•Class B voting common stock. The charter restricts ownership of Farmer Mac's Class B voting common stock to FCS institutions and also provides that five members of Farmer Mac's 15-member board of directors are elected by a plurality of the votes of the Class B stockholders each year. The charter ~~does not contain any~~contains no restrictions on the maximum number or percentage of outstanding shares of Class B voting common stock that any one holder may ~~be held by an eligible stockholder,~~own, and Farmer Mac is not aware of any regulation applicable to FCS institutions that requires a minimum investment in its Class B voting common stock or that prescribes a maximum amount. Farmer Mac's Class B voting common stock, which has a limited market and trades infrequently, is not listed or quoted on any exchange or other quotation system, and Farmer Mac is not aware of any publicly available quotations or prices for this class of common stock.

•Class C non-voting common stock. The charter does not impose any ownership restrictions on Farmer Mac's Class C non-voting common stock, ~~and~~so shares of this class are freely transferable. Farmer Mac uses Class C non-voting common stock for awards of equity-based compensation to officers, directors, and employees as part of the company's compensation programs. Holders of the Class C non-voting common stock do not vote on the election of directors or any other matter. Farmer Mac's Class C non-voting common stock is listed on the New York Stock Exchange under the symbol AGM.

~~Presidential director appointments~~. The remaining five members of Farmer Mac's board of directors are individuals who meet the qualifications specified in the charter and are appointed by the President of the United States with the advice and consent of the United States Senate. These appointed directors serve at the pleasure of the President of the United States.

The ownership of Farmer Mac's two classes of voting common stock is currently concentrated in a small number of institutions. Approximately 44 percent of the Class A voting common stock is held by three financial institutions, with 31 percent held by one institution. Approximately 97 percent of the Class B voting common stock is held by five FCS institutions (two of which are related to each other through a parent-subsidiary relationship). Farmer Mac believes that the concentration in the Class A voting common stock is a by-product of trading activity in the stock over time and is not by design under the charter or any regulatory mandate. Farmer Mac believes that the concentration in such a small number of holders of Class B voting common stock is a by-product of the limited number of eligible holders of that stock and the structure of the FCS, the number of institutions of which has decreased over time as a result of mergers and consolidations.

The dividend and liquidation rights of all three classes of Farmer Mac's common stock are the same. Dividends may be paid on Farmer Mac's common stock only when, as, and if declared by Farmer Mac's board of directors in its sole discretion, subject to compliance with applicable capital requirements and the payment of dividends on any outstanding preferred stock issued by Farmer Mac. Upon liquidation, dissolution, or winding up of the business of Farmer Mac, after payment and provision for payment of outstanding debt of Farmer Mac, the holders of shares of Farmer Mac's currently outstanding ~~5.875% Non-Cumulative Preferred Stock, Series A ("Series A Preferred Stock"), 6.875% Non-Cumulative Preferred Stock, Series B ("Series B Preferred Stock"),~~ 6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C ("Series C Preferred Stock"), 5.700% Non-Cumulative Preferred Stock, Series D ("Series D Preferred Stock"), 5.750% Non-Cumulative Preferred Stock, Series E ("Series E Preferred Stock"), 5.250% Non-Cumulative Preferred Stock, Series F ("Series F Preferred Stock"), 4.875% Non-Cumulative Preferred Stock, Series G ("Series G Preferred Stock"), and any other preferred stock then outstanding, would be paid at par value out of assets available for distribution, plus all declared and unpaid dividends, before the holders of shares of common stock received any payment. See also "Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities" for more information ~~regarding~~about Farmer Mac's common stock, and "Business—Financing—Equity Issuance" for more information onabout Farmer Mac's common stock and preferred stock.

Unlike some other GSEs such as other FCS institutions and the Federal Home Loan Banks, Farmer Mac is not structured as a cooperative owned exclusively by member institutions and established to provide services exclusively to its members. Rather, Farmer Mac, as a publicly-traded corporation, has a broader base of stockholders, including those who do not directly participate in the secondary market provided by Farmer Mac. ~~Therefore,~~ Farmer Mac therefore seeks to fulfill its mission of serving the financing needs of rural America in a ~~manner~~way that is consistent with providing a return on the investment of its stockholders.

Farmer ~~Mac's policy is to~~Mac generally ~~require~~requires financial institutions to own a requisite amount of Farmer Mac common stock, based on the size and type of institution, to ~~participate in the Farm & Ranch line of business.~~sell Agricultural Finance mortgage loans to Farmer Mac. As a result of this requirement, coupled with the ability of holders of Class A and Class B voting common stock to elect two-thirds of Farmer Mac's board of directors, Farmer Mac regularly conducts business with "related parties," including institutions affiliated with members of Farmer Mac's board of directors and institutions that own large amounts of Farmer Mac's voting common stock. Farmer Mac has adopted a Code of Business Conduct and Ethics and related corporate policies that ~~governs~~govern any conflicts of interest that may arise in these ~~transactions, and~~transactions. Farmer ~~Mac's policy is to require~~Mac also requires that any transactions with related parties be conducted in the ordinary course of business, with terms and conditions comparable to those available to any other counterparty not related to Farmer Mac. For more information about related party transactions, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Related Party Transactions" and Note 3 to the consolidated financial statements.

Capital

Farmer Mac's charter establishes three capital standards for Farmer Mac – minimum capital, critical capital, and risk-based capital. Farmer Mac must comply with the higher of the minimum capital requirement and the risk-based capital requirement. Also, in accordance with the applicable FCA regulation on capital planning, Farmer Mac's board of directors oversees a policy that requires Farmer Mac to maintain a sufficient level of Tier 1 capital and restricts dividends and bonus payments if Farmer Mac's Tier 1 capital falls below specified thresholds. For a discussion of Farmer Mac's capital requirements and its actual capital levels, as well as FCA's role in the establishment and monitoring of those requirements and levels, see "Business—Government Regulation of Farmer Mac—Capital Standards," "Management's Discussion and Analysis of Financial Condition and Results of Operations—Balance Sheet Review—Equity," and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital Requirements."

~~Regulatory Oversight~~Loan Eligibility

To be eligible for the Agricultural Finance line of business, a loan must either:

•be an agricultural mortgage loan (referred to as "Agricultural Finance mortgage loans") that is

◦secured by a fee simple mortgage or a leasehold mortgage with status as a first lien on agricultural real estate (including part-time farms and rural housing) located within the United States; and

◦an obligation of a citizen or national of the United States, an alien lawfully admitted for permanent residence in the United States, or a private corporation or partnership that is majority-owned by U.S. citizens, nationals, or legal resident aliens that, in each case, has training or farming experience that is sufficient to ensure a reasonable likelihood that the loan will be repaid according to its terms; or

•be the guaranteed portion of a loan guaranteed by the USDA under the Consolidated Farm and Rural Development Act (7 U.S.C. § 1921 et seq.) (referred to as "USDA Securities").

Farmer Mac's charter ~~assigns~~authorizes a maximum loan size (adjusted annually for inflation) for an eligible Agricultural Finance mortgage loan secured by more than 2,000 acres of agricultural real estate. That maximum loan size was $17.0 million as of December 31, 2023. The charter does not prescribe a maximum loan size or a total borrower exposure for an eligible Agricultural Finance mortgage loan secured by 2,000 acres or less of agricultural real estate. However, an internal policy approved by Farmer Mac's board of directors limits the cumulative direct credit exposure to ~~FCA, acting~~any one borrower or group of related borrowers on loans secured by 2,000 acres or less of agricultural real estate to 10% of Farmer Mac's Tier 1 capital ($145.2 million as of December 31, 2023). For Agricultural Finance mortgage loans, eligible agricultural real estate consists of one or more parcels of land, which may be improved by permanently affixed buildings or other structures, that (i) is used for the production of one or more agricultural commodities or products and (ii) either consists of a minimum of five acres or generates minimum annual receipts of $5,000.

As required by Farmer Mac's charter, Farmer Mac has established underwriting, security appraisal, and repayment standards for eligible loans that consider the nature, risk profile, and other differences between different categories of eligible loans. The charter prescribes that the following minimum standards must be applied to all Agricultural Finance mortgage loans:

•provide that no loan with a loan-to-value ratio ("LTV") more than 80% may be eligible;

•require each borrower to demonstrate sufficient cash flow to adequately service the loan;

•require sufficient documentation standards;

•protect the integrity of the appraisal process for any loan; and

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

Underwriting and Collateral Standards - Farm & Ranch

Farmer Mac accepts direct credit exposure to borrowers on Agricultural Finance mortgage loans in its Farm & Ranch reportable operating segment (referred to as "Farm & Ranch loans") through its loan

purchases, unfunded loan commitments, LTSPCs, and Farmer Mac Guaranteed Securities that represent interests in, or obligations secured by, pools of eligible Farm & Ranch loans but that are not AgVantage securities ("Farm & Ranch Guaranteed Securities"). Farmer Mac applies credit underwriting standards and methodologies to help assess exposures to Farm & Ranch loans, which may include collateral valuation, financial metrics, and other appropriate borrower financial and credit information.

Farm & Ranch loans typically are required to meet specific underwriting criteria established by Farmer Mac or demonstrate compensating strengths in one or more other underwriting criteria. Farmer Mac relies on the combined expertise of experienced internal agricultural credit underwriters and loan servicers, along with external agricultural loan servicing and collateral valuation contractors, to perform the necessary underwriting, servicing, and collateral valuation functions on Farm & Ranch loans.

USDA Securities are exempted from the credit underwriting, collateral valuation, documentation, and other standards that other loans must meet to be eligible for the secondary market provided by Farmer Mac and are exempted from any diversification and internal credit enhancement that may be required of pools of other eligible loans. Farmer Mac purchases nearly all of its USDA Securities through Farmer Mac II LLC, a subsidiary of Farmer Mac that operates substantially all of the business related to Farmer Mac's USDA Securities.

Underwriting and Collateral Standards - Corporate AgFinance

Farmer Mac accepts direct credit exposure to borrowers on Agricultural Finance mortgage loans in Farmer Mac’s Corporate AgFinance reportable operating segment (referred to as “Corporate AgFinance loans”) through its loan purchases and unfunded commitments. Farmer Mac applies credit underwriting standards and methodologies to help assess exposures to Corporate AgFinance loans, which may include cash flow, leverage, and liquidity assessment, financial metrics analysis, collateral valuation, and other appropriate borrower financial and credit information.

Corporate AgFinance loans tend to be larger and more complex operations than Farm & Ranch loans (generally more than $10 million) and typically are loans made to agribusinesses focused on agriculture production, food and fiber processing, and other supply chain production. The underwriting for loans to agribusinesses typically relies upon enterprise value, meaning the debt is 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. Thus, Corporate AgFinance loans often have a different credit risk profile than Farm & Ranch loans. Farmer Mac has implemented methodologies and parameters to help assess credit risk and has established specific underwriting criteria for Corporate AgFinance loans based on the sector, borrower construct, and transaction complexity. Due to the larger loan sizes and different credit risk profiles, Farmer Mac thoroughly analyzes each prospective Corporate AgFinance loan, including assessing the borrower's leverage, cash flows, liquidity, revenue and margin trends, as well as evaluating the borrower's suppliers, customers, market share, and competition. Any underlying weaknesses are assessed and analyzed in conjunction with any compensating strengths. Corporate AgFinance loans also typically require ongoing monitoring of reporting requirements and financial and non-financial covenants. Farmer Mac relies on the experience of internal underwriters with the expertise to analyze large, complex farming operations and agribusiness loans, along with collateral valuation contractors, and legal counsel to perform the necessary diligence to assess the overall credit risk and loan structures of these transactions.

Lenders

Farmer Mac approves lenders into its network of Farm & Ranch loan sellers based on an assessment of the lender's credit profile, which may include factors such as the institution's credit rating, origination history, or financial profile. Most lenders that participate in Farmer Mac's secondary market for Farm & Ranch loans meet prescribed criteria that Farmer Mac establishes for loan-selling counterparties, which typically include the requirement to:

•own a requisite amount of Farmer Mac common stock according to a schedule prescribed for the size and type of institution;

•have, in the judgment of Farmer Mac, the ability and experience to make or purchase and sell Farm & Ranch loans and service those loans in accordance with Farmer Mac's requirements either through the ~~separate Office~~lender's own staff or through contractors and originators, as well as have appropriate internal controls, policies, and procedures;

•maintain a minimum amount of ~~Secondary Market Oversight ("OSMO") within FCA,~~net liquidity or appropriate credit enhancements; and

•enter into a Seller/Servicer Agreement, which requires compliance with the ~~responsibility~~terms of Farmer Mac's Seller/Servicer Guide, including providing representations and warranties about the eligibility of the loans and accuracy of loan data provided to Farmer Mac.

Any lender authorized by the USDA to obtain a USDA guarantee on a loan may participate in Farmer Mac's secondary market for USDA Securities.

Farmer Mac purchases Corporate AgFinance loans and unfunded commitments from a diverse set of lenders that support financing of the agriculture sector. Lenders may be existing Farm & Ranch lenders that have larger, more complex borrowers in their territories, as well as larger financial and non-bank institutions, such as national and regional banks, insurance companies, Farm Credit System institutions, and other non-traditional lending organizations, that structure and originate transactions for larger, more complex farming operations and agribusinesses.

Farmer Mac evaluates each lender that originates Corporate AgFinance loans to assess the experience and capabilities of the lender’s ability to originate, structure, distribute, and monitor Corporate AgFinance transactions. In many instances, Farmer Mac will purchase loans and unfunded commitments from lenders that structure and arrange large, syndicated transactions involving numerous lenders that are necessary to support the larger transaction loan size. In these cases, Farmer Mac typically assesses each arranger’s capabilities and experience in arranging syndicated loans. Because Corporate AgFinance loans are typically offered to Farmer Mac without or with few representations and warranties, Farmer Mac places a greater emphasis on underwriting and legal documentation due diligence in connection with its purchase of these loans to mitigate risks associated with the transaction, including loan documentation, borrower eligibility, and loan data.

Loan Servicing

Farmer Mac services a sizeable portion of its Agricultural Finance mortgage loan and USDA Securities portfolios, as well as a smaller portfolio of eligible agricultural mortgage loans that are held by an unrelated third party. Farmer Mac also continues to contract with other institutions to undertake most of the servicing responsibilities for the ~~examination~~remaining portion of its Agricultural Finance mortgage loans in accordance with Farmer Mac's specified servicing requirements or in accordance with the servicing

standards established by the servicing institution if the institution's standards are acceptable to Farmer Mac. For these loans, the servicer may or may not be the same entity as the lender that sold the loans to Farmer Mac. For Farm & Ranch loans for which the servicer is not the originating lender, the originating lender often retains some servicing responsibility, particularly with direct borrower contact, which is referred to as "field servicing." Field servicers may enter into contracts with Farmer Mac's servicers that specify their field servicing responsibilities.

For Farmer Mac's USDA Securities, the lender on each USDA-guaranteed loan is required by regulation to retain the unguaranteed portion of the guaranteed loan, to service the entire underlying guaranteed loan (including the USDA-guaranteed portion of that loan), and to remain mortgagee and/or secured party of record, if applicable. The USDA-guaranteed portion and the unguaranteed portion of the loan are to be secured by the same collateral with equal lien priority. The USDA-guaranteed portion of a loan cannot be paid later than, or in any way be subordinated to, the related unguaranteed portion.

Other Products - Agricultural Finance

AgVantage Securities

Under the AgVantage securities product line, Farmer Mac guarantees and purchases securities issued by lenders and other financial institutions (including financial funds and real estate investment funds) that are secured by pools of eligible loans. Typically, Farmer Mac retains AgVantage securities in its portfolio. Most of the AgVantage securities in Farmer Mac's Agricultural Finance line of business are securities issued by agricultural lenders that are secured by pools of Farm & Ranch loans. The AgVantage securities in the Agricultural Finance line of business also include securities issued by other financial institutions (including financial funds and institutional real estate investors) secured by mortgage loans that generally have different credit profiles, structural characteristics, and loan terms than typical Farm & Ranch loans. The loans serving as collateral for these AgVantage securities require a more comprehensive underwriting that more closely approximates Farmer Mac's underwriting for Corporate AgFinance loans.

Farmer Mac has direct credit exposure to the general credit of the issuers of AgVantage securities and assumes the ultimate credit risk of an issuer default on the AgVantage securities. Before approving an institution as an issuer in an AgVantage transaction, Farmer Mac assesses the issuer's creditworthiness as well as the credit quality and performance of the issuer's loan portfolio and loan underwriting standards. Farmer Mac continues to monitor the counterparty risk assessment on an ongoing basis after the AgVantage security is issued. In addition to being a general obligation of the issuer, all AgVantage securities must be secured by eligible loans or eligible securities guaranteed by Farmer Mac in an amount at least equal to the outstanding principal amount of the issuer's AgVantage securities. As a result, Farmer Mac has indirect credit exposure to the loans or guaranteed securities that are pledged to secure the AgVantage securities, which comprise collateral for Farmer Mac in the event of a default by the issuer.

Loans pledged under AgVantage securities are serviced by the issuers of the securities (or their affiliated servicing institutions) in accordance with these institutions' servicing procedures. Farmer Mac reviews these servicing procedures before purchasing AgVantage securities from the issuer. In AgVantage transactions, the issuer is generally required to remove from the pool of pledged collateral any loan that becomes and remains delinquent in the payment of principal or interest and to replace the delinquent loan with another eligible loan that is current in payment or to pay down the AgVantage securities to maintain the minimum required collateralization level.

For AgVantage securities secured by loans eligible for Farmer Mac's Agricultural Finance line of business, Farmer Mac currently requires the general obligation to be over-collateralized, either by more eligible loans or any of the following types of assets:

•cash;

•securities issued by the U.S. Treasury or guaranteed by an agency or instrumentality of the United States;

•other highly-rated securities; or

•other instruments approved by Farmer Mac.

The required collateralization level for the AgVantage securities secured by Agricultural Finance mortgage loans currently ranges from 103% to 125%. The required collateralization level is determined based on credit factors related to the issuer and the credit profile of the loans serving as collateral, is established when the AgVantage facility is entered into with the counterparty, and does not change during the life of the AgVantage securities issued under the facility unless mutually agreed by Farmer Mac and the ~~general supervision~~counterparty.

For AgVantage securities that are secured by eligible Agricultural Finance mortgage loans, Farmer Mac requires that the loans meet the minimum standards set forth in the charter for those types of loans with a maximum limit of $75.0 million in cumulative exposure to any one borrower or related borrowers from a single AgVantage issuer.

Guarantees

Farmer Mac offers two credit enhancement alternatives to direct loan purchases for Farm & Ranch loans that allow approved lenders the ability to retain the cash flow benefits of their loans and increase their liquidity and lending capacity: (1) LTSPCs and (2) Farm & Ranch Guaranteed Securities. In LTSPCs and Farm & Ranch Guaranteed Securities, the lender effectively transfers the credit risk on their eligible loans because, through Farmer Mac's commitment to purchase the loan (in the case of LTSPCs) or Farmer Mac's guarantee (in the case of Farm & Ranch Guaranteed Securities), Farmer Mac assumes the ultimate credit risk of borrower defaults on the related loans.

An LTSPC permits the lender to retain loans in its portfolio until such time, if ever, as the lender elects to deliver some or all of the ~~safe and sound performance~~loans covered by the LTSPC to Farmer Mac for purchase. Loans subject to an LTSPC must meet Farmer Mac's standards for eligible loans at the commencement of the ~~powers, functions, and duties vested in~~LTSPC when Farmer Mac assumes the credit risk on the loans and are serviced by the ~~charter.~~holders of those loans in accordance with those lenders' servicing procedures, which Farmer Mac reviews before entering into those transactions. As consideration for its assumption of the credit risk on loans covered by an LTSPC, Farmer Mac receives commitment fees payable monthly in arrears. Some LTSPCs contain risk sharing arrangements for pools of loans that provide for the counterparty to absorb up to a specified amount (typically between one percent and three percent of the original principal balance of the loan pool) of any losses incurred on the loans in the pool. At a lender's request, Farmer Mac purchases loans subject to an LTSPC at:

•par if the loans become delinquent for either 90 days or 120 days (depending on the agreement) or are in material non-monetary default, with accrued and unpaid interest on the defaulted loans payable out of any future loan payments or liquidation proceeds; or

•fair value or in exchange for cash or Farm & Ranch Guaranteed Securities (if the loans are not delinquent), in accordance with the applicable agreement.

In Farm & Ranch Guaranteed Securities transactions, Farmer Mac guarantees securities representing interests in eligible Farm & Ranch loans held by a trust or other entity. Farmer Mac guarantees principal and interest payments on the securities in the event of a payment shortfall due to default and either retains these securities or arranges for their sale to third parties. As consideration for its assumption of credit risk on the assets underlying the Farm & Ranch Guaranteed Securities, Farmer Mac receives guarantee fees based on the outstanding principal balance of the securities it guarantees. Some Farm & Ranch Guaranteed Securities transactions include a smaller, subordinate tranche of securities issued to third parties that are not guaranteed by Farmer Mac, which helps to offset Farmer Mac's credit risk on these transactions.

Farmer Mac is obligated under its guarantee on the securities to make payments to investors of interest and principal (including balloon payments), regardless of whether Farmer Mac or the related trust has actually received those scheduled payments. Farmer Mac's guarantee fees typically are collected out of installment payments made on the underlying loans until those loans have been repaid, purchased out of the trust, or otherwise liquidated (generally as a result of default). The aggregate amount of guarantee fees received on Farm & Ranch Guaranteed Securities depends on the amount of those securities outstanding and on the applicable guarantee fee rate, which Farmer Mac's charter caps at 50 basis points (0.50%) per year.

From time to time, Farmer Mac issues and guarantees securities backed by USDA Securities that it has purchased and also guarantees securities issued by Farmer Mac II LLC backed by USDA Securities that it has purchased. Farmer Mac II LLC does not guarantee any USDA Securities it holds or any Farmer Mac Guaranteed USDA Securities issued by Farmer Mac or Farmer Mac II LLC.

Rural Infrastructure Finance

Farmer Mac's charter authorizes ~~FCA, acting through OSMO,~~the purchase of, and guarantee of securities backed by, loans for electric (including renewable electric energy) or telecommunications facilities by lenders organized as cooperatives to ~~apply~~borrowers that have received or are eligible to receive loans under the Rural Electrification Act of 1936 ("REA"). The REA is administered by the Rural Utilities Service ("RUS"), an agency of the USDA. Farmer Mac refers to eligible loans made to an electric distribution facility, an electric generation and transmission facility, or a telecommunications facility as "Rural Utilities loans" and refers to eligible loans made to renewable electric energy facilities as "Renewable Energy loans."

Farmer Mac's Rural Infrastructure Finance line of business encompasses purchases of Rural Utilities loans and Renewable Energy loans and guarantees of securities backed by those loans, as well as LTSPCs for pools of eligible Rural Utilities loans. The vast majority of Farmer Mac's business to date under the Rural Infrastructure Finance line of business has involved Rural Utilities loans made to electric facilities (primarily electric distribution cooperatives and electric generation and transmission cooperatives). During 2023, Farmer Mac purchased $232.5 million of loans to telecommunications companies that provide wireless, cable, fiber transport, and broadband services to rural America as part of its ~~general enforcement powers~~strategic initiative to provide further support for the telecommunications industry. Also during 2023, Farmer Mac purchased

$273.5 million of Renewable Energy loans as part of its strategic initiative to support rural renewable energy projects.

Underwriting and Collateral Standards

Farmer Mac's charter does not specify minimum underwriting criteria for eligible Rural Utilities or Renewable Energy loans. To manage Farmer Mac's credit risk, to mitigate the risk of loss from borrower defaults, and to provide guidance for the management, administration, and conduct of underwriting to participants in the Rural Infrastructure Finance line of business, Farmer Mac has adopted credit underwriting standards that vary by loan product and by loan type. These standards are based on industry practices for similar Rural Utilities and Renewable Energy loans and are designed to assess the creditworthiness of the borrower, as well as the risk to Farmer Mac.

For Rural Utilities loans, Farmer Mac reviews lenders' credit submissions and analyzes borrowers' audited financial statements and financial and operating reports to confirm that loans meet Farmer Mac's underwriting standards for Rural Utilities loans. It is customary with these loans for the lender or lender group to take a security interest in substantially all of the borrower's assets. When Farmer Mac purchases a Rural Utilities loan with a pledge of all assets and a lender also has a lien on all assets, Farmer Mac verifies that a lien accommodation will result in either a shared first lien or a first lien in favor of Farmer Mac. When debt indentures are used, Farmer Mac determines if available collateral is adequate to support the loan program and Farmer Mac's investment. Farmer Mac also purchases unsecured Rural Utilities loans (primarily electric generation and transmission loans) that meet Farmer Mac's underwriting standards for unsecured Rural Utilities loans.

For a Renewable Energy loan, Farmer Mac has direct credit exposure to the related standalone renewable energy project. These projects are typically financed on a non-recourse or limited recourse basis and underwritten on a projection basis with significant reliance placed on assumptions used in each project’s analysis. Farmer Mac has implemented methodologies and parameters to assess credit risk and has established specific underwriting criteria based on the project and transaction construct and complexity. Farmer Mac thoroughly analyzes each prospective Renewable Energy loan. Farmer Mac performs quantitative assessments typically focused on projected debt service requirements, term and amortization review, interest rate sensitivity, and collateral analysis. Farmer Mac also performs qualitative assessments typically focused on the project sponsor's credentials and experience, off-take (cash flow) considerations, and concentration and other market considerations. Farmer Mac also typically reviews the project contracts and agreements for each Renewable Energy loan. Renewable Energy loans are typically secured by a first lien on the borrower's project assets, an assignment of the project contracts and agreements, a land or leasehold interest, and in certain cases, a pledge of the equity interests in the borrower entity. Farmer Mac's enforcement rights in any collateral securing a Renewable Energy loan may be subject to tax equity interests in the borrower's renewable energy project.

Lenders and Loan Servicing

Farmer Mac's charter requires loans in Farmer Mac's Rural Infrastructure Finance line of business to involve a lender organized as a cooperative. Farmer Mac does not directly service the Rural Utilities or Renewable Energy loans held in its portfolio. Typically, these loans are serviced by the lender or other organization designated by Farmer Mac that has experience in servicing loans to utilities and renewable energy providers and in the context of project finance, as applicable.

Other Products - Rural Infrastructure Finance

AgVantage Securities

Farmer Mac's portfolio of AgVantage securities in its Rural Infrastructure Finance line of business includes securities issued by cooperative lenders that are secured by pools of Rural Utilities loans. For these AgVantage securities, Farmer Mac requires:

•the counterparty issuing the general obligation to have a credit rating from a nationally-recognized statistical rating organization ("NRSRO") that is at least investment grade, or be of comparable creditworthiness as determined through Farmer Mac's analysis; and

•the collateralization (consisting of current, performing loans) to be maintained at the contractually prescribed level, in an ~~annual examination~~amount at least equal to the outstanding principal amount of the security.

