—
— %
2019
1,670,711
—
— %
2020
3,090,061
—
— %
2021
3,452,587
297
0.01 %
2022
2,074,396
455
0.02 %
2023
1,477,339
3,942
0.27 %
2024
1,837,993
—
— %
Total
$
39,630,318
$
43,177
0.11 %
By geographic region(1):
Northwest
$
4,891,785
$
12,094
0.25 %
Southwest
12,958,106
12,484
0.10 %
Mid-North
9,709,624
17,165
0.18 %
Mid-South
6,023,413
(613)
(0.01) %
Northeast
2,091,361
1,075
0.05 %
Southeast
3,956,029
972
0.02 %
Total
$
39,630,318
$
43,177
0.11 %
By commodity/collateral type:
Crops
$
18,190,130
$
3,790
0.02 %
Permanent plantings
8,422,657
14,022
0.17 %
Livestock
8,723,391
3,836
0.04 %
Part-time farm
1,990,066
1,090
0.05 %
Ag. Storage and Processing
2,052,229
20,439
1.00 %
Other
251,845
—
— %
Total
$
39,630,318
$
43,177
0.11 %
(1)
Geographic regions: Northwest (AK, ID, MT, OR, WA, WY); Southwest (AZ, CA, CO, HI, NM, NV, UT); Mid-North (IA, IL, IN, MI, MN, NE, ND,
SD, WI); Mid-South (AR, KS, LA, MO, OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NH, NJ, NY, OH, PA, RI, VA, VT, WV); Southeast (AL, FL,
GA, MS, NC, SC, TN).
95
Included in realized losses in the table above is a charge-off in the amount of approximately $0.5 million
related to a single $14.5 million agricultural storage and processing borrower exposure in 2024. Also
during 2024, Farmer Mac sold $7.0 million of the holding to reduce the overall exposure to this borrower.
That sale resulted in a realized loss in the amount of approximately $1.1 million, before tax. As of
December 31, 2024, Farmer Mac had transferred the remaining holding in the amount of approximately
$7.1 million from loans held for investment to loans held for sale and recognized an unrealized loss in the
amount of approximately $1.0 million, before tax. Thus, in 2024 Farmer Mac incurred an aggregate
economic loss on this single agricultural storage and processing exposure in the amount of approximately
$2.5 million.
Analysis of portfolio performance indicates that commodity type is the primary determinant of Farmer
Mac's exposure to loss on a given loan. The following tables present concentrations of Agricultural
Finance mortgage loans by commodity type within geographic region and cumulative credit losses by
origination year and commodity type:
Table 27
As of December 31, 2024
Agricultural Finance Mortgage Loans Concentrations by Commodity Type within Geographic Region
Crops
Permanent
Plantings
Livestock
Part-time
Farm
Ag. Storage and
Processing
Other
Total
(dollars in thousands)
By geographic region(1):
Northwest
$ 718,450
$ 234,312
$ 331,297
$ 126,136
$
36,436
$
1,376
$ 1,448,007
5.8 %
1.9 %
2.7 %
1.0 %
0.3 %
— %
11.7 %
Southwest
796,861
1,898,177
600,059
124,189
158,000
23,196
3,600,482
6.4 %
15.3 %
4.9 %
1.0 %
1.3 %
0.2 %
29.1 %
Mid-North
2,585,910
10,854
276,591
77,194
234,267
2,447
3,187,263
20.9 %
0.1 %
2.2 %
0.7 %
1.9 %
— %
25.8 %
Mid-South
1,289,845
91,847
749,904
67,707
62,869
6,770
2,268,942
10.4 %
0.7 %
6.1 %
0.5 %
0.5 %
0.1 %
18.3 %
Northeast
200,465
53,493
72,871
50,891
186,017
—
563,737
1.6 %
0.5 %
0.6 %
0.4 %
1.5 %
— %
4.6 %
Southeast
453,656
280,385
303,938
62,419
195,850
4,798
1,301,046
3.8 %
2.3 %
2.4 %
0.5 %
1.5 %
— %
10.5 %
Total
$ 6,045,187
$ 2,569,068
$ 2,334,660
$ 508,536
$
873,439
$
38,587
$ 12,369,477
48.9 %
20.8 %
18.9 %
4.1 %
7.0 %
0.3 %
100.0 %
(1)
Geographic regions: Northwest (AK, ID, MT, OR, WA, WY); Southwest (AZ, CA, CO, HI, NM, NV, UT); Mid-North (IA, IL, IN, MI, MN, NE, ND,
SD, WI); Mid-South (AR, KS, LA, MO, OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NH, NJ, NY, OH, PA, RI, VA, VT, WV); Southeast (AL, FL,
GA, MS, NC, SC, TN).
96
Table 28
As of December 31, 2024
Agricultural Loans Cumulative Credit Losses by Origination Year and Commodity Type
Crops
Permanent
Plantings
Livestock
Part-time
Farm
Ag. Storage and
Processing
Total
(in thousands)
By year of origination:
2014 and prior
$
3,427
$
9,783
$
3,836
$
1,066
$
15,673
$
33,785
2015
(540)
—
—
24
—
(516)
2016
903
—
—
—
—
903
2017
—
—
—
—
4,311
4,311
2018
—
—
—
—
—
—
2019
—
—
—
—
—
—
2020
—
—
—
—
—
—
2021
—
297
—
—
—
297
2022
—
—
—
—
455
455
2023
—
3,942
—
—
—
3,942
2024
—
—
—
—
—
—
Total
$
3,790
$
14,022
$
3,836
$
1,090
$
20,439
$
43,177
For more information about the credit quality of Farmer Mac's Agricultural Finance mortgage loans and
the associated allowance for losses please refer to Note 8 and Note 12 to the consolidated financial
statements. Activity affecting the allowance for loan losses and reserve for losses is discussed in
"Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of
Operations—Provision for and Release of Allowance for Loan Losses and Reserve for Losses."
Infrastructure Finance - Direct Credit Exposure
Farmer Mac's direct credit exposure to Infrastructure Finance loans held and loans underlying LTSPCs as
of December 31, 2024 was $5.5 billion across 45 states. For more information about Farmer Mac's
underwriting and collateral valuation standards for Infrastructure Finance loans, see "Business—Farmer
Mac's Lines of Business—Infrastructure Finance—Underwriting and Collateral Standards." As of
December 31, 2024, there was one Broadband Infrastructure borrower and one Renewable Energy
borrower classified as substandard. The total exposure on those two borrowers was $42.5 million. As of
December 31, 2023, there was one Broadband Infrastructure borrower classified as substandard, with an
unpaid principal balance of $29.4 million.
Farmer Mac evaluates credit risk of Infrastructure Finance assets by reviewing a variety of borrower credit
risk characteristics. These characteristics can include (but are not limited to) financial metrics, internal risk
ratings, ratings assigned by ratings agencies, types of customers served, sources of power supply, and the
regulatory environment.
The following table disaggregates Farmer Mac’s portfolio of Infrastructure Finance loans by portfolio
segment and by internally assigned risk ratings.
97
Table 29
As of December 31, 2024
Infrastructure Finance portfolio by internally assigned risk rating
Acceptable
Special Mention
Substandard
Total
(in thousands)
Distribution Cooperative
$
2,583,858 $
— $
— $
2,583,858
Generation and Transmission Cooperative
704,365
—
—
704,365
Renewable Energy
1,403,169
—
13,356
1,416,525
Broadband Infrastructure
738,946
34,388
29,132
802,466
Infrastructure Finance Total
$
5,430,338 $
34,388 $
42,488 $
5,507,214
For more information about the credit quality of Farmer Mac's Infrastructure Finance portfolio and the
associated allowance for losses please refer to Notes 8 and 12 of the consolidated financial statements.
Other Considerations Regarding Credit Risk Related to Loans and Guarantees
The credit exposure on USDA Securities, including those underlying Farmer Mac Guaranteed USDA
Securities, is guaranteed by the full faith and credit of the United States. Therefore, Farmer Mac believes
that we have little or no credit risk exposure to the USDA Securities in the Agricultural Finance line of
business because of the USDA guarantee. As of December 31, 2024, Farmer Mac had not experienced any
credit losses on any USDA Securities or Farmer Mac Guaranteed USDA Securities and does not expect to
incur any such losses in the future. Because we do not expect credit losses on this portfolio, Farmer Mac
does not provide an allowance for losses on its portfolio of USDA Securities.
Farmer Mac requires many lenders to make representations and warranties about the conformity of
Agricultural Finance mortgage loans to Farmer Mac's standards, the accuracy of loan data provided to
Farmer Mac, and other requirements related to the loans. Sellers who make these representations and
warranties are responsible to Farmer Mac for breaches of those representations and warranties. Farmer
Mac has the ability to require a seller to cure, replace, or repurchase a loan sold or transferred to Farmer
Mac if any breach of a representation or warranty is discovered that was material to Farmer Mac's decision
to purchase the loan or that directly or indirectly causes a default or potential loss on a loan sold or
transferred by the seller to Farmer Mac. During the previous three years ended December 31, 2024, there
have been no breaches of representations and warranties by sellers that resulted in Farmer Mac requiring a
seller to cure, replace, or repurchase a loan. In addition to relying on the representations and warranties of
sellers, Farmer Mac also underwrites the Agricultural Finance mortgage loans (other than rural housing
and part-time farm mortgage loans) and Infrastructure Finance loans on which it has direct credit
exposure. For rural housing and part-time farm mortgage loans, Farmer Mac relies on representations and
warranties from the seller that those loans conform to Farmer Mac's specified underwriting criteria. For
more information about Farmer Mac's loan eligibility requirements and underwriting standards, see
"Business—Farmer Mac's Lines of Business—Agricultural Finance—Loan Eligibility," "Business—
Farmer Mac's Lines of Business—Agricultural Finance—Underwriting and Collateral Standards—Farm &
Ranch," "Business—Farmer Mac's Lines of Business—Agricultural Finance—Underwriting and
Collateral Standards—Corporate AgFinance," and "Business—Farmer Mac's Lines of Business—
Infrastructure Finance—Underwriting and Collateral Standards."
Under contracts with Farmer Mac and in consideration for servicing fees, Farmer Mac-approved servicers
service loans in accordance with Farmer Mac's requirements. Servicers are responsible to Farmer Mac for
material errors in the servicing of those loans. If a servicer materially breaches the terms of its servicing
98
agreement with Farmer Mac, such as failing to forward payments received or releasing collateral without
Farmer Mac's consent, or experiences insolvency or bankruptcy, the servicer is responsible for any
corresponding damages to Farmer Mac and, in most cases, Farmer Mac has the right to terminate the
servicing relationship for a particular loan or the entire portfolio serviced by the servicer. Farmer Mac also
can proceed against the servicer in arbitration or exercise any remedies available to it under law. In
September 2024, Farmer Mac notified a field servicer of a breach of its servicing duties and the
termination of the servicing relationship for two large borrower relationships effective October 1, 2024.
That was Farmer Mac's only exercise of remedies or taking of formal action against any servicers during
the previous three years ended December 31, 2024. For more information about Farmer Mac's servicing
requirements, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Loan Servicing"
and "Business—Farmer Mac's Lines of Business—Infrastructure Finance—Lenders and Loan Servicing."
Credit Risk – Counterparty Risk. Farmer Mac is exposed to credit risk arising from its business
relationships with other institutions, which include:
•
issuers of AgVantage securities;
•
approved lenders and servicers; and
•
interest rate swap counterparties.
Farmer Mac approves AgVantage counterparties and manages institutional credit risk related to those
AgVantage counterparties by requiring them to meet Farmer Mac's standards for creditworthiness for the
particular counterparty type and transaction. The required collateralization level is established when the
AgVantage facility is entered into with the counterparty and does not change during the life of the
AgVantage securities issued under the facility without Farmer Mac's consent. In AgVantage transactions,
the corporate obligor is typically required to remove from the pool of pledged collateral loans that become
and remain (within specified parameters) delinquent in the payment of principal or interest and to
substitute eligible loans that are current in payment or pay down the AgVantage securities to maintain the
minimum required collateralization level.
In the event of a default on an AgVantage security, Farmer Mac would have recourse to the pledged
collateral and have rights to the ongoing borrower payments of principal and interest. As a result, Farmer
Mac has indirect credit exposure to the Agricultural Finance mortgage loans and Infrastructure loans that
secure AgVantage securities. For AgVantage counterparties that are institutional real estate investors or
financial funds and other similar entities, Farmer Mac also typically requires that the counterparty
(1) maintain a higher collateralization level, through either a higher overcollateralization percentage or
lower loan-to-value ratio thresholds and (2) comply with specified financial covenants for the life of the
related AgVantage security to avoid default. As of December 31, 2024, Farmer Mac had not experienced
any credit losses on any AgVantage securities over the life of the program. For a more detailed description
of AgVantage securities, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Other
Products – Agricultural Finance—AgVantage Securities" and "Business—Farmer Mac's Lines of Business
—Infrastructure Finance—Other Products – Infrastructure Finance—AgVantage Securities."
The unpaid principal balance of outstanding on-balance sheet AgVantage securities secured by loans
eligible for the Agricultural Finance line of business totaled $5.0 billion as of December 31, 2024 and $6.1
billion as of December 31, 2023. The unpaid principal balance of on-balance sheet AgVantage securities
secured by loans eligible for the Infrastructure Finance line of business totaled $3.5 billion as of
December 31, 2024 and $3.9 billion as of December 31, 2023.
99
The following table provides information about the issuers of AgVantage securities and the required
collateralization levels for those transactions as of December 31, 2024 and 2023:
Table 30
As of December 31, 2024
As of December 31, 2023
Counterparty
Balance
Required
Collateralization
Balance
Required
Collateralization
(dollars in thousands)
AgVantage:
CFC
$
3,521,143
100%
$
3,898,468
100%
MetLife
2,050,000
103%
2,050,000
103%
Rabo AgriFinance
2,020,000
105%
3,085,000
105%
Other(1)
930,297
100% to 125%
988,879
100% to 125%
Total outstanding
$
8,521,440
$ 10,022,347
(1)
Consists of AgVantage securities issued by 9 and 8 different issuers as of December 31, 2024 and 2023, respectively.
Farmer Mac manages institutional credit risk related to lenders and servicers by requiring those
institutions to meet Farmer Mac's standards for creditworthiness. Farmer Mac monitors the financial
condition of those institutions by evaluating financial statements and credit rating agency reports. For
more information about Farmer Mac's lender eligibility requirements, see "Business—Farmer Mac's Lines
of Business—Agricultural Finance—Lenders" and "Business—Farmer Mac's Lines of Business—
Infrastructure Finance—Lenders and Loan Servicing."
Farmer Mac manages institutional credit risk related to its interest rate swap counterparties through
collateralization provisions contained in each of its swap agreements that vary based on the market value
of its swap portfolio with each counterparty. Farmer Mac and its interest rate swap counterparties are
required to fully collateralize their derivatives positions without any minimum threshold for cleared swap
transactions, as well as for non-cleared swap transactions entered into after March 1, 2017. Farmer Mac
transacts interest rate swaps with multiple counterparties to reduce counterparty credit exposure
concentration. Farmer Mac's usage of cleared derivatives has increased over time as has its exposure to
clearinghouses. The usage of cleared swap transactions reduces Farmer Mac's exposure to individual
counterparties with the central clearinghouse acting to settle the change in value of contracts on a daily
basis. Credit risk related to interest rate swap contracts is discussed in "Management's Discussion and
Analysis of Financial Condition and Results of Operations—Risk Management—Interest Rate Risk" and
Note 6 to the consolidated financial statements.
Credit Risk – Other Investments. As of December 31, 2024, Farmer Mac had $1.0 billion of cash and cash
equivalents and $6.0 billion of investment securities. The management of the credit risk inherent in these
investments is governed by Farmer Mac's internal policies as well as FCA regulations, which can be found
at 12 C.F.R. §§ 652.1-652.45 ("Liquidity and Investment Regulations"). In addition to establishing a
portfolio of highly liquid investments as an available source of cash, the goals of Farmer Mac's investment
policies are designed to minimize Farmer Mac's exposure to financial market volatility, preserve capital,
and support Farmer Mac's access to the debt markets.
The Liquidity and Investment Regulations and Farmer Mac's internal policies require that investments
held in Farmer Mac's investment portfolio meet the following creditworthiness standards: (1) at a
minimum, at least one obligor of the investment must have a very strong capacity to meet financial
commitments for the life of the investment, even under severely adverse or stressful conditions, and
generally present a very low risk of default; (2) if the obligor whose capacity to meet financial
100
commitments is being relied upon to meet the standard set forth in subparagraph (1) is located outside of
the United States, the investment must also be fully guaranteed by a U.S. government agency; and (3) the
investment must exhibit low credit risk and other risk characteristics consistent with the purpose or
purposes for which it is held.
The Liquidity and Investment Regulations and Farmer Mac's internal policies also establish concentration
limits, which are intended to limit exposure to any single entity, issuer, or obligor. The Liquidity and
Investment Regulations limit Farmer Mac's total credit exposure to any single entity, issuer, or obligor of
securities to 10% of Farmer Mac's regulatory capital ($152.6 million as of December 31, 2024). However,
Farmer Mac's current policy limits this total credit exposure to 5% of its regulatory capital ($76.3 million
as of December 31, 2024). These exposure limits do not apply to obligations of U.S. government agencies
or GSEs, although Farmer Mac's current policy restricts investing more than 100% of regulatory capital in
the senior non-convertible debt securities of any one GSE.
Although the Liquidity and Investments Regulations do not establish limits on the maximum amount,
expressed as a percentage of Farmer Mac's investment portfolio, that can be invested in each eligible asset
class, Farmer Mac's internal policies set forth asset class limits as part of Farmer Mac's overall risk
management framework.
Interest Rate Risk. Farmer Mac is subject to interest rate risk on all interest-earning assets on its balance
sheet because of timing differences in the cash flows due to maturity, paydown, or repricing of the assets
and debt together with financial derivatives. Cash flow mismatches due to changing interest rates can
reduce the earnings of Farmer Mac if assets prepay sooner than expected and the resulting cash flows must
be reinvested in lower-yielding investments when Farmer Mac's funding costs cannot be correspondingly
reduced. Alternatively, Farmer Mac could realize a decline in income if assets repay more slowly than
originally forecasted and the associated maturing debt must be replaced by debt issuances at higher
interest rates.
Interest Rate Risk Management
The goal of interest rate risk management at Farmer Mac is to manage the balance sheet in a manner that
generates stable earnings and value across a variety of interest rate environments. Recognizing that
interest rate sensitivities may change with the passage of time and as interest rates change, Farmer Mac
regularly assesses this exposure and, if necessary, adjusts its portfolio of interest-earning assets, debt, and
financial derivatives.
Farmer Mac seeks to maintain its exposure to interest rate risk within appropriate limits, as approved by
Farmer Mac's board of directors. Farmer Mac's management-level Asset and Liability Committee
("ALCO") provides oversight, establishes guidelines, and approves strategies to maintain interest rate risk
within the board-established limits.
Farmer Mac's primary strategy for managing interest rate risk is to fund asset purchases with debt that
together with financial derivatives have similar duration and convexity characteristics and help mitigate
impacts from interest rate changes across the yield curve. As part of this strategy, Farmer Mac seeks to
issue debt securities across a variety of maturities that together with financial derivatives closely align the
forecasted debt and financial derivative cash flows with forecasted asset cash flows.
101
Farmer Mac issues discount notes and both callable and non-callable medium-term notes across a
spectrum of maturities to execute its debt issuance strategy. Portions of Farmer Mac's callable debt is
issued to mitigate prepayment risk associated with certain interest-earning assets held on balance sheet. In
general, as interest rates decline, asset prepayments typically increase, and Farmer Mac may be able to
economically extinguish certain callable debt issuances. In addition, Farmer Mac enters into financial
derivatives, primarily interest rate swaps, to better match the durations of Farmer Mac's assets and
liabilities, thereby reducing overall sensitivity to changing interest rates.
Taking into consideration the prepayment provisions and the default probabilities associated with its
portfolio of interest-earning assets, Farmer Mac incorporates behavioral models when projecting and
valuing cash flows associated with these assets. In recognition that borrowers' behaviors in various interest
rate environments may change over time, Farmer Mac periodically evaluates the effectiveness of these
models compared to actual prepayment experience and adjusts and refines the models as necessary to
improve the precision of future prepayment forecasts.
Changes in interest rates may affect the timing of asset prepayments which may, in turn, impact durations
and values of the assets. Declining interest rates generally result in increased prepayments, which shortens
the duration of these assets, while rising interest rates generally result in lower prepayments, thereby
extending the duration of the assets.
Farmer Mac is subject to interest rate risk on loans and securities it has committed to acquire but not yet
purchased (other than delinquent loans purchased through LTSPCs or loans designated for securitization
under a forward purchase agreement). When Farmer Mac commits to purchase these assets, it is exposed
to interest rate risk between the time it commits to purchase the loans and the time it issues debt to fund
the purchase of these loans. Farmer Mac manages the interest rate risk exposure related to these loans by
entering into exchange-traded futures contracts involving U.S. Treasury securities and other financial
derivatives. Similarly, when Farmer Mac commits to sell certain assets, the associated interest rate
exposure is primarily managed with exchange-traded futures contracts involving U.S. Treasury securities
and other financial derivatives.
Farmer Mac's $1.0 billion of cash and cash equivalents held as of December 31, 2024 mature within three
months. As of December 31, 2024, $2.7 billion of the $6.0 billion of investment securities (46%) were
floating rate securities with rates that adjust within one year or fixed rate securities with original maturities
between three months and one year. Farmer Mac's floating rate investment securities are primarily funded
with floating rate debt. The fixed rate investment securities are generally funded in a manner consistent
with Farmer Mac's overall funding strategy that approximates a duration and convexity match.
Interest Rate Risk Metrics
Farmer Mac regularly evaluates and conducts interest rate shock simulations on its portfolio of financial
assets, debt, and financial derivatives and examines a variety of metrics to quantify and manage its
exposure to interest rate risk. These metrics include sensitivity to interest rate movements on the market
value of equity ("MVE") and forecasted net effective spread ("NES") as well as a duration gap analysis.
MVE represents management's estimate of the present value of all future cash flows from its current
portfolio of on- and off-balance sheet assets, liabilities, and financial derivatives, discounted at current
interest rates and appropriate spreads. However, MVE is not indicative of the market value of Farmer Mac
as a going concern because these market values are theoretical and do not reflect future business activities.
102
The MVE sensitivity analysis measures the degree to which the market values of Farmer Mac's assets,
liabilities, and financial derivatives are estimated to change for a given change in interest rates.
Farmer Mac's NES simulation represents the difference between projected income over the next twelve
months from the current portfolio of interest-earning assets and interest expense produced by the related
funding, including associated financial derivatives. Farmer Mac's NES simulation may be impacted by
changes in market interest rates resulting from timing differences between maturities and re-pricing
characteristics of funded assets and debt together with the associated financial derivatives. The direction
and magnitude of any such effect depends on the direction and magnitude of the change in interest rates
across the yield curve as well as the composition of Farmer Mac's portfolio. The NES simulation
represents an estimate of the net effective spread income that Farmer Mac's current portfolio is expected to
produce over a twelve-month horizon. As a result, the NES simulation sensitivity statistics provide a
short-term view of Farmer Mac's NES income sensitivity to interest rate shocks.
Duration is a measure of a financial instrument's fair value sensitivity to small changes in interest rates.
Duration gap is calculated using the net estimated durations of Farmer Mac's interest-earning assets, debt,
and financial derivatives. Duration gap quantifies the extent to which estimated fair value sensitivities are
matched for interest-earning assets, debt and financial derivatives. Duration gap provides a relatively
concise measure of the interest rate risk inherent in Farmer Mac's outstanding portfolio.
A positive duration gap denotes that the duration of Farmer Mac's interest-earning assets is greater than
the duration of its debt and financial derivatives. A positive duration gap indicates that with small changes
in interest rate movements the fair value change of Farmer Mac's interest-earning assets is more sensitive
than the fair value change of its debt and financial derivatives. Conversely, a negative duration gap
indicates that with small changes in interest rate movements the fair value change of Farmer Mac's
interest-earning assets are less sensitive than the fair value change of its debt and financial derivatives. A
duration gap of zero indicates that with small changes in interest rate movements the fair value change of
Farmer Mac's interest-earning assets is effectively offset by the fair value change of its debt and financial
derivatives.
Each of the interest rate risk metrics is quantified using asset/liability models and derived based on
management's best estimates of factors such as implied forward interest rates across the yield curve,
interest rate volatility, and timing of asset prepayments and callable debt redemptions. Accordingly, these
metrics are estimates rather than precise measurements. Actual results may differ to the extent there are
material changes to Farmer Mac's financial asset portfolio or changes in funding or hedging strategies
undertaken to mitigate unfavorable sensitivities to interest rate changes.
103
The following schedule summarizes the results of Farmer Mac's MVE and NES sensitivity analysis as of
December 31, 2024 and 2023 to an immediate and instantaneous uniform or "parallel" shift in the yield
curve:
Table 31
Percentage Change in MVE from Base Case
Interest Rate Scenario
As of December 31, 2024
As of December 31, 2023
+100 basis points
(4.0) %
(3.6) %
-100 basis points
3.6 %
2.9 %
Percentage Change in NES from Base Case
Interest Rate Scenario
As of December 31, 2024
As of December 31, 2023
+100 basis points
(0.8) %
— %
-100 basis points
1.6 %
0.8 %
As of December 31, 2024, Farmer Mac maintained a positive effective duration gap of 3.7 months, up
from the 3.4 months reported as of December 31, 2023. Since the end of 2023, the yield curve has
steepened, with the yield on 2-year U.S. Treasury Notes decreasing by approximately 1 basis point and the
yield on 10-year U.S. Treasury Notes increasing by about 69 basis points.. This shift in rates contributed
to an extension in the duration of Farmer Mac's funded assets relative to its liabilities and financial
derivatives.
Financial Derivatives Transactions
The economic effects of financial derivatives are included in Farmer Mac's MVE, NES, and duration gap
analyses. Farmer Mac typically enters into the following types of financial derivative transactions
principally to protect against risk from the effects of market price or interest rate movements on the value
of interest-earning assets, future cash flows, and debt issuance, and not for trading or speculative purposes:
•
"pay-fixed" interest rate swaps, in which Farmer Mac pays fixed rates of interest to, and receives
floating rates of interest from, counterparties;
•
"receive-fixed" interest rate swaps, in which Farmer Mac receives fixed rates of interest from, and
pays floating rates of interest to, counterparties;
•
"basis swaps," in which Farmer Mac pays floating rates of interest based on one index to, and
receives floating rates of interest based on a different index from, counterparties; and
•
exchange-traded futures contracts involving U.S. Treasury securities.
As of December 31, 2024, Farmer Mac had $24.9 billion combined notional amount of interest rate swaps,
with terms ranging from less than one year to approximately thirty years, of which $10.4 billion were pay-
fixed interest rate swaps, $13.9 billion were receive-fixed interest rate swaps, and $0.7 billion were basis
swaps.
Farmer Mac enters into interest rate swaps to more closely match the cash flow and duration
characteristics of its interest-earning assets with those of its debt. For example, Farmer Mac transacts pay-
fixed interest rate swaps and issues floating rate debt to effectively create fixed rate funding that
approximately matches the duration of the corresponding fixed rate assets being funded. Farmer Mac
evaluates the overall cost of using interest rate swaps in conjunction with debt issuance as a funding
104
alternative to duration-matched debt and enters into interest rate swaps to manage interest rate risks across
the balance sheet.
Certain financial derivatives are designated as fair value hedges of fixed rate assets classified as available-
for-sale or liabilities to protect against fair value changes in the assets or liabilities related to a benchmark
interest rate (e.g. SOFR). Also, certain financial derivatives are designated as cash flow hedges to mitigate
the volatility of future interest rate payments on floating rate debt.
As discussed in Note 6 to the consolidated financial statements, all financial derivatives are recorded on
the balance sheet at fair value as derivative assets or as derivative liabilities. Changes in the fair values of
undesignated financial derivatives are reported in "Gains on financial derivatives" in the consolidated
statements of operations. For financial derivatives designated in fair value hedge accounting relationships,
changes in the fair values of the hedged items related to the risk being hedged are reported in "Net interest
income" in the consolidated statements of operations. Interest accruals on derivatives designated in fair
value hedge accounting relationships are also recorded in "Net interest income" in the consolidated
statements of operations. For financial derivatives designated in cash flow hedge accounting relationships,
the unrealized gain or loss on the derivative is recorded in other comprehensive income. Because the
hedging instrument is an interest rate swap and the hedged forecasted transactions are future interest
payments on floating rate debt, amounts recorded in accumulated other comprehensive income are
reclassified to "Total interest expense" in conjunction with the recognition of interest expense on the debt.
All of Farmer Mac's interest rate swap transactions are conducted under standard collateralized
agreements that limit Farmer Mac's potential credit exposure to any counterparty. As of both
December 31, 2024 and 2023, Farmer Mac had no uncollateralized net exposures based on the mark-to-
market value of the portfolio of interest rate swaps.
Re-funding and repricing risk
Farmer Mac is subject to re-funding and repricing risk on any floating rate assets that are not funded to
contractual maturity. Re-funding and repricing risk arises from potential changes in funding costs resulting
from a funding strategy whereby Farmer Mac issues floating rate debt across a variety of maturities to
fund floating rate or synthetically floating rate assets that on average may have longer maturities. Changes
in Farmer Mac's funding costs relative to the benchmark market index rate to which the assets are indexed
can cause changes to net interest income when debt matures and is reissued at then current interest rates to
continue funding those assets.
Farmer Mac is subject to re-funding and repricing risk on a portion of its fixed rate assets as a result of its
use of pay-fixed receive-floating interest rate swaps that effectively convert the required funding needed
from fixed rate to floating rate. These fixed rate assets are then effectively floating rate assets that require
floating rate funding.
Farmer Mac can meet floating rate funding needs in several ways, including:
•
issuing short-term fixed rate discount notes with maturities that match the reset period of the
assets;
•
issuing floating rate medium-term notes with maturities and reset frequencies that match the assets
being funded;
•
issuing non-maturity matched, floating rate medium-term notes with reset frequencies that match
the assets being funded; or
105
•
issuing non-maturity matched, fixed rate discount notes or medium-term notes swapped to floating
rate to match the interest rate reset dates of the assets.
To meet certain floating rate funding needs, Farmer Mac frequently issues shorter-term floating-rate
medium-term notes or fixed rate medium-term notes paired with a received-fixed interest rate swap
because these funding alternatives generally provide a lower cost of funding while generating an effective
interest rate match. As funding for these floating rate assets matures, Farmer Mac seeks to refinance the
debt associated with these assets in a similar fashion to achieve an appropriate interest rate match in the
context of Farmer Mac's overall debt issuance and liquidity management strategies. However, if the
funding cost of Farmer Mac’s discount notes or medium-term notes increased relative to the benchmark
market index of the associated assets during the time between when these floating rate assets were first
funded and when Farmer Mac refinanced the associated debt, Farmer Mac would be exposed to a
commensurate reduction of net effective spread. Conversely, if the funding cost on Farmer Mac’s discount
notes or medium-term notes decreased relative to the benchmark market index during that time, Farmer
Mac would benefit from a commensurate increase to net effective spread.
