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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-09 · 452 added, 373 removed, 1020 unchanged (45% 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 March 31, 2025.

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

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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 first quarter 2025, Farmer Mac:

During second quarter 2025, Farmer Mac:

• exceeded $30 billion in outstanding business volume;

• provided $2.1 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.

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

On August 5, 2025, Farmer Mac's board of directors revised the terms of the company's share repurchase program to increase the total authorized amount of repurchases from $9.8 million to $50 million and to extend the expiration date of the program to August 5, 2027.

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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The following table shows our net income attributable to common stockholders and core earnings for the periods presented.

Core earnings and core earnings per share are non-GAAP measures that differ from net income attributable to common stockholders and earnings per common share, respectively, by excluding the effects of fair value fluctuations and specified infrequent or unusual transactions.

Core earnings is a non-GAAP measure that differs from net income attributable to common stockholders by excluding the effects of fair value fluctuations and specified infrequent or unusual transactions.

For the Three Months Ended

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

June 30, 2025 March 31, 2025 June 30, 2024

(in thousands)

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Core earnings 47,365 45,966 39,777

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.

The $5.2 million sequential increase in net income attributable to common stockholders was primarily attributable to a $4.6 million after-tax increase in net interest income, a $3.2 million increase in federal income tax benefit from the purchase of renewable energy investment tax credits, and a $2.1 million after-tax increase in the fair value of financial derivatives.

These increases were partially offset by a $4.9 million after-tax increase in the provision for credit losses.

The $8.9 million year-over-year increase in net income attributable to common stockholders was primarily attributable to a $7.5 million after-tax increase in net interest income, a $3.2 million increase in federal income tax benefit from the purchase of renewable energy investment tax credits, and a $1.5 million after-tax increase in the fair value of financial derivatives.

These factors were partially offset by a $4.0 million after-tax increase in operating expenses and a $1.2 million after-tax increase in the provision for credit losses.

The $1.4 million sequential increase in core earnings was primarily attributable to a $3.1 million after-tax increase in net effective spread and a $3.2 million increase in federal income tax benefit from the purchase of renewable energy investment tax credits, partially offset by a $4.9 million after-tax increase in the provision for credit losses.

The $7.6 million year-over-year increase in core earnings was primarily attributable to a $8.1 million after-tax increase in net effective spread and a $3.2 million increase in federal income tax benefit from the purchase of renewable energy investment tax credits, partially offset by a $4.0 million after-tax increase in operating expenses and a $1.2 million after-tax increase in the 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

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

June 30, 2025 March 31, 2025 June 30, 2024

(in thousands)

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Net effective spread % 1.19 % 1.17 % 1.14 %

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.

The $5.9 million, or 5 basis points, sequential increase in net interest income was primarily due to a $3.6 million increase from net new business volume and a $1.6 million increase in the fair value of derivatives designated in fair value hedge accounting relationships (designated financial derivatives).

The $9.5 million year-over-year increase in net interest income for second quarter 2025 compared to second quarter 2024 was primarily attributable to a $7.4 million increase from net new business volume.

The $3.9 million sequential increase in net effective spread was primarily attributable to a $3.6 million increase from net new business volume.

The $10.3 million, or 5 basis points, year-over-year increase in net effective spread for second quarter 2025 compared to second quarter 2024 was primarily due to a $7.4 million increase from net new business volume, a $1.4 million contribution from our Investments segment and a $1.4 million decrease in funding costs.

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

Business Volume

Our outstanding business volume was $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.

Our outstanding business volume was $30.6 billion as of June 30, 2025, a net increase of $0.8 billion from March 31, 2025 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 $0.6 billion in the Infrastructure Finance line of business and $0.2 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."

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

(in thousands)

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Capital in excess of minimum capital level required 602,106 583,527

The increase in capital in excess of the minimum capital level required was primarily attributable to 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, partially offset by the capital impact due to growth in total assets.

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 March 31, 2025 and December 31, 2024:

During second quarter 2025, we recorded a charge-off of $2.8 million primarily related to two specific borrower relationships for a permanent planting loan and a crop loan to reflect the amount of each loan that we deemed uncollectible.

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 June 30, 2025, March 31, 2025, and December 31, 2024:

On-Balance Sheet Off-Balance Sheet

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(dollars in thousands)

June 30, 2025 $ 415,185 4.4 % $ 37,785 1.1 %

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 $ (12,965) (0.4) % $ (15) — %

Increase/(decrease) from prior year-ending 48,173 0.2 % 6,545 0.2 %

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.

The decrease of $13.0 million in on-balance sheet substandard assets during second quarter was primarily driven by credit upgrades in crops and agricultural storage and processing, partially offset by downgrades in permanent plantings.

Substandard assets within the Infrastructure Finance portfolio increased from $42.2 million as of March 31, 2025 to $72.2 million as of June 30, 2025, primarily as a result of two borrowers that were downgraded to substandard during the quarter.

One of the downgraded loans was a Renewable Energy solar project and the other was a Broadband Infrastructure loan.

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 March 31, 2025 and December 31, 2024:

The following table pres ents 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 June 30, 2025, March 31, 2025, and December 31, 2024:

On-Balance Sheet Off-Balance Sheet

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(dollars in thousands)

June 30, 2025 $ 123,393 1.3 % $ 2,475 0.1 %

March 31, 2025 155,438 1.8 % 4,539 0.1 %

December 31, 2024 101,340 1.1 % 7,604 0.2 %

Increase/(decrease) from prior quarter-ending $ (32,045) (0.5) % $ (2,064) — %

Increase/(decrease) from prior year-ending 22,053 0.2 % (5,129) (0.1) %

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.

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 March 31, 2025.

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.

The decrease of $32.0 million and $2.1 million in on- and off-balance sheet Agricultural Finance assets, respectively, that are 90 or more days delinquent is primarily attributable to crops and permanent plantings.

As of both June 30, 2025 and December 31, 2024, there were no 90-day delinquencies in Farmer Mac's portfolio of Infrastructure Finance loan purchases and loans underlying Long-Term Standby Purchase Commitments (“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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Specifically, Farmer Mac uses the following non-GAAP measures:

"core earnings," "core earnings per share," and "net effective spread." Farmer Mac uses these non-GAAP measures to measure corporate economic performance and develop financial plans because, in management's view, they are useful alternative measures in understanding Farmer Mac's economic performance, transaction economics, and business trends.

"core earnings," "core earnings per common share," and "net effective spread." Farmer Mac uses these non-GAAP measures to measure corporate economic performance and develop financial plans because, in management's view, they are useful alternative measures in understanding Farmer Mac's economic performance, transaction economics, and business trends.