Although Farmer Mac has only indirect credit exposure on the Rural Utilities loans pledged to secure AgVantage securities, the same underwriting standards that apply to loans made to Rural Utilities borrowers on which Farmer Mac assumes direct credit exposure also apply to loans made to Rural Utilities borrowers that secure the AgVantage securities. Farmer Mac's charter does not prescribe a maximum loan size or a total borrower exposure for an eligible Rural Utilities loan, but Farmer Mac's current limit for AgVantage transactions is $75.0 million for cumulative loan exposure to any one borrower or related borrowers (with the amount of any direct exposure to a borrower not counting towards the $75.0 million limit).

COMPETITION

Farmer Mac is the only federally-chartered corporation established to provide a secondary market for agricultural mortgage loans, rural infrastructure loans, and USDA Securities, but faces competition from other entities that purchase, retain, securitize, or provide financing for the types of assets eligible for Farmer Mac's secondary market activities. These entities include commercial and investment banks, insurance companies, other FCS institutions, financial ~~transactions~~funds, and certain government programs. Farmer Mac also competes indirectly with originators of eligible loans that would prefer to retain the loans they originate rather than sell them into the secondary market. Farmer Mac is able to compete to acquire eligible loans due to the variety of products it offers and its ability to offer competitive funding structures and pricing to its customers. This enables Farmer Mac to provide flexible financing options and products designed to meet the varied needs of lending institutions related to capital requirements, liquidity, credit risk, and management of sector and geographic concentrations and borrower exposure limits. The relative competitiveness of Farmer ~~Mac~~Mac's loan rates and ~~authorizes FCA~~Farmer Mac's ability to ~~assess~~develop business with lending institutions are affected by many factors, including:

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

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

•changes in the levels of available capital and liquidity of lending institutions;

•the existence of alternative sources of funding and credit enhancement for lending institutions;

•the rate of growth in the market for eligible loans; and

•demand for Farmer Mac's products.

Because Farmer Mac's charter limits Farmer Mac's business to secondary-market activities, Farmer Mac's competitive position is affected by the willingness of originators to offer eligible loans for sale in the secondary market or to utilize Farmer Mac for funding syndicated or participated loans. The charter's limits on loan size for some Agricultural Finance mortgage loans, as well as the ~~cost~~types of ~~FCA's regulatory activities, including the cost~~loans that are eligible for Farmer Mac's lines of ~~any examination.~~business, also affect Farmer Mac's competitive position. For more information on government regulation of Farmer Mac, is also required to file quarterly reports of condition with OSMO. In addition, as a publicly-traded corporation, Farmer Mac is required to comply with the periodic reporting requirements of the SEC. For a more detailed discussion of Farmer Mac's regulatory and governmental relationships, see "Business—Government Regulation of Farmer Mac."

Farmer Mac's ability to obtain competitive funding in the debt markets is essential to its ability to maintain its relative position with its customers. As a result, competition for debt investors with other debt-issuing institutions, such as the FCS, Federal Home Loan Banks, Fannie Mae, Freddie Mac, and highly-rated financial institutions, can affect the price and volume at which Farmer Mac issues debt and therefore its ability to offer savings to customers in the form of competitive products.

CAPITAL AND CORPORATE GOVERNANCE

Farmer Mac's charter prescribes the company's basic capital and corporate governance structure, as described below. The charter authorizes Farmer Mac to issue two classes of voting common stock, each of which elects one-third of Farmer Mac's 15-person board of directors. The charter also authorizes Farmer Mac to issue non-voting common stock.

•Presidential appointments. Five members of Farmer Mac's 15-member board of directors are individuals who meet the qualifications specified in the charter and are appointed by the President of the United States with the advice and consent of the United States Senate (one of whom is designated as the chair of the board of directors). These appointed directors serve at the pleasure of the President of the United States with no set term.

•Class A voting common stock. The charter restricts ownership of Farmer Mac's Class A voting common stock to banks, insurance companies, and other financial institutions or similar entities that are not institutions of the FCS. The charter also provides that five members of Farmer Mac's 15-member board of directors are elected by a plurality of the votes of the Class A stockholders each year. The charter limits the amount of Class A voting common stock that any one holder may own to no more than 33% of the outstanding shares of Class A voting common stock. Farmer Mac is not aware of any regulation applicable to non-FCS financial institutions that requires a minimum investment in Farmer Mac's Class A voting common stock or that prescribes a maximum investment amount lower than the 33% limit set forth in the charter. Farmer Mac's Class A voting common stock is listed on the New York Stock Exchange under the symbol AGM.A.

•Class B voting common stock. The charter restricts ownership of Farmer Mac's Class B voting common stock to FCS institutions and also provides that five members of Farmer Mac's 15-member board of directors are elected by a plurality of the votes of the Class B stockholders each year. The charter contains no restrictions on the maximum number or percentage of outstanding shares of Class B voting common stock that any one holder may own, and Farmer Mac is not aware of any regulation applicable to FCS institutions that requires a minimum investment in its Class B voting common stock or that prescribes a maximum amount. Farmer Mac's Class B voting common stock, which has a limited market and trades infrequently, is not listed or quoted on any exchange or other quotation system, and Farmer Mac is not aware of any publicly available quotations or prices for this class of common stock.

1118

•Class C non-voting common stock. The charter does not impose any ownership restrictions on Farmer Mac's Class C non-voting common stock, so shares of this class are freely transferable. Farmer Mac uses Class C non-voting common stock for awards of equity-based compensation to officers, directors, and employees as part of the company's compensation programs. Holders of the Class C non-voting common stock do not vote on the election of directors or any other matter. Farmer Mac's Class C non-voting common stock is listed on the New York Stock Exchange under the symbol AGM.

The dividend and liquidation rights of all three classes of Farmer Mac's common stock are the same. Dividends may be paid on Farmer Mac's common stock only when, as, and if declared by Farmer Mac's board of directors in its sole discretion, subject to compliance with applicable capital requirements and the payment of dividends on any outstanding preferred stock issued by Farmer Mac. Upon liquidation, dissolution, or winding up of the business of Farmer Mac, after payment and provision for payment of outstanding debt of Farmer Mac, the holders of shares of Farmer Mac's currently outstanding 6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C ("Series C Preferred Stock"), 5.700% Non-Cumulative Preferred Stock, Series D ("Series D Preferred Stock"), 5.750% Non-Cumulative Preferred Stock, Series E ("Series E Preferred Stock"), 5.250% Non-Cumulative Preferred Stock, Series F ("Series F Preferred Stock"), 4.875% Non-Cumulative Preferred Stock, Series G ("Series G Preferred Stock"), and any other preferred stock then outstanding, would be paid at par value out of assets available for distribution, plus all declared and unpaid dividends, before the holders of shares of common stock received any payment. See also "Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities" for more information about Farmer Mac's common stock, and "Business—Financing—Equity Issuance" for more information about Farmer Mac's common stock and preferred stock.

Unlike some other GSEs such as other FCS institutions and the Federal Home Loan Banks, Farmer Mac is not structured as a cooperative owned exclusively by member institutions and established to provide services exclusively to its members. Rather, Farmer Mac, as a publicly-traded corporation, has a broader base of stockholders, including those who do not directly participate in the secondary market provided by Farmer Mac. Farmer Mac therefore seeks to fulfill its mission of serving the financing needs of rural America in a way that is consistent with providing a return on the investment of its stockholders.

Farmer Mac generally requires financial institutions to own a requisite amount of Farmer Mac common stock, based on the size and type of institution, to sell Agricultural Finance mortgage loans to Farmer Mac. As a result of this requirement, coupled with the ability of holders of Class A and Class B voting common stock to elect two-thirds of Farmer Mac's board of directors, Farmer Mac regularly conducts business with "related parties," including institutions affiliated with members of Farmer Mac's board of directors and institutions that own large amounts of Farmer Mac's voting common stock. Farmer Mac has adopted a Code of Business Conduct and Ethics and related corporate policies that govern any conflicts of interest that may arise in these transactions. Farmer Mac also requires that any transactions with related parties be conducted in the ordinary course of business, with terms and conditions comparable to those available to any other counterparty not related to Farmer Mac. For more information about related party transactions, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Related Party Transactions" and Note 3 to the consolidated financial statements.

Capital

Farmer Mac's charter establishes three capital standards for Farmer Mac – minimum capital, critical capital, and risk-based capital. Farmer Mac ~~is required to~~must comply with the higher of the minimum capital requirement and the risk-based capital requirement. Also, in accordance with the applicable FCA regulation on capital planning, Farmer Mac's board of directors ~~maintains~~oversees a policy ~~for maintaining~~that requires Farmer Mac to maintain a sufficient level of Tier 1 capital and ~~imposing restrictions on~~restricts dividends and bonus payments if Farmer Mac's Tier 1 capital falls below specified thresholds. For a discussion of Farmer Mac's capital requirements and its actual capital levels, as well as FCA's role in the establishment and monitoring of those requirements and levels, see "Business—Government Regulation of Farmer Mac—~~Regulation—~~Capital Standards," "Management's Discussion and Analysis of Financial Condition and Results of Operations—Balance Sheet Review—Equity," and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital Requirements."

~~Employees and Property~~

As of December 31, 2017, Farmer Mac employed 88 people, located primarily at its office at 1999 K Street, N.W., 4th Floor, Washington, D.C. 20006. Farmer Mac also maintains offices at (1) 9169 Northpark Drive, Johnston, Iowa 50322, (2) 5200 N. Palm Avenue, Suite 306, Fresno, California 93704, and (3) 1065 E. Winding Creek, Suite 200, Eagle, Idaho 83616. Farmer Mac's main telephone number is (202) 872-7700.

~~Available Information~~

Farmer Mac makes available free of charge, through the "Investors" section of its internet website at www.farmermac.com, copies of materials it files with, or furnishes to, the SEC, including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and amendments, if any, to those filings, as soon as reasonably practicable after electronically filing those materials with, or furnishing those materials to, the SEC. Please note that all references to www.farmermac.com in this report are inactive textual references only. The information contained on Farmer Mac's website is not incorporated by reference into this report.

~~FARMER MAC'S LINES OF BUSINESS~~

~~The following tables present the outstanding balances and new business volume under Farmer Mac's four lines of business – Farm & Ranch, USDA Guarantees, Rural Utilities, and Institutional Credit:~~

Lines of Business - Outstanding Business Volume
December 31, 2017 December 31, 2016
(in thousands)
On-balance sheet:
Farm & Ranch:
Loans $ 2,798,906
$ 2,381,488
Loans held in trusts:
Beneficial interests owned by third party investors 1,399,827
1,132,966
USDA Guarantees:
USDA Securities 2,068,017
1,954,800
Farmer Mac Guaranteed USDA Securities 29,980
35,599
Rural Utilities:
Loans 1,076,291
999,512
Institutional Credit:
AgVantage Securities⁽¹⁾
7,593,322
6,004,472
Total on-balance sheet $ 14,966,343
$ 12,508,837
Off-balance sheet:
Farm & Ranch:
LTSPCs $ 2,335,342
$ 2,209,409
Guaranteed Securities 333,511
415,441
USDA Guarantees:
Farmer Mac Guaranteed USDA Securities 254,217
103,976
Rural Utilities:
LTSPCs⁽²⁾
806,342
878,598
Institutional Credit:
AgVantage Securities⁽¹⁾
11,556
983,214
Revolving floating rate AgVantage facility⁽³⁾
300,000
300,000
Total off-balance sheet $ 4,040,968
$ 4,890,638
Total $ 19,007,311
$ 17,399,475

⁽¹⁾

In April 2017, Farmer Mac purchased and retained $1.0 billion in AgVantage securities from MetLife. MetLife used the proceeds from Farmer Mac's purchase of $1.0 billion in AgVantage securities to refinance an AgVantage security of the same amount that matured in April 2017. Previously, $970.0 million of the maturing $1.0 billion AgVantage security had been sold to third parties and reported as off-balance sheet business volume in the Institutional Credit line of business.


⁽²⁾	~~Includes $20.0 million related to one-year loan purchase commitments on which Farmer Mac receives a nominal unused commitment fee as of both December 31, 2017 and 2016.~~


⁽³⁾	During 2017, $100.0 million of this facility was drawn and subsequently repaid. During 2016 this facility was not utilized. Farmer Mac receives a fixed fee based on the full dollar amount of the facility. If the counterparty draws on the facility, the amounts drawn will be in the form of AgVantage Securities, and Farmer Mac will earn interest income on those securities.

New Business Volume – Farmer Mac Loan Purchases, Guarantees, and LTSPCs
For the Year Ended December 31,
2017 2016 2015
(in thousands)
Farm & Ranch:
Loans $ 1,129,545
$ 966,023
$ 748,368
LTSPCs 554,743
399,095
427,795
USDA Guarantees:
USDA Securities 369,759
375,203
363,621
Farmer Mac Guaranteed USDA Securities 161,925
106,054
13,314
Rural Utilities:
Loans 137,341
50,491
108,337
LTSPCs —
441,404
522,262
Institutional Credit:
AgVantage Securities 2,383,912
2,098,852
743,158
Revolving floating rate AgVantage facility —
—
300,000
Total purchases, guarantees, and LTSPCs $ 4,737,225
$ 4,437,122
$ 3,226,855

~~Farm & Ranch~~

Under the Farm & Ranch line of business, Farmer Mac provides a secondary market for mortgage loans secured by first liens on agricultural real estate (including part-time farms and rural housing) by (1) purchasing and retaining eligible mortgage loans, (2) securitizing eligible mortgage loans and guaranteeing the timely payment of principal and interest on the resulting securities that represent interests in, or obligations secured by, pools of those loans, or (3) issuing LTSPCs for designated eligible mortgage loans, subject to the terms of the applicable LTSPC agreement. Farmer Mac is compensated for these activities through net effective spread on loans and Farmer Mac Guaranteed Securities held on balance sheet, guarantee fees earned on Farmer Mac Guaranteed Securities, and commitment fees earned on loans in LTSPCs.

Loan Eligibility

To be eligible for the ~~Farm & Ranch~~Agricultural Finance line of business, a loan ~~is required to:~~must either:

•be an agricultural mortgage loan (referred to as "Agricultural Finance mortgage loans") that is

◦secured by a fee simple mortgage or a ~~long-term~~ leasehold mortgage with status as a first lien on agricultural real estate (including part-time farms and rural housing) located within the United States; and

be ◦an obligation of a citizen or national of the United States, an alien lawfully admitted for permanent residence in the United States, or a private corporation or partnership that is majority-owned by U.S. citizens, nationals, or legal resident ~~aliens;~~

~~be an obligation of a person, corporation, or partnership having~~aliens that, in each case, has training or farming experience that is sufficient to ensure a reasonable likelihood that the loan will be repaid according to its terms; ~~and~~or

~~meet~~•be the guaranteed portion of a loan guaranteed by the USDA under the Consolidated Farm and Rural Development Act (7 U.S.C. § 1921 et seq.) (referred to as "USDA Securities").

Farmer Mac's charter authorizes a maximum loan size (adjusted annually for inflation) for an eligible Agricultural Finance mortgage loan secured by more than 2,000 acres of agricultural real estate. That maximum loan size was $17.0 million as of December 31, 2023. The charter does not prescribe a maximum loan size or a total borrower exposure for an eligible Agricultural Finance mortgage loan secured by 2,000 acres or less of agricultural real estate. However, an internal policy approved by Farmer Mac's board of directors limits the cumulative direct credit ~~underwriting, collateral valuation, documentation, and other specified standards for the Farm & Ranch line~~exposure to any one borrower or group of ~~business. See "—Underwriting and Collateral Valuation (Appraisal) Standards" and "—Approved Lenders" for a description~~related borrowers on loans secured by 2,000 acres or less of ~~these standards.~~

~~Eligible~~agricultural real estate to 10% of Farmer Mac's Tier 1 capital ($145.2 million as of December 31, 2023). For Agricultural Finance mortgage loans, eligible agricultural real estate consists of one or more parcels of land, which may be improved by permanently affixed buildings or other structures, ~~that:~~

that (i) is used for the production of one or more agricultural commodities or ~~products;~~products and

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

As required by Farmer Mac's charter, ~~authorizes~~Farmer Mac has established underwriting, security appraisal, and repayment standards for eligible loans that consider the nature, risk profile, and other differences between different categories of eligible loans. The charter prescribes that the following minimum standards must be applied to all Agricultural Finance mortgage loans:

•provide that no loan with a ~~maximum~~loan-to-value ratio ("LTV") more than 80% may be eligible;

•require each borrower to demonstrate sufficient cash flow to adequately service the loan;

•require sufficient documentation standards;

•protect the integrity of the appraisal process for any loan; and

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

Underwriting and Collateral Standards - Farm & Ranch

Farmer Mac accepts direct credit exposure to borrowers on Agricultural Finance mortgage loans in its Farm & Ranch reportable operating segment (referred to as "Farm & Ranch loans") through its loan ~~size (adjusted annually for inflation) for an~~

Underwriting and Collateral Standards - Corporate AgFinance

Corporate AgFinance loans tend to be larger and more complex operations than Farm & Ranch loans (generally more than $10 million) and typically are loans made to agribusinesses focused on agriculture production, food and fiber processing, and other supply chain production. The underwriting for loans to agribusinesses typically relies upon enterprise value, meaning the debt is 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. Thus, Corporate AgFinance loans often have a different credit risk profile than ~~1,000 acres~~Farm & Ranch loans. Farmer Mac has implemented methodologies and parameters to help assess credit risk and has established specific underwriting criteria for Corporate AgFinance loans based on the sector, borrower construct, and transaction complexity. Due to the larger loan sizes and different credit risk profiles, Farmer Mac thoroughly analyzes each prospective Corporate AgFinance loan, including assessing the borrower's leverage, cash flows, liquidity, revenue and margin trends, as well as evaluating the borrower's suppliers, customers, market share, and competition. Any underlying weaknesses are assessed and analyzed in conjunction with any compensating strengths. Corporate AgFinance loans also typically require ongoing monitoring of ~~agricultural real estate. That maximum~~reporting requirements and financial and non-financial covenants. Farmer Mac relies on the experience of internal underwriters with the expertise to analyze large, complex farming operations and agribusiness loans, along with collateral valuation contractors, and legal counsel to perform the necessary diligence to assess the overall credit risk and loan ~~size was $12.9 million as~~structures of ~~December 31, 2017. Although the charter does not prescribe a maximum loan size or a total borrower exposure for an eligible~~these transactions.

Lenders

•own a requisite amount of Farmer Mac common stock according to a schedule prescribed for the size and type of institution;

•have, in the judgment of Farmer Mac, the ability and experience to make or purchase and sell Farm & Ranch loans and service those loans in accordance with Farmer Mac's requirements either through the lender's own staff or through contractors and originators, as well as have appropriate internal controls, policies, and procedures;

•maintain a minimum amount of net liquidity or appropriate credit enhancements; and

•enter into a Seller/Servicer Agreement, which requires compliance with the terms of Farmer Mac's Seller/Servicer Guide, including providing representations and warranties about the eligibility of the loans and accuracy of loan data provided to Farmer Mac.

Any lender authorized by the USDA to obtain a USDA guarantee on a loan may participate in Farmer Mac's secondary market for USDA Securities.

Loan Servicing

Farmer Mac services a sizeable portion of its Agricultural Finance mortgage loan and USDA Securities portfolios, as well as a smaller portfolio of eligible agricultural mortgage loans that are held by an unrelated third party. Farmer Mac also continues to contract with other institutions to undertake most of the servicing responsibilities for the remaining portion of its Agricultural Finance mortgage loans in accordance with Farmer Mac's specified servicing requirements or in accordance with the servicing

For Farmer Mac's USDA Securities, the lender on each USDA-guaranteed loan is required by regulation to retain the unguaranteed portion of the guaranteed loan, to service the entire underlying guaranteed loan (including the USDA-guaranteed portion of that loan), and to remain mortgagee and/or secured party of record, if applicable. The USDA-guaranteed portion and the unguaranteed portion of the loan are to be secured by ~~1,000 acres~~the same collateral with equal lien priority. The USDA-guaranteed portion of a loan cannot be paid later than, or ~~less~~in any way be subordinated to, the related unguaranteed portion.

Other Products - Agricultural Finance

AgVantage Securities

For AgVantage securities secured by loans eligible for Farmer Mac's Agricultural Finance line of business, Farmer Mac currently ~~limits~~requires the ~~size~~general obligation to be over-collateralized, either by more eligible loans or any of the following types of assets:

•cash;

•securities issued by the U.S. Treasury or guaranteed by an agency or instrumentality of the United States;

•other highly-rated securities; or

•other instruments approved by Farmer Mac.

~~$50.0~~with a maximum limit of $75.0 million in cumulative exposure to any one borrower or related borrowers for transactions involving direct exposure to credit risk on loans (e.g., loan purchases, LTSPC transactions, and non-AgVantage Farm & Ranch Guaranteed Securities, which are not backed by a general obligation of a lender); and

~~$75.0 million in cumulative exposure through~~from a single ~~lender to any one borrower or related borrowers (with the amount of any direct borrower exposure described above not counting toward the $75.0 million limit) for~~ AgVantage transactions, which involve the general obligation of a lender that is in turn secured by eligible loans, resulting in indirect exposure to credit risk on those loans. See "Business—Farmer Mac's Lines of Business—Institutional Credit."issuer.

Farmer Mac includes its part-time farm loans and rural housing loans in the Farm & Ranch line of business. Farmer Mac defines a "part-time farm" as agricultural real estate meeting the eligibility requirements described above on which is located a primary residence whose value is at least 30 percent of the property's aggregate value at origination. When analyzing borrower repayment capacity for part-time farm loans, Farmer Mac typically considers off-farm income as a more important factor than for Farm & Ranch loans that are not part-time farm loans. Part-time farm loans do not represent a significant part of Farmer Mac's business, with a total of $433.6 million of those loans in Farmer Mac's portfolio as of December 31, 2017.

For the rural housing portion of this line of business, an eligible loan must be secured by a mortgage on a one- to four-family, owner-occupied, moderately priced principal residence located in a community with a population of 2,500 or fewer. Farmer Mac uses the All-Transaction Housing Price Index ("HPI"), as published by the Federal Housing Finance Agency, to index the value of a moderately priced rural housing dwelling. Based on the most recent publication of the HPI, Farmer Mac increased the maximum purchase price or current appraised value for a dwelling that secures a rural housing loan (excluding the land to which the dwelling is affixed) to $300,000 effective December 18, 2017. The prior limit was $279,950. In addition to the dwelling itself, an eligible rural housing loan can be secured by land associated with the dwelling having an appraised value of no more than 50 percent of the total appraised value of the combined property. Rural housing loans do not represent a significant part of Farmer Mac's business, with a total of $6.0 million of those loans in Farmer Mac's portfolio as of December 31, 2017.

~~Summary of Farm & Ranch Transactions~~

~~During the year ended December 31, 2017, Farmer Mac added a total of $1.7 billionof new business volume under the Farm & Ranch line of business. That new business volume was partially offset by~~

repayments on existing assets (principal paydowns and maturities) during the year, resulting in $6.9 billion of total outstanding business volume in this line of business as of December 31, 2017, compared to $6.1 billion as of December 31, 2016. As of December 31, 2017, Farmer Mac had direct credit exposure on 12,455 loans in the Farm & Ranch line of business across 48 states.

During 2017, Farmer Mac purchased eligible loans from 174 entities (the top ten institutions generated 59 percent of the purchase volume) and placed loans under LTSPCs with 25 entities in the Farm & Ranch line of business. During 2016, Farmer Mac purchased eligible loans from 169 entities (the top ten institutions generated 59 percent of the purchase volume) and placed loans under LTSPCs with 25 entities. During 2015, Farmer Mac purchased eligible loans from 163 entities (the top ten institutions generated 55 percent of the purchase volume) and placed loans under LTSPCs with 28 entities.

~~The following table summarizes loans purchased or newly placed under LTSPCs under the Farm & Ranch line of business for each of the years ended December 31, 2017, 2016, and 2015:~~

For the Year Ended December 31,
2017 2016 2015
(in thousands)
Loans $ 1,129,545
$ 966,023
$ 748,368
LTSPCs 554,743
399,095
427,795
Total $ 1,684,288
$ 1,365,118
$ 1,176,163

~~The following table presents the outstanding balances of Farm & Ranch loans held and loans underlying Farm & Ranch Guaranteed Securities and LTSPCs as of the dates indicated:~~

As of December 31,
2017 2016
(in thousands)
On-balance sheet:
Loans $ 2,798,906
$ 2,381,488
Loans held in trusts:
Beneficial interests owned by third party investors 1,399,827
1,132,966
Total on-balance sheet $ 4,198,733
$ 3,514,454
Off-balance sheet:

LTSPCs $ 2,335,342
$ 2,209,409
Guaranteed Securities 333,511
415,441
Total off-balance sheet $ 2,668,853
$ 2,624,850
Total $ 6,867,586
$ 6,139,304

~~Loan Purchases~~

Farmer Mac offers loan products designed to increase the secondary market liquidity of agricultural real estate mortgage loans and the lending capacity of financial institutions that originate those loans. Farmer Mac enters into mandatory delivery commitments to purchase loans and offers rates for those commitments daily. Farmer Mac also purchases portfolios of newly originated and seasoned, current loans on a negotiated basis. Farmer Mac purchases both fixed and adjustable rate loans that have a variety of maturities and often include balloon payments. Of the $1.1 billion of loans purchased in the Farm & Ranch line of business during 2017, 70 percent~~included balloon payments. By comparison, of the $1.0~~

~~billion of loans purchased in the Farm & Ranch line of business during 2016, 60 percent included balloon payments.~~

Farmer Mac's new and expanded business relationships with larger regional and national lenders has led to an increase in Farmer Mac's loan purchase volume and the average transaction size within the Farm & Ranch line of business. The average unpaid principal balance of loans purchased in the Farm & Ranch line of business was $781,000 in 2017, compared to $665,000 during 2016 and $666,000 during 2015. As of December 31, 2017 and 2016, the average unpaid principal balance of loans outstanding in the Farm & Ranch line of business was $642,000 and $611,000, respectively.

Guarantees ~~and Commitments~~

Farmer Mac offers two credit enhancement alternatives to direct loan purchases ~~through the~~for Farm & Ranch ~~line of business~~loans that allow approved lenders the ability to retain the cash flow benefits of their loans and increase their liquidity and lending capacity: (1) LTSPCs and (2) Farm & Ranch Guaranteed Securities. LTSPCs and securitization trusts where Farmer Mac is not the primary beneficiary result in the creation of off-balance sheet obligations for Farmer Mac. Historically, the only securitization trusts where Farmer Mac has not determined itself to be the primary beneficiary have been trusts containing 100 percent participation interests in loans that comprised an LTSPC pool prior to securitization, and in which the participating institution is not a related party to Farmer Mac. In ~~performing Farmer Mac's purchase and guarantee obligations related to~~ LTSPCs and Farm & Ranch Guaranteed Securities, payments made on the underlying loans or participation interests and liquidation of the related collateral (in the event of default under the terms of those assets) are intended to protect Farmer Mac against losses.

