What changed in this filing

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Item 1. Financial Statements

2022-05-09 compared with 2021-11-08 · 308 added, 629 removed, 1076 unchanged (47% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(in thousands)

48 unchanged sentences

Series G, par value $ 25 per share, 5,000,000 shares authorized, issued and outstanding

121,327 121,327

Common stock:

3 unchanged sentences

Additional paid-in capital 127,103 125,993

Accumulated other comprehensive income/(loss), net of tax 18,206 ( 13,923 )

Accumulated other comprehensive (loss)/income, net of tax ( 39,665 ) 3,853

Retained earnings 610,087 579,270

4 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended For the Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

For the Three Months Ended

March 31, 2022 March 31, 2021

(in thousands, except per share amounts)

10 unchanged sentences

Guarantee and commitment fees 3,695 3,030

Losses on financial derivatives ( 2,347 ) ( 564 ) ( 1,120 ) ( 3,339 )

Gains/(losses) on trading securities 37 ( 258 ) ( 38 ) ( 173 )

Gains on sale of available-for-sale investment securities 253 — 253 —

Gains on sale of real estate owned — — — 485

Release of/(provision for) reserve for losses 111 ( 547 ) 1,277 ( 540 )

Gains on financial derivatives 16,074 4,293

Losses on trading securities ( 63 ) ( 13 )

Release of reserve for losses 110 944

Other income 675 583

9 unchanged sentences

Preferred stock dividends ( 6,791 ) ( 5,269 )

Loss on retirement of preferred stock — ( 1,667 ) — ( 1,667 )

Net income attributable to common stockholders $ 41,046 $ 27,958

5 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months Ended For the Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

For the Three Months Ended

March 31, 2022 March 31, 2021

(in thousands

Net income $ 47,837 $ 33,227

Other comprehensive income/(loss) before taxes:

Net unrealized gains/(losses) on available-for-sale securities 991 47,235 29,966 ( 9,554 )

Other comprehensive (loss)/incomes:

Net unrealized (losses)/gains on available-for-sale securities ( 86,267 ) 66,364

Net changes in held-to-maturity securities ( 23 ) ( 2,157 )

Net unrealized gains/(losses) on cash flow hedges 3,258 2,959 16,899 ( 27,429 )

Other comprehensive income/(loss) before tax 1,864 47,671 40,670 ( 47,690 )

Income tax (expense)/benefit related to other comprehensive income/(loss) ( 391 ) ( 10,011 ) ( 8,541 ) 10,014

Other comprehensive income/(loss) net of tax 1,473 37,660 32,129 ( 37,676 )

Net unrealized gains on cash flow hedges 31,204 18,916

Other comprehensive (loss)/income before tax ( 55,086 ) 83,123

Income tax benefit/(expense) related to other comprehensive (loss)/income 11,568 ( 17,456 )

Other comprehensive (loss)/income net of tax ( 43,518 ) 65,667

Comprehensive income $ 4,319 $ 98,894

8 unchanged sentences

Net Income — — — — — — 47,837 47,837

Other comprehensive income, net of tax — — — — — 65,667 — 65,667

Cash dividends:

Preferred stock — — — — — — ( 5,269 ) ( 5,269 )

Common stock (cash dividend of $ 0.88 per share)

— — — — — — ( 9,450 ) ( 9,450 )

Issuance of Class C Common Stock — — 21 21 12 — — 33

Stock-based compensation cost — — — — 1,665 1,665

Other stock-based award activity — — — — ( 858 ) — — ( 858 )

Balance as of March 31, 2021 14,980 $ 363,204 10,758 $ 10,758 $ 123,718 $ 51,744 $ 528,068 $ 1,077,492

Net Income — — — — — — 31,286 31,286

Other comprehensive loss, net of tax — — — — — ( 43,518 ) — ( 43,518 )

3 unchanged sentences

— — — — — — ( 10,229 ) ( 10,229 )

Issuance of Series G Preferred Stock 5,000 121,327 — — — — — 121,327

Issuance of Class C Common Stock — — 22 22 46 — — 68

1 unchanged sentence

Other stock-based award activity — — — — ( 1,049 ) — — ( 1,049 )

Balance as of June 30, 2021 19,980 $ 484,531 10,765 $ 10,765 $ 124,148 $ 16,733 $ 544,038 $ 1,180,215

Net Income — — — — — — 31,063 31,063

Other comprehensive income, net of tax — — — — — 1,473 — 1,473

Cash dividends:

Preferred stock — — — — — — ( 6,774 ) ( 6,774 )

Common stock (cash dividend of $ 0.88 per share)

— — — — — — ( 9,474 ) ( 9,474 )

Issuance of Class C Common Stock — — 1 1 45 — — 46

Stock-based compensation cost — — — — 749 — — 749

Balance as of September 30, 2021 19,980 $ 484,531 10,766 $ 10,766 $ 124,942 $ 18,206 $ 558,853 $ 1,197,298

Additional Other

Preferred Stock Common Stock Paid-In Comprehensive Retained Total

Shares Amount Shares Amount Capital Income/(Loss) Earnings Equity

(in thousands)

Balance as of December 31, 2019 9,400 $ 228,374 10,712 $ 10,712 $ 119,304 $ ( 16,161 ) $ 457,047 $ 799,276

Cumulative effect adjustment from adoption of current expected credit loss standard — — — — — — ( 2,099 ) ( 2,099 )

Balances as of January 1, 2020 9,400 $ 228,374 10,712 $ 10,712 $ 119,304 $ ( 16,161 ) $ 454,948 $ 797,177

Net Income — — — — — — 12,830 12,830

Other comprehensive loss, net of tax — — — — — ( 105,276 ) — ( 105,276 )

Cash dividends:

Preferred stock — — — — — — ( 3,431 ) ( 3,431 )

Common stock (cash dividend of $ 0.80 per share)

— — — — — — ( 8,571 ) ( 8,571 )

Issuance of Class C Common Stock — — 15 15 19 — — 34

Repurchase of Class C Common Stock — — ( 4 ) ( 4 ) — — ( 231 ) ( 235 )

Stock-based compensation cost — — — — 1,293 — 1,293

Other stock-based award activity — — — — ( 204 ) — — ( 204 )

Balance as of March 31, 2022 19,980 $ 484,531 10,788 $ 10,788 $ 127,103 $ ( 39,665 ) $ 610,087 $ 1,192,844

Net Income — — — — — — 35,626 35,626

Other comprehensive income, net of tax — — — — — 29,940 — 29,940

Cash dividends:

Preferred stock — — — — — — ( 3,939 ) ( 3,939 )

Common stock (cash dividend of $ 0.80 per share)

— — — — — — ( 8,585 ) ( 8,585 )

Issuance of Series E Preferred Stock 3,180 77,003 — — — — — 77,003

Issuance of Class C Common Stock — — 10 10 17 — — 27

Stock-based compensation cost — — — — 719 — — 719

Other stock-based award activity — — — — ( 292 ) — — ( 292 )

Balance as of June 30, 2020 12,580 $ 305,377 10,733 $ 10,733 $ 120,856 $ ( 91,497 ) $ 478,647 $ 824,116

Balance as of December 31, 2020 14,980 $ 363,204 10,737 $ 10,737 $ 122,899 $ ( 13,923 ) $ 509,560 $ 992,477

Net Income — — — — — — 33,227 33,227

4 unchanged sentences

— — — — — — ( 9,450 ) ( 9,450 )

Issuance of Series F Preferred Stock 4,800 116,160 — — — — — 116,160

Redemption of Series A preferred stock ( 2,400 ) ( 58,333 ) — — — — — ( 58,333 )

Loss on retirement of preferred stock — — — — — — ( 1,667 ) ( 1,667 )

Issuance of Class C Common Stock — — 21 21 12 — — 33

1 unchanged sentence

Other stock-based award activity — — — — ( 858 ) — — ( 858 )

Balance as of September 30, 2020 14,980 $ 363,204 10,736 $ 10,736 $ 121,525 $ ( 53,837 ) $ 488,717 $ 930,345

Balance as of March 31, 2021 14,980 $ 363,204 10,758 $ 10,758 $ 123,718 $ 51,744 $ 528,068 $ 1,077,492

The accompanying notes are an integral part of these consolidated financial statements.

FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

( unaudited )

For the Nine Months Ended

September 30, 2021 September 30, 2020

CONSOLIDATED STATEMENTS OF CASH FLOW

For the Three Months Ended

March 31, 2022 March 31, 2021

(in thousands)

5 unchanged sentences

Net change in fair value of trading securities, hedged assets, and financial derivatives 231,470 300,424

Gain on sale of real estate owned — ( 485 )

Gain on the sale of available-for-sale investment securities ( 253 ) —

Total (release)/provision for allowance for losses ( 759 ) 5,083

Total (release of)/provision for allowance for losses ( 54 ) ( 31 )

Excess tax benefits related to stock-based awards ( 137 ) 190

1 unchanged sentence

Stock-based compensation expense 2,113 1,665

Purchases of loans held for sale — ( 59,150 )

Proceeds from the sale of loans held for sale — 15,000

Proceeds from repayment of loans purchased as held for sale 15,028 25,374

6 unchanged sentences

Other liabilities 9,962 ( 322 )

Net cash provided by/(used in) operating activities 433,219 ( 225,408 )

Net cash provided by operating activities 269,305 397,796

Cash flows from investing activities:

7 unchanged sentences

Proceeds from repayment of loans purchased as held for investment 463,602 624,448

Proceeds from sale of loans previously classified as held for investment 10,000 —

Proceeds from sale of available-for-sale investment securities 257,524 —

Proceeds from sale of Farmer Mac Guaranteed Securities 25,928 49,133

Proceeds from sale of real estate owned — 2,191

Net cash used in investing activities ( 751,709 ) ( 1,550,837 )

Net cash (used in)/provided by investing activities ( 716,819 ) 64,598

Cash flows from financing activities:

5 unchanged sentences

Proceeds from common stock issuance 46 12

Retirement of preferred stock — ( 60,000 )

Proceeds from preferred stock issuance, net of stock issuance costs 121,327 193,163

Tax payments related to share-based awards ( 119 ) ( 126 )

Purchases of common stock — ( 235 )

Dividends paid on common and preferred stock ( 17,020 ) ( 14,719 )

Net cash provided by financing activities 183,601 2,082,456

Net cash provided by/(used in) financing activities 428,775 ( 483,794 )

Net change in cash and cash equivalents ( 18,739 ) ( 21,400 )

5 unchanged sentences

Reclassification of defaulted loans from loans held for investment in consolidated trusts to loans held for investment 569 23,463

Reclassification of loans held for sale to loans held for investment — 24,150

Reclassification of loans held for investment to loans held for sale 9,000 —

Capitalized interest 9 782

Securities payment not yet received ( 1,566 ) —

Charge-off from the allowance for losses 84 —

Purchases of securities - traded, not yet settled 348,020 7,502

The accompanying notes are an integral part of these consolidated financial statements.

20 unchanged sentences

on February 28, 2022.

Results for interim periods are not necessarily indicative of those that may be

expected for the fiscal year.

Results for interim periods are not necessarily indicative of those that may be expected for the fiscal year.

Presented below are Farmer Mac's significant accounting policies that contain

updated information for the three and nine months ended September 30, 2021.

updated information for the three months ended March 31, 2022.

Principles of Consolidation

The consolidated financial statements include the accounts of Farmer Mac and its two subsidiaries during the year:

The consolidated financial statements include the accounts of Farmer Mac and its two subsidiaries:

(1) Farmer Mac Mortgage Securities Corporation, whose principal activities are to facilitate the purchase and issuance of Farmer Mac Guaranteed Securities;

and (2) Farmer Mac II LLC, whose principal activity is the operation of substantially all of the business related to the USDA Guarantees line of business – primarily the acquisition of USDA Securities.

and (2) Farmer Mac II LLC, whose principal activity is the operation of substantially all of the business related to the USDA Securities included in the Agricultural Finance line of business.

The consolidated financial statements also include the accounts of Variable Interest Entities ("VIEs") in which Farmer Mac determined itself to be the primary beneficiary.

Consolidation of Variable Interest Entities

As of September 30, 2021

Farm & Ranch USDA Guarantees Corporate Total

As of March 31, 2022

Agricultural Finance Treasury Total

(in thousands)

20 unchanged sentences

(1) Includes borrower remittances of $ 6.9 million.

The borrower remittances had not been passed through to third party investors as of September 30, 2021.

The borrower remittances had not been passed through to third-party investors as of March 31, 2022.

(2) Farmer Mac uses unpaid principal balance and outstanding face amount of investment securities to represent maximum exposure to loss.

(3) Includes auction-rate certificates, government-sponsored enterprise ("GSE")-guaranteed mortgage-backed securities, and other mission related investments.