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

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

Core Earnings and Core Earnings Per Share

The main difference between core earnings and core earnings per share (non-GAAP measures) and net income attributable to common stockholders and earnings per common share (GAAP measures) is that those non-GAAP measures exclude the effects of fair value fluctuations.

Core Earnings and Core Earnings Per Common Share

The main difference between core earnings and core earnings per common share ("Core EPS"), which are non-GAAP measures, and net income attributable to common stockholders and earnings per common share ("EPS"), which are GAAP measures, is that those non-GAAP measures exclude the effects of fair value fluctuations.

These fluctuations are not expected to have a cumulative net impact on Farmer Mac's financial condition or results of operations reported in accordance with GAAP if the related financial instruments are held to maturity, as is expected.

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

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

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

For example, in third quarter 2024, we excluded the loss on the retirement of the Series C Preferred Stock from core earnings and Core EPS, 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 EPS to Core EPS, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations."

Net Effective Spread

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

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

Farmer Mac excludes from net effective spread the interest income and interest expense associated with the consolidated trusts and the average balance of the loans underlying these trusts to reflect management's view that the net interest income Farmer Mac earns on the related Farmer Mac Guaranteed Securities

owned by third parties is effectively a guarantee fee.

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

Net effective spread excludes the interest income and interest expense associated with consolidated trusts with beneficial interests owned by third parties (single-class) and the average balance of the loans underlying these trusts to reflect management's view that the net interest income earned on the related Farmer Mac Guaranteed Securities owned by third parties is effectively a guarantee fee.

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

Farmer Mac also excludes from net effective spread the fair value changes of financial derivatives and the corresponding assets or liabilities designated in fair value hedge accounting relationships because they are not expected to have an economic effect on Farmer Mac's financial performance, as we expect to hold the financial derivatives and corresponding hedged items to maturity.

Net effective spread also differs from net interest income and net interest yield because it includes the accrual of income and expense related to the contractual amounts due on financial derivatives that are not designated in hedge accounting relationships ("undesignated financial derivatives").

Farmer Mac uses interest rate swaps to manage its interest rate risk exposure by synthetically modifying the interest rate reset or maturity characteristics of certain assets and liabilities.

The accrual of the contractual amounts due on interest rate swaps designated in hedge accounting relationships is included as an adjustment to the yield or cost of the hedged item and is included in net interest income.

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

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

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:

Net effective spread also excludes the fair value changes of financial derivatives and the corresponding average balances of assets or liabilities designated in fair value hedge accounting relationships because they are not expected to have an economic effect on Farmer Mac's financial performance, as we expect to hold the financial derivatives and corresponding hedged items to maturity.

Farmer Mac uses net effective spread to show the complete net spread between its interest-earning assets and all related net funding costs, including any associated derivatives, whether or not they are designated in a hedge accounting relationship.

Accordingly, the net effective spread includes the accrual of income and expense related to the contractual amounts due on financial derivatives that are not designated in hedge accounting relationships ("undesignated financial derivatives").

For undesignated financial derivatives, Farmer Mac records the income or expense related to the accrual of the contractual amounts due in "Gains/(losses) on financial derivatives" on the Consolidated Statements of Operations.

Net effective spread also differs from net interest income because it includes the net effects of terminations or net settlements on undesignated 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.

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and (2) the net effects of initial cash payments that Farmer Mac receives upon the inception of certain swaps.

The inclusion of these items in net effective spread is intended to reflect our view of the complete net spread between an asset and all of its related funding, including any associated derivatives, whether or not they are designated in a hedge accounting relationship.

For a reconciliation of net interest income and net interest yield to net effective spread, see Table 10 in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Net Interest Income."

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."

Results of Operations

Reconciliations of Farmer Mac's net income attributable to common stockholders to core earnings and core earnings per share are presented in the following tables along with information about the composition of core earnings:

Reconciliations of net income attributable to common stockholders and EPS to core earnings and Core EPS are presented in the following tables along with information about the composition of core earnings:

Reconciliation of Net Income Attributable to Common Stockholders to Core Earnings

For the Three Months Ended

March 31, 2025 March 31, 2024

June 30, 2025 June 30, 2024

(in thousands, except per share amounts)

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Less reconciling items:

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

Gains on hedging activities due to fair value changes

Unrealized losses on trading securities

Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value 25 26

Net effects of terminations or net settlements on financial derivatives 255 (1,505)

Income tax effect related to reconciling items (480) (143)

Sub-total 1,805 536

Core earnings $ 47,365 $ 39,777

Composition of Core Earnings:

Net effective spread (1)

$ 93,893 $ 83,596

Guarantee and commitment fees (2)

Gain on sale of investment securities (GAAP)

Loss on sale of mortgage loan (GAAP)

Total revenues 100,509 89,238

Credit related expense/(income) (GAAP):

Provision for losses

REO operating expenses

Total credit related expense/(income)

Operating expenses (GAAP):

Compensation and employee benefits 17,631 14,840

General and administrative 10,859 8,904

Regulatory fees 1,000 725

Total operating expenses 29,490 24,469

Net earnings 63,146 58,539

Income tax expense (4)

10,114 11,970

Preferred stock dividends (GAAP) 5,667 6,792

Core earnings $ 47,365 $ 39,777

Basic $ 4.33 $ 3.66

Diluted $ 4.32 $ 3.63

Weighted-average shares:

Basic 10,933 10,879

Diluted 10,963 10,956

(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 more information and 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 Six Months Ended

June 30, 2025 June 30, 2024

(in thousands, except per share amounts)

Net income attributable to common stockholders $ 93,155 $ 87,268

Less reconciling items:

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

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Gains on hedging activities due to fair value changes

Unrealized gains/(losses) on trading securities

Unrealized losses on trading securities

Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value 53 57

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Guarantee and commitment fees (2)

11,362 10,238

Gain on sale of investment securities (GAAP)

Loss on sale of mortgage loan (GAAP)

Total revenues 197,302 178,341

Credit related expense/(income) (GAAP):

Provision for/(release of) losses

1,583 (1,870)

Loss on sale of REO

Provision for losses

REO operating expenses

Total credit related expense/(income)

1,651 (1,870)

Operating expenses (GAAP):

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Core earnings $ 93,331 $ 83,169

Core earnings per share:

Basic $ 8.55 $ 7.66

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(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.

