What changed in this filing

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Item 1. Business

2022-02-28 compared with 2021-02-25 · 271 added, 221 removed, 325 unchanged (60% of the section changed)

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Farmer Mac's secondary market activities include:

• purchasing eligible loans (including participations in eligible loans and revolving lines of credit) directly from lenders;

• purchasing general obligation securities that are issued by lenders and guaranteed by Farmer Mac and that are secured by eligible loans, which Farmer Mac refers to as "AgVantage," a registered trademark of Farmer Mac;

• issuing securities guaranteed by Farmer Mac that represent interests in, or obligations secured by, pools of eligible loans (together with AgVantage, these securities are referred to as "Farmer Mac Guaranteed Securities");

• 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);

• purchasing securities that are issued by lenders and guaranteed by Farmer Mac and that are secured by 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;

• providing long-term standby purchase commitments ("LTSPCs") for eligible loans.

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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.

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.

Farmer Mac's two primary sources of revenue are:

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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.

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.

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Through 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.

The current economic and regulatory environment presents Farmer Mac with opportunities to market a mix of products to lenders in need of capital, liquidity, portfolio diversification, and 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 the utilization of secondary market capital could further support their origination efforts and drive efficient capital deployment to agriculture communities and rural America.

Farmer Mac markets a mix of products to lenders who may be in need of 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 agriculture 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 profile presents opportunity to 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 conducts its secondary market activities through four lines of business – Farm & Ranch, USDA Guarantees, Rural Utilities, and Institutional Credit.

The loans (and participation interests in those loans) eligible for Farmer Mac's secondary market include:

• mortgage loans secured by first liens on agricultural real estate, including part-time farms and rural housing (comprising the assets eligible for the Farm & Ranch line of business);

• agricultural and rural development loans guaranteed by the United States Department of Agriculture ("USDA") (comprising the assets eligible for the USDA Guarantees line of business);

• loans by lenders organized as cooperatives to finance electrification and telecommunications systems in rural areas (comprising the assets eligible for the Rural Utilities line of business).

Farmer Mac also guarantees and purchases general obligations of lenders that are secured by pools of these three types of eligible loans (comprising the assets eligible for the Institutional Credit line of business).

As of December 31, 2020, the total outstanding business volume in all of Farmer Mac's lines of business was $21.9 billion.

The following table presents the outstanding balances under Farmer Mac's four lines of business (Farm & Ranch, USDA Guarantees, Rural Utilities, and Institutional Credit) as of December 31, 2020 and December 31, 2019:

Farmer Mac engages in a variety of secondary market activities across its two lines of business, Agricultural Finance and Rural Infrastructure Finance.

Within those two lines of business are four segments:

Corporate AgFinance, Farm & Ranch, Rural Utilities, and Renewable Energy, as shown in the table below:

Agricultural Finance Rural Infrastructure Finance

Farm & Ranch Corporate AgFinance Rural Utilities Renewable Energy

Interest-earning assets

Loans X X X X

Loans held in trusts X

AgVantage Securities X X X

Farmer Mac Guaranteed Securities X

USDA Securities X

Products and services that earn fee income

Farmer Mac Guaranteed Securities X X

Unfunded Commitments X X X X

Farmer Mac Guaranteed Securities 1

Securitized loan servicing X

1 Structured securitization transactions

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:

• For Farmer Mac's Agricultural Finance line of business, mortgage loans secured by first liens on agricultural real estate, 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");

• For Farmer Mac's Rural Infrastructure Finance line of business, loans by lenders organized as cooperatives to finance electrification and telecommunications systems and renewable energy providers or projects in rural areas.

As of December 31, 2021, the total outstanding business volume in Farmer Mac's two lines of business (Agricultural Finance and Rural Infrastructure Finance) was $23.6 billion.

The following table presents the outstanding balances under Farmer Mac's two lines of business as of December 31, 2021 and December 31, 2020:

Lines of Business - Outstanding Business Volume

As of December 31, 2020 As of December 31, 2019

Balance Sheet As of December 31, 2021 As of December 31, 2020

(in thousands)

On-balance sheet:

Farm & Ranch:

Loans $ 4,889,393 $ 3,675,640

Loans held in trusts:

Beneficial interests owned by third party investors 1,287,045 1,600,917

USDA Guarantees:

USDA Securities 2,452,964 2,199,072

Farmer Mac Guaranteed USDA Securities 34,456 31,887

Rural Utilities:

Loans 2,260,412 1,671,293

Institutional Credit:

AgVantage securities 7,734,947 8,432,679

Total on-balance sheet $ 18,659,217 $ 17,611,488

Off-balance sheet:

Agricultural Finance:

Farm & Ranch:

LTSPCs $ 2,325,431 $ 2,393,071

Guaranteed Securities 79,312 107,322

USDA Guarantees:

