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Item 7. Management’s Discussion and Analysis

2025-02-21 compared with 2024-02-23 · 448 added, 381 removed, 1122 unchanged (42% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The objective of this section of the report is to provide a discussion and analysis, from management’s

perspective, of the material information necessary to assess Farmer Mac's financial condition and results

of operations for the year ended December 31, 2023.

Financial information included in this report is

consolidated to include the accounts of Farmer Mac and its two subsidiaries – Farmer Mac Mortgage

The objective of this section of the report is to provide a discussion and analysis, from management’s perspective, of the material information necessary to assess Farmer Mac's financial condition and results of operations for the year ended December 31, 2024.

Financial information included in this report is consolidated to include the accounts of Farmer Mac and its two subsidiaries – Farmer Mac Mortgage

Securities Corporation and Farmer Mac II LLC.

This discussion and analysis of financial condition and

results of operations should be read together with Farmer Mac's consolidated financial statements and the

related notes to the consolidated financial statements for the fiscal years ended December 31, 2023, 2022, and 2021.

Farmer Mac is a mission-focused, purpose-driven company determined to drive economic opportunity and prosperity by increasing the accessibility of financing for American agriculture and rural infrastructure.

As the nation’s secondary market for agricultural and rural infrastructure loans, we help strengthen and connect rural America by providing a broad array of financial solutions to lenders that support flexible low-cost financing to farmers, ranchers, agribusinesses, renewable energy projects, rural utilities (including telecommunications, fiber, and broadband projects), and other related rural businesses and enterprises.

Farmer Mac also serves as a critical investment tool for entities such as states, counties, municipalities, pension funds, banks, public trust funds, and credit unions.

Farmer Mac offers those entities a variety of investment opportunities that may diversify their investment portfolios and provide the opportunity to earn a competitive return on their investment dollars.

• we continued to increase net income and core earnings;

• we maintained strong liquidity in our investment portfolio well above regulatory requirements;

• we maintained our strong capital position, well above regulatory requirements, and uninterrupted access to the debt capital markets, which historically have not been subject to the same short-term disruptions and liquidity concerns experienced by institutions that rely primarily on deposits to fund their assets;

• we provided $8.3 billion in liquidity and lending capacity to lenders serving rural America.

Farmer Mac’s performance during 2023, described in more detail below, reflects the success of our continued focus on pursuing new channels and innovative ways to further our mission to increase the accessibility of financing for American agriculture and rural infrastructure.

Despite recent macroeconomic concerns such as inflation, failures and liquidity concerns in the banking industry, rising interest rates, and geopolitical conflicts, Farmer Mac continued to deliver solid financial results.

These financial results for 2023 reflected a variety of factors, including:

• our disciplined approach to interest rate risk management that helps to protect earnings from the effects of interest rate volatility and has been accretive to Farmer Mac during periods of rising interest rates;

• effective capital strategies that resulted in advantageous funding in an elevated interest rate environment in the current period;

• an increase in outstanding business volume at higher spreads while credit quality improved;

• the resilience of the farm economy, as producers had benefited from healthy farm incomes and liquidity from relatively high commodity prices in 2021 and 2022.

This discussion and analysis of financial condition and results of operations should be read together with Farmer Mac's consolidated financial statements and the related notes to the consolidated financial statements for the fiscal year ended December 31, 2024, 2023, and 2022.

Farmer Mac is driven by its mission to increase the accessibility of financing to provide vital liquidity for American agriculture and infrastructure.

Our secondary market provides liquidity to our nation's agricultural and infrastructure businesses, supporting a vibrant and strong rural America.

We offer a wide range of solutions to help meet financial institutions’ growth, liquidity, risk management, and capital relief needs across diverse markets, including agriculture, agribusiness, broadband infrastructure, power and utilities, and renewable energy.

We are uniquely positioned to facilitate competitive access to financing that fuels growth, innovation, and prosperity in America's rural and agricultural communities.

Farmer Mac also serves as a critical investment tool for a number of entities – such as states, counties, municipalities, pension funds, banks, public trust funds, and credit unions – by offering investment opportunities that may diversify their investment portfolios and provide possibilities to earn a competitive return on their investment dollars.

During 2024, Farmer Mac:

• provided $7.0 billion in liquidity and lending capacity to lenders serving rural America;

• issued over $0.6 billion in FARM securitization certificates;

• maintained strong liquidity in our investment portfolio well above regulatory requirements;

• maintained our strong capital position, well above regulatory requirements, and uninterrupted access to the debt capital markets;

• redeemed all $75.0 million of our Series C Preferred Stock.

The discussion below of Farmer Mac's financial information includes "non-GAAP measures," which are measures of financial performance not presented in accordance with generally accepted accounting principles in the United States ("GAAP").

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Core earnings 171,630 171,156 124,314

The $21.9 million year-over-year increase in net income attributable to common stockholders was due to a $44.7 million after-tax increase in net interest income and a $2.9 million after-tax increase in guarantee fees.

The $7.6 million year-over-year increase in net income attributable to common stockholders was primarily attributable to a $20.8 million after-tax increase in net interest income, a $2.6 million federal income tax benefit from the purchase of renewable energy investment tax credits, and a $2.0 million decrease in preferred stock dividends.

These factors were partially offset by an $8.2 million after-tax increase in the provision for credit losses, a $6.6 million after-tax increase in operating expenses, and the $1.6 million loss on retirement of the Series C Preferred Stock related to deferred issuance costs.

The $21.9 million year-over-year increase in net income attributable to common stockholders for 2023 compared to 2022 was due to a $44.7 million after-tax increase in net interest income and a $2.9 million after-tax increase in guarantee fees.

These factors were partially offset by a $15.6 million after-tax decrease in the fair value of undesignated financial derivatives and a $12.1 million after-tax increase in operating expenses.

The $39.6 million year-over-year increase in net income attributable to common stockholders for 2022 compared to 2021 was due to a $38.7 million after-tax increase in net interest income and a $17.6 million after-tax increase in the fair value of undesignated financial derivatives.

These factors were partially offset by a $5.2 million after-tax decrease related to the non-recurrence of the gain on the sale of mortgage loans that occurred in the prior period, a $6.6 million increase in operating expenses, a $2.5 million increase in preferred stock dividends, and a $2.4 million increase in our provision for credit losses.

The $46.8 million year-over-year increase in core earnings was due to a $56.4 million after-tax increase in net effective spread, partially offset by a $12.1 million after-tax increase in operating expenses.

The $10.7 million year-over-year increase in core earnings for 2022 compared to 2021 was due to a $27.5 million after-tax increase in net effective spread.

This factor was partially offset by a $5.2 million after-tax decrease related to the non-recurrence of the gain on the sale of mortgage loans that occurred in the prior period, a $6.6 million increase in operating expenses, a $2.5 million increase in preferred stock dividends, and a $2.4 million increase in our provision for credit losses.

The $0.5 million year-over-year increase in core earnings was primarily attributable to a $9.9 million after-tax increase in net effective spread, a $2.6 million federal income tax benefit from the purchase of renewable energy investment tax credits, a $2.0 million decrease in preferred stock dividends, and a $1.1 million after-tax increase in guarantee and commitment fees.

These factors were partially offset by an $8.2 million after-tax increase in the provision for credit losses and a $6.6 million after-tax increase in operating expenses.

The $46.8 million year-over-year increase in core earnings for 2023 compared to 2022 was due to a $56.4 million after-tax increase in net effective spread, partially offset by a $12.1 million after-tax increase in operating expenses.

For more information about net income attributable to common stockholders, the composition of core earnings, and a reconciliation of net income attributable to common stockholders to core earnings, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations." For more information about the non-GAAP measures Farmer Mac uses, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures."

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Net effective spread % 1.15 % 1.18 % 1.02 %

The $56.6 million year-over-year increase in net interest income was primarily due to a $48.9 million decrease in funding costs and a $19.9 million increase related to net new business volume.

The $26.3 million year-over-year increase in net interest income was primarily due to an increase of $20.2 million from the shift in the composition of new business volume toward higher yielding loans and a $16.9 million increase in the fair value of derivatives designated in fair value hedge accounting relationships (designated financial derivatives).

That increased yield was partially offset by a $6.6 million decrease in cash-basis interest income and a $4.6 million increase in funding costs.

In percentage terms, the year-over-year increase was 0.01%.

The $56.6 million year-over-year increase in net interest income for 2023 compared to 2022 was primarily due to a $48.9 million decrease in funding costs and a $19.9 million increase related to net new business volume.

The decrease in funding costs was primarily due to our disciplined funding strategies and higher nominal interest rates that have led to an upward repricing of our excess long-term capital that we raised when interest rates were at historical lows and is held in our investment portfolio.

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In percentage terms, the 0.11% increase was primarily attributable to a decrease of 0.16% in funding costs and a decrease of 0.04% in net fair value changes from designated financial derivatives.

The $49.0 million year-over-year increase in net interest income for 2022 compared to 2021 was primarily attributable to a $21.9 million increase from net new business volume and a $21.4 million decrease in funding costs, due to increasing yields on interest-earning assets on our short-term investments that are funded by non-interest bearing excess equity, and a $6.1 million increase in the fair value of designated financial derivatives.

In percentage terms, the year-over-year 0.10% increase was primarily attributable to a decrease of 0.08% in funding costs and an increase of 0.02% in net fair value changes from financial derivatives designated in hedge accounting relationships (designated financial derivatives).

The $71.5 million year-over-year increase in net effective spread was primarily due to a $54.6 million decrease in non-GAAP funding costs, due to the same factors mentioned above that decreased our funding costs, and a $20.6 million increase related to net new business volume.

In percentage terms, the year-over-year increase of 0.16% was primarily attributable to a decrease in non-GAAP funding costs.

The $34.9 million year-over-year increase in net effective spread in dollars for 2022 compared to 2021 was primarily due to a $23.6 million increase from net new business volume, a $7.7 million decrease in non-GAAP funding costs, due to increasing yields on interest-earning assets on our short-term investments that are funded by non-interest bearing excess equity, a $2.4 million increase in net servicing revenue, and a $0.9 million increase in cash-basis interest income.

In percentage terms, the year-over-year increase of 0.04% was primarily attributable to a decrease of 0.03% in non-GAAP funding costs and an increase of 0.01% in cash-basis interest income.

The $12.6 million year-over-year increase in net effective spread was primarily due to a $20.2 million increase from a shift in the composition of new business volume towards higher-yielding loans.

This factor was partially offset by a $6.6 million decrease in cash-basis interest income and a $1.3 million increase in funding costs.

In percentage terms, the year-over-year decrease of 0.03% was primarily attributable to an increase of 0.04% related to the increases in funding costs and a decrease of 0.02% in cash-basis interest income, which were partially offset by an increase of 0.03% on the shift in the composition of new business volume towards higher-yielding loans.

The $71.5 million year-over-year increase in net effective spread for 2023 compared to 2022 was primarily due to a $54.6 million decrease in funding costs, due to the same factors mentioned above that decreased our funding costs, and a $20.6 million increase related to net new business volume.

In percentage terms, the year-over-year increase of 0.16% was primarily attributable to a decrease in funding costs.

For more information about Farmer Mac's use of net effective spread as a financial measure, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures." For a reconciliation of net interest income to net effective spread, see Table 10 in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Net Interest Income."

Business Volume

Our outstanding business volume was $28.5 billion as of December 31, 2023, a net increase of $2.5 billion from December 31, 2022 after taking into account all new business, maturities, and paydowns on existing assets.

The net increase was primarily attributable to a net increase of $1.4 billion in the Rural Infrastructure Finance line of business and a net increase of $1.2 billion in the Agricultural Finance line of business.

Our outstanding business volume was $29.5 billion as of December 31, 2024, a net increase of $1.1 billion from December 31, 2023 after taking into account all new business, maturities, sales, and paydowns on existing assets.

The net increase was primarily attributable to a net increase of $1.1 billion in the Infrastructure Finance line of business.

For more information about Farmer Mac's business volume, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Business Volume."

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Capital in excess of minimum capital level required 583,527 589,399

The increase in capital in excess of the minimum capital level required was primarily due to an increase in retained earnings.

The decrease in capital in excess of the minimum capital level required was primarily due to the redemption of the Series C Preferred Stock, partially offset by an increase in retained earnings.

Credit Quality

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Increase/(decrease) from prior year-ending 214,147 2.2 % (1,846) (0.1) %

The decrease of $16.8 million in on-balance sheet substandard assets during 2023 was primarily driven by the full payoff of a substandard agricultural storage and processing loan.

The $6.6 million decrease in substandard assets in our off-balance sheet portfolios during 2023 was primarily due to credit upgrades in livestock and crops, and was partially offset by credit downgrades in permanent plantings and part-time farms.

There was one substandard asset with an outstanding balance of $29.4 million in the Rural Infrastructure Finance portfolio as of December 31, 2023, and there were no substandard assets as of December 31, 2022.

The increase of $214.1 million in on-balance sheet substandard assets during 2024 was primarily driven by credit downgrades in permanent plantings, crops, livestock, part-time farms, and agricultural storage and processing.

There were two substandard assets with a cumulative outstanding balance of $42.5 million in the Infrastructure Finance portfolio as of December 31, 2024.

There was one substandard asset with an outstanding balance of $29.4 million in the Infrastructure Finance portfolio as of December 31, 2023.

For an analysis of current loan-to-value ratios across substandard and other internally assigned risk ratings, see Table 25 in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk—Loans and Guarantees."

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Increase/(decrease) from prior year-ending 68,447 0.73 % 5,820 0.17 %

On-balance sheet Agricultural Finance assets 90 or more days delinquent decreased in agricultural storage and processing and was partially offset by increases in permanent plantings, crops, livestock, and part-time farms.

Off-balance sheet Agricultural Finance assets 90 days or more delinquent decreased in permanent plantings and livestock and was partially offset by increases in crops and part-time farms.

On-balance sheet Agricultural Finance assets 90 or more days delinquent increased in permanent plantings, crops, livestock, and part-time farms.

Off-balance sheet Agricultural Finance assets 90 days or more delinquent increased in permanent plantings and crops.

The top ten borrower exposures over 90 days delinquent in either the on- or off-balance sheet Agricultural Finance portfolio represented over half of the aggregate 90-day delinquencies as of December 31, 2024.

As of both December 31, 2023 and 2022, there were no 90-day delinquencies in Farmer Mac's portfolio of Rural Infrastructure Finance loan purchases and loans underlying LTSPCs.

As of both December 31, 2024 and 2023, there were no 90-day delinquencies in Farmer Mac's portfolio of Infrastructure Finance loan purchases and loans underlying LTSPCs.

For more information about Farmer Mac's credit metrics, including 90-day delinquencies, the total allowance for losses, and substandard assets, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk—Loans and Guarantees."

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The accounting estimate that Farmer Mac considers to be critical in the preparation of its consolidated financial statements is the estimation of the fair value of AgVantage Securities (AgVantage).

Farmer Mac considers the fair value of AgVantage Securities that are classified as held-to-maturity (AgVantage HTM) because of their impact on the company's fair value disclosures in Note 5 to the consolidated financial statements – Farmer Mac Guaranteed Securities and USDA Securities and Note 13 to the consolidated financial statements – Fair Value Disclosures.

Farmer Mac considers the fair value of AgVantage Securities that are classified as held-to-maturity (AgVantage HTM) to be a critical estimate because of their impact on the company's fair value disclosures in Note 5 to the consolidated financial statements – Farmer Mac Guaranteed Securities and USDA Securities and Note 13 to the consolidated financial statements – Fair Value Disclosures.