(4) The amount under the Farm & Ranch line of business relates to unconsolidated trusts where Farmer Mac determined it was not the primary beneficiary due to shared power with an unrelated party.

(4) The amount under the Agricultural Finance line of business relates to unconsolidated trusts where it was determined that Farmer Mac was either not the primary beneficiary due to shared power with an unrelated party or a subordinate class majority holder has the unilateral right to remove Farmer Mac as Master Servicer without cause.

Consolidation of Variable Interest Entities

As of December 31, 2021

Farm & Ranch USDA Guarantees Corporate Total

Agricultural Finance Treasury Total

(in thousands)

7 unchanged sentences

Carrying value 42,298 — 42,298

— 34,537 — 34,537

Maximum exposure to loss (2)

12 unchanged sentences

The borrower remittances had not been passed through to third-party investors as of December 31, 2021.

(2) Includes $ 0.1 million of unamortized premiums and discounts and fair value adjustments related to the USDA Guarantees line of business.

(2) Farmer Mac uses unpaid principal balance and outstanding face amount of investment securities to represent maximum exposure to loss.

(4) Includes auction-rate certificates, asset-backed securities, and government-sponsored enterprise ("GSE")-guaranteed mortgage-backed securities.

(5) The amount under the Farm & Ranch line of business relates to unconsolidated trusts where Farmer Mac determined it was not the primary beneficiary due to shared power with an unrelated party.

(3) Includes auction-rate certificates, government-sponsored enterprise ("GSE")-guaranteed mortgage-backed securities, and other mission related investments.

(a) Earnings Per Common Share

1 unchanged sentence

Diluted earnings per common share is based on the daily weighted-average number of shares of common stock outstanding adjusted to include all potentially dilutive stock appreciation rights ("SARs") and unvested restricted stock awards.

The following schedule reconciles basic and diluted EPS for the three and nine months ended September 30, 2021 and 2020:

The following schedule reconciles basic and diluted EPS for the three months ended March 31, 2022 and 2021:

For the Three Months Ended

September 30, 2021 September 30, 2020

Income Weighted-Average Shares $ per

(in thousands, except per share amounts)

Net income attributable to common stockholders $ 24,289 10,766 $ 2.26 $ 18,659 10,734 $ 1.74

Effect of dilutive securities (1)

SARs and restricted stock — 76 ( 0.02 ) — 51 ( 0.01 )

Diluted EPS $ 24,289 10,842 $ 2.24 $ 18,659 10,785 $ 1.73

(1) For the three months ended September 30, 2021 and 2020, SARs and restricted stock of 28,575 and 66,445 , respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because they were anti-dilutive.

For the three months ended September 30, 2021 and 2020, contingent shares of unvested restricted stock of 18,183 and 12,680 , respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because performance conditions had not yet been met.

For the Nine Months Ended

September 30, 2021 September 30, 2020

March 31, 2022 March 31, 2021

Income Weighted-Average Shares $ per

5 unchanged sentences

Diluted EPS $ 41,046 10,887 $ 3.77 $ 27,958 10,819 $ 2.58

(1) For the nine months ended September 30, 2021 and 2020, SARs and restricted stock of 52,434 and 78,963 , respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because they were anti-dilutive.

For the nine months ended September 30, 2021 and 2020, contingent shares of unvested restricted stock of 18,183 and 12,680 , respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because performance conditions had not yet been met.

(1) For the three months ended March 31, 2022 and 2021, SARs and restricted stock of 50,005 and 99,684 , respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because they were anti-dilutive.

For the three months ended March 31, 2022 and 2021 contingent shares of unvested restricted stock of 18,535 and 18,183 respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because performance conditions had not yet been met.

(b) Comprehensive Income

Comprehensive income represents all changes in stockholders' equity except those resulting from investments by or distributions to stockholders, and is comprised of net income and unrealized gains and losses on available-for-sale securities, certain held-to-maturity securities transferred from the available-for-sale classification, and cash flow hedges, net of related taxes.

The following table presents the changes in accumulated other comprehensive income ("AOCI"), net of tax, by component for the three and nine months ended September 30, 2021 and 2020.

As of September 30, 2021 As of September 30, 2020

The following table presents the changes in accumulated other comprehensive income ("AOCI"), net of tax, by component for the three months ended March 31, 2022 and 2021.

As of March 31, 2022 As of March 31, 2021

Available-for-Sale Securities Held-to-Maturity Securities Cash Flow Hedges Total Available-for-Sale Securities Held-to-Maturity Securities Cash Flow Hedges Total

2 unchanged sentences

Beginning Balance $ ( 6,932 ) $ 16,153 $ ( 5,368 ) $ 3,853 $ ( 13,937 ) $ 22,829 $ ( 22,815 ) $ ( 13,923 )

Other comprehensive income before reclassifications 1,275 — 1,049 2,324 38,099 — 904 39,003

Amounts reclassified from AOCI ( 493 ) ( 1,884 ) 1,526 ( 851 ) ( 783 ) ( 1,993 ) 1,433 ( 1,343 )

Net comprehensive income/(loss) 782 ( 1,884 ) 2,575 1,473 37,316 ( 1,993 ) 2,337 37,660

Ending Balance $ 9,736 $ 17,935 $ ( 9,465 ) $ 18,206 $ ( 50,945 ) $ 24,386 $ ( 27,278 ) $ ( 53,837 )

For the Nine Months Ended:

Beginning Balance $ ( 13,937 ) $ 22,829 $ ( 22,815 ) $ ( 13,923 ) $ ( 43,397 ) $ 32,845 $ ( 5,609 ) $ ( 16,161 )

Other comprehensive income/(loss) before reclassifications 25,734 — 9,041 34,775 ( 5,210 ) — ( 24,684 ) ( 29,894 )

Other comprehensive (loss)/income before reclassifications ( 68,148 ) — 23,062 ( 45,086 ) 53,211 — 13,562 66,773

Amounts reclassified from AOCI ( 3 ) ( 19 ) 1,590 1,568 ( 783 ) ( 1,704 ) 1,381 ( 1,106 )

Net comprehensive income/(loss) 23,673 ( 4,894 ) 13,350 32,129 ( 7,548 ) ( 8,459 ) ( 21,669 ) ( 37,676 )

Net comprehensive (loss)/income ( 68,151 ) ( 19 ) 24,652 ( 43,518 ) 52,428 ( 1,704 ) 14,943 65,667

Ending Balance $ ( 75,083 ) $ 16,134 $ 19,284 $ ( 39,665 ) $ 38,491 $ 21,125 $ ( 7,872 ) $ 51,744

The following table presents other comprehensive income activity, the impact on net income of amounts reclassified from each component of AOCI, and the related tax impact for the three and nine months ended September 30, 2021 and 2020:

For the Three Months Ended

September 30, 2021 September 30, 2020

March 31, 2022 March 31, 2021

Before Tax Provision (Benefit) After Tax Before Tax Provision (Benefit) After Tax

2 unchanged sentences

Available-for-sale-securities:

Unrealized holding gains on available-for-sale securities $ 1,614 $ 339 $ 1,275 $ 48,226 $ 10,127 $ 38,099

Unrealized holding (losses)/gains on available-for-sale securities $ ( 86,263 ) $ ( 18,115 ) $ ( 68,148 ) $ 67,356 $ 14,145 $ 53,211

Less reclassification adjustments included in:

1 unchanged sentence

— — — ( 984 ) ( 207 ) ( 777 )

Gains on sale of available-for-sale investment securities (2)

( 253 ) ( 53 ) ( 200 ) — — —

Other income (2)

12 unchanged sentences

Total $ 31,204 $ 6,552 $ 24,652 $ 18,916 $ 3,973 $ 14,943

Other comprehensive income $ 1,864 $ 391 $ 1,473 $ 47,671 $ 10,011 $ 37,660

(1) Relates to the amortization of unrealized gains on hedged items prior to the application of fair value hedge accounting.

(2) Represents unrealized gains and losses on sales of available-for-sale securities.

(3) Represents amortization of deferred gains related to certain available-for-sale USDA Securities and Farmer Mac Guaranteed USDA Securities.

(4) Relates to the amortization of unrealized gains or losses prior to the reclassification of these securities from available-for-sale to held-to-maturity.

The amortization of unrealized gains or losses reported in AOCI for held-to-maturity securities will be offset by the amortization of the premium or discount created from the transfer into held-to-maturity securities, which occurred at fair value.

These unrealized gains or losses will be recorded over the remaining life of the security with no impact on future net income.

(5) Relates to the recognition of unrealized gains and losses on cash flow hedges recorded in AOCI.

For the Nine Months Ended

September 30, 2021 September 30, 2020

Before Tax Provision (Benefit) After Tax Before Tax Provision (Benefit) After Tax

(in thousands)

Other comprehensive income:

Available-for-sale-securities:

Unrealized holding gains/(losses) on available-for-sale securities $ 32,574 $ 6,840 $ 25,734 $ ( 6,596 ) $ ( 1,386 ) $ ( 5,210 )

Less reclassification adjustments included in:

Net interest income (1)

( 2,333 ) ( 490 ) ( 1,843 ) ( 2,916 ) ( 612 ) ( 2,304 )

Gains on sale of available-for-sale investment securities (2)

( 253 ) ( 53 ) ( 200 ) — — —

Other income (3)

( 22 ) ( 4 ) ( 18 ) ( 42 ) ( 8 ) ( 34 )

Total $ 29,966 $ 6,293 $ 23,673 $ ( 9,554 ) $ ( 2,006 ) $ ( 7,548 )

Held-to-maturity securities:

Less reclassification adjustments included in:

Net interest income (4)

( 6,195 ) ( 1,301 ) ( 4,894 ) ( 10,707 ) ( 2,248 ) ( 8,459 )

Total $ ( 6,195 ) $ ( 1,301 ) $ ( 4,894 ) $ ( 10,707 ) $ ( 2,248 ) $ ( 8,459 )

Cash flow hedges

Unrealized gains/(losses) on cash flow hedges $ 11,445 $ 2,404 $ 9,041 $ ( 31,246 ) $ ( 6,562 ) $ ( 24,684 )

Less reclassification adjustments included in:

Net interest income (5)

5,454 1,145 4,309 3,817 802 3,015

Total $ 16,899 $ 3,549 $ 13,350 $ ( 27,429 ) $ ( 5,760 ) $ ( 21,669 )

Other comprehensive income/(loss) $ 40,670 $ 8,541 $ 32,129 $ ( 47,690 ) $ ( 10,014 ) $ ( 37,676 )

Other comprehensive (loss)/income $ ( 55,086 ) $ ( 11,568 ) $ ( 43,518 ) $ 83,123 $ 17,456 $ 65,667

(1) Relates to the amortization of unrealized gains on hedged items prior to the application of fair value hedge accounting.

(2) Represents unrealized gains and losses on sales of available-for-sale securities.

(2) Represents amortization of deferred gains related to certain available-for-sale USDA Securities and Farmer Mac Guaranteed USDA Securities.

3 unchanged sentences

(4) Relates to the recognition of unrealized gains and losses on cash flow hedges recorded in AOCI.

During the third quarter, Farmer Mac acquired the loan servicing rights for a sizeable portion of its Farm & Ranch loan and USDA Guaranteed Securities portfolios.

In connection with this acquisition, Farmer Mac now collects cash from borrowers in advance of the borrower's contractual payment date.

Farmer Mac's policy is to include the cash in the consolidated balance sheet as "Cash and cash equivalents" with an offsetting liability to "Accounts payable and accrued expenses" until the contractual payment is due, at which point the payment is applied to the loan.

The net change in the amount of this custodial cash will also be disclosed in the consolidated statements of cash flows as "Custodial deposit liability".

(d) New Accounting Standards

Recently Adopted Accounting Guidance

5 unchanged sentences

January 1, 2020 Farmer Mac adopted optional expedients specific to discounting transition on a retrospective basis, and as a result of this election, the discounting transition did not have a material effect on Farmer Mac's financial position, results of operations, or cash flows.

Recently Issued Accounting Guidance

Standard Description Effect on Consolidated Financial Statements

ASU 2022-02 , Financial Instruments-Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures

The Update addresses and amends areas identified by the Financial Accounting Standards Board ("FASB") as part of its post-implementation review of the accounting standard that introduced the current expected credit losses (“CECL”) model.

The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan refinancings and restructurings made with borrowers experiencing financial difficulty.

In addition, the amendments require disclosure of current-period gross writeoffs for financing receivables and net investment in leases by year of origination in the vintage disclosures.

ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for entities that have adopted the CECL accounting standard.

Early adoption, however, is permitted if an entity has adopted the CECL accounting standard.