Farmer Mac's debt issuance strategy targets balancing liquidity risk and re-funding and repricing risk
while maintaining an appropriate liability management profile that is consistent with Farmer Mac's risk
tolerance. Farmer Mac regularly adjusts its funding strategies to mitigate the effects of interest rate
variability and seeks to maintain an effective mixture of funding structures in the context of its overall
liability and liquidity management strategies.
As of December 31, 2024, Farmer Mac held $7.4 billion of floating rate assets in its lines of business and
its investment portfolio that reset based on floating rate market indices, such as the Secured Overnight
Financing Rate ("SOFR"). As of the same date, Farmer Mac also had $10.4 billion of interest rate swaps
outstanding where Farmer Mac pays a fixed rate of interest and receives a floating rate of interest,
primarily SOFR.
Liquidity and Capital Resources
Farmer Mac's primary sources of funds to meet its liquidity and funding needs are the proceeds of its debt
issuances, guarantee and commitment fees, net effective spread, loan repayments, and repayments of
AgVantage and investment securities. Farmer Mac regularly accesses the debt capital markets for funding,
and Farmer Mac maintained steady access to the debt capital markets throughout 2024. Farmer Mac funds
its purchases of eligible loan assets, USDA Securities, Farmer Mac Guaranteed Securities, and investment
assets and finances its operations primarily by issuing debt obligations of various maturities in the debt
capital markets. As of December 31, 2024, Farmer Mac had outstanding discount notes of $2.2 billion,
medium-term notes that mature within one year of $8.3 billion, and medium-term notes that mature after
one year of $17.1 billion.
Assuming continued access to the debt capital markets, Farmer Mac believes it has sufficient liquidity and
capital resources to support its operations for the next 12 months and for the foreseeable future. Farmer
Mac has a contingency funding plan to manage unanticipated disruptions in its access to the debt capital
markets. Farmer Mac must maintain a minimum of 90 days of liquidity under the Liquidity and
Investment Regulations. In accordance with the methodology for calculating available days of liquidity
under those regulations, Farmer Mac maintained a monthly average of 301 days of liquidity throughout
2024 and had 264 days of liquidity as of December 31, 2024.
106
Farmer Mac maintains cash, cash equivalents (including U.S. Treasury securities, operational deposits,
and other short-term money market instruments), and other investment securities that can be drawn upon
for liquidity needs. Farmer Mac's liquidity investments must comply with policies adopted by Farmer
Mac's board of directors and with FCA's Liquidity and Investment Regulations, which establish
limitations on asset class, dollar amount, issuer concentration, and credit quality.
The following table presents these assets as of December 31, 2024 and 2023:
Table 32
As of December 31, 2024
As of December 31, 2023
(in thousands)
Cash and cash equivalents
$
1,024,007
$
888,707
Investment securities:
Guaranteed by U.S. Government and its agencies
1,634,951
1,249,568
Guaranteed by GSEs
4,307,857
3,704,037
Asset-backed securities
19,476
19,082
Total
$
6,986,291
$
5,861,394
The objectives of the investment portfolio as of December 31, 2024 and 2023 are to provide a level of
liquidity that mitigates enterprise risk, provides a reliable source of short-term and long-term liquidity and
to support program asset growth.
Capital Requirements. Farmer Mac is subject to the following statutory capital requirements – minimum,
critical, and risk-based. Farmer Mac must comply with the higher of the minimum capital requirement and
the risk-based capital requirement. As of December 31, 2024, Farmer Mac was in compliance with its
statutory capital requirements and was classified as within "level 1" (the highest compliance level).
In accordance with the FCA's rule on capital planning, Farmer Mac's board of directors has adopted a
policy for maintaining a sufficient level of "Tier 1" capital (consisting of retained earnings, paid-in capital,
common stock, and qualifying preferred stock). That policy restricts Tier 1-eligible dividends and any
discretionary bonus payments if Tier 1 capital falls below specified thresholds. As of December 31, 2024
and 2023, Farmer Mac's Tier 1 capital ratio was 14.2% and 15.4%, respectively. As of December 31,
2024, Farmer Mac was in compliance with its capital adequacy policy. Farmer Mac does not expect its
compliance on an ongoing basis with the FCA's rule on capital planning, including Farmer Mac's policy
on Tier 1 capital, to materially affect Farmer Mac's operations or financial condition.
For more information about the capital requirements applicable to Farmer Mac, its capital adequacy
policy, and the FCA's rule on capital planning, see "Business—Government Regulation of Farmer Mac—
Capital Standards." See Note 9 to the consolidated financial statements for more information about Farmer
Mac's capital position.
Discount and Medium-term Notes. The following table presents the amount and timing of Farmer Mac's
known, fixed, and determinable discount and medium-term note obligations by payment date as of
December 31, 2024. The payment amounts represent those amounts due to the investor (including return
of discount and interest on debt) and do not include unamortized premiums or discounts or other similar
carrying value adjustments.
107
Table 33
One Year
or Less
One to
Three Years
Three to
Five Years
Over Five
Years
Total
(in thousands)
Discount notes(1)
$ 2,187,992
$
—
$
—
$
—
$ 2,187,992
Medium-term notes(1)
8,271,327
8,671,819
5,230,031
3,196,125
25,369,302
Interest payments on fixed rate medium-term notes(2)
596,221
790,174
361,132
254,434
2,001,961
Interest payments on floating rate medium-term notes(3)
129,862
106,885
45,716
22,516
304,979
(1)
Future events, including additional issuance of discount notes and medium-term notes and refinancing of those notes, could cause actual payments to
differ significantly from these amounts. For more information about discount notes and medium-term notes, see Note 7 to the consolidated financial
statements.
(2)
Interest payments on callable medium-term notes are calculated based on maturity. Future calls of these notes could cause actual interest payments to
differ significantly from the amounts presented.
(3)
Calculated using the effective interest rates as of December 31, 2024. As a result, these amounts do not reflect the effects of changes in the interest rates
effective on future interest rate reset dates.
Farmer Mac enters into financial derivatives contracts under which it either receives cash from
counterparties, or is required to pay cash to them, depending on changes in interest rates. Financial
derivatives are carried on the consolidated balance sheets at fair value, representing the net present value
of expected future cash payments or receipts based on market interest rates as of the balance sheet date
adjusted for the consideration of credit risk of Farmer Mac and its counterparties. The fair values of the
contracts change daily as market interest rates change. Because the financial derivative liabilities recorded
on the consolidated balance sheet as of December 31, 2024 do not represent the amounts that may
ultimately be paid under the financial derivative contracts, those liabilities are not included in the table
presented above. More information about financial derivatives is included in Note 2(f) and Note 6 to the
consolidated financial statements.
Contingent Liabilities. In conducting its loan purchase activities, Farmer Mac enters into mandatory
delivery commitments to purchase agricultural mortgage loans and USDA Securities. In conducting its
LTSPC activities, Farmer Mac commits, subject to the applicable LTSPC agreement, to a future purchase
of one or more loans from identified pools of eligible loans that met Farmer Mac's standards when the
applicable transaction was entered into and Farmer Mac assumed the credit risk on the loans. The
following table presents these significant commitments:
Table 34
As of December 31,
2024
2023
(in thousands)
LTSPCs and purchase commitments
$
4,029,019
$
3,680,333
Mandatory commitments to purchase loans and USDA Securities
53,980
31,049
For more information about Farmer Mac's commitments to purchase loans, see Note 12 to the
consolidated financial statements.
Off-Balance Sheet Arrangements
Farmer Mac offers approved lenders two credit enhancement alternatives to increase their liquidity or
lending capacity while retaining the cash flow benefits of their loans: (1) certain categories of Farmer Mac
Guaranteed Securities; and (2) LTSPCs. Both products are available through each of the Agricultural
Finance and Infrastructure Finance lines of business. For securitization trusts where Farmer Mac is the
primary beneficiary, the trust assets and liabilities are included on Farmer Mac's consolidated balance
108
sheet. For securitization trusts where Farmer Mac is not the primary beneficiary and in the event of
deconsolidation, both of these alternatives create off-balance sheet obligations for Farmer Mac. See Note
12 to the consolidated financial statements for more information about consolidation and Farmer Mac's
off-balance sheet business activities.
As of December 31, 2024 and 2023, outstanding off-balance sheet LTSPCs and Farmer Mac Guaranteed
Securities totaled $4.5 billion and $4.1 billion, respectively. The following table presents the balance of
outstanding LTSPCs, off-balance sheet Farmer Mac Guaranteed Securities, and unfunded loan
commitments as of December 31, 2024 and 2023:
Table 35
Outstanding Balance of LTSPCs and
Off-Balance Sheet Farmer Mac Guaranteed Securities
As of December 31,
2024
2023
(in thousands)
Agricultural Finance:
Corporate AgFinance:
Unfunded loan commitments
$
225,734
$
145,377
Farm & Ranch:
LTSPCs and unfunded loan commitments
3,070,554
2,999,943
Farmer Mac Guaranteed Securities
426,310
452,602
Total Agricultural Finance obligations
3,722,598
3,597,922
Infrastructure Finance:
Power & Utilities:
LTSPCs and unfunded loan commitments
401,647
464,743
Broadband Infrastructure:
Unfunded loan commitments
180,259
23,035
Renewable Energy:
Unfunded loan commitments
150,825
47,235
Total Infrastructure Finance obligations
732,731
535,013
Total off-balance sheet
$
4,455,329
$
4,132,935
See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk
Management—Credit Risk – Loans and Guarantees" and Notes 2(c), 2(e), 5 and 12 to the consolidated
financial statements for more information about Farmer Mac Guaranteed Securities and Notes 2(m) and 12
to the consolidated financial statements for more information about LTSPCs.
Other Matters
None.
109
Supplemental Information
The following tables present quarterly and annual information about new business volume, repayments,
and outstanding business volume:
Table 36
New Business Volume
Agricultural Finance
Infrastructure Finance
Farm &
Ranch
Corporate
AgFinance
Power &
Utilities
Broadband
Infrastructure
Renewable
Energy
Total
(in thousands)
For the quarter ended:
December 31, 2024
$
1,034,489 $
313,123
$
78,018
$
209,729
$
496,437
$
2,131,796
September 30, 2024
776,023
307,325
360,950
187,021
357,659
1,988,978
June 30, 2024
698,787
288,740
132,958
102,075
271,890
1,494,450
March 31, 2024
665,916
290,525
113,545
2,250
347,898
1,420,134
December 31, 2023
1,282,045
188,272
404,908
29,603
225,986
2,130,814
September 30, 2023
1,384,273
275,932
557,043
50,936
17,390
2,285,574
June 30, 2023
1,574,169
218,136
205,236
89,056
71,611
2,158,208
March 31, 2023
469,013
203,211
590,412
92,819
89,747
1,445,202
December 31, 2022
1,114,255
165,395
71,278
68,944
43,737
1,463,609
For the year ended:
December 31, 2024
$
3,175,215 $
1,199,713
$
685,471
$
501,075
$
1,473,884
$
7,035,358
December 31, 2023
4,709,500
885,551
1,757,599
262,414
404,734
8,019,798
110
Table 37
Repayments of Assets
Agricultural Finance
Infrastructure Finance
Farm &
Ranch
Corporate
AgFinance
Power &
Utilities
Broadband
Infrastructure
Renewable
Energy
Total
(in thousands)
For the quarter ended:
Scheduled
$
41,265 $
231,672
$
38,003
$
52,970
$
174,920
$
538,830
Unscheduled
120,505
36,526
25,084
—
—
182,115
December 31, 2024
$
161,770 $
268,198
$
63,087
$
52,970
$
174,920
$
720,945
Scheduled
$
1,079,136 $
239,596
$
548,161
$
94,513
$
138,123
$
2,099,529
Unscheduled
117,538
41,842
26,629
—
—
186,009
September 30, 2024
$
1,196,674 $
281,438
$
574,790
$
94,513
$
138,123
$
2,285,538
Scheduled
$
752,473 $
141,565
$
62,237
$
16,062
$
138,725
$
1,111,062
Unscheduled
342,594
89,576
32,984
—
—
465,154
June 30, 2024
$
1,095,067 $
231,141
$
95,221
$
16,062
$
138,725
$
1,576,216
Scheduled
$
402,088 $
118,885
$
90,096
$
36,218
$
93,112
$
740,399
Unscheduled
150,903
99,325
32,481
—
—
282,709
March 31, 2024
$
552,991 $
218,210
$
122,577
$
36,218
$
93,112
$
1,023,108
Scheduled
$
827,122 $
133,468
$
40,122
$
13,492
$
69,040
$
1,083,244
Unscheduled
106,041
102,131
18,469
—
—
226,641
December 31, 2023
$
933,163 $
235,599
$
58,591
$
13,492
$
69,040
$
1,309,885
Scheduled
$
922,223 $
110,383
$
75,031
$
5,967
$
14,716
$
1,128,320
Unscheduled
108,960
104,999
20,578
—
—
234,537
September 30, 2023
$
1,031,183 $
215,382
$
95,609
$
5,967
$
14,716
$
1,362,857
Scheduled
$
1,050,480 $
81,386
$
553,860
$
5,084
$
52,203
$
1,743,013
Unscheduled
96,507
55,976
13,138
—
—
165,621
June 30, 2023
$
1,146,987 $
137,362
$
566,998
$
5,084
$
52,203
$
1,908,634
Scheduled
$
279,676 $
78,482
$
42,475
$
53,334
$
11,424
$
465,391
Unscheduled
231,288
128,254
57,354
—
—
416,896
March 31, 2023
$
510,964 $
206,736
$
99,829
$
53,334
$
11,424
$
882,287
Scheduled
$
447,976 $
64,308
$
71,624
$
4,047
$
9,809
$
597,764
Unscheduled
136,245
132,366
1,201
—
—
269,812
December 31, 2022
$
584,221 $
196,674
$
72,825
$
4,047
$
9,809
$
867,576
For the year ended:
Scheduled
$
2,274,962 $
731,718
$
738,497
$
199,763
$
544,880
$
4,489,820
Unscheduled
731,540
267,269
117,178
—
—
1,115,987
December 31, 2024
$
3,006,502 $
998,987
$
855,675
$
199,763
$
544,880
$
5,605,807
Scheduled
$
3,079,501 $
403,719
$
711,488
$
77,877
$
147,383
$
4,419,968
Unscheduled
542,796
391,360
109,539
—
—
1,043,695
December 31, 2023
$
3,622,297 $
795,079
$
821,027
$
77,877
$
147,383
$
5,463,663
111
Table 38
Outstanding Business Volume
Agricultural Finance
Infrastructure Finance
Farm &
Ranch
Corporate
AgFinance
Power &
Utilities
Broadband
Infrastructure
Renewable
Energy
Total
(in thousands)
As of:
December 31, 2024
$
18,606,968 $
1,887,705
$
6,809,366
$
802,465
$
1,416,525
$
29,523,029
September 30, 2024
18,090,374
1,842,780
6,794,435
645,706
1,095,008
28,468,303
June 30, 2024
18,504,501
1,816,893
7,008,276
553,197
875,472
28,758,339
March 31, 2024
18,900,906
1,766,294
6,970,537
467,186
742,307
28,847,230
December 31, 2023
18,808,801
1,693,979
6,979,570
501,153
487,521
28,471,024
September 30, 2023
18,461,835
1,741,306
6,633,252
485,043
330,575
27,652,011
June 30, 2023
18,116,503
1,680,756
6,171,818
440,074
327,901
26,737,052
March 31, 2023
17,685,961
1,599,982
6,533,581
356,101
308,493
26,484,118
December 31, 2022
17,728,792
1,603,507
6,042,997
316,616
230,170
25,922,082
Table 39
On-Balance Sheet Outstanding Business Volume
Fixed Rate
5- to 10-Year
ARMs & Resets
1-Month to 3-Year
ARMs
Total Held in
Portfolio
(in thousands)
As of:
December 31, 2024
$
14,356,171
$
3,370,540
$
6,815,034
$
24,541,745
September 30, 2024
14,328,691
3,311,001
6,265,792
23,905,484
June 30, 2024
14,064,831
3,273,764
6,850,137
24,188,732
March 31, 2024
14,166,500
3,194,246
6,849,237
24,209,983
December 31, 2023
14,133,794
3,171,672
6,455,359
23,760,825
September 30, 2023
13,727,280
3,019,317
6,255,690
23,002,287
June 30, 2023
13,721,129
3,003,560
5,493,104
22,217,793
March 31, 2023
13,607,740
3,020,229
5,924,032
22,552,001
December 31, 2022
13,693,810
3,031,288
5,251,427
21,976,525
112
The following table presents the quarterly net effective spread (a non-GAAP measure) by segment:
Table 40
Net Effective Spread
Agricultural Finance
Infrastructure Finance
Treasury
Farm &
Ranch
Corporate
AgFinance
Power &
Utilities
Broadband
Infrastructure
Renewable
Energy
Funding
Investments
Net Effective
Spread
Dollars
Yield
Dollars
Yield
Dollars
Yield
Dollars
Yield
Dollars
Yield
Dollars
Yield
Dollars
Yield
Dollars
Yield
(dollars in thousands)
For the quarter ended:
December 31, 2024
$
32,556
$
7,891
$
5,059
$
3,414
$
4,859
$
31,242
$
2,507
$
87,528
0.96 %
1.95 %
0.32 %
2.34 %
1.76 %
0.42 %
0.15 %
1.16 %
September 30, 2024
35,755
6,397
4,785
2,794
3,810
30,912
943
85,396
1.05 %
1.56 %
0.30 %
2.21 %
1.78 %
0.42 %
0.05 %
1.16 %
June 30, 2024
34,156
7,866
5,253
2,393
2,999
30,268
661
83,596
0.98 %
1.91 %
0.32 %
2.16 %
1.86 %
0.41 %
0.04 %
1.14 %
March 31, 2024
32,843
7,971
4,890
2,342
2,049
32,474
475
83,044
0.95 %
2.05 %
0.30 %
2.08 %
1.75 %
0.45 %
0.03 %
1.14 %
December 31, 2023
33,329
8,382
4,916
2,426
1,540
33,361
597
84,551
0.98 %
2.06 %
0.31 %
2.06 %
1.69 %
0.47 %
0.04 %
1.19 %
September 30, 2023
32,718
8,250
3,979
2,383
1,150
34,412
532
83,424
0.97 %
2.05 %
0.26 %
2.15 %
1.46 %
0.49 %
0.04 %
1.20 %
June 30, 2023
34,388
7,444
3,681
2,127
1,100
32,498
594
81,832
1.03 %
1.92 %
0.25 %
2.25 %
1.47 %
0.48 %
0.04 %
1.20 %
March 31, 2023
32,465
7,148
3,599
1,908
858
31,738
(543)
77,173
0.97 %
1.94 %
0.24 %
2.53 %
1.53 %
0.47 %
(0.04) %
1.15 %
December 31, 2022
32,770
7,471
3,271
1,689
935
27,656
(2,689)
71,103
0.98 %
1.94 %
0.24 %
2.39 %
1.76 %
0.42 %
(0.19) %
1.07 %
113
The following table presents quarterly core earnings (a non-GAAP measure) reconciled to net income
attributable to common stockholders:
Table 41
Core Earnings by Quarter End
December
2024
September
2024
June
2024
March
2024
December
2023
September
2023
June
2023
March
2023
December
2022
(in thousands)
Revenues:
Net effective spread
$ 87,528
$ 85,396
$ 83,596
$ 83,044
$
84,551
$
83,424
$ 81,832
$ 77,173
$
71,103
Guarantee and commitment fees
5,086
4,997
5,256
4,982
4,865
4,828
4,581
4,654
4,677
Gain on sale of investment securities
—
—
1,052
—
—
—
—
—
—
Loss on sale of mortgage loan
—
—
(1,147)
—
—
—
—
—
—
Other
(491)
1,133
481
1,077
767
1,056
409
1,067
390
Total revenues
92,123
91,526
89,238
89,103
90,183
89,308
86,822
82,894
76,170
Credit related expense/(income):
Provision for/(release of) losses
3,872
3,258
6,230
(1,870)
(575)
(181)
1,142
750
1,945
REO operating expenses
—
196
—
—
—
—
—
—
819
Total credit related expense/
(income)
3,872
3,454
6,230
(1,870)
(575)
(181)
1,142
750
2,764
Operating expenses:
Compensation and employee benefits
15,641
15,237
14,840
18,257
15,523
14,103
13,937
15,351
12,105
General and administrative
12,452
8,625
8,904
8,255
8,916
9,100
9,420
7,527
8,055
Regulatory fees
1,000
725
725
725
725
831
831
835
832
Total operating expenses
29,093
24,587
24,469
27,237
25,164
24,034
24,188
23,713
20,992
Net earnings
59,158
63,485
58,539
63,736
65,594
65,455
61,492
58,431
52,414
Income tax expense
9,938
12,681
11,970
13,553
13,881
13,475
12,539
12,756
11,210
Preferred stock dividends
5,666
5,897
6,792
6,791
6,791
6,792
6,791
6,791
6,791
Core earnings
$ 43,554
$ 44,907
$ 39,777
$ 43,392
$
44,922
$
45,188
$ 42,162
$ 38,884
$
34,413
Reconciling items:
Gains/(losses) on undesignated
financial derivatives due to fair
value changes
$
3,084
$
(1,064) $
(359) $
1,683
$
(836) $
2,921
$
2,141
$
916
$
1,596
Gains/(losses) on hedging activities
due to fair value changes
5,737
205
2,604
3,002
(3,598)
3,210
(4,901)
(105)
(148)
Unrealized (losses)/gains on trading
assets
(83)
99
(87)
(14)
(37)
1,714
(57)
359
31
Net effects of amortization of
premiums/discounts and deferred
gains on assets consolidated at fair
value
(39)
27
26
31
88
29
29
29
57
Net effects of terminations or net
settlements on financial derivatives
534
(503)
(1,505)
(192)
(800)
(79)
583
523
1,268
Issuance costs on the retirement of
preferred stock
—
(1,619)
—
—
—
—
—
—
—
Income tax effect related to
reconciling items
(1,939)
260
(143)
(947)
1,089
(1,638)
464
(362)
(590)
Net income attributable to
common stockholders
$ 50,848
$ 42,312
$ 40,313
$ 46,955
$
40,828
$
51,345
$ 40,421
$ 40,244
$
36,627
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Farmer Mac is exposed to market risk from changes in interest rates. Farmer Mac manages this market
risk by entering into various financial transactions, including financial derivatives, and by monitoring and
measuring its exposure to changes in interest rates. See "Management's Discussion and Analysis of
114
Financial Condition and Results of Operations—Risk Management—Interest Rate Risk" for more
information about Farmer Mac's exposure to interest rate risk and its strategies to manage that risk. For
information about Farmer Mac's use of financial derivatives and related accounting policies, see Note 6 to
the consolidated financial statements.
Item 8.
Financial Statements
Management's Report on Internal Control over Financial Reporting
The management of Farmer Mac is responsible for establishing and maintaining adequate internal control
over financial reporting, as defined in Exchange Act Rule 13a-15(f). Internal control over financial
reporting is a process designed under the supervision of Farmer Mac's Chief Executive Officer and Chief
Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of Farmer Mac's financial statements for external purposes in accordance with accounting
principles generally accepted in the United States of America.
Farmer Mac's internal control over financial reporting includes those policies and procedures that:
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of Farmer Mac; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of Farmer Mac are being
made only in accordance with authorizations of management and directors of Farmer Mac; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of Farmer Mac's assets that could have a material effect on the consolidated financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Under the supervision and with the participation of Farmer Mac's Chief Executive Officer and Chief
Financial Officer, Farmer Mac's management assessed the effectiveness of Farmer Mac's internal control
over financial reporting as of December 31, 2024. In making this assessment, Farmer Mac's management
used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control - Integrated Framework (2013). Based on its evaluation under the COSO
criteria, management concluded that Farmer Mac's internal control over financial reporting as of
December 31, 2024 was effective.
Farmer Mac's independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited
the effectiveness of Farmer Mac's internal control over financial reporting as of December 31, 2024, as
stated in their report appearing below.
115
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
of the Federal Agricultural Mortgage Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of the Federal Agricultural Mortgage
Corporation and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related
consolidated statements of operations and comprehensive income, of equity and of cash flows for each of
the three years in the period ended December 31, 2024, including the related notes (collectively referred to
as the "consolidated financial statements"). We also have audited the Company's internal control over
financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2024 in
conformity with accounting principles generally accepted in the United States of America. Also in our
opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining
effective internal control over financial reporting, and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying Management’s Report on Internal Control
over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated
financial statements and on the Company's internal control over financial reporting based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement, whether due to error or fraud, and whether effective internal
control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control
over financial reporting included obtaining an understanding of internal control over financial reporting,
116
assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations
of management and directors of the company; and (iii) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit
committee and that (i) relates to accounts or disclosures that are material to the consolidated financial
statements and (ii) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing
a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of AgVantage Farmer Mac Guaranteed Securities
As disclosed by management, the Company guarantees and purchases general obligations of lenders and
other financial institutions that are secured by pools of the types of loans eligible for purchase under
Farmer Mac's Agricultural Finance or Infrastructure Finance lines of business, which are referred to as
AgVantage securities. As described in Notes 5 and 13 to the consolidated financial statements, the total
unpaid principal balance of AgVantage securities as of December 31, 2024 was $8.5 billion, and the fair
value of the AgVantage securities of December 31, 2024 was $8.2 billion. The fair value of AgVantage
securities is estimated using a discounted cash flow model. The significant unobservable input used is the
discount rate commensurate with the risks involved.
The principal considerations for our determination that performing procedures relating to the valuation of
AgVantage securities is a critical audit matter are (i) the high degree of audit effort in performing
procedures and evaluating audit evidence related to the discount rate assumption used by management in
117
the valuation of the AgVantage securities, and (ii) the audit effort involved the use of professionals with
specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with
forming our overall opinion on the consolidated financial statements. These procedures included testing
the effectiveness of controls relating to the valuation of AgVantage securities, including controls over the
model, data and assumption. These procedures also included, among others, (i) the involvement of
professionals with specialized skill and knowledge to assist in developing an independent range of prices
for a sample of AgVantage securities, and (ii) comparing management’s estimate to the independently
developed range to evaluate the reasonableness of management’s estimate. Developing the independent
range of prices involved testing the completeness and accuracy of data provided by management and
independently developing the discount rate assumption.
/s/ PricewaterhouseCoopers LLP
Washington, District of Columbia
February 21, 2025
We have served as the Company’s auditor since 2010.
118
FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of
December 31, 2024
December 31, 2023
(in thousands)
Assets:
Cash and cash equivalents (includes restricted cash of $16,190 and $5,111, respectively)
$
1,024,007
$
888,707
Investment securities:
Available-for-sale, at fair value (amortized cost of $6,105,116 and $5,060,135, respectively)
5,953,014
4,918,931
Held-to-maturity, at amortized cost
9,270
53,756
Other investments
11,017
6,817
Total Investment Securities
5,973,301
4,979,504
Farmer Mac Guaranteed Securities:
Available-for-sale, at fair value (amortized cost of $5,835,658 and $5,825,433, respectively)
5,514,546
5,532,479
Held-to-maturity, at amortized cost
2,717,688
4,213,069
Total Farmer Mac Guaranteed Securities
8,232,234
9,745,548
USDA Securities:
Trading, at fair value
818
1,241
Held-to-maturity, at amortized cost
2,370,534
2,354,171
Total USDA Securities
2,371,352
2,355,412
Loans:
Loans held for sale, at lower of cost or fair value
6,170
—
Loans held for investment, at amortized cost
11,183,408
9,623,119
Loans held for investment in consolidated trusts, at amortized cost
2,038,283
1,432,261
Allowance for losses
(23,223)
(16,031)
Total loans, net of allowance
13,204,638
11,039,349
Financial derivatives, at fair value
27,789
37,478
Accrued interest receivable (includes $28,563 and $16,764, respectively, related to consolidated trusts)
310,592
287,128
Guarantee and commitment fees receivable
50,499
49,832
Deferred tax asset, net
1,544
8,470
Prepaid expenses and other assets
128,786
132,954
Total Assets
$
31,324,742
$
29,524,382
Liabilities and Equity:
Liabilities:
Notes payable
$
27,371,174
$
26,336,542
Debt securities of consolidated trusts held by third parties
1,929,628
1,351,069
Financial derivatives, at fair value
77,326
117,131
Accrued interest payable (includes $12,387 and $9,407, respectively, related to consolidated trusts)
195,113
181,841
Guarantee and commitment obligation
48,326
47,563
Accounts payable and accrued expenses
212,527
76,662
Reserve for losses
1,622
1,711
Total Liabilities
29,835,716
28,112,519
Commitments and Contingencies (Note 12)
Equity:
Preferred stock:
Series C, par value $25 per share, 3,000,000 shares authorized, issued and outstanding as of
December 31, 2023 (redemption value $75,000,000)
—
73,382
Series D, par value $25 per share, 4,000,000 shares authorized, issued and outstanding
96,659
96,659
Series E, par value $25 per share, 3,180,000 shares authorized, issued and outstanding
77,003
77,003
Series F, par value $25 per share, 4,800,000 shares authorized, issued and outstanding
116,160
116,160
Series G, par value $25 per share, 5,000,000 shares authorized, issued and outstanding
121,327
121,327
Common stock:
Class A Voting, $1 par value, no maximum authorization, 1,030,780 shares outstanding
1,031
1,031
Class B Voting, $1 par value, no maximum authorization, 500,301 shares outstanding
500
500
Class C Non-Voting, $1 par value, no maximum authorization, 9,360,083 shares and 9,310,872
shares outstanding, respectively
9,360
9,311
Additional paid-in capital
135,894
132,919
Accumulated other comprehensive loss, net of tax
(12,147)
(40,145)
Retained earnings
943,239
823,716
Total Equity
1,489,026
1,411,863
Total Liabilities and Equity
$
31,324,742
$
29,524,382
The accompanying notes are an integral part of these consolidated financial statements.