Farmer Mac Guaranteed USDA Securities 299,298 389,216

Loans On-balance sheet $ 4,775,070 $ 3,979,854

Loans held in consolidated trusts:

Beneficial interests owned by third-party investors On-balance sheet 948,623 1,287,045

IO-FMGS On-balance sheet 12,297 —

USDA Securities On-balance sheet 2,445,806 2,487,420

AgVantage Securities On-balance sheet 4,725,000 4,425,000

LTSPCs and unfunded commitments Off-balance sheet 2,587,154 2,314,965

Farmer Mac Guaranteed Securities Off-balance sheet 578,358 378,610

Loans serviced for others Off-balance sheet 22,331 —

Total Farm & Ranch $ 16,094,639 $ 14,872,894

Corporate AgFinance:

Loans On-balance sheet $ 1,123,300 $ 909,539

AgVantage Securities On-balance sheet 367,464 744,110

Unfunded Loan Commitments Off-balance sheet 47,070 10,466

Total Corporate AgFinance $ 1,537,834 $ 1,664,115

Total Agricultural Finance $ 17,632,473 $ 16,537,009

Rural Infrastructure Finance:

Rural Utilities:

LTSPCs 556,425 609,278

Institutional Credit:

AgVantage securities 4,412 7,567

Total off-balance sheet $ 3,264,878 $ 3,506,454

Loans On-balance sheet $ 2,302,373 $ 2,187,377

AgVantage Securities On-balance sheet 3,033,262 2,565,837

LTSPCs and Unfunded Loan Commitments Off-balance sheet 556,837 556,425

Farmer Mac Guaranteed Securities Off-balance sheet 2,755 4,412

Total Rural Utilities $ 5,895,227 $ 5,314,051

Renewable Energy:

Loans On-balance sheet $ 86,763 $ 73,035

Unfunded Loan Commitments Off-balance sheet — —

Total Renewable Energy $ 86,763 $ 73,035

Total Rural Infrastructure Finance $ 5,981,990 $ 5,387,086

Total $ 23,614,463 $ 21,924,095

Under the Farm & Ranch line of business, Farmer Mac provides a secondary market for mortgage loans secured by first liens on agricultural real estate (including part-time farms and rural housing) by (1) purchasing and retaining eligible mortgage loans and revolving lines of credit, (2) securitizing eligible mortgage loans and guaranteeing the timely payment of principal and interest on the resulting securities that represent interests in, or obligations secured by, pools of those loans, or (3) issuing LTSPCs for designated eligible mortgage loans, subject to the applicable LTSPC agreement.

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, and commitment fees earned on loans in LTSPCs.

Farmer Mac experiences direct credit exposure to borrowers through its loan purchases, 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.

Agricultural Finance

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 purchased or securitized by Farmer Mac, and (4) issuing LTSPCs for designated eligible loans.

Loan Eligibility

To be eligible for the Farm & Ranch line of business, a loan must:

• be 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;

• be 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;

• be an obligation of a person, corporation, or partnership having training or farming experience that is sufficient to ensure a reasonable likelihood that the loan will be repaid according to its terms;

• meet the credit underwriting, collateral valuation, documentation, and other specified standards for the Farm & Ranch line of business.

See "—Underwriting and Collateral Standards" and "— Lenders" for a description of these standards.

Eligible agricultural real estate consists of one or more parcels of land, which may be improved by permanently affixed buildings or other structures, that:

• is used for the production of one or more agricultural commodities or products;

• either consists of a minimum of five acres or generates minimum annual receipts of $5,000.

This variety in the types of permitted collateral to include buildings and structures used in agriculture production means that eligible Farm & Ranch loans may include loans to agribusinesses that support agriculture production, food and fiber processing, and other supply chain production, as well as loans to direct growers and producers of agricultural commodities.

Farmer Mac's charter authorizes a maximum loan size (adjusted annually for inflation) for an eligible Farm & Ranch loan secured by more than 2,000 acres of agricultural real estate.

That maximum loan size

was $13.2 million as of December 31, 2020.

The charter does not prescribe a maximum loan size or a total borrower exposure for an eligible Farm & Ranch loan secured by 2,000 acres or less of agricultural real estate.

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;

◦ 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;

• 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 maximum loan size was $14.1 million as of December 31, 2021.

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 ($120.1 million as of December 31, 2021).

Guarantees and Commitments

Farmer Mac offers two credit enhancement alternatives to direct loan purchases through the Farm & Ranch line of business 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.

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 and five 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;

• 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 or participation interests in those loans held by a trust or other entity.

Farmer Mac either retains or sells these securities and guarantees the timely payment of principal and interest on the securities in the event of a payment shortfall due to default.

