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Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2024-11-04 · 467 added, 523 removed, 926 unchanged (52% 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 quarter ended September 30, 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:

(1) the interim unaudited consolidated financial statements and the related notes that appear elsewhere in this report;

and (2) Farmer Mac's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 as filed with the SEC on February 23, 2024 (the "2023 Annual Report").

This discussion and analysis of financial condition and

results of operations should be read together with:

(1) the interim unaudited consolidated financial

statements and the related notes that appear elsewhere in this report;

and (2) Farmer Mac's Annual Report

on Form 10-K for the fiscal year ended December 31, 2024 as filed with the SEC on February 21, 2025

(the "2024 Annual Report").

FORWARD-LOOKING STATEMENTS

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• trends in net interest income and net effective spread;

• trends in portfolio credit quality, delinquencies, substandard assets, credit losses, and provisions for losses;

• trends in portfolio credit quality, delinquencies, substandard assets, credit losses, and provisions for expected credit losses;

• assessment of economic and market trends;

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Management's expectations for Farmer Mac's future necessarily involve assumptions, estimates, and the evaluation of risks and uncertainties.

Various factors or events, both known and unknown, could cause Farmer Mac's actual results to differ materially from the expectations as expressed or implied by the forward-looking statements, including the factors discussed under "Risk Factors" in Part I, Item 1A of Farmer Mac's 2023 Annual Report, as well as uncertainties about:

Various factors or events, both known and unknown, could cause Farmer Mac's actual results to differ materially from the expectations as expressed or implied by the

forward-looking statements, including the factors discussed under "Risk Factors" in Part I, Item 1A of Farmer Mac's 2024 Annual Report, as well as uncertainties about:

• the availability to Farmer Mac of debt and equity financing and, if available, the reasonableness of rates and terms;

• legislative or regulatory developments that could affect Farmer Mac, its sources of business, or agricultural or rural infrastructure industries;

• legislative, regulatory, or political developments that could affect Farmer Mac, its sources of business, or agricultural or infrastructure industries;

• fluctuations in the fair value of assets held by Farmer Mac and its subsidiaries;

• the level of lender interest in Farmer Mac's products and the secondary market provided by Farmer Mac;

• the general rate of growth in agricultural mortgage and rural infrastructure indebtedness;

• the effect of economic conditions stemming from disruptive global events or otherwise on agricultural mortgage or rural infrastructure lending, borrower repayment capacity, or collateral values, including inflation, fluctuations in interest rates, changes in U.S.

trade policies, fluctuations in export demand for U.S.

• the general rate of growth in agricultural mortgage and infrastructure indebtedness;

• the effect of economic conditions stemming from disruptive global events or otherwise on agricultural mortgage or infrastructure lending, borrower repayment capacity, or collateral values, including inflation, fluctuations in interest rates, changes in U.S.

trade policies (including tariffs and trade restrictions), fluctuations in export demand for U.S.

agricultural products and foreign currency exchange rates, supply chain disruptions, increases in input costs, labor availability, and volatility in commodity prices;

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• the effects of the Federal Reserve’s efforts to achieve monetary policy normalization to respond to inflation and employment levels;

• other factors that could hinder agricultural mortgage lending or borrower repayment capacity, including the effects of severe weather, flooding and drought, climate change, or fluctuations in agricultural real estate values.

• other factors that could hinder agricultural mortgage lending or borrower repayment capacity, including the effects of severe weather, flooding and drought, or fluctuations in agricultural real estate values.

Considering these potential risks and uncertainties, no undue reliance should be placed on any forward-looking statements expressed in this report.

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The information in this report is not necessarily indicative of future results.

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

As a secondary market provider for our nation's agricultural and rural infrastructure credit, we provide financial solutions to a broad spectrum of customers supporting rural America, including agricultural lenders, agribusinesses, and rural electric cooperatives.

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 third quarter 2024:

• we provided $2.0 billion in liquidity and lending capacity to lenders serving rural America;

• 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;

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

During first quarter 2025, Farmer Mac:

• provided $1.8 billion in liquidity and lending capacity to lenders serving rural America;

• 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.

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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For the Three Months Ended

September 30, 2024 June 30, 2024 September 30, 2023

March 31, 2025 December 31, 2024 March 31, 2024

(in thousands)

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Core earnings 45,966 43,554 43,392

The $2.0 million sequential increase in net income attributable to common stockholders was due to a $2.3 million after-tax decrease in our provision for credit losses, a $0.9 million decrease in preferred stock dividends related to the redemption of the Series C Preferred Stock, and a $0.6 million after-tax increase in late fee income.

These factors were partially offset by the $1.6 million loss on retirement of the Series C Preferred Stock, related to deferred issuance costs.

The $9.0 million year-over-year decrease in net income attributable to common stockholders was due to a $3.6 million after-tax decrease in the fair value of undesignated financial derivatives, a $2.7 million after-tax increase in our provision for credit losses, the $1.6 million loss on retirement of the Series C Preferred Stock related to deferred issuance costs, and a $1.2 million after-tax decrease in guarantee and commitment fee income.

These factors were partially offset by a $0.9 million decrease in preferred stock dividends related to the redemption of the Series C Preferred Stock.

The $5.1 million sequential increase in core earnings was due to a $2.3 million after-tax decrease in our provision for credit losses, a $1.4 million after-tax increase in net effective spread, a $0.9 million decrease in preferred stock dividends related to the redemption of the Series C Preferred Stock, and a $0.6 million after-tax increase in late fee income.

The $0.3 million year-over-year decrease in core earnings was due to a $2.7 million after-tax increase in our provision for credit losses partially offset by a $1.5 million after-tax increase in net effective spread and a $0.9 million decrease in preferred stock dividends related to the redemption of the Series C Preferred Stock.

The $6.9 million sequential decrease in net income attributable to common stockholders was primarily attributable to a $5.5 million after-tax decrease in the fair value of financial derivatives, a $2.6 million decrease in federal income tax benefit from the purchase of renewable energy investment tax credits that occurred in fourth quarter 2024 and did not recur in first quarter 2025, and a $1.9 million after-tax decrease in net interest income.

These decreases were partially offset by a $1.8 million after-tax decrease

in the provision for credit losses, and a $0.8 million after-tax decrease in an unrealized loss on a mortgage loan held for sale that occurred in fourth quarter 2024 and did not recur in first quarter 2025.

The $3.0 million year-over-year decrease in net income attributable to common stockholders for first quarter 2025 compared to first quarter 2024 was primarily attributable to a $3.7 million after-tax decrease in the fair value of financial derivatives and a $2.7 million after-tax increase in the provision for credit losses.

These factors were partially offset by a $3.6 million after-tax increase in net interest income.

The $2.4 million sequential increase in core earnings was primarily attributable to a $1.9 million after-tax increase in net effective spread, a $1.8 million after-tax decrease in the provision for credit losses, and a $0.9 million after-tax decrease in unrealized loss on mortgage loan held for sale, partially offset by a $2.6 million decrease in federal income tax benefit from the purchase of renewable energy investment tax credits.

The $2.6 million year-over-year increase in core earnings for first quarter 2025 compared to 2024 was due to a $5.5 million after-tax increase in net effective spread, partially offset by a $2.7 million after-tax increase in provision for credit losses.

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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For the Three Months Ended

September 30, 2024 June 30, 2024 September 30, 2023

March 31, 2025 December 31, 2024 March 31, 2024

(in thousands)

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Net effective spread % 1.17 % 1.16 % 1.14 %

The $0.5 million sequential decrease in net interest income was primarily due to a $2.4 million decrease in the fair value of derivatives designated in fair value hedge accounting relationships (designated financial derivatives), a $0.9 million increase from a shift in the composition of new business volume towards higher-yielding loans, and a decrease of $0.9 million in our funding costs, which was primarily attributable to our proactive asset liability management practices such as calling fixed-rate debt in response to lower nominal interest rates.

In percentage terms, net interest income remained consistent compared to second quarter 2024.

The $0.9 million year-over-year decrease in net interest income was primarily due to an increase of $3.0 million of funding costs, which was primarily attributable to (1) the widening of debt spreads that occurred in fourth quarter 2023, which increased our floating-rate funding costs, and (2) a $2.9 million decrease in the fair value of derivatives designated in fair value hedge accounting relationships (designated financial derivatives).

These factors were partially offset by a $5.0 million increase from a shift in the composition of new business volume towards higher-yielding loans.

In percentage terms, the year-over-year decrease of 0.07% was primarily attributable to an increase of 0.07% in funding costs and a decrease in the fair value of our designated financial derivatives of 0.03%, partially offset by an increase of 0.03% related to the shift in the composition of new business volume towards higher-yielding loans.

The $1.8 million sequential increase in net effective spread was primarily due to a $0.9 million increase from a shift in the composition of new business volume towards higher-yielding loans, and a decrease of $0.9 million in our non-GAAP funding costs, which was primarily attributable to our proactive asset liability management practices such as calling fixed-rate debt in response to lower nominal interest rates.

In percentage terms, the sequential increase of 0.02% was primarily attributable to an increase of 0.01% due to the shift in the composition of new business volume towards higher-yielding loans and a decrease of 0.01% in non-GAAP funding costs.

The $2.0 million year-over-year increase in net effective spread was primarily due to a $5.0 million increase from a shift in the composition of new business volume towards higher-yielding loans.

This factor was partially offset by an increase of $3.0 million in non-GAAP funding costs, which was primarily attributable to the widening of debt spreads that occurred in fourth quarter 2023 and increased our floating-rate funding costs.

In percentage terms, the year-over-year decrease of 0.04% was primarily attributable to an increase of 0.07% related to the increases in non-GAAP funding costs, and was partially offset by an increase of 0.03% on the shift in the composition of new business volume towards higher-yielding loans.

The $2.4 million sequential decrease in net interest income was primarily due to a $4.6 million decrease in the fair value of derivatives designated in fair value hedge accounting relationships (designated financial derivatives) and an increase of $0.6 million in funding costs.

These factors were partially offset by a $2.8 million increase from net new business volume.

In percentage terms, the sequential decrease was 0.06%, which was primarily attributable to the decrease in the fair value of designated financial derivatives.

The $4.6 million year-over-year increase in net interest income for first quarter 2025 compared to first quarter 2024 was primarily attributable to a $6.4 million increase from net new business volume and a $0.6 million decrease in funding costs, partially offset by a $1.9 million decrease in the fair value of designated financial derivatives.

The $2.5 million sequential increase in net effective spread was primarily attributable to net new business volume.

The $6.9 million year-over-year increase in net effective spread for first quarter 2025 compared to first quarter 2024 was primarily due to a $6.4 million increase from net new business volume and a $0.6 million decrease in funding costs.

In percentage terms, the year-over-year increase of 0.03% was primarily attributable to the shift in the composition of new business volume towards higher-yielding assets.

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 September 30, 2024, a net decrease of $290.0 million from June 30, 2024 after taking into account all new business, maturities, sales, and paydowns on existing assets.

The net decrease was primarily attributable to a net decrease of $388.2 million in the Agricultural Finance line of business, partially offset by a net increase of $98.2 million in the Rural Infrastructure Finance line of business.