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

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

For the Three Months Ended

March 31, 2025 March 31, 2024

Reconciliation of GAAP Basic EPS to Core Earnings - Basic EPS

For the Three Months Ended For the Six Months Ended

June 30, 2025 June 30, 2024 June 30, 2025 June 30, 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)

(0.06) (0.03) (0.29) 0.12

Gains on hedging activities due to fair value changes

Unrealized gains/(losses) on trading securities

0.25 0.24 0.35 0.52

Unrealized losses on trading securities

(0.01) (0.01) (0.01) (0.01)

Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value — — 0.01 0.01

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Shares used in per share calculation (GAAP and Core Earnings) 10,933 10,879 10,915 10,863

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

For the Three Months Ended

March 31, 2025 March 31, 2024

Reconciliation of GAAP Diluted EPS to Core Earnings - Diluted EPS

For the Three Months Ended For the Six Months Ended

June 30, 2025 June 30, 2024 June 30, 2025 June 30, 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)

(0.06) (0.03) (0.29) 0.12

Gains on hedging activities due to fair value changes

Unrealized gains/(losses) on trading securities

0.25 0.24 0.35 0.51

Unrealized losses on trading securities

(0.01) (0.01) (0.01) (0.01)

Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value — — — 0.01

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

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

(Losses)/gains on financial derivatives due to fair value changes, including:

(a) (Losses)/gains on undesignated financial derivatives due to fair value changes;

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.

The amount of this non-GAAP reconciling item is the recorded amount of premium, discount, or deferred gain amortization during the reporting period on those assets for which the premium, discount, or deferred gain was based on the application of an accounting principle (e.g., consolidation of variable interest entities) rather than on a cash transaction (e.g., a purchase price premium or discount).

The net effects of terminations or net settlements on financial derivatives.

These terminations or net settlements relate to:

• Forward contracts on the debt of other GSEs and futures contracts on U.S.

Treasury securities.

These contracts are used as a short-term economic hedge of the issuance of debt.

Unrealized losses on trading securities are reported on Farmer Mac's Consolidated Statements of Operations and represent changes during the period in fair values for trading assets remaining on our 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 reflects the amortization recorded during the reporting period on those assets for which the premium, discount, or deferred gain was a result of consolidation accounting rather than a cash transaction.

The net effects of terminations or net settlements on financial derivatives relate to forward contracts on the debt of other GSEs and futures contracts on U.S.

Treasury securities, which are used as a short-term economic hedge of the issuance of debt.

For GAAP purposes, realized gains or losses on settlements of these contracts are reported in the Consolidated Statements of Operations in the period in which they occur.

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

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

The following sections provide more detail about specific components of our results of operations.

Net Interest Income .

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.

Therefore, as the average balance of non-accruing loans and the income received increases or decreases, the net interest income and yield will fluctuate accordingly.

The average balance of loans in consolidated trusts with beneficial interests owned by third parties (single-class) and for which Farmer Mac guarantees all classes of securities issued is disclosed in the net effect of consolidated trusts and is not included in the average balances of interest-earning assets and interest-bearing liabilities.

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

The following table provides information about interest-earning assets and funding for the three and six months ended June 30, 2025 and 2024.

The average balance of loans in consolidated trusts with beneficial interests owned by third parties (single-class) and for which Farmer Mac guarantees all classes of securities issued is excluded from the average balances of interest-earning assets and interest-bearing liabilities and, instead, is disclosed in the net effect of consolidated trusts along with the associated net interest income.

For the Three Months Ended

March 31, 2025 March 31, 2024

June 30, 2025 June 30, 2024

Balance Income/

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Net interest income/yield $ 32,385,956 $ 96,797 1.20 % $ 30,366,870 $ 87,340 1.15 %

(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).

(1) Excludes interest income of $10.0 million and $9.9 million in second quarter 2025 and 2024, respectively, related to consolidated trusts with beneficial interests owned by third parties (single-class).

(2) Excludes interest expense of $9.0 million and $8.5 million in second 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 the Six Months Ended

June 30, 2025 June 30, 2024

Balance Income/

Expense Average

Balance Income/

Expense Average

(dollars in thousands)

Interest-earning assets:

Cash and investments $ 7,377,693 $ 172,293 4.67 % $ 6,237,051 $ 169,462 5.43 %

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

23,800,045 588,283 4.94 % 23,035,820 611,679 5.31 %

Total interest-earning assets 31,177,738 760,576 4.88 % 29,272,871 781,141 5.34 %

Total interest-bearing liabilities (2)

29,061,297 574,838 3.96 % 27,299,257 609,856 4.47 %

Net non-interest-bearing funding 2,116,441 — 1,973,614 —

Total funding 31,177,738 574,838 3.69 % 29,272,871 609,856 4.17 %

Net interest income/yield prior to consolidation of certain trusts 31,177,738 185,738 1.19 % 29,272,871 171,285 1.17 %

Net effect of consolidated trusts (3)

870,801 1,998 0.46 % 880,196 2,423 0.55 %

Net interest income/yield $ 32,048,539 $ 187,736 1.17 % $ 30,153,067 $ 173,708 1.15 %

(1) Excludes interest income of $19.9 million and $18.9 million in the first half of 2025 and 2024, respectively, related to consolidated trusts with beneficial interests owned by third parties (single-class).

(2) Excludes interest expense of $17.9 million and $16.5 million in the first half of 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 $14.0 million increase in net interest income for the six months ended June 30, 2025, compared to the same period in the prior year was primarily attributable to a $13.8 million increase from net new business volume.

The following table sets forth information about changes in the components of Farmer Mac's net interest income for the periods indicated prior to consolidation of trusts with beneficial interests owned by third parties (single-class) and for which Farmer Mac guarantees all classes of securities issued.

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 Three Months Ended March 31, 2025

For the Six Months Ended June 30, 2025

Compared to Same Period in 2024

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(1) Excludes the effect of debt in consolidated trusts with beneficial interests owned by third parties (single-class).

The following table presents a reconciliation of net interest income and net interest yield to net effective spread.

Net effective spread is measured by:

including (1) expenses related to undesignated financial derivatives, which consists of income or expense related to contractual amounts due on financial derivatives not designated in hedge relationships (the income or expense related to financial derivatives

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

The following table presents a reconciliation of net interest income to net effective spread.

Net effective spread is measured by including:

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

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

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

For the Three Months Ended

March 31, 2025 March 31, 2024

Dollars Yield Dollars Yield

For the Three Months Ended For the Six Months Ended

June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Dollars Yield Dollars Yield Dollars Yield Dollars Yield

(dollars in thousands)

Net interest income/yield $ 90,939 1.15 % $ 86,368 1.15 %

Net interest income

$ 96,797 1.20 % $ 87,340 1.15 % $ 187,736 1.17 % $ 173,708 1.15 %

Net effects of consolidated trusts (987) 0.02 % (1,371) 0.02 % (1,998) 0.02 % (2,423) 0.02 %

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Net effective spread $ 93,893 1.19 % $ 83,596 1.14 % $ 183,883 1.18 % $ 166,640 1.14 %

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.

The $10.3 million, or 5 basis point, year-over-year increase in net effective spread for second quarter 2025 compared to second quarter 2024 was primarily due to a $7.4 million increase from net new business volume, a $1.4 million contribution from our Investments segment and a $1.4 million decrease in funding costs.