Farmer Mac considers the fair value of AgVantage Securities that are classified as available-for-sale (AgVantage AFS) to be a critical estimate due to the significance of the periodic measurement of mark-to-market adjustments relative to the company's total assets, comprehensive income, and equity.

Farmer Mac also considers the fair value of AgVantage to be a critical accounting estimate because Farmer Mac applies a discount rate in calculating the net present value of future expected cash flows that is both significant to the estimate of their fair value and

unobservable in the market.

Farmer Mac also considers the fair value of AgVantage to be a critical accounting estimate because Farmer Mac applies a discount rate in calculating

the net present value of future expected cash flows that is both significant to the estimate of their fair value and unobservable in the market.

Farmer Mac relies upon this significant unobservable input to estimate the fair value of AgVantage because there are no observable transactions in these securities in the market.

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See Note 5 to the consolidated financial statements – Farmer Mac Guaranteed Securities and USDA Securities for more information.

Farmer Mac's AgVantage AFS fair value was $5.5 billion and $7.6 billion as of December 31, 2023 and 2022, respectively.

Farmer Mac's AgVantage AFS fair value was $5.5 billion as of both December 31, 2024 and 2023.

The fair value of AgVantage AFS had accumulated net unrealized losses in the amount of $321.2 million and $293.0 million as of December 31, 2024 and 2023, respectively.

See Note 5 to the consolidated financial statements – Farmer Mac Guaranteed Securities and USDA Securities for more information.

Farmer Mac applies discount rates that are commensurate with the risks involved to estimate the fair value measurement of AgVantage AFS.

As of December 31, 2023, Farmer Mac applied discount rates that ranged from 4.7% to 5.4% (with a weighted average of 5.0%).

As of December 31, 2022, Farmer Mac applied discount rates that ranged from 4.7% to 6.1% (with a weighted average of 5.1%).

Use of different discount rates than those selected by Farmer Mac may result in materially different estimates of fair value for AgVantage AFS.

Farmer Mac selects the discount rate for each AgVantage AFS security by analyzing credit default swap levels and the long-term credit outlook of Farmer Mac's major counterparties and estimating an appropriate credit spread relative to U.S.

Farmer Mac applies discount rates that are commensurate with the risks involved to estimate the fair value measurement of both AgVantage AFS and HTM.

As of December 31, 2024, Farmer Mac applied discount rates that ranged from 5.0% to 5.5% (with a weighted average of 5.1%) for AgVantage AFS and 5.0% to 6.8% (with a weighted average of 5.3%) for AgVantage HTM.

As of December 31, 2023, Farmer Mac applied discount rates that ranged from 4.7% to 5.4% (with a weighted average of 5.0%) for AgVantage AFS and 4.8% to 8.6% (with a weighted average of 5.5%) for AgVantage HTM.

Use of different discount rates than those selected by Farmer Mac may result in materially different estimates of fair value for AgVantage AFS and HTM.

Farmer Mac selects the discount rate for each AgVantage AFS and HTM security by analyzing credit default swap levels and the long-term credit outlook of Farmer Mac's major counterparties and estimating an appropriate credit spread relative to U.S.

Treasury yields.

The periodic measurement of fair value and underlying discount rate methodology is subject to Farmer Mac’s internal controls and review by management.

As of December 31, 2023, a 0.50% increase in the discount rates used to determine the fair value of AgVantage AFS would decrease the overall GAAP carrying value by approximately 2.01%.

As of December 31, 2024, a 0.50% increase in the discount rates used to determine the fair value of AgVantage AFS and HTM would decrease the overall GAAP carrying value by approximately 1.8% and 1.3%, respectively.

See Note 13 to the consolidated financial statements – Fair Value Disclosures for more information.

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The non-GAAP financial measures that Farmer Mac uses may not be comparable to similarly labeled non-GAAP financial measures disclosed by other companies.

Farmer Mac's disclosure of these non-GAAP measures is intended to be supplemental in nature and is not meant to be considered in isolation from, as a substitute for, or as more important than, the related financial information prepared in accordance with GAAP.

Farmer Mac's disclosure of these non-GAAP measures is intended to be supplemental in nature and is not meant to be considered in isolation from, as a

substitute for, or as more important than, the related financial information prepared in accordance with GAAP.

Core Earnings and Core Earnings Per Share

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Another difference is that these two non-GAAP measures exclude specified infrequent or unusual transactions that we believe are not indicative of future operating results and that may not reflect the trends and economic financial performance of Farmer Mac's core business.

For example, in prior periods, we excluded any losses on retirement of preferred stock from core earnings and core earnings per share.

Similar transactions may reoccur in future periods.

For example, in third quarter 2024, we excluded the loss on the retirement of the Series C Preferred Stock from core earnings and core earnings per share, which is consistent with Farmer Mac's historical treatment of any losses on the retirement of preferred stock.

For a reconciliation of Farmer Mac's net income attributable to common stockholders to core earnings and of earnings per common share to core earnings per share, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations."

Net Effective Spread

Farmer Mac uses net effective spread to measure the net spread Farmer Mac earns between its interest-earning assets and the related net funding costs of these assets.

Farmer Mac uses net effective spread to measure the net spread Farmer Mac earns between its interest-earning assets and the related net funding costs of those assets.

As further explained below, net effective spread differs from net interest income and net interest yield by excluding certain items from net interest income and net interest yield and including certain other items that net interest income and net interest yield do not contain.

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For undesignated financial derivatives, Farmer Mac records the income or expense related to the accrual of the contractual amounts due in "Gains on financial derivatives" on the consolidated statements of operations.

However, the accrual of the contractual amounts due for undesignated financial derivatives are included in Farmer Mac's calculation of net effective spread.

However, the accrual

of the contractual amounts due for undesignated financial derivatives are included in Farmer Mac's calculation of net effective spread.

Net effective spread also differs from net interest income and net interest yield because it includes the net effects of terminations or net settlements on financial derivatives, which consist of:

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Less reconciling items:

Gains/(losses) on undesignated financial derivatives due to fair value changes (see Table 13)

Gains on undesignated financial derivatives due to fair value changes (see Table 13)

3,344 5,142 13,495

(Losses)/gains on hedging activities due to fair value changes (5,394) 5,343 (1,810)

Unrealized gains/(losses) on trading securities 1,979 (917) (115)

Gains/(losses) on hedging activities due to fair value changes

11,548 (5,394) 5,343

Unrealized (losses)/gains on trading securities

(85) 1,979 (917)

Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value 45 175 39

Net effects of terminations or net settlements on financial derivatives (1,666) 227 15,794

Issuance costs on the retirement of preferred stock (1,619) — —

Income tax effect related to reconciling items (2,769) (447) (7,089)

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20,321 18,928 18,144

Gains on sale of mortgage loans — — 6,539

Gain on sale of investment securities (GAAP)

Loss on sale of mortgage loan (GAAP)

2,200 3,299 1,684

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Credit related expense (GAAP):

Provision for/(release of) losses 1,136 806 (2,187)

Provision for losses

11,490 1,136 806

REO operating expenses 196 — 819

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Less reconciling items:

Gains/(losses) on undesignated financial derivatives due to fair value changes (see Table 13)

Gains on undesignated financial derivatives due to fair value changes (see Table 13)

0.31 0.49 1.25

(Losses)/gains on hedging activities due to fair value changes

Gains/(losses) on hedging activities due to fair value changes

1.06 (0.50) 0.50

Unrealized gains/(losses) on trading securities

Unrealized (losses)/gains on trading securities

(0.01) 0.18 (0.08)

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Net effects of terminations or net settlements on financial derivatives (0.15) 0.02 1.47

Issuance costs on the retirement of preferred stock (0.15) — —

Income tax effect related to reconciling items (0.25) (0.04) (0.66)

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Less reconciling items:

Gains/(losses) on undesignated financial derivatives due to fair value changes (see Table 13)

Gains on undesignated financial derivatives due to fair value changes (see Table 13)

0.30 0.47 1.24

(Losses)/gains on hedging activities due to fair value changes

Gains/(losses) on hedging activities due to fair value changes

1.05 (0.49) 0.49

Unrealized gains/(losses) on trading securities

Unrealized (losses)/gains on trading securities

(0.01) 0.18 (0.08)

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Net effects of terminations or net settlements on financial derivatives (0.14) 0.02 1.45

Issuance costs on the retirement of preferred stock (0.15) — —

Income tax effect related to reconciling items (0.25) (0.04) (0.65)

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The non-GAAP reconciling items between net income attributable to common stockholders and core earnings are:

Gains/(losses) on financial derivatives due to fair value changes are presented by two reconciling items in Table 6 above:

(a) Gains/(losses) on undesignated financial derivatives due to fair value changes;

and (b) (Losses)/gains on hedging activities due to fair value changes.

Unrealized gains/(losses) on trading securities.

The unrealized gains/(losses) on trading securities are reported on Farmer Mac's consolidated statements of operations, which represent changes during the period in fair values for trading assets remaining on Farmer Mac's balance sheet as of the end of the reporting period.

Gains on financial derivatives due to fair value changes are presented by two reconciling items in Table 6 above:

(a) Gains on undesignated financial derivatives due to fair value changes;

and (b) Gains/(losses) on hedging activities due to fair value changes.

Unrealized (losses)/gains on trading securities.

The unrealized (losses)/gains on trading securities are reported on Farmer Mac's consolidated statements of operations, which represent changes during the period in fair values for trading assets remaining on Farmer Mac's balance sheet as of the end of the reporting period.

The net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value.

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For core earnings purposes, these realized gains or losses are deferred and amortized as net yield adjustments over the term of the related debt, which generally ranges from 3 to 15 years.

The recognition of deferred issuance costs on the retirement of the Series C Preferred Stock in July 2024 has been excluded from core earnings because they are not frequently occurring transactions, nor are they indicative of future operating results.

This is consistent with Farmer Mac's previous treatment of deferred issuance costs associated with the retirement of preferred stock.

The following sections provide more detail about specific components of Farmer Mac's results of operations.

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The interest income and expense associated with these trusts are shown in the net effect of consolidated trusts.

For the Year Ended

For the Years Ended

December 31, 2024 December 31, 2023 December 31, 2022

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(4) Includes the effect of consolidated trusts with beneficial interests owned by third parties (single-class).

The $56.6 million year-over-year increase in net interest income was primarily due to a $48.9 million decrease in funding costs and a $19.9 million increase related to net new business volume.

That increased yield was partially offset by a $6.6 million decrease in cash-basis interest income and a $4.6 million increase in funding costs.

In percentage terms, the year-over-year increase was 0.01%.

For 2023 compared to 2022, the $56.6 million year-over-year increase in net interest income was primarily due to a $48.9 million decrease in funding costs and a $19.9 million increase related to net new business volume.

The decrease in funding costs was due to our disciplined funding strategies and higher nominal interest rates that have led to an upward repricing of our excess long-term capital that we raised when interest rates were at historical lows and is held in our investment portfolio.

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In percentage terms, the 0.11% increase was primarily attributable to a decrease of 0.16% in funding costs and a decrease of 0.04% in net fair value changes from designated financial derivatives.

For 2022 compared to 2021, the $49.0 million year-over-year increase in net interest income was primarily attributable to a $21.9 million increase from net new business volume, a $21.4 million decrease in funding costs due to increasing yields on interest-earning assets on our short-term investments that are funded by non-interest bearing excess equity, and a $6.1 million increase in the fair value of designated financial derivatives.

The following table sets forth information about changes in the components of Farmer Mac's net interest income prior to consolidation of certain trusts for the periods indicated.

For each category, information is provided on changes attributable to changes in volume (change in volume multiplied by prior rate), and

changes in rate (change in rate multiplied by old volume), and then allocated based on the relative size of rate and volume changes from the prior period.

For each category, information is provided on changes attributable to changes in volume (change in volume multiplied by prior rate), and changes in rate (change in rate multiplied by old volume), and then allocated based on the relative size of rate and volume changes from the prior period.

2023 2023 vs.

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Net effective spread $ 339,564 1.15 % $ 326,980 1.18 % $ 255,529 1.02 %

The $71.5 million year-over-year increase in net effective spread was primarily due to a $54.6 million decrease in non-GAAP funding costs, due to our disciplined funding strategies and higher nominal interest rates that have led to an upward repricing of our excess capital that is held in our short-term investment

portfolio, and a $20.6 million increase related to net new business volume.

In percentage terms, the year-over-year increase of 0.16% was primarily attributable to a decrease in non-GAAP funding costs.

For 2022 compared to 2021, the $34.9 million year-over-year increase in net effective spread in dollars was primarily due to a $23.6 million increase from net new business volume, a $7.7 million decrease in non-GAAP funding costs due to increasing yields on interest-earning assets on our short-term investments that are funded by non-interest bearing excess equity, a $2.4 million increase in net servicing revenue, and a $0.9 million increase in cash-basis interest income.

In percentage terms, the year-over-year increase of 0.04% was primarily attributable to an decrease of 0.03% in non-GAAP funding costs and an increase of 0.01% in cash-basis interest income.

The $12.6 million year-over-year increase in net effective spread was primarily due to a $20.2 million increase from a shift in the composition of new business volume towards higher-yielding loans.

This factor was partially offset by a $6.6 million decrease in cash-basis interest income and a $1.3 million increase in funding costs.

In percentage terms, the year-over-year decrease of 0.03% was primarily attributable to an increase of 0.04% related to the increases in funding costs and a decrease of 0.02% in

cash-basis interest income, which were partially offset by an increase of 0.03% on the shift in the composition of new business volume towards higher-yielding loans.

For 2023 compared to 2022, the $71.5 million year-over-year increase in net effective spread was primarily due to a $54.6 million decrease in funding costs, due to our disciplined funding strategies and higher nominal interest rates that have led to an upward repricing of our excess capital that is held in our short-term investment portfolio, and a $20.6 million increase related to net new business volume.

In percentage terms, the year-over-year increase of 0.16% was primarily attributable to a decrease in funding costs.

See Note 14 to the consolidated financial statements for more information about net interest income and net effective spread from Farmer Mac's individual business segments.

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Balance as of December 31, 2021 $ 14,492 $ 1,950 $ 16,442

Release of losses (860) (1,327) (2,187)

Recovery 1,054 — 1,054

Balance as of December 31, 2021 $ 14,492 $ 1,950 $ 16,442

Provision for/(release of) losses

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Balance as of December 31, 2023 $ 16,589 $ 1,711 $ 18,300

Provision for/(release of) losses

11,579 (89) 11,490

Charge-offs (4,498) — (4,498)

Balance as of December 31, 2024 $ 23,670 $ 1,622 $ 25,292

See Notes 8 and 12 to the consolidated financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk—Loans and Guarantees."

During 2023, we recorded a $1.1 million net provision to the total allowance for losses primarily as a result of one rural infrastructure loan that was downgraded to substandard during the year, partially offset by an allowance for losses release related to a single collateral dependent agricultural storage and processing loan that fully paid off during the year.

During 2024, we recorded a $11.5 million net provision to the total allowance for losses primarily as a result of one permanent planting borrower relationship, risk rating downgrades in Agricultural Finance, and new loan volume in Infrastructure Finance.

Guarantee and Commitment Fees .

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Guarantee and commitment fee income $ 15,738 $ 16,712 $ 13,040

Guarantee and commitment fees increased for the year ended December 31, 2023 compared to 2022, which was due to increases in the average outstanding balance of LTSPCs during the period.

As adjusted for the core earnings presentation, guarantee and commitment fees were $18.9 million for the year ended December 31, 2023, compared to $18.1 million and $17.5 million for the years ended December 31, 2022, and 2021, respectively.