Our outstanding business volume was $29.8 billion as of March 31, 2025, a net increase of $0.2 billion from December 31, 2024 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 $0.7 billion in the Infrastructure Finance line of business, partially offset by a net decrease of $0.5 billion in the Agricultural 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."

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(in thousands)

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Capital in excess of minimum capital level required 600,776 583,527

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.

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

Credit Quality

The following table presents Agricultural Finance on- and off-balance sheet substandard assets, in dollars and as a percentage of the respective portfolio as of September 30, 2024, June 30, 2024, and December 31, 2023:

The following table presents Agricultural Finance on- and off-balance sheet substandard assets, in dollars and as a percentage of the respective portfolio as of March 31, 2025 and December 31, 2024:

On-Balance Sheet Off-Balance Sheet

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(dollars in thousands)

September 30, 2024 $ 342,058 4.1 % $ 35,827 1.1 %

June 30, 2024 219,679 2.7 % 28,323 0.9 %

March 31, 2025 $ 428,150 4.8 % $ 37,800 1.1 %

December 31, 2024 367,012 4.2 % 31,240 0.9 %

Increase/(decrease) from prior quarter-ending $ 122,379 1.4 % $ 7,504 0.2 %

Increase/(decrease) from prior year-ending 61,138 0.6 % 6,560 0.2 %

The increase of $122.4 million in on-balance sheet substandard assets during third quarter was primarily driven by credit downgrades in permanent plantings, crops, livestock, part-time farms, and agricultural storage and processing.

The $7.5 million increase in substandard assets in our off-balance sheet portfolios during third quarter was primarily due to credit downgrades in crops, permanent plantings, and livestock, and was partially offset by credit upgrades in part-time farms.

There was one substandard asset with an outstanding balance of $24.1 million in the Rural Infrastructure Finance portfolio as of September 30, 2024.

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

The increase of $61.1 million in on-balance sheet substandard assets during first quarter was primarily driven by credit downgrades in agricultural storage and processing, crops, and permanent plantings.

As of both March 31, 2025 and December 31, 2024, there were two substandard assets with a cumulative outstanding balance of $42.2 million and $42.5 million, respectively, in the Infrastructure Finance portfolio.

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

The following table presents 90-day delinquencies for the on- and off-balance sheet Agricultural Finance portfolios in dollars and as a percentage of the respective balance sheet category as of September 30, 2024, June 30, 2024 , and December 31, 2023:

On-Balance Sheet Off-Balance Sheet

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(dollars in thousands)

September 30, 2024 $ 138,049 1.67 % $ 6,358 0.20 %

June 30, 2024 57,791 0.71 % 4,272 0.13 %

March 31, 2025 $ 155,438 1.75 % $ 4,539 0.13 %

December 31, 2024 101,340 1.15 % 7,604 0.22 %

Increase/(decrease) from prior quarter-ending $ 80,258 0.96 % $ 2,086 0.07 %

Increase/(decrease) from prior year-ending 54,098 0.60 % (3,065) (0.09) %

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

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

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 September 30, 2024.

As of both September 30, 2024 and December 31, 2023, there were no 90-day delinquencies in Farmer Mac's portfolio of Rural Infrastructure Finance loan purchases and loans underlying LTSPCs.

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 decreased in crops, permanent plantings, and livestock.

As of both March 31, 2025 and December 31, 2024, 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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Another difference is that these two non-GAAP measures exclude specified infrequent or unusual transactions that we believe are not indicative of future operating results and that may not reflect the trends and economic financial performance of Farmer Mac's core business.

For example, in third quarter 2024, we excluded the loss on the retirement of the Series C Preferred Stock from core earnings and core earnings per share.

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.

Farmer Mac excludes from net effective spread the interest income and interest expense associated with the consolidated trusts and the average balance of the loans underlying these trusts to reflect management's view that the net interest income Farmer Mac earns on the related Farmer Mac Guaranteed Securities owned by third parties is effectively a guarantee fee.

owned by third parties is effectively a guarantee fee.

Accordingly, the excluded interest income and interest expense associated with consolidated trusts is reclassified to guarantee and commitment fees in determining Farmer Mac's core earnings.

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

(1) the net effects of

cash settlements on agency forward contracts on the debt of other GSEs and U.S.

(1) the net effects of cash settlements on agency forward contracts on the debt of other GSEs and U.S.

Treasury security futures that we use as short-term economic hedges on the issuance of debt;

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For the Three Months Ended

September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

(in thousands, except per share amounts)

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Gains on hedging activities due to fair value changes

Unrealized gains on trading securities 99 1,714

Unrealized gains/(losses) on trading securities

Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value 28 31

Net effects of terminations or net settlements on financial derivatives (1,070) (192)

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

Income tax effect related to reconciling items 526 (947)

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Guarantee and commitment fees (2)

Gain on sale of investment securities (GAAP)

Loss on sale of mortgage loan (GAAP)

Total revenues 96,793 89,103

Credit related expense (GAAP):

Credit related expense/(income) (GAAP):

Provision for/(release of) losses

REO operating expenses 196 —

Total credit related expense 3,454 (181)

Operating expenses (GAAP):

Compensation and employee benefits 15,237 14,103

General and administrative 8,625 9,100

Regulatory fees 725 831

Total operating expenses 24,587 24,034

Net earnings 63,485 65,455

Income tax expense (4)

1,583 (1,870)

Preferred stock dividends (GAAP) 5,897 6,792

Core earnings $ 44,907 $ 45,188

Core earnings per share:

Basic $ 4.13 $ 4.17

Diluted $ 4.10 $ 4.13

Weighted-average shares:

Basic 10,883 10,839

Diluted 10,966 10,938

(1) Net effective spread is a non-GAAP measure.

See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures—Net Effective Spread" for an explanation of net effective spread.

See Table 10 for a reconciliation of net interest income to net effective spread.

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

(3) Reflects reconciling adjustments for the reclassification to exclude expenses related to interest rate swaps not designated as hedges and terminations or net settlements on financial derivatives, and reconciling adjustments to exclude fair value adjustments on financial derivatives and trading assets and the recognition of deferred gains over the estimated lives of certain Farmer Mac Guaranteed Securities and USDA Securities.

(4) Includes the tax impact of non-GAAP reconciling items between net income attributable to common stockholders and core earnings.

Reconciliation of Net Income Attributable to Common Stockholders to Core Earnings

For the Nine Months Ended

September 30, 2024 September 30, 2023

(in thousands, except per share amounts)

Net income attributable to common stockholders $ 129,580 $ 132,010

Less reconciling items:

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

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

5,811 (1,796)

Unrealized (losses)/gains on trading securities

Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value 84 87

Net effects of terminations or net settlements on financial derivatives (2,200) 1,027

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

Income tax effect related to reconciling items (830) (1,536)

Sub-total 1,504 5,776

Core earnings $ 128,076 $ 126,234

Composition of Core Earnings:

Net effective spread (1)

$ 252,036 $ 242,429

Guarantee and commitment fees (2)

Loss on sale of REO

Total credit related expense/(income)

1,651 (1,870)

Gain on sale of investment securities (GAAP)

Loss on sale of mortgage loan (GAAP)

Total revenues 269,867 259,024

Credit related expense (GAAP):

Provision for losses

REO operating expenses 196 —

Total credit related expense 7,814 1,711

Operating expenses (GAAP):

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Reconciliation of GAAP Basic Earnings Per Share to Core Earnings - Basic Earnings Per Share

For the Three Months Ended For the Nine Months Ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

For the Three Months Ended

March 31, 2025 March 31, 2024

(in thousands, except per share amounts)

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(Losses)/gains on undesignated financial derivatives due to fair value changes (see Table 13)

(0.09) 0.27 0.02 0.55

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

0.02 0.30 0.54 (0.17)

Unrealized gains on trading securities

0.01 0.16 — 0.19

Gains on hedging activities due to fair value changes

Unrealized gains/(losses) on trading securities

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

Net effects of terminations or net settlements on financial derivatives (0.10) (0.02)

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

Income tax effect related to reconciling items 0.05 (0.09)

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Reconciliation of GAAP Diluted Earnings Per Share to Core Earnings - Diluted Earnings Per Share

For the Three Months Ended For the Nine Months Ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

For the Three Months Ended

March 31, 2025 March 31, 2024

(in thousands, except per share amounts)

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(Losses)/gains on undesignated financial derivatives due to fair value changes (see Table 13)

(0.09) 0.27 0.02 0.54

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

0.02 0.29 0.53 (0.16)

Unrealized gains on trading securities

0.01 0.16 — 0.18

Gains on hedging activities due to fair value changes

Unrealized gains/(losses) on trading securities

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

Net effects of terminations or net settlements on financial derivatives (0.10) (0.02)

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

Income tax effect related to reconciling items 0.05 (0.09)

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(a) (Losses)/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.

and (b) 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.

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.

Net Interest Income .

The following table provides information about interest-earning assets and funding for the three and nine months ended September 30, 2024 and 2023.

The following table provides information about interest-earning assets and funding for the three months ended March 31, 2025 and 2024.

The average balance of non-accruing loans is included in the average balance of loans, Farmer Mac Guaranteed Securities, and USDA Securities presented, though the related income is accounted for on a cash basis.

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For the Three Months Ended

September 30, 2024 September 30, 2023

Balance Income/

Expense Average

Balance Income/

Expense Average

(dollars in thousands)

Interest-earning assets:

Cash and investments $ 6,492,807 $ 88,879 5.48 % $ 5,974,669 $ 79,947 5.35 %

Loans, Farmer Mac Guaranteed Securities and USDA Securities (1)

22,932,539 309,208 5.39 % 21,859,457 293,378 5.37 %

Total interest-earning assets 29,425,346 398,087 5.41 % 27,834,126 373,325 5.36 %

Notes payable due within one year 3,867,653 50,613 5.23 % 3,212,217 38,704 4.82 %

Notes payable due after one year (2)

23,673,268 261,748 4.42 % 22,784,190 248,002 4.35 %

Total interest-bearing liabilities (3)

27,540,921 312,361 4.54 % 25,996,407 286,706 4.41 %

Net non-interest-bearing funding 1,884,425 — 1,837,719 —

Total funding 29,425,346 312,361 4.25 % 27,834,126 286,706 4.12 %

Net interest income/yield prior to consolidation of certain trusts 29,425,346 85,726 1.17 % 27,834,126 86,619 1.24 %

Net effect of consolidated trusts (4)

884,929 1,065 0.48 % 861,980 1,024 0.48 %

Net interest income/yield $ 30,310,275 $ 86,791 1.15 % $ 28,696,106 $ 87,643 1.22 %

(1) Excludes interest income of $9.6 million and $8.5 million in third quarter 2024 and 2023, respectively, related to consolidated trusts with beneficial interests owned by third parties (single-class).

(2) Includes current portion of long-term notes.

(3) Excludes interest expense of $8.6 million and $7.5 million in third quarter 2024 and 2023, respectively, related to consolidated trusts with beneficial interests owned by third parties (single-class).