As consideration for its assumption of the credit risk on the assets underlying the Farm & Ranch Guaranteed Securities, Farmer Mac receives guarantee fees based on the outstanding principal balance of the related securities.

Farmer Mac is obligated under its guarantee on the securities to make timely payments to investors of principal (including balloon payments) and interest based on the scheduled payments on the underlying loans, 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 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.

The amount of

Farm & Ranch Guaranteed Securities outstanding is influenced by the repayment rates on the underlying loans and by the rate at which Farmer Mac issues new Farm & Ranch Guaranteed Securities.

In general, when the level of interest rates declines significantly below the interest rates on loans underlying Farm & Ranch Guaranteed Securities, the rate of prepayments is likely to increase.

Conversely, when interest rates rise above the interest rates on the loans underlying Farm & Ranch Guaranteed Securities, the rate of prepayments is likely to decrease.

In addition to changes in interest rates, the timing of principal payments on Farm & Ranch Guaranteed Securities also is influenced by a variety of economic, demographic, and other considerations.

Farmer Mac's guarantee does not cover prepayments on the loans underlying the related Farm & Ranch Guaranteed Securities.

Underwriting and Collateral Standards

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 agricultural real estate mortgage loans in the Farm & Ranch line of business:

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;

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• confirm that the borrower is or will be actively engaged in agricultural production.

In addition to these minimum standards, eligible loans in Farmer Mac's Farm & Ranch line of business are also typically required to meet more specific underwriting criteria established by Farmer Mac or demonstrate compensating strength in one or more other underwriting criteria.

For larger loan exposures to agriculture production and agribusinesses that support agriculture production, food and fiber processing, and other supply chain production, which may have different risk profiles, Farmer Mac has implemented methodologies and parameters that help assess credit risk based on the appropriate sector, borrower construct, and transaction complexity.

Underwriting and Collateral Standards - Farm & Ranch

Farmer Mac experiences 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 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.

Farmer Mac approves lenders into its network of 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 the Farm & Ranch line of business meet prescribed criteria that Farmer Mac establishes for loan-selling counterparties, which typically include the requirement to:

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.

Farmer Mac purchases nearly all of its USDA Securities through Farmer Mac II LLC, a subsidiary of Farmer Mac that operates substantially all of the business related to Farmer Mac's USDA Securities.

Underwriting and Collateral Standards - Corporate AgFinance

Farmer Mac experiences 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 loans tend to be larger and more complex farming operations than Farm & Ranch loans (generally more than $10 million) and typically are loans made to agribusinesses focused on agriculture production, food and fiber processing, and other supply chain production.

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, and 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 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 loans eligible for Farmer Mac's Farm & Ranch line of business 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;

• 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;

• 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 who 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 generally does not directly service the loans in the Farm & Ranch line of business, although in some cases Farmer Mac may assume direct servicing for defaulted loans.

Farmer Mac contracts with other institutions to undertake most of the servicing responsibilities for its 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.

During 2021, Farmer Mac began servicing a sizeable portion of the Agricultural Finance mortgage loan and USDA Securities portfolios through a strategic acquisition of loan servicing rights along with experienced servicing personnel and an operational servicing platform.

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.

However, 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.

Loans under LTSPCs are serviced by the holders of those loans in accordance with those lenders' servicing procedures, which Farmer Mac reviews before entering into those transactions.

The substance of all servicing for loans in the Farm & Ranch line of business is performed in a manner consistent with Farmer Mac's servicing requirements, with some special servicing for loans purchased from LTSPCs to collateralize Farm & Ranch Guaranteed Securities, in order to accommodate the borrower rights regime unique to loans originated by FCS institutions.

USDA Guarantees

Farmer Mac's charter provides that:

• USDA-guaranteed portions of loans (which Farmer Mac refers to as "USDA Securities") guaranteed under the Consolidated Farm and Rural Development Act (7 U.S.C.

§ 1921 et seq.) are statutorily included in the definition of loans eligible for the secondary market programs provided by Farmer Mac;

• 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;

• Farmer Mac is authorized to pool, issue, and guarantee timely interest and principal on securities backed by USDA Securities ("Farmer Mac Guaranteed USDA Securities").

Farmer Mac purchases USDA Securities through Farmer Mac II LLC, a subsidiary of Farmer Mac that operates substantially all of the business related to the USDA Guarantees line of business.

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.

Any lender authorized by the USDA to obtain a USDA guarantee on a loan may participate in Farmer Mac's USDA Guarantees line of business.

Loan Servicing

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, and to remain mortgagee and/or secured party of record.

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.

Rural Utilities

Farmer Mac's charter authorizes the purchase of, and guarantee of securities backed by, loans (including participation interests in 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.

Farmer Mac's Rural Utilities line of business encompasses purchases of eligible Rural Utilities loans and guarantees of securities backed by those loans, as well as LTSPCs for pools of eligible Rural Utilities loans.