119
FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31,
2024
2023
2022
(in thousands, except per share amounts)
Interest income:
Investments and cash equivalents
$
345,501 $
287,144 $
82,659
Farmer Mac Guaranteed Securities and USDA Securities
628,828
590,250
283,769
Loans
629,187
514,894
350,420
Total interest income
1,603,516
1,392,288
716,848
Total interest expense
1,249,649
1,064,741
445,908
Net interest income
353,867
327,547
270,940
Provision for losses
(11,579)
(858)
(1,323)
Net interest income after provision for losses
342,288
326,689
269,617
Non-interest income/(expense):
Guarantee and commitment fees
15,738
16,712
13,040
Gains on financial derivatives
2,636
2,882
22,631
Losses on sale of mortgage loans
(1,147)
—
—
Gains on sale of available-for-sale investment securities
1,052
—
—
Release of/(provision for) reserve for losses
89
(278)
517
Other income
3,029
4,195
2,500
Non-interest income
21,397
23,511
38,688
Operating expenses:
Compensation and employee benefits
63,975
58,914
48,766
General and administrative
38,236
34,963
29,772
Regulatory fees
3,175
3,222
3,269
Real estate owned operating costs, net
196
—
819
Operating expenses
105,582
97,099
82,626
Income before income taxes
258,103
253,101
225,679
Income tax expense
50,910
53,098
47,535
Net income
207,193
200,003
178,144
Preferred stock dividends
(25,146)
(27,165)
(27,165)
Loss on retirement of preferred stock
(1,619)
—
—
Net income attributable to common stockholders
$
180,428 $
172,838 $
150,979
Earnings per common share:
Basic earnings per common share
$
16.59 $
15.97 $
14.00
Diluted earnings per common share
$
16.44 $
15.81 $
13.87
The accompanying notes are an integral part of these consolidated financial statements.
120
FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31,
2024
2023
2022
(in thousands)
Net income
$
207,193 $
200,003 $
178,144
Other comprehensive income/(loss):
Net unrealized gains/(losses) on available-for-sale securities
39,078
59,640
(137,506)
Net changes in held-to-maturity securities
(636)
(31,750)
259
Net unrealized (losses)/gains on cash flow hedges
(3,002)
(14,348)
68,012
Other comprehensive income/(loss) before tax
35,440
13,542
(69,235)
Income tax (expense)/benefit related to other comprehensive income/(loss)
(7,442)
(2,844)
14,539
Other comprehensive income/(loss) net of tax
27,998
10,698
(54,696)
Comprehensive income
$
235,191 $
210,701 $
123,448
The accompanying notes are an integral part of these consolidated financial statements.
121
FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
Accumulated
Additional
Other
Preferred Stock
Common Stock
Paid-In
Comprehensive
Retained
Total
Shares
Amount
Shares
Amount
Capital
Income/(Loss)
Earnings
Equity
(in thousands)
Balance as of December 31, 2021
19,980
$ 484,531
10,766
$ 10,766
$ 125,993
$
3,853
$ 588,557
$ 1,213,700
Net Income
—
—
—
—
—
—
178,144
178,144
Other comprehensive loss, net of tax
—
—
—
—
—
(54,696)
—
(54,696)
Cash dividends:
Preferred stock
—
—
—
—
—
—
(27,165)
(27,165)
Common stock (cash dividend of $0.95 per share)
—
—
—
—
—
—
(41,006)
(41,006)
Issuance of Class C Common Stock
—
—
35
35
190
—
—
225
Stock-based compensation cost
—
—
—
—
4,625
—
—
4,625
Other stock-based award activity
—
—
—
—
(1,869)
—
—
(1,869)
Balance as of December 31, 2022
19,980
$ 484,531
10,801
$ 10,801
$ 128,939
$
(50,843) $ 698,530
$ 1,271,958
Net Income
—
—
—
—
—
—
200,003
200,003
Other comprehensive income, net of tax
—
—
—
—
—
10,698
—
10,698
Cash dividends:
Preferred stock
—
—
—
—
—
—
(27,165)
(27,165)
Common stock (cash dividend of $1.10 per share)
—
—
—
—
—
—
(47,652)
(47,652)
Issuance of Class C Common Stock
—
—
41
41
233
—
—
274
Stock-based compensation cost
—
—
—
—
6,801
—
—
6,801
Other stock-based award activity
—
—
—
—
(3,054)
—
—
(3,054)
Balance as of December 31, 2023
19,980
$ 484,531
10,842
$ 10,842
$ 132,919
$
(40,145) $ 823,716
$ 1,411,863
Net Income
—
—
—
—
—
—
207,193
207,193
Other comprehensive income, net of tax
—
—
—
—
—
27,998
—
27,998
Cash dividends:
Preferred stock
—
—
—
—
—
—
(25,146)
(25,146)
Common stock (cash dividend of $1.40 per share)
—
—
—
—
—
—
(60,905)
(60,905)
Redemption of Series C preferred stock
(3,000) (73,382)
—
—
—
—
—
(73,382)
Loss on retirement of preferred stock
—
—
—
—
—
—
(1,619)
(1,619)
Issuance of Class C Common Stock
—
—
49
49
287
—
—
336
Stock-based compensation cost
—
—
—
—
8,087
—
—
8,087
Other stock-based award activity
—
—
—
—
(5,399)
—
—
(5,399)
Balance as of December 31, 2024
16,980
$ 411,149
10,891
$ 10,891
$ 135,894
$
(12,147) $ 943,239
$ 1,489,026
The accompanying notes are an integral part of these consolidated financial statements.
122
FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended
2024
2023
2022
(in thousands)
Cash flows from operating activities:
Net income
$
207,193
$
200,003
$
178,144
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of deferred gains, premiums, and discounts on loans, investments, Farmer Mac
Guaranteed Securities, and USDA Securities
(23,879)
(17,025)
720
Amortization of debt premiums, discounts, and issuance costs
21,242
31,421
19,656
Net change in fair value of trading securities, loans held for sale, hedged items, and financial derivatives
214,319
78,249
689,998
Losses on sale of mortgage loans
1,147
—
—
Gains on the sale of available-for-sale investment securities
(1,052)
—
—
Total provision for/(release of) allowance for losses
11,490
1,136
806
Excess tax benefits related to stock-based awards
831
523
101
Deferred income taxes
(516)
6,690
12,406
Stock-based compensation expense
8,088
6,801
4,624
Proceeds from repayment of loans purchased as held for sale
29,216
24,378
33,311
Net change in:
Interest receivable
(31,885)
(63,944)
(63,777)
Guarantee and commitment fees receivable
96
(1,700)
1,043
Other assets
18,590
54,369
(126,054)
Accrued interest payable
13,272
63,954
58,884
Custodial deposit liability
130,643
(10,778)
(7,666)
Other liabilities
13,851
1,721
7,075
Net cash provided by operating activities
612,646
375,798
809,271
Cash flows from investing activities:
Purchases of equipment and leasehold improvements
(5,272)
—
—
Purchases of available-for-sale and held-to-maturity investment securities
(2,431,900)
(1,573,707)
(2,472,056)
Purchases of other investment securities
(3,293)
(3,145)
(2,443)
Purchases of Farmer Mac Guaranteed Securities and USDA Securities
(1,600,144)
(4,453,284)
(5,275,733)
Purchases of loans held for investment
(3,870,628)
(2,164,053)
(2,592,924)
Purchases of defaulted loans
(4,447)
—
—
Proceeds from repayment of available-for-sale and held-to-maturity investment securities
1,328,716
1,397,096
1,440,201
Proceeds from repayment of Farmer Mac Guaranteed Securities and USDA Securities
3,067,497
3,478,124
4,429,364
Proceeds from repayment of loans purchased as held for investment
1,655,784
1,363,588
1,321,989
Proceeds from sale of available-for-sale investment securities
115,247
—
—
Proceeds from sale of loans previously classified as held for investment
5,775
—
9,000
Proceeds from sale of Farmer Mac Guaranteed Securities
60,192
—
99,643
Net cash used in investing activities
(1,682,473)
(1,955,381)
(3,042,959)
Cash flows from financing activities:
Proceeds from issuance of discount notes
59,737,284
49,291,165
52,470,273
Proceeds from issuance of medium-term notes
8,545,837
8,274,618
9,031,116
Proceeds from issuance of debt securities of consolidated trusts
588,250
222,188
258,198
Payments to redeem discount notes
(59,308,438)
(48,138,591)
(54,085,418)
Payments to redeem medium-term notes
(8,052,883)
(7,862,450)
(5,192,159)
Payments to third parties on debt securities of consolidated trusts
(138,807)
(102,045)
(226,291)
Proceeds from common stock issuance
287
233
192
Tax payments related to share-based awards
(5,351)
(3,013)
(1,835)
Retirement of preferred stock
(75,000)
—
—
Dividends paid on common and preferred stock
(86,052)
(74,817)
(68,171)
Net cash provided by financing activities
1,205,127
1,607,288
2,185,905
Net change in cash and cash equivalents
135,300
27,705
(47,783)
Cash, cash equivalents, and restricted cash at beginning of period
888,707
861,002
908,785
Cash, cash equivalents, and restricted cash at end of period
$
1,024,007
$
888,707
$
861,002
Cash paid during the period for:
Interest
819,959
582,960
269,327
Income taxes
39,200
48,000
33,800
Non-cash activity:
Loans securitized as Farmer Mac Guaranteed Securities
109,546
36,497
162,875
Loans held for investment transferred to consolidated trusts
624,097
281,027
297,713
The accompanying notes are an integral part of these consolidated financial statements.
123
FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
ORGANIZATION
The Federal Agricultural Mortgage Corporation ("Farmer Mac") is a stockholder-owned, federally
chartered instrumentality of the United States established under Title VIII of the Farm Credit Act of 1971,
as amended (12 U.S.C. §§ 2279aa et seq.), which is sometimes referred to as Farmer Mac's
charter. Farmer Mac was originally created by the United States Congress to provide a secondary market
for a variety of loans made to borrowers in rural America. This secondary market is designed to increase
the accessibility of finance at stable interest rates to America's rural communities and to provide rural
borrowers with the benefits of capital markets pricing and product innovation.
Farmer Mac's secondary market activities include:
•
purchasing eligible loans directly from lenders (including participation interests, syndicated
notes, revolving and non-revolving credit facilities, and unfunded commitments to make
advances on loans);
•
guaranteeing and purchasing securities issued by lenders and other financial institutions that
are secured by pools of eligible loans (Farmer Mac refers to these securities as "AgVantage," a
registered trademark of Farmer Mac);
•
issuing and guaranteeing securities that represent interests in, or obligations secured by, pools
of eligible loans (together with AgVantage, Farmer Mac refers to these securities as "Farmer
Mac Guaranteed Securities");
•
servicing (including as master servicer) eligible loans purchased or securitized by Farmer Mac;
and
•
providing long-term standby purchase commitments ("LTSPCs") for eligible loans.
Farmer Mac conducts its secondary market activities through two lines of business — Agricultural
Finance and Infrastructure Finance. For more information about those lines of business and the segments
within them, see Note 14 - Business Segments.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Farmer Mac conform with accounting principles generally
accepted in the United States of America ("generally accepted accounting principles" or "GAAP"). The
preparation of consolidated financial statements in conformity with generally accepted accounting
principles requires management to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the
consolidated financial statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates. The following are the significant accounting
policies that Farmer Mac follows in preparing and presenting its consolidated financial statements:
(a) Principles of Consolidation
The consolidated financial statements include the accounts of Farmer Mac and its two subsidiaries during
the year: (1) Farmer Mac Mortgage Securities Corporation, whose principal activities are to facilitate the
purchase and issuance of Farmer Mac Guaranteed Securities; and (2) Farmer Mac II LLC, which operated
124
substantially all of the business related to the USDA Securities included in the Agricultural Finance line of
business from 2010 through 2023 and continues to hold a "run-off" portfolio of USDA Securities. The
consolidated financial statements also include the accounts of Variable Interest Entities ("VIEs") in which
Farmer Mac determined itself to be the primary beneficiary.
(b) Cash and Cash Equivalents
Farmer Mac considers cash on hand and highly liquid investment securities with maturities at the time of
purchase of three months or less to be cash equivalents.
(c) Investment Securities, Farmer Mac Guaranteed Securities, and USDA Securities
Securities for which Farmer Mac has the intent and ability to hold to maturity are classified as held-to-
maturity and are carried at amortized cost. Securities for which Farmer Mac does not have the positive
intent and ability to hold to maturity are classified as available-for-sale or trading and are carried at
estimated fair value. Unrealized gains and losses on available-for-sale securities are reported as a
component of accumulated other comprehensive income in stockholders' equity. For securities classified
as trading, unrealized gains and losses are included in earnings. Gains and losses on the sale of available-
for-sale and trading securities are determined using the specific identification cost method.
Farmer Mac determines the fair value of investment securities using quoted market prices, when
available. Farmer Mac determines the fair values of certain investment securities for which quoted market
prices are not available, Farmer Mac Guaranteed Securities, and USDA Securities based on the present
value of the associated expected future cash flows. In estimating the present value of the expected future
cash flows, management is required to make estimates and assumptions. The key estimates and
assumptions include discount rates and collateral repayment rates. Premiums, discounts, and other
deferred costs are amortized to interest income using the effective interest method.
Farmer Mac generally receives compensation when loans with yield maintenance provisions underlying
AgVantage Farmer Mac Guaranteed Securities prepay. These yield maintenance payments mitigate
Farmer Mac's exposure to reinvestment risk and are calculated such that, when reinvested with the prepaid
principal, they should generate substantially the same cash flows that would have been generated had the
loans not prepaid. Yield maintenance payments are recognized as interest income in the consolidated
statements of operations.
(d) Loans
Loans for which Farmer Mac has the positive intent and ability to hold for the foreseeable future are
classified as held for investment and reported at their unpaid principal balance, net of unamortized
purchase discounts or premiums. Loans for which Farmer Mac does not have the positive intent and
ability to hold for the foreseeable future are classified as held for sale and reported at the lower of cost or
fair value determined on a pooled basis. Farmer Mac de-recognizes sold loans, and recognizes any
associated gain or loss, when they have been legally isolated from Farmer Mac, the buyer has the right to
pledge or exchange them, and Farmer Mac does not maintain effective control over them. When Farmer
Mac consolidates a trust, it recognizes the loans underlying the trust in the consolidated balance sheets as
"Loans held for investment in consolidated trusts, at amortized cost." See Note 2(o) for more information
on the accounting policy related to consolidation.
125
Non-accrual Loans
Non-accrual loans are loans for which it is probable that Farmer Mac will be unable to collect all amounts
due according to the contractual terms of the loan agreement and include all loans 90 days or more past
due. When a loan becomes 90 days past due, interest accrual on the loan is discontinued and interest
previously accrued is reversed against interest income in the current period. The interest on such loans is
accounted for on the cash basis until a loan qualifies for return to accrual status. Loans are returned to
accrual status when all the principal and interest payments contractually due are collected and certain
performance criteria are met.
(e) Securitization
Securitization involves the transfer of financial assets to another entity in exchange for cash and/or
beneficial interests in the assets transferred. Farmer Mac or third parties transfer agricultural mortgage
loans, Infrastructure loans, or USDA securities into trusts that are used as vehicles for the securitization of
the transferred financial assets. The trusts issue Farmer Mac Guaranteed Securities that are beneficial
interests in the assets of the trusts, to either Farmer Mac or third-party investors. Farmer Mac guarantees
principal and interest payments on the securities issued by the trusts and receives guarantee fees as
compensation for its guarantee. Farmer Mac recognizes guarantee fees on the accrual basis over the terms
of the Farmer Mac Guaranteed Securities, which generally coincide with the terms of the underlying
loans. As such, no guarantee fees are unearned at the end of any reporting period.
Farmer Mac is required to perform under its guarantee obligation when the underlying loans for the off-
balance sheet Farmer Mac Guaranteed Securities do not make their scheduled installment payments. When
a loan underlying a Farmer Mac Guaranteed Security (other than Farmer Mac Guaranteed Securities
structured as real estate mortgage investment conduits under 26 U.S.C. §§ 860A-860G) becomes 90 days
or more past due, Farmer Mac may, in its sole discretion, repurchase the loan from the trust and generally
does repurchase such loans, thereby reducing the principal balance of the outstanding Farm & Ranch
Guaranteed Security. When Farmer Mac purchases a delinquent loan underlying a Farmer Mac
Guaranteed Security, Farmer Mac stops accruing the guarantee fee upon loan purchase.
If Farmer Mac repurchases a loan that is collateral for a Farmer Mac Guaranteed Security, Farmer Mac
would have the right to enforce the terms of the loan, and in the event of a default, would have access to
the underlying collateral. Farmer Mac typically recovers its investment in the defaulted loans purchased
either through borrower payments, loan payoffs, payments by third parties, or foreclosure and sale of the
collateral securing the loans.
Farmer Mac has recourse to the USDA for any amounts advanced for the timely payment of principal and
interest on Farmer Mac Guaranteed USDA Securities. That recourse is the USDA guarantee, a full-faith-
and-credit obligation of the United States that becomes enforceable if a lender fails to repurchase the
USDA-guaranteed portion from its owner within 30 days after written demand from the owner when
(a) the borrower under the guaranteed loan is in default not less than 60 days in the payment of any
principal or interest due on the USDA-guaranteed portion, or (b) the lender has failed to remit to the
owner the payment made by the borrower on the USDA-guaranteed portion or any related loan subsidy
within 30 days after the lender's receipt of the payment.
126
Transfers of Financial Assets
Farmer Mac accounts for transfers of financial assets as sales when it has surrendered control over the
related assets. Whether control has been relinquished requires, among other things, an evaluation of
relevant legal considerations and an assessment of the nature and extent of Farmer Mac's continuing
involvement with the assets transferred. Gains and losses stemming from transfers reported as sales are
included in the accompanying consolidated statements of operations when incurred. Assets obtained and
liabilities incurred in connection with transfers reported as sales are initially recognized in the
consolidated balance sheets at fair value.
(f) Financial Derivatives
Farmer Mac enters into financial derivative transactions principally to protect against risk from the effects
of market price or interest rate movements on the value of certain assets, future cash flows or debt
issuance, not for trading or speculative purposes. Farmer Mac enters into interest rate swap contracts to
adjust the characteristics of its short-term debt to match more closely the cash flow and duration
characteristics of its longer-term loans and other assets, and also to adjust the characteristics of its long-
term debt to match more closely the cash flow and duration characteristics of its short-term assets, thereby
reducing interest rate risk and, often times, deriving an overall lower effective cost of borrowing than
would otherwise be available to Farmer Mac in the conventional debt market.
Accounting for financial derivatives differs depending on whether a derivative is designated in a hedge
accounting relationship. Derivative instruments designated in fair value hedge accounting relationships
mitigate exposure to changes in the fair value of assets or liabilities. Derivative instruments designated in
cash flow hedge accounting relationships mitigate exposure to the variability in expected future cash flows
or other forecasted transactions. In order to qualify for fair value or cash flow hedge accounting treatment,
documentation must indicate the intention to designate the derivative as a hedge of a specific asset, or
liability, or a future cash flow. Effectiveness of the hedge is assessed before the end of the quarter of
inception and monitored over the life of the hedging relationship.
Changes in the fair values of financial derivatives not designated as cash flow or fair value hedges were
reported in "Gains on financial derivatives" in the consolidated statements of operations. For financial
derivatives designated in fair value hedge accounting relationships, changes in the fair values of hedged
items related to the risk being hedged are reported in the same interest income or expense line item as
income or expense from the hedged financial asset or liability in the consolidated statements of operations.
Interest accruals on derivatives designated in fair value hedge relationships are also recorded in "Net
interest income" in the consolidated statements of operations. For financial derivatives designated in cash
flow hedge relationships, the unrealized gain or loss on the derivative is recorded in other comprehensive
income. Because the hedging instrument is an interest rate swap and the hedged forecasted transactions are
future interest payments on variable rate debt, amounts recorded in accumulated other comprehensive
income are reclassified to "Total interest expense" in conjunction with the recognition of interest expense
on the debt.
Collateralized Agreements and Offsetting Arrangements
127
Over-the-Counter Derivatives
Farmer Mac uses master netting and collateral agreements to reduce our credit risk exposure to our over-
the-counter derivative ("OTC") counterparties for interest-rate swap derivatives. Master netting
agreements provide for the netting of amounts receivable and payable from an individual counterparty, as
well as posting of collateral in the form of cash depending on which party is in a liability position.
Farmer Mac has master netting agreements in place with all of our OTC derivative counterparties. The
market value of each counterparty's derivatives outstanding is calculated to determine the amount of our
net credit exposure, which is equal to the market value of derivatives in net gain position by counterparty
after giving consideration to collateral posted. In the event a counterparty defaults on its obligation under
the derivatives agreement and the default is not remedied in the manner prescribed by the agreement,
Farmer Mac has a right under the agreement to sell the collateral. As a result, Farmer Mac's use of master
netting and collateral agreements reduce our exposure to our counterparties in the event of default.
Cleared Derivatives
The majority of Farmer Mac's interest-rate swaps are subject to the central clearing requirement. Changes
in the value of cleared derivatives are settled daily via payments made through the clearinghouse. Farmer
Mac nets the exposure by clearinghouse and clearing member.
See Notes 6 and 13 for more information on financial derivatives.
(g) Notes Payable
Debt issuance costs and premiums and discounts are deferred and amortized to interest expense using the
effective interest method over the contractual life of the related debt.
(h) Allowance for Losses and Reserve for Losses
Farmer Mac maintains an allowance for credit losses to cover current expected credit losses as of the
balance sheet date for on-balance sheet investment securities, loans held for investment, and AgVantage
Farmer Mac Guaranteed Securities (collectively referred to as "allowance for losses"). Farmer Mac also
maintains a reserve for credit losses to cover current expected credit losses as of the balance sheet date for
off-balance sheet loans underlying LTSPCs and off-balance sheet Farmer Mac Guaranteed Securities
(collectively referred to as "reserve for losses"). Both the allowance for losses and reserve for losses are
based on historical information and reasonable and supportable forecasts.
Farmer Mac has never experienced a credit loss in its Infrastructure Finance line of business. Farmer Mac
measures its expected credit losses for the expected life of all financial instruments, including its
Infrastructure Finance loans. To estimate expected credit losses on these loans, Farmer Mac relies upon
industry historical credit loss data from ratings agencies and publicly available information as disclosed in
the securities filings of other major lenders who serve the utilities and renewable industries.
The allowance for losses increases through periodic provisions for loan losses that are charged against net
interest income and the reserve for losses increases through provisions for losses that are charged to non-
interest expense. Both the allowance for losses and reserve for losses are decreased by charge-offs for
realized losses, net of recoveries. Releases from the allowance for losses or reserve for losses occur when
128
the estimate of expected credit losses as of the end of a period is less than the estimate at the beginning of
the period.
The total allowance for losses consists of the allowance for losses and the reserve for losses.
Charge-offs
Farmer Mac records a charge-off from the allowance for losses when either a) a loan, or a portion of a
loan, is deemed uncollectible; or b) a loss has been confirmed through the receipt of assets, generally the
underlying collateral, in full satisfaction of the loan. The charge-off equals the excess of the recorded
investment in the loan over the fair value of the collateral less estimated selling costs.
Estimation Methodology
Farmer Mac bases its methodology for determining its current estimate of expected losses on a statistical
model, which incorporates credit loss history and reasonable and supportable forecasts. Farmer Mac's
estimation methodology includes the following key components:
•
An economic model for each portfolio, including Agricultural Finance loans (Corporate AgFinance
and Farm & Ranch), Infrastructure Finance loans (Power & Utilities, Broadband Infrastructure,
and Renewable Energy), and AgVantage Securities;
•
A migration matrix for each portfolio that reasonably predicts the movement of each financial asset
among various risk categories over the course of each asset's expected life (the migration matrix
forms the basis for our estimate of the probability of default of each financial asset);
•
A loss-given-default ("LGD") model that reasonably predicts the amount of loss that Farmer Mac
would incur upon the default of each financial asset;
•
An economic factor forecast that updates the migration matrix model and the LGD model with
current assumptions for the economic indicators that Farmer Mac has determined are most
correlated with or relevant to the performance of each portfolio of assets (including Gross
Domestic Product ("GDP"), credit spreads, unemployment rates, land values, and commodity
prices); and
•
A discounted cash flow analysis, which relies upon each of the above model outputs, plus the
contractual terms of each financial asset, and the effective interest rate of each financial asset.
Management evaluates these assumptions by considering many relevant factors, including:
•
economic conditions;
•
geographic and agricultural commodity/product concentrations in the portfolio;
•
the credit profile of the portfolio, including risk ratings and financial metrics;
•
delinquency trends of the portfolio;
•
historical charge-off and recovery activities of the portfolio; and
•
other factors to capture current portfolio trends and characteristics that differ from historical
experience.
Management believes that its methodology produces a reasonable estimate of expected credit losses, as of
the balance sheet date, for the expected life of all of its financial assets.
129
Allowance for Loss on Available-for-Sale (AFS) Securities
To measure current expected credit losses on impaired AFS securities, Farmer Mac first considers those
impaired securities that: 1) Farmer Mac does not intend to sell, and 2) it is not more likely than not that
Farmer Mac will be required to sell before recovering its amortized cost basis. In assessing whether a
credit loss exists, Farmer Mac compares the present value, discounted at the security's effective interest
rate, of cash flows expected to be collected from an impaired AFS debt security to its amortized cost basis.
If the present value of cash flows expected to be collected is less than the amortized cost basis of the
impaired security, a credit loss exists and Farmer Mac records an allowance for loss for that credit loss.
However, the amount of that allowance is limited by the amount that the security’s fair value is less than
its amortized cost basis. Accrued interest receivable is recorded separately on the Consolidated Balance
Sheet, and the allowance for credit losses excludes uncollectible accrued interest receivable.
Collateral Dependent Assets ("CDAs")
CDAs are loan credit exposures in which the borrower is either in foreclosure or is experiencing financial
difficulty and repayment is expected to be provided substantially through the sale or operation of the
collateral by Farmer Mac. Farmer Mac estimates the current expected credit loss on CDAs based upon the
appraised value of the collateral, the costs to sell it, and any applicable credit protection such as a
guarantee.
(i) Earnings Per Common Share
Basic earnings per common share ("EPS") is based on the daily weighted-average number of shares of
common stock outstanding. Diluted earnings per common share is based on the daily weighted-average
number of shares of common stock outstanding adjusted to include all potentially dilutive stock
appreciation rights ("SARs") and unvested restricted stock unit awards. The following schedule reconciles
basic and diluted EPS for the years ended December 31, 2024, 2023, and 2022:
Table 2.1
For the Years Ended December 31,
2024
2023
2022
Net
Income
Weighted
-Average
Shares
$ per
Share
Net
Income
Weighted
-Average
Shares
$ per
Share
Net
Income
Weighted
-Average
Shares
$ per
Share
(in thousands, except per share amounts)
Basic EPS
Net income attributable to common
stockholders
$ 180,428
10,874
$ 16.59
$ 172,838
10,829
$ 15.97 $ 150,979
10,791 $ 14.00
Effect of dilutive securities(1)
SARs and restricted stock units
—
101
(0.15)
—
108
(0.16)
—
92 (0.13)
Diluted EPS
$ 180,428
10,975
$ 16.44
$ 172,838
10,937
$ 15.81 $ 150,979
10,883 $ 13.87
(1)
For the Years Ended December 31, 2024, 2023, and 2022, SARs and restricted stock units of 30,891, 32,683, and 32,448, respectively, were outstanding
but not included in the computation of diluted earnings per share of common stock because they were anti-dilutive. For the Years Ended December 31,
2024, 2023, and 2022, contingent shares of unvested restricted stock units of 28,670, 30,648, and 18,535 respectively, were outstanding but not included
in the computation of diluted earnings per share of common stock because performance conditions had not yet been met.
130
(j) Income Taxes
Deferred federal income tax assets and liabilities are established for temporary differences between
financial and taxable income and are measured using the current enacted statutory tax rate. Income tax
expense is equal to the income taxes payable in the current year plus the net change in the deferred tax
asset or liability balance.
Deferred tax assets are measured at rates enacted for the periods in which they are expected to be realized.
To the extent rates change, the deferred tax asset will be adjusted to reflect the new rate. A increase in
corporate tax rates would result in an increase in the value of the deferred tax asset.
Farmer Mac evaluates its tax positions quarterly to identify and recognize any liabilities related to
uncertain tax positions in its federal income tax returns. Farmer Mac uses a two-step approach in which
income tax benefits are recognized if, based on the technical merits of a tax position, it is more likely than
not (a probability of greater than 50%) that the tax position would be sustained upon examination by the
taxing authority, which includes all related appeals and litigation process. The amount of tax benefit
recognized is then measured at the largest amount of tax benefit that is greater than 50% likely to be
realized upon settlement with the taxing authority, considering all information available at the reporting
date. Farmer Mac's policy for recording interest and penalties associated with uncertain tax positions is to
record them as a component of income tax expense. Farmer Mac establishes a valuation allowance for
deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be
realized. In determining its deferred tax asset valuation allowance, Farmer Mac considered its taxable
income of the appropriate character (for example, ordinary income or capital gain) within the carryback
and carryforward periods available under the tax law and the impact of possible tax planning strategies.
(k) Stock-Based Compensation
Farmer Mac accounts for its stock-based employee compensation plans using the grant date fair value
method of accounting. Farmer Mac measures the cost of employee services received in exchange for an
award of equity instruments based on the grant-date fair value of the award determined using the Black-
Scholes option pricing model. The cost is recognized over the period during which an employee is
required to provide service in exchange for the award. For performance-based grants, Farmer Mac
recognizes the grant-date fair value over the vesting period as long as it remains probable that the
performance conditions will be met. If the service or performance conditions are not met, Farmer Mac
reverses previously recognized compensation expense upon forfeiture.
Farmer Mac recognized $8.1 million, $6.8 million, and $4.6 million of compensation expense related to
SARs and non-vested restricted stock unit awards for the years ended December 31, 2024, 2023, and
2022, respectively.
(l) Comprehensive Income
Comprehensive income represents all changes in stockholders' equity except those resulting from
investments by or distributions to stockholders, and is comprised of net income and unrealized gains and
losses on available-for-sale securities, certain held-to-maturity securities transferred from the available-
for-sale classification, and cash flow hedges, net of related taxes.
131
The following table presents the changes in accumulated other comprehensive income ("AOCI"), net of
tax, by component for the years ended December 31, 2024, 2023, and 2022.