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

For the Nine Months Ended

September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

Balance Income/

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Total interest-earning assets 30,839,656 371,519 4.82 % 29,086,382 387,327 5.33 %

Notes payable due within one year 3,162,862 123,893 5.22 % 3,463,479 115,557 4.45 %

Notes payable due after one year (2)

24,216,950 798,324 4.40 % 22,242,225 657,538 3.94 %

Total interest-bearing liabilities (2)

6 unchanged sentences

Net interest income/yield $ 31,711,121 $ 90,939 1.15 % $ 29,939,265 $ 86,368 1.15 %

(1) Excludes interest income of $28.5 million and $25.6 million in the first nine months of 2024 and 2023, respectively, related to consolidated trusts with beneficial interests owned by third parties (single-class).

(2) Includes current portion of long-term notes.

(3) Excludes interest expense of $25.0 million and $22.4 million in the first nine months of 2024 and 2023, respectively, related to consolidated trusts with beneficial interests owned by third parties (single-class).

(1) Excludes interest income of $9.9 million and $9.0 million in first quarter 2025 and 2024, respectively, related to consolidated trusts with beneficial interests owned by third parties (single-class).

(2) Excludes interest expense of $8.9 million and $7.9 million in first quarter 2025 and 2024, respectively, related to consolidated trusts with beneficial interests owned by third parties (single-class).

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

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 the Nine Months Ended September 30, 2024

For the Three Months Ended March 31, 2025

Compared to Same Period in 2024

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Net effective spread is measured by:

including (1) expenses related to undesignated financial derivatives, which consists of income or expense related to contractual amounts due on financial derivatives not designated in hedge relationships (the income or expense related to financial derivatives designated in hedge accounting relationships is already included in net interest income), and (2) the amortization of losses due to terminations or net settlements of financial derivatives;

designated in hedge accounting relationships is already included in net interest income), and (2) the amortization of losses due to terminations or net settlements of financial derivatives;

and excluding (1) the amortization of premiums and discounts on assets consolidated at fair value, (2) the net effects of consolidated trusts with beneficial interests owned by third parties (single-class), and (3) the fair value changes of financial derivatives and corresponding financial assets or liabilities in fair value hedge relationships.

See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures—Net Effective Spread" for more information about net effective spread.

For the Three Months Ended For the Nine Months Ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Dollars Yield Dollars Yield Dollars Yield Dollars Yield

For the Three Months Ended

March 31, 2025 March 31, 2024

Dollars Yield Dollars Yield

(dollars in thousands)

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Net effective spread $ 89,990 1.17 % $ 83,044 1.14 %

The $9.6 million year-over-year increase in net effective spread was primarily due to a $13.1 million increase from a shift in the composition of new business volume towards higher-yielding loans.

This was partially offset by a $3.5 million increase in non-GAAP funding costs, which was primarily attributable to the widening of debt spreads that occurred in fourth quarter 2023 and increased our floating-rate funding costs.

In percentage terms, the year-over-year decrease of 0.03% was primarily attributable to an increase in non-GAAP funding costs.

In percentage terms, the year-over-year increase of 0.03% was primarily attributable to the shift in the composition of new business volume towards higher-yielding assets, partially offset by increased funding costs.

See Note 10 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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Provision for and Release of Allowance for Losses and Reserve for Losses .

The following table summarizes the components of Farmer Mac's total allowance for losses for the three and nine month periods ended September 30, 2024 and 2023:

As of September 30, 2024 As of September 30, 2023

The following table summarizes the components of Farmer Mac's total allowance for losses for the three month period ended March 31, 2025 and 2024:

For the Three Months Ended

March 31, 2025 March 31, 2024

Losses Reserve

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(in thousands)

For the Three Months Ended

Beginning Balance $ 23,670 $ 1,622 $ 25,292 $ 16,589 $ 1,711 $ 18,300

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1,684 (101) 1,583 (1,801) (69) (1,870)

Charge-offs — — — — — —

Ending Balance $ 20,352 $ 1,523 $ 21,875 $ 17,215 $ 1,660 $ 18,875

For the Nine Months Ended

Beginning Balance $ 16,589 $ 1,711 $ 18,300 $ 15,731 $ 1,433 $ 17,164

Provision for/(release of) losses 7,806 (188) 7,618 1,484 227 1,711

Charge-offs (4,043) — (4,043) — — —

Recovery 83 — 83 — — —

Ending Balance $ 25,437 $ 1,521 $ 26,958 $ 14,788 $ 1,642 $ 16,430

See Notes 5 and 6 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 third quarter 2024, we recorded a $3.3 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 Rural Infrastructure.

During first quarter 2025, we recorded a $1.6 million net provision to the total allowance for losses primarily due to new loan volume in the Infrastructure Finance and Agricultural Finance lines of business.

Guarantee and Commitment Fees .

The following table presents guarantee and commitment fees, which compensate Farmer Mac for assuming the credit risk on loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs, for the three and nine months ended September 30, 2024 and 2023:

For the Three Months Ended For the Nine Months Ended

Change Change

September 30, 2024 September 30, 2023 $ % September 30, 2024 September 30, 2023 $ %

For the Three Months Ended

March 31, 2025 March 31, 2024 $ %

(dollars in thousands)

3 unchanged sentences

Guarantee and commitment fee income $ 4,479 $ 3,917 $ 562 14 %

Guarantee and commitment fees decreased for the three and nine months ended September 30, 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 core earnings presentation, guarantee and commitment fees were $5.0 million and $15.2 million for the three and nine months ended September 30, 2024, respectively, compared to $4.8 million and $14.1 million for the three and nine months ended September 30, 2023, 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 increased for the three months ended March 31, 2025 compared to 2024, which was primarily attributable to increased business volume in unused commitments in the Infrastructure Finance line of business.

As adjusted for the non-GAAP core earnings presentation, guarantee and commitment fees were $5.5 million for the three months ended March 31, 2025, compared to $5.0 million for the three months ended March 31, 2024.

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."

(Losses)/gains on financial derivatives .

The components of gains and losses on financial derivatives for the three and nine months ended September 30, 2024 and 2023 are summarized in the following table:

For the Three Months Ended For the Nine Months Ended

Change Change

September 30, 2024 September 30, 2023 $ % September 30, 2024 September 30, 2023 $ %

The components of gains and losses on financial derivatives for the three months ended March 31, 2025 and 2024 are summarized in the following table:

For the Three Months Ended

March 31, 2025 March 31, 2024 $ %

(dollars in thousands)

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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 "(Losses)/gains 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 4 to the consolidated financial statements for more information about Farmer Mac's financial derivatives.

Operating Expenses .

The components of operating expenses for the three and nine months ended

September 30, 2024 and 2023 are summarized in the following table:

For the Three Months Ended For the Nine Months Ended

Change Change

September 30, 2024 September 30, 2023 $ % September 30, 2024 September 30, 2023 $ %

The components of operating expenses for the three months ended March 31, 2025 and 2024 are summarized in the following table:

For the Three Months Ended

March 31, 2025 March 31, 2024 $ %

(dollars in thousands)

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Compensation and Employee Benefits .

The increase in compensation and employee benefits expenses for the three and nine months ended September 30, 2024 compared to 2023 was largely due to increased headcount and increased stock compensation expense.

The decrease in compensation and employee benefits expenses for the quarter ended March 31, 2025 compared to 2024 was primarily attributable to lower short-term incentive compensation awards.

General and Administrative Expenses (G&A) .

The decrease in G&A expenses for the three months and nine months ended September 30, 2024 compared to 2023 was primarily due to a decrease in consulting costs related to technology strategic initiatives because more of the costs were capitalized during the current year than in the prior-year period.

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 was substantially completed during fourth quarter 2024.

The increase in G&A expenses for the quarter ended March 31, 2025 compared to 2024 was primarily attributable to an increase in information technology infrastructure costs, transactional legal fees, hiring expenses, and servicing advance expenses.

Income Tax Expense .

The following table presents income tax expense and the effective income tax rate for the three and nine months ended September 30, 2024 and 2023:

For the Three Months Ended For the Nine Months Ended

Change Change

September 30, 2024 September 30, 2023 $ % September 30, 2024 September 30, 2023 $ %

The following table presents income tax expense and the effective income tax rate for the three months ended March 31, 2025 and 2024:

For the Three Months Ended

March 31, 2025 March 31, 2024 $ %

(dollars in thousands)

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Business Volume .

The following table sets forth the net growth or decrease in Farmer Mac's lines of business for the three and nine months ended September 30, 2024 and 2023:

The following table sets forth the net growth or decrease in Farmer Mac's lines of business for the three months ended March 31, 2025 and 2024:

Net New Business Volume

For the Three Months Ended For the Nine Months Ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

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

For the Three Months Ended

Balance Sheet March 31, 2025 March 31, 2024

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

(in thousands)

23 unchanged sentences

Total Agricultural Finance $ (510,795) $ 164,420

Rural Infrastructure Finance:

Rural Utilities:

Infrastructure Finance:

Power & Utilities:

Loans On-balance sheet $ 133,899 $ 51,544

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LTSPCs and unfunded loan commitments Off-balance sheet (30,705) (41,401)

Other Farmer Mac Guaranteed Securities (3)

Total Power & Utilities

$ 378,600 $ (9,032)

Broadband Infrastructure:

Loans On-balance sheet $ 35,629 $ (37,526)

Unfunded loan commitments

Off-balance sheet 136,740 3,558

Total Rural Utilities $ (121,332) $ 506,403 $ (40,582) $ 758,682

Total Broadband Infrastructure $ 172,369 $ (33,968)

Renewable Energy:

2 unchanged sentences

Total Renewable Energy $ 192,139 $ 254,786

Total Rural Infrastructure Finance $ 98,204 $ 509,077 $ 566,905 $ 859,087

Total Infrastructure Finance

$ 743,108 $ 211,786

Total $ 232,313 $ 376,206

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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 $28.5 billion as of September 30, 2024, a net decrease of $0.3 billion from June 30, 2024 after taking into account all new business, maturities, sales, and paydowns on existing assets.

The $0.4 billion net decrease in Farm & Ranch during third quarter 2024 resulted from $1.2 billion of scheduled maturities and repayments, partially offset by $0.8 billion of new purchases, commitments, and guarantees.

Included in the $0.8 billion is the purchase of $271.9 million of Farm & Ranch loans.

Scheduled loan maturities and repayments in the aggregate amount of $157.4 million partially offset those purchases.

Not included in these Farm & Ranch loan purchase results for third quarter 2024 is Farmer Mac's October 2024 purchase of a $122.1 million pool of loans from a single agricultural lender, which will be reflected in Farmer Mac's results for fourth quarter 2024.

During third quarter 2024, a total of $0.5 billion in Farm & Ranch AgVantage Securities matured without refinancing, which primarily reflected slower loan growth resulting in less liquidity needs from Farmer Mac's AgVantage counterparties.

The $25.9 million net increase in Corporate AgFinance during third quarter 2024 resulted from $307.3 million of new purchases and unfunded loan commitments, which was partially offset by $281.4 million of scheduled maturities, repayments, sales, and paydowns on revolving commitments.

The $0.1 billion net decrease in Rural Utilities during third quarter 2024 resulted from $701.2 million of scheduled maturities and repayments, partially offset by $579.9 million of new purchases, unfunded loan commitments, and guarantees.