The $17.3 million, or 4 basis point, increase in net effective spread for the six months ended June 30, 2025, compared to the same period in the prior year, was primarily due to a $13.8 million increase in net new business volume, reflecting continued growth in the Renewable Energy and Broadband Infrastructure segments, a $2.8 million contribution from the Investments segment, and a $0.5 million decrease in 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 month period ended March 31, 2025 and 2024:

For the Three Months Ended

March 31, 2025 March 31, 2024

The following table summarizes the components of Farmer Mac's total allowance for losses for the three and six months ended June 30, 2025 and 2024:

As of June 30, 2025 As of June 30, 2024

Losses Reserve

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(in thousands)

For the Three Months Ended

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

Provision for/(release of) losses

Provision for losses

7,713 99 7,812 6,179 51 6,230

Charge-offs (2,840) — (2,840) (4,043) — (4,043)

Recovery 40 — 40 — — —

Ending Balance $ 30,350 $ 1,620 $ 31,970 $ 16,924 $ 1,693 $ 18,617

For the Six Months Ended

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

Provision for/(release of) losses 9,397 (2) 9,395 4,378 (18) 4,360

Charge-offs (2,840) — (2,840) (4,043) — (4,043)

Recovery 123 — 123 — — —

Ending Balance $ 30,350 $ 1,620 $ 31,970 $ 16,924 $ 1,693 $ 18,617

During second quarter 2025, we recorded a $7.8 million net provision to the total allowance for losses of which $2.8 million resulted from two specific borrower relationships for a permanent planting loan and a crop loan.

During second quarter 2025, we recorded a charge-off of $2.8 million related to these two specific borrower relationships to reflect the amount of each loan that we deemed uncollectible.

The remaining $5.0 million net provision recorded during the second quarter 2025 was due to downgrades in Infrastructure Finance, declining economic forecast factors of commercial and industrial loan performance and agricultural land values, and new volume growth in Broadband Infrastructure and Renewable Energy.

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 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 months ended March 31, 2025 and 2024:

For the Three Months Ended

March 31, 2025 March 31, 2024 $ %

For the Three Months Ended For the Six Months Ended

Change Change

June 30, 2025 June 30, 2024 $ % June 30, 2025 June 30, 2024 $ %

(dollars in thousands)

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Guarantee and commitment fee income $ 4,816 $ 3,797 $ 1,019 27 % $ 9,295 $ 7,714 $ 1,581 20 %

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.

Guarantee and commitment fee income increased for the three and six months ended June 30, 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 $5.9 million and $11.4 million for the three and six months ended June 30, 2025, respectively, compared to $5.3 million and $10.2 million for the three and six months ended June 30, 2024, respectively.

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

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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 months ended March 31, 2025 and 2024 are summarized in the following table:

For the Three Months Ended

March 31, 2025 March 31, 2024 $ %

Gains/(losses) on financial derivatives .

The components of gains and losses on financial derivatives for the three and six months ended June 30, 2025 and 2024 are summarized in the following table:

For the Three Months Ended For the Six Months Ended

Change Change

June 30, 2025 June 30, 2024 $ % June 30, 2025 June 30, 2024 $ %

(dollars in thousands)

(Losses)/gains due to fair value changes

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

$ (639) $ (359) $ (280) 78 % $ (3,212) $ 1,324 $ (4,536) (343) %

Accrual of contractual payments (208) (486) 278 (57) % 110 (521) 631 (121) %

(Losses)/gains due to terminations or net settlements

Gains/(losses) due to terminations or net settlements

927 (954) 1,881 (197) % 546 (523) 1,069 (204) %

(Losses)/gains on financial derivatives

Gains/(losses) on financial derivatives

$ 80 $ (1,799) $ 1,879 (104) % $ (2,556) $ 280 $ (2,836) (1013) %

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

The accrual of periodic cash settlements for interest paid or received from Farmer Mac's interest rate swaps that are undesignated financial derivatives is shown as income or expense related to financial derivatives.

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

Treasury security futures and initial cash 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.

Treasury security futures and initial cash payments received upon the inception of certain undesignated swaps are included in "Gains/(losses) due to terminations or net settlements" in the table above.

See Note 4 to the consolidated financial statements for more information about our financial derivatives.

Operating Expenses .

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 $ %

The components of operating expenses for the three and six months ended June 30, 2025 and 2024 are summarized in the following table:

For the Three Months Ended For the Six Months Ended

Change Change

June 30, 2025 June 30, 2024 $ % June 30, 2025 June 30, 2024 $ %

(dollars in thousands)

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Total Operating Expenses $ 29,490 $ 24,469 $ 5,021 21 % $ 59,000 $ 51,706 $ 7,294 14 %

Compensation and Employee Benefits .

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 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.

The increase in compensation and employee benefits expenses for the three and six months ended June 30, 2025 compared to 2024 was largely due to increased headcount.

The increase in G&A expenses for the three and six months ended June 30, 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 months ended March 31, 2025 and 2024:

For the Three Months Ended

March 31, 2025 March 31, 2024 $ %

The following table presents income tax expense and the effective income tax rate for the three and six months ended June 30, 2025 and 2024:

For the Three Months Ended For the Six Months Ended

Change Change

June 30, 2025 June 30, 2024 $ % June 30, 2025 June 30, 2024 $ %

(dollars in thousands)

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Effective tax rate 16.2 % 20.5 % (4.3) % 18.7 % 20.9 % (2.2) %

The decrease in the effective tax rate in 2025 is primarily attributable to the purchase of $35.6 million in renewable energy investment tax credits during the second quarter 2025.

The purchases of renewable energy investment tax credits have been at prices of approximately $0.91 per $1.00 of credit and resulted in a benefit in the amount of $3.2 million.

Business Volume .

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:

The following table sets forth the net growth or decrease in our lines of business for the three and six months ended June 30, 2025 and 2024:

Net New Business Volume

For the Three Months Ended

Balance Sheet March 31, 2025 March 31, 2024

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

For the Three Months Ended For the Six Months Ended

Balance Sheet June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

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

(in thousands)

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

Farmer Mac's outstanding business volume was $29.8 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.

Farmer Mac's outstanding business volume was $30.6 billion as of June 30, 2025, a net increase of $0.8 billion from March 31, 2025 after taking into account all new business, maturities, sales, and paydowns on existing assets.

The $0.1 billion net increase in Farm & Ranch during second quarter 2025 was primarily attributable to net loan growth partially offset by maturities of AgVantage securities that counterparties did not re-issue.

The $0.1 billion net increase in Power & Utilities during second quarter 2025 was primarily attributable to loan purchases.

The $0.2 billion net increase in Broadband Infrastructure during second quarter 2025 was primarily attributable to $0.3 billion in loan purchases and commitments, partially offset by repayments.