Both LTSPC and Farm & Ranch Guaranteed Securities transactions permit a lender to nominate from its portfolio an identified pool of loans, subject to review by Farmer Mac for conformity with its eligibility standards for Farm & Ranch loans. In Farm & Ranch Guaranteed Securities and LTSPC transactions, the lender effectively transfers the credit risk on ~~those~~their eligible loans because, through Farmer Mac's ~~guarantee or~~ commitment to purchase the loan (in the case of LTSPCs) or Farmer Mac's guarantee (in the case of Farm & Ranch Guaranteed Securities), Farmer Mac assumes the ultimate credit risk of borrower defaults on the ~~underlying~~related loans. This type of risk transfer reduces a lender's credit and concentration risk exposures and, consequently, its regulatory capital requirements and loss reserve requirements. The loans and participation interests underlying LTSPCs and Farm & Ranch Guaranteed Securities may include those with payment, maturity, and interest rate characteristics that differ from the loan products that Farmer Mac offers for purchase on a daily basis, but all are subject to the applicable standards described in

"—Underwriting and Collateral Valuation (Appraisal) Standards." See also "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk – Loans and Guarantees."

~~LTSPCs~~. An LTSPC commits Farmer Mac, subject to the terms of the applicable LTSPC agreement, to a future purchase of one or more loans from an identified pool of eligible loans that met Farmer Mac's standards at the time the transaction was entered into and Farmer Mac assumed the credit risk on the loans. The LTSPC structure, which is not a guarantee of loans or securities, permits the lender to retain ~~the loan pool~~loans in its portfolio until such time, if ever, as the lender elects to deliver some or all of the loans incovered by the ~~pool~~LTSPC to Farmer Mac for ~~purchase under~~purchase. Loans subject to an LTSPC must meet Farmer Mac's standards for eligible loans at the ~~terms~~commencement of the LTSPC ~~agreement.~~when Farmer Mac assumes the credit risk on the loans and are serviced by the holders of those loans in accordance with those lenders' servicing procedures, which Farmer Mac reviews before entering into those transactions. As consideration for its assumption of the credit risk on loans ~~underlying~~covered by an LTSPC, Farmer Mac receives commitment fees payable monthly in arrears. Farmer Mac offers different options under LTSPC arrangements to meet the credit and liquidity needs of its counterparties. Some LTSPCs provide that the underlying loans can be converted into Farm & Ranch Guaranteed Securities at the option of the counterparty with no conversion

~~fee paid to Farmer Mac.~~ Some LTSPCs contain risk sharing arrangements for pools of loans that provide for the counterparty to absorb up to a specified amount (typically between one percent and ~~five~~three percent of the original principal balance of the loan pool) of any losses incurred on the loans in the pool. As of December 31, 2017 and 2016, approximately 7.2 percent and 9.3 percent, respectively, of total LTSPCs and Farm & Ranch Guaranteed Securities, including those consolidated as loans on Farmer Mac's balance sheet, contained risk sharing arrangements.

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

•fair value or in exchange for cash or Farm & Ranch Guaranteed Securities (if the loans are not delinquent), in accordance with the ~~terms of the~~ applicable agreement.

In 2017, Farmer Mac entered into $554.7 million of LTSPCs, compared to $399.1 million in 2016, in the Farm & Ranch line of business. In 2017, LTSPCs were the preferred credit enhancement alternative for new credit protection transactions, and they continue to be a significant portion of the Farm & Ranch line of business. During 2017 and 2016, there were no conversions of LTSPCs into Farm & Ranch Guaranteed Securities. As of December 31, 2017, the aggregate principal balance of the loans underlying LTSPCs in Farmer Mac's Farm & Ranch line of business was $2.3 billion. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Business Volume."

~~Farm & Ranch Guaranteed Securities~~. In Farm & Ranch Guaranteed Securities transactions, Farmer Mac guarantees securities representing interests in eligible Farm & Ranch loans ~~or participation interests in those loans~~ held by a trust or other entity. Farmer Mac guarantees principal and interest payments on the ~~timely~~securities in the event of a payment ~~of interest~~shortfall due to default and ~~principal on~~either retains these securities ~~which are either retained by Farmer Mac~~ or ~~sold~~arranges for their sale to third parties. ~~For those securities sold to third parties, the eligible loans or participation interests are often acquired from lenders in exchange for the Farm & Ranch Guaranteed Securities backed by those assets.~~ As consideration for its assumption of ~~the~~ credit risk on the assets underlying the Farm & Ranch Guaranteed Securities, Farmer Mac receives guarantee fees based on the outstanding principal balance of the ~~related securities.~~ securities it guarantees. Some Farm & Ranch Guaranteed Securities transactions include a smaller, subordinate tranche of securities issued to third parties that are not guaranteed by Farmer Mac, which helps to offset Farmer Mac's credit risk on these transactions.

Farmer Mac is obligated under its guarantee on the securities to make ~~timely~~ payments to investors of interest and principal (including balloon payments) ~~and interest based on the scheduled payments on the underlying loans,~~, regardless of whether Farmer Mac or the related trust has actually received those scheduled payments. Farmer Mac's guarantee fees typically are collected out of installment payments made on the underlying loans until those loans have been repaid, purchased out of the trust, or otherwise liquidated (generally as a result of default). The aggregate amount of guarantee fees received on Farm & Ranch Guaranteed Securities depends on the amount of those securities outstanding and on the applicable guarantee fee rate, which Farmer Mac's charter caps at 50 basis points ~~(0.50 percent)~~(0.50%) per year. ~~The amount of Farm & Ranch Guaranteed Securities outstanding is influenced by the repayment rates on the underlying loans and by the rate at which~~

From time to time, Farmer Mac issues new Farm & Ranch Guaranteed Securities, including as a result of conversions from LTSPCs. In general, when the level of interest rates declines significantly below the interest rates on loans underlying Farm & Ranch Guaranteed Securities, the rate of prepayments is likely to increase. Conversely, when interest rates rise above the interest rates on the loans underlying Farm & Ranch Guaranteed Securities, the rate of prepayments is likely to decrease. In

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

Of the $19.0 billion outstanding principal balance of assets included in Farmer Mac's four lines of business as of December 31, 2017, $1.7 billion were in the form of Farm & Ranch Guaranteed Securities created from the deposit of eligible loan assets into securitization trusts that issue "pass-through" certificates representing interests in the underlying assets. This type of securitization structure may involve the deposit of either whole loans or loan participation interests into the trusts.

As of December 31, 2017, Farmer Mac had outstanding Farm & Ranch Guaranteed Securities of $1.4 billion that represent interests in whole loans and $333.5 million that represent interests in loan participations as a result of conversions from LTSPCs. Both types of transactions involve the deposit of eligible assets into securitization trusts along with all of the rights under related agreements that provide for, among other things, remedies for any breaches of representations and warranties made by the lender and the servicing of the underlying assets. In each of these transactions, the related trust has issued securities that represent interests in the assets of the trust and that Farmer Mac guarantees ~~as to the timely payment of principal and interest.~~

For Farm & Ranch Guaranteed Securities that result from the conversion of LTSPCs, a 100 percent participation in the cash flows associated with each loan formerly subject to the LTSPC, rather than the whole loan, is deposited into the securitization trust. These transactions involve loan participations for reasons unique to the counterparties that have elected these conversions, all of whom are members of the FCS. Loans made by FCS institutions to farmers and ranchers have, by statute, specified loan and collateral actions to which borrowers are entitled, known as "borrower rights." Farmer Mac does not have the ability to offer all of the prescribed borrower rights without the involvement of another FCS counterparty. In recognition of this and Farmer Mac's desire not to disrupt the borrower's relationship with the originating FCS lender and expectations about how the loan will be serviced, Farmer Mac developed the participation interest securitization structure for FCS loans with borrower rights. The deposit of participation interests into securitization trusts permits the legal ownership of the related loan to remain with the FCS counterparty, together with the servicing and borrower rights related to the loan. Farmer Mac, in its role as trustee, generally has the right to give or withhold consent to the exercise of remedies as to each related loan. The FCS servicers in these transactions are also the holders of the related Farm & Ranch Guaranteed Securities, which have the same economic benefit to the holder from a cash flow perspective as a securitization of whole loans. See "—Servicing" for more information about the servicing of loans underlying Farm & Ranch Guaranteed Securities.

For the years ended December 31, 2017 and 2016, Farmer Mac sold Farm & Ranch Guaranteed Securities in the amounts of $363.5 million and $511.4 million, respectively. No gains or losses resulted from these sales in either 2017 or 2016. During 2017 and 2016, there were no conversions of LTSPCs into Farm & Ranch Guaranteed Securities. As of December 31, 2017, the aggregate principal balance of the loans that backed Farmer Mac's Farm & Ranch Guaranteed Securities, which may or may not be consolidated on-balance sheet depending on the primary beneficiary determination described above, was $1.7 billion. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Business Volume."

~~Underwriting and Collateral Valuation (Appraisal) Standards~~

As required by Farmer Mac's charter, Farmer Mac has established underwriting, security appraisal, and repayment standards for eligible loans taking into account the nature, risk profile, and other differences between different categories of eligible loans. The charter prescribes that the following minimum standards must be applied to agricultural real estate mortgage loans in the Farm & Ranch line of business:

~~provide that no loan with a loan-to-value ratio ("LTV") in excess of 80 percent may be eligible;~~

~~require each borrower to demonstrate sufficient cash flow to adequately service the loan;~~

~~require sufficient documentation standards;~~

~~protect the integrity of the appraisal process for any loan; and~~

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

In addition to these minimum standards, agricultural mortgage loans on which Farmer Mac assumes direct credit exposure, such as loans purchased or underlying LTSPCs or Farm & Ranch Guaranteed Securities, are also typically required to meet more specific underwriting standards established by Farmer Mac, as described below.

Farmer Mac relies on the combined expertise of experienced internal agricultural credit underwriters and loan servicers, along with external agricultural loan servicing and collateral valuation contractors, to perform the necessary underwriting, servicing, and collateral valuation functions on Farm & Ranch loans.

~~Underwriting~~. To manage Farmer Mac's credit risk and to provide guidance for the management, administration, and conduct of underwriting to all participating and potential Farm & Ranch lenders, Farmer Mac has adopted credit underwriting standards that vary by loan type and loan product. Farmer Mac developed these standards based on industry practices for similar mortgage loans and designed them to assess the creditworthiness of the borrower, as well as the risk to Farmer Mac for having assumed the credit risk on those loans. Furthermore, Farmer Mac requires Farm & Ranch lenders to make representations and warranties regarding the conformity of eligible mortgage loans to these standards and any other requirements that Farmer Mac may impose from time to time. Farmer Mac has the ability to require repurchase of the loan upon a material breach of these representations and warranties. The underwriting standards described in this section apply to Farmer Mac's Farm & Ranch loans other than part-time farm and rural housing loans, whose underwriting standards more closely resemble generally-accepted industry standards for residential lending, including fully verified repayment capacity and use of credit scores.

Farmer Mac's credit underwriting standards for Farm & Ranch loans generally require that the original LTV of any loan not exceed 70 percent. Farmer Mac may require lower original LTV thresholds for some categories of loans, such as loans secured by property located in certain geographic regions, unseasoned loans, single purpose facility loans, and loans exceeding certain dollar thresholds. Farmer Mac, from time to time, allows higher LTV thresholds for loans secured by swine and poultry facilities that are supported by a strong production contract with a reputable processor (up to 75 percent original LTV) and rural housing and part-time farm loans secured primarily by owner-occupied residences (up to 80 percent original LTV). The original LTV of a loan is calculated by dividing the loan's principal balance at the time of guarantee, purchase, or commitment by the lower of the appraised value or the purchase price at the date of loan origination or, when available, updated appraised value at the time of guarantee, purchase, or commitment.

~~In the case of newly-originated Farm & Ranch loans, Farmer Mac's credit underwriting standards include:~~

~~pro forma total debt service coverage ratio supported by historical profitability, including farm and non-farm income, of 1.25 or higher;~~

~~pro forma debt-to-asset ratio of 50 percent or less; and~~

~~pro forma ratio of current assets to current liabilities of 1.25 or higher.~~

Farmer Mac evaluates these standards on an ongoing basis based on current and anticipated market conditions, and adjusts these standards as Farmer Mac determines is necessary. Farmer Mac also uses an interest rate shock test for adjustable rate Farm & Ranch loans with initial reset periods of less than five years.

Farmer Mac includes its facility loans, such as dairy and processing facilities, in its Farm & Ranch line of business. Farmer Mac defines a facility loan as a loan secured by agricultural real estate with building improvements (other than a residence) that contribute more than 60 percent of the appraised value of the property. The credit underwriting standards for facility loans are the same as for other Farm & Ranch loans except that certain facility loans are required to have a more stringent total debt service coverage ratio, including farm and non-farm income, of 1.35 or higher.

Loans not exceeding $1.5 million that are secured by eligible collateral with original LTVs not greater than 55 percent made to borrowers with high credit scores and adequate financial resources may be accepted without further underwriting tests being applied.

Farmer Mac's underwriting standards provide for the acceptance of a loan that, in the judgment of the Farmer Mac underwriter, is a sound loan with a high probability of repayment in accordance with its terms even though the loan does not meet one or more of the underwriting ratios usually required for loans of that type. In those cases, Farmer Mac permits approval of a loan if it:

has compensating strengths, which means it exceeds minimum requirements for one or more of the underwriting standards to a degree that compensates for noncompliance with one or more other standards; and

is made to a producer of particular agricultural commodities or products in a segment of agriculture in which such compensating strengths are typical of the financial condition of sound borrowers in that segment.

~~Although underwriting approvals may be made based on compensating strengths, no loan will be approved if it does not at least meet all of the minimum standards prescribed by Farmer Mac's charter.~~

Farmer Mac's use of compensating strengths is not intended to provide a basis for waiving or lessening the requirement that eligible mortgage loans under the Farm & Ranch line of business be of consistently high quality. Loans approved on the basis of compensating strengths are fully underwritten and have experienced lower cumulative rates of loss following default compared to loans that were approved on the basis of conformance with all applicable underwriting ratios.

In the case of a seasoned loan, Farmer Mac considers sustained historical performance to be a reliable alternative indicator of a borrower's ability to pay the loan according to its terms. In the Farm & Ranch line of business, a seasoned loan generally will be deemed an eligible loan if:

~~it has been outstanding for at least five years and has an LTV of 60 percent or less;~~

~~there have been no payments more than 30 days past due during the three-year period immediately before the date the loan is either purchased by Farmer Mac or made subject to an LTSPC; and~~

~~there have been no material restructurings or modifications for credit reasons during the previous five years.~~

A seasoned loan that has been outstanding for more than one year but less than five years must substantially comply with the applicable underwriting standards for newly originated loans as of the date the loan was originated by the lender.

~~Farmer Mac performs due diligence before purchasing, guaranteeing~~ securities backed by ~~or committing to purchase seasoned loans, including:~~

~~evaluating loan database information to determine conformity to the criteria set forth in the preceding paragraphs;~~

~~confirming that loan file data conform to database information;~~

~~validating supporting credit information in the loan files; and~~

~~reviewing loan documentation and collateral valuations.~~

~~Farmer Mac performs these and other due diligence procedures using methods that consider the size, age, leverage, industry sector, and nature of the collateral for the loans.~~

Required documentation for all loans in the Farm & Ranch line of business includes a first lien mortgage or deed of trust, a written promissory note, and assurance of Farmer Mac's lien position through either a title insurance policy or title opinion from an experienced real estate attorney in any geographic area where title insurance is not the industry practice.

As Farmer Mac develops new credit products, it establishes underwriting guidelines for them. Those guidelines result in industry-specific measures that meet or exceed the minimum underwriting standards contained in Farmer Mac's charter and provide Farmer Mac with the flexibility to deliver the benefits of a secondary market to farmers, ranchers, and rural homeowners in diverse sectors of the rural economy. Farmer Mac does not require that each loan's compliance with the applicable underwriting standards be re-evaluated after Farmer Mac purchases the loan or approves it for inclusion in a pool that backs Farm & Ranch Guaranteed Securities or an LTSPC pool.

~~Collateral Valuation Standards~~. Farmer Mac has adopted collateral valuation standards for newly originated loans purchased or underlying Farm & Ranch Guaranteed Securities or LTSPCs. Those standards require, among other things, that a current valuation be performed, or have been performed within the preceding 12 months, independently of the credit decision-making process. Farmer Mac generally requires appraisals to conform to the Uniform Standards of Professional Appraisal Practice ("USPAP") promulgated by the Appraisal Standards Board.

~~Farmer Mac's collateral valuation standards require that the valuation function be conducted or administered by an individual who meets specific qualification and competence criteria and who:~~

is not associated, except by the engagement for the collateral valuation, with the credit underwriters making the loan decision, though the appraiser or evaluator and the credit underwriter may be directly or indirectly employed by a common employer;

~~receives no financial or professional benefit of any kind by virtue of the report content, valuation, or credit decision made, or based on the valuation report; and~~

~~has no present or contemplated future direct or indirect interest in the property serving or to serve as collateral.~~

Farmer Mac's collateral valuation standards require uniform reporting of reliable and credible opinions of the market value based on analyses of comparable property sales, including consideration of the property's income-producing capacity and, if relevant, the market's response to the cost of improvements, as well as information regarding market trends. For seasoned loans, Farmer Mac obtains collateral valuation updates as considered necessary in its assessment of collateral risk determined in the due diligence process. If a current or updated collateral valuation is required for a seasoned loan, the collateral valuation standards described above would apply.

~~Portfolio Diversification~~

It is Farmer Mac's policy to diversify its portfolio of loans held and loans underlying Farm & Ranch Guaranteed Securities and LTSPCs, both geographically and by agricultural commodity/product. Farmer Mac directs its marketing efforts toward agricultural lenders throughout the nation to achieve commodity/product and geographic diversification in its exposure to credit risk. Farmer Mac evaluates its credit exposure in particular geographic regions and commodities/products relative to the total principal amount of all outstanding loans held and loans underlying LTSPCs and Farm & Ranch Guaranteed Securities.

Farmer Mac is not obligated to assume credit risk on every loan that meets its underwriting and collateral valuation standards submitted by an eligible participant. Farmer Mac may consider other factors, such as its overall portfolio diversification, commodity and farming forecasts, and risk management objectives, in deciding whether or not to accept a loan as part of the Farm & Ranch line of business. For example, if industry forecasts indicate possible weakness in a geographic area or agricultural commodity or product, Farmer Mac may decide not to purchase or commit to purchase an affected loan as part of managing Farmer Mac's overall portfolio exposure to areas of possible heightened risk exposure. Because Farmer Mac effectively assumes the credit risk on all loans underlying an LTSPC, Farmer Mac's commodity/product and geographic diversification disclosures reflect all loans underlying LTSPCs and any loans that have been purchased out of LTSPC pools. For information about the diversification of Farmer Mac's existing portfolio, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk – Loans and Guarantees" and Note 8 to the consolidated financial statements.

~~Approved Lenders~~

As of December 31, 2017, Farmer Mac had 680 approved lenders eligible to participate in Farmer Mac's Farm & Ranch line of business, ranging from single-office to multi-branch institutions, spanning community banks, FCS institutions, mortgage companies, mortgage funds, commercial banks, and insurance companies, compared to 638 eligible approved lenders as of December 31, 2016. In addition to participating directly in the Farm & Ranch line of business, some of the approved lenders facilitate indirect participation by other lenders by managing correspondent networks of lenders from which the approved lenders purchase loans to sell to Farmer Mac. As of December 31, 2017, of the 680 approved

lenders eligible to participate, 196 lenders had been active participants in the Farm & Ranch line of business during the previous 12 months by either selling at least one loan to Farmer Mac or entering into an LTSPC transaction with Farmer Mac, as compared to 184 out of 638 approved lenders as of December 31, 2016.

~~To be considered for approval as a participant in the Farm & Ranch line of business, a lender must meet criteria that Farmer Mac establishes. Those criteria include the following requirements:~~

~~own a requisite amount of Farmer Mac common stock according to a schedule prescribed for the size and type of institution;~~

have, in the judgment of Farmer Mac, the ability and experience to make or purchase and sell loans eligible for Farmer Mac's Farm & Ranch line of business and service those loans in accordance with Farmer Mac's requirements either through the lender's own staff or through contractors and originators;

~~maintain a minimum adjusted net worth; and~~

enter into a Seller/Servicer Agreement, which requires compliance with the terms of the Farmer Mac Seller/Servicer Guide, including providing representations and warranties regarding the eligibility of the loans and accuracy of loan data provided to Farmer Mac.

~~Servicing~~

Farmer Mac generally does not directly service the loans included in the Farm & Ranch line of business, although in some cases Farmer Mac may assume direct servicing for defaulted loans. Farmer Mac serves in the role of master servicer for Farm & Ranch loans held by Farmer Mac and for whole loans underlying Farm & Ranch Guaranteed Securities. In that capacity, Farmer Mac contracts with other institutions, known as central servicers, to undertake the majority of the servicing responsibilities for the loans in accordance with Farmer Mac's specified servicing requirements. For these loans, the central servicer may or may not be the same entity as the lender that sold the loans to Farmer Mac, and the originating lenders may retain some direct borrower contacts, referred to as "field servicing" functions. Field servicers may enter into contracts with Farmer Mac's central servicers that specify the retained servicing functions.

~~Loans related to the participation interests underlying Farm & Ranch Guaranteed~~USDA Securities that ~~result from the conversion of LTSPCs are serviced for the benefit of Farmer Mac, as trustee~~it has purchased and ~~guarantor, by the FCS institution that participated the loans to Farmer Mac. The servicer of those loans is usually~~ also the holder of the related Farm & Ranch Guaranteed Securities. In those transactions, the FCS servicer is required to service the loans related to the securitized participation interests in a commercially reasonable manner and in substantial compliance with Farmer Mac's servicing requirements for Farm & Ranch loans. Those servicers are also required to give effect to all statutory borrower rights applicable to the loans and have shared power with Farmer Mac for some servicing actions to ensure this. The loans related to the Farm & Ranch Guaranteed Securities that result from the conversion of loans formerly subject to an LTSPC are the only loans included in the Farm & Ranch line of business that are subject to a shared power servicing provision.

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

In summary, the substance of all servicing for loans in the Farm & Ranch line of business is performed in a manner consistent with Farmer Mac's servicing requirements, with some special servicing for the assets

~~underlying Farm & Ranch Guaranteed Securities resulting from LTSPC conversions to accommodate the borrower rights regime unique to loans originated by FCS institutions.~~

~~USDA Guarantees~~

~~General~~

~~Farmer Mac initiated its USDA Guarantees line of business in 1991 after Congress revised Farmer Mac's charter to provide that:~~

USDA-guaranteed portions of loans (which Farmer Mac refers to as "USDA Securities") guaranteed under the Consolidated Farm and Rural Development Act (7 U.S.C. § 1921 et seq.) are statutorily included in the definition of loans eligible for the secondary market programs provided by Farmer Mac;

~~Farmer Mac is authorized to pool and issue Farmer Mac Guaranteed Securities backed by USDA Securities.~~

~~Since January 2010, nearly all purchases of USDA Securities have been made~~guarantees securities issued by Farmer Mac II LLC a subsidiary of Farmer Mac that operates substantially all of the business related to the USDA Guarantees line of business. Farmer Mac operates only that part of the business that involves the issuance of Farmer Mac Guaranteedbacked by USDA Securities ~~to investors other than Farmer Mac or Farmer Mac II LLC. Although Farmer Mac II LLC may issue securities in these transactions,~~that it has purchased. Farmer Mac II LLC does not guarantee any USDA Securities it holds or any Farmer Mac Guaranteed USDA Securities issued by Farmer Mac or Farmer Mac II LLC.

Rural Infrastructure Finance

~~Summary of USDA Guarantees Transactions~~

Farmer ~~Mac guarantees~~Mac's charter authorizes the ~~timely payment~~purchase of, principal and interest on Farmer Mac Guaranteed USDA Securities backed by USDA Securities. Farmer Mac does not guarantee the repayment of the USDA Securities themselves. During the year ended December 31, 2017, Farmer Mac II LLC purchased approximately $531.7 million of USDA Securities, of which $375.7 million were retained and $156.0 million were securitized and sold to lenders or other investors in the form of Farmer Mac Guaranteed USDA Securities. During the year ended December 31, 2016, Farmer Mac II LLC purchased approximately $481.3 million of USDA Securities, of which $383.3 million were retained and $98.0 million were securitized and sold to lenders or other investors in the form of Farmer Mac Guaranteed USDA Securities. During the year ended December 31, 2015, Farmer Mac II LLC purchased approximately $376.9 million of USDA Securities, all of which were retained. In addition to the purchases of USDA Securities made by Farmer Mac II LLC in 2017, Farmer Mac purchased for its liquidity investment portfolio $45.0 million of USDA Securities that were not eligible for Farmer Mac's USDA Guarantees line of business because the related USDA guarantees were issued under authority not related to the Consolidated Farm and Rural Development Act. Farmer Mac did not purchase any USDA Securities in 2016 or 2015. During 2017, 2016, and 2015, Farmer Mac and Farmer Mac II LLC conducted USDA Guarantees transactions with 222, 222, and 209 entities, respectively.

As of December 31, 2017 and 2016, $2.4 billion and $2.1 billion, respectively, of Farmer Mac Guaranteed USDA Securities and USDA Securities were outstanding. The following table presents activity in the USDA Guarantees line of business for each of the years indicated:

    For the Year Ended December 31,
    2017 2016 2015
    (in thousands)
Purchased and retained $ 375,715
$ 383,303
$ 376,935
Purchased and sold 155,969
97,954
—
Total $ 531,684
$ 481,257
$ 376,935

~~The following table presents the outstanding balance of USDA Securities and Farmer Mac Guaranteed USDA Securities as of the dates indicated:~~

As of December 31,
2017 2016
(in thousands)
On-balance sheet:
USDA Securities $ 2,068,017
$ 1,954,800
Farmer Mac Guaranteed USDA Securities 29,980
35,599
Off-balance sheet:
Farmer Mac Guaranteed USDA Securities 254,217
103,976
Total $ 2,352,214
$ 2,094,375

~~As of December 31, 2017, Farmer Mac had experienced no other-than-temporary impairment on any of its Farmer Mac Guaranteed USDA Securities or USDA Securities.~~

~~United States Department of Agriculture Guaranteed Loan Programs~~

The USDA, acting through its agencies, currently administers the federal rural credit programs first developed in the mid-1930s. The USDA makes direct loans and guarantees portions of loans made and serviced by USDA-qualified lenders for various purposes. The USDA's guarantee is supported by the full faith and credit of the United States. The USDA guarantees up to 95 percent of the principal amount of guaranteed loans. Through its USDA Guarantees line of business, Farmer Mac is one of several competing purchasers of USDA Securities representing the USDA-guaranteed portions of farm ownership loans, farm operating loans, business and industry loans, community facilities loans, and other loans. The guaranteed portions of these loans are fully guaranteed as to principal and interest by the USDA.