The $0.2 billion net increase in Renewable Energy during third quarter 2024 primarily reflects $325.7 million in loan purchases and unfunded commitments, partially offset by $106.2 million 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 $27.7 billion as of September 30, 2023, a net increase of $0.9 billion from June 30, 2023 after taking into account all new business, maturities, and paydowns on existing assets.

The $0.3 billion net increase in Farm & Ranch during third quarter 2023 resulted from $1.4 billion of new purchases, commitments, and guarantees, partially offset by $1.0 billion of scheduled maturities and repayments.

Farmer Mac purchased a total of $0.2 billion in Farm & Ranch loans during third quarter 2023, partially offset by $0.1 billion in repayments.

The $0.1 billion net increase was primarily driven by strong borrower economics despite the continued higher interest rate environment.

Farmer Mac also purchased a total of $1.0 billion in Farm & Ranch AgVantage Securities during third quarter 2023, which primarily reflected the refinancing of maturing securities.

Farmer Mac's outstanding business volume was $29.8 billion as of March 31, 2025, a net increase of $0.2 billion from December 31, 2024 after taking into account all new business, maturities, sales, and paydowns on existing assets.

The $0.5 billion net decrease in Farm & Ranch during first quarter 2025 was primarily attributable to maturities of AgVantage securities that our counterparties did not re-issue.

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

The $0.4 billion net increase in Power & Utilities during first quarter 2025 was primarily attributable to the purchase of a $0.3 billion AgVantage security.

The $0.2 billion net increase in Broadband Infrastructure during first quarter 2025 was primarily attributable to $0.2 billion of new commitments.

The $0.2 billion net increase in Renewable Energy during first quarter 2025 was primarily attributable to $0.3 billion in loan purchases and commitments.

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

Farmer Mac's outstanding business volume was $28.8 billion as of March 31, 2024, a net increase of $0.4 billion from December 31, 2023 after taking into account all new business, maturities, and paydowns on existing assets.

The $0.1 billion net increase in Farm & Ranch during first quarter 2024 resulted from $0.7 billion of new

purchases, commitments, and guarantees, partially offset by $0.6 billion of scheduled maturities and

Included in the $0.7 billion is the purchase of $0.3 billion of Farm & Ranch loans, which

included the acquisition of a pool of loans totaling $0.1 billion from a single agricultural lender.

agricultural lender's capital planning provided the opportunity to purchase that pool of loans.

loan maturities and repayments in the aggregate amount of $0.2 billion partially offset those purchases.

Farmer Mac also purchased a total of $0.3 billion in Farm & Ranch AgVantage Securities during first

quarter 2024, which primarily reflected the refinancing of maturing securities and opportunistic new

The $0.3 billion in gross purchases was partially offset by $0.1 billion in scheduled maturities.

The $0.1 billion net increase in Corporate AgFinance during third quarter 2023 resulted from $0.3 billion of new purchases and commitments, which was partially offset by $0.2 billion of scheduled maturities and repayments.

Farmer Mac purchased a total of $195.6 million in loans, which was partially offset by $159.7

million in scheduled maturities and repayments.

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

The $0.5 billion net increase in Rural Utilities during third quarter 2023 resulted from $0.6 billion of new purchases, commitments, and guarantees, which was partially offset by $0.1 billion of scheduled maturities and repayments.

Farmer Mac purchased a total of $500.0 million in AgVantage Securities, $43.5 million in telecommunications loans, and $47.0 million in electric distribution and generation and transmission loans.

The $90.5 million in loan purchases was partially offset by $61.4 million in scheduled maturities and repayments.

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

The $2.7 million net increase in Renewable Energy during third quarter 2023 primarily reflects $17.4 million in loan purchases and unfunded commitments, partially offset by $14.7 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 quarter to quarter.

The $0.1 billion net increase in Corporate AgFinance during first quarter 2024 resulted from $0.3 billion

of new purchases and unfunded loan commitments, which was partially offset by $0.2 billion of scheduled

maturities, repayments, and paydowns on revolving commitments.

Included in the $0.3 billion is $0.1

billion of purchases of Corporate AgFinance AgVantage Securities, which was partially offset by $0.1

billion of scheduled maturities.

The $0.3 billion net increase in Renewable Energy during first quarter 2024 primarily reflects

$0.3 billion in loan purchases and unfunded commitments, partially offset by $0.1 billion in

The net increase in Renewable Energy loan purchases and unfunded commitments primarily

reflects the continued strong demand for renewable power generation and storage.

This relationship in turn depends on a variety of factors both internal and external to Farmer Mac.

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The following table sets forth information about the Farmer Mac Guaranteed Securities issued during the periods indicated:

For the Three Months Ended For the Nine Months Ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

For the Three Months Ended

March 31, 2025 March 31, 2024

(dollars in thousands)

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Total Farmer Mac Guaranteed Securities Issuances $ 330,898 $ 427,486

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 second quarter 2024, Farmer Mac executed its fourth structured securitization transaction, whereby it sold and securitized agricultural mortgage loans resulting in $305.6 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.

During the three and nine months ended September 30, 2024 and 2023, Farmer Mac realized no gains or losses from the securitization of loans that it holds in consolidated trusts.

During the three months ended March 31, 2025 and 2024, Farmer Mac realized no gains or losses from the securitization of loans that it holds in consolidated trusts.

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

During the three and nine months ended September 30, 2024 and 2023, Farmer Mac realized no gains or losses from the issuance of Farmer Mac Guaranteed USDA Securities or AgVantage Securities.

During the three months ended March 31, 2025 and 2024, 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:

Outstanding Business Volume

Balance Sheet As of September 30, 2024 As of December 31, 2023

Balance Sheet As of March 31, 2025 As of December 31, 2024

(in thousands)

25 unchanged sentences

Total Agricultural Finance $ 19,983,878 $ 20,494,673

Rural Infrastructure Finance:

Rural Utilities:

Infrastructure Finance:

Power & Utilities:

Loans On-balance sheet $ 3,020,475 $ 2,886,576

3 unchanged sentences

Off-balance sheet 370,942 401,647

Total Rural Utilities $ 7,440,141 $ 7,480,723

Total Power & Utilities

$ 7,187,966 $ 6,809,366

Broadband Infrastructure:

Loans On-balance sheet $ 657,836 $ 622,207

Unfunded loan commitments

Off-balance sheet 316,999 180,259

Total Broadband Infrastructure $ 974,835 $ 802,466

Renewable Energy:

3 unchanged sentences

Total Renewable Energy $ 1,608,664 $ 1,416,525

Total Rural Infrastructure Finance $ 8,535,149 $ 7,968,244

Total Infrastructure Finance

$ 9,771,465 $ 9,028,357

Total $ 29,755,343 $ 29,523,030

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

The following table summarizes by maturity date the scheduled principal amortization of loans held, loans underlying off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities) and LTSPCs, USDA Securities, and Farmer Mac Guaranteed USDA Securities as of September 30, 2024:

Schedule of Principal Amortization as of September 30, 2024

Schedule of Principal Amortization as of March 31, 2025

Loans Loans Underlying Off-Balance Sheet Farmer Mac Guaranteed Securities and LTSPCs USDA Securities and Farmer Mac Guaranteed USDA Securities Total

7 unchanged sentences

Total $ 13,986,939 $ 4,377,454 $ 2,592,413 $ 20,956,806

Of Farmer Mac's $28.5 billion outstanding principal balance of business volume as of September 30, 2024, $8.9 billion were AgVantage securities included in the Agricultural Finance and Rural Infrastructure Finance lines of business.

Of Farmer Mac's $29.8 billion outstanding principal balance of business volume as of March 31, 2025, $8.3 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.

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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 September 30, 2024:

The following table summarizes by maturity date the outstanding principal amount of both on- and off-balance sheet AgVantage securities as of March 31, 2025:

AgVantage Balances by Year of Maturity

September 30, 2024

March 31, 2025

(in thousands)

6 unchanged sentences

(1) Includes various maturities ranging from 2030 to 2044.

The weighted-average remaining maturity of the outstanding AgVantage securities shown in the table above was 4.7 years as of September 30, 2024.

The weighted-average remaining maturity of the outstanding AgVantage securities shown in the table above was 4.8 years as of March 31, 2025.

Business Outlook

Products and Portfolio

Farmer Mac serves a vital role in serving rural America by offering liquidity, capital, and risk management tools as a secondary market 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.

Given significant increases in market interest rates over the past two years and global and economic volatility, Farmer Mac's outstanding business volume was flat in third quarter 2024 versus third quarter 2023, but net effective spread increased by 4.0% year-to-date 2024 versus the same year-to-date period 2023.

This year-over-year increase in net effective spread primarily reflects 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 3.1% and 8.4% in first quarter 2025 versus first quarter 2024, respectively.

The increase in business volume and net effective spread primarily reflects the increased 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.

In addition, 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 third quarter 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 third quarter 2024, driven by slower market loan growth and a tightening of market credit spreads resulting in less liquidity and diversification needs from our counterparties.

Future growth will 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 9.6% in third quarter 2024 versus third quarter 2023.

The Rural Infrastructure Finance segments showed significant business volume growth in third quarter 2024, increasing 14.6% to $8.5 billion in third quarter 2024 versus third quarter 2023.

Business volume in Rural Infrastructure Finance was strong across most products and segments year-over-year, primarily driven by increased investment activity and additional financing for renewable energy projects in response to continued strong demand for renewable power generation and storage.

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 rural infrastructure lenders.

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 for borrowers managing through this agricultural cycle.

The net effect of these forces contributed to positive Farm & Ranch loan purchase portfolio growth in first quarter 2025.

Future changes in monetary policy, sustained elevated product interest rates, the impact of changes to global trade policies (including tariffs and trade restrictions), and the financial health of borrowers are anticipated to influence the demand for agricultural real estate 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.

During first quarter 2025, Farmer Mac closed a new AgVantage facility with a large counterparty, demonstrating the continued interest in this unique wholesale finance product from potential counterparties.

Any future wholesale finance 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 16.1% in first quarter 2025 versus first quarter 2024.

The Infrastructure Finance segments showed significant business volume growth in first quarter 2025, increasing over $1.5 billion, or 19.5%, to $9.8 billion in first quarter 2025 versus first quarter 2024.

Business volume in Infrastructure Finance was strong across most products and segments in first quarter 2025, 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 business volume 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 October 2024, Farmer Mac purchased from a single agricultural lender a pool of Farm & Ranch loans with an aggregate outstanding principal balance of $122.1 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, 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.

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.

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, the impacts of changes to global trade policies (including tariffs and trade restrictions) within the agricultural and infrastructure sectors and the corresponding supply chains, 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 rural 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.

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 we have the ability to call 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.

During third quarter 2024, we began to see some benefit from calling fixed-rate debt and may continue to see this benefit throughout the rest of 2024.

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, trade, tax, and regulatory policies and executive orders 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.

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.

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

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

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

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.

In September 2024, the Farm Credit Administration notified us that the amount of Farmer Mac's annual assessment for regulatory fees for the period October 1, 2024 through September 30, 2025 was $4.0 million.

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.

Technology enhancements are planned for the remainder of 2024 and into 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.