In Farmer Mac's presentation of core earnings, guarantee and commitment fees include interest income and interest expense related to consolidated trusts owned by third parties to reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee on those consolidated Farmer Mac Guaranteed Securities.

Farmer Mac has also excluded guarantee asset fair value changes from the presentation of core earnings because these fluctuations are not expected to have a cumulative net impact on Farmer Mac's financial condition or results of operations if Farmer Mac fulfills its guarantee obligation throughout the term of the guaranteed securities, as is expected.

For more information about net income attributable to common stockholders, the composition of core earnings, and a reconciliation of net income attributable to common stockholders to core earnings, see Table 6 in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations." For more information about the non-GAAP measures Farmer Mac uses, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures."

Guarantee and commitment fee income decreased for the year ended December 31, 2024 compared to 2023, which was due to a decrease in the fair value of our retained beneficial interest in our off-balance sheet securitization.

As adjusted for the non-GAAP core earnings presentation, guarantee and commitment fees were $20.3 million for the year ended December 31, 2024, compared to $18.9 million and $18.1 million for the years ended December 31, 2023 and 2022, respectively.

In Farmer Mac's presentation of non-GAAP core earnings, guarantee and commitment fees include interest income and interest expense related to consolidated trusts owned by third parties to reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee on those consolidated Farmer Mac Guaranteed Securities.

Farmer Mac has also excluded changes in the fair values of guarantee assets from the presentation of core earnings because management does not expect these fluctuations to have a cumulative net impact on Farmer Mac's financial condition, results of operations, or cash flows if Farmer Mac fulfills its guarantee obligation throughout the term of the guaranteed securities, as is expected.

For more information about net income attributable to common stockholders, the composition of non-GAAP core earnings, and a reconciliation of net income attributable to common stockholders to core earnings, see Table 6 in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations." For more information about the non-GAAP measures Farmer Mac uses, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures."

Gains on financial derivatives .

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(dollars in thousands)

Gains/(losses) due to fair value changes

Gains due to fair value changes

$ 3,344 $ 5,142 $ 13,495

Accrual of contractual payments (1,377) (4,845) (7,756)

Gains/(losses) due to terminations or net settlements

Gains due to terminations or net settlements

669 2,585 16,892

Gains on financial derivatives

$ 2,636 $ 2,882 $ 22,631

These changes in fair value are primarily the result of fluctuations in long-term interest rates.

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Payments or receipts to terminate undesignated derivative positions or net cash settled forward sales contracts on the debt of other GSEs and undesignated U.S.

Treasury security futures and initial cash payments received upon the inception of certain undesignated swaps are included in "Gains/(losses) due to

terminations or net settlements" in the table above.

Treasury security futures and initial cash

payments received upon the inception of certain undesignated swaps are included in "Gains due to terminations or net settlements" in the table above.

See Note 6 to the consolidated financial statements for more information about Farmer Mac's financial derivatives.

Gains on Sale of Mortgage Loans

For the Years Ended December 31,

2023 2022 2021

(in thousands)

Gains on sale of mortgage loans $ — $ — $ 6,539

In 2021, Farmer Mac executed a structured securitization of Farm & Ranch loans that resulted in a gain of $6.5 million from the sale of the pool of mortgage loans into the securitization vehicle.

Operating Expenses .

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Compensation and Employee Benefits .

The increase in compensation and employee benefits expenses for the year ended December 31, 2024 compared to 2023 was largely due to increased headcount and increased stock compensation expense.

The increase in compensation and employee benefits expenses for the year ended December 31, 2023 compared to 2022 was largely due to increased headcount.

The increase in compensation and employee benefits expenses for 2022 compared to 2021 was due to increased headcount (full year impact of 32 net new hires in 2021 and 5 net new hires in 2022) and increased executive stock compensation.

General and Administrative Expenses (G&A) .

The increase in G&A expenses for the year ended December 31, 2023 compared to 2022 was primarily due to increased spending on software licenses and information technology and other consultants to support growth and strategic initiatives.

One of those initiatives is a multi-year effort to replace Farmer Mac's platform for securities trades and to implement a treasury management system.

That initiative is expected to be completed during the first half of 2024.

The increase in G&A expenses for the year ended December 31, 2024 compared to 2023 was primarily due to an increase in licensing fees and information technology infrastructure costs from the deployment of our modernized treasury and cash management systems in fourth quarter 2024.

We also saw an increase in transactional legal fees as we continue to grow our Broadband Infrastructure and Renewable Energy portfolios.

Income Tax Expense .

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Effective tax rate 19.7 % 21.0 % 21.1 %

The decrease in Farmer Mac's effective tax rate in 2024 is primarily attributable to renewable energy investment tax credits that Farmer Mac purchased during 2024.

Business Volume .

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For the Years Ended

December 31, 2023 December 31, 2022

Balance Sheet Net Growth/(Decrease) Net Growth/(Decrease)

Balance Sheet December 31, 2024 December 31, 2023

Net Growth/(Decrease) Net Growth/(Decrease)

(in thousands)

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Total Agricultural Finance $ (8,107) $ 1,170,481

Rural Infrastructure Finance:

Rural Utilities:

Infrastructure Finance:

Power & Utilities:

Loans On-balance sheet $ 270,217 $ 124,167

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Off-balance sheet — (1,169)

Total Rural Utilities $ 1,121,110 $ 464,386

Total Power & Utilities

$ (170,204) $ 936,574

Broadband Infrastructure:

Loans On-balance sheet $ 144,089 $ 168,614

Unfunded loan commitments

Off-balance sheet 157,224 15,922

Total Broadband Infrastructure $ 301,313 $ 184,536

Renewable Energy:

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Total Renewable Energy $ 929,004 $ 257,351

Total Rural Infrastructure Finance $ 1,378,461 $ 607,793

Total Infrastructure Finance

$ 1,060,113 $ 1,378,461

Total $ 1,052,006 $ 2,548,942

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(3) Other categories of Farmer Mac Guaranteed Securities that were sold by Farmer Mac to third parties.

Farmer Mac's outstanding business volume was $29.5 billion as of December 31, 2024, a net increase of $1.1 billion from December 31, 2023 after taking into account all new business, maturities, sales, and paydowns on existing assets.

The $0.2 billion net decrease in Farm & Ranch during 2024 resulted from $3.4 billion of scheduled maturities and repayments, partially offset by $3.2 billion of new purchases, commitments, and guarantees.

Included in the $3.2 billion is the purchase of $1.5 billion of Farm & Ranch loans.

Scheduled loan maturities and repayments in the aggregate amount of $0.6 billion partially offset those purchases.

Those purchases include $179.2 million related to Farmer Mac's purchase of two pools of loans from a single agricultural lender.

During 2024, Farmer Mac also securitized $0.7 billion loans in on-balance sheet securitizations, which transferred them from loans held for investment to loans held in securitized trusts.

During 2024, a total of $2.0 billion in Farm & Ranch AgVantage Securities matured or were repaid while Farmer Mac purchased $0.9 billion.

This activity primarily reflected slower loan growth resulting in less liquidity needs from Farmer Mac's AgVantage counterparties than in previous years.

The $0.2 billion net increase in Corporate AgFinance during 2024 primarily resulted from $1.2 billion of new purchases and unfunded loan commitments, which was partially offset by $1.0 billion of scheduled maturities, repayments, sales, and paydowns on revolving commitments.

The $0.2 billion net decrease in Power & Utilities during 2024 resulted from $0.9 billion of scheduled maturities and repayments, partially offset by $0.7 million of new purchases, unfunded loan commitments, and guarantees.

The $0.3 billion net increase in Broadband Infrastructure during 2024 resulted from new purchases of $0.5 billion in loans and unfunded commitments, partially offset by $0.2 billion in scheduled maturities and repayments.

The $0.9 billion net increase in Renewable Energy during 2024 primarily resulted from $1.5 billion in loan purchases and unfunded commitments, partially offset by $0.5 billion in repayments.

The net increase in Renewable Energy loan purchases and unfunded commitments primarily reflects the continued strong demand for renewable power generation and storage.

Farmer Mac's outstanding business volume was $28.5 billion as of December 31, 2023, a net increase of $2.5 billion from December 31, 2022 after taking into account all new business, maturities, and paydowns on existing assets.

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The $2.7 billion in gross purchases was partially offset by $2.5 billion in scheduled maturities.

The $90.5 million net increase in Corporate AgFinance during 2023 resulted from $0.9 billion of new purchases and unfunded loan commitments, which was partially offset by $0.8 billion of scheduled maturities, repayments, and paydowns on revolving commitments.

The $0.1 billion net increase in Corporate AgFinance during 2023 resulted from $0.9 billion of new purchases and unfunded loan commitments, which was partially offset by $0.8 billion of scheduled maturities, repayments, and paydowns on revolving commitments.

Farmer Mac purchased a total of $578.1 million in loans, including draws on revolving commitments, which was partially offset by $484.6 million in scheduled maturities, repayments, and paydowns on revolving commitments.

The increase in loan purchases was primarily due to Farmer Mac's continued focus to support loans to larger and more complex agribusinesses focused on food and fiber processing and other food supply chain production.

The $1.1 billion net increase in Rural Utilities during 2023 resulted from $2.0 billion of new purchases, unfunded loan commitments, and guarantees, which was partially offset by $0.9 billion of scheduled maturities and repayments.

Farmer Mac purchased a total of $1.5 billion in AgVantage Securities, $232.5 million in telecommunications loans, and $297.6 million in electric distribution and generation and transmission loans.

The $530.1 million in loan purchases was partially offset by $237.3 million in scheduled maturities and repayments.

The net increase in loan purchases primarily reflected borrowers' normal-course capital expenditures related to maintaining and upgrading utility infrastructure as well as investments in broadband infrastructure, and Farmer Mac's continued focus to support telecommunications investment in rural America.

The $257.4 million net increase in Renewable Energy during 2023 primarily reflects $273.5 million in loan purchases and unfunded commitments, partially offset by $52.7 million in repayments.

Farmer Mac's outstanding business volume was $25.9 billion as of December 31, 2022, a net increase of $2.3 billion from December 31, 2021 after taking into account all new business, scheduled maturities, and paydowns on existing assets.

The $1.6 billion net increase in Farm & Ranch during 2022 resulted from $6.9 billion of new purchases, commitments, and guarantees, mostly offset by $5.3 billion of scheduled maturities and repayments.

Farmer Mac purchased a total of $1.4 billion in loans, which was primarily driven by improved borrower economics albeit navigating a substantially higher interest rate environment.

The $1.4 billion in gross Farm & Ranch loan purchases was partially offset by $1.1 billion in scheduled maturities and repayments.

Farmer Mac also purchased a total of $4.2 billion in Farm & Ranch AgVantage Securities during 2022, which primarily reflected the refinancing of maturing securities as well as financial counterparties seeking to add longer-term AgVantage securities to manage their asset-liability maturity profile given increases in credit spreads and interest rates.

The $4.2 billion in gross purchases was partially offset by $3.3 billion in scheduled maturities.

Of the AgVantage Securities that were acquired during 2022 and were still outstanding as of December 31, 2022, $470.0 million are scheduled to mature by June 30, 2023 and an additional $600.0 million are scheduled to mature by December 31, 2023.

The $65.7 million net increase in Corporate AgFinance during 2022 resulted from $546.6 million of new purchases and unfunded loan commitments, which was partially offset by $480.9 million of scheduled maturities, repayments, and sales.

Farmer Mac purchased a total of $328.9 million in loans, which was partially offset by $276.9 million in scheduled maturities and repayments.

The $464.4 million net increase in Rural Utilities during 2022 resulted from $1.4 billion of new purchases, unfunded loan commitments, and guarantees, which was partially offset by $927.8 million of scheduled maturities and repayments.

Farmer Mac purchased a total of $670.0 million in AgVantage Securities, $231.0 million in telecommunications loans, and $449.5 million in electric distribution and generation and transmission loans.

The $0.9 billion net increase in Power & Utilities during 2023 resulted from $1.8 billion of new purchases, unfunded loan commitments, and guarantees, which was partially offset by $0.8 billion of scheduled maturities and repayments.

Farmer Mac purchased a total of $1.5 billion in AgVantage Securities and $297.6 million in electric distribution and generation and transmission loans.

The $297.6 million in loan purchases was partially offset by $173.4 million in scheduled maturities and repayments.

The $143.4 million net increase in Renewable Energy during 2022 primarily reflects $182.3 million in loan purchases and unfunded loan commitments, partially offset by $38.9 million in repayments.

The net increase in loan purchases primarily reflected borrowers' normal-course capital expenditures related to maintaining and upgrading utility infrastructure.

The $0.2 billion net increase in Broadband Infrastructure during 2023 resulted from $0.3 billion of new purchases and unfunded loan commitments, which was partially offset by $0.1 in repayments.

The $0.3 billion net increase in Renewable Energy during 2023 primarily reflects $273.5 million in loan purchases, partially offset by $52.7 million in repayments.

The level and composition of Farmer Mac’s outstanding business volume is based on the relationship between new business, loan sales, scheduled maturities, and repayments on existing assets from year to year.

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AgVantage securities $ 1,362,720 $ 4,284,405 $ 4,990,483

Structured securitization transactions (not consolidated) — — 289,519

Loans securitized and held in consolidated trusts with beneficial interests owned by third parties (structured and single-class)

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Farmer Mac either retains the loans it purchases or securitizes them and retains or sells Farmer Mac Guaranteed Securities backed by those securitized loans.

During 2023, Farmer Mac sold and securitized agricultural mortgage loans in a structured securitization resulting in $281.0 million of Farmer Mac Guaranteed Securities.

Farmer Mac consolidates the assets and liabilities of the trust for this structured securitization.

During 2024, Farmer Mac executed two structured securitization transactions, whereby it sold and securitized agricultural mortgage loans resulting in $624.1 million of Farmer Mac Guaranteed Securities.

In this transaction, Farmer Mac transferred

selected loans to a depositor which then deposited the loans into a trust, at which time the loans became assets of the trust.

Farmer Mac concluded that it was the primary beneficiary of the trust because Farmer Mac retained significant interest and has power over the activities most significant to the economic performance of the Variable Interest Entity in its role as Master Servicer.

Therefore, Farmer Mac consolidates the assets and liabilities of the trust for this structured securitization.

Farmer Mac does not consider the assets held by the related securitization trust to be available to satisfy the claims of the creditors of Farmer Mac and/or the depositor.

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Farmer Mac consolidates these loans and presents them as "Loans held for investment in consolidated trusts, at amortized cost" on the consolidated balance sheets.

During 2021, Farmer Mac realized a $5.2 million gain after tax from the sale of Farmer Mac Guaranteed Securities in its structured securitization transaction.

During 2024, 2023, and 2022, Farmer Mac realized no gains or losses from the issuance of Farmer Mac Guaranteed USDA Securities or AgVantage Securities.