~~USDA Guarantees~~. Each USDA guarantee is a full faith and credit obligation of the United States and becomes enforceable if a lender fails to repurchase the portion of the loan that is guaranteed by the USDA from its holder within 30 days after written demand from the holder when:

~~the borrower under the guaranteed loan is in default not less than 60 days in the payment of any principal or interest due on the USDA-guaranteed portion of the loan; or~~

the lender has failed to remit to the holder the payment made by the borrower on the USDA-guaranteed portion of the loan or any related loan subsidy within 30 days after the lender's receipt of the payment.

If the lender does not repurchase the USDA-guaranteed portion as provided above, the USDA is required to purchase the unpaid principal balance of the USDA-guaranteed portion together with accrued interest (including any loan subsidy) to the date of purchase, less the lender's servicing fee, within 60 days after written demand upon the USDA by the holder. While the USDA guarantee will not cover the note interest to the holder on USDA-guaranteed portions accruing after 90 days from the date of the original demand letter of the holder to the lender requesting repurchase, Farmer Mac has established procedures to require prompt demand on the USDA to purchase USDA-guaranteed portions that have not been repurchased by the lender.

If, in the opinion of the lender (with the concurrence of the USDA) or in the opinion of the USDA, repurchase of the USDA-guaranteed portion is necessary to service the related guaranteed loan adequately, the holder is required to sell the USDA-guaranteed portion to the lender or USDA for an amount equal to the unpaid principal balance and accrued interest on such USDA-guaranteed portion less the lender's servicing fee. Federal regulations prohibit the lender from repurchasing USDA-guaranteed portions for arbitrage purposes.

~~Lenders~~. Any lender authorized by the USDA to obtain a USDA guarantee on a loan may participate in Farmer Mac's USDA Guarantees line of business. During both 2017 and 2016, 222 lenders, consisting mostly of community and regional banks, sold USDA Securities to Farmer Mac.

~~Loan Servicing~~. The lender on each USDA guaranteed loan is required by regulation to retain the unguaranteed portion of the guaranteed loan, to service the entire underlying guaranteed loan, including the USDA-guaranteed portion, and to remain mortgagee and/or secured party of record. The USDA-guaranteed portion and the unguaranteed portion of the loan are to be secured by the same collateral with equal lien priority. The USDA-guaranteed portion of a loan cannot be paid later than, or in any way be subordinated to, the related unguaranteed portion.

~~Rural Utilities~~

~~General~~

~~Under its charter, Farmer Mac is permitted to purchase,~~ and guarantee of securities backed by, ~~rural~~loans for electric ~~and telephone loans made~~(including renewable electric energy) or telecommunications facilities by lenders organized as cooperatives to borrowers ~~who~~that have received or are eligible to receive loans under the Rural Electrification Act of 1936 ("REA"). The REA is administered by the Rural Utilities Service ("RUS"), an agency of the USDA. ~~None of~~ Farmer ~~Mac's business~~Mac refers to ~~date under the Rural~~eligible loans made to an electric distribution facility, an electric generation and transmission facility, or a telecommunications facility as "Rural Utilities ~~line of business has involved telecommunications~~loans" and refers to eligible loans made to renewable electric energy facilities as "Renewable Energy loans."

Farmer Mac's Rural ~~Utilities~~Infrastructure Finance line of business encompasses purchases of ~~eligible rural utilities~~Rural Utilities loans and Renewable Energy loans and guarantees of securities backed by those loans, as well as ~~the issuance of~~ LTSPCs for pools of eligible ~~rural utilities loans. Farmer Mac began issuing LTSPCs for pools of eligible rural utilities loans in 2015.~~

~~Summary of~~ Rural Utilities ~~Transactions~~

~~During~~loans. The vast majority of Farmer Mac's business to date under the ~~year ended December 31, 2017, Farmer Mac added $137.3 million~~Rural Infrastructure Finance line of ~~new Rural Utilities~~ business ~~compared to $491.9 million and $630.6 million for the years ended December 31, 2016 and 2015, respectively. As of both December 31, 2017 and 2016, the aggregate outstanding principal balance of~~has involved Rural Utilities loans ~~held~~made to electric facilities (primarily electric distribution cooperatives and ~~underlying LTSPCs was $1.9 billion.~~

electric generation and transmission cooperatives). During 2023, Farmer Mac purchased $232.5 million of loans to telecommunications companies that provide wireless, cable, fiber transport, and broadband services to rural America as part of its strategic initiative to provide further support for the telecommunications industry. Also during 2023, Farmer Mac purchased

2715

$273.5 million of Renewable Energy loans as part of its strategic initiative to support rural renewable energy projects.

~~The following table summarizes new Rural Utilities business activity for each of the years ended December 31, 2017, 2016, and 2015:~~

For the Year Ended December 31,
2017 2016 2015
(in thousands)
Loans $ 137,341
$ 50,491
$ 108,337
LTSPCs —
441,404
522,262
Total $ 137,341
$ 491,895
$ 630,599

~~The following table presents the outstanding balances of Rural Utilities loans held as of the dates indicated:~~

As of December 31,
2017 2016
(in thousands)
On-balance sheet:
Loans $ 1,076,291
$ 999,512
Off-balance sheet:
LTSPCs⁽¹⁾
806,342
878,598
Total $ 1,882,633
$ 1,878,110


⁽¹⁾	~~Includes $20.0 million related to one-year loan purchase commitments on which Farmer Mac receives a nominal unused commitment fee as of both December 31, 2017 and 2016, respectively.~~

~~Loan Eligibility~~

~~To be eligible for Farmer Mac's Rural Utilities line of business, a rural utilities loan (or an interest in such a loan) is required to:~~

~~be made for an electric or telephone facility by a lender organized as a cooperative to a borrower that has received or is eligible to receive a loan under the REA;~~

~~be performing and not more than 30 days delinquent; and~~

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

Underwriting and Collateral Standards

Farmer Mac's charter does not specify minimum underwriting criteria for eligible ~~rural utilities loans under the~~ Rural Utilities ~~line of business.~~or Renewable Energy loans. To manage Farmer Mac's credit risk, to mitigate the risk of loss from borrower defaults, and to provide guidance for the management, administration, and conduct of underwriting to participants in the Rural ~~Utilities~~Infrastructure Finance line of business, Farmer Mac has adopted credit underwriting standards that vary by loan product and by loan ~~type, based on whether loans are made to electric distribution cooperatives or electric generation and transmission ("G&T") cooperatives.~~type. These standards are based on industry practices for similar ~~rural utilities~~Rural Utilities and Renewable Energy loans and are designed to assess the creditworthiness of the borrower, as well as the risk to Farmer Mac.

For Rural Utilities loans, Farmer Mac reviews lenders' credit submissions and analyzes borrowers' audited financial statements and financial and operating reports ~~filed with RUS and the Federal Energy Regulatory Commission~~ to confirm that loans meet Farmer Mac's underwriting standards for ~~rural utilities~~Rural Utilities loans. ~~Furthermore, Farmer Mac requires sellers of rural utilities loans to make representations and warranties regarding the conformity of eligible loans to these standards~~

~~and any other requirements that Farmer Mac may impose from time to time. Farmer Mac has the ability to require repurchase of the loan upon a material breach of these representations and warranties.~~

In addition to the loan eligibility criteria described above for rural utilities loans, Farmer Mac has developed different underwriting standards for rural utilities loans that depend on whether the borrower is an electric distribution cooperative or a G&T cooperative. Farmer Mac's credit underwriting standards for all rural utilities loans on which it assumes direct credit exposure (i.e., with no general obligation of a lender involved in the transaction) require:

~~each borrower to demonstrate sufficient cash flow to adequately service the loan; and~~

~~each borrower's leverage position to be adequate based on industry standards.~~

In the case of a newly-originated loan to a distribution cooperative on which Farmer Mac assumes direct credit exposure, the borrower typically must, among other criteria set forth in Farmer Mac's credit underwriting standards, meet the following ratios (based on the average of the most recent three years):

~~the ratio of long-term debt to "net utility plant" does not exceed 90 percent;~~

~~the modified debt service coverage ratio (the cooperative's available cash plus patronage capital credits allocated to the cooperative, relative to debt expense) equals or exceeds 1.35; and~~

~~the ratio of equity to total assets equals or exceeds 20 percent.~~

The "net utility plant" means the real and tangible personal property of a rural utilities borrower constituting the long-term assets of property, plant, and equipment (PPE), less depreciation, computed in accordance with applicable accounting requirements.

In the case of a newly-originated loan to a G&T cooperative on which Farmer Mac assumes direct credit exposure, the borrower typically must, among other criteria set forth in Farmer Mac's credit underwriting standards, meet the following ratios (based on the average of the most recent three years):

~~the equity to total assets ratio equals or exceeds 10 percent;~~

~~the modified debt service coverage ratio equals or exceeds 1.10;~~

~~the debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio does not exceed 12; and~~

~~the aggregate members' equity to total capitalization ratio equals or exceeds 25 percent.~~

~~The due diligence Farmer Mac performs before purchasing, or guaranteeing securities backed by, rural utilities loans includes:~~

~~evaluating loan database information to determine conformity to Farmer Mac's underwriting standards;~~

~~confirming that loan file data conforms to database information;~~

~~validating supporting credit information in the loan files; and~~

~~reviewing loan documentation.~~

Farmer Mac is not obligated to assume credit risk on every rural utilities loan submitted to Farmer Mac that meets its underwriting and collateral valuation standards. Farmer Mac may consider other factors, such as portfolio diversification, in deciding whether or not to accept the loans.

~~Collateral~~

It is customary inwith these loans ~~to distribution cooperatives and G&T cooperatives~~ for the lender or lender group to take a security interest in substantially all of the borrower's assets. ~~In cases in which~~When Farmer Mac purchases a ~~rural utilities~~Rural Utilities loan with a pledge of all assets and a lender also has a lien on all assets, Farmer Mac verifies that a lien accommodation ~~results~~will result in either a shared first lien or a first lien in favor of Farmer Mac. ~~In cases where~~When debt indentures are used, Farmer Mac determines if available collateral is adequate to support the loan program and Farmer Mac's investment. ~~As of December 31, 2017, substantially all of the Rural Utilities loans held by~~ Farmer Mac ~~consisted of loans with a pledge of all assets. Farmer Mac sometimes~~also purchases unsecured Rural Utilities loans (primarily electric generation and transmission loans) that meet ~~stricter~~Farmer Mac's underwriting standards than those described above under "—Underwriting." In accordance with Farmer Mac's internal policies, the total outstanding balance of unsecured Rural Utilities loans may not exceed $100 million. As of December 31, 2017, Farmer Mac held $25.1 million offor unsecured Rural Utilities loans.

~~Servicing~~

~~Farmer Mac generally does not directly service the Rural Utilities loans held in its portfolio. Those loans are serviced by~~For a servicer designated by Farmer Mac. National Rural Utilities Cooperative Finance Corporation ("CFC") currently services all of the Rural Utilities loans in Farmer Mac's portfolio. CFC is a related party to Farmer Mac by virtue of CFC's stock ownership in Farmer Mac. As of December 31, 2017, CFC held approximately 8 percent of Farmer Mac's outstanding Class A voting common stock (or approximately 5 percent of total voting shares). See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Related Party Transactions."

~~Approved Lenders~~

Farmer Mac's charter requires eligible rural utilities loans be made by a lender organized as a cooperative. Currently, the only two rural utilities lenders that are cooperatives are CFC and CoBank, ACB ("CoBank"), an institution of the FCS. To date, CFC is the only lender to have participated in Farmer Mac's Rural Utilities line of business.

~~Portfolio Diversification~~

Rural utilities loans are made throughout the entire United States. Farmer Mac analyzes the geographic distribution of loans to cooperatives and considers regional concentration levels in connection with its business activities under the Rural Utilities program. As of December 31, 2017, Farmer Mac had direct credit exposure on 1,066 loans to electric cooperatives constituting $1.9 billion across 39 states.

~~Farmer Mac's charter does not prescribe a maximum~~Renewable Energy loan, size for an eligible rural utilities loan, but Farmer Mac currently has a $50.0 million limit in place for cumulative direct credit exposure on those loans (e.g., purchases of loans, LTSPCs, or guarantees of securities representing interests in loans) to any one borrower or group of related borrowers. For indirect credit exposures on rural utilities loans (e.g., AgVantage transactions), Farmer Mac's current limit is $75.0 million for cumulative loan exposure to any one borrower or related borrowers, with the amount of any direct exposure to a borrower not counting toward the $75.0 million limit. See "Business—Farmer Mac's Lines of Business—Institutional Credit." As of December 31, 2017, Farmer Mac's direct credit exposure to rural utilities loans consisted of $1.4 billion in loans to distribution cooperatives and $0.5 billion in loans to G&T cooperatives.

~~Institutional Credit~~

Under the Institutional Credit line of business, Farmer Mac provides advances against eligible loans by guaranteeing and purchasing general obligations of institutions approved by Farmer Mac, which obligations are also secured by the types of loans eligible for one of Farmer Mac's other lines of business. Farmer Mac refers to these obligations as AgVantage^® securities. Farmer Mac guarantees the timely payment of principal and interest on AgVantage securities and may retain AgVantage securities in its portfolio or sell them to third parties in the capital markets as Farmer Mac Guaranteed Securities.

Farmer Mac has direct credit exposure to the ~~issuers of AgVantage securities~~related standalone renewable energy project. These projects are typically financed on a non-recourse or limited recourse basis and ~~assumes the ultimate credit risk of issuer default~~underwritten on ~~the AgVantage securities. Before approving an institution as an issuer~~a projection basis with significant reliance placed on assumptions used in an AgVantage transaction, Farmer Mac assesses the institution's creditworthiness as well as its loan performance. Farmer Mac continues to monitor the counterparty risk assessment on an ongoing basis after the AgVantage security is issued. In addition to being a general obligation of the issuing institution, AgVantage securities must be secured by eligible loans or guaranteed securities in an amount at least equal to the outstanding principal amount of the security. As a result,each project’s analysis. Farmer Mac has ~~indirect~~implemented methodologies and parameters to assess credit ~~exposure to~~risk and has established specific underwriting criteria based on the ~~loans or guaranteed securities that are pledged to secure the AgVantage securities, which would be available to~~project and transaction construct and complexity. Farmer Mac thoroughly analyzes each prospective Renewable Energy loan. Farmer Mac performs quantitative assessments typically focused on projected debt service requirements, term and amortization review, interest rate sensitivity, and collateral analysis. Farmer Mac also performs qualitative assessments typically focused on the project sponsor's credentials and experience, off-take (cash flow) considerations, and concentration and other market considerations. Farmer Mac also typically reviews the project contracts and agreements for each Renewable Energy loan. Renewable Energy loans are typically secured by a first lien on the borrower's project assets, an assignment of the project contracts and agreements, a land or leasehold interest, and in certain cases, a pledge of the equity interests in the ~~event~~borrower entity. Farmer Mac's enforcement rights in any collateral securing a Renewable Energy loan may be subject to tax equity interests in the borrower's renewable energy project.

Lenders and Loan Servicing

Farmer Mac's charter requires loans in Farmer Mac's Rural Infrastructure Finance line of business to involve a ~~default by~~lender organized as a cooperative. Farmer Mac does not directly service the ~~issuer.~~

~~Loans pledged under AgVantage securities~~Rural Utilities or Renewable Energy loans held in its portfolio. Typically, these loans are serviced by the ~~issuers~~lender or other organization designated by Farmer Mac that has experience in servicing loans to utilities and renewable energy providers and in the context of ~~the~~project finance, as applicable.

Other Products - Rural Infrastructure Finance

AgVantage Securities

Farmer Mac's portfolio of AgVantage securities in accordance with that institution's servicing procedures. Farmer Mac reviews these servicing procedures before entering into those transactions. In AgVantage transactions, the issuer is required to remove from the pool of pledged collateral any loan that becomes more than 30 days delinquent in the payment of principal or interest and to substitute an eligible loan that is current in payment to maintain the minimum required collateralization level.

~~For AgVantage securities secured by loans eligible for Farmer Mac's Farm & Ranch~~its Rural Infrastructure Finance line of business ~~Farmer Mac currently requires the general obligation to be over-collateralized, either by more eligible loans or any of the following types of assets:~~

~~cash;~~

includes securities issued by ~~the U.S. Treasury or guaranteed by an agency or instrumentality of the United States; or~~

~~other highly-rated securities.~~

The required collateralization level for the AgVantage securities secured by Farm & Ranch loans currently ranges from 103 percent to 125 percent. Within this range, Farmer Mac generally requires higher collateralization levels for securities issued by institutions without long-term debt ratings from a nationally recognized statistical rating organization ("NRSRO"). The required collateralization level is established at the time the AgVantage facility is entered into with the counterparty and does not change during the life of the AgVantage securities issued under such facility.

~~For AgVantage securities~~cooperative lenders that are secured by ~~Farm & Ranch loans, Farmer Mac requires that the loans meet the minimum standards set forth in the charter for those types~~pools of loans and that the value is supported by either appraisals that conform to USPAP or similar collateral valuation methods based upon Farmer Mac's evaluation of the lender's collateral valuation protocols and history. Although the charter does not prescribe a maximum loan size or a total borrower exposure for an eligible Farm & Ranch loan secured by 1,000 acres or less of agricultural real estate, for AgVantage transactions Farmer Mac currently limits the

size of those loans to $75.0 million in cumulative exposure through a single lender to any one borrower or group of related borrowers (with the amount of any direct borrower exposure not counting toward the $75 million limit).

Farmer Mac has tailored a version of its AgVantage product to focus on institutional investors in agricultural assets that qualify as collateral for the types of loans eligible for the Farm & Ranch line of business. Farmer Mac refers to this product variation as the Farm Equity AgVantage^® product. This product has similar requirements for AgVantage securities secured by Farm & Ranch loans described above, but Farmer Mac also requires that Farm Equity AgVantage transactions and AgVantage transactions with smaller financial funds or entities (1) generally maintain a higher collateralization level, through lower loan-to-value ratio thresholds and higher overcollateralization requirements, and (2) generally contain specified financial covenants for the life of the related AgVantage security to avoid default. As of December 31, 2017, Farmer Mac had $279.7 million of outstanding Farm Equity AgVantage securities.

~~For AgVantage securities secured by loans eligible for Farmer Mac's~~ Rural Utilities ~~line of business,~~loans. For these AgVantage securities, Farmer Mac requires:

•the counterparty issuing the general obligation to have a credit rating from ~~an NRSRO~~a nationally-recognized statistical rating organization ("NRSRO") that is at least investment grade, or be of comparable creditworthiness as determined through Farmer Mac's analysis; and

the collateral to be comprised of loans, or interests in loans, for electric or telephone facilities by a lender organized as a cooperative to a borrower that has received or is eligible to receive a loan under the REA;

~~the collateral to be classified as performing and not in payment default beyond the applicable cure period; and~~

•the collateralization (consisting of current, performing loans) to be maintained at the contractually prescribed level, in an amount at least equal to the outstanding principal amount of the security.

Although Farmer Mac has only indirect credit exposure on the ~~rural utilities~~Rural Utilities loans pledged to secure AgVantage securities, the same underwriting standards that apply to loans made to ~~distribution cooperatives~~Rural Utilities borrowers on which Farmer Mac assumes direct credit exposure also apply to loans made to ~~distribution cooperatives~~Rural Utilities borrowers that secure the ~~general obligation of the lender in~~ AgVantage transactions. See "Business—Farmer Mac's Lines of Business—Rural Utilities—Underwriting." For loans made to G&T cooperatives that secure the general obligation of the issuer in AgVantage transactions, the G&T cooperative must either (1) have a rating from an NRSRO of BBB- (or equivalent rating) or better or (2) meet the following underwriting standards (based on the average of the most recent three years):

~~the aggregate members' equity to total capitalization ratio equals or exceeds 25 percent;~~

~~the modified debt service coverage ratio equals or exceeds 1.10; and~~

~~the equity to total assets ratio equals or exceeds 10 percent.~~

securities. Farmer Mac's charter does not prescribe a maximum loan size or a total borrower exposure for an eligible ~~rural utilities~~Rural Utilities loan, but Farmer Mac's current limit for AgVantage transactions is $75.0 million for cumulative loan exposure to any one borrower or related borrowers (with the amount of any direct exposure to a borrower not counting towards the ~~$75~~$75.0 million limit).

COMPETITION

Farmer Mac is the only federally-chartered corporation established to provide a secondary market for agricultural mortgage loans, rural infrastructure loans, and USDA Securities, but faces competition from other entities that purchase, retain, securitize, or provide financing for the types of assets eligible for Farmer Mac's secondary market activities. These entities include commercial and investment banks, insurance companies, other FCS institutions, financial funds, and certain government programs. Farmer Mac also ~~permits~~competes indirectly with originators of eligible loans that would prefer to retain the loans they originate rather than sell them into the secondary market. Farmer Mac is able to compete to acquire eligible loans due to the variety of products it offers and its ability to offer competitive funding structures and pricing to its customers. This enables Farmer Mac to provide flexible financing options and products designed to meet the varied needs of lending institutions related to capital requirements, liquidity, credit risk, and management of sector and geographic concentrations and borrower exposure limits. The relative competitiveness of Farmer Mac's loan rates and Farmer Mac's ability to develop business with lending institutions are affected by many factors, including:

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

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

•changes in the levels of available capital and liquidity of lending institutions;

•the existence of alternative sources of funding and credit enhancement for lending institutions;

•the rate of growth in the market for eligible loans; and

•demand for Farmer Mac's products.

CAPITAL AND CORPORATE GOVERNANCE

•Class B voting common stock. The charter restricts ownership of Farmer Mac's Class B voting common stock to FCS institutions and also provides that five members of Farmer Mac's 15-member board of directors are elected by a plurality of the votes of the Class B stockholders each year. The charter contains no restrictions on the maximum number or percentage of outstanding shares of Class B voting common stock that any one holder may own, and Farmer Mac is not aware of any regulation applicable to FCS institutions that requires a minimum investment in its Class B voting common stock or that prescribes a maximum amount. Farmer Mac's Class B voting common stock, which has a limited market and trades infrequently, is not listed or quoted on any exchange or other quotation system, and Farmer Mac is not aware of any publicly available quotations or prices for this class of common stock.

The dividend and liquidation rights of all three classes of Farmer Mac's common stock are the same. Dividends may be paid on Farmer Mac's common stock only when, as, and if declared by Farmer Mac's board of directors in its sole discretion, subject to compliance with applicable capital requirements and the payment of dividends on any outstanding preferred stock issued by Farmer Mac. Upon liquidation, dissolution, or winding up of the business of Farmer Mac, after payment and provision for payment of outstanding debt of Farmer Mac, the holders of shares of Farmer Mac's currently outstanding 6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C ("Series C Preferred Stock"), 5.700% Non-Cumulative Preferred Stock, Series D ("Series D Preferred Stock"), 5.750% Non-Cumulative Preferred Stock, Series E ("Series E Preferred Stock"), 5.250% Non-Cumulative Preferred Stock, Series F ("Series F Preferred Stock"), 4.875% Non-Cumulative Preferred Stock, Series G ("Series G Preferred Stock"), and any other preferred stock then outstanding, would be paid at par value out of assets available for distribution, plus all declared and unpaid dividends, before the holders of shares of common stock received any payment. See also "Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities" for more information about Farmer Mac's common stock, and "Business—Financing—Equity Issuance" for more information about Farmer Mac's common stock and preferred stock.

Unlike some other GSEs such as other FCS institutions and the Federal Home Loan Banks, Farmer Mac is not structured as a cooperative owned exclusively by member institutions and established to ~~20 percent~~provide services exclusively to its members. Rather, Farmer Mac, as a publicly-traded corporation, has a broader base of stockholders, including those who do not directly participate in the secondary market provided by Farmer Mac. Farmer Mac therefore seeks to fulfill its mission of serving the financing needs of rural ~~utilities~~America in a way that is consistent with providing a return on the investment of its stockholders.

Farmer Mac generally requires financial institutions to own a requisite amount of Farmer Mac common stock, based on the size and type of institution, to sell Agricultural Finance mortgage loans ~~pledged~~ to ~~secure AgVantage securities~~Farmer Mac. As a result of this requirement, coupled with the ability of holders of Class A and Class B voting common stock to elect two-thirds of Farmer Mac's board of directors, Farmer Mac regularly conducts business with "related parties," including institutions affiliated with members of Farmer Mac's board of directors and institutions that own large amounts of Farmer Mac's voting common stock. Farmer Mac has adopted a Code of Business Conduct and Ethics and related corporate policies that govern any conflicts of interest that may arise in these transactions. Farmer Mac also requires that any transactions with related parties be ~~unsecured or secured by less than all~~conducted in the ordinary course of ~~the borrower's assets. As of December 31, 2017, all AgVantage securities secured by eligible rural utilities loans were issued by CFC, which is a~~business, with terms and conditions comparable to those available to any other counterparty not related to Farmer Mac. For more information about related party ~~to Farmer Mac by virtue of CFC's stock~~

~~ownership in Farmer Mac. See~~transactions, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Related Party ~~Transactions."~~Transactions" and Note 3 to the consolidated financial statements.

~~As of December 31, 2017,~~

Capital

Farmer Mac's charter establishes three capital standards for Farmer Mac ~~had not experienced any credit losses, nor had it been called upon to make a guarantee payment to third parties,~~– minimum capital, critical capital, and risk-based capital. Farmer Mac must comply with the higher of the minimum capital requirement and the risk-based capital requirement. Also, in accordance with the applicable FCA regulation on ~~any of its AgVantage securities. For more information on~~capital planning, Farmer Mac's ~~AgVantage securities,~~board of directors oversees a policy that requires Farmer Mac to maintain a sufficient level of Tier 1 capital and restricts dividends and bonus payments if Farmer Mac's Tier 1 capital falls below specified thresholds. For a discussion of Farmer Mac's capital requirements and its actual capital levels, as well as FCA's role in the establishment and monitoring of those requirements and levels, see "Business—Government Regulation of Farmer Mac—Capital Standards," "Management's Discussion and Analysis of Financial Condition and Results of Operations—~~Risk Management—Credit Risk – Institutional.~~Balance Sheet Review—Equity,"

~~Summary of Institutional Credit Transactions~~

During the year ended December 31, 2017, Farmer Mac added a total of $2.4 billion of new business volume under the Institutional Credit line of business. That new business volume was partially offset by repayments on existing assets (principal paydowns and maturities) during the year, resulting in $7.9 billion of total outstanding business volume in this line of business as of December 31, 2017, compared to $7.3 billion as of December 31, 2016.