To be eligible, Rural Utilities loans must meet Farmer Mac's credit underwriting and other specified standards.

There currently are no guaranteed securities issued under the Rural Utilities line of business, although the Institutional Credit line of business includes some AgVantage securities that are secured by Rural Utilities loans.

The vast majority of Farmer Mac's business to date under the Rural Utilities line of business has involved loans made to electric facilities (primarily electric distribution cooperatives and electric generation and transmission cooperatives).

During 2020, Farmer Mac purchased $64.3 million of renewable energy loans in connection with various projects as part of Farmer Mac's renewable energy project finance strategic initiative under its Rural Utilities authority.

Loan Eligibility

To be eligible for Farmer Mac's Rural Utilities line of business, a Rural Utilities loan (or a participation interest in a loan) must:

• be to a borrower that has received or is eligible to receive a loan under the REA for an electric or telecommunications facility;

• be by a lender organized as a cooperative;

• be performing and not more than 30 days delinquent;

• meet Farmer Mac's underwriting standards described in more detail below.

Underwriting and Collateral Standards

Farmer Mac's charter does not specify minimum underwriting criteria for eligible Rural Utilities 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 Rural Utilities 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 Rural Utilities loans and are designed to assess the creditworthiness of the borrower, as well as the risk to 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 Rural Utilities loans.

It is customary in loans to electric distribution cooperatives and electric generation and transmission cooperatives for the lender or lender group to take a security interest in substantially all of the borrower's assets.

When Farmer Mac purchases a Rural 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 results 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.

Loans to renewable electric energy borrowers are typically secured by the borrower's project equipment, contracts, and land or leasehold interest, but Farmer Mac's enforcement rights may be subject to tax equity interests in the borrower's renewable energy project.

Farmer Mac also purchases unsecured Rural Utilities loans (primarily electric generation and transmission loans) that meet Farmer Mac's underwriting standards for unsecured Rural Utilities loans.

Lenders and Loan Servicing

Farmer Mac's charter requires eligible Rural Utilities loans to be by a lender organized as a cooperative.

Farmer Mac does not directly service the Rural Utilities loans held in its portfolio, which are serviced by a designee of Farmer Mac.

Institutional Credit

Under the Institutional Credit line of business, Farmer Mac guarantees and purchases general obligations of lenders and other financial institutions (including financial funds) that are secured by pools of the types of loans eligible for purchase under Farmer Mac's Farm & Ranch, USDA Guarantees, or Rural Utilities lines of business..Farmer Mac refers to these as AgVantage securities.

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.

Farmer Mac's guarantee and purchase of AgVantage securities comprise the Institutional Credit line of business.

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.

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Farmer Mac reviews these servicing procedures before purchasing AgVantage securities from the issuer.

In AgVantage transactions, the issuer is required to remove from the pool of pledged collateral any loan that becomes more than 30 days 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 Farm & Ranch 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:

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:

• securities issued by the U.S.

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• other instruments approved by Farmer Mac.

The required collateralization level for the AgVantage securities secured by Farm & Ranch loans currently ranges from 103% to 125%.

The required collateralization level is determined based on credit factors related to the issuer, 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 unless mutually agreed by Farmer Mac and the counterparty.

For AgVantage securities that are secured by Farm & Ranch 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 from a single AgVantage issuer.

Farmer Mac has tailored a version of its AgVantage product to focus on institutional investors in agricultural assets that qualify as collateral for the types of loans eligible for the Farm & Ranch line of business.

Farmer Mac refers to this product variation as the Farm Equity AgVantage product.

This product has similar requirements for AgVantage securities secured by Farm & Ranch loans described above, but Farmer Mac also requires that Farm Equity AgVantage transactions maintain a higher collateralization level through lower loan-to-value ratio thresholds and contain specified financial covenants for the life of the related AgVantage security.

AgVantage securities secured by loans eligible for Farmer Mac's Rural Utilities line of business require:

• the counterparty issuing the general obligation to have a credit rating from an NRSRO that is at least investment grade, or be of comparable creditworthiness as determined through Farmer Mac's analysis;

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 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 from a single AgVantage issuer.

Guarantees and LTSPCs

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.

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.

At a lender's request, Farmer Mac purchases loans subject to an LTSPC at:

• 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 the timely payment of principal and interest 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 timely 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.

From time to time, Farmer Mac issues and guarantees securities backed by USDA Securities that it has purchased and also guarantees 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.

Rural Infrastructure Finance

Farmer Mac's charter 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.

Farmer Mac refers to eligible loans made to an electric distribution facility, an electric generation and transmission facility, or a telecommunications facility as "Rural Utilities loans" and refers to eligible loans made to renewable electric energy facilities as "Renewable Energy loans."