The following table sets forth information about outstanding volume in each of Farmer Mac's lines of business as of the dates indicated:

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Total Agricultural Finance $ 20,494,673 $ 20,502,780 $ 19,332,299

Rural Infrastructure Finance:

Rural Utilities:

Infrastructure Finance:

Power & Utilities:

Loans On-balance sheet $ 2,886,576 $ 2,616,359 $ 2,492,192

5 unchanged sentences

Off-balance sheet — — 1,169

Total Rural Utilities $ 7,480,723 $ 6,359,613 $ 5,895,227

Total Power & Utilities

$ 6,809,366 $ 6,979,570 $ 6,042,996

Broadband Infrastructure:

Loans On-balance sheet $ 622,207 $ 478,118 $ 309,504

Unfunded loan commitments

Off-balance sheet 180,259 23,035 7,113

Total Broadband Infrastructure $ 802,466 $ 501,153 $ 316,617

Renewable Energy:

3 unchanged sentences

Total Renewable Energy $ 1,416,525 $ 487,521 $ 230,170

Total Rural Infrastructure Finance $ 7,968,244 $ 6,589,783 $ 5,981,990

Total Infrastructure Finance

$ 9,028,357 $ 7,968,244 $ 6,589,783

Total $ 29,523,030 $ 28,471,024 $ 25,922,082

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Total $ 13,609,172 $ 4,267,519 $ 2,590,233 $ 20,466,924

Of Farmer Mac's $28.5 billion outstanding principal balance of business volume as of December 31, 2023, $10.0 billion were AgVantage securities included in the Agricultural Finance and Rural Infrastructure Finance lines of business.

Of Farmer Mac's $29.5 billion outstanding principal balance of business volume as of December 31, 2024, $8.5 billion were AgVantage securities included in the Agricultural Finance and Infrastructure Finance lines of business.

Unlike business volume in the form of purchased loans, USDA Securities, and loans underlying LTSPCs and non-AgVantage Farmer Mac Guaranteed Securities, most AgVantage securities do not require periodic payments of principal based on amortization schedules and instead have fixed maturity dates when the secured general obligation is due.

Changes in quarterly AgVantage securities volume are primarily driven by the generally larger transaction sizes for that product, scheduled maturity amounts for a particular quarter, the liquidity needs of Farmer Mac’s AgVantage counterparties, and changes in the pricing and availability of wholesale funding.

Based on these factors, Farmer Mac expects its business volumes in AgVantage securities to continue to be volatile.

The following table summarizes by maturity date the outstanding principal amount of both on- and off-balance sheet AgVantage securities as of December 31, 2024:

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The ownership of Farmer Mac's two classes of voting common stock is currently concentrated in a small number of institutions.

Approximately 51% of the Class A voting common stock is held by four financial institutions, with 31% held by one institution.

Approximately 47% of the Class A voting common stock is held by three financial institutions, with 31% held by one institution.

Approximately 97% of the Class B voting common stock is held by five FCS institutions (two of which are related to each other through a parent-subsidiary relationship).

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Farmer Mac did not conduct any business with AgriBank during 2024 or 2023.

Bath State Bank Less than 5% ownership Farmer Mac director Dennis L.

Brack serves as a director of Bath State Bank and Bath State Bancorp, the holding company of Bath State Bank.

Farmer Mac purchased $1.3 million and no USDA Securities from Bath State Bank in 2023 and 2022, respectively.

Bath State Bank Less than 5% ownership Former Farmer Mac director Dennis L.

Brack (retired in May 2024) serves as a director of Bath State Bank and Bath State Bancorp, the holding company of Bath State Bank.

Farmer Mac purchased $6.5 million and $1.3 million USDA Securities from Bath State Bank in 2024 and 2023, respectively.

Farmer Mac also purchased $3.0 million and $0.3 million in Agricultural Finance mortgage loans from Bath State Bank in 2024 and 2023, respectively.

163,253 shares of Class B voting common stock

(32.63% of outstanding Class B stock and 10.66% of total voting common stock outstanding) Farmer Mac director Everett M.

Dobrinski served as a director of CoBank through December 2019.

Although no longer a director of CoBank, Mr.

Dobrinski served on CoBank's independent nominating committee until December 2023.

(32.63% of outstanding Class B stock and 10.66% of total voting common stock outstanding) Former Farmer Mac director Everett M.

Dobrinski (retired in May 2024) served on CoBank's independent nominating committee until December 2023.

Farmer Mac purchased $442.7 million and $438.8 million in loans from CoBank in 2024 and 2023, respectively.

In 2024 and 2023, CoBank retained $4.0 million and $3.6 million of servicing fees related to the loan participations sold to Farmer Mac, respectively.

Farm Credit of Florida

Less than 5% ownership Farmer Mac director Robert Sexton serves as a director of Farm Credit of Florida.

Farmer Mac purchased $1.7 million Agricultural Finance mortgage loans from Farm Credit of Florida in 2024.

Farmer Mac did not purchase any mortgage loans from Farm Credit of Florida in 2023.

In 2024 and 2023, Farm Credit of Florida retained $16,000 and $11,000 in servicing fees for its work as a Farmer Mac servicer, respectively.

Farm Credit Bank of Texas (FCBT) 38,503 shares of Class B voting common stock

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Matthew 25 Management Corp.

71,500 shares of Class A voting common stock (6.94% of outstanding Class A stock and 4.67% of total voting common stock outstanding)

None Farmer Mac did not conduct any business with Matthew 25 Management Corp.

during 2023 or 2022.

79,484 shares of Class A voting common stock (7.71% of outstanding Class A stock and 5.19% of total voting common stock outstanding) None Farmer Mac did not conduct any business with Matthew 25 Management Corp.

during 2024 and 2023.

Name of Institution Ownership of

Farmer Mac Voting Common Stock Affiliation with Any

Farmer Mac Directors Primary Aspects of Institution's

Business Relationship with Farmer Mac

National Rural Utilities Cooperative Finance Corporation (CFC) 81,500 shares of Class A voting common stock

(7.91% of outstanding Class A stock and 5.32% of total voting common stock outstanding) None

Transactions with CFC represented 37.1% and 46.7% of loans under the Rural Infrastructure Finance line of business during 2023 and 2022, respectively.

Transactions with CFC represented 27.9% and 37.1% of loans under the Infrastructure Finance line of business during 2024 and 2023, respectively.

In 2024 and 2023, Farmer Mac earned commitment fees of approximately $0.9 million and $1.0 million, respectively, attributable to transactions with CFC.

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In 2024 and 2023, CFC retained approximately $4.1 million and $3.7 million in servicing fees for its work as a Farmer Mac servicer, respectively.

Name of Institution Ownership of

Farmer Mac Voting Common Stock Affiliation with Any

Farmer Mac Directors Primary Aspects of Institution's

Business Relationship with Farmer Mac

The Vanguard Group, Inc.

53,805 shares of Class A voting common stock

(5.22% of outstanding Class A stock and 3.51% of total voting common stock outstanding)

None Farmer Mac did not conduct any business with The Vanguard Group during 2023 or 2022.

Zions Bancorporation, National Association (Zions) 322,100 shares of Class A voting common stock

(31.25% of outstanding Class A stock and 21.04% of total voting common stock outstanding)

None In 2023 and 2022, Farmer Mac's purchases of on-balance sheet Agricultural Finance mortgage loans from Zions represented approximately 9.5% and 12.9%, respectively, of Agricultural Finance mortgage loan purchase volume for those years.

Those purchases represented 6.9% and 9.6%, respectively, of total Agricultural Finance mortgage loan business volume (excluding AgVantage and USDA Securities) for those years.

The purchases of USDA Securities from Zions represented approximately 0.1% and 1.5%, respectively, of the USDA Guarantees purchases for the years ended December 31, 2023 and 2022.

Transactions with Zions represented 3.1% and 3.5%, respectively, of Farmer Mac's total outstanding business volume (excluding loans serviced for others) as of December 31, 2023 and 2022.

In 2023 and 2022, Zions retained approximately $11.2 million and $10.4 million, respectively, in servicing fees for its work as a Farmer Mac servicer.

None In 2024 and 2023, Farmer Mac purchased $173.9 million and $160.1 million of Agricultural Finance mortgage loans from Zions, respectively.

In 2024 and 2023, Farmer Mac purchased $0.4 million and $0.2 million, of USDA Securities from Zions, respectively.

Transactions with Zions represented 3.1% of Farmer Mac's total outstanding business volume (excluding loans serviced for others) as of both December 31, 2024 and 2023.

In both 2024 and 2023, Zions retained approximately $11.2 million in servicing fees for its work as a Farmer Mac servicer.

As discussed in more detail in Note 2(o) to the consolidated financial statements, Farmer Mac’s consolidated financial statements include the accounts of variable interest entities ("VIEs") in which Farmer Mac determines itself to be the primary beneficiary, including securitization trusts where Farmer Mac shares the power to make decisions about default mitigation with a related party.

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Products and Portfolio

Farmer Mac serves a vital role in serving rural America by offering liquidity, capital, and risk management tools as a secondary market that help increase the accessibility of financing for American agriculture and rural infrastructure.

The growth trajectory of Farmer Mac is closely tied to the capital and liquidity needs of the lending institutions serving agriculture and rural infrastructure businesses and the overall financial health of borrowers in these sectors.

Despite significant increases in market interest rates over the past two years and global and economic volatility, Farmer Mac was able to increase outstanding business volume and net effective spread by 9.8% and 28.0%, respectively, in 2023.

The increase in outstanding business volume and net effective spread primarily reflects Farmer Mac's effective and active asset-liability and capital management strategies, the diversification of Farmer Mac’s business model, and the resiliency of the agriculture and rural infrastructure sectors.

Farmer Mac serves a vital role in serving rural America by offering liquidity, capital, and risk management tools as a secondary market to help increase the accessibility of financing for American agriculture and rural infrastructure.

The growth trajectory of Farmer Mac is closely tied to the capital and liquidity needs of the lending institutions serving agriculture and infrastructure businesses and the overall financial health of borrowers in these sectors.

Even with continued high market interest rates and global and economic volatility, Farmer Mac's outstanding business volume and net effective spread increased 3.7% and 3.8% in 2024 versus 2023, respectively.

The increase in business volume and net effective spread primarily reflects the diversification of Farmer Mac’s business model and the resiliency of the agriculture and infrastructure sectors.

Several factors continue to influence business volume growth dynamics.

The rise in market interest rates that have persisted over the past few years has had a direct impact on Farmer Mac’s Farm & Ranch product interest rates, and there generally exists an inverse correlation between Farm & Ranch new loan purchase volumes and changes in Farm & Ranch product interest rates, with higher product interest rates slowing portfolio loan prepayments.

The net effect of these forces contributed to positive Farm & Ranch loan purchase portfolio growth in 2023 as new Farm & Ranch loan purchases outpaced loan prepayments, although the overall net Farm & Ranch loan purchase portfolio growth was below prior years, primarily because of the continued higher product interest rate environment.

Future changes in monetary policy and sustained elevated product interest rates are anticipated to influence the demand for Agricultural Finance mortgage loans and the pace of repayments.

Farmer Mac experienced significant momentum in its wholesale finance product during 2023, driven by volatile market credit spreads resulting in greater liquidity and diversification needs from our counterparties.

This momentum could continue into 2024 and will be determined by market interest rates and credit spreads, overall economic conditions, and the relative value of Farmer Mac’s products versus the broader market.

Corporate AgFinance loan purchases and unfunded commitments increased 12.9% in 2023 to $1.4 billion despite volatile transaction velocity throughout 2023 due to market and economic uncertainty.

The Rural Infrastructure Finance segments showed substantial business volume growth in 2023, driven by counterparty demand for wholesale funding, increased investment activity in telecommunications and rural broadband borrowers, and additional financing for renewable energy projects.

Finally, Farmer Mac increased assets under management through the expansion of its servicing platform through loan pool purchases and purchases of loan servicing rights for loans owned by other entities.

Opportunities for profitable future growth include Farmer Mac's crucial role in alleviating liquidity, equity capital, and return-on-equity capital challenges faced by agricultural and rural infrastructure lenders.

The suite of offerings encompasses loan and portfolio purchases, participations, guarantees, LTSPCs, wholesale funding, and securitizations.

The persistently elevated market interest rates have had a direct effect on Farmer Mac’s Farm & Ranch product interest rates, and there generally exists an inverse correlation between Farm & Ranch new loan purchase volumes and changes in Farm & Ranch product interest rates, with higher product interest rates slowing portfolio loan prepayments.

Also, a tightening agricultural economy is creating the need for additional liquidity and working capital needs for borrowers managing through this agricultural cycle.

The net effect of these forces contributed to positive Farm & Ranch loan purchase portfolio growth in 2024.

Future changes in monetary policy, sustained elevated product interest rates, and the financial health of borrowers are anticipated to influence the demand for Agricultural Finance mortgage loans and the pace of repayments.

Farmer Mac experienced a decrease in wholesale finance volume during 2024, driven by slower market loan growth and a tightening of market credit spreads that resulted in less liquidity and diversification needs from our counterparties.

Any future growth will likely be influenced by market interest rates and credit spreads, overall economic conditions and loan growth opportunities, and the relative value of Farmer Mac’s products versus the broader market.

Corporate AgFinance loan purchases and unfunded commitments increased 14.4% in 2024 versus 2023.

The Infrastructure Finance segments showed significant business volume growth in 2024, increasing over $1 billion, or 13.3%, to $9.0 billion in 2024 versus 2023.

Business volume in Infrastructure Finance was strong across most products and segments in 2024, primarily driven by increased financing activity for renewable energy projects and broadband infrastructure in response to continued strong demand for renewable power generation and storage and data center investments.

Opportunities for profitable future growth include Farmer Mac's potential role in alleviating liquidity, capital, and return-on-equity capital challenges faced by agricultural and infrastructure lenders.

The suite of Farmer Mac's offerings encompasses loan and loan portfolio purchases, participations, guarantees, LTSPCs, wholesale funding, and securitizations.

In 2024, Farmer Mac purchased from a single agricultural lender two pools of Farm & Ranch loans with an aggregate outstanding principal balance of $179.2 million.

Ongoing business and product development efforts continue to attract institutional investors and nontraditional lenders, resulting in the diversification of Farmer Mac's customer base and product set, potentially generating increased product demand from new sources.

Farmer Mac’s improved loan servicing capabilities enhance our loan portfolio purchase value proposition, adding new product offerings to an increasingly diverse customer base.

Growing relationships with larger agriculture lenders, financial industry consolidation, and interest rate and market volatility continue to provide increased opportunities for Farmer Mac, influencing the demand

for loan purchases, risk management solutions, and wholesale funding.

This growth may lead to an increase in the average transaction size within Farmer Mac’s lines of business.

The financing needs arising from mergers, acquisitions, consolidation, and vertical integration in the agricultural and rural infrastructure industries present further opportunities for Farmer Mac’s loan purchase products and other financing solutions.

Furthermore, investments supporting consumer and food supply demand may increase financing needs in the food and agriculture supply chain, potentially requiring incremental capital support through the secondary market.

Deepening relationships with eligible rural infrastructure counterparties are expected to continue to create opportunities to support fiber and broadband-related projects, rural telecommunications investments, and renewable energy projects.

Throughout 2023, Farmer Mac was not affected by the liquidity concerns that affected many regional and national banks due to fluctuations caused by elevated interest rates and deposit withdrawals.

Unlike depository institutions, Farmer Mac's funding strategies do not rely on deposits, allowing us to navigate beyond short-term liquidity disruptions and to take advantage of increased opportunities in a competitive lending environment.

Our funding advantage over regional and national banks is also aided by the fact that our debt has a contractual term to maturity and that only we have the ability to call our callable debt before its original maturity date when market conditions are beneficial to Farmer Mac.

Farmer Mac’s expanded loan servicing capabilities enhance our loan portfolio purchase value proposition, adding new product offerings to an increasingly diverse customer base.

Growing relationships with larger agriculture lenders, financial industry consolidation, interest rates and market volatility, as well as financial institutions' focus on capital efficiency and liquidity continue to provide increased opportunities for Farmer Mac, influencing the demand for loan purchases, risk management solutions, and wholesale funding.

Any such growth may lead to an increase in the average transaction size within Farmer Mac’s lines of business.