Farmer Mac is still assessing the impact of the new accounting standard but does not expect that adoption of the new guidance will have a material effect on Farmer Mac's financial position, results of operations, or cash flows.

INVESTMENT SECURITIES

The following tables set forth information about Farmer Mac's available-for-sale and held-to-maturity investment securities as of September 30, 2021 and December 31, 2020:

As of September 30, 2021

The following tables set forth information about Farmer Mac's available-for-sale and held-to-maturity investment securities as of March 31, 2022 and December 31, 2021:

As of March 31, 2022

Amount Outstanding Unamortized Premium/(Discount) Amortized

14 unchanged sentences

Total held-to-maturity $ 44,970 $ — $ 44,970 $ — $ — $ ( 371 ) $ 44,599

(1) Amounts presented exclude $ 4.7 million of accrued interest receivable on investment securities as of September 30, 2021.

(1) Amounts presented exclude $ 3.9 million of accrued interest receivable on investment securities as of March 31, 2022.

(2) Represents the amount of impairment that has resulted from credit-related factors, and therefore was recognized in the consolidated statement of operations as a provision for losses.

Amount excludes unrealized losses relating to non-credit factors.

(3) The held-to-maturity investment securities had a weighted average yield of 1.5 % as of September 30, 2021.

(3) The held-to-maturity investment securities had a weighted average yield of 1.5 % as of March 31, 2022.

As of December 31, 2021

6 unchanged sentences

Floating rate auction-rate certificates backed by Government guaranteed student loans $ 19,700 $ — $ 19,700 $ ( 52 ) $ — $ ( 394 ) $ 19,254

Floating rate asset-backed securities 6,232 — 6,232 — — ( 1 ) 6,231

Floating rate Government/GSE guaranteed mortgage-backed securities 2,168,016 90 2,168,106 — 11,821 ( 1,096 ) 2,178,831

11 unchanged sentences

(3) The held-to-maturity investment securities had a weighted average yield of 1.5 % as of December 31, 2021.

During the three and nine months ended September 30, 2021, Farmer Mac received proceeds of $ 232.0 million and $ 257.5 million, respectively, from the sale of securities from its available-for-sale investment portfolio, resulting in gains of $ 0.3 million and $ 0.3 million, respectively.

Farmer Mac did no t sell any securities from its available-for-sale investment portfolio during the three and nine months ended September 30, 2020.

As of September 30, 2021 and December 31, 2020, unrealized losses on available-for-sale investment securities were as follows:

As of September 30, 2021

Farmer Mac did no t sell any securities from its available-for-sale investment portfolio during the three months ended March 31, 2022 and 2021.

As of March 31, 2022 and December 31, 2021, unrealized losses on available-for-sale investment securities were as follows:

As of March 31, 2022

Available-for-Sale Securities

21 unchanged sentences

Floating rate auction-rate certificates backed by Government guaranteed student loans $ — $ — $ 19,254 $ ( 394 )

Floating rate asset-backed securities — — 6,231 ( 1 )

Floating rate Government/GSE guaranteed mortgage-backed securities 459,195 ( 619 ) 37,307 ( 477 )

Fixed rate Government/GSE guaranteed mortgage-backed securities 406,805 ( 5,730 ) — —

Fixed rate U.S.

2 unchanged sentences

Number of securities in loss position 69 24

The unrealized losses presented above are principally due to a general widening of market spreads and changes in the levels of interest rates from the dates of acquisition to September 30, 2021 and December 31, 2020, as applicable.

The unrealized losses presented above are principally due to a general widening of market spreads and changes in the levels of interest rates from the dates of acquisition to March 31, 2022 and December 31, 2021, as applicable.

The resulting decrease in fair values reflects an increase in the perceived risk by the financial markets related to those securities.

As of both September 30, 2021 and December 31, 2020, all of the investment securities in an unrealized loss position either were backed by the full faith and credit of the U.S.

As of both March 31, 2022 and December 31, 2021, all of the investment securities in an unrealized loss position either were backed by the full faith and credit of the U.S.

government or had credit ratings of at least "AA+."

Securities in unrealized loss positions for 12 months or longer have a fair value as of September 30, 2021 that is, on average, approximately 98.8 % of their amortized cost basis.

Securities in unrealized loss positions for 12 months or longer have a fair value as of March 31, 2022 that is, on average, approximately 98.4 % of their amortized cost basis.

Farmer Mac believes that all of these unrealized losses are recoverable within a reasonable period of time by way of maturity or changes in credit spreads.

The amortized cost, fair value, and weighted-average yield of available-for-sale investment securities by remaining contractual maturity as of September 30, 2021 are set forth below.

The amortized cost, fair value, and weighted-average yield of available-for-sale investment securities by remaining contractual maturity as of March 31, 2022 are set forth below.

Asset-backed and mortgage-backed securities are included based on their final maturities, although the actual maturities may differ due to prepayments of the underlying assets.

As of September 30, 2021

As of March 31, 2022

Available-for-Sale Securities

7 unchanged sentences

FARMER MAC GUARANTEED SECURITIES AND USDA SECURITIES

The following tables set forth information about on-balance sheet Farmer Mac Guaranteed Securities and USDA Securities as of September 30, 2021 and December 31, 2020:

As of September 30, 2021

The following tables set forth information about on-balance sheet Farmer Mac Guaranteed Securities and USDA Securities as of March 31, 2022 and December 31, 2021:

As of March 31, 2022

Unpaid Principal Balance Unamortized Premium/(Discount) Amortized

11 unchanged sentences

AgVantage $ 6,659,760 $ 1,216 $ 6,660,976 $ ( 681 ) $ 45,780 $ ( 116,851 ) $ 6,589,224

Farmer Mac Guaranteed Securities (3)

— 11,918 11,918 — — ( 896 ) 11,022

Total available-for-sale $ 6,659,760 $ 13,134 $ 6,672,894 $ ( 681 ) $ 45,780 $ ( 117,747 ) $ 6,600,246

USDA Securities (4)

$ 3,370 $ 111 $ 3,481 $ — $ — $ ( 95 ) $ 3,386

(1) Amounts presented exclude $ 30.4 million, $ 37.5 million, and $ 0.1 million of accrued interest receivable on available-for-sale, held-to-maturity, and trading securities, respectively, as of September 30, 2021.

(1) Amounts presented exclude $ 35.8 million, $ 34.5 million, and $ 0.1 million of accrued interest receivable on available-for-sale, held-to-maturity, and trading securities, respectively, as of March 31, 2022.

(2) Represents the amount of impairment that has resulted from credit-related factors, and therefore was recognized in the statement of financial operations as a provision for losses.

Amount excludes unrealized losses relating to non-credit factors.

(3) The trading USDA securities had a weighted average yield of 5.13 % as of September 30, 2021.

(3) Fair value includes $ 11.0 million of an interest-only security with a notional amount of $ 262.6 million.

(4) The trading USDA securities had a weighted average yield of 5.06 % as of March 31, 2022.

As of December 31, 2021

12 unchanged sentences

AgVantage $ 6,122,240 $ 1,270 $ 6,123,510 $ ( 263 ) $ 212,908 $ ( 20,010 ) $ 6,316,145

Farmer Mac Guaranteed Securities (3)

— 12,297 12,297 — 117 — $ 12,414

Total available-for-sale $ 6,122,240 $ 13,567 $ 6,135,807 $ ( 263 ) $ 213,025 $ ( 20,010 ) $ 6,328,559

USDA Securities (4)

3 unchanged sentences

Amount excludes unrealized losses relating to non-credit factors.

(3) Fair value includes $ 12.4 million of an interest-only security with a notional amount of $ 275.4 million.

(4) The trading USDA securities had a weighted average yield of 5.05 % as of December 31, 2021.

As of September 30, 2021 and December 31, 2020, unrealized losses on held-to-maturity and available-for-sale on-balance sheet Farmer Mac Guaranteed Securities and USDA Securities were as follows:

As of September 30, 2021

As of March 31, 2022 and December 31, 2021, unrealized losses on held-to-maturity and available-for-sale on-balance sheet Farmer Mac Guaranteed Securities and USDA Securities were as follows:

As of March 31, 2022

Held-to-Maturity and Available-for-Sale Securities

7 unchanged sentences

AgVantage $ 1,287,544 $ ( 15,861 ) $ 207,683 $ ( 17,317 )

Farmer Mac Guaranteed USDA Securities 10,541 ( 363 ) — —

USDA Securities 2,379,076 ( 44,593 ) — —

2 unchanged sentences

AgVantage $ 2,876,180 $ ( 95,246 ) $ 197,060 $ ( 21,605 )

Farmer Mac Guaranteed Securities 11,022 ( 896 ) — —

Total available-for-sale $ 2,887,202 $ ( 96,142 ) $ 197,060 $ ( 21,605 )

As of December 31, 2021

12 unchanged sentences

AgVantage $ 1,867,364 $ ( 17,263 ) $ 90,971 $ ( 2,747 )

The unrealized losses presented above are principally due to changes in interest rates from the date of acquisition to September 30, 2021 and December 31, 2020, as applicable.

The unrealized losses on the held-to-maturity USDA Securities as of both September 30, 2021 and December 31, 2020 reflect their increased cost basis resulting from their transfer to held-to-maturity as of October 1, 2016.

The credit exposure related to Farmer Mac's USDA Guarantees line of business is covered by the full faith and credit guarantee of the United States of America.

The unrealized losses from AgVantage securities were on 11 available-for-sale securities as of both September 30, 2021 and December 31, 2020.

There were 8 and 2 held-to-maturity AgVantage securities with an unrealized loss as of September 30, 2021 and December 31, 2020, respectively.

As of September 30, 2021 and December 31, 2020, 2 and 7 available-for-sale AgVantage securities, respectively, had been in a loss position for more than 12 months.

During the three and nine months ended September 30, 2021 and 2020, Farmer Mac had no sales of Farmer Mac Guaranteed Securities or USDA Securities and, therefore, Farmer Mac realized no gains or losses.

The amortized cost, fair value, and weighted-average yield of available-for-sale and held-to-maturity Farmer Mac Guaranteed Securities and USDA Securities by remaining contractual maturity as of September 30, 2021 are set forth below.

The balances presented are based on their final maturities, although the actual maturities may differ due to prepayments of the underlying assets.

As of September 30, 2021

The unrealized losses presented above are principally due to changes in interest rates from the date of acquisition to March 31, 2022 and December 31, 2021, as applicable.

The unrealized losses on the held-to-maturity USDA Securities as of both March 31, 2022 and December 31, 2021 reflect their increased cost basis resulting from their transfer to held-to-maturity as of October 1, 2016.

The credit exposure related to Farmer Mac's USDA Securities in the Agricultural Finance line of business is covered by the full faith and credit guarantee of the United States of America.

The unrealized losses from AgVantage securities were on 31 and 13 available-for-sale securities as of March 31, 2022 and December 31, 2021, respectively.

There were 38 and 10 held-to-maturity AgVantage securities with an unrealized loss as of March 31, 2022 and December 31, 2021, respectively.

As of March 31, 2022 and December 31, 2021, 4 and 2 available-for-sale AgVantage securities, respectively, had been in a loss position for more than 12 months.

As of March 31, 2022, there were 2 held-to-maturity AgVantage securities in a loss position for more than 12 months.

As of December 31, 2021, there were no held-to-maturity AgVantage securities in a loss position for more than 12 months.

During the three months ended March 31, 2022 and 2021, Farmer Mac had no sales of Farmer Mac Guaranteed Securities or USDA Securities and, therefore, Farmer Mac realized no gains or losses.

The balances presented are based on their contractual maturities, although the actual maturities may differ due to prepayments of the underlying assets.

As of March 31, 2022

Available-for-Sale Securities

7 unchanged sentences

(1) Amounts presented exclude $ 35.8 million of accrued interest receivable.

As of September 30, 2021

As of March 31, 2022

Held-to-Maturity Securities

9 unchanged sentences

Farmer Mac enters into financial derivative transactions to protect against risk from the effects of market price, or interest rate movements, on the value of certain assets, future cash flows, or debt issuance, and not for trading or speculative purposes.

For more information about Farmer Mac's financial derivatives,

see Note 6 in Farmer Mac's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as

filed with the SEC on February 25, 2021.

The following tables summarize information related to Farmer Mac's financial derivatives on a gross basis without giving consideration to master netting arrangements as of September 30, 2021 and December 31, 2020:

As of September 30, 2021

For more information about Farmer Mac's financial derivatives, see Note 6 in Farmer Mac's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on February 28, 2022.