During fourth quarter 2024, Farmer Mac substantially completed its multi-year effort to replace its platform for securities trades and to implement a treasury management system.

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 and process re-engineering 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, increase standardization of data and processing, as well as streamlining operational workflows.

Agricultural Finance Industry Outlook

Overall farm incomes fell in 2023 and are forecast to have fallen again in 2024.

According to the USDA, net cash farm income peaked at $210.1 billion in 2022, a new all-time high.

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 net cash farm income dropped 21% in 2023 and will decrease another 7% in 2024.

Declines in crop producer revenues are being partially offset by lower expenses for protein producers in 2024 as sectors rotate through agricultural cycles.

Still, the overall average farm income in 2024 would be 1% higher than the 10-year inflation-adjusted average if the USDA's projections are realized.

Commodity prices may see increased volatility in 2024 and 2025 due to a rebound in global supply levels.

Annual grain crop prices remained under pressure in third quarter 2024.

annual crops have benefited from favorable growing conditions across much of the U.S.

Midwest this summer, raising the likelihood of above trend-line yields this year.

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

Tree nut producers have reduced new plantings as a result, which, combined with robust exports this marketing year, has provided moderate support for prices.

Within the livestock and animal protein sector, producers could see offsetting benefits from lower feed costs, particularly the cattle sector.

Broadly speaking, farm expenses could also abate somewhat in 2024 and into 2025, with lower expected feed, fertilizer, and fuel costs partially offset by higher expected interest, labor, and rental rates.

Demand for corn and soybean by-products could see a boost in late 2024 and into 2025 as renewable diesel and sustainable aviation fuel markets continue to mature.

Declining farm incomes can 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 nut crops.

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

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

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

For 2025, the USDA forecasts an additional 22% increase in net cash farm income, fueled by a $33 billion increase in government support payments (authorized, but not yet disbursed) 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 continue to see elevated volatility in 2025.

A rebound in global supplies put downward pressure on annual grain crop prices for much of 2024.

However, annual crop prices continued to stabilize in first quarter 2025, and even increased modestly for some crops.

Prices for some tree nuts also continued to recover in first quarter 2025.

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 and robust export demand in first quarter 2025, particularly the cattle sector.

Overall farm expenses remained somewhat stable in first quarter 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 has induced uncertainty into the outlook for the agricultural sector.

Notably, trade policy continues to evolve, resulting in potential challenges and opportunities.

Exports have historically been a substantial demand source for many U.S.

agricultural commodities, including almonds, pistachios, and several crops and livestock products.

Any extended disruption to trade could therefore potentially cause domestic inventories to increase and potentially weigh on prices.

Conversely, new trade agreements could lead to an immediate boost in demand if foreign trade barriers are reduced.

Similar to many other sectors, the agricultural industry will likely remain acutely focused on trade for the rest of 2025.

Beyond developments related to trade, changing environmental regulations and immigration laws under the new administration could result in significant impacts on agricultural producers and the sector as a whole.

These changes could lead to both favorable and unfavorable conditions, different labor costs and availability, and new 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 and additional market volatility can cause loan delinquencies to continue to rise above historical averages, most likely in commodities experiencing negative market conditions like some grain and permanent crops.

Simultaneously, cash flow

constraints and heightened uncertainty 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 values have slowed in some markets in 2024 due to higher interest rates and lower profitability in many agricultural sectors.

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

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 first half of 2024 in the face of continued higher market interest rates.

The Federal Reserve Bank of Chicago AgLetter reported a 2% gain in farmland values in the Seventh District (primarily Iowa, Indiana, Illinois, and Wisconsin) between July 2023 and July 2024.

This was down from a 9% increase over the previous 12-month period and was the smallest increase in over three years.

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

Growth rates in land values could continue to moderate into 2025 due to compressing farm profitability and an elevated interest rate environment, particularly in states like California where there are multiple headwinds.

Nationally, however, a general low supply of available farmland and persistent demand for the asset class across a wide variety of investors could help maintain balance in the farmland transaction markets.

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

The Federal Reserve Bank of Chicago AgLetter reported farmland values declined 1% in the Seventh District (primarily Iowa, Indiana, Illinois, and Wisconsin) in 2024.

This was the first decline in 5 years following several years of strong growth.

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), albeit only a modest 0.1% in 2024.

The growth rate in both regions has trended consistently lower in the last several years, and growth rates in land values could remain subdued 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.

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

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

Some of the external market conditions that have and could continue to adversely affect the farm and food sectors during 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.

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agriculture exports will drop to $170.5 billion in 2025, 3% lower than 2024 and down 13% relative to peak levels in 2022.

Through August 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.

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

This forecast did not contemplate the potential effects of the Administration's current policies and proposals on tariffs and trade restrictions, so the forecast could shift depending on the implementation of future trade policies.

Through February 2025, agricultural export values were 8% lower in 2025 relative to 2024.

Slower global growth could 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 such as conflicts in Eastern Europe and the Middle East could lead to higher volatility for the U.S.

dollar during the year.

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

Through September 10, 2024, the U.S.

had experienced 20 separate billion-dollar weather disasters in 2024, as tracked by the National Oceanic and Atmospheric Administration.

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

dollar through 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.

Hurricanes Helene and Milton disrupted agricultural production in the Southeast, but Farmer Mac's portfolio had not experienced any material performance degradation as a result of those storms as of September 30, 2024.

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

Drought conditions, which were relatively sparse to start the year, increased modestly in intensity and prevalence in third quarter 2024.

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

However, there was a sizable improvement in conditions in 2023 for large portions of the West Coast.

Notably, drought conditions in California remain largely absent in 2024 and reservoirs have returned to historical averages.

As of October 15, 2024, 18% 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 virtually unchanged from 17% at the end of 2023.

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.

Through March 31, 2025, 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 first quarter 2025, largely across several western and southwestern states.

Nearly one-quarter of California was classified as in severe drought in first quarter 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.

Texas has also seen drought conditions intensify with nearly half the state experiencing severe drought conditions or worse in first quarter 2025.

As of April 15, 2025, 20% of the continental U.S.

was classified as being in severe to exceptional drought according to data from the National Center for Environmental Information, 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 have been changing in 2024 and could continue to change into 2025.

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.

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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 2024 and 2025 could provide support for raw materials such as corn and soybeans, but markets for these fuels are nascent and are expected to evolve 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 the last quarter of 2024 and into 2025.

Nonetheless, consumer spending held steady in third quarter 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 continues to moderate, inflation rises again, or economic uncertainty clears up.

Rural Infrastructure Finance Industry Outlook

Power and Energy

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.

Trade policy uncertainty, 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 and has advanced in early 2025, 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 and trade policy uncertainty clear 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 picked up again in 2024, with an annual increase in sales of 1.9% and an increase in revenue of 3.4%, respectively, in the last 12 months through July 2024 compared to July 2023.

Energy Information Administration, sales and the revenue from the sale of electricity to customers advanced in 2024, with an annual increase in sales of 2.2% and an increase in revenue of 3.5%, respectively, in the last 12 months through January 2025 compared to January 2024.

This increase was the result of higher residential and commercial electricity sales combined with slightly higher average prices paid for electricity relative to 2024.

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

Higher energy input prices, such as

natural gas and coal, became a headwind in 2022.

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

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 September 30, 2024, Farmer Mac had not observed material degradation in the financial performance of its rural electric utilities portfolio, and that portfolio has never had a serious delinquency or default since its inception.

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 March 31, 2025, 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.

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Energy Information Administration, renewable electricity capacity is expected to grow by 128% in the next ten years, compared to total electric capacity growth of 46%.

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

Because of these policy tailwinds, analysis from Bloomberg New Energy Finance (BNEF) estimates that investors will put $2.5 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.

The volatile cost of fossil fuel-based inputs combined with the falling costs of renewable power generation may influence this change in capacity.

Analysis from Bloomberg New Energy Finance (BNEF) estimates that investors will put $1.4 trillion into U.S.

renewable power projects between 2025 and 2050, although some of these estimates are based on the availability of investment tax credits that are subject to future changes in tax policy.

If realized, persistent growth in renewable energy capacity could continue 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.

Telecommunications

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.

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

In addition to capital projects spurred by these programs, Farmer Mac could see an increase in financing opportunities for other telecommunications providers in rural areas, with fiber line expansion, wireless broadband, and data processing centers increasingly important to rural economic opportunity and precision agriculture.

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 a one-year extension of the 2018 farm bill, which lapsed on September 30, 2024.

Avoiding a reversion to 1930s-era policy, which provides no price support for many key commodities that have enjoyed support for many years, would require Congress to enact another extension or a new farm bill by the end of the year.

The farm bill is crucial for Farmer Mac's customers, supporting farmers' profitability, rural community vitality, and infrastructure modernization.

Farmer Mac is seeking changes to its charter in the farm bill reauthorization to better support lenders serving rural areas.

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.

However, some types of "leapfrog" technology advances in the broadband infrastructure sector, such as low orbit satellite communication systems, could put pressure on the profitability of the providers of older digital technologies.

The change in U.S.

political leadership as a result of the 2024 elections may introduce both opportunities and challenges for the infrastructure sector.

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.

Any lack of availability or increased costs of components or technology that results from tariffs or trade restrictions also could lead to delays in completion or slow future investments in infrastructure projects.

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 connectivity, the ongoing diversification of infrastructure providers, and continued strong investments in data centers and fiber infrastructure.

Legislative, Regulatory, and Political Outlook

Farmer Mac continues to closely monitor executive branch actions and potential legislative and regulatory changes that could significantly impact the organization, its regulatory environment, the borrowers under the loans it owns or guarantees, or its stakeholders, including:

• On April 2, 2025, the Administration issued an executive order unveiling a wide-ranging tariff plan.

The order invokes authorities under the International Emergency Economic Powers Act of 1977 (IEEPA) and cites that a lack of reciprocity and persistent trade deficits are a threat to U.S.

national security.

Using the IEEPA authority, the Administration placed a universal tariff of 10 percent on all countries.

These new tariffs were set to take effect on April 5, 2025.

trading partners announced retaliatory tariffs in response, and the U.S.

government responded in kind.

On April 9, 2025, the United States government paused the retaliatory tariffs on dozens of U.S.

trading partners for 90 days, leaving in place the universal 10 percent tariff announced on April 2, 2025, as well as previous tariffs that were in place.

The 90-day pause on reciprocal tariffs did not apply to China, which is a large export market for U.S.

agricultural goods.

Export markets drive demand for some U.S.

agricultural products such as almonds, pistachios, grains, and livestock.

Tariffs and trade restrictions may lead to higher domestic inventory levels of agricultural commodities, resulting in lower prices which may affect the profitability of farmers and ranchers.

Reciprocal tariffs may impact the cost and availability of some farm inputs such as fertilizers, pesticides, and machinery, impacting farmers with tight profit margins.

While tariffs and trade restrictions may create uncertainty for the agricultural economy, new trade agreements could boost demand for U.S.

commodities in the long-term if foreign barriers are reduced.

Tariffs and trade restrictions also may lead to supply chain disruptions for materials and technology used in some renewable energy and broadband infrastructure projects that may result in higher material and project costs while the market adjusts.

Farmer Mac will continue to closely monitor trade developments throughout 2025.