Table 2.2
Available-for-
Sale Securities
Held-to-Maturity
Securities
Cash Flow
Hedges
Total
(in thousands)
Balance as of January 1, 2022
$
(6,932) $
16,153
$
(5,368) $
3,853
Other comprehensive (loss)/income before reclassifications
(108,624)
—
54,688
(53,936)
Amounts reclassified from AOCI
(5)
204
(959)
(760)
Net comprehensive (loss)/income
(108,629)
204
53,729
(54,696)
Balance as of December 31, 2022
$
(115,561) $
16,357
$
48,361
$
(50,843)
Other comprehensive income/(loss) before reclassifications
47,114
(25,199)
4,973
26,888
Amounts reclassified from AOCI
—
118
(16,308)
(16,190)
Net comprehensive income/(loss)
47,114
(25,081)
(11,335)
10,698
Balance as of December 31, 2023
$
(68,447) $
(8,724) $
37,026
$
(40,145)
Other comprehensive income before reclassifications
31,715
—
13,947
45,662
Amounts reclassified from AOCI
(843)
(502)
(16,319)
(17,664)
Net comprehensive income/(loss)
30,872
(502)
(2,372)
27,998
Balance as of December 31, 2024
$
(37,575) $
(9,226) $
34,654
$
(12,147)
132
The following table presents other comprehensive income activity, the impact on net income of amounts
reclassified from each component of AOCI, and the related tax impact for the years ended December 31,
2024, 2023, and 2022:
Table 2.3
For the Years Ended December 31,
2024
2023
2022
Before
Tax
Provision
(Benefit)
After
Tax
Before
Tax
Provision
(Benefit)
After
Tax
Before
Tax
Provision
(Benefit)
After
Tax
(in thousands)
Other comprehensive income:
Available-for-sale-
securities:
Unrealized holding gains/
(losses) on available-for-
sale securities
$ 40,145 $
8,430 $ 31,715 $ 59,640 $ 12,526 $ 47,114 $ (137,500) $ (28,876) $ (108,624)
Less reclassification
adjustments included in:
Gains on sale of
available-for-sale
investment securities(1)
(1,052)
(221)
(831)
—
—
—
—
—
—
Other income(2)
(15)
(3)
(12)
—
—
—
(6)
(1)
(5)
Total
$ 39,078 $
8,206 $ 30,872 $ 59,640 $ 12,526 $ 47,114 $ (137,506) $ (28,877) $ (108,629)
Held-to-maturity securities:
Change in fair value(3)
$
— $
— $
— $ (31,898) $ (6,699) $ (25,199) $
— $
— $
—
Less reclassification
adjustments included in:
Net interest income(4)
(636)
(134)
(502)
148
30
118
259
55
204
Total
$
(636) $
(134) $
(502) $ (31,750) $ (6,669) $ (25,081) $
259 $
55 $
204
Cash flow hedges
Unrealized gains on cash
flow hedges
$ 17,655 $
3,708 $ 13,947 $ 6,295 $ 1,322 $ 4,973 $ 69,225 $ 14,537 $ 54,688
Less reclassification
adjustments included in:
Net interest income(5)
(20,657)
(4,338) (16,319) (20,643)
(4,335) (16,308)
(1,213)
(254)
(959)
Total
$ (3,002) $
(630) $ (2,372) $ (14,348) $ (3,013) $ (11,335) $ 68,012 $ 14,283 $ 53,729
Other comprehensive
income/(loss)
$ 35,440 $
7,442 $ 27,998 $ 13,542 $ 2,844 $ 10,698 $ (69,235) $ (14,539) $ (54,696)
(1)
Represents realized gains and losses on sales of available-for-sale securities.
(2)
Represents amortization of deferred gains related to certain available-for-sale USDA Securities and Farmer Mac Guaranteed USDA Securities.
(3)
Represents the accumulated unrealized loss on the AgVantage Securities transferred from available-for-sale to held-to-maturity.
(4)
Relates to the amortization of unrealized gains or losses prior to the reclassification of these securities from available-for-sale to held-to-maturity. The
amortization of unrealized gains or losses reported in AOCI for held-to-maturity securities will be offset by the amortization of the premium or discount
created from the transfer into held-to-maturity securities, which occurred at fair value. These unrealized gains or losses will be recorded over the
remaining life of the security with no impact on future net income.
(5)
Relates to the recognition of unrealized gains and losses on cash flow hedges recorded in AOCI.
(m) Guarantees
Farmer Mac accounts for its LTSPCs as guarantees. LTSPCs and securitization trusts where Farmer Mac
is not the primary beneficiary result in the creation of guarantee obligations for Farmer Mac. Farmer Mac
records, at the inception of a guarantee or LTSPC, a liability for the fair value of its obligation to stand
ready to perform under the terms of each guarantee or LTSPC and an asset that is equal to the fair value of
the fees that will be received over the life of each guarantee or LTSPC. The fair values of the guarantee
obligation and asset at inception are based on the present value of expected cash flows using
133
management's best estimate of certain key assumptions, which include prepayment speeds, forward yield
curves, and discount rates commensurate with the risks involved. Because the cash flows of these
instruments may be interest rate path dependent, these values and projected discount rates are derived
using a Monte Carlo simulation model. The guarantee obligation and corresponding asset are later
amortized into guarantee and commitment fee income in relation to the decrease in the unpaid principal
balance on the underlying Agricultural Finance real estate mortgage loans and Infrastructure Finance
loans.
See Note 2(h) for Farmer Mac's policy for estimating probable losses for LTSPCs.
(n) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. In determining fair value, Farmer Mac
uses various valuation approaches, including market and income based approaches. When available, the
fair value of Farmer Mac's financial instruments is based on quoted market prices, valuation techniques
that use observable market-based inputs, or unobservable inputs that are corroborated by market
data. Pricing information obtained from third parties is internally validated for reasonableness before use
in the consolidated financial statements.
Fair value measurements related to financial instruments that are reported at fair value in the consolidated
financial statements each period are referred to as recurring fair value measurements. Fair value
measurements related to financial instruments that are not reported at fair value each period but are subject
to fair value adjustments in certain circumstances are referred to as nonrecurring fair value measurements.
Fair Value Classification and Transfers
The fair value hierarchy ranks the quality and reliability of the information used to determine fair
values. The hierarchy gives highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities and the lowest priority to unobservable inputs. The following three levels are used to
classify fair value measurements:
Level 1
Unadjusted quoted prices in active markets that are accessible at the measurement date
for identical, unrestricted assets or liabilities.
Level 2
Quoted prices in markets that are not active or financial instruments for which all
significant inputs are observable, either directly or indirectly.
Level 3
Prices or valuations that require unobservable inputs that are significant to the fair value
measurement.
Farmer Mac performs a detailed analysis of the assets and liabilities carried at fair value to determine the
appropriate level based on the transparency of the inputs used in the valuation techniques. In certain cases,
the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such
cases, an instrument's level within the fair value hierarchy is based on the lowest level of input that is
significant to the fair value measurement. Farmer Mac's assessment of the significance of a particular
input to the fair value measurement of an instrument requires judgment and consideration of factors
specific to the instrument. While Farmer Mac believes its valuation methods are appropriate and
consistent with those of other market participants, using different methodologies or assumptions to
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determine fair value could result in a materially different estimate of fair value for some financial
instruments.
The following is a description of the fair value techniques used for instruments measured at fair value as
well as the general classification of those instruments under the valuation hierarchy described above.
Recurring Fair Value Measurements and Classification
Available-for-Sale and Trading Investment Securities
The fair value of investments in U.S. Treasuries is based on unadjusted quoted prices for identical
securities in active markets. Farmer Mac classifies these fair value measurements as "Level 1."
For a significant portion of Farmer Mac's investment portfolio, including most asset-backed securities,
senior agency debt securities, and Government/GSE guaranteed mortgage-backed securities, fair value is
primarily determined using a reputable and nationally recognized third-party pricing service. The prices
obtained are non-binding and generally representative of recent market trades on similar securities. The
fair value of certain asset-backed and Government guaranteed mortgage-backed securities are estimated
based on quotations from brokers or dealers. Farmer Mac corroborates its primary valuation source by
obtaining a secondary price from another independent third-party pricing service. Farmer Mac classifies
these fair value measurements as "Level 2."
For certain investment securities that are thinly traded or not quoted, Farmer Mac estimates fair value
using internally-developed models that employ a discounted cash flow approach. Farmer Mac maximizes
the use of observable market data, including prices of financial instruments with similar maturities and
characteristics, interest rate yield curves, measures of volatility, and prepayment rates. Farmer Mac
generally considers a market to be thinly traded or not quoted if the following conditions exist: (1) there
are few transactions for the financial instruments; (2) the prices in the market are not current; (3) the price
quotes vary significantly either over time or among independent pricing services or dealers; or (4) there is
limited availability of public market information. Farmer Mac classifies these fair value measurements as
"Level 3."
Available-for-Sale and Trading Farmer Mac Guaranteed Securities and USDA Securities
Farmer Mac estimates the fair value of its Farmer Mac Guaranteed Securities and USDA Securities by
discounting the projected cash flows of these instruments at discount rates commensurate with the risks
involved. The fair values are based on the present value of expected cash flows using management's best
estimate of certain key assumptions, which include prepayment speeds, forward yield curves, and discount
rates commensurate with the risks involved. Farmer Mac classifies these fair value measurements as Level
3 because there is limited market activity and therefore require the use of significant unobservable inputs
in estimating the fair value.
Financial Derivatives
The fair value of exchange-traded U.S. Treasury futures is based on unadjusted quoted prices for identical
financial instruments. Farmer Mac classifies these fair value measurements as Level 1.
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Farmer Mac's derivative portfolio consists primarily of interest rate swaps and forward sales contracts on
the debt of other GSEs. Farmer Mac estimates the fair value of these financial instruments primarily based
upon a third-party accounting and valuation system. The third-party accounting and valuation system
determines the fair value of the interest rate swaps using the market standard methodology of netting the
discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or
payments). Farmer Mac also incorporates credit valuation adjustments to appropriately reflect both its own
nonperformance risk and the respective counterparty’s nonperformance risk in the fair value
measurements of its derivatives. The credit valuation adjustments associated with Farmer Mac’s
derivatives utilize model-derived credit spreads, which are Level 3 inputs. As of December 31, 2024,
Farmer Mac has assessed the significance of the impact of the credit valuation adjustments on the overall
valuation of these interest rate contracts and has determined that the credit valuation adjustments were not
significant to the overall valuation of its derivative portfolio. As a result, Farmer Mac classifies these
derivative instruments as Level 2 due to the observable nature of the significant inputs utilized.
Farmer Mac also internally values its derivative portfolio using a discounted cash flow valuation technique
and obtains counterparty valuations to corroborate management's estimate of fair value, which is based
upon a third-party accounting and valuation system.
See Note 13 for more information about fair value measurement.
(o) Consolidation of Variable Interest Entities
Farmer Mac has interests in various entities that are considered to be VIEs. These interests include
investments in securities issued by VIEs, such as Farmer Mac agricultural mortgage-backed securities
created pursuant to Farmer Mac's securitization transactions and mortgage- and asset-backed trusts that
Farmer Mac did not create. The consolidation model uses a qualitative evaluation that requires
consolidation of an entity when the reporting enterprise both: (1) has the power to direct matters which
significantly impact the activities and success of the entity, and (2) has exposure to benefits and/or losses
that could potentially be significant to the entity. The reporting enterprise that meets both these conditions
is deemed the primary beneficiary of the VIE. Upon consolidation of a VIE, Farmer Mac accounts for the
incremental assets and liabilities initially at their carrying amounts.
The VIEs in which Farmer Mac has a variable interest are limited to securitization trusts. Given the
interests Farmer Mac holds, the major factor in determining if Farmer Mac is the primary beneficiary is
whether Farmer Mac has the power to direct the activities of the trust that potentially have the most
significant impact on the economic performance of the trust. Generally, the ability to make decisions
regarding default mitigation is evidence of that power. Farmer Mac determined that it is the primary
beneficiary for the securitization trusts related to most Agricultural Finance securitization transactions
because of its rights as guarantor under both programs to control the default mitigation activities of the
trusts. For certain securitization trusts created when loans subject to LTSPCs were converted to Farmer
Mac Guaranteed Securities, Farmer Mac determined that it was not the primary beneficiary since the
power to make decisions regarding default mitigation was shared among unrelated parties. For these trusts,
the shared power provisions are substantive with respect to decision-making power and relate to the same
activity (i.e., default mitigation). For similar securitization transactions where the power to make decisions
regarding default mitigation was shared with a related party, Farmer Mac determined that it was the
primary beneficiary because the applicable accounting guidance does not permit parties within a related
party group to conclude that the power is shared. In the event that a related party status changes,
consolidation or deconsolidation of these securitization trusts could occur.
136
For those trusts that Farmer Mac is the primary beneficiary, the assets and liabilities are presented on the
consolidated balance sheets as "Loans held for investment in consolidated trusts, at amortized cost" and
"Debt securities of consolidated trusts held by third parties," respectively. These assets can only be used to
satisfy the obligations of the related trust.
For those trusts in which Farmer Mac has a variable interest but is not the primary beneficiary, Farmer
Mac's interests are presented as either "Farmer Mac Guaranteed Securities," "USDA Securities," or
"Investment securities" on the consolidated balance sheets. Farmer Mac's involvement in VIEs classified
as Farmer Mac Guaranteed Securities or USDA Securities include securitization trusts under the
Agricultural Finance line of business. In the case of USDA guaranteed trusts, Farmer Mac is not
determined to be the primary beneficiary because it does not have the decision-making power over default
mitigation activities. Based on the USDA's program authority over the servicing and default mitigation
activities of the USDA guaranteed portions of loans, Farmer Mac believes that the USDA has the power to
direct the activities that most significantly impact the trust's economic performance. Farmer Mac does not
have exposure to losses that could be significant to the trust and there are no triggers that would result in
Farmer Mac superseding the USDA's authority with regard to directing the activities of the trust. For VIEs
classified as investment securities, which include auction-rate certificates, asset-backed securities, and
government-sponsored enterprise ("GSE") guaranteed mortgage-backed securities, Farmer Mac is
determined not to be the primary beneficiary because of the lack of voting rights or other powers to direct
the activities of the trust.
137
The following tables present, by segment, details about the consolidation of VIEs:
Table 2.4
Consolidation of Variable Interest Entities
As of December 31, 2024
Agricultural
Finance
Treasury
Total
(in thousands)
On-Balance Sheet:
Consolidated VIEs:
Loans held for investment in consolidated trusts, at amortized cost
$
2,038,283
$
—
$
2,038,283
Debt securities of consolidated trusts held by third parties (1)(2)
1,929,628
—
1,929,628
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Carrying value
59,317
—
59,317
Maximum exposure to loss (3)
58,985
—
58,985
Investment securities:
Carrying value (4)
—
4,212,258
4,212,258
Maximum exposure to loss (3)(4)
—
4,547,397
4,547,397
Off-Balance Sheet:
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Maximum exposure to loss (3)(5)
426,310
—
426,310
(1)
Includes borrower remittances of $4.7 million. The borrower remittances had not been passed through to third-party investors as of December 31, 2024.
(2)
Includes $113.2 million in unamortized discount related to structured securitization transactions.
(3)
Farmer Mac uses unpaid principal balance and outstanding face amount of investment securities to represent maximum exposure to loss.
(4)
Includes auction-rate certificates, government-sponsored enterprise ("GSE") guaranteed mortgage-backed securities, and other mission related
investments.
(5)
The amount under the Agricultural Finance line of business relates to unconsolidated trusts where it was determined that Farmer Mac was either not the
primary beneficiary due to shared power with an unrelated party or a subordinate class majority holder has the unilateral right to remove Farmer Mac as
Master Servicer without cause.
138
Consolidation of Variable Interest Entities
As of December 31, 2023
Agricultural
Finance
Treasury
Total
(in thousands)
On-Balance Sheet:
Consolidated VIEs:
Loans held for investment in consolidated trusts, at amortized cost
$
1,432,261
$
—
$
1,432,261
Debt securities of consolidated trusts held by third parties (1)(2)
1,351,069
—
1,351,069
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Carrying value
46,343
—
46,343
Maximum exposure to loss (3)
45,952
—
45,952
Investment securities:
Carrying value (4)
—
3,676,555
3,676,555
Maximum exposure to loss (3)(4)
—
3,862,006
3,862,006
Off-Balance Sheet:
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Maximum exposure to loss (3)(5)
452,602
—
452,602
(1)
Includes borrower remittances of $6.0 million. The borrower remittances had not been passed through to third-party investors as of December 31, 2023.
(2)
Includes $87.1 million in unamortized discount related to a structured securitization transaction.
(3)
Farmer Mac uses unpaid principal balance and outstanding face amount of investment securities to represent maximum exposure to loss.
(4)
Includes auction-rate certificates, government-sponsored enterprise ("GSE") guaranteed mortgage-backed securities, and other mission related
investments.
(5)
The amount under the Agricultural Finance line of business relates to unconsolidated trusts where it was determined that Farmer Mac was either not the
primary beneficiary due to shared power with an unrelated party or a subordinate class majority holder has the unilateral right to remove Farmer Mac as
Master Servicer without cause.
(p) Custodial Deposit Liability
Farmer Mac, as a servicer, collects cash from borrowers in advance of the borrower's contractual payment
date. Farmer Mac's policy is to include the cash in the consolidated balance sheet as "Cash and cash
equivalents" with an offsetting liability to "Accounts payable and accrued expenses" until the payment is
contractually due, at which point the payment is applied to the loan. The net change in the amount of this
custodial cash will also be disclosed in the consolidated statements of cash flows as "Custodial deposit
liability." The balance of this liability was $157.1 million and $26.5 million as of December 31, 2024 and
2023, respectively.
(q) Business Segments
During fourth quarter 2024, Farmer Mac's Chief Operating Decision Maker ("CODM") – its President and
Chief Executive Officer – began to be provided with financial information of an additional operating
segment, "Broadband Infrastructure." Prior to fourth quarter 2024, the financial information of the
Broadband Infrastructure segment had been included within the Rural Utilities segment, which was
renamed as "Power & Utilities" in fourth quarter 2024. The CODM reviews segment core earnings to
make decisions about allocating resources and to assess the financial performance of the segments. Prior
to fourth quarter 2024, the reportable segments were: Farm & Ranch, Corporate AgFinance, Rural
Utilities, Renewable Energy, Funding, Investments, and Corporate. Beginning in fourth quarter 2024, the
reportable segments are: Farm & Ranch, Corporate AgFinance, Power & Utilities, Broadband
Infrastructure, Renewable Energy, Funding, and Investments. The purpose of separately reporting the
139
financial results of the Broadband Infrastructure segment is for the CODM to separately review and
analyze its financial performance according to this type of customer and market because it is meaningfully
distinct from the Power & Utilities customer and market.
Prior to 2024, all operating expenses were allocated to a Corporate segment. Beginning in fourth quarter
2024, operating expenses that are directly attributable to the operating segments are allocated to each
respective segment. The remaining operating expenses that are not directly attributable to operating
segments are unallocated and reported as a reconciling adjustment between total segment results and
consolidated net income.
For the three years ended December 31, 2024, 2023, and 2022, Farmer Mac has recast its segment results
to reflect these changes.
See Note 14 for more information on segment profitability.
(r) New Accounting Standards
Recently Adopted Accounting Guidance
Standard
Description
Date of Adoption
Effect on Consolidated Financial
Statements
ASU 2023-02, Investments -
Equity Method and Joint
Ventures (Topic 323):
Accounting for Investments in
Tax Credit Structures Using
the Proportional Amortization
Method
The amendments in this Update
permit an entity to elect to account
for their tax equity investments using
the proportional amortization method
if certain conditions are met,
regardless of the tax credit program
from which the income tax credits are
received.
January 1, 2024
The adoption of this Update did not have a
material effect on Farmer Mac's financial
position, results of operations, or cash
flows.
ASU 2023-07, Segment
Reporting (Topic 280):
Improvements to Reportable
Segment Disclosures
The amendments in this Update
require disclosures, on an annual and
interim basis, of significant segment
expenses that are regularly provided
to the chief operating decision maker
("CODM"), as well as the aggregate
amount of other segment items
included in the reported measure of
segment profit or loss. This Update
also requires that a public entity
disclose the title and position of the
CODM and an explanation of how
the CODM uses the reported
measure(s) of segment profit or loss.
Public entities will be required to
provide all annual disclosures
currently required by Topic 280 in
interim periods.
December 31, 2024
Farmer Mac adopted this ASU for the year-
end December 31, 2024, and applied it
retrospectively to all prior periods
presented. See note 14 to the consolidated
financial statements.
140
Recently Issued Accounting Guidance, Not Yet Adopted Within Our Consolidated Financial Statements
Standard
Description
Effect on Consolidated Financial
Statements
ASU 2023-09, Income
Taxes (Topic 740):
Improvements to Income
Tax Disclosures
The Update provides guidance on improvements to annual
income tax disclosures by requiring (1) consistent categories
and greater disaggregation of information in the rate
reconciliation and (2) income taxes paid disaggregated by
jurisdiction. Additionally, public entities must provide a
separate disclosure for any reconciling item that meets a
quantitative threshold. ASU 2023-09 is effective for annual
periods beginning after December 15, 2024. The
amendments should be applied on a prospective basis. Early
adoption is permitted.
Farmer Mac is still assessing the impact of the
new accounting standard but does not expect that
adoption of the new guidance will have a material
impact on Farmer Mac's financial position, results
of operations, or cash flows.
ASU 2024-03, Income
Statement - Reporting
Comprehensive Income -
Expense Disaggregation
Disclosures (Subtopic
220-40): Disaggregation
of Income Statement
Expenses
In November 2024, the FASB issued ASU 2024-03, Income
Statement-Reporting Comprehensive Income-Expense
Disaggregation Disclosures (Subtopic 220-40):
Disaggregation of Income Statement Expenses, requiring
public entities to disclose additional information about
specific expense categories in the notes to the financial
statements on an interim and annual basis. ASU 2024-03 is
effective for fiscal years beginning after December 15,
2026, and for interim periods beginning after December 15,
2027, with early adoption permitted.
Farmer Mac is still assessing the impact of the
new accounting standard but does not expect that
adoption of the new guidance will have a material
impact on Farmer Mac's financial position, results
of operations, or cash flows.
(s) Reclassifications
Certain reclassifications of prior period information were made to conform to the current period
presentation. The reclassifications of prior period information were not material to the consolidated
financial statements.
3.
RELATED PARTY TRANSACTIONS
Farmer Mac considers an entity to be a related party if (1) the entity holds at least 5% of a class of Farmer
Mac voting common stock or (2) the institution has an affiliation with a Farmer Mac director and conducts
material business with Farmer Mac. As provided by Farmer Mac's statutory charter, only banks, insurance
companies, and other financial institutions or similar entities may hold Farmer Mac's Class A voting
common stock and only institutions of the Farm Credit System may hold Farmer Mac's Class B voting
common stock. Farmer Mac's statutory charter also provides that Class A stockholders elect 5 members of
Farmer Mac's 15-member board of directors and that Class B stockholders elect 5 members of the board of
directors. Farmer Mac generally requires financial institutions to own a requisite amount of common
stock, based on the size and type of institution, to participate in the Agricultural Finance line of
business. As a result of these requirements, Farmer Mac conducts business with related parties in the
normal course of Farmer Mac's business. All related party transactions were conducted with terms and
conditions comparable to those available to any other participant in Farmer Mac's lines of business not
related to Farmer Mac.
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Zions Bancorporation, National Association:
Farmer Mac considers Zions Bancorporation, National Association and its affiliates ("Zions") a related
party because Zions owns approximately 31.2% of Farmer Mac's Class A voting common stock. The
following transactions occurred between Farmer Mac and Zions during 2024, 2023, and 2022:
Table 3.1
For the Years Ended December 31,
2024
2023
2022
(in thousands)
Unpaid Principal Balance:
Purchases:
Loans
$
173,928
$
160,079
$
274,517
USDA Securities
363
231
4,171
Sales of Farmer Mac Guaranteed Securities
60,192
—
99,643
Outstanding Agricultural Finance mortgage loans purchased and USDA Securities purchased from Zions
represented 3.1% of Farmer Mac's outstanding business volume (excluding loans serviced for others) as of
both December 31, 2024 and 2023.
Zions retained servicing fees of $11.2 million, $11.2 million, and $10.4 million in 2024, 2023, and 2022,
respectively, for its work as a Farmer Mac servicer.
National Rural Utilities Cooperative Financial Corporation:
Farmer Mac considers the National Rural Utilities Cooperative Financial Corporation ("CFC") a related
party because CFC owns approximately 7.91% of Farmer Mac's Class A voting common stock. The
following transactions occurred between Farmer Mac and CFC during 2024, 2023, and 2022:
Table 3.2
Farmer Mac Loan Purchases and Guarantees
For the Years Ended December 31,
2024
2023
2022
(in thousands)
Unpaid Principal Balance:
Loans
$
453,972
$
298,254
$
386,998
LTSPCs
—
—
30,421
AgVantage Securities
200,000
1,450,000
670,000
Total purchases and guarantees
$
653,972
$ 1,748,254
$ 1,087,419
Of Farmer Mac's total outstanding business volume (excluding loans serviced for others) as of December
31, 2024 and 2023, Power & Utilities loans, loans under LTSPCs, and AgVantage securities issued by
CFC represented 19.0% and 20.4%, respectively.
Farmer Mac had interest receivable of $30.0 million and $27.0 million as of December 31, 2024 and 2023,
respectively, and earned interest income of $158.4 million, $143.5 million, and $79.4 million during 2024,
2023, and 2022, respectively, related to its AgVantage transactions with CFC.
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As of both December 31, 2024 and 2023, Farmer Mac had $0.1 million of commitment fees receivable
from CFC and earned commitment fees of $0.9 million, $1.0 million, and $1.1 million, respectively for
2024, 2023, and 2022.
CFC retained servicing fees of $4.1 million, $3.7 million, and $3.4 million in 2024, 2023, and 2022,
respectively, for its work as a Farmer Mac central servicer.
CoBank:
Farmer Mac considers CoBank a related party because CoBank owns approximately 32.6% of Farmer
Mac's Class B voting common stock.
Farmer Mac purchased $442.7 million, $438.8 million, and $376.0 million of loans and participations
from CoBank, under the Infrastructure Finance and Agricultural Finance lines of business in 2024, 2023,
and 2022, respectively. Of Farmer Mac's total outstanding business volume as of December 31, 2024 and
2023, CoBank's loans, participations, and unfunded commitments represented 7.1% and 6.7%,
respectively, of total outstanding volume (excluding loans serviced for others).
CoBank retained servicing fees of $4.0 million, $3.6 million, and $3.5 million in 2024, 2023, and 2022,
respectively, for its work as a Farmer Mac central servicer.
AgFirst Farm Credit Bank:
Farmer Mac considers AgFirst Farm Credit Bank ("AgFirst") a related party because AgFirst owns
approximately 16.8% of Farmer Mac's Class B voting common stock.
AgFirst entered into no Agricultural Finance LTSPC transactions in either 2024, 2023, or 2022. The
aggregate balance of Agricultural Finance LTSPCs outstanding as of December 31, 2024 and 2023 was
$415.2 million and $447.3 million, respectively. In 2024, 2023, and 2022, Farmer Mac received
$1.3 million, $1.4 million, and $1.2 million, respectively, in commitment fees from AgFirst, and had
$0.1 million of commitment fees receivable as of both December 31, 2024 and 2023.
AgFirst owns certain securities backed by rural housing loans. Farmer Mac guarantees the last ten percent
of losses (based on the original principal balance at the time of pooling) from each loan in the pool
backing those securities. As of December 31, 2024 and 2023, the outstanding balance of those securities
owned by AgFirst was $1.5 million and $1.8 million, respectively. Farmer Mac received guarantee fees of
$12,000, $12,000, and $15,000 in 2024, 2023, and 2022, respectively, on those securities.
Farm Credit Bank of Texas:
Farmer Mac considers Farm Credit Bank of Texas a related party because the bank owns approximately
7.7% of Farmer Mac's Class B voting common stock. Farmer Mac received from Farm Credit Bank of
Texas commitment fees of $3.6 million, $3.4 million, and $2.9 million in 2024, 2023, and 2022,
respectively. The aggregate amount of Agricultural Finance LTSPCs outstanding with Farm Credit Bank
of Texas as of December 31, 2024 and 2023 was $1.2 billion and $923.9 million, respectively. In each of
2024, 2023, and 2022, Farm Credit Bank of Texas retained $0.1 million in servicing fees for its work as a
Farmer Mac central servicer.
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Other Related Party Transactions
Farmer Mac considers Friona Industries LP and Farm Credit of Florida related parties because each of
those entities has an affiliation with a member of Farmer Mac's board of directors.
In 2024, Farmer Mac purchased an Agricultural Finance loan participation in the amount of $46.2 million
from an unrelated seller where Friona Industries LP was the borrower. Farmer Mac did not purchase any
Agricultural Finance mortgage loans where Friona Industries LP was the borrower in 2023 or 2022.
Farmer Mac purchased $1.7 million in Agricultural Finance loans from Farm Credit of Florida in 2024.
Farmer Mac did not purchase any Agricultural Finance mortgage loans from Farm Credit of Florida in
2023 or 2022.
144
4.
INVESTMENT SECURITIES
Farmer Mac’s investment securities portfolio is comprised primarily of the following major security types,
which is based on the Issuer and associated security characteristics:
•
U.S Government guaranteed securities: single-family and multi-family mortgage-backed securities
issued by Government National Mortgage Association (Ginnie Mae) and pass-through securities
issued by the Small Business Administration, which are guaranteed by the U.S. Government;
•
U.S. Government Sponsored Enterprise (“GSE”) guaranteed securities: single-family and multi-
family mortgage-backed securities issued by Federal National Mortgage Association (Fannie Mae)
and Federal Home Loan Mortgage Corporation (Freddie Mac). GSE securities are not guaranteed
by the U.S. government;
•
U.S. Treasury Obligations: sovereign debt issued by the United States of America.
The following tables set forth information about Farmer Mac's available-for-sale and held-to-maturity
investment securities as of December 31, 2024 and 2023:
Table 4.1
As of December 31, 2024
Amount
Outstanding
Unamortized
Premium/
(Discount)
Amortized
Cost(1)
Allowance
for losses(2)
Unrealized
Gains
Unrealized
Losses
Fair Value
(in thousands)
Available-for-sale:
Floating rate auction-rate certificates
backed by Government guaranteed student
loans
$
19,700
$
—
$
19,700
$
(27) $
—
$
(197) $
19,476
Floating rate Government/GSE guaranteed
mortgage-backed securities
2,317,032
(841)
2,316,191
—
3,484
(13,950)
2,305,725
Fixed rate Government/GSE guaranteed
mortgage-backed securities
2,544,136
(66,845)
2,477,291
—
3,426
(142,750)
2,337,967
Floating rate U.S. Treasuries
—
—
—
—
—
—
—
Fixed rate U.S. Treasuries
1,302,677
(10,743)
1,291,934
—
2,604
(4,692)
1,289,846
Total available-for-sale
6,183,545
(78,429)
6,105,116
(27)
9,514
(161,589)
5,953,014
Held-to-maturity:
Floating rate Government/GSE
guaranteed mortgage-backed securities(3)
9,270
—
9,270
—
270
—
9,540
Total held-to-maturity
$
9,270
$
—
$
9,270
$
—
$
270
$
—
$
9,540
(1)
Amounts presented exclude $22.3 million of accrued interest receivable on investment securities as of December 31, 2024.
(2)
Represents the amount of impairment that has resulted from credit-related factors, and therefore was recognized in the consolidated statement of
operations as a provision for losses. Amount excludes unrealized losses relating to non-credit factors.