The financing needs arising from mergers, acquisitions, consolidation, and vertical integration in the agricultural and infrastructure industries present further opportunities for Farmer Mac’s loan purchase products and other financing solutions.

And investments supporting consumer and food supply demand may increase financing needs in the food and agriculture supply chain, potentially requiring incremental capital support through the secondary market.

Deepening relationships with eligible infrastructure counterparties are expected to continue to create opportunities to support fiber and broadband-related transactions, including significant market activity and investments in wholesale data centers, as well as renewable energy projects.

Changes associated with governmental policies, including but not limited to fiscal, monetary, tax, and regulatory policies implemented by the new federal executive administration, have the potential to impact the primary business sectors served by Farmer Mac, which could affect business volume growth and opportunities.

Unlike depository institutions, Farmer Mac's funding sources do not rely on deposits, allowing us to navigate beyond short-term liquidity disruptions and to potentially take advantage of increased opportunities in a competitive lending environment.

This is because our debt has a contractual term to maturity and because we have the ability to redeem our callable debt before its original maturity date when market conditions are beneficial to Farmer Mac.

In contrast, depository institutions largely rely on demand deposit accounts in which the depositors hold the right to withdraw at any time.

Because of these differences in funding strategies, certain economic disruptions may have a positive impact on Farmer Mac’s funding costs relative to the overall market.

The increase in short-term rates during the last two years has provided an asymmetric benefit to Farmer Mac's earnings as a result of effective capital allocation and interest rate risk strategies.

Our proactive equity capital allocation strategies help to limit any downside effect to earnings when rates decline.

Farmer Mac's fundamental asset-liability management approach, which matches the duration and convexity of assets and liabilities in all rate environments, also helps to minimize earnings volatility during periods of short-term interest rate fluctuations.

In addition to active asset-liability management, Farmer Mac's business may benefit from natural business hedges that help mitigate vulnerability to effects from interest rate volatility.

When interest rates rise, prepayments tend to decline, but interest earned on excess cash and capital increases, maintaining Farmer Mac's strong market access without relying on deposits.

During the second half of 2024, we began to see some benefit from calling fixed-rate debt and may continue to see this benefit subject to market conditions.

Farmer Mac's business may benefit from natural business hedges that help mitigate vulnerability to effects from interest rate volatility.

When interest rates rise, prepayments tend to decline, but interest earned on excess cash and capital could increase.

Conversely, when interest rates decline, loan purchase volume often increases, but prepayments tend to rise as well.

Farmer Mac manages its interest rate risk by issuing callable debt and maintaining market-based credit spreads.

Although these natural business dynamics may not be perfect offsets, they often effectively counterbalance to mitigate volatility from changes in short-term interest rates.

Farmer Mac expects continued increases in its operating expenses over the next several years as we continue to expand our investments in human capital, technology, and business infrastructure to increase capacity and efficiency as we seek to accommodate growth opportunities and achieve our long-term strategic objectives.

Investments in infrastructure and funding platforms to support strategic objectives are expected to allow Farmer Mac to scale more efficiently with future portfolio and earnings growth.

These investments will likely help improve product delivery and funding efficiency, potentially creating additional benefits for future growth.

Another focus of our infrastructure investments will be a continued effort to expand our servicing capabilities and to enhance the efficiency and effectiveness of processes associated with loan onboarding and servicing.

Farmer Mac will continue to leverage technology enhancements and servicing

standardization efforts to drive scalability and consistency.

In 2023, Farmer Mac’s servicing portfolios grew by more than 50% in both number of loans serviced and outstanding balances.

Servicing capabilities also increased to incorporate new features as we started servicing eligible loans on behalf of others.

Technology enhancements are planned for 2024 to continue to incorporate all Farmer Mac loan portfolios onto our servicing platform and to provide flexibility in accessing loan portfolio information, as well as streamlining operational workflows.

Although these natural business dynamics may not be perfect offsets, they tend to provide some counterbalance to mitigate volatility from changes in short-term interest rates.

Farmer Mac anticipates ongoing increases in operating expenses over the next several years, aligned with our planned expansion of investments in human capital, technology, and business infrastructure.

These investments are designed to enhance capacity and efficiency in support of growth opportunities and long-term strategic objectives.

By investing in infrastructure and funding platforms, Farmer Mac aims to scale more efficiently in tandem with future portfolio and earnings growth.

These initiatives are expected to improve product delivery and funding efficiency, potentially generating more benefits for future growth.

Another focus of our planned infrastructure investments is a continued effort to expand our servicing capabilities and to enhance the efficiency of processes associated with loan onboarding and servicing.

Farmer Mac expects to continue to leverage technology enhancements and servicing standardization efforts to drive scalability and consistency.

Technology enhancements are planned for 2025 to continue to

incorporate all Farmer Mac loan portfolios onto our servicing platform and to provide flexibility in accessing loan portfolio information, as well as streamlining operational workflows.

Agricultural Finance Industry Outlook

Farm Incomes.

Overall farm incomes fell in 2023 and are forecast to fall again in 2024 after reaching new highs in 2022.

The USDA estimates that net cash farm income climbed 34% to $202.2 billion in 2022, a new all-time high.

The primary driver of increased profitability in 2022 was higher cash revenues, in contrast to 2019 and 2020, when elevated government support payments supported farm incomes.

Although the USDA estimates that net cash farm income decreased 21% in 2023 and will decrease another 24% in 2024 due to lower commodity prices and elevated farm expenses, the average of 2023 and 2024 farm income projections are 10% higher than the 10-year average, demonstrating the continued strength in farm profitability.

Grain commodity prices may see increased volatility in 2024 due to changing global supply levels, but some livestock and animal protein sectors may see offsetting benefits from lower feed costs, particularly the cattle sector.

Demand for corn and soybean by-products could see a boost in 2024 as renewable diesel and sustainable aviation fuel markets mature.

Farm expenses could also abate somewhat in 2024, with lower expected feed, fertilizer, and fuel costs partially offset by higher expected interest, labor, and rental rates.

Overall farm profitability has compressed in the last two years.

According to the USDA, net cash farm income peaked at $210.1 billion in 2022, a record for both nominal and inflation-adjusted farm profits.

The primary driver of profitability in 2022 was higher cash revenues, in contrast to 2019 and 2020, when elevated government support payments supported farm incomes.

The USDA currently estimates that annual net cash farm income decreased 25% in 2023 but rebounded 2% higher in 2024.

Looking ahead to 2025, the USDA forecasts an additional 22% increase in net cash farm income, fueled by a $33 billion increase in government support payments from the American Relief Act enacted in 2024.

If realized, 2025 net cash farm income would reach the third-highest inflation-adjusted level in history.

Ad-hoc and supplemental government support payments are not guaranteed annually, but can help offset poor market conditions for producers.

Commodity prices may see increased volatility in 2025 due to a rebound in global supply levels.

Annual grain crop prices, which had faced pressure for much of 2024, stabilized in fourth quarter 2024, and even increased modestly for some crops.

Prices were also modestly higher for tree nuts in fourth quarter 2024.

Tree nut producers have reduced new plantings in recent years, which, combined with robust exports this marketing year, has provided moderate support for prices.

Tree nut prices, including almonds and walnuts, had faced similar pressure in recent years from rising production.

However, production was relatively stable in 2024, helping limit and even partially alleviate the buildup in inventories.

Within the livestock and animal protein sector, producers benefited from lower feed costs in 2024, particularly the cattle sector.

Broadly speaking, farm expenses could also abate somewhat into 2025, with lower expected feed, fertilizer, interest, and fuel costs partially offset by higher expected livestock, labor, and rental rates.

Demand for corn and soybean by-products could see a boost in 2025 as renewable diesel and sustainable aviation fuel markets continue to mature.

The change in U.S.

political leadership may introduce both opportunities and challenges for the agricultural sector.

Shifts in trade policies, environmental regulations, and immigration laws could result in significant impacts on agricultural producers and the sector as a whole.

These changes could lead to both favorable and unfavorable conditions, influencing trade dynamics, the strength of the U.S.

dollar, labor costs and availability, and regulatory frameworks.

The agricultural sector may experience varying degrees of disruption and adaptation in response to these evolving policies, and these changes could increase the volatility of sector profitability in the near-term.

Lower prices for several agricultural commodities could have multiple competing effects on loan performance and agricultural credit demand.

Constraints on cash flow can cause loan delinquency rates to rise back to and surpass historical averages.

This reversion is most likely in commodities experiencing negative market conditions like some grain and permanent crops.

Simultaneously, cash flow constraints can increase demand for debt capital to reorganize balance sheets and replace lost incomes.

Farmer Mac believes that its portfolio and market strategy is sufficiently diversified by borrower, industry, and region to maintain robust portfolio performance through the current cycle to be positioned to support any expansion of the farm mortgage market that may arise in the coming quarters.

Record-setting farm incomes in 2021 and 2022, combined with historically low interest rates in 2020 and 2021, drove a rapid rise in land values and a decrease in farm delinquencies and bankruptcies.

Momentum for farmland values persisted throughout 2023 due to high levels of farm liquidity and a constrained supply of farmland for sale.

Land value survey data from the USDA show a 7.4% increase in average farm real estate values from June 2022 to June 2023.

Annual farm real estate value gains were highest in the Northern Plains (13.7%) and the Southern Plains (9.4%) but also strong in the Lake states (8.2%), the Corn Belt (7.1%), and the Southeast (5.7%).

Farmland value growth rates moderated in the second half of 2023 in the face of continued higher market interest rates.

The Federal Reserve Bank of Chicago AgLetter reported a 5% gain in farmland values in the Seventh District (primarily Iowa, Indiana, Illinois, and Wisconsin) between October 2022 and October 2023.

Data from the Federal Reserve Bank of Kansas City show a similar rise in land values in the Tenth District (primarily Kansas, Missouri, Nebraska, and Oklahoma) during that same period.

Growth rates in land values could moderate slightly into 2024 due to compressing farm profitability and a continued elevated interest rate environment, although a low supply of available farmland and strong demand for the asset class across a wide variety of investors could help maintain balance in the farmland transaction markets.

Land values slowed in some markets in 2024 due to higher interest rates and lower profitability for some agricultural sectors.

Land value survey data from the USDA shows a 5% increase in average farm real estate values from June 2023 to June 2024.

Annual farm real estate value gains were highest in the Southeast (9.4%) and the Southern Plains (7.5%) and still strong but slowing in the Lake states (4.3%), the Corn Belt (3.7%), and the Southeast (2.4%).

Farmland value growth rates moderated in the second half of 2024 in the face of continued higher market interest rates and stagnating price for some commodities.

The Federal Reserve Bank of Chicago AgLetter reported no change in farmland values in the Seventh District (primarily Iowa, Indiana, Illinois, and Wisconsin) between October 2023 and October 2024.

This was down from a 5% increase over the previous 12-month period.

Data from the Federal Reserve Bank of Kansas City showed that land values continued to grow in the Tenth District (primarily Kansas, Missouri, Nebraska, and Oklahoma), increasing 5.5% from third quarter 2023 to third quarter 2024.

However, the growth rate in both regions has trended consistently lower in the last several years, and growth rates in land values could continue to moderate in 2025.

Lower prices for some commodities and an elevated interest rate environment represent headwinds to farmland values, particularly in states like California.

A relatively low supply of available farmland in many regions and persistent demand for the asset class across a wide variety of investors could help maintain balance in the farmland transaction markets.

While regional averages for farmland values generally provide a good barometer for the overall changes in U.S.

farmland values, economic forces affecting land markets are highly localized, and some markets may experience greater volatility in farmland values than state or national averages indicate.

Based on our robust collateral underwriting standards, we believe that our loan collateral is well-positioned to endure reasonably foreseeable volatility in farmland values due to external factors.

Based on our robust collateral underwriting standards, we believe that our loan collateral is well-positioned to endure reasonably foreseeable volatility in farmland values that could result from external factors.

Markets and Weather

Exogenous factors facing farm and food producers can create uncertainty and market instability within the sector.

Some of the external market conditions that could adversely affect the farm and food sectors in 2024 include foreign trade and trade policy, supply chain disruptions, and

environmental conditions.

Some of the external market conditions that could adversely affect the farm and food sectors into 2025 include foreign trade and trade policy, supply chain disruptions, and weather and environmental conditions.

agricultural sector has become increasingly dependent on foreign markets as a source of demand, making trade policy an important consideration for farms and food.

The USDA projects that U.S.

agriculture exports will drop to $169.5 billion in 2024, a 14% decrease relative to peak levels in 2022.

Through November 2023, agricultural export values were down approximately 11% in 2023 compared to 2022.

The value of the U.S.

dollar relative to other major currencies fell 3% in 2023, but economic and geopolitical uncertainties such as conflicts in Eastern Europe and the Middle East increased U.S.

dollar volatility during the year.

A strong U.S.

dollar could potentially be a headwind for farm, food, fiber, and fuel exports heading into 2024.

Slower global growth could also be a headwind for consumer-oriented products like animal proteins, dairy, fruits, and nuts, and Ukrainian corn and wheat production may eventually stabilize.

Severe weather conditions and long-term environmental change continue to shape agricultural sectors.

experienced 28 separate billion-dollar weather disasters in 2023, the highest number of billion-dollar weather disasters on record, as tracked by the National Oceanic and Atmospheric Administration.

agriculture exports will drop to $170.0 billion in 2025, 3% lower than 2024 and down 13% relative to peak levels in 2022.

Through November 2024, agricultural export values were roughly even in 2024 compared to 2023.

One challenge for U.S.

exports has been the value of the U.S.

dollar relative to competing exporters of agricultural goods.

The USDA projects this headwind to continue in 2025.

Slower global growth could also be a headwind for consumer-oriented products like animal proteins, dairy, fruits, and nuts.

Ukrainian corn and wheat export shipments continue to rebound and have approached pre-2022 levels in recent months.

Looking ahead, economic and geopolitical uncertainties could lead to higher volatility for the U.S.

dollar during 2025.

Severe weather conditions continue to shape agricultural sectors.

In 2024, the U.S.

experienced 27 separate billion-dollar weather disasters, as tracked by the National Oceanic and Atmospheric Administration.

Many of those events affected agriculture, including midwestern storms, flooding, western wildfires, excessive heat, and drought.

Federal crop insurance provides a strong mitigator against this risk, but farmers and ranchers face increasingly severe weather incidents.

Long and persistent heat and drought conditions affected agricultural production regions in the western and midwestern parts of the United States in 2021 and 2022.

There was a sizable improvement in conditions in 2023 for large portions of the West Coast, especially California, but drought conditions have intensified in other areas of the country.

Approximately 14% of the continental U.S.

was classified as being in severe to exceptional drought as of January 2, 2024, according to data from the National Center for Environmental Information.

For loans in other areas that commonly experience exceptional drought (primarily in California), Farmer Mac's underwriting standards include an assessment of anticipated long-term water availability for the related property and how water availability impacts the collateral value and the borrower's liquidity position to mitigate that risk.

Ag Processing and Food Supply Chain.

The production of food, feed, fiber, and biofuels has been economically viable in the past few years, but some factors may change in 2024.

Through December 31, 2024, Farmer Mac's portfolio had

not experienced any material performance degradation as a result of these events.

Federal crop insurance provides a strong mitigator against this risk, but farmers and ranchers face increasingly severe weather incidents and production volatility.

Drought conditions increased modestly in intensity and prevalence in fourth quarter 2024 after a sizable improvement in conditions in 2023 for large portions of the West Coast.

Drought conditions intensified in several western states in the second half of 2024.

Nearly one-third of California was classified as in severe drought to start 2025, up from 0% at the beginning of 2024.