• On January 20, 2025, President Trump 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.

On March 31, 2025, FCA board member Vincent Logan announced his retirement from federal service.

His departure creates a vacancy on the FCA board that the Administration will have the opportunity to fill, subject to the advice and consent of the U.S.

The remaining two board members, including Chairman Hall, are currently serving in a "holdover status." These members will continue in their roles until the President nominates and the U.S.

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.

• On April 21, 2025, Paul Atkins was sworn in as the Chairman of the Securities and Exchange Commission (SEC).

• 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.

The 2018 farm bill has been extended by one year twice to allow Congress more time to develop new policies to improve the farm safety net, address critical infrastructure, expand trade, and support food insecurity.

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.

• The FCA's proposed 2024 regulatory agenda includes a proposed rulemaking to review Farmer Mac's regulatory capital framework, with rulemaking expected in May 2025.

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

• Two of the three members of the FCA board remain in holdover status, meaning their terms have expired.

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

On May 2, 2024, President Biden nominated Marcus D.

Graham to the FCA board to replace Glen Smith.

Graham's nomination will require Senate confirmation by year-end, or the nomination will be returned to the President.

• Farmer Mac will monitor the effects of the fall elections on policies affecting Farmer Mac's business, including the expiration of key provisions of the Tax Cuts and Jobs Act at the end of 2025 and the suspension of the debt ceiling, which expires on January 1, 2025.

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

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

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

Balance Sheet Review

The following table summarizes Farmer Mac's balance sheet as of the periods indicated:

September 30, 2024 December 31, 2023 $ %

March 31, 2025 December 31, 2024 $ %

(in thousands)

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Total liabilities and equity $ 31,803,939 $ 31,324,742 $ 479,197 2 %

The increase in total assets was primarily attributable to 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 and a larger investment portfolio.

Liabilities .

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

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

The increase in total liabilities was primarily due to an increase in total notes payable to fund the acquisition of loan volume.

The increase in total equity was primarily due to an increase in retained earnings.

Risk Management

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Agricultural Finance - Direct Credit Exposure

Farmer Mac's direct credit exposure to Agricultural Finance mortgage loans as of September 30, 2024 was $11.5 billion across 48 states.

Farmer Mac's direct credit exposure to Agricultural Finance mortgage loans as of March 31, 2025 was $12.4 billion across 48 states.

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

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

For more information about Farmer Mac's underwriting and collateral valuation standards for Agricultural Finance mortgage loans, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Underwriting and Collateral Standards—Farm & Ranch" and "Business—Farmer Mac's Lines of Business—Agricultural Finance—Underwriting and Collateral Standards—Corporate AgFinance" in Farmer Mac's 2023 Annual Report.

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" in Farmer Mac's 2024 Annual Report.

Farmer Mac's 90-day delinquency measure includes loans 90 days or more past due, as well as loans in foreclosure and non-performing loans where the borrower is in bankruptcy.

For Agricultural Finance mortgage loans to which Farmer Mac has direct credit exposure, Farmer Mac's 90-day delinquencies as of September 30, 2024, were $144.4 million (1.26% of the Agricultural Finance mortgage loan portfolio to which Farmer Mac has direct credit exposure), compared to $62.1 million (0.54% of the Agricultural Finance mortgage loan portfolio) as of June 30, 2024 and $34.7 million (0.31% of the Agricultural Finance mortgage loan portfolio) as of December 31, 2023.

Those 90-day delinquencies consisted of 84 delinquent loans as of September 30, 2024, compared to 34 delinquent loans as of June 30, 2024 and 23 delinquent loans as of December 31, 2023.

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

The increase in loans 90 days or more delinquent as of September 30, 2024 compared to June 30, 2024 is consistent with the seasonal pattern of delinquencies with higher levels generally observed at the end of the first and third quarters and lower levels generally observed at the end of the second and fourth quarter of each year.

This seasonal pattern results from the annual (January 1st) and semi-annual (January 1st and July 1st) payment dates on most Farm & Ranch loans.

$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 September 30, 2024.

For Agricultural Finance mortgage loans to which Farmer Mac has direct credit exposure, Farmer Mac's 90-day delinquencies as of March 31, 2025, were $160.0 million (1.29% of the Agricultural Finance mortgage loan portfolio to which Farmer Mac has direct credit exposure), compared to $108.9 million (0.88% of the Agricultural Finance mortgage loan portfolio) as of December 31, 2024.

Those 90-day delinquencies consisted of 99 delinquent loans as of March 31, 2025, compared to 62 delinquent loans as of December 31, 2024.

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.

This reflects compressed profitability in certain agricultural commodity segments, including some permanent planting and crops.

The top ten borrower exposures over 90 days delinquent represented over half of the 90-day delinquencies as of March 31, 2025.

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

Farmer Mac's 90-day delinquency rate as of September 30, 2024 was higher than Farmer Mac's historical average.

Farmer Mac's 90-day delinquency rate as of March 31, 2025 was above Farmer Mac's historical average.

In the near-term, our delinquency rate may continue to 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.

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(dollars in thousands)

September 30, 2024 $ 11,466,670 $ 144,407 1.26 %

June 30, 2024 11,409,396 62,063 0.54 %

March 31, 2025 $ 12,389,478 $ 159,977 1.29 %

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September 30, 2023 11,014,678 42,443 0.39 %

Across all of Farmer Mac's lines of business, 90-day delinquencies represented 0.51% of total outstanding business volume as of September 30, 2024, compared to 0.12% as of December 31, 2023 and 0.15% as of September 30, 2023.

The following table presents outstanding Agricultural Finance mortgage loans and 90-day delinquencies as of September 30, 2024 by year of origination, geographic region, commodity/collateral type, original loan-to-value ratio, and range in the size of borrower exposure:

Agricultural Finance Mortgage Loans 90-Day Delinquencies as of September 30, 2024

June 30, 2023 10,826,201 45,368 0.42 %

March 31, 2023 10,680,419 70,646 0.66 %

Across all of Farmer Mac's lines of business, 90-day delinquencies represented 0.54% of total outstanding business volume as of March 31, 2025, compared to 0.37% as of December 31, 2024 and 0.27% as of March 31, 2024.

The following table presents outstanding Agricultural Finance mortgage loans and 90-day delinquencies as of March 31, 2025 by year of origination, geographic region, commodity/collateral type, original loan-to-value ratio, and range in the size of borrower exposure:

Agricultural Finance Mortgage Loans 90-Day Delinquencies as of March 31, 2025

Distribution of Agricultural Loans Agricultural Loans 90-Day Delinquencies (1)

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Assets categorized as "substandard" have a well-defined weakness or weaknesses, and there is a distinct possibility that some loss will be sustained if deficiencies are not corrected.

As of September 30, 2024, Farmer Mac's Agricultural Finance mortgage loans (to which it has direct credit exposure) comprising substandard assets were $377.9 million (3.3% of the portfolio), compared to $248.0 million (2.2% of the portfolio) as of June 30, 2024 , and $186.0 million (1.7% of the portfolio) as of December 31, 2023.

Those substandard assets comprised 302 loans as of September 30, 2024, 238 loans as of June 30, 2024, and 206 loans as of December 31, 2023.

The increase of $129.9 million in Agricultural Finance substandard assets during third quarter 2024 was primarily driven by credit downgrades in permanent plantings, crops, livestock, part-time farms and agricultural storage and processing.

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

The percentage of Agricultural Finance substandard assets within the portfolio as of September 30, 2024 was below the historical average.

As of March 31, 2025, Farmer Mac's Agricultural Finance mortgage loans (to which it has direct credit exposure) comprising substandard assets were $466.0 million (3.8% of the portfolio), compared to $398.3 million (3.2% of the portfolio) as of December 31, 2024.

Those substandard assets comprised 380 loans as of March 31, 2025 and 336 loans as of December 31, 2024.

The increase of $67.7 million in Agricultural Finance substandard assets during first quarter 2025 was primarily attributable to credit risk rating downgrades in agricultural storage and processing and crop loans.

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.

The percentage of Agricultural Finance substandard assets within the portfolio as of March 31, 2025 was below the historical average.

Farmer Mac's average Agricultural Finance substandard assets as a percentage of its Agricultural Finance mortgage loans over the last 15 years is approximately 4%.

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Loan-to-value ratios depend on the market value of a property, as determined in accordance with Farmer Mac's collateral valuation standards.

As of September 30, 2024 and December 31, 2023, the average unpaid principal balances for Farm & Ranch loans outstanding and to which Farmer Mac has direct credit exposure was $801,000 and $804,000, respectively.

As of March 31, 2025 and December 31, 2024, the average unpaid principal balances for Farm & Ranch loans outstanding and to which Farmer Mac has direct credit exposure was $802,000 and $817,000, respectively.

Farmer Mac calculates the "original loan-to-value" ratio of a loan by dividing the original loan principal balance by the original appraised property value.

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The original loan-to-value ratio of any cross-collateralized loans is calculated on a combined basis rather than on a loan-by-loan basis.

The weighted-average original loan-to-value ratio for Farm & Ranch mortgage loans purchased during third quarter 2024 was 52%, compared to 47% for loans purchased during third quarter 2023.

The weighted-average original loan-to-value ratio for Farm & Ranch mortgage loans and loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs was 52% as of both September 30, 2024 and December 31, 2023.

The weighted-average original loan-to-value ratio for all 90-day delinquencies was 54% and 56% as of September 30, 2024 and December 31, 2023, respectively.

The weighted-average current loan-to-value ratio (the loan to-value ratio based on original appraised value and current outstanding loan amount adjusted to reflect amortization) for Agricultural Finance mortgage loans and loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs was 45% and 47% as of September 30, 2024 and December 31, 2023, respectively.

The weighted-average original loan-to-value ratio for Farm & Ranch mortgage loans purchased during first quarter 2025 was 51%, compared to 49% for loans purchased during first quarter 2024.

The weighted-average original loan-to-value ratio for all 90-day delinquencies was 54% and 53% as of March 31, 2025 and December 31, 2024, respectively.

The weighted-average current loan-to-value ratio (the loan to-value ratio based on original appraised value and current outstanding loan amount adjusted to reflect amortization) for Agricultural Finance mortgage loans and loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs was 47% and 46% as of March 31, 2025 and December 31, 2024, respectively.

The following table presents the current loan-to-value ratios for the Agricultural Finance mortgage loans to which Farmer Mac has direct credit exposure, as disaggregated by internally assigned risk ratings:

Agricultural Finance Mortgage Loans current loan-to-value ratio by internally assigned risk rating as of September 30, 2024

Agricultural Finance Mortgage Loans current loan-to-value ratio by internally assigned risk rating as of March 31, 2025

Acceptable Special Mention Substandard Total

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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 September 30, 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 following table presents Farmer Mac's cumulative net credit losses relative to the cumulative original balance for all Agricultural Finance mortgage loans as of March 31, 2025 by year of origination, geographic region, and commodity/collateral type.