(3)
The held-to-maturity investment securities had a weighted average yield of 6.4% as of December 31, 2024.
145
As of December 31, 2023
Amount
Outstanding
Unamortized
Premium/
(Discount)
Amortized
Cost(1)
Allowance
for losses(2)
Unrealized
Gains
Unrealized
Losses
Fair Value
(in thousands)
Available-for-sale:
Floating rate auction-rate certificates
backed by Government guaranteed student
loans
$
19,700
$
—
$
19,700
$
(27) $
—
$
(591) $
19,082
Floating rate Government/GSE guaranteed
mortgage-backed securities
2,454,009
(1,138) 2,452,871
—
1,212
(29,649)
2,424,434
Fixed rate Government/GSE guaranteed
mortgage-backed securities
1,727,669
(46,788) 1,680,881
—
6,558
(117,824)
1,569,615
Floating rate U.S. Treasuries
50,000
(17)
49,983
—
—
(15)
49,968
Fixed rate U.S. Treasuries
869,585
(12,885)
856,700
—
2,074
(2,942)
855,832
Total available-for-sale
5,120,963
(60,828) 5,060,135
(27)
9,844
(151,021)
4,918,931
Held-to-maturity:
Floating rate Government/GSE
guaranteed mortgage-backed securities(3)
53,756
—
53,756
—
1,745
—
55,501
Total held-to-maturity
$
53,756
$
—
$
53,756
$
—
$
1,745
$
—
$
55,501
(1)
Amounts presented exclude $15.9 million of accrued interest receivable on investment securities as of December 31, 2023.
(2)
Represents the amount of impairment that has resulted from credit-related factors, and therefore was recognized in the consolidated statement of
operations as a provision for losses. Amount excludes unrealized losses relating to non-credit factors.
(3)
The held-to-maturity investment securities had a weighted average yield of 6.7% as of December 31, 2023.
During the year ended December 31, 2024, Farmer Mac sold floating rate government/GSE guaranteed
mortgage-backed securities for $115.2 million from its available-for-sale investment portfolio, resulting in
a gain of $1.1 million. These sales were done to rebalance the liquidity investment portfolio given the
lower level of business volume activity while demonstrating that the portfolio provides strong contingent
liquidity. Farmer Mac did not sell any securities from its available-for-sale investment portfolio during the
years ended December 31, 2023 and 2022.
As of December 31, 2024 and 2023, unrealized losses on available-for-sale investment securities were as
follows:
Table 4.2
As of December 31, 2024
Available-for-Sale Securities
Unrealized loss position for
less than 12 months
Unrealized loss position for
more than 12 months
Fair Value
Unrealized
Loss
Fair Value
Unrealized
Loss
(dollars in thousands)
Floating rate auction-rate certificates backed by Government
guaranteed student loans
$
—
$
—
$
19,476
$
(197)
Floating rate Government/GSE guaranteed mortgage-backed securities
269,862
(420)
1,025,360
(13,530)
Fixed rate Government/GSE guaranteed mortgage-backed securities
999,793
(17,682)
946,166
(125,068)
Floating rate U.S. Treasuries
—
—
—
—
Fixed rate U.S. Treasuries
590,307
(4,375)
58,523
(317)
Total
$
1,859,962
$
(22,477) $
2,049,525
$
(139,112)
Number of securities in loss position
90
155
146
As of December 31, 2023
Available-for-Sale Securities
Unrealized loss position for
less than 12 months
Unrealized loss position for
more than 12 months
Fair Value
Unrealized
Loss
Fair Value
Unrealized
Loss
(dollars in thousands)
Floating rate auction-rate certificates backed by Government
guaranteed student loans
$
—
$
—
$
19,082
$
(591)
Floating rate Government/GSE guaranteed mortgage-backed securities
568,759
(4,395)
1,449,122
(25,254)
Fixed rate Government/GSE guaranteed mortgage-backed securities
384,305
(4,262)
905,759
(113,562)
Floating rate U.S. Treasuries
49,969
(15)
—
—
Fixed rate U.S. Treasuries
140,435
(606)
237,192
(2,336)
Total
$
1,143,468
$
(9,278) $
2,611,155
$
(141,743)
Number of securities in loss position
91
162
The unrealized losses presented above are principally due to a general widening of market spreads and
changes in the levels of interest rates from the dates of acquisition to December 31, 2024 and 2023, as
applicable. The resulting decrease in fair values reflects an increase in the perceived risk by the financial
markets related to those securities. As of both December 31, 2024 and 2023, all of the investment
securities in an unrealized loss position either were backed by the full faith and credit of the U.S.
government, a U.S. government sponsored enterprise, or had credit ratings of at least "AA+."
Securities in unrealized loss positions for 12 months or longer have a fair value as of December 31, 2024
that is, on average, approximately 93.6% of their amortized cost basis. Farmer Mac believes that all of
these unrealized losses are recoverable within a reasonable period of time by way of maturity, changes in
credit spread, or changes in levels of interest rates.
The amortized cost, fair value, and weighted-average yield of available-for-sale investment securities by
remaining contractual maturity as of December 31, 2024 are set forth below. Asset-backed and mortgage-
backed securities are included based on their final maturities, although the actual maturities may differ due
to prepayments of the underlying assets.
Table 4.3
As of December 31, 2024
Available-for-Sale Securities
Amortized
Cost
Fair Value
Weighted-
Average
Yield
(dollars in thousands)
Due within one year
$
463,931
$
464,956
3.90%
Due after one year through five years
2,308,576
2,288,524
4.09%
Due after five years through ten years
2,441,044
2,319,007
3.94%
Due after ten years
891,565
880,527
4.97%
Total
$
6,105,116
$
5,953,014
4.15%
147
5.
FARMER MAC GUARANTEED SECURITIES AND USDA SECURITIES
The following tables set forth information about on-balance sheet Farmer Mac Guaranteed Securities and
USDA Securities as of December 31, 2024 and 2023:
Table 5.1
As of December 31, 2024
Unpaid
Principal
Balance
Unamortized
Premium/
(Discount)
Amortized
Cost(1)
Allowance
for losses(2)
Unrealized
Gains
Unrealized
Losses
Fair Value
(in thousands)
Held-to-maturity:
AgVantage
$ 2,694,492
$
(26,928) $ 2,667,564
$
(178) $
5,978
$
(21,592) $ 2,651,772
Farmer Mac Guaranteed USDA
Securities
50,275
27
50,302
—
246
(1,220)
49,328
Total Farmer Mac Guaranteed
Securities
2,744,767
(26,901) 2,717,866
(178)
6,224
(22,812) 2,701,100
USDA Securities
2,351,334
19,200
2,370,534
—
180
(258,190) 2,112,524
Total held-to-maturity
$ 5,096,101
$
(7,701) $ 5,088,400
$
(178) $
6,404
$ (281,002) $ 4,813,624
Available-for-sale:
AgVantage
$ 5,826,948
$
—
$ 5,826,948
$
(236) $
6,295
$ (327,476) $ 5,505,531
Farmer Mac Guaranteed
Securities(3)
—
8,710
8,710
—
305
—
9,015
Total available-for-sale
$ 5,826,948
$
8,710
$ 5,835,658
$
(236) $
6,600
$ (327,476) $ 5,514,546
Trading:
USDA Securities(4)
$
814
$
42
$
856
$
— $
—
$
(38) $
818
(1)
Amounts presented exclude $57.5 million and $59.8 million of accrued interest receivable on available-for-sale and held-to-maturity securities,
respectively, as of December 31, 2024.
(2)
Represents the amount of impairment that has resulted from credit-related factors, and therefore was recognized in the statement of financial operations as
a provision for losses. Amount excludes unrealized losses relating to non-credit factors.
(3)
Fair value includes $9.0 million of an interest-only security with a notional amount of $228.0 million.
(4)
The trading USDA securities had a weighted average yield of 5.47% as of December 31, 2024.
As of December 31, 2023
Unpaid
Principal
Balance
Unamortized
Premium/
(Discount)
Amortized
Cost(1)
Allowance
for losses(2)
Unrealized
Gains
Unrealized
Losses
Fair Value
(in thousands)
Held-to-maturity:
AgVantage
$ 4,206,324
$
(29,622) $ 4,176,702
$
(209) $
4,676
$
(39,451) $ 4,141,718
Farmer Mac Guaranteed USDA
Securities
36,543
33
36,576
—
107
(806)
35,877
Total Farmer Mac Guaranteed
Securities
4,242,867
(29,589) 4,213,278
(209)
4,783
(40,257) 4,177,595
USDA Securities
2,331,093
23,078
2,354,171
—
417
(319,783) 2,034,805
Total held-to-maturity
$ 6,573,960
$
(6,511) $ 6,567,449
$
(209) $
5,200
$ (360,040) $ 6,212,400
Available-for-sale:
AgVantage
$ 5,816,024
$
—
$ 5,816,024
$
(317) $
16,416
$ (309,411) $ 5,522,712
Farmer Mac Guaranteed
Securities(3)
—
9,409
9,409
—
358
—
9,767
Total available-for-sale
$ 5,816,024
$
9,409
$ 5,825,433
$
(317) $
16,774
$ (309,411) $ 5,532,479
Trading:
USDA Securities(4)
$
1,236
$
64
$
1,300
$
—
$
—
$
(59) $
1,241
(1)
Amounts presented exclude $47.2 million and $67.4 million of accrued interest receivable on available-for-sale and held-to-maturity securities,
respectively, as of December 31, 2023.
148
(2)
Represents the amount of impairment that has resulted from credit-related factors, and therefore was recognized in the statement of financial operations as
a provision for losses. Amount excludes unrealized losses relating to non-credit factors.
(3)
Fair value includes $9.8 million of an interest-only security with a notional amount of $238.4 million.
(4)
The trading USDA securities had a weighted average yield of 5.46% as of December 31, 2023.
On July 1, 2023, Farmer Mac transferred $2.7 billion of AgVantage Securities from available-for-sale to
held-to-maturity to reflect Farmer Mac's positive intent and ability to hold these securities until maturity or
payoff. Farmer Mac transferred these securities at fair value as of the date of the transfer, which included
a cost basis adjustment due to unrealized losses of $31.9 million. The accumulated unrealized losses were
recorded in accumulated other comprehensive income in the amount of $31.9 million. Both the cost basis
adjustment and accumulated unrealized depreciation began amortizing as of the date of transfer and will
continue be amortized as an adjustment to the yield on the held-to-maturity AgVantage Securities over the
remaining term of the transferred securities.
As of December 31, 2024 and 2023, unrealized losses on held-to-maturity and available-for-sale on-
balance sheet Farmer Mac Guaranteed Securities and USDA Securities were as follows:
Table 5.2
As of December 31, 2024
Held-to-Maturity and Available-for-Sale Securities
Unrealized loss position for
less than 12 months
Unrealized loss position for
more than 12 months
Fair Value
Unrealized
Loss
Fair Value
Unrealized
Loss
(in thousands)
Held-to-maturity:
AgVantage
$
998,200
$
(3,326) $
1,187,464
$
(18,266)
Farmer Mac Guaranteed USDA Securities
30,912
(529)
8,070
(691)
USDA Securities
8,938
(164)
2,099,695
(258,026)
Total held-to-maturity
$
1,038,050
$
(4,019) $
3,295,229
$
(276,983)
Available-for-sale:
AgVantage
$
1,152,227
$
(12,889) $
3,649,845
$
(314,587)
Total available-for-sale
$
1,152,227
$
(12,889) $
3,649,845
$
(314,587)
149
As of December 31, 2023
Held-to-Maturity and Available-for-Sale Securities
Unrealized loss position for
less than 12 months
Unrealized loss position for
more than 12 months
Fair Value
Unrealized
Loss
Fair Value
Unrealized
Loss
(in thousands)
Held-to-maturity:
AgVantage
$
2,070,770
$
(6,705) $
725,347
$
(32,746)
Farmer Mac Guaranteed USDA Securities
—
—
8,393
(806)
USDA Securities
—
—
2,023,801
(319,783)
Total held-to-maturity
$
2,070,770
$
(6,705) $
2,757,541
$
(353,335)
Available-for-sale:
AgVantage
$
508,182
$
(5,716) $
4,043,431
$
(303,695)
Total available-for-sale
$
508,182
$
(5,716) $
4,043,431
$
(303,695)
The unrealized losses presented above are principally due to changes in interest rates from the date of
acquisition to December 31, 2024 and 2023, as applicable.
The credit exposure related to Farmer Mac's USDA Securities in the Agricultural Finance line of business
is covered by the full faith and credit guarantee of the United States of America.
The unrealized losses from AgVantage securities were on 66 and 68 available-for-sale securities as of
December 31, 2024 and 2023, respectively. There were 45 and 53 held-to-maturity AgVantage securities
with an unrealized loss as of December 31, 2024 and 2023, respectively. As of December 31, 2024 and
2023, 54 and 62 available-for-sale AgVantage securities had been in a loss position for more than 12
months, respectively. As of December 31, 2024 and 2023, there were 26 and 22 held-to-maturity
AgVantage securities, respectively, in a loss position for more than 12 months.
During the three years ended December 31, 2024, 2023, and 2022. Farmer Mac had no sales of
AgVantage Farmer Mac Guaranteed Securities, USDA Farmer Mac Guaranteed Securities or USDA
Trading Securities and, therefore, Farmer Mac realized no gains or losses.
150
The amortized cost, fair value, and weighted-average yield of available-for-sale and held-to-maturity
Farmer Mac Guaranteed Securities and USDA Securities by remaining contractual maturity as of
December 31, 2024 are set forth below. The balances presented are based on their contractual maturities,
although the actual maturities may differ due to prepayments of the underlying assets.
Table 5.3
As of December 31, 2024
Available-for-Sale Securities
Amortized
Cost(1)
Fair Value
Weighted-
Average
Yield
(dollars in thousands)
Due within one year
$
871,516
$
869,749
4.20 %
Due after one year through five years
3,102,516
3,010,710
3.73 %
Due after five years through ten years
730,000
650,677
3.26 %
Due after ten years
1,131,626
983,410
3.82 %
Total
$
5,835,658
$
5,514,546
3.75 %
(1)
Amounts presented exclude $57.5 million of accrued interest receivable.
As of December 31, 2024
Held-to-Maturity Securities
Amortized
Cost(1)
Fair Value
Weighted-
Average
Yield
(dollars in thousands)
Due within one year
$
1,094,388
$
1,089,152
4.41 %
Due after one year through five years
1,021,370
1,006,240
4.08 %
Due after five years through ten years
296,135
263,383
3.72 %
Due after ten years
2,676,507
2,454,849
4.23 %
Total
$
5,088,400
$
4,813,624
4.25 %
(1)
Amounts presented exclude $59.8 million of accrued interest receivable.
6.
FINANCIAL DERIVATIVES
Farmer Mac enters into financial derivative transactions to protect against risk from the effects of market
price, or interest rate movements, on the value of certain assets, future cash flows, or debt issuance, and
not for trading or speculative purposes. Certain financial derivatives are designated as fair value hedges of
fixed rate assets, classified as available-for-sale, to protect against fair value changes in the assets related
to changes in a benchmark interest rate (e.g., SOFR). Certain other financial derivatives are designated as
cash flow hedges to mitigate the volatility of future interest rate payments on floating rate debt. Certain
financial derivatives are not designated in hedge accounting relationships.
Farmer Mac manages the interest rate risk related to loans it has committed to acquire, but has not yet
permanently funded, primarily through the use of futures contracts involving U.S. Treasury securities.
Farmer Mac aims to achieve a duration-matched hedge ratio between the hedged item and the hedge
instrument. Gains or losses generated by these hedge transactions are expected to offset changes in
funding costs. All financial derivatives are recorded on the balance sheet at fair value as a freestanding
asset or liability.
The following tables summarize information related to Farmer Mac's financial derivatives on a gross basis
without giving consideration to master netting arrangements. The table below includes accrued interest on
cleared swaps, but excludes $15.8 million and $16.4 million of accrued interest receivable and
$4.9 million and $6.5 million of accrued interest payable on uncleared swaps as of December 31, 2024 and
2023, respectively. The aforementioned accrued interest on uncleared swaps is included within Accrued
Interest Receivable and Accrued Interest Payable on the consolidated balance sheets.
Table 6.1
As of December 31, 2024
Fair Value
Weighted-
Average
Pay Rate
Weighted-
Average
Receive
Rate
Weighted-
Average
Forward
Price
Weighted-
Average
Remaining
Term
(in years)
Notional
Amount
Asset
(Liability)
(dollars in thousands)
Fair value hedges:
Interest rate swaps:
Receive fixed non-callable
$ 7,460,685
$
174
$ (12,165)
4.71%
3.40%
1.53
Pay fixed non-callable
9,657,181
5,134
(97)
2.67%
4.56%
9.12
Receive fixed callable
4,592,077
5,119
(65,167)
4.54%
3.67%
2.65
Cash flow hedges:
Interest rate swaps:
Pay fixed non-callable
540,000
16,903
(2)
1.92%
4.87%
3.43
No hedge designation:
Interest rate swaps:
Pay fixed non-callable
157,776
819
(1)
2.92%
4.75%
3.40
Receive fixed non-callable
1,803,328
48
(2)
4.52%
4.43%
0.30
Basis swaps
655,384
8
(354)
4.69%
4.52%
3.83
Treasury futures
29,900
46
—
108.91
Netting adjustments(1)
—
(462)
462
Total financial derivatives
$ 24,896,331
$
27,789
$ (77,326)
(1)
Amounts represent the application of the netting requirements that allow Farmer Mac to settle positive and negative positions, including accrued interest,
held or placed with the same clearing agent.
152
As of December 31, 2023
Fair Value
Weighted-
Average
Pay Rate
Weighted-
Average
Receive
Rate
Weighted-
Average
Forward
Price
Weighted-
Average
Remaining
Term
(in years)
Notional
Amount
Asset
(Liability)
(dollars in thousands)
Fair value hedges:
Interest rate swaps:
Receive fixed non-callable
$ 9,776,685
$
2,350
$ (20,390)
5.57%
2.94%
1.78
Pay fixed non-callable
9,174,253
7,767
(1,081)
2.50%
5.47%
9.57
Receive fixed callable
3,879,827
7,374
(95,984)
5.40%
3.40%
2.48
Cash flow hedges:
Interest rate swaps:
Pay fixed non-callable
558,000
20,234
(43)
1.94%
5.82%
4.30
No hedge designation:
Interest rate swaps:
Pay fixed non-callable
160,623
676
(29)
2.92%
5.64%
4.34
Receive fixed non-callable
1,358,396
263
(3)
5.44%
4.87%
0.64
Basis swaps
850,384
39
(746)
5.52%
5.48%
3.83
Treasury futures
21,300
11
(91)
112.51
Netting adjustments(1)
—
(1,236)
1,236
Total financial derivatives
$ 25,779,468
$
37,478
$ (117,131)
(1)
Amounts represent the application of the netting requirements that allow Farmer Mac to settle positive and negative positions, including accrued interest,
held or placed with the same clearing agent.
As of December 31, 2024, Farmer Mac expects to reclassify $10.5 million after-tax from accumulated
other comprehensive income to earnings over the next twelve months related to cash flow hedges. This
amount could differ from amounts actually recognized due to changes in interest rates, hedge de-
designations, and the addition of other hedges after December 31, 2024. During the years ended
December 31, 2024 and 2023, there were no gains or losses from interest rate swaps designated as cash
flow hedges reclassified to earnings because it was probable that the originally forecasted transactions
would occur.
The following tables summarize the net income/(expense) recognized in the consolidated statements of
operations related to derivatives for the years ended December 31, 2024, 2023, and 2022:
153
Table 6.2
For the Year Ended December 31, 2024
Net Income/(Expense) Recognized in Consolidated Statement of Operations on Derivatives
Net Interest Income
Non-Interest
Income
Total
Interest Income
Investments and
Cash Equivalents
Interest Income
Farmer Mac
Guaranteed
Securities and
USDA
Securities
Interest
Income
Loans
Total
Interest
Expense
Gains on
financial
derivatives
(in thousands)
Total amounts presented in the
consolidated statement of operations
$
345,501 $
628,828
$
629,187
$ (1,249,649) $
2,636
$ 356,503
Income/(expense) related to interest
settlements on fair value hedging
relationships:
Recognized on derivatives
40,224
147,922
68,346
(275,387)
—
(18,895)
Recognized on hedged items
44,303
213,759
69,516
(423,428)
—
(95,850)
Premium/discount amortization
recognized on hedged items
2,134
—
—
(3,197)
—
(1,063)
Income/(expense) related to interest
settlements on fair value hedging
relationships
$
86,661 $
361,681
$
137,862
$ (702,012) $
—
$ (115,808)
Gains/(losses) on fair value hedging
relationships:
Recognized on derivatives
$
29,181 $
52,494
$
71,213
$ 105,355
$
—
$ 258,243
Recognized on hedged items
(28,502)
(49,922)
(66,852)
(101,419)
—
(246,695)
Gains/(losses) on fair value hedging
relationships
$
679 $
2,572
$
4,361
$
3,936
$
—
$
11,548
Expense related to interest settlements
on cash flow hedging relationships:
Interest settlements reclassified from
AOCI into net income on derivatives
$
— $
—
$
—
$
20,657
$
—
$
20,657
Recognized on hedged items
—
—
—
(31,241)
—
(31,241)
Discount amortization recognized on
hedged items
—
—
—
(34)
—
(34)
Expense recognized on cash flow
hedges
$
— $
—
$
—
$
(10,618) $
—
$ (10,618)
Gains on financial derivatives not
designated in hedging relationships:
Gains on interest rate swaps
$
— $
—
$
—
$
—
$
2,424
$
2,424
Interest expense on interest rate swaps
—
—
—
—
(1,377)
(1,377)
Treasury futures
—
—
—
—
1,589
1,589
Gains on financial derivatives not
designated in hedge relationships
$
— $
—
$
—
$
—
$
2,636
$
2,636
154
For the Year Ended December 31, 2023
Net Income/(Expense) Recognized in Consolidated Statement of Operations on Derivatives
Net Interest Income
Non-Interest
Income
Total
Interest Income
Investments and
Cash Equivalents
Interest Income
Farmer Mac
Guaranteed
Securities and
USDA
Securities
Interest
Income
Loans
Total
Interest
Expense
Gains on
financial
derivatives
(in thousands)
Total amounts presented in the
consolidated statement of operations:
$
287,144 $
590,250
$ 514,894
$ (1,064,741) $
2,882
$ 330,429
Income/(expense) related to interest
settlements on fair value hedging
relationships:
Recognized on derivatives
35,377
146,027
64,648
(345,852)
—
(99,800)
Recognized on hedged items
33,488
183,396
63,133
(341,523)
—
(61,506)
Premium/discount amortization
recognized on hedged items
1,860
—
—
(2,865)
—
(1,005)
Income/(expense) related to interest
settlements on fair value hedging
relationships
$
70,725 $
329,423
$ 127,781
$ (690,240) $
—
$ (162,311)
(Losses)/gains on fair value hedging
relationships:
Recognized on derivatives
$
(19,445) $
(91,151) $
(23,528) $
279,803
$
—
$ 145,679
Recognized on hedged items
18,472
89,437
21,686
(280,668)
—
(151,073)
(Losses)/gains on fair value hedging
relationships
$
(973) $
(1,714) $
(1,842) $
(865) $
—
$
(5,394)
Expense related to interest settlements
on cash flow hedging relationships:
Interest settlements reclassified from
AOCI into net income on derivatives
$
— $
—
$
—
$
20,643
$
—
$
20,643
Recognized on hedged items
—
—
—
(31,610)
—
(31,610)
Discount amortization recognized on
hedged items
—
—
—
(55)
—
(55)
Expense recognized on cash flow
hedges
$
— $
—
$
—
$
(11,022) $
—
$ (11,022)
Gains on financial derivatives not
designated in hedge relationships:
Gains on interest rate swaps
$
— $
—
$
—
$
—
$
4,395
$
4,395
Interest expense on interest rate swaps
—
—
—
—
(4,845)
(4,845)
Treasury futures
—
—
—
—
3,332
3,332
Gains on financial derivatives not
designated in hedge relationships
$
— $
—
$
—
$
—
$
2,882
$
2,882
155
For the Year Ended December 31, 2022
Net Income/(Expense) Recognized in Consolidated Statement of Operations on Derivatives
Net Interest Income
Non-Interest
Income
Total
Interest Income
Investments and
Cash Equivalents
Interest Income
Farmer Mac
Guaranteed
Securities and
USDA
Securities
Interest
Income
Loans
Total
Interest
Expense
Gains on
financial
derivatives
(in thousands)
Total amounts presented in the
consolidated statement of operations:
$
82,659 $
283,769
$
350,420
$ (445,908) $
22,631
$ 293,571
Income/(expense) related to interest
settlements on fair value hedging
relationships:
Recognized on derivatives
2,727
(19,486)
(501)
(61,941)
—
(79,201)
Recognized on hedged items
16,199
142,809
56,141
(132,406)
—
82,743
Premium/discount amortization
recognized on hedged items
(754)
—
—
(2,116)
—
(2,870)
Income/(expense) related to interest
settlements on fair value hedging
relationships
$
18,172 $
123,323
$
55,640
$ (196,463) $
—
$
672
(Losses)/gains on fair value hedging
relationships:
Recognized on derivatives
$
104,722 $
553,530
$
351,116
$ (489,445) $
—
$ 519,923
Recognized on hedged items
(105,889)
(553,393)
(341,162)
486,323
—
(514,121)
(Losses)/gains on fair value hedging
relationships
$
(1,167) $
137
$
9,954
$
(3,122) $
—
$
5,802
Expense related to interest settlements
on cash flow hedging relationships:
Interest settlements reclassified from
AOCI into net income on derivatives
$
— $
—
$
—
$
1,213
$
—
$
1,213
Recognized on hedged items
—
—
—
(12,847)
—
(12,847)
Discount amortization recognized on
hedged items
—
—
—
(57)
—
(57)
Expense recognized on cash flow
hedges
$
— $
—
$
—
$ (11,691) $
—
$ (11,691)
Gains on financial derivatives not
designated in hedge relationships:
Gains on interest rate swaps
$
— $
—
$
—
$
—
$
13,012
$
13,012
Interest expense on interest rate swaps
—
—
—
—
(7,619)
(7,619)
Treasury futures
—
—
—
—
17,238
17,238
Gains on financial derivatives not
designated in hedge relationships
$
— $
—
$
—
$
—
$
22,631
$
22,631
The following table shows the carrying amount and associated cumulative basis adjustment related to the
application of hedge accounting that is included in the carrying amount of hedged assets and liabilities in
fair value hedging relationships as of December 31, 2024 and 2023:
156
Table 6.3
Hedged Items in Fair Value Relationship
Carrying Amount of Hedged Assets/
(Liabilities)
Cumulative Amount of Fair Value Hedging
Adjustments included in the Carrying
Amount of the Hedged Assets/(Liabilities)
December 31, 2024
December 31, 2023
December 31, 2024
December 31, 2023
(in thousands)
Investment securities, Available-for-Sale, at
fair value(1)
$
1,477,880
$
1,251,386
$
(117,137) $
(88,635)
Farmer Mac Guaranteed Securities, Available-
for-Sale, at fair value(2)
5,478,484
5,497,948
(307,358)
(257,436)
Loans held for investment, at amortized cost
1,816,738
1,699,361
(372,444)
(305,592)
Notes Payable(3)
(11,899,049)
(13,350,111)
148,999
250,418
(1)
Amortized cost of $1.6 billion and $1.4 billion as of December 31, 2024 and 2023, respectively.
(2)
Amortized cost of $5.8 billion as of both December 31, 2024 and 2023.
(3)
Carrying amount represents amortized cost.
The following tables present the fair value of financial assets and liabilities, based on the terms of Farmer
Mac's master netting arrangements as of December 31, 2024 and 2023:
Table 6.4
December 31, 2024
Gross
Amount
Recognized
Gross Amounts
offset in the
Consolidated
Balance Sheet
Net Amount
Presented in the
Consolidated
Balance Sheet
Gross Amounts Not Offset in the Consolidated Balance Sheet
Netting
Adjustments
Financial
instruments
pledged
Cash
Collateral
Net
Amount(1)
(in thousands)
Assets:
Uncleared
derivatives
$
22,759
$
—
$
22,759 $
(22,061) $
— $
(652) $
46
Cleared
derivatives
5,492
(462)
5,030
—
(5,030)
—
—
Total
$
28,251
$
(462) $
27,789 $
(22,061) $
(5,030) $
(652) $
46
Liabilities:
Uncleared
derivatives
$
(77,326) $
—
$
(77,326) $
22,061 $
— $
44,299 $
(10,966)
Cleared
derivatives
(462)
462
—
—
—
—
—
Total
$
(77,788) $
462
$
(77,326) $
22,061 $
— $
44,299 $
(10,966)
(1)
Any over-collateralization at an individual clearing agent and/or counterparty level is not included in the determination of the net amount. As of
December 31, 2024, Farmer Mac had additional net exposure of $209.0 million due to instances where Farmer Mac's collateral to a counterparty exceeded
the net derivative position and $4.7 million due to instances where Farmer Mac's collateral from a counterparty exceeded the net derivative position.
157
December 31, 2023
Gross
Amount
Recognized
Gross Amounts
offset in the
Consolidated
Balance Sheet
Net Amount
Presented in the
Consolidated
Balance Sheet(1)
Gross Amounts Not Offset in the Consolidated Balance Sheet
Netting
Adjustments
Financial
instruments
pledged
Cash
Collateral(2)
Net
Amount(3)
(in thousands)
Assets:
Uncleared
derivatives
$
25,751
$
—
$
25,751 $
(25,727) $
— $
— $
24
Cleared
derivatives
10,388
(1,236)
9,152
—
—
—
9,152
Total
$
36,139
$
(1,236) $
34,903 $
(25,727) $
— $
— $
9,176
Liabilities:
Uncleared
derivatives
$
(100,114) $
—
$
(100,114) $
25,727 $
— $
69,360 $
(5,027)
Cleared
derivatives
(1,236)
1,236
—
—
—
—
—
Total
$
(101,350) $
1,236
$
(100,114) $
25,727 $
— $
69,360 $
(5,027)
(1)
Amounts presented may not agree to the consolidated balance sheet related to counterparties not subject to master netting agreements.
(2)
Cash collateral excludes $15.2 million of collateral posted and $2.0 million of collateral received related to counterparties not subject to master netting
agreements.
(3)
Any over-collateralization at an individual clearing agent and/or counterparty level is not included in the determination of the net amount. As of
December 31, 2023, Farmer Mac had additional net exposure of $207.2 million due to instances where Farmer Mac's collateral to a counterparty
exceeded the net derivative position.