The $0.3 billion net increase in Renewable Energy during second quarter 2025 was primarily attributable to $0.5 billion in loan purchases and commitments, partially offset by repayments.

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 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

Farmer Mac's outstanding business volume was $28.8 billion as of June 30, 2024, a net increase of $0.1 billion from March 31, 2024 after taking into account all new business, maturities, and paydowns on existing assets.

The $0.4 billion net decrease in Farm & Ranch during second quarter 2024 resulted from $1.1 billion of

scheduled maturities and repayments, partially offset by $0.7 billion of new purchases, commitments, and

Included in the $0.7 billion is the purchase of $390.2 million of Farm & Ranch loans.

Scheduled loan maturities and repayments in the aggregate amount of $133.1 million partially offset those

During second quarter 2024, a total of $0.8 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 $0.8 billion in maturities and repayments were partially

offset by $0.2 billion in new purchases.

The $0.1 billion net increase in Corporate AgFinance during second 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, sales, and paydowns on revolving commitments.

Included in the

$0.3 billion is $243.7 million of purchases of Corporate AgFinance loans and unfunded commitments,

which was partially offset by $172.4 million of scheduled repayments.

The net increase in Corporate

AgFinance loan purchases and unfunded commitments primarily reflected a more active market for

agribusiness transactions during the quarter.

The $37.7 million net increase in Power & Utilities during second quarter 2024 resulted from $133.0 million of new purchases and unfunded loan commitments, which was partially offset by $95.2 million of scheduled maturities and repayments.

The $0.1 billion net increase in Broadband Infrastructure during second quarter 2024 resulted from $102.1 million of new purchases and unfunded commitments, which was partially offset by $16.1 million of scheduled maturities and repayments.

The $0.1 billion net increase in Renewable Energy during second quarter 2024 primarily reflects

$271.9 million in loan purchases and unfunded commitments, partially offset by $138.7 million in

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

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

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

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

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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

March 31, 2025 March 31, 2024

For the Three Months Ended For the Six Months Ended

June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

(dollars in thousands)

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Total Farmer Mac Guaranteed Securities Issuances $ 443,653 $ 589,195 $ 774,551 $ 1,016,681

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.

During the three and six months ended June 30, 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 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.

During the three and six months ended June 30, 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 March 31, 2025 As of December 31, 2024

Balance Sheet As of June 30, 2025 As of December 31, 2024

(in thousands)

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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 March 31, 2025:

Schedule of Principal Amortization as of March 31, 2025

Schedule of Principal Amortization as of June 30, 2025

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

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Total $ 14,841,108 $ 4,634,352 $ 2,640,309 $ 22,115,769

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.

Of the $30.6 billion outstanding business volume as of June 30, 2025, $8.0 billion were AgVantage securities included in the Agricultural Finance and Infrastructure Finance lines of business.

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

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

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

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

Based on these factors, we expect business volumes in AgVantage securities to continue to fluctuate.

The following table summarizes by maturity date the outstanding principal amount of AgVantage securities as of June 30, 2025:

AgVantage Balances by Year of Maturity

March 31, 2025

June 30, 2025

(in thousands)

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(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 4.8 years as of March 31, 2025.

The weighted-average remaining maturity of the outstanding AgVantage securities shown in the table above was 4.8 years as of June 30, 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 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 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.

The persistently elevated market interest rates have had a direct effect on Farmer Mac’s Farm & Ranch product interest rates, which have continued to slow 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 net effect of these forces contributed to strong Farm & Ranch loan purchase portfolio growth in second quarter 2025.

Farmer Mac experienced a decrease in wholesale finance volume during second quarter 2025, driven by slower market loan growth and a tightening of market credit spreads that resulted in less liquidity and diversification needs from our counterparties.

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 product versus the broader market.

Opportunities for profitable future business volume growth include Farmer Mac's potential role in alleviating liquidity, capital, and return-on-equity 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.

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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.

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

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

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

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

Changes associated with governmental policies, including but not limited to fiscal, monetary, 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.

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 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.

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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.

Technology enhancements and process re-engineering are planned for the remainder of 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

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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.

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

On July 9, 2025, the USDA announced that $16 billion in funding for the Supplemental Disaster Relief Program authorized in the American Relief Act would be available in two stages.

This first stage opened in July 2025 to producers with eligible crop losses that received assistance under crop insurance or the Noninsured Crop Disaster Assistance Program during 2023 and 2024.

The second stage will begin in the fall of 2025 for eligible shallow or uncovered losses.

In total, 2025 net cash farm income would reach the third-highest inflation-adjusted level in history if the current USDA projection is realized.

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 the remainder of 2025.

Rising global inventories put downward pressure on grain prices for much of 2024.

Annual crop prices stabilized in first quarter 2025, and even increased modestly for some crops, before facing renewed downward pressure in second quarter 2025.

Conversely, tree nut prices continued to rise in second 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.

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

But relatively stable production in 2024 helped 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 half 2025, particularly the cattle sector.

Overall farm expenses remained somewhat stable in first half 2025, but remained higher than the period before the most recent surge in farm incomes from 2020-2022.

Agricultural sector revenues remained elevated overall in first half 2025 compared to pre-2020 as well.

The USDA shows a similar pattern for agricultural sector revenues and expenses leading up to the 2013 peak in farm incomes and the years thereafter.

Revenues have declined further for some agricultural subsectors in first half 2025 than others, including annual crops.

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

trade policy continues to evolve, resulting in potential challenges and opportunities for the agricultural sector.

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

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

is rapidly evolving its trade posture and tariff levels, which increases uncertainty of foreign demand for U.S.

agricultural products.

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.

Beyond developments related to trade, changing environmental regulations and immigration laws under the federal executive 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.

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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.

Constraints on cash flow and additional market volatility could 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.

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

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

Land values slowed in some markets in 2024 and 2025 due to higher interest rates and lower profitability for some agricultural subsectors.

Land value survey data from the USDA shows a 4.3% increase in average farm real estate values from June 2024 to June 2025.

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

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

Annual farm real estate value gains were highest in the Southern Plains (5.9%) and the Lake states (5.7%) and still strong but slowing in the Northern Plains (4.9%), the Southeast (4.7%) and the Corn Belt (4.0%).

According to the survey data, California farm real estate average value increase 2.2% overall and 3.5% for cropland.

Farmland value growth rates continued to moderate in the first half of 2025 in the face of continued higher market interest rates and stagnating prices for some commodities.

The Farmer Mac Farmland Price Index Powered by Acrevalue ® decreased 3% in first quarter 2025 relative to the same period last year.

While basing this index on actual farmland transactions can lead to greater volatility, the underlying slowdown in farmland value growth is also supported by Federal Reserve data.