Farmer Mac's Rural Infrastructure Finance line of business encompasses purchases of Rural Utilities loans and Renewable Energy loans and guarantees of securities backed by those loans, as well as LTSPCs for pools of eligible Rural Utilities loans.

The vast majority of Farmer Mac's business to date under the Rural Infrastructure Finance line of business has involved Rural Utilities loans made to electric facilities (primarily electric distribution cooperatives and electric generation and transmission cooperatives).

During 2021, Farmer Mac purchased $132.2 million of loans and loan commitments to telecommunications companies that provide wireless, cable, fiber transport, and broadband services to rural America as part of its strategic initiative to provide further support for the telecommunications industry.

Also during 2021, Farmer Mac purchased $31.2 million of Renewable Energy loans as part of its strategic initiative to support rural renewable energy projects.

Underwriting and Collateral Standards

Farmer Mac's charter does not specify minimum underwriting criteria for eligible Rural Utilities 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 Rural 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 Rural Utilities and Renewable Energy loans and are designed to assess the creditworthiness of the borrower, as well as the risk to Farmer Mac.

For Rural 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 Rural Utilities loans.

When Farmer Mac purchases a Rural 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 Rural Utilities loans (primarily electric generation and transmission loans) that meet Farmer Mac's underwriting standards for unsecured Rural Utilities loans.

For a Renewable Energy loan, 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 undertakes a review of 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.

Lenders and Loan Servicing

Farmer Mac's charter requires loans in Farmer Mac's Rural Infrastructure Finance line of business to have been originated by a lender organized as a cooperative.

Farmer Mac does not directly service the Rural Utilities 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 - Rural Infrastructure Finance

AgVantage Securities

Farmer Mac's portfolio of AgVantage securities in its Rural Infrastructure Finance line of business includes securities issued by cooperative lenders that are secured by pools of Rural 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;

• 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 Rural Utilities loans pledged to secure AgVantage securities, the same underwriting standards that apply to loans made to electric cooperatives on which Farmer Mac assumes direct credit exposure also apply to loans made to electric cooperatives that secure the general obligation of the lender in AgVantage transactions.

Although Farmer Mac has only indirect credit exposure on the Rural Utilities loans pledged to secure AgVantage securities, the same underwriting standards that apply to loans made to Rural Utilities borrowers on which Farmer Mac assumes direct credit exposure also apply to loans made to Rural 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 Rural 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 to a borrower not counting towards the $75.0 million limit).

Farmer Mac also permits up to 20% of Rural Utilities loans pledged to secure AgVantage securities to be unsecured or secured by less than all of the borrower's assets.

Farmer Mac is the only federally-chartered corporation established to provide a secondary market for agricultural mortgage loans, Rural Utilities loans, and USDA Securities.

But Farmer Mac does face indirect competition from many sources.

These sources include other entities that purchase, retain, securitize, or provide financing for the types of assets eligible for Farmer Mac's secondary market activities such as commercial and investment banks, insurance companies, other FCS institutions, financial funds, and certain government programs.

Farmer Mac is the only federally-chartered corporation established to provide a secondary market for agricultural mortgage loans, rural 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.

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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:

• the overall supply of capital available to the agricultural and rural utilities sectors;

• the ability of other lending institutions to compete with Farmer Mac (e.g., by price averaging through offering multiple loan and fee based products or by accepting a lower return on equity given market dynamics);

• the overall supply of capital available to agricultural and rural infrastructure borrowers;

• the types and variety of products offered by Farmer Mac's competitors to meet the needs of Farmer Mac's customer base;

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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 Farm & Ranch 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.

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."

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CAPITAL AND CORPORATE GOVERNANCE

Farmer Mac's charter prescribes the company's basic capital and corporate governance structure.

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.

The classes of Farmer Mac's outstanding common stock and their relationship to Farmer Mac's board of directors are described below.

• 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 .

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The charter does not impose any ownership restrictions on Farmer Mac's Class C non-voting common stock, and shares of this class are freely transferable.

Farmer Mac uses Class C non-voting stock for awards of equity-based compensation to officers, directors, and selected employees as part of the company's compensation programs.

Holders of the Class C common stock do not vote on the election of directors or any other matter.

Farmer Mac uses Class C non-voting common stock for awards of equity-based compensation to officers, directors, and selected 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.

• Presidential director appointments .

The remaining five members of Farmer Mac's 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.

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 6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C ("Series C Preferred Stock"), 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"), 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.

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 6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C ("Series C Preferred Stock"), 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.

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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 participate in the Farm & Ranch line of business.

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.

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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

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.

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HUMAN CAPITAL

As of December 31, 2020, Farmer Mac employed 121 people, with 34 new employees hired during the year.

Farmer Mac employs full-time employees to meet its business needs as it grows and evolves while supplementing human capital needs with independent contractors and consultants as needed.