As of December 31, 2017 and 2016, the outstanding principal amount of AgVantage securities held by Farmer Mac on its balance sheet was $7.6 billion and $6.0 billion, respectively. As of December 31, 2017 and 2016, the aggregate outstanding principal amount of off-balance sheet AgVantage securities sold to third parties totaled $0.3 billion and $1.3 billion, respectively. The decrease in the unpaid principal balance of outstanding off-balance sheet AgVantage securities from year-end 2016 was attributable to the refinancing of a $1.0 billion AgVantage security that matured in April 2017 into three new on-balance sheet AgVantage securities. Previously, $970.0 million of this $1.0 billion maturing AgVantage security was reported as off-balance sheet business volume because it was owned by third party investors. The amount as of both December 31, 2017 and 2016 includes a $300.0 million revolving floating rate AgVantage facility entered into with CFC. During 2017, $100.0 million of this facility was drawn and subsequently repaid. During 2016, this facility was not utilized. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Business Volume" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—~~Risk Management—Credit Risk – Institutional.~~Liquidity and Capital Resources—Capital Requirements." ~~The following table summarizes new Institutional Credit line~~

Regulatory Oversight

Farmer Mac's charter assigns to FCA, acting through the separate Office of ~~business activity~~Secondary Market Oversight ("OSMO") within FCA, the responsibility for ~~each~~the examination of ~~the years ended December 31, 2017, 2016, and 2015:~~

For the Year Ended December 31,
2017 2016 2015
(in thousands)
AgVantage Securities $ 2,383,912
$ 2,098,852
$ 743,158
Revolving floating rate AgVantage facility —
—
300,000
$ 2,383,912
$ 2,098,852
$ 1,043,158

~~The following table presents the outstanding principal amount of AgVantage securities held by~~ Farmer Mac and ~~off-balance sheet AgVantage securities as~~the general supervision of the ~~dates indicated:~~safe and sound performance of the powers, functions, and duties vested in Farmer Mac by the charter. The charter also authorizes FCA, acting through OSMO, to apply its general enforcement powers to Farmer Mac. Farmer Mac's charter requires an annual examination of the financial transactions of Farmer Mac and authorizes FCA to assess Farmer Mac for the cost of FCA's regulatory activities, including the cost of any examination. Farmer Mac is also required to file quarterly reports of condition with OSMO. As a publicly-traded corporation, Farmer Mac also must comply with the periodic reporting requirements of the SEC. For a more detailed discussion of Farmer Mac's regulatory and governmental relationships, see "Business—Government Regulation of Farmer Mac."

HUMAN CAPITAL

As of December 31, 2023, Farmer Mac employed 185 people, with 36 new employees hired during the year resulting in a net increase of 27 employees (17%) compared to year-end 2022. Farmer Mac primarily employs full-time employees to meet its business needs as it grows and evolves while supplementing human capital needs with part-time employees (including interns) and independent contractors and consultants as needed.

Farmer Mac has experienced a geographic evolution in its workforce since 2020 and now employs personnel in 27 states across the United States. This represents a 73% increase in geographic diversity (by state) since the start of the COVID-19 pandemic in early 2020. As of December 31, 2023, 95 full-time employees were located in the Washington, D.C. area, 28 full-time employees were located in the Johnston, Iowa area, and 62 full-time employees worked on a fully remote basis in other parts of the United States.

Workplace Culture

Farmer Mac continues to focus on how and where people work and to reassess physical workspace needs and operates under a "Presence with Purpose" model. This hybrid work approach, which is grounded in the three core principles of community, collaboration, and communication, relies on managers and leaders to consider their unique team circumstances and determine an appropriate cadence for purposeful in-

As of December 31,
2017 2016
(in thousands)
On-balance sheet:
AgVantage Securities $ 7,593,322
$ 6,004,472
Off-balance sheet:

AgVantage Securities $ 11,556
$ 983,214
Revolving floating rate AgVantage facility⁽¹⁾
300,000
300,000
Total off-balance sheet $ 311,556
$ 1,283,214
Total $ 7,904,878
$ 7,287,686


⁽¹⁾	During 2017, $100.0 million of this facility was drawn and subsequently repaid. During 2016, this facility was not utilized. Farmer Mac receives a fixed fee based on the full dollar amount of the facility. If the counterparty draws on the facility, the amounts drawn will be in the form of AgVantage Securities, and Farmer Mac will earn interest income on those securities.

person presence. This has allowed leadership to leverage the collaborative benefits that cannot be fully replicated remotely while still being flexible with the unique needs of each team and employee. To ensure continuity in regular communication, Farmer Mac has continued to reinforce employees' access to secure digital meeting platforms, and its senior executive team has continued to lead regular meetings of all employees to share pertinent information on Farmer Mac's business and operations and to provide a forum for discussing issues. In 2023, Farmer Mac was awarded a Top Workplaces USA national award and an industry award in financial services. Farmer Mac also received six Top Workplaces USA cultural excellence awards in 2023 in the categories of innovation, employee appreciation, leadership, compensation & benefits, employee well being, and professional development.

Compensation & Benefits

As a financial services organization, Farmer Mac must attract and retain a highly skilled workforce in an often competitive employment environment. Farmer Mac uses traditional methods to attract and retain talent, such as competitive salaries and benefits that include:

•a robust paid time off program (up to 5 weeks of vacation, 2 weeks of sick leave, 11 paid holidays, 6 weeks of pregnancy leave, 6 weeks of parental leave, and 8 hours of leave to volunteer for community or charitable service activities);

•an "equity for all" program in which all employees are eligible to receive annual grants of equity-based compensation;

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

•a 401(k) plan that provides for both voluntary employee contributions and employer contributions at the levels described in Note 11 to the consolidated financial statements;

•a self-funded short-term disability benefit that provides varying percentages of base salary payments through the time of eligibility for long-term disability insurance coverage;

•group term life insurance and long-term disability insurance with all premiums paid by Farmer Mac;

•pre-tax dependent care reimbursement;

•partially-funded health savings accounts;

•access to group rates for legal services insurance, additional life and disability insurance, and pet insurance; and

•professional and career development opportunities and programs.

Talent Acquisition and Development

Farmer Mac is committed to the professional and career development of all employees. "Farmer Mac LEARN" is a program that Farmer Mac launched in 2022 to provide a comprehensive suite of learning and development services to maximize the learning effectiveness in the business. Farmer Mac LEARN is deployed in a blended learning fashion and is structured around six strategic LEARN Academies to enable effective learning and career development. The LEARN Academies were introduced in 2023 and include:

•New Hire Academy

•Skills Academy

•Leadership Academy

•Business Academy

•Ethics & Compliance Academy

•IT and Cybersecurity Academy

Each Academy is structured around learning paths aligned to each employee’s professional level, role, and career trajectory. Farmer Mac continues to invest in digital learning platforms to support the learning needs of the employees and business, while also leveraging internal subject matter expertise to elevate learning offerings. Farmer Mac also continues to offer an education assistance plan for employees with at least one year of full-time employment.

As part of its workforce strategy, Farmer Mac is building intern, early career, and talent pipelines through partnership with academic institutions, community organizations, and business partners. Farmer Mac also places strategic focus on succession planning. Detailed succession plans are crafted in partnership with key leaders in the business to identify and develop high potential leaders to promote career readiness for expanded responsibilities and roles in Farmer Mac.

Farmer Mac experienced a 6.4% turnover rate in 2023, which was down from 12.3% in 2022, despite a highly competitive employment market.

Philanthropy

Farmer Mac's mission to serve agricultural and rural communities, as well as philanthropic activities undertaken in support of its mission, provide Farmer Mac an advantage in its effort to attract and retain talent. Farmer Mac's philanthropic philosophy centers on supporting agriculture and rural communities and supporting the next generation of farmers and ranchers and financial professionals, including in the communities where Farmer Mac's employees live.

Code of Business Conduct and Ethics

Farmer Mac's onboarding program includes a mandatory compliance session for every new hire and contract consultant within their first week. All employees also take annual training on and recertification of Farmer Mac's Code of Business Conduct and Ethics, which encompasses the following core principles: (1) promoting a safe workplace and a respectful and inclusive culture, (2) conducting business lawfully, fairly, and objectively, (3) communicating responsibly and protecting information, (4) conducting business diligently and being a good corporate citizen, and (5) how to report actual or suspected misconduct. Farmer Mac's Code of Business Conduct and Ethics was refreshed in May 2023 while maintaining this principles-based approach. Farmer Mac's Code of Business Conduct and Ethics is available at www.farmermac.com and is not incorporated by reference into this report.

Diversity, Equity, and Inclusion

Farmer Mac's diversity, equity, and inclusion ("DEI") council was formed in late 2020 at the direction of Farmer Mac's board of directors and senior executives. In 2023, Farmer Mac's DEI council, with support from external consultants, continued to assess the council’s objectives and focused its DEI efforts on refining its three-year plan. This included leveraging regular internal Farmer Mac communications to inform and educate personnel on diversity, equity, and inclusion matters and engage in company-wide philanthropic efforts with a focus on inclusion.

AVAILABLE INFORMATION

Farmer Mac makes available free of charge, through the "Investors" section of its internet website at www.farmermac.com, copies of materials it files with, or furnishes to, the SEC, including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and any amendments to those filings, as soon as reasonably practicable after electronically filing those materials with, or furnishing those materials to, the SEC. All references to www.farmermac.com in this report are inactive textual references only. The information contained on Farmer Mac's website is not incorporated by reference into this report.

FUNDING OF GUARANTEE AND LTSPC OBLIGATIONS

The ~~principal~~main sources of funding for the payment of Farmer Mac's obligations under its guarantees and LTSPCs are the fees Farmer Mac receives for its guarantees and commitments, net effective spread, proceeds of debt issuances, loan repayments, and maturities of AgVantage securities. Farmer Mac ~~satisfies~~has traditionally satisfied its obligations under LTSPCs and its guarantees by purchasing defaulted loans out of the LTSPCs ~~and~~or from related securitization trusts under the ~~related trusts for Farmer Mac Guaranteed Securities.~~terms of the respective agreements governing the LTSPC or guaranteed securities. Farmer Mac typically recovers a significant portion of the value of defaulted loans purchased either through borrower payments, loan payoffs, payments by third parties, or foreclosure and sale of the property securing the loans. Net credit losses/(gains) arising from Farmer Mac's guarantees and commitments include charge-offs/(recoveries) against its allowance for losses, gains and losses on the sale of real estate ~~owned ("REO"), which consists of real estate~~ acquired through foreclosure (known as "real estate owned" or "REO"), and fair value adjustments of REOs held. During 2017, Farmer Mac had net credit gains of $1.4 million, compared to net credit losses of $0.2 million during 2016. The net credit gains during 2017 included $1.7 million of net gains on the sale of REO compared to $15,000 during 2016.

Farmer Mac's charter requires Farmer Mac to maintain in its accounts a portion of the guarantee fees it receives from its guarantee activities as a reserve against losses. As of December 31, ~~2017,~~2023, this reserve against losses arising from Farmer Mac's guarantee activities was ~~$71.6~~$129.6 million. Farmer Mac calculates the amount of this statutorily required reserve against losses arising from its guarantee activities based on the credit risk component of guarantee fees received on all ~~Farmer Mac Guaranteed Securities,~~securities it guarantees, including AgVantage securities. This amount does not represent ~~either anticipated credit losses or estimated probable~~expected credit losses and does not directly relate to either the allowance for loan losses or the reserve for losses in Farmer Mac's consolidated balance sheets. Rather, this is the amount of capital that must be exhausted before Farmer Mac may issue obligations to the U.S. Treasury against the $1.5 billion that Farmer Mac is statutorily authorized to borrow from the U.S. Treasury to fulfill its guarantee obligations. That borrowing authority is not intended to be a routine funding source and has never been used. For a more detailed discussion of Farmer Mac's borrowing authority from the U.S. Treasury, see "Business—Farmer Mac's Authority to Borrow from the U.S. Treasury."

Farmer Mac's total outstanding guarantees and LTSPCs exceed the total of: (1) the amount held as an allowance for losses, (2) the amount maintained as a reserve against losses arising from guarantee

activities, and (3) the amount Farmer Mac may borrow from the U.S. Treasury. However, Farmer Mac does not expect its future payment obligations under its guarantees and LTSPCs to exceed amounts available to satisfy those obligations, ~~including~~which includes access to the underlying collateral in the event of default. For information about Farmer Mac's allowance for losses, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk – Loans and Guarantees" and Note ~~2(j)~~2(h), Note 8, and Note 812 to the consolidated financial statements.

FINANCING

Debt Issuance

Farmer Mac's ~~statutory~~ charter authorizes Farmer Mac to issue debt obligations to purchase eligible loans ~~USDA Securities,~~ and ~~Farmer Mac Guaranteed~~securities, USDA Securities, and to maintain reasonable amounts ~~for business operations, including~~of liquid investments to maintain an adequate supply of liquidity. Farmer Mac funds its purchases of eligible ~~loan~~program assets and liquidity investment assets primarily by issuing debt obligations of various maturities in the public capital markets. Farmer Mac also issues debt obligations to obtain funds to finance its ~~transaction costs and its~~ obligations under guarantees and LTSPCs. Farmer Mac's debt obligations include discount notes and ~~fixed and floating rate~~ medium-term notes, including callable medium-term notes, all of which are unsecured general obligations of Farmer Mac. Discount notes ~~generally~~ have original maturities of ~~1.0~~1 year or ~~less, whereas medium-term~~less. Medium-term notes generally have maturities of 0.5 years to ~~15.0~~25.0 years.

The interest and principal on Farmer Mac's debt obligations are not guaranteed by, and do not constitute debts or obligations of, FCA, or the United States, or any agency or instrumentality of the United States other than Farmer Mac. Farmer Mac is an institution of the FCS but is not liable for any debt or obligation of any other institution of the FCS. Likewise, neither the FCS nor any other individual institution of the FCS is liable for any debt or obligation of Farmer Mac. Income to the purchaser of a Farmer Mac discount note or medium-term note is not exempt under federal law from federal, state, or local taxation. Farmer Mac's discount notes and medium-term notes are not currently rated by an NRSRO.

Farmer Mac's board of directors has authorized the issuance of up to $18.0 billion of discount notes and medium-term notes (of which $15.5 billion was outstanding as of December 31, 2017), subject to periodic review of the adequacy of that level relative to Farmer Mac's borrowing needs. Farmer Mac invests the proceeds of its debt issuances in ~~loan~~eligible program asset purchases, Farmer Mac Guaranteed Securities, and liquidity investment assets in accordance with policies established by its board of directors that comply with ~~FCA's~~Farmer Mac's Liquidity and Investment Regulations, which establish limitations on asset class, dollar amount, issuer concentration, and credit quality. Farmer Mac's regular debt issuance supports its access to the capital markets, and Farmer Mac's liquidity investment assets provide an alternative source of funds should market conditions be unfavorable. ~~Farmer Mac's current policies authorize liquidity investments in:~~

~~obligations of or guaranteed by the United States;~~

~~obligations of or guaranteed by GSEs;~~

~~municipal securities;~~

~~international and multilateral development bank obligations;~~

~~money market instruments;~~

~~diversified investment funds;~~

~~asset-backed securities;~~

~~corporate debt securities;~~

~~mortgage-backed securities; and~~

~~preferred stock issued by other FCS institutions.~~

For more information about ~~Farmer Mac's outstanding investments~~the Liquidity and ~~indebtedness,~~Investment Regulations, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—~~Balance Sheet Review"~~Liquidity and Capital Resources." For more information about Farmer Mac's outstanding investments and indebtedness, see Note 4 and Note 7 to the consolidated financial statements.

Equity Issuance

Farmer Mac's charter authorizes Farmer Mac to issue voting common stock, non-voting common stock, and non-voting preferred stock. Farmer Mac may obtain additional capital from future issuances of ~~voting and non-voting~~ common stock and ~~non-voting~~ preferred stock.

Common Stock

Only banks, other financial entities, insurance companies, and institutions of the FCS may hold voting common stock. No holder of Class A voting common stock may directly or indirectly be a beneficial owner of more than ~~33 percent~~33% of the outstanding shares of Class A voting common stock. There are no restrictions on the maximum number or percentage of outstanding shares of Class B voting common stock that may be held by an eligible stockholder. No ownership restrictions apply to Class C non-voting common stock, and those securities are freely transferable.

The dividend rights of all three classes of Farmer Mac's common stock are the same, and dividends may be paid on common stock only when, as, and if declared by Farmer Mac's board of directors in its sole discretion, subject to compliance with applicable capital requirements and the payment of dividends on outstanding preferred stock. Upon liquidation, dissolution, or winding up of the business of Farmer Mac, after payment and provision for payment of outstanding debt of Farmer Mac, the holders of shares of preferred stock would be paid at par value out of assets available for distribution, plus all declared and unpaid dividends, before the holders of shares of common stock received any payment.

As of December 31, ~~2017,~~2023, the following shares of Farmer Mac common stock were outstanding:

•1,030,780 shares of Class A voting common stock;

•500,301 shares of Class B voting common stock; and

~~9,087,670~~•9,310,872 shares of Class C non-voting common stock.

Except for the period from March 16, 2020 to March 10, 2021, Farmer Mac has had a common stock repurchase program in place since third quarter 2015. In March 2023, Farmer Mac's board of directors ~~approved a share~~extended the expiration date of the repurchase program ~~during third quarter 2015 authorizing Farmer Mac~~ to ~~repurchase up to $25.0 million of its outstanding Class C non-voting common stock for two years. In August 2017, Farmer Mac's board of directors approved~~March 2025 on the ~~continuation of the share repurchase program on its existing~~same terms ~~through August 2019 for the repurchase~~and with a remaining authorization of up to ~~$5.4~~$9.8 million ~~of Farmer Mac's outstanding Class C non-voting common~~in stock ~~which is the amount currently remaining under the share repurchase program as originally authorized.~~repurchases. As of December 31, ~~2017,~~2023, Farmer Mac had repurchased approximately ~~668,000~~673,000 shares of Class C non-voting common stock at a cost of approximately ~~$19.6~~$19.8 million ~~pursuant to~~under the share repurchase ~~program.~~program since 2015.

The following table presents the dividends declared on Farmer Mac's common stock during and ~~subsequent to 2017:~~

after 2023:

Date
Dividend
Declared

Per
Share
Amount

~~Date~~
~~Dividend~~
~~Declared~~

~~Per~~
~~Share~~
~~Amount~~

For

Holders Of

Record As Of

Date

Paid

February 22, 2023

$1.10

March ~~1, 2017~~16, 2023

~~$0.36~~

~~March 20, 2017~~

March 31, ~~2017~~2023

May 3, ~~2017~~2023

$1.10

~~$0.36~~

June 16, 2023

~~June 15, 2017~~

June 30, ~~2017~~2023

August ~~3, 2017~~9, 2023

$1.10

~~$0.36~~

September 15, ~~2017~~2023

September 29, ~~2017~~2023

November ~~1, 2017~~8, 2023

$1.10

~~$0.36~~

December 15, ~~2017~~2023

December 29, ~~2017~~2023

February ~~28, 2018~~21, 2024

$1.40

~~$0.58~~

March 15, 2024

~~March 19, 2018~~

* The dividend declared on February ~~28, 2018~~21, 2024 is scheduled to be paid on March ~~30, 2018.~~28, 2024.

Farmer Mac's ability to declare and pay common stock dividends could be restricted if it were to fail to comply with applicable capital requirements. See Note 9 to the consolidated financial statements and "Business—Government Regulation of Farmer Mac—~~Regulation—~~Capital Standards."

Preferred Stock

No ownership restrictions apply to any preferred stock issued by Farmer Mac, and those securities are freely transferable. As of December 31, ~~2017,~~2023, the following shares of Farmer Mac preferred stock were outstanding:

~~2,400,000 shares of Series A Preferred Stock, all of which were issued on January 17, 2013;~~

~~3,000,000 shares of Series B Preferred Stock, all of which were issued on March 25, 2014; and~~

•3,000,000 shares of Series C Preferred Stock, all of which were issued onin June ~~20, 2014.~~2014;

•4,000,000 shares of Series D Preferred Stock, all of which were issued in May 2019;

•3,180,000 shares of Series E Preferred Stock, all of which were issued in May 2020;

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

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

The Series AC Preferred Stock, Series BD Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, and Series CG Preferred Stock, (collectively, ~~referred to as the~~ "Outstanding Preferred Stock") each has a par value of $25.00 per share and an initial liquidation preference of $25.00 per share. Farmer Mac incurred direct costs of $1.7 million related to the issuance of the Series A Preferred Stock, direct costs of $1.9 million related to the issuance of the Series B Preferred Stock, and direct costs of $1.6 million related to the issuance of the Series C Preferred Stock. Since each of their respective issuances, Farmer Mac has not issued any ~~additional~~more shares of any series of Outstanding Preferred Stock. Each series of Outstanding Preferred Stock ranks senior to Farmer Mac's outstanding Class A voting common stock, Class B voting common stock, Class C non-voting common stock, and any other common stock of Farmer Mac issues in the future.

The Series AD Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, and ~~the~~ Series BG Preferred Stock pay an annual dividend rate fixed at ~~5.875 percent~~5.700%, 5.750%, 5.250%, and ~~6.875 percent,~~4.875%, respectively, for the life of the securities. The Series C Preferred Stock pays an annual dividend rate of ~~6.000 percent~~6.000% from the date of issuance to and including the quarterly payment date ~~occurring~~ on July 17, 2024 and thereafter at a floating rate equal to three-month LIBOR plus ~~3.260 percent.~~3.260%, which Farmer Mac expects will be converted to the Term Secured Overnight Financing Rate published by CME Group Benchmark Administration, Ltd., plus a spread adjustment based on the tenor of the securities, if not redeemed prior to that payment date. Dividends on all series of Outstanding Preferred Stock are non-cumulative, ~~which means that~~so if the board of directors has not declared a dividend before the applicable dividend payment date for any dividend period, ~~such~~the dividend will not be paid or ~~cumulate,~~accumulate, and Farmer Mac will ~~have no obligation~~not be obligated to pay dividends for ~~such~~that dividend period, whether or not dividends on any series of Outstanding Preferred Stock are declared for any future dividend period. Farmer Mac may pay dividends on the Outstanding Preferred Stock without paying dividends on any class or series of stock Farmer Mac may issue in the future that ranks junior to the Outstanding Preferred Stock.

The Series AC Preferred Stock, Series BD Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, and Series CG Preferred Stock rank equally with each other and will rank equally with any other class or series of stock Farmer Mac may issue in the future of equal priority as to dividends and upon liquidation. Farmer Mac has the right, but not the obligation, to redeem some or all of the issued and outstanding shares of Series ~~A Preferred Stock on and anytime after January 17, 2018, the Series B Preferred Stock on and anytime after April 17, 2019, and the Series~~ C Preferred Stock on and ~~anytime~~any time after July 18, 2024, the Series D Preferred Stock on and after July 17, 2024, the Series E Preferred Stock on and after July 17, 2025, the Series F Preferred Stock on and after October 17, 2025, and the Series G Preferred Stock on and any time after July 17, 2026, all at a price equal to the then-applicable liquidation preference. Any redemption date for the Series D, Series E, Series F, or Series G Preferred Stock must be a scheduled quarterly dividend payment date. The Outstanding Preferred Stock is considered Tier 1 capital for Farmer Mac. For more information on Farmer Mac's capital requirements, see "Business—Government Regulation of Farmer Mac—~~Regulation—~~Capital Standards."

~~The following table presents the dividends declared and paid on Series A Preferred Stock during and subsequent to 2017:~~



~~Date~~ ~~Dividend~~ ~~Declared~~	~~Per~~ ~~Share~~ ~~Amount~~	~~For~~ ~~Period~~ ~~Beginning~~	~~For~~ ~~Period~~ ~~Ending~~	~~Date~~ ~~Paid~~
~~March 1, 2017~~	~~$0.3672~~	~~January 18, 2017~~	~~April 17, 2017~~	~~April 17, 2017~~
~~May 3, 2017~~	~~$0.3672~~	~~April 18, 2017~~	~~July 17, 2017~~	~~July 17, 2017~~
~~August 3, 2017~~	~~$0.3672~~	~~July 18, 2017~~	~~October 17, 2017~~	~~October 17, 2017~~
~~November 1, 2017~~	~~$0.3672~~	~~October 18, 2017~~	~~January 17, 2018~~	~~January 17, 2018~~
~~February 28, 2018~~	~~$0.3672~~	~~January 18, 2018~~	~~April 17, 2018~~	*

* The dividend declared on February 28, 2018 is scheduled to be paid on April 17, 2018.

~~The following table presents the dividends declared and paid on Series B Preferred Stock during and subsequent to 2017:~~



~~Date~~ ~~Dividend~~ ~~Declared~~	~~Per~~ ~~Share~~ ~~Amount~~	~~For~~ ~~Period~~ ~~Beginning~~	~~For~~ ~~Period~~ ~~Ending~~	~~Date~~ ~~Paid~~
~~March 1, 2017~~	~~$0.4297~~	~~January 18, 2017~~	~~April 17, 2017~~	~~April 17, 2017~~
~~May 3, 2017~~	~~$0.4297~~	~~April 18, 2017~~	~~July 17, 2017~~	~~July 17, 2017~~
~~August 3, 2017~~	~~$0.4297~~	~~July 18, 2017~~	~~October 17, 2017~~	~~October 17, 2017~~
~~November 1, 2017~~	~~$0.4297~~	~~October 18, 2017~~	~~January 17, 2018~~	~~January 17, 2018~~
~~February 28, 2018~~	~~$0.4297~~	~~January 18, 2018~~	~~April 17, 2018~~	*

* The dividend declared on February 28, 2018 is scheduled to be paid on April 17, 2018.

The following table presents the dividends declared and paid on Series C Preferred Stock during and ~~subsequent to 2017:~~after 2023:

Date
Dividend
Declared

Per
Share
Amount

For
Period
Beginning

For
Period
Ending

Date
Paid

February 22, 2023

$0.3750

January 18, 2023

April 17, 2023

~~Date~~
~~Dividend~~
~~Declared~~May 3, 2023

$0.3750

~~Per~~
~~Share~~
~~Amount~~

April 18, 2023

July 17, 2023

~~For~~
~~Period~~
~~Beginning~~

~~For~~
~~Period~~
~~Ending~~

~~Date~~
~~Paid~~July 17, 2023

~~March 1, 2017~~August 9, 2023

$0.3750

July 18, 2023

October 17, 2023

November 8, 2023

$0.3750

October 18, 2023

January 17, 2024

February 21, 2024

$0.3750

January 18, ~~2017~~2024

April 17, ~~2017~~2024

~~April 17, 2017~~

~~May 3, 2017~~

~~$0.3750~~

~~April 18, 2017~~

~~July 17, 2017~~

~~August 3, 2017~~

~~$0.3750~~

~~July 18, 2017~~

~~October 17, 2017~~

~~November 1, 2017~~

~~$0.3750~~

~~October 18, 2017~~

~~January 17, 2018~~

~~February 28, 2018~~

~~$0.3750~~

~~January 18, 2018~~

~~April 17, 2018~~

* The dividend declared on February ~~28, 2018~~21, 2024 is scheduled to be paid on April 17, ~~2018.~~2024.