Farmer Mac records posted cash as a reduction in the outstanding balance of cash and cash equivalents
and an increase in the balance of prepaid expenses and other assets. Any investment securities posted as
collateral are included in the investment securities balances on the consolidated balance sheets. If Farmer
Mac had breached certain provisions of the derivative contracts as of December 31, 2024 or 2023, it could
have been required to settle its obligations under the agreements, but would not have been required to post
additional collateral. As of December 31, 2024 and 2023, there were no financial derivatives in a net
payable position where Farmer Mac was required to pledge collateral which the counterparty had the right
to sell or repledge.
Of Farmer Mac's $24.9 billion notional amount of interest rate swaps outstanding as of December 31,
2024, $19.1 billion were cleared through the swap clearinghouse, the Chicago Mercantile Exchange
("CME"). Of Farmer Mac's $25.8 billion notional amount of interest rate swaps outstanding as of
December 31, 2023, $20.5 billion were cleared through the CME.
7.
NOTES PAYABLE
Farmer Mac's borrowings consist of discount notes and medium-term notes, both of which are unsecured
general obligations of Farmer Mac. Discount notes generally have original maturities of 1 year or less,
whereas medium-term notes generally have maturities of 0.5 years to 25.0 years.
158
The following tables set forth information related to Farmer Mac's borrowings as of December 31, 2024
and 2023:
Table 7.1
December 31, 2024
Outstanding as of December 31
Average Outstanding During the Year
Amount
Weighted-
Average Rate
Amount
Weighted-
Average Rate
(dollars in thousands)
Due within one year:
Discount notes
$
2,167,258
4.42 % $
1,928,884
5.11 %
Medium-term notes
2,343,264
4.64 %
1,000,290
5.28 %
Current portion of medium-term notes
5,927,101
3.20 %
Total due within one year
$
10,437,623
3.77 %
Due after one year:
Medium-term notes due in:
Two years
$
4,844,538
2.66 %
Three years
3,822,999
3.53 %
Four years
2,732,980
4.13 %
Five years
2,491,831
4.41 %
Thereafter
3,190,202
2.63 %
Total due after one year
$
17,082,550
3.34 %
Total principal net of discounts
$
27,520,173
3.51 %
Hedging adjustments
(148,999)
Total
$
27,371,174
December 31, 2023
Outstanding as of December 31
Average Outstanding During the Year
Amount
Weighted-
Average Rate
Amount
Weighted-
Average Rate
(dollars in thousands)
Due within one year:
Discount notes
$
1,734,387
5.32 % $
1,097,300
5.08 %
Medium-term notes
384,970
5.07 %
1,731,308
4.09 %
Current portion of medium-term notes
5,967,811
2.90 %
Total due within one year
$
8,087,168
3.52 %
Due after one year:
Medium-term notes due in:
Two years
$
5,523,671
3.27 %
Three years
3,825,702
2.27 %
Four years
3,038,229
3.44 %
Five years
2,623,202
4.37 %
Thereafter
3,488,987
2.80 %
Total due after one year
$
18,499,791
3.16 %
Total principal net of discounts
$
26,586,959
3.27 %
Hedging adjustments
(250,417)
Total
$
26,336,542
159
The maximum amount of Farmer Mac's discount notes outstanding at any month end during the years
ended December 31, 2024 and 2023 was $2.3 billion and $1.8 billion, respectively.
Callable medium-term notes give Farmer Mac the option to redeem the debt at par value on a specified
call date or at any time on or after a specified call date. The following table summarizes by maturity date
the amounts and costs for Farmer Mac debt callable in 2025 as of December 31, 2024:
Table 7.2
Debt Callable in 2025 as of December 31, 2024, by Maturity
Amount
Weighted-Average Rate
(dollars in thousands)
Maturity:
2026
$
1,522,550
2.20 %
2027
909,401
2.94 %
2028
588,198
3.80 %
2029
415,862
4.42 %
Thereafter
1,827,209
2.25 %
Total
$
5,263,220
2.70 %
The following schedule summarizes the earliest interest rate reset date, or debt maturities, of total
borrowings outstanding as of December 31, 2024, including callable and non-callable medium-term notes,
assuming callable notes are redeemed at the initial call date:
Table 7.3
Earliest Interest Rate Reset Date, or Debt Maturities,
of Borrowings Outstanding
Amount
Weighted-Average Rate
(dollars in thousands)
Debt with interest rate resets, or debt maturities in:
2025
$
11,933,596
3.91 %
2026
4,366,691
2.43 %
2027
3,494,164
3.41 %
2028
2,490,159
4.06 %
2029
2,324,985
4.38 %
Thereafter
2,910,578
2.42 %
Total principal net of discounts
$
27,520,173
3.51 %
During the years ended December 31, 2024 and 2023, Farmer Mac called $1.9 billion and $233.0 million
of callable medium-term notes, respectively.
Authority to Borrow from the U.S. Treasury
Farmer Mac's statutory charter authorizes it, upon satisfying certain conditions, to borrow up to $1.5
billion from the U.S. Treasury through the issuance of debt obligations to the U.S. Treasury. Any funds
borrowed from the U.S. Treasury may be used solely to fulfill Farmer Mac's guarantee obligations. Any
debt obligations issued by Farmer Mac under this authority would bear interest at a rate determined by the
U.S. Treasury, taking into consideration the average rate on outstanding marketable obligations of the
United States as of the last day of the last calendar month ending before the date of the purchase of the
160
obligations from Farmer Mac. The charter requires Farmer Mac to repurchase any of its debt obligations
held by the U.S. Treasury within a reasonable time. As of December 31, 2024, Farmer Mac had not used
this borrowing authority.
Gains on Repurchases of Outstanding Debt
No outstanding debt repurchases were made in the years ended December 31, 2024 and 2023. During
2022, Farmer Mac repurchased $27.0 million of outstanding debt at a gain of $0.2 million.
8.
LOANS
Farmer Mac classifies loans as either held for investment or held for sale. Loans held for investment are
recorded at the unpaid principal balance, net of unamortized premium or discount and other cost basis
adjustments. Loans held for sale are reported at the lower of cost or fair value determined on a pooled
basis. As of December 31, 2024, Farmer Mac had $6.2 million of loans held for sale and none as of
December 31, 2023. During the year ended December 31, 2024, Farmer Mac recorded $1.0 million of
lower of cost or fair value adjustments and none during the year ended December 31, 2023.
During 2024, Farmer Mac sold a portion of a Corporate AgFinance agricultural storage and processing
loan at a loss of $1.1 million to reduce the overall exposure to the borrower.
Under the Agricultural Finance line of business, Farmer Mac has two segments – Farm & Ranch and
Corporate AgFinance. The segments are characterized by similarities in risk attributes and the manner in
which Farmer Mac monitors and assesses credit risk.
The following table includes loans held for investment and loans held for sale and displays the
composition of the loan balances as of December 31, 2024 and 2023:
Table 8.1
As of December 31, 2024
As of December 31, 2023
Unsecuritized
In
Consolidated
Trusts
Total
Unsecuritized
In
Consolidated
Trusts
Total
(in thousands)
Agricultural Finance loans
Farm & Ranch
$ 5,414,732
$ 2,038,283
$ 7,453,015
$ 5,133,450
$ 1,432,261
$ 6,565,711
Corporate AgFinance
1,381,674
—
1,381,674
1,259,723
—
1,259,723
Total Agricultural Finance loans
6,796,406
2,038,283
8,834,689
6,393,173
1,432,261
7,825,434
Infrastructure Finance loans
4,774,483
—
4,774,483
3,534,763
—
3,534,763
Total unpaid principal balance(1)
11,570,889
2,038,283
13,609,172
9,927,936
1,432,261
11,360,197
Unamortized premiums, discounts, fair
value hedge basis adjustment, and other
cost basis adjustments
(381,311)
—
(381,311)
(304,817)
—
(304,817)
Total loans
11,189,578
2,038,283
13,227,861
9,623,119
1,432,261
11,055,380
Allowance for losses
(22,594)
(629)
(23,223)
(15,588)
(443)
(16,031)
Total loans, net of allowance
$ 11,166,984
$ 2,037,654
$ 13,204,638
$ 9,607,531
$ 1,431,818
$ 11,039,349
(1)
Unpaid principal balance is the basis of presentation in disclosures of outstanding balances for Farmer Mac's lines of business.
161
Allowance for Losses
The following table is a summary, by asset type, of the allowance for losses as of December 31, 2024 and
2023:
Table 8.2
December 31, 2024
December 31, 2023
Allowance for Losses
Allowance for Losses
(in thousands)
Loans:
Agricultural Finance loans
Farm & Ranch
$
5,132 $
3,936
Corporate AgFinance
5,379
2,948
Total Agricultural Finance loans
10,511
6,884
Infrastructure Finance loans
12,712
9,147
Total
$
23,223 $
16,031
The following is a summary of the changes in the allowance for losses for each year in the three-year
period ended December 31, 2024:
Table 8.3
Agricultural Finance loans
Infrastructure
Finance loans(3)
Farm & Ranch(1)
Corporate
AgFinance(2)
Total
(in thousands)
Balance as of December 31, 2021
$
2,882 $
560 $
3,442 $
10,599
Provision for/(release of) losses
1,246
2,171
3,417
(2,285)
Charge-offs
(84)
—
(84)
—
Balance as of December 31, 2022
$
4,044 $
2,731 $
6,775 $
8,314
(Release of)/provision for losses
(108)
217
109
833
Charge-offs
—
—
—
—
Balance as of December 31, 2023
$
3,936 $
2,948 $
6,884 $
9,147
Provision for losses
1,297
6,828
8,125
3,565
Charge-offs
(101)
(4,397)
(4,498)
—
Balance as of December 31, 2024
$
5,132 $
5,379 $
10,511 $
12,712
(1)
As of December 31, 2024, 2023, and 2022, the allowance for losses for Agricultural Finance Farm & Ranch loans includes $1.2 million, $1.0 million, and
$1.9 million allowance for collateral dependent assets secured by agricultural real estate, respectively.
(2)
As of December 31, 2024, 2023, and 2022, the allowance for losses for Agricultural Finance Corporate AgFinance loans includes $1.0 million,
$0.0 million, and $2.4 million allowance for collateral dependent assets secured by agricultural real estate, respectively.
(3)
As of December 31, 2024, 2023, and 2022, the allowance for losses for Infrastructure Finance loans includes no allowance for collateral dependent assets.
The $3.6 million net provision to the allowance for the Infrastructure Finance portfolio during the year
ended December 31, 2024 was primarily attributable to new loan volume within the Broadband
Infrastructure and Renewable Energy segments and a single renewable energy project that became
substandard during fourth quarter 2024.
The $8.1 million net provision to the allowance for the Agricultural Finance mortgage loan portfolio
during the year ended December 31, 2024 was primarily attributable to two permanent planting borrower
relationships and other risk rating downgrades. During the year ended December 31, 2024, Farmer Mac
162
had charge-offs of $4.5 million, which was primarily related to a single permanent planting borrower that
entered into bankruptcy during second quarter 2024, at which time $3.9 million was deemed uncollectible.
The $0.8 million net provision to the allowance for the Infrastructure Finance portfolio during the year
ended December 31, 2023 was primarily attributable to a single telecommunications loan that was
downgraded to substandard during the year. The $0.1 million net provision to the allowance for the
Agricultural Finance mortgage loan portfolio during the year ended December 31, 2023 was primarily
attributable to increased loan volume.
The $2.3 million net release from the allowance for the Infrastructure Finance portfolio during the year
ended December 31, 2022 was primarily attributable to a risk rating upgrade on a single loan and
improvements in forecasts of future economic conditions. The risk rating upgrade on that loan reflected
that borrower's successful securitization of its large payable that arose during the arctic freeze that struck
Texas in February 2021. The $3.4 million net provision to the allowance for the Agricultural Finance
mortgage loan portfolio during the year ended December 31, 2022 was primarily attributable to a risk
rating downgrade on a single agricultural storage and processing loan, due to its ongoing bankruptcy
proceedings.
The following table presents the unpaid principal balances by delinquency status of Farmer Mac's loans
and non-performing assets as of December 31, 2024 and 2023:
Table 8.4
As of December 31, 2024
Accruing
Current
30-59 Days
60-89 Days
90 Days and
Greater(2)
Total Past
Due
Nonaccrual
loans(3)(4)
Total Loans
(in thousands)
Loans(1):
Agricultural Finance loans
Farm & Ranch
$ 7,299,364 $
16,478 $
7,268 $
6,359 $
30,105 $
123,546 $ 7,453,015
Corporate AgFinance
1,336,305
—
—
—
—
45,369 1,381,674
Total Agricultural Finance
loans
8,635,669
16,478
7,268
6,359
30,105
168,915 8,834,689
Infrastructure Finance loans
4,774,483
—
—
—
—
— 4,774,483
Total
$ 13,410,152 $
16,478 $
7,268 $
6,359 $
30,105 $
168,915 $ 13,609,172
(1)
Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of
past due loans.
(2)
Includes loans in consolidated trusts with beneficial interests owned by third parties (single-class) that are 90 days or more past due.
(3)
Includes loans that are 90 days or more past due, in foreclosure, or in bankruptcy with at least one missed payment, excluding loans performing under
either their original loan terms or a court-approved bankruptcy plan.
(4)
Includes $41.5 million of nonaccrual loans for which there was no associated allowance. During the year ended December 31, 2024, Farmer Mac received
$4.9 million in interest on nonaccrual loans.
163
As of December 31, 2023
Accruing
Current
30-59 Days
60-89 Days
90 Days and
Greater(2)
Total Past
Due
Nonaccrual
loans(3)(4)
Total Loans
(in thousands)
Loans(1):
Agricultural Finance loans
Farm & Ranch
$ 6,470,205 $
15,326 $
3,953 $
10,991 $
30,270 $
65,236 $ 6,565,711
Corporate AgFinance
1,259,723
—
—
—
—
— 1,259,723
Total Agricultural Finance
loans
7,729,928
15,326
3,953
10,991
30,270
65,236 7,825,434
Infrastructure Finance loans
3,534,763
—
—
—
—
— 3,534,763
Total
$ 11,264,691 $
15,326 $
3,953 $
10,991 $
30,270 $
65,236 $ 11,360,197
(1)
Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of
past due loans.
(2)
Includes loans in consolidated trusts with beneficial interests owned (single-class) by third parties that are 90 days or more past due.
(3)
Includes loans that are 90 days or more past due, in foreclosure, or in bankruptcy with at least one missed payment, excluding loans performing under
either their original loan terms or a court-approved bankruptcy plan.
(4)
Includes $25.7 million of nonaccrual loans for which there was no associated allowance. During the year ended December 31, 2023, Farmer Mac received
$2.6 million in interest on nonaccrual loans.
Credit Quality Indicators
The following tables present credit quality indicators related to Agricultural Finance mortgage loans and
Infrastructure Finance loans held as of December 31, 2024 and 2023, by year of origination:
Table 8.5
As of December 31, 2024
Year of Origination:
2024
2023
2022
2021
2020
Prior
Revolving
Loans -
Amortized
Cost Basis
Total
(in thousands)
Agricultural Finance - Farm &
Ranch loans(1):
Internally Assigned Risk
Rating:
Acceptable
$ 987,444 $ 525,559 $ 1,079,933 $ 1,577,305 $ 1,019,779 $ 1,287,334 $ 404,950 $ 6,882,304
Special mention(2)
139,297
34,290
32,886
24,204
7,533
23,099
22,087
283,396
Substandard(3)
8,077
28,790
52,350
24,733
60,418
92,594
20,353
287,315
Total
$ 1,134,818 $ 588,639 $ 1,165,169 $ 1,626,242 $ 1,087,730 $ 1,403,027 $ 447,390 $ 7,453,015
For the Year Ended
December 31, 2024:
Current period charge-offs
$
— $
— $
— $
101 $
— $
— $
— $
101
(1)
Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of
past due loans.
(2)
Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately
secured.
(3)
Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not
corrected.
164
As of December 31, 2024
Year of Origination:
2024
2023
2022
2021
2020
Prior
Revolving
Loans -
Amortized
Cost Basis
Total
(in thousands)
Agricultural Finance - Corporate
AgFinance(1):
Internally Assigned Risk
Rating:
Acceptable
$ 210,807 $ 152,918 $ 64,860 $ 235,493 $ 80,085 $ 161,354 $ 262,295 $ 1,167,812
Special mention(2)
—
37,010
—
14,557
75,440
—
7,158
134,165
Substandard(3)
—
7,309
7,652
—
14,335
33,479
16,922
79,697
Total
$ 210,807 $ 197,237 $ 72,512 $ 250,050 $ 169,860 $ 194,833 $ 286,375 $ 1,381,674
For the Year Ended
December 31, 2024:
Current period charge-offs
$
— $
— $
455 $
— $
— $
— $
3,942 $
4,397
(1)
Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of
past due loans.
(2)
Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately
secured.
(3)
Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not
corrected.
As of December 31, 2024
Year of Origination:
2024
2023
2022
2021
2020
Prior
Revolving
Loans -
Amortized
Cost Basis
Total
(in thousands)
Infrastructure Finance loans(1):
Internally Assigned Risk
Rating:
Acceptable
$ 1,158,427 $ 521,143 $ 578,882 $ 174,232 $ 574,135 $ 1,229,626 $ 461,162 $ 4,697,607
Special mention(2)
—
—
34,388
—
—
—
—
34,388
Substandard(3)
—
13,356
29,132
—
—
—
—
42,488
Total
$ 1,158,427 $ 534,499 $ 642,402 $ 174,232 $ 574,135 $ 1,229,626 $ 461,162 $ 4,774,483
For the Year Ended
December 31, 2024:
Current period charge-offs
$
— $
— $
— $
— $
— $
— $
— $
—
(1)
Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of
past due loans.
(2)
Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately
secured.
(3)
Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not
corrected.
165
As of December 31, 2023
Year of Origination:
2023
2022
2021
2020
2019
Prior
Revolving
Loans -
Amortized
Cost Basis
Total
(in thousands)
Agricultural Finance - Farm &
Ranch loans(1):
Internally Assigned Risk
Rating:
Acceptable
$ 530,956 $ 1,137,226 $ 1,653,780 $ 1,120,917 $ 323,922 $ 1,068,862 $ 385,766 $ 6,221,429
Special mention(2)
70,524
46,529
27,957
11,591
4,782
21,257
8,777
191,417
Substandard(3)
3,357
23,987
10,164
17,395
28,942
58,606
10,414
152,865
Total
$ 604,837 $ 1,207,742 $ 1,691,901 $ 1,149,903 $ 357,646 $ 1,148,725 $ 404,957 $ 6,565,711
For the Year Ended
December 31, 2023:
Current period charge-offs
$
— $
— $
— $
— $
— $
— $
— $
—
(1)
Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of
past due loans.
(2)
Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately
secured.
(3)
Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not
corrected.
As of December 31, 2023
Year of Origination:
2023
2022
2021
2020
2019
Prior
Revolving
Loans -
Amortized
Cost Basis
Total
(in thousands)
Agricultural Finance - Corporate
AgFinance loans(1):
Internally Assigned Risk
Rating:
Acceptable
$ 207,279 $ 97,922 $ 261,992 $ 123,158 $ 99,352 $ 112,947 $ 254,325 $ 1,156,975
Special mention(2)
—
14,522
15,408
50,822
20,333
—
1,663
102,748
Substandard(3)
—
—
—
—
—
—
—
—
Total
$ 207,279 $ 112,444 $ 277,400 $ 173,980 $ 119,685 $ 112,947 $ 255,988 $ 1,259,723
For the Year Ended
December 31, 2023:
Current period charge-offs
$
— $
— $
— $
— $
— $
— $
— $
—
(1)
Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of
past due loans.
(2)
Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately
secured.
(3)
Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not
corrected.
166
As of December 31, 2023
Year of Origination:
2023
2022
2021
2020
2019
Prior
Revolving
Loans -
Amortized
Cost Basis
Total
(in thousands)
Infrastructure Finance loans(1):
Internally Assigned Risk
Rating:
Acceptable
$ 618,946 $ 681,272 $ 187,746 $ 593,841 $ 701,937 $ 611,548 $ 100,223 $ 3,495,513
Special mention(2)
—
9,850
—
—
—
—
—
9,850
Substandard(3)
—
29,400
—
—
—
—
—
29,400
Total
$ 618,946 $ 720,522 $ 187,746 $ 593,841 $ 701,937 $ 611,548 $ 100,223 $ 3,534,763
For the Year Ended
December 31, 2023:
Current period charge-offs
$
— $
— $
— $
— $
— $
— $
— $
—
(1)
Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of
past due loans.
(2)
Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately
secured.
(3)
Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not
corrected.
9.
EQUITY
Common Stock
Farmer Mac has three classes of common stock outstanding:
•
Class A voting common stock, which may be held only by banks, insurance companies, and
other financial institutions or similar entities that are not institutions of the Farm Credit
System. By federal statute, no holder of Class A voting common stock may directly or
indirectly be a beneficial owner of more than 33% of the outstanding shares of Class A voting
common stock.
•
Class B voting common stock, which may be held only by institutions of the Farm Credit
System. There are no restrictions on the maximum holdings of Class B voting common stock.
•
Class C non-voting common stock, which has no ownership restrictions.
During 2024, 2023, and 2022, Farmer Mac paid a quarterly dividend of $1.40, $1.10, and $0.95 per share
on all classes of its common stock. Farmer Mac's ability to declare and pay dividends on its common stock
could be restricted if it fails to comply with applicable capital requirements.
Except for the period from March 16, 2020 to March 10, 2021, Farmer Mac has had a common stock
repurchase program in place since third quarter 2015. On March 10, 2021, Farmer Mac's board of
directors reinstated the share repurchase program on its previous terms and extended the expiration date of
the program to March 2023. In February 2023, Farmer Mac's board of directors renewed the share
repurchase program on its previous terms (with a remaining authorization of up to $9.8 million in stock
repurchases) and extended the expiration date of the program to February 2025. Farmer Mac has not
167
repurchased any shares of its Class C non-voting common stock since the repurchase program was
reinstated in March 2021. As of December 31, 2024, Farmer Mac had repurchased approximately 673,000
shares of Class C non-voting common stock at a cost of approximately $19.8 million under the share
repurchase program since 2015.
Preferred Stock
On July 18, 2024, Farmer Mac redeemed all outstanding shares of its 6.000% Fixed-to-Floating Rate Non-
Cumulative Series C Preferred Stock, plus any declared and unpaid dividends through and including the
redemption date. As a result of this redemption, Farmer Mac recognized $1.6 million of loss on retirement
of preferred stock in third quarter 2024, which was related to deferred issuance costs.
The following table presents the Series D Preferred Stock, the Series E Preferred Stock, the Series F
Preferred Stock, and the Series G Preferred Stock (collectively referred to as the "Outstanding Preferred
Stock") as of December 31, 2024:
Table 9.1
Series D
May 13, 2019
$
3,340,456
4,000,000
5.700 % $
25.00
July 17, 2024
Series E
May 20, 2020
$
2,496,750
3,180,000
5.750 % $
25.00
July 17, 2025
Series F
August 20, 2020
$
3,839,902
4,800,000
5.250 % $
25.00
October 17, 2025
Series G
May 27, 2021
$
3,661,677
5,000,000
4.875 % $
25.00
July 17, 2026
Name
Issuance Date
Issuance Cost
Shares Issued
Annual Dividend
Rate(1)
Liquidation Value
Per Share
First Possible
Redemption
Date(2)
(1)
Dividends on all series of Outstanding Preferred Stock are non-cumulative, which means that if Farmer Mac's board of directors has not declared a
dividend before the applicable dividend payment date for any dividend period, such dividend will not be paid or cumulate, and Farmer Mac will have no
obligation to pay dividends for such dividend period, whether or not dividends on any series of Outstanding Preferred Stock are declared for any future
dividend period.
(2)
Farmer Mac has the right but not the obligation to redeem.
The following tables present the quarterly dividends paid by Farmer Mac on its outstanding preferred
stock during the years ended December 31, 2024, 2023, and 2022:
Table 9.2
For the Year Ended December 31, 2024
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock,
Series C
$
0.3750 $
0.3750 $
— $
—
5.700% Non-Cumulative Preferred Stock, Series D
0.3563
0.3563
0.3563
0.3563
5.750% Non-Cumulative Preferred Stock, Series E
0.3594
0.3594
0.3594
0.3594
5.250% Non-Cumulative Preferred Stock, Series F
0.3281
0.3281
0.3281
0.3281
4.875% Non-Cumulative Preferred Stock, Series G
0.3047
0.3047
0.3047
0.3047
168
For the Year Ended December 31, 2023
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock,
Series C
$
0.3750 $
0.3750 $
0.3750 $
0.3750
5.700% Non-Cumulative Preferred Stock, Series D
0.3563
0.3563
0.3563
0.3563
5.750% Non-Cumulative Preferred Stock, Series E
0.3594
0.3594
0.3594
0.3594
5.250% Non-Cumulative Preferred Stock, Series F
0.3281
0.3281
0.3281
0.3281
4.875% Non-Cumulative Preferred Stock, Series G
0.3047
0.3047
0.3047
0.3047
For the Year Ended December 31, 2022
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock,
Series C
$
0.3750 $
0.3750 $
0.3750 $
0.3750
5.700% Non-Cumulative Preferred Stock, Series D
0.3563
0.3563
0.3563
0.3563
5.750% Non-Cumulative Preferred Stock, Series E
0.3594
0.3594
0.3594
0.3594
5.250% Non-Cumulative Preferred Stock, Series F
0.3281
0.3281
0.3281
0.3281
4.875% Non-Cumulative Preferred Stock, Series G
0.3047
0.3047
0.3047
0.3047
Equity-Based Incentive Compensation Plans
Farmer Mac's Amended and Restated 2008 Omnibus Incentive Compensation Plan authorizes the grant of
restricted stock units and SARs, among other alternative forms of equity-based compensation, to Farmer
Mac's directors, officers, and employees. SARs awarded to officers and employees vest annually in
thirds. Farmer Mac has not granted SARs to directors since 2008. If not exercised or cancelled earlier due
to the termination of employment, SARs granted to officers or employees expire after 10 years from the
grant date. For all SARs granted, the exercise price is equal to the closing price of Farmer Mac's Class C
non-voting common stock on the date of grant. SARs granted during the years ended December 31, 2024,
2023, and 2022 have a weighted average exercise price per share of $198.54, $135.12 and $120.38,
respectively. During the years ended December 31, 2024, 2023, and 2022, restricted stock unit awards
were granted to employees, officers, and directors with vesting periods of one to three years.
169
The following tables summarize SARs and non-vested restricted stock unit activity for the years ended
December 31, 2024, 2023, and 2022:
Table 9.3
For the Years Ended December 31,
2024
2023
2022
SARs
Weighted-
Average
Exercise
Price
SARs
Weighted-
Average
Exercise
Price
SARs
Weighted-
Average
Exercise
Price
Outstanding, beginning of year
125,952
$
87.18
132,163
$
75.82
130,409
$
66.10
Granted
15,465
198.54
16,761
135.12
18,432
120.38
Exercised
(34,728)
65.59
(22,972)
56.82
(16,678)
49.04
Canceled
—
—
—
—
—
—
Outstanding, end of year
106,689
110.35
125,952
87.18
132,163
75.82
Exercisable at end of year
73,906
87.31
87,378
73.15
83,054
63.12
For the Years Ended December 31,
2024
2023
2022
Non-vested
Restricted
Stock Units
Weighted-
Average
Grant Date
Fair Value
Non-vested
Restricted
Stock Units
Weighted-
Average
Grant Date
Fair Value
Non-vested
Restricted
Stock Units
Weighted-
Average
Grant Date
Fair Value
Outstanding, beginning of year
114,353
$
120.13
100,025
$
91.84
103,891
$
78.55
Granted
39,333
197.52
59,745
135.56
38,668
120.14
Canceled
(4,854)
160.27
(62)
88.68
(2,711)
97.44
Vested and issued
(51,893)
107.33
(45,355)
78.12
(39,823)
84.25
Outstanding, end of year
96,939
156.37
114,353
120.13
100,025
91.84
The cancellations of non-vested restricted stock units during the years ended December 31, 2024, 2023,
and 2022 were due to unvested awards terminating in accordance with the provisions of the applicable
equity compensation plans or award agreements upon directors' or employees' departures from Farmer
Mac.
Cash is not received from exercises of SARs or the vesting and issuance of restricted stock units. During
the years ended December 31, 2024, 2023, and 2022, the reduction of income taxes payable as a result of
the deduction for the exercise of SARs and the vesting of restricted stock units was $3.0 million, $1.7
million, and $1.2 million, respectively.
During the years ended December 31, 2024, 2023, and 2022, Farmer Mac recorded a net decrease to
additional paid-in capital of $5.4 million, $3.1 million, and $1.9 million, respectively, related to stock-
based compensation awards.
170
As of December 31, 2024, Farmer Mac had no stock options outstanding. The following tables summarize
information about SARs and non-vested restricted stock units outstanding as of December 31, 2024:
Table 9.4
SARs:
Outstanding
Exercisable
Vested or Expected to Vest
Range of
Exercise Prices
SARs
Weighted-
Average
Remaining
Contractual Life
SARs
Weighted-
Average
Remaining
Contractual Life
SARs
Weighted-
Average
Remaining
Contractual Life
$25.00 - $39.99
4,000
0.2 years
4,000
0.2 years
4,000
0.2 years
40.00 - 54.99
—
0.0 years
—
0.0 years
—
0.0 years
55.00 - 69.99
3,381
2.2 years
3,381
2.2 years
3,381
2.2 years
70.00 - 84.99
30,942
4.8 years
30,942
4.8 years
30,942
4.8 years
85.00 - 99.99
21,162
5.8 years
21,162
5.8 years
21,162
5.8 years
100.00 - 114.99
—
0.0 years
—
0.0 years
—
0.0 years
115.00 - 129.99
14,978
7.2 years
8,834
7.2 years
14,978
7.2 years
130.00 - 144.99
16,761
8.3 years
5,587
8.3 years
16,761
8.3 years
145.00 - 159.99
—
0.0 years
—
0.0 years
—
0.0 years
160.00 - 174.99
—
0.0 years
—
0.0 years
—
0.0 years
175.00 - 189.99
—
0.0 years
—
0.0 years
—
0.0 years
190.00 - 204.99
15,465
2.3 years
—
0.0 years
15,465
2.3 years
106,689
73,906
106,689
Non-vested Restricted Stock Units:
Outstanding
Expected to Vest
Weighted-
Average
Grant-Date
Fair Value
Non-vested
Restricted
Stock Units
Weighted-Average
Remaining
Contractual
Life
Non-vested
Restricted
Stock Units
Weighted-Average
Remaining
Contractual
Life
$110.00 - $124.99
20,087
0.3 years
20,087
0.3 years
125.00 - 139.99
38,272
1.3 years
38,272
1.3 years
140.00 - 154.99
1,860
1.3 years
1,860
1.3 years
155.00 - 169.99
—
0.0 years
—
0.0 years
170.00 - 184.99
610
2.3 years
610
2.3 years
185.00 - 199.99
36,110
2.3 years
36,110
2.3 years
96,939
96,939
As of December 31, 2024 and 2023, the intrinsic value of SARs, and non-vested restricted stock units
outstanding, exercisable, and vested or expected to vest was $28.4 million and $35.0 million,
respectively. During the years ended December 31, 2024, 2023, and 2022, the total intrinsic value of
SARs exercised was $4.6 million, $2.4 million, and $1.1 million, respectively. As of December 31, 2024,
there was $7.5 million of total unrecognized compensation cost related to non-vested SARs and restricted
stock unit awards. This cost is expected to be recognized over a weighted-average period of 1.7 years.