Our workforce included seven actively engaged independent contractors as of the end of the year.

As of December 31, 2021, Farmer Mac employed 153 people, with 42 new employees hired during the year resulting in a net increase of 32 employees (26%) compared to year-end 2020.

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's employees are located throughout the United States, often near many of its primary customers.

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As a financial services organization, Farmer Mac must attract and retain a highly skilled workforce in an often competitive employment environment.

We utilize traditional methods to attract and retain talent, such as competitive salaries and benefits, including a generous group health plan and an employer-funded 401(k) plan.

We use traditional methods to attract and retain talent, such as competitive salaries and benefits, including:

a generous group health plan with all premiums paid by Farmer Mac;

an employer-funded 401(k) plan;

group term life insurance and long-term disability insurance;

and other voluntary benefits of interest to employees, such as pre-tax dependent care reimbursement, partially-funded health savings accounts, and access to group rates for legal services insurance, additional life insurance, and pet insurance.

We also believe that our mission to serve agricultural and rural communities, as well as philanthropic activities we undertake in support of our mission, provide Farmer Mac an advantage in our efforts to attract and retain talent.

During 2021, Farmer

Mac contributed to Feeding America, Foodbank of Iowa, Common Good City Farm, DC and the Tribal Agriculture Fellowship (TAF) established by the Native American Agriculture Fund’s (NAAF).

We also recognize that employee engagement is a key component in Farmer Mac's human capital retention strategy.

Therefore, we seek to create an inclusive work culture that is diverse and collaborative, with a focus on long-term succession planning and professional development.

We also utilize flexible work structures and technology to create incentives to join and remain with Farmer Mac.

Farmer Mac experienced a 9.6% turnover rate in 2020, which was down 4.3% compared to 2019.

Farmer Mac approaches learning through three primary pillars:

compliance, cybersecurity, and professional development.

We have largely relied on eLearning platforms, self-paced study, and some externally facilitated training to support all three pillars.

Farmer Mac also offers an education assistance plan for employees with at least one year of full-time employment in an amount up to $50,000.00.

We also use flexible work structures and technology to create incentives to join and remain with Farmer Mac.

Farmer Mac experienced a 7.3% turnover rate in 2021, which was down from 9.6% in 2020.

COVID-19 Pandemic

The COVID-19 pandemic altered the way many companies work, including Farmer Mac.

In March 2020, we executed our business continuity plan swiftly and with minimal disruption, and all of our employees have been working in a fully-remote environment since then.

We promptly assessed the technical resources required for Farmer Mac to operate on a fully-remote basis, as well the ability of our employees to manage home and work in this new paradigm.

For example, Farmer Mac provided stipends to all employees to purchase office equipment and supplies for remote work capability.

To encourage employee morale and support our mission, Farmer Mac donated the budgeted stipend funds that remained unused to a nonprofit organization fighting against food insecurity in the United States.

To ensure continuity in regular communications, we have reinforced our employees' access to secure digital meeting platforms, and our senior executive team has been leading bi-weekly meetings of all employees to share pertinent information on Farmer Mac's business and operations and to provide a forum for discussing current events.

We also leveraged this engagement opportunity to gauge the health and well-being of employees and to solicit their feedback, to which we responded with initiatives to address work/life balance, including added flexibility in working hours and paid time off.

We have established a cross-functional team to assess the criteria necessary for a safe return to Farmer Mac's offices, including employee health screenings, facility redesign, and family care needs.

currently have an established timeline for a full-scale return of our employees to Farmer Mac's offices.

However, we remain confident in our employees' capacity to remain engaged and productive on a remote basis as may be needed for the foreseeable future.

We continued to execute our business in a mostly remote capacity during 2021 as a result of the COVID-19 pandemic.

The pandemic has compelled many companies, including Farmer Mac, to focus on how people work, as evidenced by our regular engagement with two “Future of Work” committees – one targeted at the employee level and the second including executive leaders.

The committees are grounded in three fundamental principles:

community, collaboration, and communication.

In 2021, these committees contemplated the company’s vaccine policy, phased approach to resuming in-person work interactions, employee surveys, and general sentiments about the future of work.

To ensure continuity in regular communications, we have continued to reinforce our employees' access to secure digital meeting platforms, and our 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 current events.

We also used this engagement opportunity to gauge the health and well-being of employees and to solicit their feedback, to which we responded with initiatives to address work/life balance, including added flexibility in working hours and paid time off.

We do not currently have an established timeline for a full-scale return of our employees to Farmer Mac's offices.

We have adopted a phased approach to resuming in-person work interactions, with the current phase involving the ability for employees to work in one of Farmer Mac’s office locations on a voluntary basis in accordance with published health safety protocols.