~~Non-Controlling Interest in Farmer Mac II LLC~~

Until March 30, 2015, Farmer Mac II LLC had 250,000 shares of preferred stock outstanding ("Farmer Mac II LLC Preferred Stock") as a result of a private offering completed in January 2010 of $250.0 million aggregate face amount of securities issued by a newly formed Delaware statutory trust. The ~~trust securities, called Farm Asset-Linked Capital Securities or "FALConS," represented undivided beneficial ownership interests in~~following table presents the ~~250,000 shares of Farmer Mac II LLC Preferred Stock. The Farmer Mac II LLC~~dividends declared and paid on Series D Preferred Stock ~~had a liquidation preference of $1,000 per share. From~~during and after 2023:

Date
Dividend
Declared

Per
Share
Amount

For
Period
Beginning

For
Period
Ending

Date
Paid

February 22, 2023

$0.35625

January 18, 2023

April 17, 2023

May 3, 2023

$0.35625

April 18, 2023

July 17, 2023

August 9, 2023

$0.35625

July 18, 2023

October 17, 2023

November 8, 2023

$0.35625

October 18, 2023

January 17, 2024

February 21, 2024

$0.35625

January 18, 2024

April 17, 2024

* The dividend declared on February 21, 2024 is scheduled to be paid on April 17, 2024.

The following table presents the ~~date of issuance to but excluding the quarterly payment date occurring~~dividends declared and paid on ~~March 30, 2015, the annual dividend rate on the Farmer Mac II LLC~~Series E Preferred Stock ~~was 8.875 percent, at which time~~during and after 2023:

Date
Dividend
Declared

Per
Share
Amount

For
Period
Beginning

For
Period
Ending

Date
Paid

February 22, 2023

$0.359375

January 18, 2023

April 17, 2023

May 3, 2023

$0.359375

April 18, 2023

July 17, 2023

August 9, 2023

$0.359375

July 18, 2023

October 17, 2023

November 8, 2023

$0.359375

October 18, 2023

January 17, 2024

February 21, 2024

$0.359375

January 18, 2024

April 17, 2024

* The dividend declared on February 21, 2024 is scheduled to be paid on April 17, 2024.

The following table presents the ~~annual dividend rate would have increased to 10.875 percent had the Farmer Mac II~~dividends declared and paid on Series F Preferred Stock ~~not been redeemed~~during and after 2023:

Date
Dividend
Declared

Per
Share
Amount

For
Period
Beginning

For
Period
Ending

Date
Paid

February 22, 2023

$0.3281250

January 18, 2023

April 17, 2023

May 3, 2023

$0.3281250

April 18, 2023

July 17, 2023

August 9, 2023

$0.3281250

July 18, 2023

October 17, 2023

November 8, 2023

$0.3281250

October 18, 2023

January 17, 2024

February 21, 2024

$0.3281250

January 18, 2024

April 17, 2024

* The dividend declared on ~~March 30, 2015.~~ February 21, 2024 is scheduled to be paid on April 17, 2024.

The ~~redemption of Farmer Mac II LLC~~following table presents the dividends declared and paid on Series G Preferred Stock during and after 2023:

Date
Dividend
Declared

Per
Share
Amount

For
Period
Beginning

For
Period
Ending

Date
Paid

February 22, 2023

$0.3046875

January 18, 2023

April 17, 2023

May 3, 2023

$0.3046875

April 18, 2023

July 17, 2023

August 9, 2023

$0.3046875

July 18, 2023

October 17, 2023

November 8, 2023

$0.3046875

October 18, 2023

January 17, 2024

February 21, 2024

$0.3046875

January 18, 2024

April 17, 2024

* The dividend declared on ~~March 30, 2015 triggered the redemption of all the outstanding FALConS securities~~February 21, 2024 is scheduled to be paid on ~~that same day.~~April 17, 2024.

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

Farmer Mac is authorized to borrow up to $1.5 billion from the U.S. Treasury through the issuance of debt obligations to the U.S. Treasury. Any funds borrowed from the U.S. Treasury may be used solely ~~for the purpose of fulfilling~~to fulfill Farmer Mac's guarantee obligations. Farmer Mac's charter provides that the U.S. Treasury is required to purchase Farmer Mac's debt obligations up to the authorized limit if Farmer Mac certifies that:

•a portion of the guarantee fees assessed by Farmer Mac has been set aside as a reserve against losses arising out of Farmer Mac's guarantee activities in an amount determined by Farmer Mac's board of directors to be necessary and such reserve has been exhausted (that amount was

$~~71.6~~129.6 million as of December 31, ~~2017)~~2023); and

•the proceeds of such obligations are needed to fulfill Farmer Mac's guarantee obligations.

Any debt obligations issued by Farmer Mac under this authority would bear interest at a rate determined by the U.S. Treasury, taking into consideration the average rate on outstanding marketable obligations of the United States as of the last day of the last calendar month ending before the date of the purchase of the obligations from Farmer Mac. Farmer Mac would be required to repurchase any of its debt obligations held by the U.S. Treasury within a "reasonable time." As of December 31, ~~2017,~~2023, Farmer Mac had not used this borrowing authority and does not expect to use this borrowing authority in the future.

The United States government does not guarantee payments due on securities guaranteed by Farmer Mac, ~~Guaranteed Securities,~~ funds invested in the equity or debt securities of Farmer Mac, any dividend payments on shares of Farmer Mac stock, or the profitability of Farmer Mac.

GOVERNMENT REGULATION OF FARMER MAC

General

Farmer Mac was created by federal statute in 1988 in the aftermath of the collapse of the agricultural credit delivery system. Farmer Mac's primary committees of jurisdiction in Congress – the Committee on Agriculture of the U.S. House of Representatives and the U.S. Senate Committee on Agriculture, Nutrition and Forestry – added requirements for Farmer Mac that had not been included in any of the other statutes establishing other GSEs. Unlike the other existing GSEs at the time, Farmer Mac was required to be regulated by an independent regulator, FCA, which has the authority to regulate Farmer Mac's safety and soundness. The statute creating Farmer Mac expressly requires that eligible Farm & Ranch loans meet minimum credit and appraisal standards that represent sound loans to profitable businesses. The enabling legislation also did not contain a specific federal securities law exemption, ~~as had been given to the housing GSEs,~~ which had the effect of requiring Farmer Mac to comply with the periodic reporting requirements of the SEC, including filing annual and quarterly reports on the financial status of Farmer Mac and current reports when there are significant developments. Farmer Mac's ~~statutory~~ charter also requires offerings of securities backed by eligible loans and guaranteed by Farmer Mac ~~Guaranteed Securities~~ to be registered under the Securities Act of 1933 and related regulations (collectively, ~~the~~ "Securities Act"), unless an exemption for an offering is available that is not ~~related to~~based on Farmer Mac's status as an instrumentality of the United States.

Since Farmer Mac's creation, Congress has amended Farmer Mac's charter ~~four~~five times:

•in 1990 to ~~create the~~authorize Farmer Mac to purchase, and guarantee securities backed by, USDA ~~Guarantees line of business;~~Securities;

•in 1991 to clarify Farmer Mac's authority to purchase its guaranteed securities, establish OSMO as Farmer Mac's financial regulator, and set minimum regulatory capital requirements for Farmer Mac;

•in 1996 to remove certain barriers to and restrictions on Farmer Mac's operations to be more competitive (e.g., allowing Farmer Mac to buy loans directly from lenders and issue guaranteed securities representing ~~100 percent~~100% of the principal of the purchased loans and modifying capital requirements); ~~and~~

•in 2008 to authorize Farmer Mac to purchase, and guarantee securities backed by, loans ~~made~~or interests in loans by lenders organized as cooperatives to borrowers to finance electrification and telecommunications systems in rural ~~areas.~~areas; and

•in 2018 to expand the acreage exception to agricultural mortgage loan amount limitation from 1,000 acres to 2,000 acres, subject to FCA's feasibility assessment (which was completed in June 2019), and to repeal obsolete provisions and make technical corrections.

Farmer Mac's authorities and regulatory structure were not revised by ~~subsequent~~ legislation adopted in 2008 to regulate other GSEs.

Office of Secondary Market Oversight (OSMO)

As an institution of the FCS, Farmer Mac (including its subsidiaries) is subject to the regulatory authority of FCA. Farmer Mac's charter assigns to FCA, acting through OSMO within FCA, the responsibility for the examination of Farmer Mac and the general supervision of the safe and sound performance of the powers, functions, and duties vested in Farmer Mac by its charter. The charter also authorizes FCA, acting through OSMO, to apply its general enforcement powers to Farmer Mac. Farmer Mac (including

its

4029

~~its~~ subsidiaries) is the only entity regulated by OSMO, which was created as a separate office in recognition of the different role that Farmer Mac plays in providing a secondary market, as compared to the roles of other FCS institutions as primary lenders. The Director of OSMO is selected by and reports to the FCA board.

Farmer Mac's charter requires an annual examination of the financial transactions of Farmer Mac and authorizes FCA to assess Farmer Mac for the cost of its regulatory activities, including the cost of any examination. Each year, OSMO conducts an examination of Farmer Mac to evaluate its safety and soundness, compliance with applicable laws and regulations, and mission achievement. The examination includes a review of Farmer Mac's capital adequacy, asset quality, management performance, earnings, liquidity, and sensitivity to interest rate risk. OSMO may also conduct additional oversight and examination activities ~~that are not related~~unrelated to its annual examination of Farmer Mac at any other time it determines necessary. Farmer Mac is also required to file quarterly reports of condition with FCA.

Capital Standards

General Requirements. Farmer Mac's charter establishes three capital standards for Farmer Mac:

•Statutory minimum capital requirement. Farmer Mac's minimum capital level is an amount of core capital (stockholders' equity less accumulated other comprehensive income) equal to the sum of ~~2.75 percent~~2.75% of Farmer Mac's aggregate on-balance sheet assets, as calculated for regulatory purposes, plus ~~0.75 percent~~0.75% of Farmer Mac's aggregate off-balance sheet obligations, specifically including:


◦	~~the unpaid principal balance of outstanding Farmer Mac Guaranteed Securities;~~


◦	~~instruments issued or guaranteed by Farmer Mac that are substantially equivalent to Farmer Mac Guaranteed Securities, including LTSPCs; and~~


◦	~~other off-balance sheet obligations of Farmer Mac.~~

◦the unpaid principal balance of outstanding loan-backed securities guaranteed by Farmer Mac;

◦instruments issued or guaranteed by Farmer Mac that are substantially equivalent to securities guaranteed by Farmer Mac, including LTSPCs; and

◦other off-balance sheet obligations of Farmer Mac.

•Statutory critical capital requirement. Farmer Mac's critical capital level is an amount of core capital equal to ~~50 percent~~50% of the total minimum capital requirement at that time.

~~Regulatory/~~Regulatory and Compliance Risk

Farmer Mac and many of its business ~~partners~~counterparties are subject to comprehensive government regulation, and unanticipated changes to ~~the~~those laws and regulations ~~to which Farmer Mac or its business partners are subject~~ could adversely affect Farmer Mac's business, operating results, reputation, or financial condition.

Farmer Mac was established under a statutory charter that ~~is subject to amendment by~~ the U.S. Congress may amend at any time and is regulated by various government agencies, including the FCA and the SEC. As a result, Farmer Mac is exposed to the risk of legal or regulatory penalties, material financial loss, including fines, judgments, damages, and/or settlements, or of loss of reputation, if it fails to comply with applicable laws, regulations, or rules, as well as regulatory requests and self-regulatory organization standards and codes of conduct, applicable to its business activities. Future legislative or regulatory actions affecting Farmer Mac's statutory charter or its business activities, including increased regulatory supervision, and any required changes to Farmer Mac's business or operations resulting from such actions, could result in a financial loss for Farmer Mac or otherwise reduce its profitability, impose ~~additional~~more compliance and other costs on Farmer Mac, limit the products offered by Farmer Mac or its ability to pursue business opportunities in which it might otherwise consider engaging, curtail business activities in which it is currently engaged, affect the value of assets that Farmer Mac holds, or otherwise adversely affect Farmer Mac's business, results of operations, reputation, or financial condition.

The financial services industry, in which most of Farmer Mac's business ~~partners~~counterparties and customers operate, is subject to significant legislation and regulations. ~~Specifically, to~~To the extent that current or future legislation, regulations, or ~~regulations~~supervisory activities affect the activities of banks, insurance companies, other rural lenders, derivatives counterparties, clearinghouses, securities dealers, or other regulated entities that constitute a large portion of Farmer Mac's business counterparties or customers, Farmer Mac could experience ~~reduced customer demand~~loss of business or ~~profitability,~~business opportunities, increased compliance costs, disadvantageous business terms in its dealings with counterparties, and unfavorable changes to its business practices or activities. As a result, Farmer Mac's business, operating results, reputation, or financial condition could be adversely affected.

Farmer ~~Mac is subject to~~Mac's capital requirements ~~that are subject to~~may change, and failure to meet those requirements could result in supervisory measures or the inability of Farmer Mac to declare dividends, or otherwise materially and adversely affect Farmer Mac's business, operating results, or financial condition.

Farmer Mac is required by statute and regulation to maintain certain capital levels. Any inability by Farmer Mac to meet these capital requirements could result in supervisory measures by FCA, adversely affect Farmer Mac's ability to declare dividends on its common and preferred stock, or otherwise materially and adversely affect Farmer Mac's business, operating results, or financial condition. ~~In addition, as~~As required by an FCA regulation on capital planning, Farmer Mac has adopted a policy to maintain a sufficient level of Tier 1 capital and to ~~impose restrictions on~~restrict paying Tier 1-eligible dividends if Tier 1 capital falls below specified thresholds. For more information onabout Farmer Mac's capital requirements, including the Tier 1 capital requirement, see "Business—Government Regulation of Farmer Mac—Regulation—Capital Standards." Factors that could adversely affect the adequacy of Farmer Mac's capital levels in the future, and which may be beyond Farmer Mac's control, include:

•credit ~~losses or other-than-temporary impairment charges;~~losses;

•adverse changes in interest rates or credit spreads;

•the need to increase the level of the allowance for losses on loans;

•legislative or regulatory actions that increase Farmer Mac's ~~applicable~~ capital requirements; and

•changes in ~~U.S. generally accepted accounting principles.~~GAAP.

Political Risk

Farmer Mac is a GSE that may be materially and adversely affected by legislative or political ~~developments that may affect the ongoing operations or continued existence of GSEs.~~developments.

Farmer Mac is a GSE ~~that is governed by~~with a statutory charter ~~which is subject to amendment~~that may be amended by ~~the U.S.~~ Congress at any time, and is also regulated by government agencies, including the FCA and the SEC. Although Farmer Mac is not aware of any pending legislative or regulatory proposals that would ~~adversely affect either the manner in which Farmer Mac conducts~~materially impact its business or ~~the status of Farmer Mac as a GSE at this time,~~operations, Farmer Mac's ability to effectively conduct its business is subject to risks and uncertainties related to ~~legislative or~~ political developments that ~~may~~could affect ~~the status~~Farmer Mac or ~~operations of~~ GSEs generally. ~~From time to time,~~These political risks and uncertainties may be heightened under a new Congress or Presidential administration. Farmer Mac cannot predict whether or when legislative or regulatory initiatives may ~~be commenced~~commence that, if successful, ~~could result in the enactment of legislation or the promulgation of regulations that~~ could negatively affect the status of Farmer Mac as a GSE or ~~the manner in which~~how Farmer Mac operates. Farmer Mac cannot predict whether any legislative proposals related to the housing GSEs would also address the continued GSE status of Farmer Mac or modify the current operating structure or authorities of Farmer Mac in any material way. Implementation of any such proposaloperates, and which could have a material and adverse effect on Farmer Mac's business, operating results, financial condition, or capital levels. See "Business—Government Regulation of Farmer Mac" for ~~additional discussion on~~more information about the rules and regulations governing Farmer Mac's activities.

Human Capital Risk

Farmer Mac's ability to attract and retain motivated and qualified employees is critical to the success of its business, and ~~failure~~significant or sustained disruption in the continuity of Farmer Mac's employees or executive leaders may materially adversely affect Farmer Mac's business performance, operations, financial condition, or reputation.

Farmer Mac relies on its employees' breadth and depth of knowledge of Farmer Mac and related industries to ~~do so~~run its business operations successfully. If Farmer Mac cannot continue to retain and attract motivated and qualified employees or adoes not have adequate human capital to achieve its business objectives, Farmer Mac's business performance, operations, financial condition, or reputation could be materially adversely affected. A significant disruption in the continuity of Farmer Mac's employees or any significant executive leadership change ~~may materially adversely affect Farmer Mac's performance, operations, financial condition, or reputation.~~

Farmer Mac relies on its employees' breadth and depth of knowledge of agricultural and rural utilities lending, financial products, and other areas of expertise to run its business operations successfully. If Farmer Mac is unable to continue to retain and attract qualified employees, Farmer Mac's performance, operations, or financial condition could ~~be materially adversely affected. Additionally, a significant disruption in the continuity of Farmer Mac's employees or any significant executive leadership change could:~~

~~create uncertainty or instability;~~

~~require Farmer Mac and its existing employees to divert or expend additional resources and attention to replace personnel;~~

also result in a loss of productivity and ~~be disruptive to its daily operations in the interim;~~

affect Farmer Mac's ability to successfully execute ~~its~~ business ~~strategies;~~

strategies by creating uncertainty or instability or requiring Farmer Mac to divert or expend more resources to replace personnel. Loss of key leadership personnel could also damage the public or market perception of Farmer Mac or result in the departure of other executives or key ~~employees; or~~

~~negatively impact the public or market perception of Farmer Mac.~~

employees. Any of these factors could materially adversely affect Farmer Mac's business performance, operations, financial condition, or reputation.

In December 2017, Farmer Mac appointed Lowell L. Junkins, the chairman of its board of directors, to serve as the Acting President and Chief Executive Officer of Farmer Mac following the termination of employment of Farmer Mac's former President and Chief Executive Officer while Farmer Mac conducts a search for a successor. If Farmer Mac is unsuccessful in appointing a new President and Chief Executive Officer with appropriate qualifications and expertise in a timely manner, Farmer Mac's performance, operations, financial condition, or reputation could be materially adversely affected.

Any of the risks described in this section could materially and adversely affect Farmer Mac's business, operating results, financial condition, reputation, capital levels, and future earnings. For ~~additional discussion~~more information about Farmer Mac's risk management, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management" in Item 7 of this Annual Report on Form 10-K.


~~Item 1B.~~	~~Unresolved Staff Comments~~

Item 1B.Unresolved Staff Comments

None.


~~Item 2.~~	~~Properties~~

Item 1C.Cybersecurity

Risk Management and Strategy

Farmer Mac recognizes the importance of assessing, identifying, and managing risks associated with cybersecurity threats. These risks include the potential for:

•unauthorized access to or acquisition, destruction, alteration, release, theft, or loss of confidential, proprietary, or personal data;

•fraud or extortion;

•financial and economic loss or costs;

•errors in Farmer Mac’s financial statements;

•impairment of Farmer Mac’s liquidity;

•harm to employees, customers, or vendors;

•liability or service interruptions to customers;

•loss of customers or vendors;

•violation of data protection laws and other litigation and legal risk;

•increased regulatory or legislative scrutiny; and

•reputational damage.

Farmer Mac’s process to identify and assess material risks from cybersecurity threats operates alongside Farmer Mac’s broader overall risk assessment process that contemplates all company risks. As part of this process, appropriate personnel collaborate with subject matter specialists, as necessary, to gather information to identify and assess material cybersecurity threat risks, their severity, and potential mitigations.

Farmer Mac has implemented a variety of processes, technologies, and controls to aid in its efforts to identify, assess, and manage cybersecurity risks. Farmer Mac’s approach includes:

•an enterprise risk management program that includes cybersecurity risk assessment and management and is periodically refreshed;

•security reviews designed to identify risks from many new features, software, and vendors, including a security operations center to monitor our systems;

•a team of trained and experienced security professionals to investigate and remediate cybersecurity incidents;

•regular cybersecurity training for all employees and network users to raise and maintain awareness of cybersecurity risks and best practices;

•a vulnerability management program designed to identify vulnerabilities in the systems and software Farmer Mac uses;

•regular cybersecurity testing, including penetration testing on a periodic basis to allow security researchers to help identify vulnerabilities in Farmer Mac’s systems before they mature into real-world cybersecurity threats;

•a third-party service provider risk management program designed to identify and mitigate risks associated with third-party vendors and business partners, which includes pre-engagement diligence, contractual security and notification provisions, and ongoing monitoring, as appropriate;

•a threat intelligence program designed to model and research potential cybersecurity threat actors to identify vulnerabilities and anticipate attack vectors before they are exploited;

•cybersecurity controls designed to segment access to systems and to limit access to sensitive data; and

•patch management controls aimed at reducing system vulnerabilities.

These processes vary in maturity across the business, and Farmer Mac works continually to improve them.

Farmer Mac also maintains a privacy and security incident response program to prepare for, detect, respond to, and recover from cybersecurity incidents. That program includes processes to triage, assess severity for, escalate, contain, investigate, and remediate any cybersecurity incident, as well as to comply with any applicable legal obligations and to mitigate brand and reputational damage. Farmer Mac also conducts regular tabletop exercises to test and fortify the controls of its cybersecurity incident response program. Farmer Mac’s security operations center and incident response team assesses the severity and priority of incidents on a rolling basis, with escalations of cybersecurity incidents provided to Farmer Mac’s management team. If a cybersecurity incident is determined to be a material cybersecurity incident, Farmer Mac’s incident response plan defines the process for any required regulatory disclosures.

Farmer Mac’s risk management approach is supplemented by external and internal enterprise risk management audits, which are designed to test the effectiveness of Farmer Mac’s security controls. Prior cybersecurity incidents have not materially affected Farmer Mac's business strategy, results of operations, or financial condition. Farmer Mac does not believe that there are currently any known risks from cybersecurity threats that are reasonably likely to materially affect its business strategy, results of operations, or financial condition, although the occurrence of both intentional and unintentional incidents could cause a variety of adverse business impacts in the future. For more information on Farmer's Mac's cybersecurity risks see "Operational Risks" in "Risk Factors" in Part I, Item 1A of this report. Those disclosures are incorporated by reference in this section.

Governance

Farmer Mac’s board of directors is actively involved in overseeing the company's cybersecurity risk management. At least once a year, the full board of directors meets with Farmer Mac’s Chief Information Security Officer (“CISO”) to discuss Farmer Mac’s programs and policies related to cybersecurity and risk initiatives and considers them closely both from a risk management perspective and as part of Farmer Mac’s business strategy.

The board has created a dedicated cybersecurity subcommittee of the enterprise risk committee to oversee Farmer Mac’s cybersecurity programs and practices, including the identification and mitigation of security and privacy risks. The cybersecurity subcommittee consists of three members of the enterprise risk committee. Two members of that subcommittee have successfully completed the National Association of Corporate Directors (“NACD”) certificate in cyber-risk oversight program. The other member of the subcommittee is the CEO of an energy company and has direct experience managing cyber risk and cybersecurity incidents in that capacity. The chair of the board audit committee has also successfully completed the NACD certificate in cyber-risk oversight program (but is not a member of the cybersecurity subcommittee). The cybersecurity subcommittee typically meets on a monthly basis with the CISO and other members of Farmer Mac's management team to discuss the performance and effectiveness of Farmer Mac's cyber program and to receive updates on cybersecurity risks, any cybersecurity incidents, and major cybersecurity initiatives.

The materials provided to Farmer Mac’s cybersecurity subcommittee and discussed in the meetings include:

•updates on Farmer Mac’s data security posture;

•results from third-party assessments and testing;

•progress towards predetermined risk-mitigation-related goals;

•Farmer Mac’s incident response plan; and

•information about cybersecurity threat risks or incidents and developments, as well as the steps management has taken to respond to those risks or incidents.

At each regular quarterly meeting of the board enterprise risk committee, the cybersecurity subcommittee reviews a summary of the information discussed in the most recent cybersecurity subcommittee meetings. The board of directors has determined that cybersecurity is a priority area of focus and regularly engages with the CISO and other members of senior management in substantial discussions in board and committee meetings to address cybersecurity topics relating to risk management, compliance, strategy, innovation, and governance. Material cybersecurity threat risks are also considered during separate board and committee meeting discussions of important matters like enterprise risk management, operational budgeting, business continuity planning, business transactions and acquisitions, and brand management.

Farmer Mac’s CISO manages Farmer Mac’s cybersecurity program, including the identification, evaluation, and prioritization of security risks, as well as the company’s response to security incidents. The CISO has more than 19 years of experience in cybersecurity and information technology and holds a Master’s degree in Business Administration with a focus on Information Technology. The CISO also holds a Certified Information Security Manager (CISM) certification, which is an advanced certification indicating that an individual possesses the knowledge and experience required to develop and manage an enterprise information security program. The CISO reports to Farmer Mac's Senior Vice President – Enterprise Risk Officer, who in turn reports to the Chief Executive Officer.

Members of senior management have regular meetings with the CISO and other members of Farmer Mac's information technology team to discuss and monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents. The participants in these meetings also discuss their management of, and participation in, the cybersecurity risk management and strategy processes described in this report, including the operation of Farmer Mac’s incident response plan. Farmer Mac provides quarterly cybersecurity training to all employees, board members, and users of Farmer Mac's technology assets. Employees with elevated privileges within the computing environment also receive specialized training tailored to their job responsibilities. Farmer Mac tracks the metrics from the cybersecurity training program and includes the results in dashboard reports shared and discussed with senior management, the board enterprise risk committee, and the board cybersecurity subcommittee.