The following tables summarize information related to Farmer Mac's financial derivatives on a gross basis without giving consideration to master netting arrangements as of March 31, 2022 and December 31, 2021:

As of March 31, 2022

Fair Value Weighted-

43 unchanged sentences

Receive fixed non-callable 1,377,250 — — 0.13 % 0.43 % 0.97

Receive fixed callable 200,000 1 ( 12 ) 0.13 % 0.15 % 0.72

Basis swaps 1,608,911 489 ( 280 ) 0.17 % 0.20 % 3.31

4 unchanged sentences

Net amount $ 19,139 $ 160,271

As of September 30, 2021, Farmer Mac expects to reclassify $ 5.7 million after-tax from accumulated other comprehensive income to earnings over the next twelve months.

This amount could differ from amounts actually recognized due to changes in interest rates, hedge de-designations, and the addition of other hedges after September 30, 2021.

During the three and nine months ended September 30, 2021 and 2020, there were no gains or losses from interest rate swaps designated as cash flow hedges reclassified to earnings because it was probable that the originally forecasted transactions would occur.

The following table summarizes the net income/(expense) recognized in the consolidated statements of operations related to derivatives for the three and nine months ended September 30, 2021 and 2020:

For the Three Months Ended September 30, 2021

Net Income/(Expense) Recognized in Consolidated Statement of Operations on Derivatives

Net Interest Income Non-Interest Income Total

Interest Income Investments and Cash Equivalents Interest Income Farmer Mac Guaranteed Securities and USDA Securities Interest Income Loans Total Interest Expense Losses on financial derivatives

(in thousands)

Total amounts presented in the consolidated statement of operations $ 4,121 $ 38,428 $ 61,923 $ ( 49,467 ) $ ( 2,347 ) $ 52,658

Income/(expense) related to interest settlements on fair value hedging relationships:

Recognized on derivatives ( 141 ) ( 20,925 ) ( 6,911 ) 10,886 — ( 17,091 )

Recognized on hedged items 274 28,937 11,817 ( 12,940 ) — 28,088

Discount amortization recognized on hedged items — — — ( 287 ) — ( 287 )

Income/(expense) related to interest settlements on fair value hedging relationships $ 133 $ 8,012 $ 4,906 $ ( 2,341 ) $ — $ 10,710

Gains/(losses) on fair value hedging relationships:

Recognized on derivatives $ 1,827 $ 30,060 $ 19,652 $ ( 9,727 ) $ — $ 41,812

Recognized on hedged items ( 1,737 ) ( 31,523 ) ( 19,184 ) 8,712 — ( 43,732 )

Gains/(losses) on fair value hedging relationships $ 90 $ ( 1,463 ) $ 468 $ ( 1,015 ) $ — $ ( 1,920 )

Expense related to interest settlements on cash flow hedging relationships:

Interest settlements reclassified from AOCI into net income on derivatives $ — $ — $ — $ ( 1,932 ) $ — $ ( 1,932 )

Recognized on hedged items — — — ( 685 ) — ( 685 )

Discount amortization recognized on hedged items — — — ( 11 ) — ( 11 )

Expense recognized on cash flow hedges $ — $ — $ — $ ( 2,628 ) $ — $ ( 2,628 )

Losses on financial derivatives not designated in hedging relationships:

Losses on interest rate swaps $ — $ — $ — $ — $ ( 2,093 ) $ ( 2,093 )

Interest expense on interest rate swaps — — — — 168 168

Treasury futures — — — — ( 422 ) ( 422 )

Losses on financial derivatives not designated in hedge relationships $ — $ — $ — $ — $ ( 2,347 ) $ ( 2,347 )

For The Three Months Ended September 30, 2020

Net Income/(Expense) Recognized in Consolidated Statement of Operations on Derivatives

Net Interest Income Non-Interest Income Total

Interest Income

Farmer Mac Guaranteed Securities and USDA Securities Interest Income Loans Total Interest Expense Losses on financial derivatives

(in thousands)

Total amounts presented in the consolidated statement of operations:

$ 45,335 $ 56,204 $ ( 63,974 ) $ ( 564 ) $ 37,001

Income/(expense) related to interest settlements on fair value hedging relationships:

Recognized on derivatives ( 20,373 ) ( 6,194 ) 9,605 — ( 16,962 )

Recognized on hedged items 31,439 10,965 ( 12,328 ) — 30,076

Discount amortization recognized on hedged items — — ( 191 ) — ( 191 )

Income/(expense) related to interest settlements on fair value hedging relationships $ 11,066 $ 4,771 $ ( 2,914 ) $ — $ 12,923

(Losses)/gains on fair value hedging relationships:

Recognized on derivatives $ 38,363 $ 28,198 $ ( 9,665 ) $ — $ 56,896

Recognized on hedged items ( 41,855 ) ( 29,372 ) 9,284 — ( 61,943 )

(Losses)/gains on fair value hedging relationships $ ( 3,492 ) $ ( 1,174 ) $ ( 381 ) $ — $ ( 5,047 )

Expense related to interest settlements on cash flow hedging relationships:

Interest settlements reclassified from AOCI into net income on derivatives $ — $ — $ ( 1,814 ) $ — $ ( 1,814 )

Recognized on hedged items — — ( 711 ) — ( 711 )

Discount amortization recognized on hedged items — — ( 4 ) — ( 4 )

Expense recognized on cash flow hedges $ — $ — $ ( 2,529 ) $ — $ ( 2,529 )

Losses on financial derivatives not designated in hedge relationships:

Losses on interest rate swaps $ — $ — $ — $ ( 4,292 ) $ ( 4,292 )

Interest expense on interest rate swaps — — — 3,800 3,800

Treasury futures — — — ( 72 ) ( 72 )

Losses on financial derivatives not designated in hedge relationships $ — $ — $ — $ ( 564 ) $ ( 564 )

For the Nine Months Ended September 30, 2021

As of March 31, 2022, Farmer Mac expects to reclassify $ 1.2 million after-tax from accumulated other comprehensive income to earnings over the next twelve months related to cash flow hedges.

This amount could differ from amounts actually recognized due to changes in interest rates, hedge de-designations, and the addition of other hedges after March 31, 2022.

During the three months ended March 31, 2022 and 2021, there were no gains or losses from interest rate swaps designated as cash flow hedges reclassified to earnings because it was probable that the originally forecasted transactions would occur.

The following tables summarize the net income/(expense) recognized in the consolidated statements of operations related to derivatives for the three months ended March 31, 2022 and 2021:

For the Three Months Ended March 31, 2022

Net Income/(Expense) Recognized in Consolidated Statement of Operations on Derivatives

Net Interest Income Non-Interest Income Total

Interest Income Investments and Cash Equivalents Interest Income Farmer Mac Guaranteed Securities and USDA Securities Interest Income Loans Total Interest Expense Losses on financial derivatives

Interest Income Investments and Cash Equivalents Interest Income Farmer Mac Guaranteed Securities and USDA Securities Interest Income Loans Total Interest Expense Gains on financial derivatives

(in thousands)

3 unchanged sentences

Recognized on hedged items 2,597 31,929 12,619 ( 18,157 ) — 28,988

Discount amortization recognized on hedged items — — — ( 765 ) — ( 765 )

Premium/discount amortization recognized on hedged items ( 414 ) — — ( 440 ) — ( 854 )

Income/(expense) related to interest settlements on fair value hedging relationships $ 699 $ 10,285 $ 5,673 $ ( 4,397 ) $ — $ 12,260

8 unchanged sentences

Expense recognized on cash flow hedges $ — $ — $ — $ ( 2,811 ) $ — $ ( 2,811 )

Losses on financial derivatives not designated in hedging relationships:

Losses on interest rate swaps $ — $ — $ — $ — $ ( 4,363 ) $ ( 4,363 )

Gains on financial derivatives not designated in hedging relationships:

Gains on interest rate swaps $ — $ — $ — $ — $ 703 $ 703

Interest expense on interest rate swaps — — — — ( 927 ) ( 927 )

Treasury futures — — — — 16,298 16,298

Losses on financial derivatives not designated in hedge relationships $ — $ — $ — $ — $ ( 1,120 ) $ ( 1,120 )

For The Nine Months Ended September 30, 2020

Gains on financial derivatives not designated in hedge relationships $ — $ — $ — $ — $ 16,074 $ 16,074

For the Three Months Ended March 31, 2021

Net Income/(Expense) Recognized in Consolidated Statement of Operations on Derivatives

1 unchanged sentence

Interest Income

Farmer Mac Guaranteed Securities and USDA Securities Interest Income Loans Total Interest Expense Losses on financial derivatives

Farmer Mac Guaranteed Securities and USDA Securities Interest Income Loans Total Interest Expense Gains on financial derivatives

(in thousands)

15 unchanged sentences

Expense recognized on cash flow hedges $ — $ — $ ( 2,408 ) $ — $ ( 2,408 )

(Losses)/gains on financial derivatives not designated in hedge relationships:

Losses on interest rate swaps $ — $ — $ — $ ( 2,415 ) $ ( 2,415 )

Gains on financial derivatives not designated in hedge relationships:

Gains on interest rate swaps $ — $ — $ — $ 1,470 $ 1,470

Interest expense on interest rate swaps — — — 2,223 2,223

Treasury futures — — — 600 600

(Losses)/gains on financial derivatives not designated in hedge relationships $ — $ — $ — $ ( 3,339 ) $ ( 3,339 )

The following table shows the carrying amount and associated cumulative basis adjustment related to the application of hedge accounting that is included in the carrying amount of hedged assets and liabilities in fair value hedging relationships as of September 30, 2021 and December 31, 2020:

Gains on financial derivatives not designated in hedge relationships $ — $ — $ — $ 4,293 $ 4,293

Hedged Items in Fair Value Relationship

Carrying Amount of Hedged Assets/(Liabilities) Cumulative Amount of Fair Value Hedging Adjustments included in the Carrying Amount of the Hedged Assets/(Liabilities)

September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021

(in thousands)

6 unchanged sentences

( 8,024,125 ) ( 7,083,535 ) 279,191 42,377

(1) Includes $ 1.4 million and $ 1.6 million of hedging adjustments on discontinued hedging relationships as of September 30, 2021 and December 31, 2020, respectively.

(2) Includes $ 1.2 million and $ 1.4 million of hedging adjustments on a discontinued hedging relationship as of September 30, 2021 and December 31, 2020, respectively.

(1) Includes $ 1.2 million and $ 1.3 million of hedging adjustments on discontinued hedging relationships as of March 31, 2022 and December 31, 2021, respectively.

(2) Includes $ 1.2 million of hedging adjustments on a discontinued hedging relationship as of both March 31, 2022 and December 31, 2021.

(3) Carrying amount represents amortized cost.

The following table shows Farmer Mac's credit exposure to interest rate swap counterparties as of September 30, 2021 and December 31, 2020:

September 30, 2021

The following table shows Farmer Mac's credit exposure to interest rate swap counterparties as of March 31, 2022 and December 31, 2021:

March 31, 2022

Gross Amount Recognized (1)

11 unchanged sentences

(1) Gross amount excludes netting arrangements and any adjustment for nonperformance risk, but includes accrued interest.

As of September 30, 2021, Farmer Mac held $ 2.2 million of cash and no investment securities as collateral for its derivatives in net asset positions, compared to $ 1.3 million of cash and no investment securities as collateral for its derivatives in net asset positions as of December 31, 2020.

Farmer Mac posted $ 6.0 million cash and $ 169.2 million of investment securities as of September 30, 2021 and posted $ 11.2 million cash and $ 201.1 million investment securities as of December 31, 2020.

As of both March 31, 2022 and December 31, 2021, Farmer Mac held no cash or investment securities as collateral for its derivatives in net asset positions.

Farmer Mac posted $ 78.5 million cash and $ 183.9 million of investment securities as of March 31, 2022 and posted $ 16.6 million cash and $ 177.9 million investment securities as of December 31, 2021.

Farmer Mac records posted cash as a reduction in the outstanding balance of cash and cash equivalents and an increase in the balance of prepaid expenses and other assets.

Any investment securities posted as collateral are included in the investment securities balances on the consolidated balance sheets.

If Farmer Mac had breached certain provisions of the derivative contracts as of September 30, 2021 and December 31, 2020, it could have been required to settle its obligations under the agreements, but would not have been required to post additional collateral.

As of September 30, 2021 and December 31, 2020, there were no financial derivatives in a net payable position where Farmer Mac was required to pledge collateral which the counterparty had the right to sell or repledge.

Of Farmer Mac's $ 15.8 billion notional amount of interest rate swaps outstanding as of September 30, 2021, $ 13.2 billion were cleared through the swap clearinghouse, the Chicago Mercantile Exchange ("CME").

If Farmer Mac had breached certain provisions of the derivative contracts as of March 31, 2022 or December 31, 2021, it could have been required to settle its obligations under the agreements, but would not have been required to post additional collateral.