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

Agricultural Finance Mortgage Loans Credit Losses Relative to Cumulative

Original Loans, Guarantees, and LTSPCs as of September 30, 2024

Original Loans, Guarantees, and LTSPCs as of March 31, 2025

Cumulative Original Loans, Guarantees and LTSPCs Cumulative Net Credit Losses/(Recoveries) Cumulative Loss Rate

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The following tables present concentrations of Agricultural Finance mortgage loans by commodity type within geographic region and cumulative credit losses by origination year and commodity type:

As of September 30, 2024

As of March 31, 2025

Agricultural Finance Mortgage Loans Concentrations by Commodity Type within Geographic Region

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

As of September 30, 2024

As of March 31, 2025

Agricultural Loans Cumulative Credit Losses by Origination Year and Commodity Type

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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 September 30, 2024 was $5.0 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" in Farmer Mac's 2023 Annual Report.

As of September 30, 2024, there was one telecommunications loan classified as substandard, with an unpaid principal balance of $24.1 million.

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.

Infrastructure Finance - Direct Credit Exposure

Farmer Mac's direct credit exposure to Infrastructure Finance loans held and loans underlying LTSPCs as of March 31, 2025 was $6.0 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" in Farmer Mac's 2024 Annual Report.

As of March 31, 2025, there were no delinquencies in Farmer Mac's

portfolio of Infrastructure Finance loans.

As of March 31, 2025, there was one Broadband Infrastructure borrower and one Renewable Energy borrower classified as substandard.

The total exposure on those two borrowers was $42.2 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 Rural Infrastructure loans by portfolio segment and by internally assigned risk ratings.

As of September 30, 2024

Rural Infrastructure Finance portfolio by internally assigned risk rating

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

As of March 31, 2025

Infrastructure Finance portfolio by internally assigned risk rating

Acceptable Special Mention Substandard Total

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Renewable Energy 1,595,542 — 13,122 1,608,664

Telecommunications 587,103 34,475 24,128 645,706

Rural Infrastructure Total $ 4,922,524 $ 47,866 $ 24,128 $ 4,994,518

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 5 and 6 of the consolidated financial statements.

Broadband Infrastructure

936,052 9,724 29,059 974,835

Infrastructure Finance Total

$ 5,923,011 $ 9,724 $ 42,181 $ 5,974,916

For more information about the credit quality of Farmer Mac's Infrastructure Finance portfolio and the associated allowance for losses please refer to Notes 5 and 6 of the consolidated financial statements.

Other Considerations Regarding Credit Risk Related to Loans and Guarantees

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Therefore, Farmer Mac believes that we have little or no credit risk exposure to the USDA Securities in the Agricultural Finance line of business because of the USDA guarantee.

As of September 30, 2024, Farmer Mac had not experienced any credit losses on any USDA Securities or Farmer Mac Guaranteed USDA Securities and does not expect to incur any such losses in the future.

As of March 31, 2025, Farmer Mac had not experienced any credit losses on any USDA Securities or Farmer Mac Guaranteed USDA Securities and does not expect to incur any such losses in the future.

Because we do not expect credit losses on this portfolio, Farmer Mac does not provide an allowance for losses on its portfolio of USDA Securities.

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Farmer Mac has the ability to require a seller to cure, replace, or repurchase a loan sold or transferred to Farmer Mac if any breach of a representation or warranty is discovered that was material to Farmer Mac's decision to purchase the loan or that directly or indirectly causes a default or potential loss on a loan sold or transferred by the seller to Farmer Mac.

During the previous three years ended September 30, 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.

During the three months ended March 31, 2025, there have been no breaches of representations and warranties by sellers that resulted in Farmer Mac requiring a seller to cure, replace, or repurchase a loan.

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

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

For more information about Farmer Mac's loan eligibility requirements and underwriting standards, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Loan Eligibility," "Business—Farmer Mac's Lines of Business—Agricultural Finance—Underwriting and Collateral Standards—Farm & Ranch," "Business—Farmer Mac's Lines of Business—Agricultural Finance—Underwriting and Collateral Standards—Corporate AgFinance," and "Business—Farmer Mac's Lines of Business—Rural Infrastructure Finance—Underwriting and Collateral Standards" in Farmer Mac’s 2023 Annual Report.

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" in Farmer Mac's 2024 Annual Report.

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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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 September 30, 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—Rural Infrastructure Finance—Lenders and Loan Servicing" in Farmer Mac’s 2023 Annual Report.

That was Farmer Mac's only exercise of remedies or taking of formal action against any servicers during the previous three years ended March 31, 2025.

In April 2025, Farmer Mac terminated the entire seller/servicer relationship with that field servicer and assumed field servicing duties on all loans sold to Farmer Mac by that entity.

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" in Farmer Mac's 2024 Annual Report.

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 September 30, 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" in Farmer Mac’s 2023 Annual Report.

The unpaid principal balance of outstanding on-balance sheet AgVantage securities secured by loans eligible for the Agricultural Finance line of business totaled $5.3 billion as of September 30, 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 $3.5 billion as of September 30, 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 September 30, 2024 and December 31, 2023:

As of September 30, 2024 As of December 31, 2023

As of March 31, 2025, Farmer Mac had not experienced any credit losses on any AgVantage securities over the life of the program.

For a more detailed description of AgVantage securities, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Other Products – Agricultural Finance—AgVantage Securities" and "Business—Farmer Mac's Lines of Business—Infrastructure Finance—Other Products – Infrastructure Finance—AgVantage Securities" in Farmer Mac's 2024 Annual Report.

The unpaid principal balance of outstanding on-balance sheet AgVantage securities secured by loans eligible for the Agricultural Finance line of business totaled $4.5 billion as of March 31, 2025 and $5.0

billion as of December 31, 2024.

The unpaid principal balance of on-balance sheet AgVantage securities secured by loans eligible for the Infrastructure Finance line of business totaled $3.8 billion as of March 31, 2025 and $3.5 billion as of December 31, 2024.

The following table provides information about the issuers of AgVantage securities and the required collateralization levels for those transactions as of March 31, 2025 and December 31, 2024:

As of March 31, 2025 As of December 31, 2024

Counterparty Balance Required Collateralization Balance Required Collateralization

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Total outstanding $ 8,279,277 $ 8,521,440

(1) Consists of AgVantage securities issued by 9 and 8 different issuers as of September 30, 2024 and December 31, 2023, respectively.

(1) Consists of AgVantage securities issued by 9 different issuers as of both March 31, 2025 and December 31, 2024.

Farmer Mac manages institutional credit risk related to lenders and servicers by requiring those institutions to meet Farmer Mac's standards for creditworthiness.

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

For more information about Farmer Mac's lender eligibility requirements, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Lenders" and "Business—Farmer Mac's Lines of Business—Rural Infrastructure Finance—Lenders and Loan Servicing" in Farmer Mac’s 2023 Annual Report.

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" in Farmer Mac's 2024 Annual Report.

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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Credit Risk – Other Investments .

As of September 30, 2024, Farmer Mac had $0.8 billion of cash and cash equivalents and $5.9 billion of investment securities.

As of March 31, 2025, Farmer Mac had $1.0 billion of cash and cash equivalents and $6.3 billion of investment securities.

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

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The Liquidity and Investment Regulations and Farmer Mac's internal policies require that investments held in Farmer Mac's investment portfolio meet the following creditworthiness standards:

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;

(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.

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The Liquidity and Investment Regulations and Farmer Mac's internal policies also establish concentration limits, which are intended to limit exposure to any single entity, issuer, or obligor.

The Liquidity and Investment Regulations limit Farmer Mac's total credit exposure to any single entity, issuer, or obligor of securities to 10% of Farmer Mac's regulatory capital ($148.7 million as of September 30, 2024).

However, Farmer Mac's current policy limits this total credit exposure to 5% of its regulatory capital ($74.3 million as of September 30, 2024).

However, Farmer Mac's current policy limits this total credit exposure to 5% of its regulatory capital ($77.7 million as of March 31, 2025).

These exposure limits do not apply to obligations of U.S.

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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.

Farmer Mac's primary strategy for managing interest rate risk is to fund asset purchases with debt that together with financial derivatives have similar duration and convexity characteristics and help mitigate impacts from interest rate changes across the yield curve.

As part of this strategy, Farmer Mac seeks to

issue debt securities across a variety of maturities that together with financial derivatives closely align the forecasted debt and financial derivative cash flows with forecasted asset cash flows.

impacts from interest rate changes across the yield curve.

As part of this strategy, Farmer Mac seeks to issue debt securities across a variety of maturities that together with financial derivatives closely align the forecasted debt and financial derivative cash flows with forecasted asset cash flows.

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.

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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Treasury securities and other financial derivatives.

Farmer Mac's $0.8 billion of cash and cash equivalents held as of September 30, 2024 mature within three months.

As of September 30, 2024, $2.8 billion of the $5.9 billion of investment securities (47%) 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 $1.0 billion of cash and cash equivalents held as of March 31, 2025 mature within three months.

As of March 31, 2025, $3.0 billion of the $6.2 billion of investment securities (47%) were floating rate securities with rates that adjust within one year or fixed rate securities with original maturities between three months and one year.

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

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

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Actual results may differ to the extent there are material changes to Farmer Mac's financial asset portfolio or changes in funding or hedging strategies undertaken to mitigate unfavorable sensitivities to interest rate changes.

The following schedule summarizes the results of Farmer Mac's MVE and NES sensitivity analysis as of September 30, 2024 and December 31, 2023 to an immediate and instantaneous uniform or "parallel" shift in the yield curve:

The following schedule summarizes the results of Farmer Mac's MVE and NES sensitivity analysis as of March 31, 2025 and December 31, 2024 to an immediate and instantaneous uniform or "parallel" shift in the yield curve:

Percentage Change in MVE from Base Case

Interest Rate Scenario As of September 30, 2024 As of December 31, 2023

Interest Rate Scenario As of March 31, 2025 As of December 31, 2024

+100 basis points (3.7) % (4.0) %

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Percentage Change in NES from Base Case

Interest Rate Scenario As of September 30, 2024 As of December 31, 2023

Interest Rate Scenario As of March 31, 2025 As of December 31, 2024

+100 basis points — % (0.8) %

-100 basis points 0.7 % 1.6 %

As of September 30, 2024, Farmer Mac maintained a positive effective duration gap of 3.4 months, remaining consistent with the 3.4 months reported as of December 31, 2023.

Since the end of 2023, the yield curve has steepened, with the yield-to-maturities of 2-year and 10-year U.S.

Treasury Notes decreasing by approximately 61 and 10 basis points, respectively.

This shift in rates shortened the duration of Farmer Mac's funded assets and liabilities, resulting in Farmer Mac's duration gap being stable.

As of March 31, 2025, Farmer Mac maintained a positive effective duration gap of 3.7 months, which was relatively unchanged compared to December 31, 2024.

Since the end of 2024, the yield curve has declined, with the yields on both 2‑year and 10‑year U.S.

Treasury Notes falling by approximately 36 basis points.

This change in interest rates resulted in a relatively similar decline in the duration of Farmer Mac’s funded assets, liabilities, and financial derivatives.

Financial Derivatives Transactions

6 unchanged sentences

Treasury securities.

As of September 30, 2024, Farmer Mac had $25.4 billion combined notional amount of interest rate swaps, with terms ranging from less than one year to just over thirty years, of which $10.4 billion were pay-fixed interest rate swaps, $14.4 billion were receive-fixed interest rate swaps, and $0.7 billion were basis swaps.