Farmer Mac had minimal exposure to the areas affected by the southern California wildfires in early 2025.

As of January 21, 2025, 17% of the continental U.S.

was classified as being in moderate to exceptional drought according to data from the National Center for Environmental Information, which is slightly higher than the same period of 2024.

At the end of 2024, approximately 70% of the United States is classified as experiencing some level of drought or dryness according to the National Drought Mitigation Center, USDA, and NOAA.

For loans in areas that commonly experience exceptional drought (primarily in California), Farmer Mac's underwriting standards include an assessment of anticipated long-term water availability for the related property and how water availability impacts the collateral value and the borrower's liquidity position to mitigate that risk.

Agricultural Processing and Food Supply Chain

The production of food, feed, fiber, and biofuels has been economically viable in the past few years, but some factors continued to evolve into 2025.

Rising consumer inflation boosted the profitability of the food processing and supply chains in 2021 and 2022.

Lower consumer prices increased the volume of consumer spending but also limited the profit expansion of food and fiber businesses.

Biofuels have gained more demand due to low-carbon regulations in several states and incremental tax benefits for the production of renewable diesel and sustainable aviation fuel.

A large amount of planned biofuel projects and new facilities for 2024 and 2025 could raise the prices of raw materials such as corn and soybeans.

Moderating consumer prices in 2023 and 2024 increased the volume of consumer spending but also limited the profit expansion of food and fiber businesses.

Biofuels have gained demand due to low-carbon regulations in several states and incremental tax benefits for the production of renewable diesel and sustainable aviation fuel.

A large number of planned biofuel projects and new facilities for 2025 could provide support for raw materials such as corn and soybeans, but markets for these fuels are nascent and could evolve or erode rapidly in the coming quarters.

A strong U.S.

dollar, trade issues, and a high risk of global economic turmoil could pose challenges for these sectors in 2024.

Nonetheless, consumer spending remains strong at the beginning of 2024, creating favorable conditions for value-added food, feed, fiber, and biofuel consumption.

Credit demand in these sectors could grow in the next few quarters if interest rate policy moderates, inflation rises again, or economic uncertainty clears up.

Rural Infrastructure Finance Industry Outlook

Power and Energy.

dollar, trade issues, labor availability, changes to consumer demand due to health policy and pharmaceuticals, and a high risk of global economic stress could pose challenges for these sectors in 2025 and 2026.

Nonetheless, consumer spending held steady throughout 2024, providing stable conditions for value-added food, feed, fiber, and biofuel consumption.

Credit demand in these sectors could grow in the next few quarters if interest rate policy maintains course, inflation rises again, mergers and acquisitions activity increases, or economic uncertainty clears up.

Infrastructure Finance Industry Outlook

Power & Utilities

Economic conditions affecting rural power and electricity markets typically follow those in the general economy.

According to data from the U.S.

Energy Information Administration, sales and the revenue from the sale of electricity to customers have slowed, with an annual decrease in sales of 1.1% and an increase in revenue of 2.9%, respectively, in the last 12 months through November 2023 compared to November 2022.

This decrease in sales was driven by a drop in the residential electricity sector.

The average price of electricity to industrial customers increased 2.0% in November 2023 relative to 2022.

Energy Information Administration, sales and the revenue from the sale of electricity to customers advanced in 2024, with an annual increase in sales of 1.1% and an increase in revenue of 3.5%, respectively, in the last 12 months through November 2024 compared to November 2023.

This increase was the result of higher residential and commercial electricity sales combined with slightly higher average prices paid for electricity relative to 2023.

Higher energy input prices, such as natural gas and coal, became a headwind in 2022.

prices rose consistently in 2021 and 2022 because of reduced supply and additional demand for U.S.

liquified natural gas from European countries.

Coal prices also rapidly increased in 2022, driven by higher natural gas prices and additional overseas demand to offset limited Russian coal exports.

Oil and natural gas price volatility moderated throughout 2023, but geopolitical uncertainty in the Middle East and Eastern Europe could increase volatility in 2024.

Despite higher input costs, power producers are generally able to pass cost increases through higher retail electricity prices, as evidenced by the increase in retail electricity price increases throughout 2022 and parts of 2023.

Through December 31, 2023, Farmer Mac had not observed material degradation in the financial performance of its rural utilities portfolio, and that portfolio has never had a serious delinquency or default since its inception.

After two years of increased prices and heightened volatility, oil and natural gas prices moderated throughout much of 2023 and 2024.

Continued geopolitical uncertainty in the Middle East and Eastern Europe could increase energy price volatility, but power producers are generally able to pass higher input costs through to retail electricity prices as

evidenced by higher retail electricity prices in 2022 and parts of 2023.

Through December 31, 2024, Farmer Mac had not observed material degradation in the financial performance of its Power & Utilities loans, and that portfolio has never had a serious delinquency or default since its inception.

Credit demand for electric cooperatives will likely be tied to ongoing normal-course capital expenditures related to maintaining and upgrading utility infrastructure.

These growth opportunities may be affected by the demand for electric power in rural areas, capital expenditures by electric cooperatives driven by regulatory or technological changes, the changing interest rate environment, increased policy initiatives to support rural connectivity, and competitive dynamics within the rural utilities cooperative finance industry.

Generally, these investments are expected to continue at historical levels based on the replacement and modernization of existing infrastructure.

Telecommunications.

Rural telecommunication connectivity has proven to be of vital economic importance in the last decade, as more households and agricultural enterprises require more data and connectivity to thrive.

The rapid growth in digital technologies, including the ongoing interest and investment in artificial intelligence, advancements in cloud computing, and wireless network densification, will require significantly more computing and storage capabilities as well as investment in additional fiber network capacity.

These industry tailwinds are creating additional investments in rural telecommunications infrastructure by cooperative and non-cooperative providers, which is aided by access to many federally funded programs, such as USDA's Broadband Equity Access and Deployment Program (BEAD), the Federal Communications Commission's Rural Digital Opportunity Fund (RDOF), the USDA’s ReConnect program, and the USDA’s Telecommunications Infrastructure Loan and Loan Guarantee program.

These growth opportunities may be affected by the demand for electric power in rural areas, increased power demand from regional data centers, capital expenditures by electric cooperatives driven by regulatory or technological changes, the changing interest rate environment, increased policy initiatives to support rural connectivity, and competitive dynamics within the rural utilities cooperative finance industry.

Generally, these investments are expected to continue at, or above, historical levels based on the replacement and modernization of existing and new infrastructure.

Renewable Energy

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According to data from the U.S.

Energy Information Administration, renewable electricity capacity is expected to grow by 48% in the next five years, compared to total electric capacity growth of 10%.

Energy Information Administration, renewable electricity capacity is expected to grow by 167% in the next ten years, compared to total electric capacity growth of 43%.

The rising cost of fossil fuel-based inputs combined with the falling costs of renewable power generation may hasten this increase in capacity along with recently enacted legislation, such as the Inflation Reduction Act of 2022 that incentivizes domestic production in clean energy technologies such as solar and wind.

Because of these policy tailwinds, analytics from Bloomberg New Energy Finance (BNEF) estimate that investors will install nearly 400 gigawatts of renewable energy capacity between 2023 and 2030.

BNEF analysis also anticipates that nearly $2.5 trillion will be invested in renewable projects between 2021 and 2050.

Because of these policy tailwinds, analysis from Bloomberg New Energy Finance (BNEF) estimates that investors will put $3.2 trillion into renewable projects between 2021 and 2050.

If realized, growth in renewable energy capacity has the potential to broaden Farmer Mac's customer base focused on financing renewable energy projects and companies.

In response to this expected growth, Farmer Mac has hired industry-specialized staff and deployed new financing products tailored to the renewable energy sector, which represents a new and growing market opportunity for Farmer Mac.

Broadband Infrastructure

Rural telecommunication and data connectivity has proven to be of vital economic importance in the last decade, as more households and agricultural enterprises require more data and connectivity to thrive.

In addition to capital projects spurred by these programs, Farmer Mac could see an increase in financing opportunities for other telecommunications providers in rural areas, with fiber line expansion, wireless broadband deployment, industry consolidation and efficiency through mergers and acquisitions, and data processing center buildouts all increasingly important to rural economic opportunity and the constant connectivity required by the food and agriculture industries.

The recent change in U.S.

political leadership may introduce both opportunities and challenges for the infrastructure sector.

Potential changes in tax policy as well as trade and immigration laws could result in significant impacts to infrastructure borrowers, especially for renewable energy projects.

These changes could lead to delays in completing current projects and slow future investments in renewable energy and

battery storage projects as well as the deployment of fiber and broadband infrastructure in rural areas.

The infrastructure sector may experience varying degrees of disruption and adaptation in response to these evolving policies, and these changes could increase the volatility of sector profitability in the near-term.

The potential for disruption in these sectors due to policy changes may be somewhat mitigated by the historically strong market demand for electrification, the ongoing diversification of power generating assets from electricity producers, and continued strong investments in data centers and fiber infrastructure.

Legislative and Regulatory Outlook

Farmer Mac continues to monitor potential legislative and regulatory changes that could affect Farmer Mac or its stakeholders, including:

• On November 16, 2023, President Biden signed into law a one-year extension of the 2018 farm bill.

The extension (through September 30, 2024) will give Congress more time to reauthorize and update a variety of programs impacting farm profitability, agricultural credit, and rural infrastructure.

A farm bill is a critical piece of legislation for a variety of Farmer Mac's customers.

Congress has started an extensive process to review programs that are included in the farm bill in preparation for reauthorization.

Farmer Mac is seeking changes to its charter in this farm bill reauthorization to enhance its partnerships and services in support of lenders serving farmers, ranchers, agribusinesses, and rural infrastructure.

Because the source of Farmer Mac's charter is federal statute, any proposed changes to the text of our charter are subject to approval by Congress and being signed into law by the President of the United States.

• On October 5, 2023, FCA approved a final rule on cyber risk management.

The rule requires an assessment of internal and external risk factors, identification of potential systems and software vulnerabilities, the establishment of a risk management program for the risks identified, development of a cyber risk training program, policies for managing third-party relationships, and the establishment of board reporting requirements.

The effective date of the final rule is January 1, 2025.

• The FCA's proposed 2023 regulatory agenda includes a proposed rulemaking to review Farmer Mac's regulatory capital framework.

The FCA's regulatory agenda estimates that proposed rulemaking in May 2024, although this timeline may change.

Farmer Mac's management team will continue to monitor the FCA's process for this potential rulemaking.

• Two of the three members of the FCA board are currently serving in holdover status because their terms have expired.

These board members will continue to serve in their roles until replacements are nominated by the President and confirmed by the U.S.

Farmer Mac continues to closely monitor potential legislative and regulatory changes that could significantly impact the organization or its stakeholders, including:

• The 2024 elections have resulted in single-party control over both the executive and legislative branches of government.

Some recent executive branch actions have the potential to influence Farmer Mac's regulatory environment:

◦ President Trump has designated Jeffery Hall, who had already been serving on the board of the Farm Credit Administration (FCA), as the board chairman and CEO of FCA, the safety and soundness regulator of Farmer Mac.

Chairman Hall will oversee FCA’s regulatory agenda while serving in that role.

Any new rules proposed by FCA would not be subject to President Trump's "regulatory freeze" executive order issued on January 20, 2025 because that freeze does not apply to rules approved by a department or agency head appointed or designated by President Trump.

FCA's latest regulatory projects plan published in Fall 2024 includes a review of Farmer Mac's regulatory capital framework, with a notice of proposed rulemaking targeted for May 2025.

This timeline may change, and Farmer Mac's management team will continue to monitor and engage with this regulatory process as it develops.

◦ President Trump has designated Mark Uyeda as the Acting Chairman of the Securities and Exchange Commission (SEC).

Similar to any new rules proposed by FCA, any new rules proposed by the SEC would not be subject to President Trump's "regulatory freeze" executive order issued on January 20, 2025 because the Acting Chairman was designated by President Trump.

• Two of the three members of the FCA board, including Chairman Hall, are currently serving in a "holdover status," meaning that their terms have expired.

These board members will continue to serve until the President nominates and the Senate confirms their replacements.

• FCA's final rule on cyber risk management became effective on January 1, 2025.

Farmer Mac does not expect this new rule to have a significant effect on its business practices or operations, as most of the rule's requirements had already been implemented by Farmer Mac before the rule's effective date.

• Congress is expected to consider a number of significant issues during 2025, including the expiring provisions of the Tax Cuts and Jobs Act of 2017, the debt ceiling, annual spending bills, and the reauthorization or extension of the farm bill.

The farm bill, an omnibus legislative bill supporting farmers' profitability, rural community vitality, and infrastructure modernization, is typically updated by Congress every five years.

However, the 2018 farm bill has been extended twice for

one year each to allow Congress more time to develop new policies included in farm bill reauthorization.

The current one-year extension of the 2018 farm bill will expire on September 30, 2025.

If Congress does not pass a new farm bill or extend the 2018 farm bill by December 31, 2025, federal agricultural policy will revert to 1930s-era policy, which provides no price support for many key commodities.

• Farmer Mac continues to work with stakeholders and Congress on changes to its charter in the farm bill reauthorization to better support lenders serving rural areas.

Any changes would require Congressional approval and the President's signature.

• Farmer Mac will continue to monitor Congress’s consideration of tax policy in 2025.

Several provisions of the Tax Cuts and Jobs Act of 2017 are scheduled to expire in 2025.

Congress is likely to address the expiration of these policies and possibly address other tax policies that may directly affect Farmer Mac, such as the corporate tax rate and potential exemptions for income generated from loans secured by agricultural real estate.

Balance Sheet Review

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Total liabilities and equity $ 31,324,742 $ 29,524,382 $ 1,800,360 6 %

The increase in total assets was primarily attributable to new Farmer Mac Guaranteed Securities volume, new loan volume, including those held in consolidated trusts, and a larger investment portfolio.

The increase in total assets was primarily attributable to new loan volume, including those held in consolidated trusts, and a larger investment portfolio.

Liabilities .

The increase in total liabilities was primarily due to an increase in total notes payable to fund the acquisition of Farmer Mac Guaranteed Securities, loan volume, and investment portfolio assets, including those held in consolidated trusts.

The increase in total equity was primarily due to an increase in retained earnings and an increase in accumulated other comprehensive income.

The increase in total liabilities was primarily due to an increase in total notes payable to fund the acquisition of loan volume, including those held in consolidated trusts.

The increase in total equity was primarily due to an increase in retained earnings and an increase in accumulated other comprehensive income, which was partially offset by the redemption of the Series C Preferred Stock.

Risk Management

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Farmer Mac applies credit underwriting standards and methodologies to help assess exposures to loan purchases, which may include collateral valuation, financial metrics, and other appropriate borrower financial and credit information.

For Corporate AgFinance loans, which are often larger loan exposures to agriculture production and agribusinesses that support agriculture production, food and fiber processing, and other supply chain production, and which may have risk profiles that differ from smaller agricultural mortgage loans, Farmer Mac has implemented methodologies and parameters that help assess credit risk based on the appropriate sector, borrower construct, and

transaction complexity.

For more information about Farmer Mac's underwriting and collateral valuation standards for Agricultural Finance mortgage loans, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Underwriting and Collateral Standards—Farm & Ranch" and "Business—Farmer Mac's Lines of Business—Agricultural Finance—Underwriting and Collateral Standards—Corporate AgFinance."

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Those 90-day delinquencies consisted of 62 delinquent loans as of December 31, 2024, compared to 23 delinquent loans as of December 31, 2023.