The Federal Reserve Bank of Chicago AgLetter reported farmland values rose 1% in the Seventh District in first quarter 2025.

This followed a 1% annual decrease in 2024, which was the first decline in 5 years.

The Federal Reserve Bank of Kansas City reported that non-irrigated farmland values decreased 2% in the Tenth District in first quarter 2025.

Farmland value growth rates have trended consistently lower in many Federal Reserve districts over the last several years, and could remain subdued in second half 2025.

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

Despite these headwinds, a relatively low supply of available farmland in many regions and persistent demand for the asset class across a wide variety of investors have helped maintain balance in 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 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.

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

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.

The USDA incorporated the expected impact of tariffs in its May Outlook for U.S.

Agricultural Trade report, but the export forecast could shift depending on the implementation of future trade policies.

Through May 2025, agricultural export values were 3% 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.

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

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.

dollar throughout the rest of 2025.

Severe weather conditions continue to shape some agricultural subsectors.

In 2024, the U.S.

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

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

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

Through March 31, 2025, Farmer Mac's portfolio had not experienced any material performance degradation as a result of these events.

Through June 30, 2025, Farmer Mac's portfolio had not experienced any material performance degradation as a result of disruptive weather events from 2024 or 2025.

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.

Drought conditions increased modestly in intensity and prevalence in second quarter 2025, largely across several western and southwestern states.

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

Several other Southwest states continue to face prevalent drought conditions as well, including Arizona, Utah, and New Mexico, although agricultural production is significantly less prominent in those states compared to California.

In total, approximately 16% 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.

The ongoing implementation of groundwater management regulation, especially in California, continues to influence land values in many regions of the state.

Farmer Mac works closely with water consultants and collateral valuation professionals to identify properties influenced by changing water availability.

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

Agricultural Processing and Food Supply Chain

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

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

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

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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.

Still, consumer spending held steady throughout 2024 and the first half 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 or loosens, inflation rises again, mergers and acquisitions activity increases, or economic and trade policy uncertainty clear up.

Infrastructure Finance Industry Outlook

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According to data from the U.S.

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

Energy Information Administration, sales and the revenue from the sale of electricity to customers advanced in early 2025, with an annual increase in sales of 3.1% and an increase in revenue of 6.5%, respectively, in the last 12 months through April 2025 compared to April 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.

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

Continued geopolitical uncertainty in the Middle East and Eastern Europe could increase energy price volatility, but power producers are generally able to pass higher input costs through to retail electricity prices as evidenced by higher retail electricity prices in 2022 and parts of 2023.

Through 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.

Electricity demand has been consistently strong in the first half of 2025, and power producers are continuing to invest in additional capacity to meet the rising demand from consumers and data centers.

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, 2023, and early 2025.

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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Renewable Energy

Growth in renewable energy generation and deployment of energy storage technologies has the potential to continue to deepen Farmer Mac's relationships with existing customers through new business opportunities.

Investment in renewable energy generation and deployment of energy storage technologies in the last five years deepened Farmer Mac's relationships with existing customers through new business opportunities.

According to data from the U.S.

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

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.

Energy Information Administration, renewable energy net generation grew by 70% in the last five years, compared to a non-renewable electricity net generation decrease of 3%.

The volatile cost of fossil fuel-based inputs combined with policy initiatives and the falling costs of renewable power generation influenced this change in generation capacity.

In response to this expansion, Farmer Mac hired industry-specialized staff and deployed new financing products tailored to the renewable energy sector, which represented a rapidly developing market opportunity for Farmer Mac.

Recent changes to tax policy may alter the trajectory and velocity of investments in U.S.

renewable energy.

1, commonly referred to as the "One Big Beautiful Bill Act," which President Trump signed into law on July 4, 2025, phases out tax credits that have been routinely used to support renewable power project investments.

As these tax credits phase out, new power projects are still likely to be financed, but the marginal costs of electricity generation may be higher without subsidization.

Increased policy uncertainty and higher cost structures could decrease the overall renewable power investment market growth velocity over the next five years.

However, due to the substantial increase in demand for electricity and need for new power generation, Farmer Mac expects to continue to participate in renewable energy power project finance transactions for both new projects and refinancing opportunities of existing projects.

We have calculated approximately $115 million of capacity to use renewable energy tax credits to apply against our 2024 federal corporate income tax liability and to carry back to claim refunds for federal corporate income taxes paid in 2021, 2022 and 2023.

We began purchasing renewable energy tax credits in fourth quarter 2024.

Through June 30, 2025, we have purchased approximately $64.8 million in renewable energy investment tax credits at prices of approximately $0.91 per $1.00 of credit.

All of the tax

credits we have purchased are on projects that have been placed in service.

We are focused on purchasing renewable energy tax credits for projects in rural areas or associated with agriculture, such as renewable gas generation from dairy waste.

1's phase-outs of future renewable energy investment tax credits, projects eligible for renewable energy investment tax credits generally must be placed in service by December 31, 2027 unless construction begins by July 4, 2026.

Broadband Infrastructure

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

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

These industry tailwinds are creating additional investments in rural telecommunications infrastructure, 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), and the USDA’s ReConnect program.

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

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.

Changes in tax policy as well as trade and immigration laws could result in significant challenges and opportunities to infrastructure borrowers.

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.

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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.

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

Tariffs and Trade Restrictions

• 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.

agricultural products like almonds, pistachios, grains, and livestock.

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.

Tariffs and trade restrictions may lead to higher domestic inventory levels of agricultural commodities—resulting in lower prices that affect the profitability of farmers and ranchers—while also impacting the cost and availability of farm inputs such as fertilizers, pesticides, and machinery, which is particularly challenging for producers 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

Farmer Mac will continue to closely monitor trade developments throughout 2025 for impacts on its lines of business.

1 (One Big Beautiful Bill Act)

1 includes many provisions that have the potential to impact Farmer Mac and it’s stakeholders, including farmers, ranchers, and the renewable energy industry.

Notably, the bill contains several updates to the federal crop insurance and revenue protection programs, including expanded coverage for some permanent crop and livestock producer types.

These programs are typically addressed during the reauthorization of the farm bill by Congress.

The remaining farm bill programs not reauthorized by H.R.

1 are set to expire on September 30, 2025 unless Congress passes an extension or reauthorization.

The bill also contains tax provisions that directly impact Farmer Mac and its stakeholders.

These include an amendment to the Internal Revenue Code that excludes 25% of net interest income on qualifying rural or agricultural real-property loans originated after the enactment of the bill from gross income for banks, insurers, and Farmer Mac.

Beyond this, the bill also includes a provision to gradually phase out tax credits for renewable energy projects with project deadlines to retain eligibility for different project tax credits.

Farmer Mac will continue to monitor and assess the impacts of H.R.