As of March 31, 2022 and December 31, 2021, there were no financial derivatives in a net payable position where Farmer Mac was required to pledge collateral which the counterparty had the right to sell or repledge.

Of Farmer Mac's $ 18.9 billion notional amount of interest rate swaps outstanding as of March 31, 2022, $ 16.0 billion were cleared through the swap clearinghouse, the Chicago Mercantile Exchange ("CME").

Of Farmer Mac's $ 17.5 billion notional amount of interest rate swaps outstanding as of December 31, 2021, $ 14.9 billion were cleared through the CME.

During the first nine months of 2021, Farmer Mac continued the use of non-cleared basis swaps to prepare for the transition away from the use of LIBOR as a reference rate.

During first quarter 2022 and throughout 2021, Farmer Mac continued the use of non-cleared basis swaps to prepare for the transition away from the use of LIBOR as a reference rate.

Farmer Mac classifies loans as either held for investment or held for sale.

1 unchanged sentence

Loans held for sale are reported at the lower of cost or fair value determined on a pooled

During third quarter 2021, Farmer Mac reclassified $ 301.6 million from loans held for investment to loans held for sale related to the FARM Series 2021-1 securitization.

See note 11 for more information on the securitization.

As of September 30, 2021 and December 31, 2020, Farmer Mac had $ 301.6 million and no loans held for sale, respectively.

Farmer Mac did not record any lower of cost or fair value adjustments during the three or nine months ended September 30, 2021 related to its loans held for sale.

The following table includes loans held for investment and loans held for sale and displays the composition of the loan balances as of September 30, 2021 and December 31, 2020:

As of September 30, 2021 As of December 31, 2020

As of March 31, 2022 and December 31, 2021, Farmer Mac had $ 9.0 million and no loans held for sale, respectively.

Farmer Mac did not record any lower of cost or fair value adjustments during the three months ended March 31, 2022 or 2021.

The following table includes loans held for investment and loans held for sale and displays the composition of the loan balances as of March 31, 2022 and December 31, 2021:

As of March 31, 2022 As of December 31, 2021

Unsecuritized In Consolidated Trusts Total Unsecuritized In Consolidated Trusts Total

(in thousands)

Farm & Ranch $ 5,800,376 $ 977,373 $ 6,777,749 $ 4,889,393 $ 1,287,045 $ 6,176,438

Rural Utilities 2,243,172 — 2,243,172 2,260,412 — 2,260,412

Agricultural Finance mortgage loans $ 6,044,029 $ 888,200 $ 6,932,229 $ 5,898,370 $ 948,623 $ 6,846,993

Rural Infrastructure Finance loans 2,551,851 — 2,551,851 2,389,136 — 2,389,136

Total unpaid principal balance (1)

6 unchanged sentences

Allowance for Losses

The following table is a summary, by asset type, of the allowance for losses as of September 30, 2021 and December 31, 2020:

September 30, 2021 December 31, 2020

The following table is a summary, by asset type, of the allowance for losses as of March 31, 2022 and December 31, 2021:

March 31, 2022 December 31, 2021

Allowance for Losses Allowance for Losses

(in thousands)

Farm & Ranch $ 3,506 $ 3,745

Rural Utilities 10,788 10,087

Agricultural Finance mortgage loans $ 3,948 $ 3,442

Rural Infrastructure Finance loans 9,622 10,599

Total $ 13,570 $ 14,041

The following is a summary of the changes in the allowance for losses for the three and nine month period ended September 30, 2021 and 2020:

For the Three Months Ended For the Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Allowance for Losses Allowance for Losses Allowance for Losses Allowance for Losses

The following is a summary of the changes in the allowance for losses for the three month period ended March 31, 2022 and 2021:

For the Three Months Ended

March 31, 2022 March 31, 2021

Allowance for Losses Allowance for Losses

(in thousands)

Farm & Ranch:

Agricultural Finance mortgage loans

Beginning Balance $ 3,442 $ 3,745

Cumulative effect adjustment from adoption of current expected credit loss standard — — — ( 3,909 )

Adjusted Beginning Balance 3,092 6,039 3,745 6,545

Provision for/(release of) losses 590 ( 27 )

2 unchanged sentences

$ 3,948 $ 3,718

Rural Utilities:

Rural Infrastructure Finance loans

Beginning Balance $ 10,599 $ 10,087

Cumulative effect adjustment from adoption of current expected credit loss standard — — — 5,378

Adjusted Beginning Balance 10,908 8,900 10,087 5,378

(Release of)/provision for losses ( 977 ) 1,002

2 unchanged sentences

$ 9,622 $ 11,089

(1) As of September 30, 2021 and 2020, allowance for losses for Farm & Ranch includes no allowance and $ 1.8 million, respectively, for collateral dependent assets secured by agricultural real estate.

(2) As of both September 30, 2021 and 2020, allowance for losses for Rural Utilities includes no allowance for collateral dependent assets.

The release from the allowance for Rural Utilities loan losses of $ 0.1 million recorded during third quarter 2021 was primarily attributable to the impact of improving economic factor forecasts.

The $ 0.4 million provision to the allowance for the Farm & Ranch portfolio during third quarter 2021 was primarily attributable to a decline in the economic factor forecast for commodity prices in Farmer Mac's fruit and nuts portfolio.

The net provision recorded to the allowance for the nine months ended September 30, 2021 was primarily a result of the impact of the Texas Arctic Freeze on the Rural Utilities portfolio, partially offset by improving economic factor forecasts.

The net release from the allowance for the nine months ended September 30, 2021 was primarily a result of improving agricultural commodity prices on the Farm & Ranch portfolio in the first half of the year, partially offset by declines in the third quarter.

The provision to the allowance for loan losses of $ 0.9 million recorded during third quarter 2020 was

primarily due to the impact of net new loan volume in the Rural Utilities portfolio and credit downgrades

on existing volume during the quarter.

The impact of the Rural Utilities portfolio on the net increase to the

provision was partially offset by improving economic factors that uniquely impacted the Farm & Ranch

portfolio, specifically continued improvements in commodity prices and continued expectations for stable

farm land values.

The provision to the allowance for loan losses of $ 4.3 million recorded during the nine months ended

September 30, 2020 was primarily due to the impact of net new loan volume in the Rural Utilities

portfolio and the impact of economic factor forecasts on the Rural Utilities portfolio, especially continued

expected higher unemployment, as a result of the COVID-19 pandemic and the resulting economic

The following table presents the unpaid principal balances by delinquency status of Farmer Mac's loans and non-performing assets as of September 30, 2021 and December 31, 2020:

As of September 30, 2021

(1) As of both March 31, 2022 and 2021, allowance for losses for Agricultural Finance mortgage loans includes no allowance for collateral dependent assets secured by agricultural real estate.

(2) As of both March 31, 2022 and 2021, allowance for losses for Rural Infrastructure Finance loans includes no allowance for collateral dependent assets.

The net release from the allowance for Rural Infrastructure Finance loan losses of $ 1.0 million recorded during first quarter 2022 was primarily attributable to a risk rating upgrade on a single loan related to the borrower's successful securitization of a large payable incurred as a result of the arctic freeze that struck Texas in February 2021, and was partially offset by new loan volume.

The $ 0.6 million net provision to the allowance for the Agricultural Finance mortgage loan portfolio during first quarter 2022 was primarily attributable to a risk rating downgrade on a single agricultural storage and processing loan.

The provision to the allowance for Rural Infrastructure Finance loan losses of $ 1.0 million recorded during first quarter 2021 was primarily attributable to the impact of ratings downgrades on multiple rural utilities that were negatively impacted by the arctic freeze that struck Texas in February 2021.

The small release from the allowance for the Farm & Ranch portfolio during first quarter 2021 was primarily

attributable to ratings upgrades and updated loss-given-default assumptions, offset by net growth in our loan portfolio.

The following table presents the unpaid principal balances by delinquency status of Farmer Mac's loans and non-performing assets as of March 31, 2022 and December 31, 2021:

As of March 31, 2022

Current 30-59 Days 60-89 Days 90 Days and Greater (2)

1 unchanged sentence

(in thousands)

Farm & Ranch $ 6,633,343 $ 2,345 $ 482 $ 3,655 $ 6,482 $ 137,924 $ 6,777,749

Rural Utilities 2,243,172 — — — — — 2,243,172

Agricultural Finance mortgage loans $ 6,797,744 $ 4,624 $ 639 $ 8,517 $ 13,780 $ 120,705 $ 6,932,229

Rural Infrastructure Finance loans 2,551,851 — — — — — 2,551,851

Total $ 9,349,595 $ 4,624 $ 639 $ 8,517 $ 13,780 $ 120,705 $ 9,484,080

3 unchanged sentences

(4) Includes $ 34.9 million of nonaccrual loans for which there was no associated allowance.

During the three and nine months ended September 30, 2021, Farmer Mac received $ 1.4 million and $ 4.4 million, respectively, in interest on nonaccrual loans.

During the three months ended March 31, 2022, Farmer Mac received $ 1.8 million in interest on nonaccrual loans.

As of December 31, 2021

2 unchanged sentences

(in thousands)

Farm & Ranch $ 6,055,154 $ 4,582 $ 632 $ 1,072 $ 6,286 $ 114,998 $ 6,176,438

Rural Utilities 2,260,412 — — — — — 2,260,412

Agricultural Finance mortgage loans $ 6,715,070 $ 4,548 $ 568 $ — $ 5,116 $ 126,807 $ 6,846,993

Rural Infrastructure Finance loans 2,389,136 — — — — — 2,389,136

Total $ 9,104,206 $ 4,548 $ 568 $ — $ 5,116 $ 126,807 $ 9,236,129

5 unchanged sentences

Credit Quality Indicators

The following tables present credit quality indicators related to Farm & Ranch loans and Rural Utilities loans held as of September 30, 2021 and December 31, 2020, by year of origination:

As of September 30, 2021

The following tables present credit quality indicators related to Agricultural Finance mortgage loans and Rural Infrastructure Finance loans held as of March 31, 2022 and December 31, 2021, by year of origination:

As of March 31, 2022

Year of Origination:

1 unchanged sentence

(in thousands)

Farm & Ranch (1) :

Agricultural Finance mortgage loans (1) :

Internally Assigned Risk Rating:

5 unchanged sentences

Total $ 407,133 $ 2,207,958 $ 1,537,824 $ 571,198 $ 372,486 $ 1,295,289 $ 540,341 $ 6,932,229

For the Three Months Ended September 30, 2021:

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period recoveries — — — — — — — —

Current period Farm & Ranch net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

For the Nine Months Ended September 30, 2021:

For the Three Months Ended:

Current period charge-offs $ — $ — $ — $ — $ — $ ( 84 ) $ — $ ( 84 )

Current period recoveries — — — — — — — —

Current period Farm & Ranch net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period Agricultural Finance net charge-offs $ — $ — $ — $ — $ — $ ( 84 ) $ — $ ( 84 )

(1) Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.

1 unchanged sentence

(3) Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not corrected.

As of September 30, 2021

As of March 31, 2022

Year of Origination:

1 unchanged sentence

(in thousands)

Rural Utilities (1) :

Rural Infrastructure Finance loans (1) :

Internally Assigned Risk Rating:

5 unchanged sentences

Total $ 175,976 $ 230,729 $ 643,667 $ 766,559 $ 8,017 $ 695,266 $ 31,637 $ 2,551,851

For the Three Months Ended September 30, 2021:

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period recoveries — — — — — — — —

Current period Rural Utilities net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

For the Nine Months Ended September 30, 2021:

For the Three Months Ended:

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period recoveries — — — — — — — —

Current period Farm & Ranch net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period Rural Infrastructure net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

(1) Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.

5 unchanged sentences

(in thousands)

Farm & Ranch (1) :

Agricultural Finance mortgage loans (1) :

Internally Assigned Risk Rating:

5 unchanged sentences

Total $ 2,224,509 $ 1,596,563 $ 617,576 $ 400,104 $ 351,687 $ 1,095,135 $ 561,419 $ 6,846,993

For the Three Months Ended September 30, 2020:

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period recoveries — — — — — — — —

Current period Farm & Ranch net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

For the Nine Months Ended September 30, 2020:

For the Three Months Ended March 31, 2021:

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period recoveries — — — — — — — —

Current period Farm & Ranch net charge-offs $ — $ — $ — $ — $ — $ 394 $ — $ 394

Current period Agricultural Finance net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

(1) Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.