As of March 31, 2025, Farmer Mac had $24.0 billion combined notional amount of interest rate swaps, with terms ranging from less than one year to approximately thirty years, of which $10.5 billion were pay-fixed interest rate swaps, $12.9 billion were receive-fixed interest rate swaps, and $0.6 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.

10 unchanged sentences

All of Farmer Mac's interest rate swap transactions are conducted under standard collateralized agreements that limit Farmer Mac's potential credit exposure to any counterparty.

As of both September 30, 2024 and December 31, 2023, Farmer Mac had no uncollateralized net exposures based on the mark-to-market value of the portfolio of interest rate swaps.

As of both March 31, 2025 and December 31, 2024, Farmer Mac had no uncollateralized net exposures based on the mark-to-market value of the portfolio of interest rate swaps.

Re-funding and repricing risk

15 unchanged sentences

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 September 30, 2024, Farmer Mac held $7.3 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 March 31, 2025, Farmer Mac held $7.5 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 $10.5 billion of interest rate swaps outstanding where Farmer Mac pays a fixed rate of interest and receives a floating rate of interest, primarily SOFR.

1 unchanged sentence

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 2024.

Farmer Mac regularly accesses the debt capital markets for funding, and Farmer Mac maintained steady access to the debt capital markets throughout 2025.

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

As of September 30, 2024, Farmer Mac had outstanding discount notes of $2.2 billion, medium-term notes that mature within one year of $7.7 billion, and medium-term notes that mature after one year of $17.2 billion.

As of March 31, 2025, Farmer Mac had outstanding discount notes of $1.9 billion, medium-term notes that mature within one year of $8.2 billion, and medium-term notes that mature after one year of $17.9 billion.

Assuming continued access to the debt capital markets, Farmer Mac believes it has sufficient liquidity and capital resources to support its operations for the next 12 months and for the foreseeable future.

1 unchanged sentence

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 308 days of liquidity throughout third quarter 2024 and had 309 days of liquidity as of September 30, 2024.

In accordance with the methodology for calculating available days of liquidity under those regulations, Farmer Mac maintained a monthly average of 290 days of liquidity throughout 2025 and had 289 days of liquidity as of March 31, 2025.

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.

The following table presents these assets as of September 30, 2024 and December 31, 2023:

As of September 30, 2024 As of December 31, 2023

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

for liquidity needs.

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

The following table presents these assets as of March 31, 2025 and December 31, 2024:

As of March 31, 2025 As of December 31, 2024

(in thousands)

6 unchanged sentences

Total $ 7,287,340 $ 6,986,291

The objectives of the investment portfolio as of September 30, 2024 and December 31, 2023 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 March 31, 2025 and December 31, 2024 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 .

1 unchanged sentence

Farmer Mac must comply with the higher of the minimum capital requirement and the risk-based capital requirement.

As of September 30, 2024, Farmer Mac was in compliance with its statutory capital requirements and was classified as within "level 1" (the highest compliance level).

As of March 31, 2025, Farmer Mac was in compliance with its statutory capital requirements and was classified as within "level 1" (the highest compliance level).

In accordance with the FCA's rule on capital planning, Farmer Mac's board of directors has adopted a policy for maintaining a sufficient level of "Tier 1" capital (consisting of retained earnings, paid-in capital, common stock, and qualifying preferred stock).

That policy restricts Tier 1-eligible dividends and any discretionary bonus payments if Tier 1 capital falls below specified thresholds.

As of September 30, 2024 and December 31, 2023, Farmer Mac's Tier 1 capital ratio was 14.2% and 15.4%, respectively.

As of September 30, 2024, Farmer Mac was in compliance with its capital adequacy policy.

As of March 31, 2025 and December 31, 2024, Farmer Mac's Tier 1 capital ratio was 13.9% and 14.2%, respectively.

As of March 31, 2025, Farmer Mac was in compliance with its capital adequacy policy.

Farmer Mac does not expect its compliance on an ongoing basis with the FCA's rule on capital planning, including Farmer Mac's policy on Tier 1 capital, to materially affect Farmer Mac's operations or financial condition.

Capital Standards." See Note 8 to the consolidated financial statements for more information about Farmer Mac's capital position.

For more information about the capital requirements applicable to Farmer Mac, its capital adequacy policy, and the FCA's rule on capital planning, see "Business—Government Regulation of Farmer Mac—Capital Standards." See Note 8 to the consolidated financial statements for more information about Farmer Mac's capital position.

Other Matters

2 unchanged sentences

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)

For the quarter ended:

September 30, 2024 $ 776,023 $ 307,325 $ 579,887 $ 325,743 $ 1,988,978

June 30, 2024 698,787 288,740 235,033 271,890 1,494,450

March 31, 2025 $ 548,509 $ 270,966 $ 486,961 $ 229,649 $ 301,315 $ 1,837,400

5 unchanged sentences

September 30, 2023 1,384,273 275,932 557,043 50,936 17,390 2,285,574

June 30, 2023 1,574,169 218,136 205,236 89,056 71,611 2,158,208

March 31, 2023 469,013 203,211 590,412 92,819 89,747 1,445,202

For the year ended:

2 unchanged sentences

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)

2 unchanged sentences

Unscheduled 258,599 99,776 30,385 — — 388,760

September 30, 2024 $ 1,196,674 $ 281,438 $ 701,219 $ 106,207 $ 2,285,538

Scheduled $ 752,473 $ 141,565 $ 78,299 $ 138,725 $ 1,111,062

Unscheduled 342,594 89,576 32,984 — 465,154

June 30, 2024 $ 1,095,067 $ 231,141 $ 111,283 $ 138,725 $ 1,576,216

Scheduled $ 402,088 $ 118,885 $ 126,314 $ 93,112 $ 740,399

Unscheduled 150,903 99,325 32,481 — 282,709

March 31, 2025 $ 1,045,555 $ 269,308 $ 108,361 $ 57,279 $ 109,176 $ 1,589,679

17 unchanged sentences

September 30, 2023 $ 1,031,183 $ 215,382 $ 95,609 $ 5,967 $ 14,716 $ 1,362,857

Scheduled $ 1,050,480 $ 81,386 $ 553,860 $ 5,084 $ 52,203 $ 1,743,013

Unscheduled 96,507 55,976 13,138 — — 165,621

June 30, 2023 $ 1,146,987 $ 137,362 $ 566,998 $ 5,084 $ 52,203 $ 1,908,634

Scheduled $ 279,676 $ 78,482 $ 42,475 $ 53,334 $ 11,424 $ 465,391

Unscheduled 231,288 128,254 57,354 — — 416,896

March 31, 2023 $ 510,964 $ 206,736 $ 99,829 $ 53,334 $ 11,424 $ 882,287

For the year ended:

6 unchanged sentences

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)

September 30, 2024 $ 18,090,374 $ 1,842,780 $ 7,440,141 $ 1,095,008 $ 28,468,303

June 30, 2024 18,504,501 1,816,893 7,561,473 875,472 28,758,339

March 31, 2025 $ 18,094,515 $ 1,889,363 $ 7,187,966 $ 974,835 $ 1,608,664 $ 29,755,343

5 unchanged sentences

September 30, 2023 18,461,835 1,741,306 6,633,252 485,043 330,575 27,652,011

June 30, 2023 18,116,503 1,680,756 6,171,818 440,074 327,901 26,737,052

March 31, 2023 17,685,961 1,599,982 6,533,581 356,101 308,493 26,484,118

On-Balance Sheet Outstanding Business Volume

1 unchanged sentence

(in thousands)

September 30, 2024 $ 14,328,691 $ 3,311,001 $ 6,265,792 $ 23,905,484

June 30, 2024 14,064,831 3,273,764 6,850,137 24,188,732

March 31, 2025 $ 14,397,557 $ 3,393,642 $ 6,892,411 $ 24,683,610

5 unchanged sentences

September 30, 2023 13,727,280 3,019,317 6,255,690 23,002,287

June 30, 2023 13,721,129 3,003,560 5,493,104 22,217,793

March 31, 2023 13,607,740 3,020,229 5,924,032 22,552,001

The following table presents the quarterly net effective spread (a non-GAAP measure) by segment:

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)

For the quarter ended:

March 31, 2025 $ 33,885 $ 8,640 $ 5,329 $ 3,566 $ 5,112 $ 31,604 $ 1,854 $ 89,990

1.01 % 2.09 % 0.32 % 2.27 % 1.55 % 0.41 % 0.10 % 1.17 %

December 31, 2024

32,556 7,891 5,059 3,414 4,859 31,242 2,507 87,528

0.96 % 1.95 % 0.32 % 2.34 % 1.76 % 0.42 % 0.15 % 1.16 %

September 30, 2024 35,755 6,397 4,785 2,794 3,810 30,912 943 85,396

1 unchanged sentence

June 30, 2024 34,156 7,866 5,253 2,393 2,999 30,268 661 83,596

0.98 % 1.91 % 0.32 % 2.16 % 1.86 % 0.41 % 0.04 % 1.14 %

March 31, 2024 32,843 7,971 4,890 2,342 2,049 32,474 475 83,044

0.95 % 2.05 % 0.30 % 2.08 % 1.75 % 0.45 % 0.03 % 1.14 %

December 31, 2023

33,329 8,382 4,916 2,426 1,540 33,361 597 84,551

0.98 % 2.06 % 0.31 % 2.06 % 1.69 % 0.47 % 0.04 % 1.19 %

September 30, 2023 32,718 8,250 3,979 2,383 1,150 34,412 532 83,424

3 unchanged sentences

March 31, 2023 32,465 7,148 3,599 1,908 858 31,738 (543) 77,173

December 31, 2022 32,770 0.98 % 7,471 1.94 % 4,960 0.34 % 935 1.76 % 27,656 0.42 % (2,689) (0.19) % 71,103 1.07 %

September 30, 2022 33,343 1.04 % 7,600 1.99 % 4,220 0.30 % 705 1.97 % 22,564 0.36 % (2,791) (0.21) % 65,641 1.03 %

(1) Farmer Mac excludes the Corporate segment in the presentation above because the segment does not have any interest-earning assets.

(2) See Note 10 to the consolidated financial statements for a reconciliation of GAAP net interest income by segment to net effective spread by segment for the three months ended September 30, 2024 and 2023.

0.97 % 1.94 % 0.24 % 2.53 % 1.53 % 0.47 % (0.04) % 1.15 %

The following table presents quarterly core earnings (a non-GAAP measure) reconciled to net income attributable to common stockholders:

Core Earnings by Quarter End

September 2024 June 2024 March 2024 December 2023 September 2023 June 2023 March 2023 December 2022 September 2022

March 2025 December 2024 September 2024 June 2024 March 2024 December 2023 September 2023 June 2023 March 2023

(in thousands)

8 unchanged sentences

REO operating expenses — — 196 — — — — — —

Losses on sale of REO 68 — — — — — — — —

Total credit related expense/(income) 1,651 3,872 3,454 6,230 (1,870) (575) (181) 1,142 750

18 unchanged sentences

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-Q

Item 2. Management’s Discussion and Analysis