1 on Farmer Mac and the industries we serve in the coming quarters.

Farm Credit Administration

• On January 20, 2025, President Trump designated Jeffery Hall, who had already been serving on the board of the 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.

• 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.

His departure created 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.

• On June 2, 2025, the Administration nominated Glen Smith for the position of Under Secretary of Agriculture for Rural Development at the U.S.

Department of Agriculture.

While his nomination is pending before the Senate, Mr.

Smith will continue to serve on the FCA board.

• Chairman Hall and Mr.

Smith continue to serve on the FCA board in “holdover status.” They will remain in these roles until the Administration nominates, and the Senate confirms, new members to the FCA board.

Balance Sheet Review

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

March 31, 2025 December 31, 2024 $ %

June 30, 2025 December 31, 2024 $ %

(in thousands)

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Credit Risk – Loans and Guarantees .

Farmer Mac is exposed to both direct and indirect credit risk.

We have direct credit exposure to our Agricultural Finance mortgage loans, Infrastructure Finance loans, and loans underlying LTSPCs.

We have indirect credit exposure to the Agricultural Finance mortgage loans and Infrastructure Finance loans that secure AgVantage securities because, 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.

Agricultural Finance - Direct Credit Exposure

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's direct credit exposure to Agricultural Finance mortgage loans as of June 30, 2025 was $12.8 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 2024 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 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.

For Agricultural Finance mortgage loans to which Farmer Mac has direct credit exposure, Farmer Mac's 90-day delinquencies as of June 30, 2025, were $125.9 million (0.98% of the Agricultural Finance mortgage loan portfolio to which Farmer Mac has direct credit exposure), compared to $160.0 million (1.29% of the Agricultural Finance mortgage loan portfolio) as of March 31, 2025 and $108.9 million (0.88% of the Agricultural Finance mortgage loan portfolio) as of December 31, 2024.

Those 90-day delinquencies consisted of 75 delinquent loans as of June 30, 2025, compared to 99 delinquent loans as of March 31, 2025 and 62 delinquent loans as of December 31, 2024.

The decrease in the number of 90-day delinquencies during second quarter 2025 was primarily driven by a decrease in permanent plantings and crop loans;

although 90-day delinquencies remain concentrated in those two commodity groups within the Southwest region.

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

The top ten borrower exposures over 90 days delinquent represented over half of the 90-day delinquencies as of June 30, 2025.

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

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.

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

The highest 90-day delinquency rate observed during that period occurred in 2009 at approximately 2%, which coincided with increased delinquencies in loans within Farmer Mac's ethanol loan portfolio.

Farmer Mac's 90-day delinquency rate of 0.98% as of June 30, 2025 was slightly below our historical average of approximately 1%, which is based on the average 90-day delinquency rate as a percentage of the Agricultural Finance mortgage loan portfolio over the last 15 years.

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

highest 90-day delinquency rate observed during the last 15 years occurred in 2009 at approximately 2%, which coincided with increased delinquencies in loans within Farmer Mac's ethanol loan portfolio.

The following table presents historical information about Farmer Mac's 90-day delinquencies in the Agricultural Finance mortgage loan portfolio compared to the unpaid principal balance of all Agricultural Finance mortgage loans to which Farmer Mac has direct credit exposure:

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(dollars in thousands)

June 30, 2025 $ 12,836,478 $ 125,868 0.98 %

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

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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

Across all of Farmer Mac's lines of business, 90-day delinquencies represented 0.41% of total outstanding business volume as of June 30, 2025, compared to 0.37% as of December 31, 2024 and 0.22% as of June 30, 2024.

The following table presents outstanding Agricultural Finance mortgage loans and 90-day delinquencies as of June 30, 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 June 30, 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 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%.

As of June 30, 2025, Farmer Mac's Agricultural Finance mortgage loans (to which it has direct credit exposure) comprising substandard assets were $453.0 million (3.5% of the portfolio), compared to $466.0 million (3.8% of the portfolio) as of March 31, 2025, and $398.3 million (3.2% of the portfolio) as of December 31, 2024.

Those substandard assets comprised 367 loans as of June 30, 2025, 380 loans as of March 31, 2025, and 336 loans as of December 31, 2024.

The decrease of $13.0 million in Agricultural Finance substandard assets during second quarter 2025 was primarily attributable to credit risk rating upgrades in crops and agricultural storage and processing, partially offset by downgrades in permanent plantings.

Credit performance within the crops and livestock commodities continues 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 of 3.5% as of June 30, 2025 was below the historical average of approximately 4% calculated based on substandard assets as a percentage of Agricultural Finance loans over the last 15 years.

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

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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 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.

As of June 30, 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 $815,000 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 first quarter 2025 was 51%, compared to 49% for loans purchased during first quarter 2024.

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 March 31, 2025 and December 31, 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 weighted-average original loan-to-value ratio for Farm & Ranch mortgage loans purchased during second quarter 2025 was 51%, compared to 49% for loans purchased during second quarter 2024.

The weighted-average original loan-to-value ratio for all 90-day delinquencies was 55% and 53% as of June 30, 2025 and December 31, 2024, respectively.

Farmer Mac calculates the "current loan-to-value" ratio of a loan by dividing the original appraised value (or most recently obtained valuation, if available) by the current outstanding loan amount adjusted to reflect loan amortization.

The weighted-average current loan-to-value ratio for Agricultural Finance mortgage loans and loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs was 47% and 46% as of June 30, 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 March 31, 2025

Agricultural Finance Mortgage Loans current loan-to-value ratio by internally assigned risk rating as of June 30, 2025

Acceptable Special Mention Substandard Total

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Total $ 11,779,193 $ 604,315 $ 452,970 $ 12,836,478

(1) The current loan-to-value ratio is based on original appraised value (or most recently obtained valuation, if available) and current outstanding loan amount adjusted to reflect loan amortization.

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

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

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 following table presents Farmer Mac's cumulative net credit losses relative to the cumulative original balance for all Agricultural Finance mortgage loans as of June 30, 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 March 31, 2025

Original Loans, Guarantees, and LTSPCs as of June 30, 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 March 31, 2025

As of June 30, 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 March 31, 2025

As of June 30, 2025

Agricultural Loans Cumulative Credit Losses by Origination Year and Commodity Type

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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.

Farmer Mac's direct credit exposure to Infrastructure Finance loans held and loans underlying LTSPCs as of June 30, 2025 was $6.6 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.

As of June 30, 2025, there were no delinquencies in Farmer Mac's portfolio of Infrastructure Finance loans.

One of the downgraded loans was a Renewable Energy solar project and the other was a Broadband Infrastructure loan.

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

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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

As of June 30, 2025

Infrastructure Finance portfolio by internally assigned risk rating

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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 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.

As of June 30, 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 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.

During the three months ended June 30, 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.