5 unchanged sentences

(in thousands)

Rural Utilities (1) :

Rural Infrastructure Finance loans (1) :

Internally Assigned Risk Rating:

5 unchanged sentences

Total $ 242,570 $ 635,166 $ 774,941 $ 8,100 $ 86,878 $ 628,903 $ 12,578 $ 2,389,136

For the Three Months Ended September 30, 2020:

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period recoveries — — — — — — — —

Current period Rural Utilities net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

For the Nine Months Ended September 30, 2020:

For the Three Months Ended March 31, 2021:

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period recoveries — — — — — — — —

Current period Farm & Ranch net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period Rural Infrastructure net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

(1) Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.

2 unchanged sentences

GUARANTEES AND COMMITMENTS

The following table presents the maximum principal amount of potential undiscounted future payments that Farmer Mac could be required to make under all off-balance sheet Farmer Mac Guaranteed Securities as of September 30, 2021 and December 31, 2020, not including offsets provided by any recourse provisions, recoveries from third parties, or collateral for the underlying loans:

The following table presents the maximum principal amount of potential undiscounted future payments that Farmer Mac could be required to make under all off-balance sheet Farmer Mac Guaranteed Securities as of March 31, 2022 and December 31, 2021, not including offsets provided by any recourse provisions, recoveries from third parties, or collateral for the underlying loans:

Outstanding Balance of Off-Balance Sheet Farmer Mac Guaranteed Securities

As of September 30, 2021 As of December 31, 2020

As of March 31, 2022 As of December 31, 2021

(in thousands)

Farm & Ranch:

Agricultural Finance

Farmer Mac Guaranteed Securities $ 544,484 $ 578,358

USDA Guarantees:

Farmer Mac Guaranteed USDA Securities 259,893 299,298

Institutional Credit:

AgVantage Securities 4,412 4,412

Rural Infrastructure Finance

Farmer Mac Guaranteed Securities 2,755 2,755

Total off-balance sheet Farmer Mac Guaranteed Securities $ 547,239 $ 581,113

1 unchanged sentence

The following table summarizes the significant cash flows received from and paid to trusts used for Farmer Mac securitizations:

For the Nine Months Ended

September 30, 2021 September 30, 2020

For the Three Months Ended

March 31, 2022 March 31, 2021

(in thousands)

3 unchanged sentences

The following table presents the liability and the weighted-average remaining maturity of all loans underlying off-balance sheet Farmer Mac Guaranteed Securities:

As of September 30, 2021 As of December 31, 2020

As of March 31, 2022 As of December 31, 2021

(dollars in thousands)

5 unchanged sentences

Farmer Mac has recorded a liability for its obligation to stand ready under the commitment in the guarantee and commitment obligation on the consolidated balance sheets.

The following table presents the liability, the maximum principal amount of potential undiscounted future payments that Farmer Mac could be requested to make under all Long-Term Standby Purchase Commitments ("LTSPCs"), not including offsets provided by any recourse provisions, recoveries from third parties, or collateral for the underlying loans, as well as the weighted-average remaining maturity of all loans underlying LTSPCs:

As of September 30, 2021 As of December 31, 2020

The following table presents the liability, the maximum principal amount of potential undiscounted future payments that Farmer Mac could be requested to make under all LTSPCs, not including offsets provided by any recourse provisions, recoveries from third parties, or collateral for the underlying loans, as well as the weighted-average remaining maturity of all loans underlying LTSPCs:

As of March 31, 2022 As of December 31, 2021

(dollars in thousands)

5 unchanged sentences

Reserve for Losses

The following table is a summary, by asset type, of the reserve for losses as of September 30, 2021 and December 31, 2020:

September 30, 2021 December 31, 2020

The following table is a summary, by asset type, of the reserve for losses as of March 31, 2022 and December 31, 2021:

March 31, 2022 December 31, 2021

Reserve for Losses Reserve for Losses

(in thousands)

Farm & Ranch:

Agricultural Finance:

LTSPCs and Farmer Mac Guaranteed Securities $ 993 $ 1,068

Rural Utilities

Rural Infrastructure Finance

LTSPCs 847 882

Total $ 1,840 $ 1,950

The following is a summary of the changes in the reserve for losses for the three and nine month period ended September 30, 2021 and 2020:

For the Three Months Ended For the Nine Months Ended

September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Reserve for Losses Reserve for Losses Reserve for Losses Reserve for Losses

The following is a summary of the changes in the reserve for losses for the three month period ended March 31, 2022 and 2021:

For the Three Months Ended

March 31, 2022 March 31, 2021

Reserve for Losses Reserve for Losses

(in thousands)

Farm & Ranch:

Agricultural Finance mortgage loans

Beginning Balance $ 1,068 $ 2,097

Cumulative effect adjustment from adoption of current expected credit loss standard — — — ( 148 )

Adjusted Beginning Balance 1,194 1,650 2,097 2,016

(Release of)/provision for losses ( 91 ) 628 ( 994 ) 262

Release of losses ( 75 ) ( 731 )

Charge-offs — —

Ending Balance $ 993 $ 1,366

Rural Utilities:

Rural Infrastructure Finance loans

Beginning Balance $ 882 $ 1,180

Cumulative effect adjustment from adoption of current expected credit loss standard — — — 1,011

Adjusted Beginning Balance 917 1,370 1,180 1,011

(Release of)/provision for losses ( 20 ) ( 80 ) ( 283 ) 279

Release of losses ( 35 ) ( 213 )

Charge-offs — —

Ending Balance $ 847 $ 967

The release from the reserve for losses in the Rural Utilities LTSPC portfolio recorded during the three and nine months ended September 30, 2021 was primarily due to improving economic factor forecasts and ratings upgrades.

The release in the Farm & Ranch LTSPC portfolio was primarily due to ratings upgrades and updated loss-given-default assumptions.

The provision to the reserve for losses recorded during the three and nine months ended September 30,

2020 was primarily due to credit downgrades in the LTSPC portfolio.

The following table presents the unpaid principal balances by delinquency status of Farm & Ranch loans underlying LTSPCs.

Farm & Ranch Farmer Mac Guaranteed Securities, Rural Utilities loans underlying LTSPCs, and non-performing assets as of September 30, 2021 and December 31, 2020:

As of September 30, 2021

The release from the reserve for losses in both the Agricultural Finance and Rural Infrastructure Finance LTSPC and Farmer Mac Guaranteed portfolios recorded during the three months ended March 31, 2022 was primarily due to decreased net volume in those portfolios.

The release from the reserve for losses in the Rural Infrastructure Finance LTSPC portfolio recorded during first quarter 2021 was primarily due to improving economic factor forecasts and ratings upgrades.

The release in the Agricultural Finance LTSPC portfolio was primarily due to ratings upgrades and updated loss-given-default assumptions.

The following table presents the unpaid principal balances by delinquency status of Agricultural Finance and Rural Utilities loans underlying LTSPCs and Farmer Mac Guaranteed Securities as of March 31, 2022 and December 31, 2021:

As of March 31, 2022

Current 30-59 Days 60-89 Days 90 Days and Greater (1)

1 unchanged sentence

(in thousands)

Farm and Ranch:

Agricultural Finance:

LTSPCs and Farmer Mac Guaranteed Securities $ 2,942,666 $ 1,578 $ 1,618 $ 1,887 $ 5,083 $ 2,947,749

Rural Utilities:

Rural Infrastructure:

LTSPCs $ 562,568 $ — $ — $ — $ — $ 562,568

(1) Includes loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs that are 90 days of more past due, in foreclosure, or in bankruptcy with at least one missed payment, excluding loans performing under either their original loan terms or a court-approved bankruptcy plan.

(1) Includes loans underlying off-balance sheet Agricultural Finance Guaranteed Securities and LTSPCs that are 90 days of more past due, in foreclosure, or in bankruptcy with at least one missed payment, excluding loans performing under either their original loan terms or a court-approved bankruptcy plan.

As of December 31, 2021

2 unchanged sentences

(in thousands)

Farm and Ranch:

Agricultural Finance:

LTSPCs and Farmer Mac Guaranteed Securities $ 2,953,091 $ 8,068 $ — $ 3,597 $ 11,665 $ 2,964,756

Rural Utilities:

Rural Infrastructure:

LTSPCs $ 556,837 $ — $ — $ — $ — $ 556,837

Credit Quality Indicators

The following tables present credit quality indicators related to Farm & Ranch loans underlying LTSPCs, Farm & Ranch Farmer Mac Guaranteed Securities, and Rural Utilities loans underlying LTSPCs as of September 30, 2021 and December 31, 2020, by year of origination:

As of September 30, 2021

The following tables present credit quality indicators related to Agricultural Finance and Rural Utilities loans underlying LTSPCs and Farmer Mac Guaranteed Securities as of March 31, 2022 and December 31, 2021, by year of origination:

As of March 31, 2022

Year of Origination:

1 unchanged sentence

(in thousands)

Farm & Ranch LTSPCs and Farmer Mac Guaranteed Securities:

Agricultural Finance LTSPCs and Farmer Mac Guaranteed Securities:

Internally Assigned Risk Rating:

5 unchanged sentences

Total $ 39,991 $ 425,698 $ 507,304 $ 245,879 $ 193,559 $ 1,264,636 $ 270,682 $ 2,947,749

For the Three Months Ended September 30, 2021:

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period recoveries — — — — — — — —

Current period Farm & Ranch net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

For the Nine Months Ended September 30, 2021:

For the Three Months Ended:

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period recoveries — — — — — — — —

Current period Farm & Ranch net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period Agricultural Finance net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

(1) Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.

(2) Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not corrected.

As of September 30, 2021

As of March 31, 2022

Year of Origination:

1 unchanged sentence

(in thousands)

Rural Utilities LTSPCs:

Rural Infrastructure Finance LTSPCs:

Internally Assigned Risk Rating:

5 unchanged sentences

Total $ — $ — $ — $ — $ — $ 489,384 $ 73,184 $ 562,568

For the Three Months Ended September 30, 2021:

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period recoveries — — — — — — — —

Current period Rural Utilities net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

For the Nine Months Ended September 30, 2021:

For the Three Months Ended:

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period recoveries — — — — — — — —

Current period Farm & Ranch net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period Rural Infrastructure net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

(1) Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.

4 unchanged sentences

(in thousands)

Farm & Ranch LTSPCs and Farmer Mac Guaranteed Securities:

Agricultural Finance LTSPCs and Farmer Mac Guaranteed Securities:

Internally Assigned Risk Rating:

5 unchanged sentences

Total $ 376,027 $ 544,098 $ 245,089 $ 200,298 $ 251,812 $ 1,089,305 $ 258,127 $ 2,964,756

For the Three Months Ended September 30, 2020:

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period recoveries — — — — — — — —

Current period Farm & Ranch net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

For the Nine Months Ended September 30, 2020:

For the Three Months Ended March 31, 2021:

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period recoveries — — — — — — — —

Current period Farm & Ranch net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period Agricultural Finance net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

(1) Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.

4 unchanged sentences

(in thousands)

Rural Utilities LTSPCs:

Rural Infrastructure Finance LTSPCs:

Internally Assigned Risk Rating:

5 unchanged sentences

Total $ — $ — $ — $ — $ — $ 499,594 $ 57,243 $ 556,837

For the Three Months Ended September 30, 2020:

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period recoveries — — — — — — — —

Current period Rural Utilities net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

For the Nine Months Ended September 30, 2020:

For the Three Months Ended March 31, 2021:

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period recoveries — — — — — — — —

Current period Farm & Ranch net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Current period Rural Infrastructure net charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

(1) Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.

3 unchanged sentences

Discount notes generally have original maturities of 1.0 year or less, whereas medium-term notes generally have maturities of 0.5 years to 25.0 years.

The following tables set forth information related to Farmer Mac's borrowings as of September 30, 2021 and December 31, 2020:

September 30, 2021

Outstanding as of September 30 Average Outstanding During the Quarter

The following tables set forth information related to Farmer Mac's borrowings as of March 31, 2022 and December 31, 2021:

March 31, 2022

Outstanding as of March 31 Average Outstanding During the Quarter

Amount Weighted- Average Rate Amount Weighted- Average Rate

36 unchanged sentences

Total $ 22,716,156

The maximum amount of Farmer Mac's discount notes outstanding at any month end during the nine months ended September 30, 2021 and 2020 was $ 2.4 billion and $ 2.6 billion, respectively.

The maximum amount of Farmer Mac's discount notes outstanding at any month end during the three months ended March 31, 2022 and 2021 was $ 2.2 billion and $ 1.8 billion, respectively.

Callable medium-term notes give Farmer Mac the option to redeem the debt at par value on a specified call date or at any time on or after a specified call date.