Item 2.Properties

Farmer Mac maintains its principal office at 1999 K Street, N.W., 4th Floor, Washington, D.C. 20006, under ~~the terms of~~ a ~~sublease~~lease that ~~began on October 1, 2011 and~~ ends on August 30, 2024. During 2023, Farmer Mac signed a new lease for office space at 2100 Pennsylvania Avenue, N.W., Washington, D.C., which begins on September 1, 2024 and ends on April 30, 2036. Under the terms of that lease, Farmer Mac has had access to the property since May 2023 and may take possession of its new office space upon completion of the agreed-upon buildout of tenant improvements, which is expected before September 1, 2024. Farmer Mac also maintains ~~the following additional~~another office ~~locations: (1)~~location at 9169 Northpark Drive, Johnston, Iowa ~~50322,~~50131, under ~~the terms of a~~an amended lease that began on

October 1, 2017 and ends on ~~June 30, 2023; (2) 5200 N. Palm Avenue, Suite 306, Fresno, California 93704,~~August 31, 2027. Farmer Mac believes that its offices (including the anticipated office space under the terms of a lease that began on January 1, 2017 and ends on February 29, 2020; and (3) 1065 E. Winding Creek, Suite 200, Eagle, Idaho 83616, under the terms of a lease that began on October 1, 2016 and ends on November 30, 2019. Farmer Mac's ~~offices~~new lease) are suitable and adequate for its current and ~~currently~~ anticipated ~~needs.~~needs for the near future.


~~Item 3.~~	~~Legal Proceedings~~

Item 3.Legal Proceedings

None.


~~Item 4.~~	~~Mine Safety Disclosures~~

Item 4.Mine Safety Disclosures

Not applicable.

6152

PART II


~~Item 5.~~	~~Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities~~

Item 5.Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer

Purchases of Equity Securities

(a)Farmer Mac has three classes of common stock outstanding – Class A voting common stock, Class B voting common stock, and Class C non-voting common stock. Ownership of Class A voting common stock is restricted to banks, insurance companies, and other financial institutions or similar entities that are not institutions of the FCS. Ownership of Class B voting common stock is restricted to institutions of the FCS. There are no ownership restrictions on the Class C non-voting common stock. ~~Under the terms of~~In the original public offering of the Class A and Class B voting common stock, Farmer Mac reserved the right to redeem at book value any shares of either class held by an ineligible holder.

Farmer Mac's Class A voting common stock and Class C non-voting common stock are listed on the New York Stock Exchange under the symbols AGM.A and AGM, respectively. The Class B voting common stock, which has a limited market and trades infrequently, is not listed or quoted on any exchange or other quotation system, and Farmer Mac is not aware of any publicly available quotations or prices for that class of common stock.

As of ~~March 1, 2018, there were 963~~February 5, 2024, Farmer Mac had 833 registered owners of the Class A voting common stock, 7775 registered owners of the Class B voting common stock, and ~~902~~789 registered owners of the Class C non-voting common stock.

The information below represents the high and low closing sales prices for shares of both the Class A and Class C common stock for the periods indicated below, as reported by the New York Stock Exchange:

Sales Prices
   Class A Stock Class C Stock
   High Low High Low
   (per share)
2018
First quarter (through March 1, 2018) $ 79.30
$ 72.22
$ 82.74
$ 74.55
2017
Fourth quarter $ 76.34
$ 66.62
$ 80.27
$ 67.02
Third quarter 75.00
62.47
74.77
63.26
Second quarter 65.86
51.55
68.08
53.94
First quarter 69.45
54.51
61.95
55.05
2016

Fourth quarter $ 62.00
$ 43.48
$ 58.72
$ 39.72
Third quarter 52.38
36.60
42.32
33.95
Second quarter 41.61
34.99
43.50
32.62
First quarter 38.00
26.09
40.00
26.36

The dividend rights of all three classes of Farmer Mac's common stock are the same, and dividends may be paid on common stock only when, as, and if declared by Farmer Mac's board of directors in its sole discretion, subject to compliance with applicable capital requirements and payment of dividends on any outstanding preferred stock. On ~~March 2, 2016,~~February 24, 2022, Farmer Mac's board of directors declared a ~~quarterly~~ dividend of ~~$0.26~~$0.95 per share on Farmer Mac's common stock payable for first quarter ~~2016.~~2022. That dividend

~~rate~~ was paid quarterly through fourth quarter ~~2016.~~2022. On ~~March 1, 2017,~~February 22, 2023, Farmer Mac's board of directors declared a ~~quarterly~~ dividend of ~~$0.36~~$1.10 per share on Farmer Mac's common stock payable for first quarter ~~2017.~~2023. That dividend was paid quarterly through fourth quarter ~~2017.~~2023. On February ~~28, 2018,~~21, 2024, Farmer Mac's board of directors declared a ~~quarterly~~ dividend of ~~$0.58~~$1.40 per share on Farmer Mac's common stock payable for first quarter ~~2018.~~2024. See "Business—Financing—Equity Issuance" for more information on Farmer Mac's common stock.

The quarterly dividend of $1.40 per share on all three classes of common stock for first quarter 2024 represents an increase of $0.30 per common share, or 27%, over the quarterly dividend payout in 2023. In deciding to increase Farmer ~~Mac seeks~~Mac's common stock dividend payout, the board of directors considered Farmer Mac's strong capital position and the consistency of and outlook for earnings, balanced against the need for capital to ~~provide~~fund the significant growth objectives identified in the company's strategic plan and to meet regulatory requirements and metrics established by the board of directors. These actions are also consistent with Farmer Mac's goal of providing a competitive return on its common stockholders' investments through the payment of cash dividends while retaining sufficient capital to support future growth in its business and to meet regulatory requirements and metrics established by Farmer Mac's board of directors. Farmer Mac expects to maintain a growing and sustainable common dividend and to target a common dividend payout ratio of its core earnings to common stockholders of approximately 30 percent. However, thedividends.

The declaration and payment of future dividends to holders of Farmer Mac's common stock are, however, at the discretion of Farmer Mac's board of directors and depend on many factors, including Farmer Mac's financial condition, actual results of operations and earnings, the capital needs of Farmer Mac's business, regulatory requirements, and other factors that Farmer Mac's board deems relevant. Farmer Mac's ability to pay dividends on its common stock is also subject to the payment of dividends on its outstanding preferred stock. ~~Also, applicable~~Applicable FCA regulations also require Farmer Mac to provide FCA with 15 days'

advance notice of certain capital distributions. Farmer Mac's ability to declare and pay dividends could be restricted if it were to fail to comply with applicable capital requirements. See Note 9 to the consolidated financial statements for more information about Farmer Mac's capital position and see "Business—Government Regulation of Farmer Mac—Regulation—Capital Standards" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital Requirements" for more information on the capital requirements applicable to Farmer Mac.

Information about securities authorized for issuance under Farmer Mac's equity compensation plans appears under "Equity Compensation Plans" in Farmer Mac's definitive proxy statement to be filed on or about April ~~2, 2018.~~17, 2024. That portion of the definitive proxy statement is incorporated by reference into this Annual Report on Form 10-K.

Farmer Mac is a federally chartered instrumentality of the United States, and its common stock is exempt from registration under Section 3(a)(2) of the Securities Act. One type of transaction related to Farmer Mac's common stock occurred during fourth quarter ~~2017~~2023 that was not registered under the Securities Act and not otherwise reported on a Current Report on Form 8-K:

On•In October ~~3, 2017, pursuant to~~2023, consistent with Farmer Mac's policy that permits directors of Farmer Mac to elect to receive shares of Class C non-voting common stock in lieu of their cash retainers, Farmer Mac issued an aggregate of 44420 shares of ~~its~~ Class C non-voting common stock to the ~~three~~seven directors who elected to receive such stock in lieu of a portion of their cash retainers. The number of shares issued to the directors was calculated based on a price of ~~$72.74~~$154.30 per share, which was the closing price of the Class C non-voting common stock on September ~~29, 2017,~~30, 2023, the last business day of the third quarter, as reported by the New York Stock Exchange.

Performance Graph. The following graph compares the performance of Farmer Mac's Class A voting common stock and Class C non-voting common stock with the performance of the New York Stock Exchange Composite Index ~~(the "NYSE~~("NYSE Comp") and the Standard & Poor's 500 ~~Diversified Financials~~Financial Services Index ~~(the "S~~("S&P 500 ~~Div Fin"~~Financial Services Index") over the period from December 31, ~~2012~~2018 to December 31, ~~2017.~~2023. The S&P 500 Financial Services Index was renamed in 2023 and was formerly known as the Standard & Poor's 500 Diversified Financials Index. The graph assumes that $100 was invested on December 31, ~~2012~~2018 in each of: Farmer Mac's Class A voting common stock; Farmer Mac's Class C non-voting common stock; the NYSE ~~Comp;~~Composite Index; and the S&P 500 ~~Div Fin.~~Financial Services Index. The graph also assumes that all dividends were reinvested into the same securities throughout the past five years. Farmer Mac obtained the information ~~contained~~ in the performance graph from S&P Global Market Intelligence.

This performance graph shall not be deemed to be "soliciting material" or to be "filed" with the SEC, and this performance graph shall not be incorporated by reference into any of Farmer Mac's filings under the Securities Act or the Securities Exchange Act of 1934 and related regulations, or any other document, whether made before or after the date of this report and ~~irrespective of~~despite any general incorporation language contained in a filing or document (except to the extent Farmer Mac specifically incorporates this section by reference into a filing or document).


~~(b)~~	~~Not applicable.~~


~~(c)~~	~~None.~~

(b)Not applicable.

(c)None.

Item 6.[Reserved].

6455


~~Item 6.~~	~~Selected Financial Data~~

The selected consolidated financial data presented below is summarized from Farmer Mac's consolidated balance sheet data as of December 31, 2017 and the five-year period then ended, as well as selected results of operations data for the five-year period then ended. This data should be reviewed in conjunction with the audited consolidated financial statements and related notes and with "Management'sItem 7.Management's Discussion and Analysis of Financial Condition and Results of ~~Operations" included in~~Operations

The objective of this ~~Annual Report on Form 10-K.~~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

As of December 31,
Summary of Financial Condition: 2017 2016 2015 2014 2013
(dollars in thousands)
Cash and cash equivalents $ 302,022
$ 265,229
$ 1,210,084
$ 1,363,387
$ 749,313
Investment securities 2,260,437
2,515,851
2,775,516
1,939,188
2,484,075
Farmer Mac Guaranteed Securities 7,598,188
6,002,916
5,426,621
5,453,901
5,091,600
USDA Securities 2,131,365
2,029,613
1,917,319
1,771,532
1,612,013
Loans, net 5,266,786
4,507,435
3,962,044
3,520,075
3,193,248
Total assets 17,792,274
15,606,020
15,540,354
14,287,821
13,361,780
Notes payable:
Due within one year 8,089,826
8,440,123
9,111,461
7,353,953
7,338,781
Due after one year 7,432,790
5,222,977
4,967,036
5,471,186
5,001,169
Total liabilities 17,084,128
14,962,373
14,986,634
13,505,992
12,787,311
Stockholders' equity 708,146
643,425
553,517
545,801
332,616
Non-controlling interest⁽¹⁾
—
222
203
236,028
241,853
Capital:
Statutory minimum capital requirement $ 520,271
$ 466,498
$ 462,070
$ 421,328
$ 398,531
Core capital 657,061
609,667
564,536
766,296
590,671
Capital in excess of minimum capital requirement 136,790
143,169
102,466
344,968
192,140
Selected Financial Ratios:
Return on average assets⁽²⁾
0.43 % 0.41 % 0.32 % 0.28 % 0.55 %
Return on average common equity⁽³⁾
16.64 % 16.78 % 13.83 % 12.42 % 28.17 %
Average equity to assets⁽⁴⁾
4.05 % 3.84 % 3.69 % 3.18 % 2.63 %
Average total equity to assets⁽⁵⁾
4.05 % 3.84 % 4.48 % 4.91 % 4.49 %
Tier 1 capital ratio⁽⁶⁾
12.6 % 12.7 % 10.5 % 11.3 % 6.7 %

⁽¹⁾

On May 14, 2014, Farmer Mac purchased $6.0 million of FALConS from certain holders. On March 30, 2015, Farmer Mac II LLC redeemed all of the outstanding shares of Farmer Mac II LLC Preferred Stock which, in turn, triggered the redemption of all of the outstanding FALConS on that same day. The remaining balance relates to AgVisory, Farmer Mac's former majority-owned subsidiary whose principal activity was to appraise agricultural real estate. On May 1, 2017, Farmer Mac transferred its entire 65% ownership interest in AgVisory back to the limited liability company as a company redemption.


⁽²⁾	~~Calculated as net income attributable to common stockholders divided by the simple average of beginning and ending total assets.~~


⁽³⁾	Calculated as net income attributable to common stockholders divided by the simple average of beginning and ending stockholders' equity, net of preferred stock, at redemption value and accumulated other comprehensive (loss)/income, net of tax.


⁽⁴⁾	~~Calculated as the simple average of beginning and ending stockholders' equity divided by the simple average of beginning and ending total assets.~~


⁽⁵⁾	~~Calculated as the simple average of beginning and ending stockholders' equity and non-controlling interest divided by the simple average of beginning and ending total assets.~~

⁽⁶⁾

In 2016, Farmer Mac adjusted the calculation of its Tier 1 capital ratio to eliminate certain interest rate risk components of the risk weighting of assets to reflect the fact that Farmer Mac pursues a match-funding approach to funding its assets and therefore does not bear material interest rate risk in its portfolio. These interest rate risk components have not been eliminated in the calculations for the Tier 1 capital ratio for the years ended December 31, 2013 through December 31, 2015. For more information about Farmer Mac's Tier 1 capital ratio, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital Requirements."

For the Year Ended December 31,
Summary of Operations: 2017 2016 2015 2014 2013
(in thousands, except per share amounts)
Interest Income:

Net interest income after provision for loan losses $ 155,939
$ 139,209
$ 123,419
$ 71,308
$ 109,934
Non-interest income:
Guarantee and commitment fees 14,114
14,868
14,077
14,694
15,627
Gains on financial derivatives, hedging activities and trading assets 729
3,771
3,751
16,983
30,945
Gains/(losses) on asset sales and debt repurchases 89
(9 ) 9
(238 ) 3,575
Gains/(losses) on the sale of real estate owned 1,748
15
(1 ) 137
1,236
Other income 832
1,823
2,305
1,714
3,057
Non-interest income 17,512
20,468
20,141
33,290
54,440
Non-interest expense 42,765
40,320
35,482
31,492
33,107
Income before income taxes 130,686
119,357
108,078
73,106
131,267
Income tax expense 46,369
42,057
34,239
2,824
33,752
Net income 84,317
77,300
73,839
70,282
97,515
Less: Net loss/(income) attributable to non-controlling interest 165
34
(5,139 ) (22,192 ) (22,187 )
Preferred stock dividends (13,182 ) (13,182 ) (13,182 ) (9,839 ) (3,495 )
Loss on retirement of preferred stock —
—
(8,147 ) —
—
Net income attributable to common stockholders $ 71,300
$ 64,152
$ 47,371
$ 38,251
$ 71,833
Allowance for Losses Activity:
Provision for/(release of) losses $ 1,758
$ 1,002
$ 208
$ (3,166 ) $ 448
Net charge-offs 327
130
3,772
41
4,004
Ending balance 8,866
7,435
6,563
10,127
13,334
Earnings Per Common Share and Dividends:
Basic earnings per common share $ 6.73
$ 6.12
$ 4.33
$ 3.50
$ 6.64
Diluted earnings per common share 6.60
5.97
4.19
3.37
6.41
Common stock dividends per common share 1.44
1.04
0.64
0.56
0.48


~~Item 7.~~	~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~

of operations for the year ended December 31, 2023. Financial information included in this report is

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

Securities Corporation and Farmer Mac II LLC. The accounts of Contour Valuation Services, LLC (which began doing business as AgVisory during first quarter 2016) ("AgVisory"), Farmer Mac's former majority-owned subsidiary, are also included through May 1, 2017, at which time Farmer Mac redeemed its ownership interest. This discussion and analysis of financial condition and

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

related notes to the consolidated financial statements for the fiscal years ended December 31, ~~2017, 2016,~~2023, 2022, and ~~2015.~~2021.

Overview

Farmer Mac ~~increased its~~is a mission-focused, purpose-driven company determined to drive economic opportunity and prosperity by increasing the accessibility of financing for American agriculture and rural infrastructure. As the nation’s secondary market for agricultural and rural infrastructure loans, we help strengthen and connect rural America by providing a broad array of financial solutions to lenders that support flexible low-cost financing to farmers, ranchers, agribusinesses, renewable energy projects, rural utilities (including telecommunications, fiber, and broadband projects), and other related rural businesses and enterprises. Farmer Mac also serves as a critical investment tool for entities such as states, counties, municipalities, pension funds, banks, public trust funds, and credit unions. Farmer Mac offers those entities a variety of investment opportunities that may diversify their investment portfolios and provide the opportunity to earn a competitive return on their investment dollars.

During 2023:

•we continued to increase net income and core earnings;

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

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

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

Farmer Mac’s performance during 2023, described in more detail below, reflects the success of our continued focus on pursuing new channels and innovative ways to further our mission to increase the accessibility of financing for American agriculture and rural infrastructure. Despite recent macroeconomic concerns such as inflation, failures and liquidity concerns in the banking industry, rising interest rates, and geopolitical conflicts, Farmer Mac continued to deliver solid financial results. These financial results for 2023 reflected a variety of factors, including:

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

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

•an increase in outstanding business volume ~~by $1.6 billion~~ (~~9.2 percent~~) ~~to $19.0 billion during 2017. The primary drivers~~at higher spreads while credit quality improved; and

•the resilience of the ~~increase were net portfolio growth of $0.7 billion~~farm economy, as producers had benefited from healthy farm incomes and liquidity from relatively high commodity prices in ~~Farm & Ranch loan~~2021 and 2022.

purchases and $0.6 billion in purchases of AgVantage securities. Farmer Mac's overall credit quality deteriorated modestly during 2017, as the total allowance for losses, substandard assets, and 90-day delinquencies as of December 31, 2017 all increased in terms of both dollars and as a percentage of the Farm & Ranch portfolio from their respective 2016 levels. Substandard assets and 90-day delinquencies as a percentage of the Farm & Ranch portfolio remained below Farmer Mac's historical average substandard assets rate and historical average 90-day delinquency rate, respectively.

Farmer Mac also increased the quarterly dividend on all three classes of its common stock by 61 percent from $0.36 per share in each quarter of 2017 to $0.58 per share for first quarter 2018. Farmer Mac expects the new U.S. tax legislation enacted in December 2017 to have a positive effect on core earnings because of the lower federal corporate income tax rate that will apply to Farmer Mac starting in 2018. This was an important factor in Farmer Mac’s decision to significantly increase the amount of its quarterly common stock dividend beginning in 2018, consistent with its common stock dividend policy to target a core earnings payout ratio of approximately 30 percent. This represents the seventh consecutive year that Farmer Mac has increased its quarterly dividend from the prior year, and Farmer Mac believes that the most recent increase is supported by Farmer Mac's earnings potential and overall capital position.

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

Net Income and Core Earnings

~~Farmer Mac's~~The following table shows our net income attributable to common stockholders and core earnings for ~~2017 was $71.3 million, compared~~the periods presented. Core earnings and core earnings per share are non-GAAP measures that differ from net income attributable to ~~$64.2 million for 2016~~common stockholders and ~~$47.4 million for 2015.~~earnings per common share, respectively, by excluding the effects of fair value fluctuations and specified infrequent or unusual transactions.

Table 1


	For the Years Ended December 31,
	2023		2022		2021
	(in thousands)
Net income attributable to common stockholders	$	172,838	$	150,979	$	111,412
Core earnings	171,156		124,314		113,570

The ~~$7.1~~$21.9 million year-over-year increase in net income attributable to common stockholders was due to a $44.7 million after-tax increase in net interest income and a $2.9 million after-tax increase in guarantee fees. These factors were partially offset by a $15.6 million after-tax decrease in the fair value of undesignated financial derivatives and a $12.1 million after-tax increase in operating expenses.

The $39.6 million year-over-year increase in net income attributable to common stockholders for ~~2017~~2022 compared to ~~2016~~2021 was ~~primarily driven by increases of $11.3~~due to a $38.7 million after-tax increase in net interest income and a ~~$1.1~~$17.6 million after-tax increase in ~~net realized gains~~the fair value of undesignated financial derivatives. These factors were partially offset by a $5.2 million after-tax decrease related to the non-recurrence of the gain on the sale of ~~real estate owned properties. The year-over-year increase was offset~~mortgage loans that occurred in ~~part by (1)~~the prior period, a $2.7 million after-tax decrease in gains in fair value of financial derivatives and hedged assets; (2) a $1.6 million after-tax increase in non-interest expense in 2017, primarily attributable to higher general and administrative ("G&A") expenses and higher compensation and employee benefits expenses; and (3) the re-measurement of net deferred tax asset due to the enactment of new federal tax legislation (the Tax Cuts and Jobs Act), which resulted in a $1.4 million increase to income tax expense in 2017.

~~The $16.8~~$6.6 million increase in ~~net income attributable to common stockholders for 2016 compared to 2015 was driven by an~~operating expenses, a $2.5 million increase ~~of $9.4 million after-tax~~ in ~~net interest income~~preferred stock dividends, and a ~~$1.8~~$2.4 million ~~after-tax~~ increase in gains in fair value of financial derivatives and hedged assets. Also contributing to the increase was the absence in 2016 of (1) an $8.1 million ($6.2 million after-tax) loss recorded in first quarter 2015 resulting from the write-off of deferred issuance costs upon the redemption of the Farmer Mac II LLC Preferred Stock on March 30, 2015; and (2) $3.5 million after-tax in dividend expense recorded during first quarter 2015 on that preferred stock. The increase was offset in part by a $3.1 million after-tax increase in non-interest expense in 2016 primarily attributable to higher G&A expenses, higher compensation and employee benefits expenses, and a decrease in the release of reserveour provision for credit losses.

~~Farmer Mac's non-GAAP core earnings for 2017 were $65.6 million, compared to $53.5 million in 2016 and $47.0 million in 2015.~~

The ~~$12.1~~$46.8 million year-over-year increase in core earnings for 2017 compared to 2016 was primarily attributable to (1) a $11.9 million after-tax increase in net effective spread; (2) a $1.1 million after-tax increase in net realized gains on the sale of real estate owned properties; and (3) a $0.8 million after-tax increase in guarantee and commitment fee income. The increase in core earnings in 2017 was offset in part primarily by a $1.5 million after-tax increase in operating expenses, driven by higher compensation and employee benefits and G&A expenses. The $0.9 million after-tax increase in compensation and benefits expenses was due ~~primarily~~ to an increase in headcount and employee health insurance costs. The $0.6 million after-tax increase in G&A expenses was attributable primarily to (1) continued investments in technology and business infrastructure; (2) higher legal fees related to general corporate matters, including fees related to the termination of employment of Farmer Mac's former President and Chief Executive Officer in December 2017; (3) an increase in building lease expenses due to new leases for office space entered into during 2017; and (4) expenses related to business development efforts.

~~The $6.5 million increase in core earnings for 2016 compared to 2015 was primarily attributable to higher total revenues, which included (1)~~a ~~$3.7~~$56.4 million after-tax increase in net effective spread, and (2) a $1.3 million after-tax increase in guarantee and commitment fee income. Also contributing to the increase was a $3.5 million after-tax decrease in preferred dividend expense resulting from the redemption of all outstanding shares of Farmer Mac II LLC Preferred Stock in first quarter 2015. The increase in core earnings in 2016 waspartially offset ~~in part~~ by a ~~$1.8~~$12.1 million after-tax increase in operating ~~expenses and~~expenses.

The $10.7 million year-over-year increase in core earnings for 2022 compared to 2021 was due to a ~~$0.5~~$27.5 million after-tax increase in ~~the~~ net ~~provision~~effective spread. This factor was partially offset by a $5.2 million after-tax decrease related to the ~~allowance~~non-recurrence of the gain on the sale of mortgage loans that occurred in the prior period, a $6.6 million increase in operating expenses, a $2.5 million increase in preferred stock dividends, and a $2.4 million increase in our provision for credit losses.

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."

Net Interest Income and Net Effective Spread

~~Net interest income was $157.6 millionfor 2017, compared to $140.3 million for 2016 and $125.8 million for 2015. The overall net interest yield was 0.94 percent for 2017, compared to 0.90 percent for 2016 and 0.88 percent for 2015.~~

The ~~$17.3 million increase in~~following table shows our net interest income ~~for 2017 compared to 2016 was driven by net growth in Farm & Ranch loans, on-balance sheet AgVantage Securities,~~ and USDA Securities. Another factor contributing to the increase was the effect of an increase in short-term interest rates on assets and liabilities indexed to LIBOR due to the Federal Reserve's decisions since December 2016 to raise the target range for the federal funds rate. This effect on net interest income occurred because interest expense used to calculate net interest income does not include all the funding expenses related to these assets, specifically the expense on financial derivatives not designated in hedge accounting relationships. This increase in short-term rates on assets and liabilities indexed to LIBOR did not have a similar effect on net effective spread ~~because net effective~~in both dollars and percentage yield or spread includes interest expense from all funding related to those assets, including interest expense from financial derivatives not designated in hedge accounting relationships. Also contributing to the year-over-year increase was an increase in the net effect of

consolidated trusts resulting from an increase in securitization activity of Farm & Ranch loans throughout 2016 and 2017. Farmer Mac earns the difference between the interest income recognized on loans in consolidated trusts and the related interest expense recognized on debt securities of consolidated trusts held by third parties. The increase in net interest income was offset in part by an increase in net yield adjustments related to amortization of premiums and discounts on assets consolidated at fair value. The 4 basis point increase in net interest yield in 2017 compared to 2016 was primarily attributable to a reduction in the average balance of lower-earning cash and cash equivalents and investment securities.

The $14.5 million increase in net interest income for 2016 compared to 2015 was due to several factors. One factor was the effect of an increase in short-term interest rates on assets and liabilities indexed to LIBOR due to the Federal Reserve's decision to raise the target range for the federal funds rate in fourth quarter 2015. As noted above, the effect on net interest income occurred because interest expense does not include the expense on financial derivatives not designated in hedge accounting relationships. Another factor contributing to the year-over-year increase in net interest income was an increase in the average outstanding balance of Farm & Ranch loans, USDA Securities, and AgVantage securities. Also contributing to the increase were (1) lower net yield adjustments related to amortization of premiums and discounts on assets consolidated at fair value driven by slower prepayments on those assets and (2) an increase in the net effect of consolidated trusts due to an increase in securitization activity of Farm & Ranch loans during 2016. The increase was offset in part by (1) higher net yield adjustments from amortization of purchase premiums on certain Farm & Ranch loans and (2) a tighter spread on a large AgVantage security that was refinanced in first quarter 2016 at a shorter maturity than the original security. The 2 basis point increase in net interest yield for 2016 compared to 2015 was primarily driven by a lower average balance in cash and cash equivalents primarily during the second half of 2016.