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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 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.

Those two actions against one field servicer were Farmer Mac's only exercise of remedies or taking of formal action against any servicers during the previous three years ended June 30, 2025.

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.

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

As of June 30, 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

The unpaid principal balance of outstanding on-balance sheet AgVantage securities secured by loans eligible for the Agricultural Finance line of business totaled $4.2 billion as of June 30, 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

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 June 30, 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 June 30, 2025 and December 31, 2024:

As of June 30, 2025 As of December 31, 2024

Counterparty Balance Required Collateralization Balance Required Collateralization

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Total outstanding $ 8,021,787 $ 8,521,440

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

(1) Consists of AgVantage securities issued by 10 and 9 different issuers as of June 30, 2025 and December 31, 2024, respectively.

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

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Credit Risk – Other Investments .

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

As of June 30, 2025, Farmer Mac had $1.0 billion of cash and cash equivalents and $6.7 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 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 ($155.4 million as of March 31, 2025).

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).

However, Farmer Mac's current policy limits this total credit exposure to 5% of its regulatory capital ($79.7 million as of June 30, 2025).

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

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Treasury securities and other financial derivatives.

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 $1.0 billion of cash and cash equivalents held as of June 30, 2025 mature within three months.

As of June 30, 2025, $3.0 billion of the $6.7 billion of investment securities (44%) 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.

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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 March 31, 2025 and December 31, 2024 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 June 30, 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 March 31, 2025 As of December 31, 2024

Interest Rate Scenario As of June 30, 2025 As of December 31, 2024

+100 basis points (3.8) % (4.0) %

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Percentage Change in NES from Base Case

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

Interest Rate Scenario As of June 30, 2025 As of December 31, 2024

+100 basis points (0.5) % (0.8) %

-100 basis points 1.8 % 1.6 %

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.

As of June 30, 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 the 2‑year and 10‑year U.S.

Treasury Notes falling by approximately 52 and 34 basis points, respectively.

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

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Treasury securities.

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.

As of June 30, 2025, Farmer Mac had $24.1 billion combined notional amount of interest rate swaps, with terms ranging from less than one year to approximately thirty years, of which $10.7 billion were pay-fixed interest rate swaps, $12.8 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.

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Also, certain financial derivatives are designated as cash flow hedges to mitigate the volatility of future interest rate payments on floating rate debt.

As discussed in Note 4 to the consolidated financial statements, all financial derivatives are recorded on the balance sheet at fair value as derivative assets or as derivative liabilities.

Changes in the fair values of undesignated financial derivatives are reported in "(Losses)/gains on financial derivatives" in the consolidated statements of operations.

For financial derivatives designated in fair value hedge accounting relationships, changes in the fair values of the hedged items related to the risk being hedged are reported in "Net interest income" in the consolidated statements of operations.

Interest accruals on derivatives designated in fair value hedge accounting relationships are also recorded in "Net interest income" in the consolidated statements of operations.

For financial derivatives designated in cash flow hedge accounting relationships, the unrealized gain or loss on the derivative is recorded in other comprehensive income.

Because the hedging instrument is an interest rate swap and the hedged forecasted transactions are future interest payments on floating rate debt, amounts recorded in accumulated other comprehensive income are reclassified to "Total interest expense" in conjunction with the recognition of interest expense on the debt.

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

As of both 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.

As of both June 30, 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

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

As of 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 June 30, 2025, Farmer Mac held $7.4 billion of floating rate assets in its lines of business and its investment portfolio that reset based on floating rate market indices, such as the Secured Overnight Financing Rate ("SOFR").

As of the same date, Farmer Mac also had $10.7 billion of interest rate swaps outstanding where Farmer Mac pays a fixed rate of interest and receives a floating rate of interest, primarily SOFR.

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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 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.

As of June 30, 2025, Farmer Mac had outstanding discount notes of $2.0 billion, medium-term notes that mature within one year of $8.3 billion, and medium-term notes that mature after one year of $18.6 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.

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

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

In accordance with the methodology for calculating available days of liquidity under those regulations, Farmer Mac maintained a monthly average of 303 days of liquidity throughout second quarter 2025 and had 310 days of liquidity as of June 30, 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.

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

The following table presents these assets as of June 30, 2025 and December 31, 2024:

As of June 30, 2025 As of December 31, 2024

(in thousands)

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Total $ 7,713,330 $ 6,986,291

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.

The objectives of the investment portfolio as of June 30, 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 .

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

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).

As of June 30, 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 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.

As of June 30, 2025 and December 31, 2024, Farmer Mac's Tier 1 capital ratio was 13.6% and 14.2%, respectively.

As of June 30, 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.

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For the quarter ended:

June 30, 2025 $ 896,499 $ 280,331 $ 185,563 $ 280,350 $ 482,276 $ 2,125,019

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

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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:

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Unscheduled 190,374 80,303 40,787 — — 311,464

June 30, 2025 $ 703,553 $ 216,171 $ 73,175 $ 80,744 $ 149,904 $ 1,223,547

Scheduled $ 786,956 $ 169,532 $ 77,976 $ 57,279 $ 109,176 $ 1,200,919

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

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

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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:

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(in thousands)

June 30, 2025 $ 18,217,905 $ 1,953,523 $ 7,300,354 $ 1,174,441 $ 1,941,036 $ 30,587,259

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

6 unchanged sentences

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

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(in thousands)

June 30, 2025 $ 14,644,420 $ 3,488,344 $ 7,197,147 $ 25,329,911

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

6 unchanged sentences

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:

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For the quarter ended:

June 30, 2025 $ 35,710 $ 8,609 $ 5,636 $ 3,932 $ 6,227 $ 31,668 $ 2,111 $ 93,893

1.07 % 2.07 % 0.33 % 2.24 % 1.68 % 0.40 % 0.11 % 1.19 %

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

16 unchanged sentences

1.03 % 1.92 % 0.25 % 2.25 % 1.47 % 0.48 % 0.04 % 1.20 %

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

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

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

Core Earnings by Quarter End

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

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

(in thousands)

8 unchanged sentences

REO operating expenses 148 — — 196 — — — — —

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

(Gain)/loss on REO (87) 68 — — — — — — —

Total credit related expense/(income) 7,873 1,651 3,872 3,454 6,230 (1,870) (575) (181) 1,142

11 unchanged sentences

Gains/(losses) on hedging activities due to fair value changes 2,709 1,099 5,737 205 2,604 3,002 (3,598) 3,210 (4,901)

Unrealized gains/(losses) on trading assets 9 (83) 99 (87) (14) (37) 1,714 (57) 359

Unrealized (losses)/gains on trading assets (65) 9 (83) 99 (87) (14) (37) 1,714 (57)

Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value 25 28 (39) 27 26 31 88 29 29

4 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