The following table summarizes by maturity date the amounts and costs for Farmer Mac debt callable in 2021 as of September 30, 2021:

Debt Callable in 2021 as of September 30, 2021, by Maturity

The following table summarizes by maturity date the amounts and costs for Farmer Mac debt callable in 2022 as of March 31, 2022:

Debt Callable in 2022 as of March 31, 2022, by Maturity

Amount Weighted-Average Rate

6 unchanged sentences

Total $ 3,503,635 1.22 %

The following schedule summarizes the earliest interest rate reset date, or debt maturities, of total borrowings outstanding as of September 30, 2021, including callable and non-callable medium-term notes, assuming callable notes are redeemed at the initial call date:

The following schedule summarizes the earliest interest rate reset date, or debt maturities, of total borrowings outstanding as of March 31, 2022, including callable and non-callable medium-term notes, assuming callable notes are redeemed at the initial call date:

Earliest Interest Rate Reset Date, or Debt Maturities, of Borrowings Outstanding

9 unchanged sentences

Total principal net of discounts $ 23,319,158 1.01 %

During the nine months ended September 30, 2021 and 2020, Farmer Mac called $ 1.7 billion and $ 2.7 billion of callable medium-term notes, respectively.

During the three months ended March 31, 2022 and 2021, Farmer Mac called $ 26.0 million and $ 1.0 billion of callable medium-term notes, respectively.

Authority to Borrow from the U.S.

4 unchanged sentences

Any debt obligations issued by Farmer Mac under this authority would bear interest at a rate determined by the U.S.

Treasury, taking into consideration the average rate on outstanding marketable obligations of the

United States as of the last day of the last calendar month ending before the date of the purchase of the obligations from Farmer Mac.

Treasury, taking into consideration the average rate on outstanding marketable obligations of the United States as of the last day of the last calendar month ending before the date of the purchase of the obligations from Farmer Mac.

The charter requires Farmer Mac to repurchase any of its debt obligations held by the U.S.

Treasury within a reasonable time.

As of September 30, 2021, Farmer Mac had not used this borrowing authority.

As of March 31, 2022, Farmer Mac had not used this borrowing authority.

Gains on Repurchase of Outstanding Debt

During the three and nine months ended September 30, 2021, Farmer Mac repurchased $ 23.0 million of outstanding debt at a gain of $ 14,000 ;

no outstanding debt repurchases were made in the three and nine months ended September 30, 2020.

Preferred Stock

In May 2021, Farmer Mac issued 5.0 million shares of 4.875 % non-cumulative perpetual Series G

preferred stock, par value $ 25.00 per share.

Farmer Mac incurred direct costs of $ 3.7 million related to

the issuance of the Series G preferred stock.

The dividend rate on the Series G preferred stock will remain

at a non-cumulative, fixed rate of 4.875 % per year, when, as, and if a dividend is declared by the Board of

Directors of Farmer Mac, for so long as the Series G preferred stock remains outstanding.

preferred stock has no maturity date, but Farmer Mac has the option to redeem the preferred stock at any

time on any dividend payment date on and after July 17, 2026.

During each of the first, second, and third quarters in 2021, Farmer Mac paid a quarterly dividend of $ 0.88 per share on all classes of its common stock.

For each quarter in 2020, Farmer Mac paid a quarterly dividend of $ 0.80 per share on all classes of its common stock.

No outstanding debt repurchases were made in the three months ended March 31, 2022 and 2021.

During first quarter 2022, Farmer Mac paid a quarterly dividend of $ 0.95 per share on all classes of its common stock.

For each quarter in 2021, Farmer Mac paid a quarterly dividend of $ 0.88 per share on all

classes of its common stock.

Farmer Mac's board of directors approved a share repurchase program during third quarter 2015 authorizing Farmer Mac to repurchase up to $ 25.0 million of its outstanding Class C non-voting common stock.

The share repurchase program, last modified on March 14, 2019, authorized Farmer Mac to repurchase up to $ 10.0 million of Farmer Mac's outstanding Class C non-voting common stock.

The share repurchase program, last modified on March 14, 2019, authorized Farmer Mac to

repurchase up to $ 10.0 million of Farmer Mac's outstanding 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.

1 unchanged sentence

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.

Farmer Mac did no t repurchase any shares of its Class C non-voting common stock during the first nine months of 2021.

As of September 30, 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.

Farmer Mac did no t repurchase any shares of its Class C non-voting common stock during the first three months of 2022.

As of March 31, 2022, 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.

Capital Requirements

Farmer Mac is required to comply with the higher of the minimum capital requirement and the risk-based capital requirement.

As of both September 30, 2021 and December 31, 2020, the minimum capital

requirement was greater than the risk-based capital requirement.

As of both March 31, 2022 and December 31, 2021, the minimum capital requirement was greater than the risk-based capital requirement.

Farmer Mac's ability to declare and pay dividends could be restricted if it fails to comply with applicable capital requirements.

As of September 30, 2021, Farmer Mac's minimum capital requirement was $ 699.6 million and its core capital level was $ 1.2 billion, which was $ 479.5 million above the minimum capital requirement as of that date.

As of March 31, 2022, Farmer Mac's minimum capital requirement was $ 743.8 million and its core capital level was $ 1.2 billion, which was $ 488.7 million above the minimum capital requirement as of that date.

As of December 31, 2021, Farmer Mac's minimum capital requirement was $ 713.8 million and its core capital level was $ 1.2 billion, which was $ 486.8 million above the minimum capital requirement as of that date.

2 unchanged sentences

Fair Value Classification and Transfers

The following tables present information about Farmer Mac's assets and liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020, respectively, and indicate the fair value hierarchy of the valuation techniques used by Farmer Mac to determine such fair value:

Assets and Liabilities Measured at Fair Value as of September 30, 2021

The following tables present information about Farmer Mac's assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021, respectively, and indicate the fair value hierarchy of the valuation techniques used by Farmer Mac to determine such fair value:

Assets and Liabilities Measured at Fair Value as of March 31, 2022

Level 1 Level 2 Level 3 (1)

11 unchanged sentences

AgVantage — — 6,589,224 6,589,224

Farmer Mac Guaranteed Securities — — 11,022 11,022

Total Farmer Mac Guaranteed Securities — — 6,600,246 6,600,246

3 unchanged sentences

Financial derivatives 1,039 25,290 — 26,329

Guarantee Asset — — 6,138 6,138

Total Assets at fair value $ 1,391,615 $ 2,811,067 $ 6,628,731 $ 10,831,413

11 unchanged sentences

Floating rate auction-rate certificates backed by Government guaranteed student loans $ — $ — $ 19,254 $ 19,254

Floating rate asset-backed securities — 6,231 — 6,231

Floating rate Government/GSE guaranteed mortgage-backed securities — 2,178,831 — 2,178,831

6 unchanged sentences

AgVantage — — 6,316,145 6,316,145

Farmer Mac Guaranteed Securities — — 12,414 12,414

Total Farmer Mac Guaranteed Securities — — 6,328,559 6,328,559

3 unchanged sentences

Financial derivatives 73 19,066 — 19,139

Guarantee Asset — — 6,237 6,237

Total Assets at fair value $ 1,179,542 $ 2,656,734 $ 6,358,451 $ 10,194,727

1 unchanged sentence

Total Liabilities at fair value $ — $ 34,248 $ — $ 34,248

Non-recurring:

Mortgage Servicing Rights $ — $ — $ 2,681 $ 2,681

Total non-recurring assets at fair value $ — $ — $ 2,681 $ 2,681

(1) Level 3 assets represent 25 % of total assets and 62 % of financial instruments measured at fair value.

There were no significant assets or liabilities measured at fair value on a non-recurring basis as of September 30, 2021 or December 31, 2020.

There were no material assets or liabilities measured at fair value on a non-recurring basis as of March 31, 2022 or December 31, 2021.

Transfers in and/or out of the different levels within the fair value hierarchy are based on the fair values of the assets and liabilities as of the beginning of the reporting period.

During the nine months ended September 30, 2021 and 2020, there were no transfers within the fair value hierarchy for fair value measurements of Farmer Mac's investment securities, Farmer Mac Guaranteed Securities, USDA Securities, and financial derivatives.

During the three months ended March 31, 2022 and 2021, there were no transfers within the fair value hierarchy.

The following tables present additional information about assets and liabilities measured at fair value on a recurring basis for which Farmer Mac has used significant unobservable inputs to determine fair value.

Net transfers in and/or out of Level 3 are based on the fair values of the assets and liabilities as of the beginning of the reporting period.

There were no liabilities measured at fair value using significant unobservable inputs during the three and nine months ended September 30, 2021 and 2020.

Level 3 Assets and Liabilities Measured at Fair Value for the Three Months Ended September 30, 2021

There were no liabilities measured at fair value using significant unobservable inputs during the three months ended March 31, 2022 and 2021.

Level 3 Assets and Liabilities Measured at Fair Value for the Three Months Ended March 31, 2022

Beginning Balance Purchases Sales Settlements Allowance for Losses Realized and

unrealized gains/(losses) included

in Income Unrealized gains/(losses)

unrealized (losses)/gains included

in Income Unrealized gains

included in Other

9 unchanged sentences

AgVantage 6,316,145 832,750 — ( 295,284 ) ( 418 ) ( 210,587 ) ( 53,382 ) 6,589,224

Total available-for-sale 6,877,405 — — ( 708,882 ) ( 70 ) ( 31,462 ) 1,768 6,138,759

USDA Securities:

Trading 5,050 — — ( 294 ) — 37 — 4,793

Total USDA Securities 5,050 — — ( 294 ) 37 — 4,793

Total Assets at fair value $ 6,901,703 $ — $ — $ ( 709,176 ) $ ( 64 ) $ ( 31,425 ) $ 2,014 $ 6,163,052

Level 3 Assets and Liabilities Measured at Fair Value for the Three Months Ended September 30, 2020

Beginning Balance Purchases Sales Settlements Allowance for Losses Realized and

unrealized gains/(losses) included

in Income Unrealized gains/(losses)

included in Other

Comprehensive

Income Ending Balance

(in thousands)

Investment Securities:

Available-for-sale:

Floating rate auction-rate certificates backed by Government guaranteed student loans $ 18,283 $ — $ — $ — $ 1 $ — $ 788 $ 19,072

Total available-for-sale 18,283 — — — 1 — 788 19,072

Farmer Mac Guaranteed Securities 12,414 — — ( 379 ) — — ( 1,013 ) 11,022

Available-for-sale:

AgVantage 7,898,387 122,892 — ( 513,864 ) ( 96 ) ( 41,832 ) 46,151 7,511,638

Total available-for-sale 6,328,559 832,750 — ( 295,663 ) ( 418 ) ( 210,587 ) ( 54,395 ) 6,600,246

2 unchanged sentences

Total USDA Securities 4,401 — — ( 952 ) ( 63 ) — 3,386

Guarantee and commitment obligations:

Guarantee Asset 6,237 — — ( 255 ) — 156 — 6,138

Total Guarantee and commitment obligations 6,237 — — ( 255 ) — 156 — 6,138

Total Assets at fair value $ 6,358,451 $ 832,750 $ — $ ( 296,870 ) $ ( 416 ) $ ( 210,494 ) $ ( 54,690 ) $ 6,628,731

Level 3 Assets and Liabilities Measured at Fair Value for the Nine Months Ended September 30, 2021

Level 3 Assets and Liabilities Measured at Fair Value for the Three Months Ended March 31, 2021

Beginning Balance Purchases Sales Settlements Allowance for Losses Realized and

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Total Assets at fair value $ 6,973,567 $ 160,615 $ — $ ( 244,935 ) $ 157 $ ( 168,756 ) $ 67,285 $ 6,787,933

Level 3 Assets and Liabilities Measured at Fair Value for the Nine Months Ended September 30, 2020

Beginning Balance Purchases Sales Settlements Allowance for Losses Realized and

unrealized gains/(losses) included

in Income Unrealized gains/(losses)

included in Other

Comprehensive

Income Ending Balance

(in thousands)

Investment Securities:

Available-for-sale:

Floating rate auction-rate certificates backed by Government guaranteed student loans $ 18,912 $ — $ — $ — $ ( 37 ) $ — $ 197 $ 19,072

Total available-for-sale 18,912 — — — ( 37 ) — 197 19,072

Farmer Mac Guaranteed Securities:

Available-for-sale:

AgVantage 7,143,025 958,368 — ( 826,380 ) ( 330 ) 257,597 ( 20,642 ) 7,511,638

Total available-for-sale 7,143,025 958,368 — ( 826,380 ) ( 330 ) 257,597 ( 20,642 ) 7,511,638

USDA Securities:

Trading 8,913 — — ( 1,910 ) — ( 173 ) — 6,830

Total USDA Securities 8,913 — — ( 1,910 ) ( 173 ) — 6,830

Total Assets at fair value $ 7,170,850 $ 958,368 $ — $ ( 828,290 ) $ ( 367 ) $ 257,424 $ ( 20,445 ) $ 7,537,540

The following tables present additional information about the significant unobservable inputs, such as discount rates and constant prepayment rates ("CPR"), used in the fair value measurements categorized in Level 3 of the fair value hierarchy as of September 30, 2021 and December 31, 2020:

As of September 30, 2021

As of March 31, 2022

Financial Instruments Fair Value Valuation Technique Unobservable Input Range (Weighted-Average)

4 unchanged sentences

AgVantage $ 6,589,224 Discounted cash flow Discount rate 1.7 % - 3.2 % ( 2.9 %)

Farmer Mac Guaranteed Securities $ 11,022 Discounted cash flow Discount rate 3.4 % - 3.9 % ( 3.6 %)

USDA Securities $ 3,386 Discounted cash flow Discount rate 3.1 % - 4.7 % ( 4.4 %)

CPR 21 % - 33 % ( 31 %)

Guarantee Asset $ 6,138 Discounted cash flow Discount rate 3.9 % - 4.4 % ( 4.2 %)

As of December 31, 2021

5 unchanged sentences

AgVantage $ 6,316,145 Discounted cash flow Discount rate 0.9 % - 2.1 % ( 1.7 %)

Farmer Mac Guaranteed Securities $ 12,414 Discounted cash flow Discount rate 2.3 % - 2.8 % ( 2.6 %)

USDA Securities $ 4,401 Discounted cash flow Discount rate 1.4 % - 3.1 % ( 2.8 %)

CPR 25 % - 42 % ( 39 %)

Guarantee Asset $ 6,237 Discounted cash flow Discount rate 5.4 % - 5.8 % ( 5.6 %)

CPR 7 % - 12 % ( 8 %)

The significant unobservable input used in the fair value measurements of AgVantage Farmer Mac Guaranteed Securities is the discount rate commensurate with the risks involved.