The weighted-average grant date fair values of SARs and restricted stock unit awards granted in the years
ended December 31, 2024, 2023, and 2022 were $159.08, $114.68, and $91.94 per share,
respectively. Under the fair value-based method of accounting for stock-based compensation cost, Farmer
Mac recognized compensation expense of $8.1 million, $6.8 million, and $4.6 million during the years
ended December 31, 2024, 2023, and 2022, respectively.
171
The fair value of SARs was estimated using the Black-Scholes option pricing model based on the
following assumptions:
Table 9.5
For the Years Ended December 31,
2024
2023
2022
Risk-free interest rate
4.1%
4.1%
1.9%
Expected years until exercise
6 years
6 years
6 years
Expected stock volatility
36.0%
36.6%
37.4%
Dividend yield
2.8%
3.3%
3.2%
The risk-free interest rates used in the model were based on the U.S. Treasury yield curve in effect at the
grant date. Farmer Mac used historical data to estimate the timing of SARs exercises used in the
model. Expected volatilities were based on historical volatility of Farmer Mac's Class C non-voting
common stock. The dividend yields were based on the expected dividends as a percentage of the value of
Farmer Mac's Class C non-voting common stock on the grant date.
Because stock will be issued upon the vesting of restricted stock units regardless of the stock price,
expected stock volatility is not considered in determining grant date fair value. Restricted stock unit
awards also accrue dividends which are paid at vesting. The weighted-average grant date fair value of the
restricted stock units awarded in the years ended December 31, 2024, 2023, and 2022 was $197.52,
$135.56, and $120.14 per unit, respectively, which is based on the closing price of Farmer Mac's Class C
non-voting stock on the date granted.
Capital Requirements
Farmer Mac is required to comply with the higher of the minimum capital requirement and the risk-based
capital requirement. As of both December 31, 2024 and 2023, the minimum capital requirement was
greater than the risk-based capital requirement. Farmer Mac's ability to declare and pay dividends could be
restricted if it fails to comply with applicable capital requirements.
As of December 31, 2024, Farmer Mac's minimum capital requirement was $917.6 million and its core
capital level was $1.5 billion, which was $583.5 million above the minimum capital requirement as of that
date. As of December 31, 2023, Farmer Mac's minimum capital requirement was $862.6 million and its
core capital level was $1.5 billion, which was $589.4 million above the minimum capital requirement as
of that date.
In accordance with a rule of the Farm Credit Administration ("FCA") on Farmer Mac's capital planning,
and as part of Farmer Mac's capital plan, Farmer Mac has adopted a policy for maintaining a sufficient
level of Tier 1 capital (consisting of retained earnings, paid-in-capital, common stock, and qualifying
preferred stock) and imposing restrictions on Tier 1-eligible dividends and any discretionary bonus
payments in the event that this capital falls below specified thresholds.
172
10.
INCOME TAXES
Farmer Mac is subject to federal corporate income taxes but is exempt from state and local corporate
income taxes. The components of the federal corporate income tax expense for the years ended
December 31, 2024, 2023, and 2022 were as follows:
Table 10.1
For the Year Ended December 31,
2024
2023
2022
(in thousands)
Current income tax expense
$
54,687
$
46,712
$
35,609
Deferred income tax expense
(3,777)
6,386
11,926
Income tax expense
$
50,910
$
53,098
$
47,535
A reconciliation of income tax at the statutory federal corporate income tax rate to the income tax expense
for the years ended December 31, 2024, 2023, and 2022 is as follows:
Table 10.2
For the Year Ended December 31,
2024
2023
2022
(dollars in thousands)
Tax expense at statutory rate
$
54,201
$
53,151
$
47,393
Excess tax benefits related to stock-based awards
(1,755)
(924)
(401)
Tax credits
(3,260)
—
—
Other
1,724
871
543
Income tax expense
$
50,910
$
53,098
$
47,535
Statutory tax rate
21.0 %
21.0 %
21.0 %
173
The components of the deferred tax assets and liabilities as of December 31, 2024 and 2023 were as
follows:
Table 10.3
As of December 31,
2024
2023
(in thousands)
Deferred tax assets:
Basis difference related to hedge items
$
136,589
$
84,922
Unrealized losses on available-for-sale securities
12,441
20,514
Allowance for losses
5,310
3,842
Compensation and Benefits
1,779
2,127
Stock-based compensation
3,014
2,481
Capital loss carryforwards
—
35
Valuation allowance
—
(35)
Other
5,887
2,051
Total deferred tax assets
$
165,020
$
115,937
Deferred tax liability:
Basis differences related to financial derivatives
$
135,528
$
80,887
Unrealized gains on cash flow hedges
9,212
9,843
Basis difference related to structured securitizations
18,726
16,647
Other
10
90
Total deferred tax liability
$
163,476
$
107,467
Net deferred tax asset
$
1,544
$
8,470
As of December 31, 2024 and 2023, Farmer Mac did not identify any uncertain tax positions.
Farmer Mac did not have any unrecognized tax benefits for the years ended December 31, 2024, 2023, and
2022.
Tax years 2021 through 2024 remain subject to examination.
11.
EMPLOYEE BENEFITS
Farmer Mac makes contributions to a defined contribution retirement plan for all of its employees.
Farmer Mac contributed 13.2% of the lesser of an employee's gross salary and the maximum
compensation permitted under the Economic Growth and Tax Relief Reconciliation Act of 2001
("EGTRRA") ($345,000 for 2024, $330,000 for 2023, and $305,000 for 2022), plus 5.7% of the difference
between: (1) the lesser of the gross salary and the amount established under EGTRRA and (2) the Social
Security Taxable Wage Base. Employees are fully vested after having been employed for approximately 3
years. Expenses for this plan for the years ended December 31, 2024, 2023, and 2022 were $4.2 million,
$3.6 million, and $3.1 million, respectively.
Farmer Mac established a Nonqualified Deferred Compensation Plan ("NQDC Plan") for its executive
officers effective May 1, 2017. Under the NQDC Plan, Farmer Mac credits the account of each participant
each calendar year with an amount equal to 18.9% of the difference between: (1) the amount established
under EGTRRA and (2) a participant’s gross annual base salary, which for purposes of calculating
employer credits under the NQDC Plan is capped at $750,000 for all other participants. This fixed
174
contribution percentage is the same formula used for determining employer contributions to Farmer Mac’s
defined contribution retirement plan based on an employee’s gross annual base salary that is above the
amount established under EGTRRA for that year. Expenses for the NQDC Plan were $0.2 million, $0.1
million, and $0.2 million, respectively, for the years ended December 31, 2024, 2023, and 2022.
12.
GUARANTEES AND COMMITMENTS
Farmer Mac offers two credit enhancement alternatives to direct loan purchases that allow approved
lenders the ability to retain the cash flow benefits of their loans and increase their liquidity and lending
capacity: (1) Farmer Mac Guaranteed Securities and (2) LTSPCs, both of which are available through
each of the Agricultural Finance and Infrastructure Finance lines of business.
The contractual terms of Farmer Mac's off-balance sheet guarantees and LTSPCs range from less than 1
year to 30 years. However, the actual term of each guarantee or LTSPC may be significantly less than the
contractual term based on the prepayment characteristics of the related loans. Farmer Mac's maximum
potential exposure under these off-balance sheet guarantees and LTSPCs is the unpaid principal balance of
the underlying loans. Farmer Mac's maximum potential exposure was $4.5 billion and $4.1 billion as of
December 31, 2024 and 2023, respectively. The maximum exposure from these guarantees and LTSPCs is
not representative of the actual loss Farmer Mac is likely to incur, based on historical loss experience. In
the event Farmer Mac was required to make payments under its guarantees or LTSPCs, Farmer Mac
would have the right to enforce the terms of the loans, and in the event of default, would have access to
the underlying collateral. For information on Farmer Mac's methodology for determining the reserve for
losses for its financial guarantees, see Note 2(h). The following table presents changes in Farmer Mac's
guarantee and commitment obligations in the consolidated balance sheets for the years ended
December 31, 2024, 2023, and 2022:
Table 12.1
For the Years Ended December 31,
2024
2023
2022
(in thousands)
Beginning balance, January 1
$
47,563
$
46,582
$
43,926
Additions to the guarantee and commitment obligation(1)
6,036
5,312
8,569
Amortization of the guarantee and commitment obligation
(5,273)
(4,331)
(5,913)
Ending balance, December 31
$
48,326
$
47,563
$
46,582
(1)
Represents the fair value of the guarantee and commitment obligation at inception.
Off-Balance Sheet Farmer Mac Guaranteed Securities
The following table presents the maximum principal amount of potential undiscounted future payments
that Farmer Mac could be required to make under all off-balance sheet Farmer Mac Guaranteed Securities
as of December 31, 2024 and 2023, not including offsets provided by any recourse provisions, recoveries
from third parties, or collateral for the underlying loans:
175
Table 12.2
Outstanding Balance of Off-Balance Sheet Farmer Mac Guaranteed Securities
As of December 31, 2024
As of December 31, 2023
(in thousands)
Agricultural Finance
Farmer Mac Guaranteed Securities
$
426,310
$
452,602
Infrastructure Finance
Farmer Mac Guaranteed Securities
—
—
Total off-balance sheet Farmer Mac Guaranteed Securities
$
426,310
$
452,602
Eligible loans and other eligible assets may be placed into trusts that are used as vehicles for the
securitization of the transferred assets and the Farmer Mac-guaranteed beneficial interests in the trusts are
sold to investors.
The following table summarizes the significant cash flows received from and paid to trusts used for
Farmer Mac securitizations:
Table 12.3
For the Years Ended December 31,
2024
2023
2022
(in thousands)
Proceeds from new securitizations
$
648,442
$
222,188 $
357,841
Guarantee fees received
1,484
1,620
1,852
Farmer Mac presents a liability for its obligation to stand ready under its guarantee in "Guarantee and
commitment obligation" on the consolidated balance sheets. The following table presents the liability and
the weighted-average remaining maturity of all loans underlying off-balance sheet Farmer Mac
Guaranteed Securities:
Table 12.4
As of December 31, 2024
As of December 31, 2023
(dollars in thousands)
Guarantee and commitment obligation
$
5,595 $
5,969
Weighted average remaining maturity:
Farmer Mac Guaranteed Securities
21.2 years
21.9 years
176
Long-Term Standby Purchase Commitments
Farmer Mac has recorded a liability for its obligation to stand ready under the commitment in the
guarantee and commitment obligation on the consolidated balance sheets. The following table presents the
liability, the maximum principal amount of potential undiscounted future payments that Farmer Mac could
be requested to make under all LTSPCs, not including offsets provided by any recourse provisions,
recoveries from third parties, or collateral for the underlying loans, as well as the weighted-average
remaining maturity of all loans underlying LTSPCs:
Table 12.5
As of December 31, 2024
As of December 31, 2023
(dollars in thousands)
Guarantee and commitment obligation(1)
$
42,731 $
41,594
Maximum principal amount
4,029,019
3,680,333
Weighted-average remaining maturity
14.5 years
14.5 years
(1) Relates to LTSPCs issued or modified on or after January 1, 2003.
Commitments
Farmer Mac enters into mandatory and optional delivery commitments to purchase loans. Most loan
purchase commitments entered into by Farmer Mac are mandatory commitments, in which Farmer Mac
charges a fee to extend or cancel the commitment. As of December 31, 2024 and 2023, commitments to
purchase Agricultural Finance loans and USDA Guarantees totaled $54.0 million and $31.0 million,
respectively, all of which were mandatory commitments. Farmer Mac also has unfunded commitments
and letters of credit under which Farmer Mac earns a nominal fee for the obligation to provide funding at a
future date. As of December 31, 2024 and 2023, Farmer Mac had $602.6 million and $261.2 million of
these unfunded commitments and letters of credit under the Agricultural Finance and Infrastructure lines
of business. Any optional loan purchase commitments are sold forward under optional commitments to
deliver Farmer Mac Guaranteed Securities that may be canceled by Farmer Mac without penalty.
Reserve for Losses - LTSPCs and Farmer Mac Guaranteed Securities
The following table is a summary, by asset type, of the reserve for losses as of December 31, 2024 and
2023:
Table 12.6
December 31, 2024
December 31, 2023
Reserve for Losses
Reserve for Losses
(in thousands)
Agricultural Finance
$
1,431 $
1,471
Infrastructure Finance
192
240
Total
$
1,623 $
1,711
177
The following is a summary of the net changes in the reserve for losses for the three-year period ended
December 31, 2024:
Table 12.7
Agricultural Finance
loans
Infrastructure Finance
loans
Reserve for Losses
Reserve for Losses
(in thousands)
Balance as of December 31, 2021
$
1,068 $
882
Release of losses
(249)
(268)
Balance as of December 31, 2022
$
819 $
614
Provision for/(release of) losses
652
(374)
Balance as of December 31, 2023
$
1,471 $
240
Release of losses
(40)
(48)
Balance as of December 31, 2024
$
1,431 $
192
The release from the reserve for losses during 2024 for both Agricultural Finance and Infrastructure
Finance was primarily due to ratings upgrades.
The provision for the reserve for losses in the Agricultural Finance LTSPC portfolio recorded during the
year ended December 31, 2023 was primarily due to an updated estimate of expected losses based on
additional available industry data. The release from the reserve for losses in the Infrastructure Finance
LTSPC portfolio recorded during the year ended December 31, 2023 was primarily due to an updated
estimate of expected losses based on additional available loss-given-default industry data.
The release from the reserve for losses in the Infrastructure Finance LTSPC portfolio recorded during the
year ended December 31, 2022 was primarily due to decreased volume and ratings upgrades. The release
from the reserve for losses in the Agricultural Finance LTSPC portfolio was primarily due to ratings
upgrades.
The following table presents the unpaid principal balances by delinquency status of Agricultural Finance
and Infrastructure Finance loans underlying LTSPCs and Farmer Mac Guaranteed Securities as of
December 31, 2024 and 2023:
178
Table 12.8
As of December 31, 2024
Current
30-59 Days
60-89 Days
90 Days and
Greater(1)
Total Past
Due
Total Loans
(in thousands)
Agricultural Finance:
$ 3,524,406 $
1,421 $
1,358 $
7,603 $
10,382 $ 3,534,788
Infrastructure Finance:
732,731
—
—
—
—
732,731
Total
$ 4,257,137 $
1,421 $
1,358 $
7,603 $
10,382 $ 4,267,519
(1)
Includes loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs that are 90 days or more past due, in foreclosure, or in
bankruptcy with at least one missed payment, excluding loans performing under either their original loan terms or a court-approved bankruptcy plan.
As of December 31, 2023
Current
30-59 Days
60-89 Days
90 Days and
Greater(1)
Total Past
Due
Total Loans
(in thousands)
Agricultural Finance:
$ 3,390,918 $
2,776 $
2,366 $
1,784 $
6,926 $ 3,397,844
Infrastructure Finance:
535,013
—
—
—
—
535,013
Total
$ 3,925,931 $
2,776 $
2,366 $
1,784 $
6,926 $ 3,932,857
(1)
Includes loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs that are 90 days or more past due, in foreclosure, or in
bankruptcy with at least one missed payment, excluding loans performing under either their original loan terms or a court-approved bankruptcy plan.
Credit Quality Indicators
The following tables present credit quality indicators related to Agricultural Finance and Infrastructure
loans underlying LTSPCs and Farmer Mac Guaranteed Securities as of December 31, 2024 and 2023, by
year of origination:
179
Table 12.9
As of December 31, 2024
Year of Origination:
2024
2023
2022
2021
2020
Prior
Revolving
Loans -
Amortized
Cost Basis
Total
(in thousands)
Agricultural Finance:
Internally Assigned Risk
Rating:
Acceptable
$ 70,757 $ 163,646 $ 267,551 $ 563,747 $ 583,598 $ 1,312,988 $ 452,909 $ 3,415,196
Special mention(1)
—
5,963
4,920
15,954
4,354
44,964
12,197
88,352
Substandard(2)
—
—
1,246
1,135
6,345
21,297
1,217
31,240
Total
$ 70,757 $ 169,609 $ 273,717 $ 580,836 $ 594,297 $ 1,379,249 $ 466,323 $ 3,534,788
For the Year Ended
December 31, 2024:
Current period charge-offs
$
— $
— $
— $
— $
— $
— $
— $
—
(1)
Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately
secured.
(2)
Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not
corrected.
As of December 31, 2024
Year of Origination:
2024
2023
2022
2021
2020
Prior
Revolving
Loans -
Amortized
Cost Basis
Total
(in thousands)
Infrastructure Finance:
Internally Assigned Risk
Rating:
Acceptable
$
— $
— $
— $
— $
— $ 355,848 $ 376,883 $ 732,731
Special mention(1)
—
—
—
—
—
—
—
—
Substandard(2)
—
—
—
—
—
—
—
—
Total
$
— $
— $
— $
— $
— $ 355,848 $ 376,883 $ 732,731
For the Year Ended
December 31, 2024:
Current period charge-offs
$
— $
— $
— $
— $
— $
— $
— $
—
(1)
Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately
secured.
(2)
Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not
corrected.
180
As of December 31, 2023
Year of Origination:
2023
2022
2021
2020
2019
Prior
Revolving
Loans -
Amortized
Cost Basis
Total
(in thousands)
Agricultural Finance:
Internally Assigned Risk
Rating:
Acceptable
$ 169,429 $ 246,441 $ 515,396 $ 534,395 $ 264,815 $ 1,185,811 $ 391,335 $ 3,307,622
Special mention(1)
—
71
2,466
872
531
44,631
8,565
57,136
Substandard(2)
—
—
—
131
1,536
26,328
5,091
33,086
Total
$ 169,429 $ 246,512 $ 517,862 $ 535,398 $ 266,882 $ 1,256,770 $ 404,991 $ 3,397,844
For the Year Ended
December 31, 2023:
Current period charge-offs
$
— $
— $
— $
— $
— $
— $
— $
—
(1)
Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately
secured.
(2)
Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not
corrected.
As of December 31, 2023
Year of Origination:
2023
2022
2021
2020
2019
Prior
Revolving
Loans -
Amortized
Cost Basis
Total
(in thousands)
Infrastructure Finance:
Internally Assigned Risk
Rating:
Acceptable
$
— $
— $
— $
— $
— $ 419,190 $ 115,823 $ 535,013
Special mention(1)
—
—
—
—
—
—
—
—
Substandard(2)
—
—
—
—
—
—
—
—
Total
$
— $
— $
— $
— $
— $ 419,190 $ 115,823 $ 535,013
For the Year Ended
December 31, 2023:
Current period charge-offs
$
— $
— $
— $
— $
— $
— $
— $
—
(1)
Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately
secured.
(2)
Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not
corrected.
181
13.
FAIR VALUE DISCLOSURES
Fair Value Classification and Transfers
The following tables present information about Farmer Mac's assets and liabilities measured at fair value
on a recurring basis as of December 31, 2024 and 2023, respectively, and indicate the fair value hierarchy
of the valuation techniques used by Farmer Mac to determine such fair value:
Table 13.1
Assets and Liabilities Measured at Fair Value as of December 31, 2024
Level 1
Level 2
Level 3(1)
Total
(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student
loans
$
—
$
—
$
19,476
$
19,476
Floating rate Government/GSE guaranteed mortgage-backed securities
—
2,305,725
—
2,305,725
Fixed rate GSE guaranteed mortgage-backed securities
—
2,337,967
—
2,337,967
Floating rate U.S. Treasuries
—
—
—
—
Fixed rate U.S. Treasuries
1,289,846
—
—
1,289,846
Total Available-for-sale Investment Securities
1,289,846
4,643,692
19,476
5,953,014
Farmer Mac Guaranteed Securities:
Available-for-sale:
AgVantage
—
—
5,505,531
5,505,531
Farmer Mac Guaranteed Securities
—
—
9,015
9,015
Total Farmer Mac Guaranteed Securities
—
—
5,514,546
5,514,546
USDA Securities:
Trading
—
—
818
818
Total USDA Securities
—
—
818
818
Loans:
Loans held for sale, at lower of cost or fair value
—
6,160
—
6,160
Total Loans
—
6,160
—
6,160
Financial derivatives
47
27,742
—
27,789
Guarantee Asset
—
—
5,382
5,382
Total Assets at fair value
$ 1,289,893
$ 4,677,594
$ 5,540,222
$ 11,507,709
Liabilities:
Financial derivatives
$
—
$
77,326
$
—
$
77,326
Total Liabilities at fair value
$
—
$
77,326
$
—
$
77,326
(1) Level 3 assets represent 18% of total assets and 48% of financial instruments measured at fair value.
182
Assets and Liabilities Measured at Fair Value as of December 31, 2023
Level 1
Level 2
Level 3(1)
Total
(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student
loans
$
—
$
—
$
19,082
$
19,082
Floating rate Government/GSE guaranteed mortgage-backed securities
—
2,424,434
—
2,424,434
Fixed rate GSE guaranteed mortgage-backed securities
—
1,569,615
—
1,569,615
Floating rate U.S. Treasuries
49,968
—
—
49,968
Fixed rate U.S. Treasuries
855,832
—
—
855,832
Total Available-for-sale Investment Securities
905,800
3,994,049
19,082
4,918,931
Farmer Mac Guaranteed Securities:
Available-for-sale:
AgVantage
—
—
5,522,712
5,522,712
Farmer Mac Guaranteed Securities
—
—
9,767
9,767
Total Farmer Mac Guaranteed Securities
—
—
5,532,479
5,532,479
USDA Securities:
Trading
—
—
1,241
1,241
Total USDA Securities
—
—
1,241
1,241
Financial derivatives
11
37,467
—
37,478
Guarantee Asset
—
—
5,831
5,831
Total Assets at fair value
$
905,811
$ 4,031,516
$ 5,558,633
$
10,495,960
Liabilities:
Financial derivatives
$
91
$
117,040
$
—
$
117,131
Total Liabilities at fair value
$
91
$
117,040
$
—
$
117,131
(1) Level 3 assets represent 19% of total assets and 52% of financial instruments measured at fair value.
There were no material assets or liabilities measured at fair value on a non-recurring basis as of
December 31, 2024 or 2023.
Transfers in and/or out of the different levels within the fair value hierarchy are based on the fair values of
the assets and liabilities as of the beginning of the reporting period. During the years ended December 31,
2024 and 2023, there were no transfers within the fair value hierarchy.
183
The following tables present additional information about assets and liabilities measured at fair value on a
recurring basis for which Farmer Mac has used significant unobservable inputs to determine fair value.
Net transfers in and/or out of Level 3 are based on the fair values of the assets and liabilities as of the
beginning of the reporting period. There were no liabilities measured at fair value using significant
unobservable inputs during the years ended December 31, 2024, 2023, and 2022.
Table 13.2
Level 3 Assets and Liabilities Measured at Fair Value for the Year Ended December 31, 2024
Beginning
Balance
Purchases
Settlements
Allowance
for Losses
Realized and
unrealized
(losses)/gains
included
in Income
Unrealized gains/
(losses)
included in Other
Comprehensive
Income
Ending
Balance
(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate
certificates backed by Government
guaranteed student loans
$
19,082
$
—
$
—
$
—
$
—
$
394
$
19,476
Total available-for-sale
19,082
—
—
—
—
394
19,476
Farmer Mac Guaranteed Securities:
Available-for-sale:
AgVantage
5,522,712
677,400
(666,476)
81
(49,727)
21,541
5,505,531
Farmer Mac Guaranteed Securities
9,767
—
(699)
—
—
(53)
9,015
Total available-for-sale
5,532,479
677,400
(667,175)
81
(49,727)
21,488
5,514,546
USDA Securities:
Trading
1,241
—
(443)
—
20
—
818
Total USDA Securities
1,241
—
(443)
—
20
—
818
Guarantee and commitment obligations:
Guarantee Asset
5,831
—
(343)
—
(106)
—
5,382
Total Guarantee and
commitment obligations
5,831
—
(343)
—
(106)
—
5,382
Total Assets at fair value
$ 5,558,633
$ 677,400
$ (667,961) $
81
$
(49,813) $
21,882
$ 5,540,222
184
Level 3 Assets and Liabilities Measured at Fair Value for the Year Ended December 31, 2023
Beginning
Balance
Purchases
Settlements
Allowance
for Losses
Realized and
unrealized
gains
included
in Income
Unrealized
gains/(losses)
included in
Other
Comprehensive
Income
Transfers
Out(1)
Ending
Balance
(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate
certificates backed by
Government guaranteed
student loans
$
19,027
$
—
$
—
$
6
$
—
$
49
$
—
$
19,082
Total available-for-sale
19,027
—
—
6
—
49
—
19,082
Farmer Mac Guaranteed
Securities:
Available-for-sale:
AgVantage
7,599,379
2,084,650
(1,561,507)
230
89,629
(5,573) (2,684,096) 5,522,712
Farmer Mac Guaranteed
Securities
7,847
—
(1,213)
—
—
3,133
—
9,767
Total available-for-sale
7,607,226
2,084,650
(1,562,720)
230
89,629
(2,440) (2,684,096) 5,532,479
USDA Securities:
Trading
1,767
—
(550)
—
24
—
—
1,241
Total USDA Securities
1,767
—
(550)
—
24
—
—
1,241
Guarantee and commitment
obligations:
Guarantee Asset
4,467
—
(590)
—
1,954
—
—
5,831
Total Guarantee and
commitment obligations
4,467
—
(590)
—
1,954
—
—
5,831
Total Assets at fair value $ 7,632,487
$ 2,084,650 $ (1,563,860) $
236
$
91,607
$
(2,391) $ (2,684,096) $ 5,558,633
(1)
Includes $2.7 billion of AgVantage Securities transferred from available-for-sale to held-to-maturity on July 1, 2023.
185
Level 3 Assets and Liabilities Measured at Fair Value for the Year Ended December 31, 2022
Beginning
Balance
Purchases
Settlements
Allowance
for Losses
Realized and
unrealized
losses
included
in Income
Unrealized
losses
included in
Other
Comprehensive
Income
Ending
Balance
(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate
certificates backed by Government
guaranteed student loans
$
19,254
$
—
$
—
$
19
$
—
$
(246) $
19,027
Total available-for-sale
19,254
—
—
19
—
(246)
19,027
Farmer Mac Guaranteed Securities:
Available-for-sale:
AgVantage
6,316,145
3,411,665
(1,526,303)
(283)
(552,907)
(48,938) 7,599,379
Farmer Mac Guaranteed
Securities
12,414
—
(1,675)
—
—
(2,892)
7,847
Total available-for-sale
6,328,559
3,411,665
(1,527,978)
(283)
(552,907)
(51,830) 7,607,226
USDA Securities:
Trading
4,401
—
(2,583)
—
(51)
—
1,767
Total USDA Securities
4,401
—
(2,583)
—
(51)
—
1,767
Guarantee and commitment obligations:
Guarantee Asset
6,237
—
(903)
—
(867)
—
4,467
Total Guarantee and
commitment obligations
6,237
—
(903)
—
(867)
—
4,467
Total Assets at fair value
$ 6,358,451
$ 3,411,665
$ (1,531,464) $
(264) $
(553,825) $
(52,076) $ 7,632,487
186
The following tables present additional information about the significant unobservable inputs, such as
discount rates and constant prepayment rates ("CPR"), used in the fair value measurements categorized in
Level 3 of the fair value hierarchy as of December 31, 2024 and 2023:
Table 13.3
As of December 31, 2024
Financial Instruments
Fair Value
Valuation Technique
Unobservable Input
Range
(Weighted-Average)
(in thousands)
Assets:
Investment securities:
Floating rate auction-rate certificates backed
by Government guaranteed student loans
$
19,476
Indicative bids
Range of broker quotes
99.0% - 99.0% (99.0%)
Farmer Mac Guaranteed Securities:
AgVantage
$ 5,505,531
Discounted cash flow
Discount rate
5.0% - 5.5% (5.1%)
Farmer Mac Guaranteed Securities
$
9,015
Discounted cash flow
Discount rate
7.9%
CPR
3%
USDA Securities
$
818
Discounted cash flow
Discount rate
5.3% - 5.4% (5.3%)
CPR
12% - 12% (12%)
Guarantee Asset
$
5,382
Discounted cash flow
Discount rate
7.9%
CPR
3%
As of December 31, 2023
Financial Instruments
Fair Value
Valuation Technique
Unobservable Input
Range
(Weighted-Average)
(in thousands)
Assets:
Investment securities:
Floating rate auction-rate certificates backed
by Government guaranteed student loans
$
19,082
Indicative bids
Range of broker quotes
97.0% - 97.0% (97.0%)
Farmer Mac Guaranteed Securities:
AgVantage
$ 5,522,712
Discounted cash flow
Discount rate
4.7% - 5.4% (5.0%)
Farmer Mac Guaranteed Securities
$
9,767
Discounted cash flow
Discount rate
8.3%
CPR
3%
USDA Securities
$
1,241
Discounted cash flow
Discount rate
5.4% - 5.4% (5.4%)
CPR
12% - 12% (12%)
Guarantee Asset
$
5,831
Discounted cash flow
Discount rate
8.3%
CPR
3%
The significant unobservable input used in the fair value measurements of AgVantage Farmer Mac
Guaranteed Securities is the discount rate commensurate with the risks involved. Typically, significant
increases (decreases) in this input in isolation may result in materially lower (higher) fair value
measurements. Generally, in a rising interest rate environment, Farmer Mac would expect average
discount rates to increase. Conversely, in a declining interest rate environment, Farmer Mac would expect
average discount rates to decrease. CPR are not presented in the table above for AgVantage securities
187
because they generally have fixed maturity dates when the secured general obligations are due and do not
prepay.