In the meantime, we remain confident in our employees' capacity to remain engaged and productive on a remote basis and are impressed with the resilience of our teams as we enter the third year of the COVID-19 pandemic.

Code of Business Conduct and Ethics

Farmer Mac provides appropriate orientation for every new hire and requires annual training on and recertification of our Code of Business Conduct and Ethics, which encompasses the following four core principles:

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 our Code of Business Conduct and Ethics, which encompasses the following four 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, and (4) conducting business diligently and being a good corporate citizen.

Farmer Mac's Code of Business Conduct and Ethics was refreshed in 2018 to reflect this principles-based approach.

Farmer Mac's Code of Business Conduct and Ethics was refreshed in May 2021 while maintaining this principles-based approach.

Our Code of Business Conduct and Ethics is available at www.farmermac.com and is not incorporated by reference into this report.

Diversity, Equity, and Inclusion

During 2020, we strengthened our focus on diversity, equity, and inclusion ("DE&I") efforts within Farmer Mac's workforce.

Our philosophy emphasized listening first, with a focus on small employee groups to solicit feedback on Farmer Mac's practices.

This yielded guidance for a newly-formed internal Diversity Council, which is charged with helping to shape Farmer Mac's strategy for DE&I.

Farmer Mac has also contracted with an external consultant to help deepen our understanding of race and racism and how it may affect the workplace and to assist Farmer Mac's Diversity Council with building a framework and strategy for DE&I.

During 2021, we continued to strengthen our focus on diversity, equity, and inclusion ("DEI") efforts within Farmer Mac's workforce.

Farmer Mac's DEI council was formed in late 2020 at the direction of Farmer Mac's board of directors and senior executives.

The DEI council consists of 12 rotating Farmer Mac employees with the assistance of outside DEI consultants.

During 2021, the DEI council established a three-year DEI strategic plan and identified five key strategic priorities for Farmer Mac during the plan period:

(1) establish a strong DEI foundation across the organization;

(2) strengthen talent acquisition, selection, and retention processes;

(3) enhance a culture of inclusion;

(4) provide services to Farmer Mac's rural customers in a fair and equitable manner;

and (5) ensure accountability by tracking, monitoring, and communicating progress with transparency.

The council also identified several specific action items for execution under the strategic plan, including:

development of a comprehensive DEI communication and education program for employees;

identification of data and development of metrics to enhance diverse and inclusive hiring, retention, and promotion practices at Farmer Mac;

analysis of diversity within Farmer Mac's loan portfolio and vendors;

and establishment of key performance indicators to align Farmer Mac's DEI priorities with Farmer Mac's business plan objectives.

The DEI council continues to work closely with members of Farmer Mac’s senior management to execute the DEI strategic plan and reports its progress regularly to Farmer Mac's board of directors.

AVAILABLE INFORMATION

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As of December 31, 2021, this reserve against losses arising from Farmer Mac's guarantee activities was $110.5 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 either anticipated credit losses or estimated probable 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.

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.

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Discount notes have original maturities of 1 year or less.

Medium-term notes generally have maturities of 6 months to 15 years.

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.

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• 9,235,205 shares of Class C non-voting common stock.

During first quarter 2020, Farmer Mac repurchased approximately 4,000 shares of Class C non-voting common stock at a cost of approximately $0.2 million under a share repurchase program that Farmer Mac's board or directors approved in 2015 and modified in 2019.

Shortly after these repurchases were completed, Farmer Mac indefinitely suspended its share repurchase program in an effort to preserve capital and liquidity in view of market volatility and uncertainty caused by the COVID-19 pandemic.

In March 2021, Farmer Mac's board of directors reinstated 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 March 2023.

As of December 31, 2021, 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 program expires at the end of March 2021.

The following table presents the dividends declared on Farmer Mac's common stock during and after 2021:

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February 23, 2021 $0.88 March 16, 2021 March 31, 2021

May 29, 2020 $0.80 June 15, 2020 June 30, 2020

June 1, 2021 $0.88 June 15, 2021 June 30, 2021

August 11, 2021 $0.88 September 15, 2021 September 30, 2021

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• 4,800,000 shares of Series F Preferred Stock, all of which were issued in August 2020;

On September 19, 2020, Farmer Mac used part of the net proceeds from the sale of the Series F Preferred Stock to redeem and repurchase all $60.0 million aggregate outstanding of Farmer Mac's 5.875% Non-Cumulative Preferred Stock, Series A ("Series A Preferred Stock"), plus any declared and unpaid dividends through and including the redemption date.

As a result of the retirement of the Series A Preferred Stock, Farmer Mac recognized $1.7 million of deferred issuance costs, which is presented as "Loss on retirement of preferred stock" on the consolidated statements of operations.

The Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, and Series F 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.

• 5,000,000 shares of Series G Preferred Stock, all of which were issued in May 2021.