2 unchanged sentences

Conversely, in a declining interest rate environment, Farmer Mac would expect average discount rates to decrease.

Prepayment rates are not presented in the table above for AgVantage securities because they generally have fixed maturity dates when the secured general obligations are due and do not prepay.

Prepayment rates are not presented in the table above for AgVantage

securities because they generally have fixed maturity dates when the secured general obligations are due and do not prepay.

The significant unobservable inputs used in the fair value measurements of USDA Securities are the prepayment rate and discount rate commensurate with the risks involved.

3 unchanged sentences

Disclosures on Fair Value of Financial Instruments

The following table sets forth the estimated fair values and carrying values for financial assets, liabilities, and guarantees and commitments as of September 30, 2021 and December 31, 2020:

As of September 30, 2021 As of December 31, 2020

The following table sets forth the estimated fair values and carrying values for financial assets, liabilities, and guarantees and commitments as of March 31, 2022 and December 31, 2021:

As of March 31, 2022 As of December 31, 2021

Fair Value Carrying

23 unchanged sentences

Financial derivatives primarily are valued using unadjusted counterparty valuations and are classified as Level 2.

The fair value of the guarantee fees receivable/obligation and debt securities of consolidated trusts are estimated based on the present value of expected future cash flows of the underlying mortgage assets using management's best estimate of certain key assumptions, which include prepayments speeds, forward yield curves, and discount rates commensurate with the risks involved and are classified as Level 3.

The fair value of the

guarantee fees receivable/obligation and debt securities of consolidated trusts are estimated based on the present value of expected future cash flows of the underlying mortgage assets using management's best estimate of certain key assumptions, which include prepayments speeds, forward yield curves, and discount rates commensurate with the risks involved and are classified as Level 3.

Notes payable are valued by discounting the expected cash flows of these instruments using a yield curve derived from market prices observed for similar agency securities and are also classified as Level 3.

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BUSINESS SEGMENT REPORTING

The following tables present core earnings for Farmer Mac's operating segments and a reconciliation to consolidated net income for the three and nine months ended September 30, 2021 and 2020:

The following table presents the alignment of the Farmer Mac's seven segments:

Agricultural Finance Rural Infrastructure Finance Treasury

Farm & Ranch Corporate AgFinance Rural Utilities Renewable Energy Funding Investments Corporate

The financial information presented below reflects the accounts of Farmer Mac and its subsidiaries on a

consolidated basis.

Accordingly, the core earnings for Farmer Mac's segments would differ from any stand-alone financial statements of Farmer Mac's subsidiaries.

These differences would be due to various factors, including the exclusion of unrealized gains and losses related to fair value changes of trading assets and financial derivatives, as well as the allocation of certain expenses such as operating expenses, dividends and interest expense related to the issuance of capital and the issuance of indebtedness managed at the corporate level.

The following tables present core earnings for Farmer Mac's segments and a reconciliation to consolidated net income for the three months ended March 31, 2022 and 2021.

The amounts for the three months ended March 31, 2021 have been revised to conform to the current year's segment alignment.

Core Earnings by Business Segment

For the Three Months Ended September 30, 2021

Farm & Ranch USDA Guarantees Rural

Institutional Credit Corporate Reconciling

For the Three Months Ended March 31, 2022

Agricultural Finance Rural Infrastructure Treasury Corporate

Farm & Ranch Corporate AgFinance Rural

Renewable Energy Funding Investments Reconciling

Adjustments Consolidated Net Income

5 unchanged sentences

Guarantee and commitment fees 4,216 19 286 36 — — — ( 862 ) 3,695

3,831 166 320 5 — ( 1,167 ) 3,155

Other income/(expense) (3)

400 114 — — — — — 16,172 16,686

Non-interest income/(loss) 4,236 318 322 5 128 ( 3,329 ) 1,680

Total revenues 34,970 7,342 3,445 411 16,738 4 — 19,346 82,256

(Provision for)/release of losses ( 510 ) ( 515 ) 1,169 ( 202 ) — 2 — — ( 56 )

Release of reserve for losses 75 — 35 — — — — — 110

Other non-interest expense ( 6,275 ) ( 2,284 ) ( 1,889 ) ( 2,514 ) ( 4,145 ) — ( 17,107 )

Non-interest expense (4)

( 6,184 ) ( 2,284 ) ( 1,869 ) ( 2,514 ) ( 4,145 ) — ( 16,996 )

Core earnings before income taxes 22,005 4,881 5,037 12,772 ( 1,123 ) ( 4,249 ) (5)

Income tax (expense)/benefit ( 4,621 ) ( 1,025 ) ( 1,058 ) ( 2,682 ) 234 892 ( 8,260 )

Core earnings before preferred stock dividends 17,384 3,856 3,979 10,090 ( 889 ) ( 3,357 ) (5)

Preferred stock dividends — — — — ( 6,774 ) — ( 6,774 )

Segment core earnings/(losses) $ 17,384 $ 3,856 $ 3,979 $ 10,090 $ ( 7,663 ) $ ( 3,357 ) (5)

Total assets at carrying value $ 6,883,879 $ 2,522,382 $ 2,249,071 $ 8,395,286 $ 4,693,750 $ — $ 24,744,368

Total on- and off-balance sheet program assets at principal balance $ 9,445,359 $ 2,722,702 $ 2,817,427 $ 8,133,303 $ — $ — $ 23,118,791

(1) Includes the amortization of premiums and discounts on assets consolidated at fair value, originally included in interest income, to reflect core earnings amounts.

(2) Includes the reclassification of interest income and interest expense from consolidated trusts owned by third parties to guarantee and commitment fees, to reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee.

(3) Includes the reclassification of interest expense related to interest rate swaps not designated as hedges, which are included in "Losses on financial derivatives" on the consolidated financial statements, to determine the effective funding cost for each operating segment.

(4) Includes directly attributable costs and an allocation of indirectly attributable costs based on employee headcount.

(5) Net adjustments to reconcile to the corresponding income measures:

core earnings before income taxes reconciled to income before income taxes;

core earnings before preferred stock dividends reconciled to net income;

and segment core earnings reconciled to net income attributable to common stockholders.

Core Earnings by Business Segment

For the Three Months Ended September 30, 2020

Farm & Ranch USDA Guarantees Rural

Utilities Institutional Credit Corporate Reconciling

Consolidated Net Income

(in thousands)

Net interest income $ 18,093 $ 4,747 $ 5,709 $ 14,171 $ 1,941 $ — $ 44,661

reconciling adjustments (1)(2)(3)

( 68 ) 1,118 1,230 4,430 431 ( 7,141 ) —

Net effective spread 18,025 5,865 6,939 18,601 2,372 ( 7,141 ) —

Guarantee and commitment fees (2)

4,111 213 328 7 — ( 1,500 ) 3,159

Other income/(expense) (3)

443 135 — — ( 125 ) ( 681 ) ( 228 )

Non-interest income/(loss) 4,554 348 328 7 ( 125 ) ( 2,181 ) 2,931

Release of/(provision for) losses 300 — ( 1,182 ) 228 1 — ( 653 )

(Provision for)/release of reserve for losses ( 628 ) — 81 — — — ( 547 )

Other non-interest expense ( 5,381 ) ( 1,643 ) ( 1,438 ) ( 2,160 ) ( 3,938 ) — ( 14,560 )

Non-interest expense (4)

( 6,009 ) ( 1,643 ) ( 1,357 ) ( 2,160 ) ( 3,938 ) — ( 15,107 )

Operating expenses — — — — — — ( 21,388 ) — ( 21,388 )

Total non-interest expense 75 — 35 — — — ( 21,388 ) — ( 21,278 )

Core earnings before income taxes 34,535 6,827 4,649 209 16,738 6 ( 21,388 ) 19,346 (4)

2 unchanged sentences

Preferred stock dividends — — — — — — ( 6,791 ) — ( 6,791 )

Loss on retirement of preferred stock — — — — — ( 1,667 ) ( 1,667 )

Segment core earnings/(losses) $ 27,283 $ 5,393 $ 3,673 $ 165 $ 13,223 $ 5 $ ( 23,981 ) $ 15,285 (4)

Total assets at carrying value $ 5,961,307 $ 2,487,687 $ 2,256,011 $ 8,716,923 $ 4,576,909 $ — $ 23,998,837

Total Assets $ 13,610,138 $ 1,491,127 $ 5,480,668 $ 92,132 $ — $ 4,995,154 $ 120,195 $ — 25,789,414

Total on- and off-balance sheet program assets at principal balance $ 16,575,595 $ 1,540,760 $ 6,006,446 $ 120,609 $ — $ — $ — $ — 24,243,410

1 unchanged sentence

(4) Includes directly attributable costs and an allocation of indirectly attributable costs based on employee headcount.

(3) Includes the reclassification of interest expense related to interest rate swaps not designated as hedges, which are included in "Gains on financial derivatives" on the consolidated financial statements, to determine the effective funding cost for each operating segment.

(4) Net adjustments to reconcile to the corresponding income measures:

3 unchanged sentences

Core Earnings by Business Segment

For the Nine Months Ended September 30, 2021

Farm & Ranch USDA Guarantees Rural

Institutional Credit Corporate Reconciling

For the Three Months Ended March 31, 2021

Agricultural Finance Rural Infrastructure Treasury Corporate

Farm & Ranch Corporate AgFinance Rural

Renewable Energy Funding Investments Reconciling

Adjustments Consolidated Net Income

5 unchanged sentences

Guarantee and commitment fees 3,908 8 319 5 — — — ( 1,210 ) 3,030

11,403 522 956 15 — ( 3,714 ) 9,182

Other income/(expense) (3)

572 — 1 — — — ( 122 ) 4,412 4,863

Non-interest income/(loss) 12,521 963 959 15 ( 123 ) ( 4,458 ) 9,877

Release of/(provision for) losses 239 — ( 701 ) ( 40 ) ( 16 ) — ( 518 )

Release of reserve for losses 994 — 283 — — — 1,277

Other non-interest expense ( 18,679 ) ( 7,080 ) ( 5,784 ) ( 7,420 ) ( 13,903 ) — ( 52,866 )

Non-interest expense (4)

( 17,685 ) ( 7,080 ) ( 5,501 ) ( 7,420 ) ( 13,903 ) — ( 51,589 )

Core earnings before income taxes 64,874 14,079 14,510 40,718 ( 5,618 ) ( 7,408 ) (5)

Income tax (expense)/benefit ( 13,623 ) ( 2,957 ) ( 3,047 ) ( 8,551 ) 1,043 1,556 ( 25,579 )

Core earnings before preferred stock dividends 51,251 11,122 11,463 32,167 ( 4,575 ) ( 5,852 ) (5)

Preferred stock dividends — — — — ( 17,885 ) — ( 17,885 )

Segment core earnings/(losses) $ 51,251 $ 11,122 $ 11,463 $ 32,167 $ ( 22,460 ) $ ( 5,852 ) (5)