The decrease in the number of 90-day delinquencies was primarily driven by decreased delinquencies in agricultural storage and processing, and was partially offset by increased delinquencies in crops, permanent plantings, part-time farms, and livestock.

The increase in the number of 90-day delinquencies was primarily driven by increased delinquencies in permanent plantings and crops and was concentrated in the Southwest region.

The increase in loans 90 days or more delinquent as of December 31, 2024 compared to December 31, 2023 reflects the continued decrease in U.S.

farm income driven by weak agricultural commodity prices and elevated input costs.

$37.6 million of the increase in 90-day delinquent loans was related to a single permanent planting borrower relationship.

The top ten borrower exposures over 90 days delinquent represented over half of the 90-day delinquencies as of December 31, 2024.

Farmer Mac believes that it remains adequately collateralized on its delinquent loans.

Farmer Mac's 90-day delinquency rate as of December 31, 2023 was below Farmer Mac's historical average.

In the near-term, our delinquency rate may exceed our historical average due to changes in the agricultural or general economy or unforeseen and idiosyncratic events like adverse weather events.

Farmer Mac's 90-day delinquency rate as of December 31, 2024 was slightly below Farmer Mac's historical average.

In the near-term, our delinquency rate may exceed our historical average due to the current agricultural cycle or changes in the general economy or unforeseen and idiosyncratic events like adverse weather events.

Farmer Mac's average 90-day delinquency rate as a percentage of its Agricultural Finance mortgage loan portfolio over the last 15 years is approximately 1%.

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Those substandard assets comprised 336 loans as of December 31, 2024 and 206 loans as of December 31, 2023.

The decrease of $23.4 million in Agricultural Finance substandard assets during 2023 was primarily driven by the payoff of a substandard loan that had been in our on-balance sheet portfolio.

Agricultural Finance substandard assets decreased as a percentage of both our on-balance sheet and our off-balance sheet Agricultural Finance portfolios during 2023.

The increase of $212.3 million in Agricultural Finance substandard assets during 2024 was primarily attributable to credit risk rating downgrades in permanent plantings and crops.

Most of the increase in substandard permanent planting loans were in the Corporate AgFinance segment of the portfolio.

Credit performance within the crops and livestock commodities have begun to revert toward historical averages after those commodities were supported by higher commodity prices and federal government support payments in previous years.

Overall, Agricultural Finance substandard assets increased as a percentage of our on- and off-balance sheet Agricultural Finance portfolios during 2024.

The percentage of Agricultural Finance substandard assets within the portfolio as of December 31, 2024 was below the historical average.

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The highest substandard asset rate observed during the last 15 years occurred in 2010 at approximately 8%, which coincided with an increase in substandard loans within Farmer Mac's ethanol portfolio.

If Farmer Mac's substandard asset rate increases from current levels, it is likely that Farmer Mac's provision to the allowance for loan losses and the reserve for losses will also increase.

If Farmer Mac's substandard asset rate increases from current levels on a sustained basis, it is likely that Farmer Mac's provision to the allowance for loan losses and the reserve for losses would also increase.

Although some credit losses are inherent to the business of agricultural lending, Farmer Mac believes that losses associated with the current agricultural credit cycle will be moderated by the strength and diversity of its Agricultural Finance portfolio, which Farmer Mac believes is adequately collateralized.

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The weighted-average original loan-to-value ratio for Farm & Ranch mortgage loans purchased during 2024 was 49%, compared to 51% for loans purchased during 2023.

The weighted-average original loan-to-value ratio for Farm & Ranch mortgage loans and loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs was 52% and 51% as of December 31, 2023 and

2022, respectively.

The weighted-average original loan-to-value ratio for all 90-day delinquencies was 53% and 56% as of December 31, 2024 and 2023, respectively.

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(2) "Enterprise Value" loans are generally secured by all business assets and common stock (in addition to first lien mortgages) of the borrower and the value of the borrowing entity depends on its ability to generate recurring positive cash flow.

Enterprise Value is the estimated value of the borrower as a going concern, which is estimated using one ore more valuation techniques such as discounted cash flow, cash flow multiples, asset liquidation, or other valuation techniques.

Enterprise Value is the estimated value of the borrower as a going concern, which is estimated using one or more valuation techniques such as discounted cash flow, cash flow multiples, asset liquidation, or other valuation techniques.

The following table presents Farmer Mac's cumulative net credit losses relative to the cumulative original balance for all Agricultural Finance mortgage loans as of December 31, 2024 by year of origination, geographic region, and commodity/collateral type.

The purpose of this table is to present information about realized losses relative to original Farm & Ranch purchases, guarantees, and commitments.

The purpose of this table is to present information about realized credit losses relative to original Farm & Ranch purchases, guarantees, and commitments.

Agricultural Finance Mortgage Loans Credit Losses Relative to Cumulative

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Southeast (AL, FL, GA, MS, NC, SC, TN).

Included in realized losses in the table above is a charge-off in the amount of approximately $0.5 million related to a single $14.5 million agricultural storage and processing borrower exposure in 2024.

Also during 2024, Farmer Mac sold $7.0 million of the holding to reduce the overall exposure to this borrower.

That sale resulted in a realized loss in the amount of approximately $1.1 million, before tax.

As of December 31, 2024, Farmer Mac had transferred the remaining holding in the amount of approximately $7.1 million from loans held for investment to loans held for sale and recognized an unrealized loss in the amount of approximately $1.0 million, before tax.

Thus, in 2024 Farmer Mac incurred an aggregate economic loss on this single agricultural storage and processing exposure in the amount of approximately $2.5 million.

Analysis of portfolio performance indicates that commodity type is the primary determinant of Farmer Mac's exposure to loss on a given loan.

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Activity affecting the allowance for loan losses and reserve for losses is discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Provision for and Release of Allowance for Loan Losses and Reserve for Losses."

Rural Infrastructure Finance - Direct Credit Exposure

Farmer Mac's direct credit exposure to Rural Infrastructure Finance loans held and loans underlying LTSPCs as of December 31, 2023 was $4.1 billion across 45 states.

For more information about Farmer Mac's underwriting and collateral valuation standards for Rural Infrastructure Finance loans, see "Business—Farmer Mac's Lines of Business—Rural Infrastructure Finance—Underwriting and Collateral Standards." As of December 31, 2023, there were no delinquencies in Farmer Mac's portfolio of Rural Infrastructure Finance loans.

As of December 31, 2023, there was one telecommunications loan classified as substandard, with an unpaid principal balance of $29.4 million.

Farmer Mac evaluates credit risk of Rural Infrastructure assets by reviewing a variety of borrower credit risk characteristics.

These characteristics can include (but is not limited to) financial metrics, internal risk ratings, ratings assigned by ratings agencies, types of customers served, sources of power supply, and the regulatory environment.

The following table disaggregates Farmer Mac’s portfolio of Rural Infrastructure loans by portfolio segment and by internally assigned risk ratings.

Infrastructure Finance - Direct Credit Exposure

Farmer Mac's direct credit exposure to Infrastructure Finance loans held and loans underlying LTSPCs as of December 31, 2024 was $5.5 billion across 45 states.

For more information about Farmer Mac's underwriting and collateral valuation standards for Infrastructure Finance loans, see "Business—Farmer Mac's Lines of Business—Infrastructure Finance—Underwriting and Collateral Standards." As of December 31, 2024, there was one Broadband Infrastructure borrower and one Renewable Energy borrower classified as substandard.

The total exposure on those two borrowers was $42.5 million.

As of December 31, 2023, there was one Broadband Infrastructure borrower classified as substandard, with an unpaid principal balance of $29.4 million.

Farmer Mac evaluates credit risk of Infrastructure Finance assets by reviewing a variety of borrower credit risk characteristics.

These characteristics can include (but are not limited to) financial metrics, internal risk ratings, ratings assigned by ratings agencies, types of customers served, sources of power supply, and the regulatory environment.

The following table disaggregates Farmer Mac’s portfolio of Infrastructure Finance loans by portfolio segment and by internally assigned risk ratings.

As of December 31, 2024

Rural Infrastructure Finance portfolio by internally assigned risk rating

Infrastructure Finance portfolio by internally assigned risk rating

Acceptable Special Mention Substandard Total

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Renewable Energy 1,403,169 — 13,356 1,416,525

Telecommunications 467,711 9,850 29,400 506,961

Rural Infrastructure Total $ 4,030,526 $ 9,850 $ 29,400 $ 4,069,776

For more information about the credit quality of Farmer Mac's Rural Infrastructure Finance portfolio and the associated allowance for losses please refer to Notes 8 and 12 of the consolidated financial statements.

Broadband Infrastructure

738,946 34,388 29,132 802,466

Infrastructure Finance Total

$ 5,430,338 $ 34,388 $ 42,488 $ 5,507,214

For more information about the credit quality of Farmer Mac's Infrastructure Finance portfolio and the associated allowance for losses please refer to Notes 8 and 12 of the consolidated financial statements.

Other Considerations Regarding Credit Risk Related to Loans and Guarantees

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During the previous three years ended December 31, 2024, there have been no breaches of representations and warranties by sellers that resulted in Farmer Mac requiring a seller to cure, replace, or repurchase a loan.

In addition to relying on the representations and warranties of sellers, Farmer Mac also underwrites the Agricultural Finance mortgage loans (other than rural housing and part-time farm mortgage loans) and Rural Infrastructure Finance loans on which it has direct credit exposure.

In addition to relying on the representations and warranties of sellers, Farmer Mac also underwrites the Agricultural Finance mortgage loans (other than rural housing and part-time farm mortgage loans) and Infrastructure Finance loans on which it has direct credit exposure.

For rural housing and part-time farm mortgage loans, Farmer Mac relies on representations and warranties from the seller that those loans conform to Farmer Mac's specified underwriting criteria.

For more information about Farmer Mac's loan eligibility requirements and underwriting standards, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Loan Eligibility," "Business—Farmer Mac's Lines of Business—Agricultural Finance—Underwriting and Collateral Standards—Farm & Ranch," "Business—Farmer Mac's Lines of Business—Agricultural Finance—Underwriting and Collateral Standards—Corporate AgFinance," and "Business—Farmer Mac's Lines of Business—Rural Infrastructure Finance—Underwriting and Collateral Standards."

For more information about Farmer Mac's loan eligibility requirements and underwriting standards, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Loan Eligibility," "Business—Farmer Mac's Lines of Business—Agricultural Finance—Underwriting and Collateral Standards—Farm & Ranch," "Business—Farmer Mac's Lines of Business—Agricultural Finance—Underwriting and Collateral Standards—Corporate AgFinance," and "Business—Farmer Mac's Lines of Business—Infrastructure Finance—Underwriting and Collateral Standards."

Under contracts with Farmer Mac and in consideration for servicing fees, Farmer Mac-approved servicers service loans in accordance with Farmer Mac's requirements.

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Farmer Mac also can proceed against the servicer in arbitration or exercise any remedies available to it under law.

During the previous three years ended December 31, 2023, Farmer Mac had not exercised any remedies or taken any formal action against any servicers.

For more information about Farmer Mac's servicing requirements, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Loan Servicing" and "Business—Farmer Mac's Lines of Business—Rural Infrastructure Finance—Lenders and Loan Servicing."

In September 2024, Farmer Mac notified a field servicer of a breach of its servicing duties and the termination of the servicing relationship for two large borrower relationships effective October 1, 2024.

That was Farmer Mac's only exercise of remedies or taking of formal action against any servicers during the previous three years ended December 31, 2024.

For more information about Farmer Mac's servicing requirements, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Loan Servicing" and "Business—Farmer Mac's Lines of Business—Infrastructure Finance—Lenders and Loan Servicing."

Credit Risk – Counterparty Risk .

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In the event of a default on an AgVantage security, Farmer Mac would have recourse to the pledged collateral and have rights to the ongoing borrower payments of principal and interest.

As a result, Farmer Mac has indirect credit exposure to the Agricultural Finance mortgage loans and Rural Infrastructure loans that secure AgVantage securities.

As a result, Farmer Mac has indirect credit exposure to the Agricultural Finance mortgage loans and Infrastructure loans that secure AgVantage securities.

For AgVantage counterparties that are institutional real estate investors or financial funds and other similar entities, Farmer Mac also typically requires that the counterparty (1) maintain a higher collateralization level, through either a higher overcollateralization percentage or lower loan-to-value ratio thresholds and (2) comply with specified financial covenants for the life of the related AgVantage security to avoid default.

As of December 31, 2024, Farmer Mac had not experienced any credit losses on any AgVantage securities over the life of the program.

For a more detailed description of AgVantage securities, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Other Products – Agricultural Finance—AgVantage Securities" and "Business—Farmer Mac's Lines of Business—Rural Infrastructure Finance—Other Products – Rural Infrastructure Finance—AgVantage Securities."

For a more detailed description of AgVantage securities, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Other Products – Agricultural Finance—AgVantage Securities" and "Business—Farmer Mac's Lines of Business—Infrastructure Finance—Other Products – Infrastructure Finance—AgVantage Securities."

The unpaid principal balance of outstanding on-balance sheet AgVantage securities secured by loans eligible for the Agricultural Finance line of business totaled $5.0 billion as of December 31, 2024 and $6.1 billion as of December 31, 2023.

The unpaid principal balance of on-balance sheet AgVantage securities secured by loans eligible for the Rural Infrastructure Finance line of business totaled $3.9 billion as of December 31, 2023 and $3.0 billion as of December 31, 2022.

The unpaid principal balance of outstanding off-balance sheet AgVantage securities totaled $0.0 million as of December 31, 2023 and $1.2 million as of December 31, 2022.

The unpaid principal balance of on-balance sheet AgVantage securities secured by loans eligible for the Infrastructure Finance line of business totaled $3.5 billion as of December 31, 2024 and $3.9 billion as of December 31, 2023.

The following table provides information about the issuers of AgVantage securities and the required collateralization levels for those transactions as of December 31, 2024 and 2023:

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Farmer Mac monitors the financial condition of those institutions by evaluating financial statements and credit rating agency reports.

For more information about Farmer Mac's lender eligibility requirements, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Lenders" and "Business—Farmer Mac's Lines of Business—Rural Infrastructure Finance—Lenders and Loan Servicing."

For more information about Farmer Mac's lender eligibility requirements, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Lenders" and "Business—Farmer Mac's Lines of Business—Infrastructure Finance—Lenders and Loan Servicing."

Farmer Mac manages institutional credit risk related to its interest rate swap counterparties through collateralization provisions contained in each of its swap agreements that vary based on the market value of its swap portfolio with each counterparty.

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As of December 31, 2024, Farmer Mac had $1.0 billion of cash and cash equivalents and $6.0 billion of investment securities.

The management of the credit risk inherent in these investments is governed by Farmer Mac's internal policies as well as Liquidity and Investment Regulations.

The management of the credit risk inherent in these investments is governed by Farmer Mac's internal policies as well as FCA regulations, which can be found at 12 C.F.R.

§§ 652.1-652.45 ("Liquidity and Investment Regulations").

In addition to establishing a portfolio of highly liquid investments as an available source of cash, the goals of Farmer Mac's investment policies are designed to minimize Farmer Mac's exposure to financial market volatility, preserve capital, and support Farmer Mac's access to the debt markets.

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(1) at a minimum, at least one obligor of the investment must have a very strong capacity to meet financial commitments for the life of the investment, even under severely adverse or stressful conditions, and generally present a very low risk of default;

(2) if the obligor whose capacity to meet financial commitments is being relied upon to meet the standard set forth in subparagraph (1) is located outside of

the United States, the investment must also be fully guaranteed by a U.S.