Disclosures on Fair Value of Financial Instruments
The following table sets forth the estimated fair values and carrying values for financial assets, liabilities,
and guarantees and commitments as of December 31, 2024 and 2023:
Table 13.4
As of December 31, 2024
As of December 31, 2023
Fair Value
Carrying
Amount
Fair Value
Carrying
Amount
(in thousands)
Financial assets:
Cash and cash equivalents
$ 1,024,007
$ 1,024,007
$
888,707
$
888,707
Investment securities
5,973,571
5,973,301
4,981,249
4,979,504
Farmer Mac Guaranteed Securities
8,215,646
8,232,234
9,710,074
9,745,548
USDA Securities
2,113,342
2,371,352
2,036,046
2,355,412
Loans
12,924,604
13,204,638
10,426,021
11,039,349
Financial derivatives
27,789
27,789
37,478
37,478
Guarantee and commitment fees receivable
57,562
50,499
58,465
49,832
Financial liabilities:
Notes payable
26,759,873
27,371,174
25,670,971
26,336,542
Debt securities of consolidated trusts held by third parties
1,910,302
1,929,628
1,268,563
1,351,069
Financial derivatives
77,326
77,326
117,131
117,131
Guarantee and commitment obligations
55,388
48,326
56,195
47,563
The carrying value of cash and cash equivalents is a reasonable estimate of their approximate fair value
and is classified as Level 1. The fair value of investments in U.S. Treasuries are valued based on
unadjusted quoted prices in active markets and are classified as Level 1. A significant portion of Farmer
Mac's investment portfolio is valued using a reputable nationally recognized third-party pricing service.
The prices obtained are non-binding and generally representative of recent market trades and are classified
as Level 2. Farmer Mac internally models the fair value of its loan portfolio, including loans held for
investment and loans held for investment in consolidated trusts, Farmer Mac Guaranteed Securities, and
USDA Securities by discounting the projected cash flows of these instruments at projected interest rates.
The fair values are based on the present value of expected cash flows using management's best estimate of
certain key assumptions, which include prepayment speeds, forward yield curves and discount rates
commensurate with the risks involved. These fair value measurements do not take into consideration the
fair value of the underlying property and are classified as Level 3. Financial derivatives primarily are
valued using the market standard methodology of netting the discounted future fixed cash payments (or
receipts) and the discounted expected variable cash receipts (or payments) and are classified as Level 2.
The fair value of the guarantee fees receivable/obligation and debt securities of consolidated trusts are
estimated based on the present value of expected future cash flows of the underlying mortgage assets
using management's best estimate of certain key assumptions, which include prepayments speeds, forward
yield curves, and discount rates commensurate with the risks involved and are classified as Level 3. Notes
payable are valued by discounting the expected cash flows of these instruments using a yield curve
derived from market prices observed for similar agency securities and are also classified as Level 3.
Because the cash flows of Farmer Mac's financial instruments may be interest rate path dependent,
188
estimated fair values and projected discount rates for Level 3 financial instruments are derived using a
Monte Carlo simulation model. Different market assumptions and estimation methodologies could
significantly affect estimated fair value amounts.
14.
BUSINESS SEGMENT REPORTING
Farmer Mac has seven reportable segments: Farm & Ranch, Corporate AgFinance, Power & Utilities,
Broadband Infrastructure, Renewable Energy, Funding, and Investments.
The Farm & Ranch segment includes the financial results of the USDA Securities portfolio, Farm &
Ranch loans, and AgVantage securities. The Corporate AgFinance segment includes loans and AgVantage
securities to larger and more complex farming operations, agribusinesses focused on food and fiber
processing, and other supply chain production.
The Power & Utilities segment includes loans to rural electric generation and transmission cooperatives
and distribution cooperatives, as well as AgVantage securities secured by those types of loans. The
Broadband Infrastructure segment includes loans to rural fiber, cable/broadband, tower, wireless, local
exchange carrier, and data center projects. The Renewable Energy segment includes rural electric solar,
wind, and gas projects.
The Funding segment includes the financial results of Farmer Mac's debt issuance, hedging, asset/liability
management, and capital allocation strategies. The company allocates interest expense to each of the other
segments using a funds transfer pricing process. That process also allocates the benefits and costs from the
company's funding and hedging strategies to the Funding segment.
The Investments segment includes the financial results of the company's investment portfolio, which is
held for liquidity purposes. Interest expense is allocated to the Investments segment using the same funds
transfer pricing process that is used to allocate interest expense to the other segments.
The following table presents Farmer Mac's seven segments:
Agricultural Finance
Infrastructure Finance
Treasury
Farm &
Ranch
Corporate
AgFinance
Power &
Utilities
Broadband
Infrastructure
Renewable
Energy
Funding
Investments
The President and Chief Executive Officer serves as the CODM. The CODM reviews segment core
earnings to make decisions about allocating resources and to assess the financial performance of the
segments. The main difference between core earnings and net income is the exclusion of the effects of fair
value fluctuations. These fluctuations are not expected to have a cumulative net impact on Farmer Mac's
financial condition or results of operations reported in accordance with GAAP if the related financial
instruments are held to maturity, as is expected. Another difference is that core earnings excludes
specified infrequent or unusual transactions that are not indicative of future operating results and that may
not reflect the trends and economic financial performance of Farmer Mac's core business. The CODM also
looks at changes in the segments' on- and off-balance sheet unpaid paid principal balances to assess the
performance of the segments.
189
The following tables present segment core earnings and assets for the years ended December 31, 2024,
2023, and 2022.
Table 14.1
Core Earnings by Business Segment
For the Year Ended December 31, 2024
Agricultural Finance
Rural Infrastructure
Treasury
Farm &
Ranch
Corporate
AgFinance
Power &
Utilities
Broadband
Infrastructure
Renewable
Energy
Funding
Investments
Total
(in thousands)
Interest income
$ 615,016
$ 100,820
$ 260,636
$
38,225
$
54,188
$
224,390
$
310,241
$ 1,603,516
Interest expense(1)
(475,248)
(70,695) (240,600)
(27,282)
(40,471)
(89,698)
(305,655) (1,249,649)
Less: reconciling adjustments(2)(3)
(4,458)
—
(49)
—
—
(9,796)
—
(14,303)
Net effective spread
135,310
30,125
19,987
10,943
13,717
124,896
4,586
339,564
Guarantee and commitment fees(3)
17,695
571
966
464
625
—
—
20,321
Other income/(expense)
3,167
(2,055)
—
—
—
—
1,076
2,188
(Provision for)/release of losses
(1,147)
(6,850)
274
1,469
(5,236)
—
—
(11,490)
Operating expenses(1)
(24,741)
(7,905)
(4,281)
(3,666)
(4,848)
(10,855)
(3,108)
(59,404)
Income tax (expense)/benefit
(27,360)
(2,916)
(3,559)
(1,934)
(894)
(23,949)
(536)
(61,148)
Segment core earnings
$ 102,924
$
10,970
$
13,387
$
7,276
$
3,364
$
90,092
$
2,018
$
230,031
Reconciliation to net income:
Net effects of derivatives and
trading securities
$
13,141
Unallocated (expenses)/income
(46,217)
Income tax effect related to
reconciling items
10,238
Net income
$
207,193
Total Assets:
Total on- and off-balance sheet
segment assets at principal balance
$ 18,606,968 $ 1,887,705 $ 6,809,366
$
802,466
$ 1,416,525
$
—
$
—
$ 29,523,030
Off-balance sheet assets under
management
(4,981,285)
Unallocated assets
6,782,997
Total assets on the consolidated
balance sheets
$ 31,324,742
(1)
The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
(2)
Includes the amortization of premiums and discounts on assets consolidated at fair value, originally included in interest income, to reflect core earnings
amounts; the reclassification of interest expense related to interest rate swaps not designated as hedges, which are included in "Gains on financial
derivatives" on the consolidated financial statements, to determine the effective funding cost for each operating segment; and excludes the fair value
changes of financial derivatives and the corresponding assets or liabilities designated in fair value hedge accounting relationships.
(3)
Includes the reclassification of interest income and interest expense from consolidated trusts owned by third parties to guarantee and commitment fees, to
reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee.
190
Core Earnings by Business Segment
For the Year Ended December 31, 2023
Agricultural Finance
Rural Infrastructure
Treasury
Farm &
Ranch
Corporate
AgFinance
Power &
Utilities
Broadband
Infrastructure
Renewable
Energy
Funding
Investments
Total
(in thousands)
Interest income
$ 559,730
$
92,335
$ 232,106
$
30,299
$
18,923
$
200,264
$
258,631
$ 1,392,288
Interest expense(1)
(422,651)
(61,111) (215,763)
(21,455)
(14,275)
(71,849)
(257,637) (1,064,741)
Less: reconciling adjustments(2)(3)
(4,179)
—
(168)
—
—
3,594
186
(567)
Net effective spread
132,900
31,224
16,175
8,844
4,648
132,009
1,180
326,980
Guarantee and commitment fees(3)
17,415
283
1,090
43
97
—
—
18,928
Other income/(expense)
2,952
35
—
—
—
3
29
3,019
(Provision for)/release of losses
(507)
(207)
4,117
(4,324)
(219)
—
4
(1,136)
Operating expenses(1)
(23,306)
(5,540)
(3,553)
(2,415)
(3,382)
(11,037)
(3,184)
(52,417)
Income tax (expense)/benefit
(27,183)
(5,418)
(3,746)
(453)
(238)
(25,405)
414
(62,029)
Segment core earnings
$ 102,271
$
20,377
$
14,083
$
1,695
$
906
$
95,570
$
(1,557) $
233,345
Reconciliation to net income:
Net effects of derivatives and
trading securities
$
1,954
Unallocated (expense)/income
(44,227)
Income tax effect related to
reconciling items
8,931
Net income
$
200,003
Total Assets:
Total on- and off-balance sheet
segment assets at principal balance
$ 18,808,801 $ 1,693,979 $ 6,979,570
$
501,153
$
487,521
$
—
$
—
$ 28,471,024
Off-balance sheet assets under
management
(4,710,199)
Unallocated assets
5,763,557
Total assets on the consolidated
balance sheets
$ 29,524,382
(1)
The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
(2)
Includes the amortization of premiums and discounts on assets consolidated at fair value, originally included in interest income, to reflect core earnings
amounts; the reclassification of interest expense related to interest rate swaps not designated as hedges, which are included in "Gains on financial
derivatives" on the consolidated financial statements, to determine the effective funding cost for each operating segment; and excludes the fair value
changes of financial derivatives and the corresponding assets or liabilities designated in fair value hedge accounting relationships.
(3)
Includes the reclassification of interest income and interest expense from consolidated trusts owned by third parties to guarantee and commitment fees, to
reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee.
191
Core Earnings by Business Segment
For the Year Ended December 31, 2022
Agricultural Finance
Rural Infrastructure
Treasury
Farm &
Ranch
Corporate
AgFinance
Power &
Utilities
Broadband
Infrastructure
Renewable
Energy
Funding
Investments
Total
(in thousands)
Interest income
$ 421,139
$
55,311
$ 152,990
$
8,832
$
5,811
$
(8,334) $
81,099
$
716,848
Interest expense(1)
(287,921)
(26,102) (141,176)
(4,471)
(3,328)
104,947
(87,857)
(445,908)
Less: reconciling adjustments(2)(3)
(4,161)
—
(103)
—
—
(11,147)
—
(15,411)
Net effective spread
129,057
29,209
11,711
4,361
2,483
85,466
(6,758)
255,529
Guarantee and commitment fees(3)
16,718
139
1,187
51
49
—
—
18,144
Other income/(expense)
1,420
261
—
—
—
—
—
1,681
(Provision for)/release of losses
(1,216)
(2,136)
3,726
(705)
(494)
—
19
(806)
Operating expenses(1)
(23,332)
(5,629)
(3,198)
(2,009)
(1,690)
(6,798)
(1,950)
(44,606)
Income tax (expense)/benefit
(25,756)
(4,587)
(2,819)
(357)
(73)
(16,521)
1,825
(48,288)
Segment core earnings
$
96,891
$
17,257
$
10,607
$
1,341
$
275
$
62,147
$
(6,864) $
181,654
Reconciliation to net income:
Net effects of derivatives and
trading securities
$
33,715
Unallocated (expense)/income
(37,978)
Income tax effect related to
reconciling items
753
Net income
$
178,144
Total Assets:
Total on- and off-balance sheet
segment assets at principal balance
$ 17,728,792 $ 1,603,507 $ 6,042,996
$
316,617
$
230,170
$
—
$
—
$ 25,922,082
Off-balance sheet assets under
management
(3,945,557)
Unallocated assets
5,356,585
Total assets on the consolidated
balance sheets
$ 27,333,110
(1)
The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
(2)
Includes the amortization of premiums and discounts on assets consolidated at fair value, originally included in interest income, to reflect core earnings
amounts; the reclassification of interest expense related to interest rate swaps not designated as hedges, which are included in "Gains on financial
derivatives" on the consolidated financial statements, to determine the effective funding cost for each operating segment; and excludes the fair value
changes of financial derivatives and the corresponding assets or liabilities designated in fair value hedge accounting relationships.
(3)
Includes the reclassification of interest income and interest expense from consolidated trusts owned by third parties to guarantee and commitment fees, to
reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
None.
Item 9A.
Controls and Procedures
Management's Evaluation of Disclosure Controls and Procedures. Farmer Mac maintains disclosure
controls and procedures designed to ensure that information required to be disclosed in its periodic filings
under the Securities Exchange Act of 1934 (“Exchange Act”), including this Annual Report on Form 10-
K, is recorded, processed, summarized, and reported on a timely basis. These disclosure controls and
procedures include controls and procedures designed to ensure that information required to be disclosed
under the Exchange Act is accumulated and communicated to Farmer Mac's management on a timely
basis to allow decisions about required disclosure. Management, including Farmer Mac's Chief Executive
Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of Farmer
192
Mac's disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the
Exchange Act) as of December 31, 2024.
Farmer Mac carried out the evaluation of the effectiveness of its disclosure controls and procedures,
required by paragraph (b) of Exchange Act Rules 13a-15 and 15d-15, under the supervision and with the
participation of management, including the Chief Executive Officer and Chief Financial Officer. Based
upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that Farmer
Mac's disclosure controls and procedures were effective as of December 31, 2024.
Management's Report on Internal Control Over Financial Reporting. See "Financial Statements—
Management's Report on Internal Control Over Financial Reporting" in Item 8 of this Annual Report on
Form 10-K.
Attestation Report of Independent Registered Public Accounting Firm. See "Financial Statements—
Report of Independent Registered Public Accounting Firm" in Item 8 of this Annual Report on Form 10-
K.
Changes in Internal Control Over Financial Reporting. During the fourth quarter of 2024, Farmer Mac
modernized its systems of record for its investments, AgVantage, and debt portfolios and its treasury
management. There were no other changes in Farmer Mac's internal control over financial reporting
during the year ended December 31, 2024 that have materially affected, or are reasonably likely to
materially affect, Farmer Mac's internal control over financial reporting.
Item 9B.
Other Information
Director and Officer Trading Arrangements
None of Farmer Mac's directors or executive officers (as defined in Rule 16a-1(f) under the Exchange Act)
adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as
defined in Item 408(c) of Regulation S-K) during the three months ended December 31, 2024.
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not Applicable.
193
PART III
Item 10.
Directors, Executive Officers, and Corporate Governance
The information required by this Item is incorporated by reference to Farmer Mac's definitive proxy
statement to be filed on or about April 16, 2025.
Item 11.
Executive Compensation
The information required by this Item is incorporated by reference to Farmer Mac's definitive proxy
statement to be filed on or about April 16, 2025.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
The information required by this Item is incorporated by reference to Farmer Mac's definitive proxy
statement to be filed on or about April 16, 2025.
Item 13.
Certain Relationships and Related Transactions and Director Independence
The information required by this Item is incorporated by reference to Farmer Mac's definitive proxy
statement to be filed on or about April 16, 2025.
Item 14.
Principal Accountant Fees and Services
The information required by this Item is incorporated by reference to Farmer Mac's definitive proxy
statement to be filed on or about April 16, 2025.
PART IV
Item 15.
Exhibits and Financial Statement Schedules
a.
(1) Financial Statements.
Refer to Item 8 above.
(2) Financial Statement Schedules.
There are no schedules because they are not applicable, not required, or the information required to be set
forth therein is included in the consolidated financial statements or in notes thereto.
*
3.1
—
Title VIII of the Farm Credit Act of 1971, as most recently amended on June 18, 2020 (Previously filed as
Exhibit 3.1 to Form 10-Q filed August 10, 2020).
*
3.2
—
Amended and Restated By-Laws of the Registrant (Previously filed as Exhibit 3.2 to Form 10-Q filed May 6,
2024).
*
4.1
—
Specimen Certificate for Farmer Mac Class A Voting Common Stock (Previously filed as Exhibit 4.1 to
Form 10-Q filed May 15, 2003).
*
4.2
—
Specimen Certificate for Farmer Mac Class B Voting Common Stock (Previously filed as Exhibit 4.2 to
Form 10-Q filed May 15, 2003).
194
*
4.3
—
Specimen Certificate for Farmer Mac Class C Non-Voting Common Stock (Previously filed as Exhibit 4.3 to
Form 10-Q filed May 15, 2003).
*
4.4
—
Specimen Certificate for 5.700% Non-Cumulative Preferred Stock, Series D (Previously filed as Exhibit 4.7 to
Form 10-Q filed August 1, 2019).
*
4.4.1
—
Certificate of Designation of Terms and Conditions of 5.700% Non-Cumulative Preferred Stock, Series D
(Previously filed as Exhibit 4.1 to Form 8-A filed May 13, 2019).
*
4.5
—
Specimen Certificate for 5.750% Non-Cumulative Preferred Stock, Series E (Previously filed as Exhibit 4.7 to
Form 10-Q filed August 10, 2020).
*
4.5.1
—
Certificate of Designation of Terms and Conditions of 5.750% Non-Cumulative Preferred Stock, Series E
(Previously filed as Exhibit 4.1 to Form 8-A filed May 20, 2020).
*
4.6
—
Specimen Certificate for 5.250% Non-Cumulative Preferred Stock, Series F (Previously filed as Exhibit 4.8 to
Form 10-Q filed November 9, 2020).
*
4.6.1
—
Certificate of Designation of Terms and Conditions of 5.250% Non-Cumulative Preferred Stock, Series F
(Previously filed as Exhibit 4.1 to Form 8-A filed August 20, 2020).
*
4.7
—
Specimen Certificate for 4.875% Non-Cumulative Preferred Stock, Series G (Previously filed as Exhibit 4.8 to
Form 10-Q filed August 5, 2021).
*
4.7.1
—
Certificate of Designation of Terms and Conditions of 4.875% Non-Cumulative Preferred Stock, Series G
(Previously filed as Exhibit 4.1 to Form 8-A filed May 27, 2021).
*
4.8
—
Description of the Registrant's securities that are registered under Section 12 of the Securities Exchange Act of
1934.(Previously filed as Exhibit 4.9 to Form 10-Q filed November 4, 2024).
†*
10.1.
—
Amended Employment Agreement dated December 23, 2020, between Bradford T. Nordholm and the
Registrant (Previously filed as Exhibit 10.1 to Form 8-K filed December 30, 2020).
†*
10.1.1
—
First Amendment to Amended Employment Agreement dated as of September 28, 2022 between Bradford T.
Nordholm and the Registrant (Previously filed as Exhibit 10.1 to Form 8-K filed October 4, 2022).
†*
10.2
—
Form of Time-Based Restricted Stock Units Award Agreement for grants made to executive officers on or after
March 2, 2021. (Previously filed as Exhibit 10.1 to Form 8-K filed March 8, 2021).
†*
10.2.1
—
Form of Time-Based Restricted Stock Units Award Agreement for grants made to directors on or after March
2, 2021 (Previously filed as Exhibit 10.2 to Form 8-K filed March 8, 2021).
†*
10.2.2
—
Amended and Restated 2008 Omnibus Incentive Plan (Previously filed as Exhibit 10.2 to Form 10-Q filed
August 9, 2018).
†*
10.2.3
—
Form of SARs Award Agreement under the 2008 Omnibus Incentive Plan for grants made from April 1, 2013
to March 31, 2015 (Previously filed as Exhibit 10.1 to Form 8-K filed April 5, 2013).
†*
10.2.4
—
Form of SARs Award Agreement under the 2008 Omnibus Incentive Plan for grants made on or after April 1,
2015 (Previously filed as Exhibit 10.1 to Form 8-K filed on April 3, 2015).
†*
10.2.5
—
Form of Performance-Based Restricted Stock Agreement (Officers) under the 2008 Omnibus Form of
Performance-Based Restricted Stock Agreement (Officers) under the 2008 Omnibus Incentive Plan for grants
made on or after March 3, 2020 (Previously filed as Exhibit 10.1 to Form 8-K filed March 9, 2020).
†*
10.3
—
Federal Agricultural Mortgage Corporation Amended and Restated Executive Officer Severance Plan
(effective January 16, 2020) (Previously filed as Exhibit 10.1 to Form 8-K filed January 23, 2020).
†*
10.4
—
Form of Participation Agreement to the Federal Agricultural Mortgage Corporation Amended and Restated
Executive Officer Severance Plan (effective January 16, 2020) (Previously filed as Exhibit 10.2 to Form 8-K
filed January 23, 2020).
†*
10.5
—
Nonqualified Deferred Compensation Plan (effective May 1, 2017) (Previously filed as Exhibit 10.2 to Form
10-Q filed May 10, 2017).
†*
10.6
—
Adoption Agreement of the Nonqualified Deferred Compensation Plan (effective May 1, 2017) (Previously
filed as Exhibit 10.3 to Form 10-Q filed May 10, 2017).
†*
10.7
—
Amended Adoption Agreement of the Nonqualified Deferred Compensation Plan, effective November 15,
2023. (Previously filed as Exhibit 10.7 to Form 10-K filed February 23, 2024).
†*
10.8
—
Form of Indemnification Agreement for Directors (Previously filed as Exhibit 10.1 to Form 8-K filed April 9,
2008).
195
†**
10.9
—
Description of compensation agreement between the Registrant and its directors, effective January 1, 2025.
*#
10.10
—
Amended and Restated Master Central Servicing Agreement between Zions First National Bank and the
Registrant, dated as of May 1, 2004 (Previously filed as Exhibit 10.11.2 to Form 10-Q filed August 9, 2004).
*
10.10.1
—
Amendment No. 1 to Amended and Restated Master Central Servicing Agreement between Zions First
National Bank and the Registrant, dated as of June 1, 2009 (Previously filed as Exhibit 10.11.1 to Form 10-Q
filed August 10, 2009).
*
10.10.2
—
Amendment No. 2 to Amended and Restated Master Central Servicing Agreement between Zions First
National Bank and the Registrant, dated as of August 25, 2010 (Previously filed as Exhibit 10.11.2 to Form 10-
Q filed November 9, 2010).
*
10.11
—
Amended and Restated Note Purchase Agreement between Farmer Mac Mortgage Securities Corporation,
National Rural Utilities Cooperative Finance Corporation, and the Registrant, dated as of March 24, 2011
(Previously filed as Exhibit 10.22 to Form 10-Q filed May 10, 2011).
*
10.11.1
—
Fifth Amended and Restated First Supplemental Note Purchase Agreement between Farmer Mac Mortgage
Securities Corporation, National Rural Utilities Cooperative Finance Corporation, and the Registrant, dated as
of January 14, 2025 (Previously filed as Exhibit 10.1 to Form 8-K filed January 14, 2025).
*
10.12
—
Amended and Restated Master Sale and Servicing Agreement between National Rural Utilities Cooperative
Finance Corporation and the Registrant, dated as of August 12, 2011 (Previously filed as Exhibit 10.26 to Form
10-Q filed November 9, 2011).
*
10.12.1
—
Amendment No. 1 to Amended and Restated Master Sale and Servicing Agreement between National Rural
Utilities Cooperative Finance Corporation and the Registrant, dated as of November 28, 2016 (Previously filed
as Exhibit 10.17 to Form 10-K filed March 9, 2017)
*
10.13
—
Third Amended, Restated and Consolidated Pledge Agreement between Farmer Mac Mortgage Securities
Corporation, National Rural Utilities Cooperative Finance Corporation, U.S. Bank National Association, and
the Registrant, dated as of January 14, 2025 (Previously filed as Exhibit 10.2 to Form 8-K filed January 14,
2025).
*
10.14
—
Long Term Standby Commitment to Purchase between National Rural Utilities Cooperative Finance
Corporation and the Registrant, dated as of August 31, 2015 (Previously filed as Exhibit 10.4 to Form 10-Q
filed November 9, 2015).
*
10.14.1
—
Amendment No. 1 to Long Term Standby Commitment to Purchase between National Rural Utilities
Cooperative Finance Corporation and the Registrant, dated as of May 31, 2016 (Previously filed as Exhibit
10.1 to Form 10-Q filed August 9, 2016).
*
10.15
—
Loan Participation Servicing Agreement between National Rural Utilities Cooperative Finance Corporation,
National Cooperative Services Corporation, and the Registrant, dated as of September 26, 2019 (Previously
filed as Exhibit 10 to Form 8-K filed October 9, 2019).
*
10.16
—
Master Non-Recourse Loan Participation Agreement between National Rural Utilities Cooperative Finance
Corporation and the Registrant, dated as of February 3, 2020 (Previously filed as Exhibit 10.1 to Form 8-K
filed February 7, 2020).
*
10.17
—
Loan Participation and Servicing Agreement between National Rural Utilities Cooperative Finance
Corporation and the Registrant, dated as of February 3, 2020 (Previously filed as Exhibit 10.2 to Form 8-K
filed February 7, 2020).
*
10.18
—
Master Non-Recourse Loan Participation Agreement between CoBank, ACB, CoBank, FCB, and the
Registrant, dated as of February 13, 2019 (Previously filed as Exhibit 10.1 to Form 8-K filed February 20,
2019).
*
10.19
—
Loan Participation and Servicing Agreement between CoBank, ACB and the Registrant, dated as of February
13, 2019 (Previously filed as Exhibit 10.2 to Form 8-K filed February 20, 2019).
**
19.1
—
Insider trading arrangements and policies, as required by applicable listing standards adopted pursuant to 17
CFR 229.408
*
21
—
List of the Registrant's subsidiaries (Previously filed as Exhibit 21 to Form 10-K filed March 8, 2018).
**
31.1
—
Certification of Registrant's principal executive officer relating to the Registrant's Annual Report on Form 10-
K for the year ended December 31, 2024, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
**
31.2
—
Certification of Registrant's principal financial officer relating to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 2024, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
**
32
—
Certification of Registrant's principal executive officer and principal financial officer relating to the
Registrant's Annual Report on Form 10-K for the year ended December 31, 2024, pursuant to 18 U.S.C.
§ 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*
97.1
—
Policy relating to recovery of erroneously awarded compensation, as required by applicable listing standards
adopted pursuant to 17 CFR 240.10D-1 (Previously filed as Exhibit 97.1 to Form 10-K filed February 23,
2024).
196
**
101.INS
—
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because
its XBRL tags are embedded within the Inline XBRL document
**
101.SCH
—
Inline XBRL Taxonomy Extension Schema
**
101.CAL
—
Inline XBRL Taxonomy Extension Calculation
**
101.DEF
—
Inline XBRL Taxonomy Extension Definition
**
101.LAB
—
Inline XBRL Taxonomy Extension Label
**
101.PRE
—
Inline XBRL Taxonomy Extension Presentation
**
104
—
Cover Page Inline Interactive Data File - the cover page interactive data file does not appear in the Interactive
Data File because its XBRL tags are embedded within the Inline XBRL document included as Exhibit 101
*
Incorporated by reference to the indicated prior filing.
**
Filed with this report.
#
Portions of this exhibit have been omitted pursuant to a request for confidential treatment.
†
Management contract or compensatory plan
Item 16.
Form 10-K Summary
None.
197
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
/s/ Bradford T. Nordholm
February 21, 2025
By:
Bradford T. Nordholm
President and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities and on the dates
indicated.
Name
Title
Date
/s/ Lowell L. Junkins
Chair of the Board of Directors
February 21, 2025
Lowell L. Junkins
/s/ Bradford T. Nordholm
President and Chief Executive Officer
February 21, 2025
Bradford T. Nordholm
(Principal Executive Officer)
/s/ Aparna Ramesh
Executive Vice President – Chief Financial
February 21, 2025
Aparna Ramesh
Officer and Treasurer
(Principal Financial Officer)
/s/ Gregory N. Ramsey
Vice President – Chief Accounting Officer
February 21, 2025
Gregory N. Ramsey
(Principal Accounting Officer)
198
Name
Title
Date
/s/ Chester J. Culver
Director
February 21, 2025
Chester J. Culver
/s/ Richard H. Davidson
Director
February 21, 2025
Richard H. Davidson
/s/ James R. Engebretsen
Director
February 21, 2025
James R. Engebretsen
/s/ Sara L. Faivre
Director
February 21, 2025
Sara L. Faivre
/s/ Amy H. Gales
Director
February 21, 2025
Amy H. Gales
/s/ Mitchell A. Johnson
Director
February 21, 2025
Mitchell A. Johnson
/s/ Eric T. McKissack
Director
February 21, 2025
Eric T. McKissack
/s/ Jeffrey L. Plagge
Director
February 21, 2025
Jeffrey L. Plagge
/s/ Kevin G. Riel
Director
February 21, 2025
Kevin G. Riel
/s/ Robert G. Sexton
Director
February 21, 2025
Robert G. Sexton
/s/ Charles A. Stones
Director
February 21, 2025
Charles A. Stones
/s/ Todd P. Ware
Director
February 21, 2025
Todd P. Ware
/s/ LaJuana S. Wilcher
Director
February 21, 2025
LaJuana S. Wilcher
199
CORPORATE HEADQUARTERS
2100 Pennsylvania Ave NW
Ste 450N
Washington, DC 20037
Phone: 202.872.7700
800.879.3276
Website: www.FarmerMac.com
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.
ANNUAL MEETING OF STOCKHOLDERS
Thursday, May 15, 2025, 8:00 a.m. (EDT)
Third Floor Conference Room
Farmer Mac Headquarters
2100 Pennsylvania Ave NW
Ste 450N
Washington, DC 20037
Dial-In: 800.836.8184
Webcast: www.FarmerMac.com/investors/
events-presentations
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.
TRANSFER AGENT AND REGISTRAR
Equiniti Trust Company, LLC (“EQ”)
48 Wall Street, Floor 23
New York, NY 10005
Phone: 800.937.5449
Email: helpast@equiniti.com
Website: equiniti.com/us/ast-access/
CERTIFICATION
Farmer Mac has included as Exhibit 31 to
its Annual Report on Form 10-K for the fiscal year
ended December 31, 2024, filed with the SEC on
February 21, 2025, the certifications of the 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 2024 Annual Report on Form 10-K,
as filed with the SEC on February 21, 2025, 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, 2024
PricewaterhouseCoopers LLP
655 New York Ave NW
Washington, DC 20001
CORPORATE INFORMATION
IN MEMORIAM – ROY H. TIARKS
Farmer Mac mourns the loss of former Board Member Roy H. Tiarks, who
died on Feb. 4, 2025. He dedicated his career to advocating for the needs of
America’s farmers, ranchers, and rural communities. His deep understanding
of agriculture and unwavering commitment to its future contributed strongly
to our board, our company, and our industry.
LIQUIDITY
IN ACTION
Accelerating Rural
Opportunities
2100 Pennsylvania Ave NW
Ste 450N
Washington, DC 20037
Phone: 202.872.7700 or 800.879.3276
www.FarmerMac.com