The Series C Preferred Stock, 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, and the Series F Preferred Stock pay an annual dividend rate fixed at 5.700%, 5.750%, and 5.250%, respectively, for the life of the securities.

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.

The Series C Preferred Stock pays an annual dividend rate of 6.000% from the date of issuance to and including the quarterly payment date on July 17, 2024 and thereafter at a floating rate equal to three-month LIBOR plus 3.260%.

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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 C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, and Series F 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 C Preferred Stock on and any time after July 18, 2024, the Series D Preferred Stock on and after July 17, 2024, the Series E Preferred Stock on and after July 17, 2025, and the Series F Preferred Stock on and after October 17, 2025, all at a price equal to the then-applicable liquidation preference.

Any redemption date for the Series D, Series E, or Series F Preferred Stock must be a scheduled quarterly dividend payment date, The Outstanding Preferred Stock is considered Tier 1 capital for Farmer Mac.

The Series C Preferred Stock, 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 C Preferred Stock on and any time after July 18, 2024, the 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 A Preferred Stock during 2020:

Beginning For

February 24, 2020 $0.3672 January 18, 2020 April 17, 2020 April 17, 2020

May 29, 2020 $0.3672 April 18, 2020 July 17, 2020 July 17, 2020

August 27, 2020 $0.2530 July 18, 2020 September 19, 2020 September 19, 2020

The following table presents the dividends declared and paid on Series C Preferred Stock during and after 2021:

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February 23, 2021 $0.3750 January 18, 2021 April 17, 2021 April 17, 2021

May 29, 2020 $0.3750 April 18, 2020 July 17, 2020 July 17, 2020

June 1, 2021 $0.3750 April 18, 2021 July 17, 2021 July 17, 2021

August 11, 2021 $0.3750 July 18, 2021 October 17, 2021 October 17, 2021

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February 23, 2021 $0.35625 January 18, 2021 April 17, 2021 April 17, 2021

May 29, 2020 $0.35625 April 18, 2020 July 17, 2020 July 17, 2020

June 1, 2021 $0.35625 April 18, 2021 July 17, 2021 July 17, 2021

August 11, 2021 $0.35625 July 18, 2021 October 17, 2021 October 17, 2021

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Beginning For

May 29, 2020 $0.227600 May 21, 2020 July 17, 2020 July 17, 2020

February 23, 2021 $0.359375 January 18, 2021 April 17, 2021 April 17, 2021

June 1, 2021 $0.359375 April 18, 2021 July 17, 2021 July 17, 2021

August 11, 2021 $0.359375 July 18, 2021 October 17, 2021 October 17, 2021

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Beginning For

August 27, 2020 $0.2078125 August 21, 2020 October 17, 2020 October 17, 2020

February 23, 2021 $0.3281250 January 18, 2021 April 17, 2021 April 17, 2021

June 1, 2021 $0.3281250 April 18, 2021 July 17, 2021 July 17, 2021

August 11, 2021 $0.3281250 July 18, 2021 October 17, 2021 October 17, 2021

November 10, 2021 $0.3281250 October 18, 2021 January 17, 2022 January 17, 2022

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* The dividend declared on February 24, 2022 is scheduled to be paid on April 17, 2022.

The following table presents the dividends declared and paid on Series G Preferred Stock during and after 2021:

Beginning For

June 1, 2021 $0.1692708 May 28, 2021 July 17, 2021 July 17, 2021

August 11, 2021 $0.3046875 July 18, 2021 October 17, 2021 October 17, 2021

November 10, 2021 $0.3046875 October 18, 2021 January 17, 2022 January 17, 2022

February 24, 2022 $0.3046875 January 18, 2022 April 17, 2022 *

* The dividend declared on February 24, 2022 is scheduled to be paid on April 17, 2022.

FARMER MAC'S AUTHORITY TO BORROW FROM THE U.S.

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Any funds borrowed from the U.S.

Treasury may be used solely to fulfill

Farmer Mac's guarantee obligations.

Treasury may be used solely to fulfill Farmer Mac's guarantee obligations.

Farmer Mac's charter provides that the U.S.

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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 as had been given to the housing GSEs, 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.

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 create the USDA Guarantees line of business;

• 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;

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The charter also authorizes FCA, acting 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.

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.

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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, 2020 was $197.4 million and Farmer Mac's regulatory capital of $1.0 billion exceeded that amount by

approximately $826.6 million.

Farmer Mac's risk-based capital requirement as of December 31, 2021 was $218.7 million, and Farmer Mac's regulatory capital of $1.2 billion exceeded that amount by approximately $1.0 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.

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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 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 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 Farm & Ranch, USDA Guarantees, Rural Utilities, and Institutional Credit lines of business.

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 Rural 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.

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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'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.

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.

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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business