(2) if the obligor whose capacity to meet financial

commitments is being relied upon to meet the standard set forth in subparagraph (1) is located outside of the United States, the investment must also be fully guaranteed by a U.S.

government agency;

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Recognizing that interest rate sensitivities may change with the passage of time and as interest rates change, Farmer Mac regularly assesses this exposure and, if necessary, adjusts its portfolio of interest-earning assets, debt, and financial derivatives.

Farmer Mac's objective is to maintain its exposure to interest rate risk within appropriate limits, as approved by Farmer Mac's board of directors.

Farmer Mac seeks to maintain its exposure to interest rate risk within appropriate limits, as approved by Farmer Mac's board of directors.

Farmer Mac's management-level Asset and Liability Committee ("ALCO") provides oversight, establishes guidelines, and approves strategies to maintain interest rate risk within the board-established limits.

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Farmer Mac issues discount notes and both callable and non-callable medium-term notes across a spectrum of maturities to execute its debt issuance strategy.

Portions of Farmer Mac's callable debt is

issued to mitigate prepayment risk associated with certain interest-earning assets held on balance sheet.

In general, as interest rates decline, prepayments typically increase, and Farmer Mac is able to economically extinguish certain callable debt issuances.

Portions of Farmer Mac's callable debt is issued to mitigate prepayment risk associated with certain interest-earning assets held on balance sheet.

In general, as interest rates decline, asset prepayments typically increase, and Farmer Mac may be able to economically extinguish certain callable debt issuances.

In addition, Farmer Mac enters into financial derivatives, primarily interest rate swaps, to better match the durations of Farmer Mac's assets and liabilities, thereby reducing overall sensitivity to changing interest rates.

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As of December 31, 2024, $2.7 billion of the $6.0 billion of investment securities (46%) were floating rate securities with rates that adjust within one year or fixed rate securities with original maturities between three months and one year.

Farmer Mac's floating rate investment securities are funded with floating rate debt.

Farmer Mac's floating rate investment securities are primarily funded with floating rate debt.

The fixed rate investment securities are generally funded in a manner consistent with Farmer Mac's overall funding strategy that approximates a duration and convexity match.

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-100 basis points 1.6 % 0.8 %

As of December 31, 2023, Farmer Mac's duration gap was positive 3.4 months, compared to positive 3.6 months as of December 31, 2022.

Treasury interest rate yield curve remained inverted during 2023, although the 2-year U.S.

Treasury Note yield-to-maturity decreased by approximately 18 basis points and the 10-year U.S.

Treasury Note yield-to-maturity was relatively flat compared to year-end 2022.

This rate movement contributed to shortening the duration of Farmer Mac's funded assets compared to its debt and financial derivatives, thereby narrowing Farmer Mac's duration gap.

As of December 31, 2024, Farmer Mac maintained a positive effective duration gap of 3.7 months, up from the 3.4 months reported as of December 31, 2023.

Since the end of 2023, the yield curve has steepened, with the yield on 2-year U.S.

Treasury Notes decreasing by approximately 1 basis point and the yield on 10-year U.S.

Treasury Notes increasing by about 69 basis points..

This shift in rates contributed to an extension in the duration of Farmer Mac's funded assets relative to its liabilities and financial derivatives.

Financial Derivatives Transactions

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Treasury securities.

As of December 31, 2023, Farmer Mac had $25.8 billion combined notional amount of interest rate swaps, with terms ranging from less than one year to just over thirty years, of which $9.9 billion were pay-fixed interest rate swaps, $15.0 billion were receive-fixed interest rate swaps, and $0.9 billion were basis swaps.

As of December 31, 2024, Farmer Mac had $24.9 billion combined notional amount of interest rate swaps, with terms ranging from less than one year to approximately thirty years, of which $10.4 billion were pay-fixed interest rate swaps, $13.9 billion were receive-fixed interest rate swaps, and $0.7 billion were basis swaps.

Farmer Mac enters into interest rate swaps to more closely match the cash flow and duration characteristics of its interest-earning assets with those of its debt.

For example, Farmer Mac transacts pay-fixed interest rate swaps and issues floating rate debt to effectively create fixed rate funding that approximately matches the duration of the corresponding fixed rate assets being funded.

Farmer Mac evaluates the overall cost of using interest rate swaps in conjunction with debt issuance as a funding alternative to duration-matched debt and enters into interest rate swaps to manage interest rate risks across the balance sheet.

Farmer Mac evaluates the overall cost of using interest rate swaps in conjunction with debt issuance as a funding

alternative to duration-matched debt and enters into interest rate swaps to manage interest rate risks across the balance sheet.

Certain financial derivatives are designated as fair value hedges of fixed rate assets classified as available-for-sale or liabilities to protect against fair value changes in the assets or liabilities related to a benchmark interest rate (e.g.

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Farmer Mac regularly adjusts its funding strategies to mitigate the effects of interest rate variability and seeks to maintain an effective mixture of funding structures in the context of its overall liability and liquidity management strategies.

As of December 31, 2023, Farmer Mac held $8.0 billion of floating rate assets in its lines of business and its investment portfolio that reset based on floating rate market indices, such as SOFR.

As of December 31, 2024, Farmer Mac held $7.4 billion of floating rate assets in its lines of business and its investment portfolio that reset based on floating rate market indices, such as the Secured Overnight Financing Rate ("SOFR").

As of the same date, Farmer Mac also had $10.4 billion of interest rate swaps outstanding where Farmer Mac pays a fixed rate of interest and receives a floating rate of interest, primarily SOFR.

Discontinuation of LIBOR

Farmer Mac has not had, and does not foresee, a material impact on our business due to the replacement of LIBOR with SOFR.

We have had no further LIBOR exposure since the quarter-ended September 30, 2023.

Liquidity and Capital Resources

Farmer Mac's primary sources of funds to meet its liquidity and funding needs are the proceeds of its debt issuances, guarantee and commitment fees, net effective spread, loan repayments, and repayments of AgVantage and investment securities.

Farmer Mac regularly accesses the debt capital markets for funding, and Farmer Mac has maintained steady access to the debt capital markets throughout 2023.

Farmer Mac regularly accesses the debt capital markets for funding, and Farmer Mac maintained steady access to the debt capital markets throughout 2024.

Farmer Mac funds its purchases of eligible loan assets, USDA Securities, Farmer Mac Guaranteed Securities, and investment assets and finances its operations primarily by issuing debt obligations of various maturities in the debt capital markets.

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Farmer Mac must maintain a minimum of 90 days of liquidity under the Liquidity and Investment Regulations.

In accordance with the methodology for calculating available days of liquidity

under those regulations, Farmer Mac maintained a monthly average of 307 days of liquidity throughout 2023 and had 319 days of liquidity as of December 31, 2023.

In accordance with the methodology for calculating available days of liquidity under those regulations, Farmer Mac maintained a monthly average of 301 days of liquidity throughout 2024 and had 264 days of liquidity as of December 31, 2024.

Farmer Mac maintains cash, cash equivalents (including U.S.

Treasury securities, operational deposits, and other short-term money market instruments), and other investment securities that can be drawn upon for liquidity needs.

Farmer Mac's current policies authorize liquidity investments in:

• obligations of or fully guaranteed by the United States or a U.S.

government agency;

• obligations of or fully guaranteed by GSEs;

• municipal securities;

• international and multilateral development bank obligations;

• money market instruments;

• diversified investment funds;

• asset-backed securities;

• corporate debt securities;

• mortgage-backed securities.

Farmer Mac's liquidity investments must comply with policies adopted by Farmer Mac's board of directors and with FCA's Liquidity and Investment Regulations, which establish limitations on asset class, dollar amount, issuer concentration, and credit quality.

The following table presents these assets as of December 31, 2024 and 2023:

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Total $ 6,986,291 $ 5,861,394

The objectives of the investment portfolio as of December 31, 2023 and 2022 are to provide a level of liquidity that mitigates enterprise risk, provides a reliable source of short-term and long-term liquidity, to prepare for the possibility of future volatility in the debt capital markets, and to support program asset growth.

The objectives of the investment portfolio as of December 31, 2024 and 2023 are to provide a level of liquidity that mitigates enterprise risk, provides a reliable source of short-term and long-term liquidity and to support program asset growth.

Capital Requirements .

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(in thousands)

LTSPCs $ 3,680,333 $ 3,423,155

LTSPCs and purchase commitments

$ 4,029,019 $ 3,680,333

Mandatory commitments to purchase loans and USDA Securities 53,980 31,049

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and (2) LTSPCs.

Both products are available through each of the Agricultural Finance and Rural Infrastructure Finance lines of business.

For securitization trusts where Farmer Mac is the primary beneficiary, the trust assets and liabilities are included on Farmer Mac's consolidated balance sheet.

Both products are available through each of the Agricultural Finance and Infrastructure Finance lines of business.

For securitization trusts where Farmer Mac is the primary beneficiary, the trust assets and liabilities are included on Farmer Mac's consolidated balance

For securitization trusts where Farmer Mac is not the primary beneficiary and in the event of deconsolidation, both of these alternatives create off-balance sheet obligations for Farmer Mac.

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Total Agricultural Finance obligations 3,722,598 3,597,922

Rural Infrastructure:

Rural Utilities:

Infrastructure Finance:

Power & Utilities:

LTSPCs and unfunded loan commitments

401,647 464,743

Farmer Mac Guaranteed Securities — 1,169

Broadband Infrastructure:

Unfunded loan commitments

180,259 23,035

Renewable Energy:

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150,825 47,235

Total Rural Infrastructure obligations 535,013 524,361

Total Infrastructure Finance obligations

732,731 535,013

Total off-balance sheet $ 4,455,329 $ 4,132,935

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New Business Volume

Agricultural Finance Rural Infrastructure Finance

Farm & Ranch Corporate AgFinance Rural Utilities Renewable Energy Total

Agricultural Finance Infrastructure Finance

Corporate AgFinance Power & Utilities Broadband Infrastructure Renewable Energy Total

(in thousands)

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Repayments of Assets

Agricultural Finance Rural Infrastructure Finance

Farm & Ranch Corporate AgFinance Rural Utilities Renewable Energy Total

Agricultural Finance Infrastructure Finance

Ranch Corporate AgFinance Power & Utilities Broadband Infrastructure Renewable Energy Total

(in thousands)

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Outstanding Business Volume

Agricultural Finance Rural Infrastructure Finance

Farm & Ranch Corporate AgFinance Rural Utilities Renewable Energy Total

Agricultural Finance Infrastructure Finance

Ranch Corporate AgFinance Power & Utilities Broadband Infrastructure Renewable Energy Total

(in thousands)

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Net Effective Spread

Agricultural Finance Rural Infrastructure Finance Treasury

Farm & Ranch Corporate AgFinance Rural Utilities Renewable Energy Funding Investments Net Effective Spread

Dollars Yield Dollars Yield Dollars Yield Dollars Yield Dollars Yield Dollars Yield Dollars Yield

Agricultural Finance Infrastructure Finance Treasury

Ranch Corporate AgFinance Power & Utilities Broadband Infrastructure Renewable Energy Funding Investments Net Effective Spread

Yield Dollars

(dollars in thousands)

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$ 32,556 $ 7,891 $ 5,059 $ 3,414 $ 4,859 $ 31,242 $ 2,507 $ 87,528

0.96 % 1.95 % 0.32 % 2.34 % 1.76 % 0.42 % 0.15 % 1.16 %

September 30, 2024 35,755 6,397 4,785 2,794 3,810 30,912 943 85,396

1.05 % 1.56 % 0.30 % 2.21 % 1.78 % 0.42 % 0.05 % 1.16 %

June 30, 2024 34,156 7,866 5,253 2,393 2,999 30,268 661 83,596

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March 31, 2024 32,843 7,971 4,890 2,342 2,049 32,474 475 83,044

0.95 % 2.05 % 0.30 % 2.08 % 1.75 % 0.45 % 0.03 % 1.14 %

December 31, 2023

33,329 8,382 4,916 2,426 1,540 33,361 597 84,551

0.98 % 2.06 % 0.31 % 2.06 % 1.69 % 0.47 % 0.04 % 1.19 %

September 30, 2023 32,718 8,250 3,979 2,383 1,150 34,412 532 83,424

0.97 % 2.05 % 0.26 % 2.15 % 1.46 % 0.49 % 0.04 % 1.20 %

June 30, 2023 34,388 7,444 3,681 2,127 1,100 32,498 594 81,832

1.03 % 1.92 % 0.25 % 2.25 % 1.47 % 0.48 % 0.04 % 1.20 %

March 31, 2023 32,465 7,148 3,599 1,908 858 31,738 (543) 77,173

0.97 % 1.94 % 0.24 % 2.53 % 1.53 % 0.47 % (0.04) % 1.15 %

December 31, 2022 32,770 7,471 3,271 1,689 935 27,656 (2,689) 71,103

(1) Farmer Mac excludes the Corporate segment in the presentation above because the segment does not have any interest-earning assets.

(2) See Note 14 to the consolidated financial statements for a reconciliation of GAAP net interest income by segment to net effective spread by segment for the years ended December 31, 2023 and 2022.

0.98 % 1.94 % 0.24 % 2.39 % 1.76 % 0.42 % (0.19) % 1.07 %

The following table presents quarterly core earnings (a non-GAAP measure) reconciled to net income attributable to common stockholders:

Core Earnings by Quarter End

December 2023 September 2023 June 2023 March 2023 December 2022 September 2022 June

2022 March 2022 December 2021

December 2024 September 2024 June 2024 March 2024 December 2023 September 2023 June 2023 March 2023 December 2022

(in thousands)

1 unchanged sentence

Guarantee and commitment fees 5,086 4,997 5,256 4,982 4,865 4,828 4,581 4,654 4,677

Gains on sale of mortgage loans — — — — — — — — 6,539

Gain on sale of investment securities — — 1,052 — — — — — —

Loss on sale of mortgage loan — — (1,147) — — — — — —

Other (491) 1,133 481 1,077 767 1,056 409 1,067 390

1 unchanged sentence

Credit related expense/(income):

(Release of)/provision for losses (575) (181) 1,142 750 1,945 450 (1,535) (54) (1,428)

Provision for/(release of) losses 3,872 3,258 6,230 (1,870) (575) (181) 1,142 750 1,945

REO operating expenses — 196 — — — — — — 819

10 unchanged sentences

Reconciling items:

(Losses)/gains on undesignated financial derivatives due to fair value changes $ (836) $ 2,921 $ 2,141 $ 916 $ 1,596 $ 6,441 $ 2,846 $ 2,612 $ (1,242)

(Losses)/gains on hedging activities due to fair value changes (3,598) 3,210 (4,901) (105) (148) (624) 428 5,687 (2,079)

Gains/(losses) on undesignated financial derivatives due to fair value changes $ 3,084 $ (1,064) $ (359) $ 1,683 $ (836) $ 2,921 $ 2,141 $ 916 $ 1,596

Gains/(losses) on hedging activities due to fair value changes 5,737 205 2,604 3,002 (3,598) 3,210 (4,901) (105) (148)

Unrealized (losses)/gains on trading assets (83) 99 (87) (14) (37) 1,714 (57) 359 31

1 unchanged sentence

Net effects of terminations or net settlements on financial derivatives 534 (503) (1,505) (192) (800) (79) 583 523 1,268

Issuance costs on the retirement of preferred stock — (1,619) — — — — — — —

Income tax effect related to reconciling items (1,939) 260 (143) (947) 1,089 (1,638) 464 (362) (590)

1 unchanged sentence

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

What changed 10-K

Item 7. Management’s Discussion and Analysis