Net effective spread, a non-GAAP measure, was $141.3 million for 2017, compared to $123.1 million in 2016 and $117.4 million in 2015. In percentage terms, net effective spread for 2017 was 0.91 percent, compared to 0.84 percent in 2016 and 0.85 percent in 2015.periods presented. Farmer Mac uses net effective spread, a non-GAAP measure, as an alternative ~~measure~~ to net interest income because management believes it is a useful metric that reflects the economics of the net spread between all the assets owned by Farmer Mac and all related funding, including any associated derivatives, some of which may not be included in net interest income.

~~For 2017~~Table 2


	For the Years Ended December 31,
	2023			2022			2021
	(in thousands)
Net interest income	$	327,547		$	270,940		$	221,951
Net interest yield %	1.15		%	1.04		%	0.94		%
Net effective spread	$	326,980		$	255,529		$	220,668
Net effective spread %	1.18		%	1.02		%	0.98		%

The $56.6 million year-over-year increase in net interest income was primarily due to a $48.9 million decrease in funding costs and a $19.9 million increase related to net new business volume. The decrease in funding costs was primarily due to our disciplined funding strategies and higher nominal interest rates that have led to an upward repricing of our excess long-term capital that we raised when interest rates were at historical lows and is held in our investment portfolio. The factors that contributed to the increase in net interest income were partially offset by an $11.2 million decrease in the fair value of derivatives designated in fair value hedge accounting relationships (designated financial derivatives). In percentage terms, the 0.11% increase was primarily attributable to a decrease of 0.16% in funding costs and a decrease of 0.04% in net fair value changes from designated financial derivatives.

The $49.0 million year-over-year increase in net interest income for 2022 compared to ~~2016,~~2021 was primarily attributable to a $21.9 million increase from net new business volume and a $21.4 million decrease in funding costs, due to increasing yields on interest-earning assets on our short-term investments that are funded by non-interest bearing excess equity, and a $6.1 million increase in the ~~$18.2~~fair value of designated financial derivatives. In percentage terms, the year-over-year 0.10% increase was primarily attributable to a decrease of 0.08% in funding costs and an increase of 0.02% in net fair value changes from financial derivatives designated in hedge accounting relationships (designated financial derivatives).

The $71.5 million year-over-year increase in net effective spread was primarily due to a $54.6 million decrease in non-GAAP funding costs, due to the same factors mentioned above that decreased our funding costs, and a $20.6 million increase related to net new business volume. In percentage terms, the year-over-year increase of 0.16% was primarily attributable to a decrease in non-GAAP funding costs.

The $34.9 million year-over-year increase in net effective spread in dollars was primarily attributable to (1) growth in on-balance sheet AgVantage securities, Farm & Ranch loans, and other business volume, which increased net effective spread by approximately $15.1 million in 2017; and (2) changes in Farmer Mac's funding strategies and improvements in LIBOR-based short-term funding costs for ~~floating rate assets indexed to LIBOR, which added approximately $4.0 million in 2017. Net effective spread in percentage terms increased 7 basis points in 2017~~2022 compared to ~~2016~~2021 was primarily due to ~~the~~a $23.6 million increase from net new business volume, a $7.7 million decrease in ~~the average balance of lower-earning cash and cash equivalents and investment securities, which added approximately 5 basis points~~non-GAAP funding costs, due to ~~net effective spread. Also contributing to the increase were the effects of changes in Farmer Mac's funding strategy and~~increasing yields on interest-earning assets on our short-term investments that are funded by non-interest bearing excess equity, a ~~favorable LIBOR-based funding market, which added approximately 3 basis points in 2017.~~

~~For 2016 compared to 2015, the $5.7~~$2.4 million increase in ~~dollars was attributable to growth~~net servicing revenue, and a $0.9 million increase in ~~outstanding business volume. The 1 basis point contraction in net effective spread in~~cash-basis interest income. In percentage terms, the year-over-year increase of 0.04% was primarily attributable to a ~~higher average balance~~decrease of 0.03% in ~~lower-earning investment securities~~non-GAAP funding costs and an increase of 0.01% in ~~2016 compared to 2015.~~cash-basis interest income.

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~~Non-GAAP Measures." For a reconciliation of net interest income to net effective spread, see Table 710 in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Net Interest Income."

Business Volume

~~Farmer Mac added $4.7~~Our outstanding business volume was $28.5 billion as of December 31, 2023, a net increase of $2.5 billionfrom December 31, 2022 after taking into account all new business, ~~volume during 2017. The new business volume included purchases of $2.4 billion~~of AgVantage securities, purchases of $1.1 billion of newly originated Farm & Ranch loans, Farm & Ranch loans added under LTSPCs of $554.7 million, purchases of $369.8 million of USDA Securities, the issuance of $161.9 million of Farmer Mac Guaranteed USDA Securities, and purchases of Rural Utilities loans of $137.3 million. Also during 2017, Farmer Mac fully refinanced a $1.0 billion AgVantage security that matured in April 2017 into three new on-balance sheet AgVantage securities. Previously, $970.0 million of the $1.0 billion maturing AgVantage security was reported as off-balance sheet business volume because it was owned by third-party investors. Taking into account maturities, and paydowns on existing ~~assets,~~assets. The net increase was primarily attributable to a net increase of $1.4 billion in the Rural Infrastructure Finance line of business and a net increase of $1.2 billion in the Agricultural Finance line of business.

For more information about Farmer Mac's ~~outstanding~~ business volume, ~~was $19.0 billion as~~see "Management's Discussion and Analysis of ~~December 31, 2017, an increase~~Financial Condition and Results of ~~$1.6 billion from December 31, 2016.~~Operations—Results of Operations—Business Volume."

Capital

As of December 31, 2017, Farmer Mac's core capital level was $657.1 million, which was $136.8 million above the minimum capital level required by Farmer Mac's statutory charter. As of December 31, 2016, Farmer Mac's core capital level was $609.7 million, which was $143.2 million above the minimum capital requirement. Table 3


	As of
	December 31, 2023		December 31, 2022
	(in thousands)
Core capital	$	1,452,008	$	1,322,801
Capital in excess of minimum capital level required	589,399		516,882

The ~~decrease~~increase in capital in excess of the minimum capital level required was primarily due ~~primarily~~ to an increase in minimum capital required to support the growth of on-balance sheet assets during 2017. In particular, the refinancing of a $1.0 billion AgVantage security that matured in April 2017 into three new on-balance sheet AgVantage securities significantly increased Farmer Mac's on-balance sheet assets because $970.0 million of the refinanced security was previously held by third party investors and reported as off-balance sheet business volume. In addition, Farmer Mac elected to adopt Accounting Standard Update ("ASU") 2018-02, "~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~," for the year ended December 31, 2017, which resulted in an increase to "Accumulated other comprehensive income, net of tax" and a corresponding decrease to "Retained earnings" of $9.1 million. The decrease in capital in excess of the minimum capital level was offset in part by an increase in retained earnings during 2017, excluding the effects of the adoption of ASU 2018-02. See Note 2(r) to the consolidated financial statements for more information about the adoption of ASU 2018-02 and the effect on Farmer Mac's consolidated financial statements.earnings.

In August 2017, Farmer Mac's board of directors approved the continuation of a share repurchase program on its existing terms through August 2019 and authorized Farmer Mac to repurchase up to $5.4 million of its outstanding Class C non-voting common stock. This is the amount that was remaining under the share repurchase program that Farmer Mac's board of directors originally authorized in third quarter 2015 for the repurchase of up to $25 million of outstanding Class C non-voting common stock. Farmer Mac did not repurchase shares during 2017 under this program. Farmer Mac also did not repurchase any shares under this program in the last three quarters of 2016, but did repurchase 307,000 shares in first quarter 2016. As of December 31, 2017, Farmer Mac had repurchased approximately 668,000 shares of Class C non-voting common stock at a cost of approximately $19.6 million under the share repurchase program.

7059

Credit Quality

~~As of December 31, 2017, Farmer Mac's total allowance for losses was $8.9 million (0.13 percent~~The following table presents Agricultural Finance on- and off-balance sheet substandard assets, in dollars and as a percentage of the ~~Farm & Ranch portfolio), compared to $7.4 million (0.12 percent of the Farm & Ranch portfolio)~~respective portfolio as of December 31, ~~2016.~~ 2023 and 2022:

Table 4



	On-Balance Sheet				Off-Balance Sheet
	Substandard Assets		% of Portfolio		Substandard Assets		% of Portfolio
	(dollars in thousands)
December 31, 2023	$	152,865	2.0	%	$	33,086	1.0	%

December 31, 2022	169,667		2.3	%	39,733		1.2	%


Increase/(decrease) from prior year-ending	$	(16,802)	(0.3)	%	$	(6,647)	(0.2)	%

The ~~$1.5~~decrease of $16.8 million ~~increase in 2017 to the provision to the allowance for losses was primarily attributable to net volume growth~~ in on-balance sheet ~~Farm & Ranch loans~~substandard assets during 2023 was primarily driven by the full payoff of a substandard agricultural storage and processing loan. The $6.6 million decrease in substandard assets in our off-balance sheet portfolios during 2023 was primarily due to credit upgrades in livestock and crops, and was partially offset by credit downgrades in ~~risk ratings.~~permanent plantings and part-time farms.

AsThere was one substandard asset with an outstanding balance of ~~December 31, 2017, Farmer Mac's substandard assets were $221.3~~$29.4 million ~~(3.2 percent of~~in the ~~Farm & Ranch portfolio), compared to $165.2 million (2.7 percent of the Farm & Ranch portfolio)~~Rural Infrastructure Finance portfolio as of December 31, ~~2016. The increase in~~2023, and there were no substandard assets from 2016 was primarily driven by credit downgrades in on-balance sheet loans across a diverse set of commodities. As of December 31, 2017, the commodity groups that experienced the largest year-over-year increases in substandard assets were crops, livestock, and permanent plantings.

~~As of December 31, 2017, Farmer Mac's 90-day delinquencies were $48.4 million (0.71 percent of the Farm & Ranch portfolio), compared to $21.0 million (0.34 percent of the Farm & Ranch portfolio)~~ as of December 31, ~~2016.~~ 2022.

For an analysis of current loan-to-value ratios across substandard and other internally assigned risk ratings, see Table 26 in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk—Loans and Guarantees."

The ~~year-over-year increase in~~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 December 31, 2023 and 2022:

Table 5



	On-Balance Sheet				Off-Balance Sheet
	90-Day Delinquencies		% of Portfolio		90-Day Delinquencies		% of Portfolio
	(dollars in thousands)
December 31, 2023	$	32,893	0.42	%	$	1,784	0.05	%

December 31, 2022	39,681		0.53	%	3,817		0.12	%


Increase/(decrease) from prior year-ending	$	(6,788)	(0.11)	%	$	(2,033)	(0.07)	%

On-balance sheet Agricultural Finance assets 90 or more days delinquent decreased in agricultural storage and processing and was ~~primarily attributable to the delinquencies of several larger loans~~partially offset by increases in permanent plantings, crops, livestock, and ~~certain crop~~part-time farms. Off-balance sheet Agricultural Finance assets 90 days or more delinquent decreased in permanent plantings and ~~permanent planting loans due to factors specific to the~~livestock and was partially offset by increases in crops and part-time farms. The top ten borrower ~~and not related to macroeconomic factors in the agricultural economy. In particular, $15.3 million permanent planting loans to a single borrower became~~exposures over 90 days delinquent in ~~first quarter 2017 and accounts for~~either the on- or off-balance sheet Agricultural Finance portfolio represented over half of the ~~year-over-year increase~~aggregate 90-day delinquencies as of December 31, 2023.

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

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

~~New Federal Tax Legislation~~

The Tax Cuts and Jobs Act was enacted on December 22, 2017. This new federal tax legislation provides for significant changes to the U.S. Internal Revenue Code that was in effect through the end of 2017 and includes a reduction of the federal corporate income tax rate from 35 percent to 21 percent effective January 1, 2018. As a result of this reduction in the tax rate, Farmer Mac re-measured its net deferred tax asset at the new 21 percent tax rate and reduced its value by $1.4 million. Accordingly, Farmer Mac recorded an increase to income tax expense of $1.4 million during fourth quarter 2017. Farmer Mac also elected to adopt ASU 2018-02 "~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~," for the year ended December 31, 2017. As a result, Farmer Mac recorded an increase to "Accumulated other comprehensive income, net of tax" and a corresponding decrease to "Retained earnings" of $9.1 million. Farmer Mac estimates that its annual effective tax rate beginning in 2018 will be approximately 21 percent, which reflects the federal corporate income tax rate under the new federal tax legislation. See Note 2(l) and Note 2(r) to the consolidated financial statements for more information about the accounting policy for income taxes and about the adoption of ASU 2018-02 and the effect on Farmer Mac's consolidated financial statements.

Critical Accounting ~~Policies and~~ Estimates

The preparation of Farmer Mac's consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the amounts reported in the consolidated financial statements and related notes for the periods presented. ~~Actual~~Farmer Mac considers an accounting estimate made in accordance with GAAP to be critical when it involves a significant level of estimation uncertainty and it has had or is likely to have a material impact on our financial condition or results ~~could differ from those estimates.~~ of operations.

The accounting estimate that Farmer Mac considers to be critical ~~accounting policies~~in the preparation of its consolidated financial statements is the estimation of the fair value of AgVantage Securities (AgVantage). Farmer Mac considers the fair value of AgVantage Securities that are ~~both important~~classified as held-to-maturity (AgVantage HTM) because of their impact on the company's fair value disclosures in Note 5 to the ~~presentation of Farmer Mac's~~consolidated financial ~~condition and results of operations and require complex, subjective judgments are the accounting policies for the allowance for losses and fair value measurement.~~

~~Allowance for Losses~~

Farmer Mac maintains an allowance for losses to cover estimated probable losses incurred as of the balance sheet date on loans held for investment ("allowance for loan losses") and loans underlying off-balance sheetstatements – Farmer Mac Guaranteed Securities and ~~LTSPCs ("reserve for losses") based on available information. For purposes~~USDA Securities and Note 13 to the consolidated financial statements – Fair Value Disclosures. Farmer Mac considers the fair value of ~~this accounting policy, the allowance for loan losses and the reserve for losses are described collectively as the "allowance for losses" because the estimation methodology is identical for loans~~AgVantage Securities that are ~~held for investment~~classified as available-for-sale (AgVantage AFS) to be a critical estimate due to the significance of the periodic measurement of mark-to-market adjustments relative to the company's total assets, comprehensive income, and ~~for loans underlying off-balance sheet~~equity. Farmer Mac also considers the fair value of AgVantage to be a critical accounting estimate because Farmer Mac applies a discount rate in calculating the net present value of future expected cash flows that is both significant to the estimate of their fair value and

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

Farmer Mac's AgVantage HTM amortized cost was $4.2 billion and $1.0 billion as of December 31, 2023 and 2022, respectively. The fair value of AgVantage HTM had net unrealized losses in the amount of $34.8 million and $53.7 million as of December 31, 2023 and 2022, respectively. See Note 5 to the consolidated financial statements – Farmer Mac Guaranteed Securities and ~~LTSPCs. Disaggregation by commodity type is performed, where appropriate, in analyzing the need~~USDA Securities for ~~an allowance for losses.~~more information.

The allowance for loan losses increases through periodic provisions for loan losses that are charged against net interest income. The reserve for losses increases through provisions for losses that are charged to non-interest expense. Both the allowance for loan losses and reserve for losses decrease by charge-offs for actual losses, net of recoveries. Charge-offs represent losses on the outstanding principal balance, any interest payments previously accrued or advanced, and expected costs of liquidation. Negative provisions, or releases of allowance for losses, occur when the estimate of probable losses as of the end of a period is lower than the estimate at the beginning of the period.

~~The total allowance for losses consists of a general allowance for losses and a specific allowance for individually identified impaired loans.~~

~~General Allowance for Losses~~

~~Farm & Ranch~~

Farmer Mac's ~~methodology for determining its general allowance for~~AgVantage AFS fair value was $5.5 billion and $7.6 billion as of December 31, 2023 and 2022, respectively. The fair value of AgVantage AFS had accumulated net unrealized losses ~~incorporates~~in the amount of $293.0 million and $408.9 million as of December 31, 2023 and 2022, respectively. See Note 5 to the consolidated financial statements – Farmer Mac's automated loan classification system. That system scores loans based on criteria such as historical repayment performance, indicators of current financial condition, loan seasoning, loan size, and loan-to-value ratio. For purposes of the loss allowance methodology, the loans in Farmer Mac's portfolio of loans and loans underlying off-balance sheet Farm & RanchMac Guaranteed Securities and ~~LTSPCs have been scored and classified~~USDA Securities for each calendar quarter since first quarter 2000. The allowance methodology captures the migration of loan scores across concurrent and overlapping three-year time horizons and calculates loss rates separately within each loan classification for (1) loans held for investment and (2) loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs. The calculated loss rates are applied to the current classification distribution of unimpaired loans in Farmer Mac's portfolio to estimate probable losses, based on the assumption that the historical credit losses and trends used to calculate loss rates will continue in the future. Management evaluates this assumption by taking into consideration various factors, including:more information.

~~economic conditions;~~

~~geographic and agricultural commodity/product concentrations in the portfolio;~~

~~the credit profile of the portfolio;~~

~~delinquency trends of the portfolio;~~

~~historical charge-off and recovery activities of the portfolio; and~~

~~other factors to capture current portfolio trends and characteristics that differ from historical experience.~~

Management believes that this methodology produces a reasonable estimate of probable losses, as of the balance sheet date, for all loans included in the Farm & Ranch line of business, including loans held for investment and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs.

~~Rural Utilities~~

Farmer Mac ~~separately evaluates~~applies discount rates that are commensurate with the ~~Rural Utilities loans it holds for investment and loans underlying LTSPCs~~risks involved to estimate ~~any probable losses inherent in those assets.~~the fair value measurement of AgVantage AFS. As of December 31, 2023, Farmer Mac ~~has not provided an allowance for losses for the portfolio segment related~~applied discount rates that ranged from 4.7% to ~~the Rural Utilities line~~5.4% (with a weighted average of ~~business based on the credit quality~~5.0%). As of ~~the collateral supporting rural utilities assets.~~

~~Specific Allowance for Impaired Loans~~

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

Use of different discount rates than those selected by Farmer Mac may result in ~~its portfolio~~materially different estimates of fair value for ~~impairment.~~AgVantage AFS. Farmer Mac selects the discount rate for each AgVantage AFS security by analyzing credit default swap levels and the long-term credit outlook of Farmer Mac's ~~individually identified impaired loans generally include loans 90 days or more past due,~~major counterparties and estimating an appropriate credit spread relative to U.S. Treasury yields. The periodic measurement of fair value and underlying discount rate methodology is subject to Farmer Mac’s internal controls and review by management. As of December 31, 2023, a 0.50% increase in foreclosure, restructured, in bankruptcy, and certain performing loans that have previously been delinquent or are secured by real estate that produces agricultural commodities or products that have been identified as under stress.

~~For individually identified impaired loans with an updated appraisal, other updated collateral valuation, or management's estimate of discounted collateral value, this analysis compares~~ the ~~measurement of~~discount rates used to determine the fair value of AgVantage AFS would decrease the collateral to the total recorded investment in the loan. The total recorded investment in the loan includes principal, interest, and advances, net of any charge-offs. In the event that an individually analyzed loan's collateraloverall GAAP carrying value does not equal or exceed its total recorded investment, Farmer Mac provides a specific allowance for loss in the amount of the difference between the recorded investment and fair value, less estimated costs to liquidate the collateral. Estimated selling costs are based on historical selling costs incurred by Farmer Mac or management's best estimate of selling costs for a particular property. For individually identified impaired loans without updated valuations, this analysis is performed in the aggregate considering similar risk characteristics of the loans and historical statistics. Farmer Mac considers appraisals that are more than two years old as of the reporting date not to be updated for purposes of individually analyzing loans.

Farmer Mac uses a risk-based approach in determining the necessity of obtaining updated appraisals on impaired loans. For example, larger exposures associated with highly improved and specialized collateral will generally receive updated appraisals once the loans are identified as impaired. In addition, updated appraisals are always obtained during the foreclosure process. Depending on the risk factors associated with the loan and underlying collateral, which can vary widely depending on the circumstances of the loan and collateral, this can occur early in the foreclosure process, while in other instances this may occur just prior to the transfer of title. As part of its routine credit review process, Farmer Mac often will exercise judgment in discounting an appraised value due to local real estate trends or the condition of the property

~~(e.g., following an inspection by Farmer Mac or the servicer)~~approximately 2.01%. ~~In addition, a property's appraised value may be discounted based on the market's reaction to Farmer Mac's asking price for sale of the property.~~

Further information regarding the allowance for losses is included in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk – Loans and Guarantees" and Note 2(j) to the consolidated financial statements.

~~Fair Value Measurement~~

A significant portion of Farmer Mac's assets consists of financial instruments that are measured at fair value in the consolidated balance sheets. For financial instruments that are complex in nature or for which observable inputs are not available, the measurement of fair value requires management to make significant judgments and assumptions. These judgments and assumptions, as well as changes in market conditions, may have a material impact on the consolidated balance sheets and statements of operations.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (also referred to as an exit price) and establishes a hierarchy for ranking fair value measurements. In determining fair value, Farmer Mac uses various valuation approaches, including market and income approaches. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. When available, the fair value of Farmer Mac's financial instruments is based on quoted market prices, valuation techniques that use observable market-based inputs, or unobservable inputs that are corroborated by market data. Pricing information obtained from third parties is internally validated for reasonableness prior to use in the consolidated financial statements.

When observable market prices are not readily available, Farmer Mac estimates fair value using techniques that rely on alternate market data or internally developed models using significant inputs that are generally less readily observable. Market data includes prices of financial instruments with similar maturities and characteristics, interest rate yield curves, measures of volatility, and prepayment rates. If market data needed to estimate fair value is not available, Farmer Mac estimates fair value using internally-developed models that employ a discounted cash flow approach. Even when market assumptions are not readily available, Farmer Mac's assumptions reflect those that market participants would likely use in pricing the asset or liability at the measurement date.

Farmer Mac's assets and liabilities presented at fair value in the consolidated balance sheets on a recurring basis include investment securities, Farmer Mac Guaranteed Securities, USDA Securities, and financial derivatives. The changes in fair value from period to period are recorded either in the consolidated statements of comprehensive income as other comprehensive (loss)/income, net of tax or in the consolidated statements of operations as gains/(losses) on financial derivatives and hedging activities or gains/(losses) on trading assets.

The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. The hierarchy gives highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The hierarchy has the following three levels to classify fair value measurements:


~~Level 1~~	~~Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.~~


~~Level 2~~	~~Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly.~~


~~Level 3~~	~~Prices or valuations that require unobservable inputs that are significant to the fair value measurement.~~

As of December 31, 2017, Farmer Mac's assets and liabilities recorded at fair value included financial instruments valued at $5.5 billion whose fair values were estimated by management in the absence of readily determinable fair values (i.e., level 3). These financial instruments measured as level 3 represented 31 percent of total assets and 71 percent of financial instruments measured at fair value as of December 31, 2017.

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

For a description of Farmer Mac’s accounting policy for fair value ~~measurement.~~measurements, see Note 2(n) to the consolidated financial statements – Significant Accounting Policies, Fair Value Measurements.

Use of Non-GAAP Measures

In the accompanying analysis of its financial information, Farmer Mac ~~sometimes~~ uses "non-GAAP measures," which are measures of financial performance that are not presented in accordance with GAAP. 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.

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

~~Core~~The main difference between core earnings and core earnings per share ~~principally differ from~~(non-GAAP measures) and net income attributable to common stockholders and earnings per common share ~~respectively, by excluding~~(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. ~~Among other items,~~Another difference is that these fair value fluctuations have included unrealized gains or losses on financial derivatives and hedging activities. Variation margin is exchanged between Farmer Mac and its counterparties on both its cleared and non-cleared derivatives portfolios. Prior to first quarter 2017, Farmer Mac accounted for variation margin as collateral and associated unrealized gains or losses on its centrally cleared derivative contracts. However, beginning in first quarter 2017, the variation margin amounts exchanged between Farmer Mac and its counterparties on cleared derivatives are considered as settlement rather than collateral as a result of a change in variation margin rules implemented by the Chicago Mercantile Exchange ("CME"), the central clearinghouse used by Farmer Mac. Specifically, effective January 3, 2017, CME began to deem the exchange of variation margin between derivatives counterparties as a partial settlement of each respective derivative contract rather than as collateral pledged by a counterparty. Accordingly, beginning in first quarter 2017, Farmer Mac presents its cleared derivatives portfolio net of variation margin payments on its consolidated balance sheets and recognizes realized gains or losses as a result of these payments on its consolidated statements

of operations. In October 2017, the U.S. Commodity Futures Trading Commission ("CFTC") issued an interpretive letter to the CME confirming that, under the Commodity Exchange Act, the exchange of variation margin payments on cleared swap positions constitutes settlement of the outstanding exposure and not collateral against it and that CME rules must reflect this interpretation. However, the CFTC acknowledged the economic equivalence between the settlement of and the pledge of collateral against outstanding exposure under a derivatives contract, and Farmer Mac also believes that the economic character of these transactions remains the same as they were before the CME rule change. Even though these variation margin amounts are accounted for as realized gains or losses on financial derivatives and hedging activities as a result of the CME rule change and subsequent CFTC interpretation, this is not expected to have a cumulative net impact on Farmer Mac's financial condition or results of operations reported in accordance with GAAP because the related financial instruments are expected to be held to maturity. Therefore, since the beginning of first quarter 2017, Farmer Mac has excluded the effects of realized gains or losses resulting from the exchange of variation margin on its cleared derivatives portfolio in its calculations of core earnings and core earnings per share to present them on a consistent basis with quarters prior to 2017.

~~Core earnings and core earnings per share also differ from net income attributable to common stockholders and earnings per common share, respectively, by excluding~~two non-GAAP measures exclude specified infrequent or unusual transactions that ~~Farmer Mac believes~~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. ~~Accordingly, the one-time, non-cash charge to income tax expense due to the re-measurement~~For example, in prior periods, we excluded any losses on retirement of ~~the net deferred tax asset was excluded~~preferred stock from core earnings and core earnings per share. Farmer Mac re-measured its net deferred tax asset at a lower federal corporate tax rate due to the enactment of new tax legislation on December 22, 2017. This charge is excluded from core earnings and core earnings per share because it is not a frequently occurring transaction, is a non-cash charge, and is not indicative ofSimilar transactions may reoccur in future operating results. Additionally, the loss from retirement of the Farmer Mac II LLC Preferred Stock in first quarter 2015 was excluded from core earnings and core earnings per share during that quarter because it was not a frequently occurring transaction and not indicative of future operating results. This was also consistent with Farmer Mac's previous treatment of these types of origination costs associated with securities underwriting that are capitalized and deferred during the life of the security.periods. For a reconciliation of Farmer Mac's net income attributable to common stockholders to core earnings and of earnings per common share to core earnings per share, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations."

Net Effective Spread

Farmer Mac uses net effective spread to measure the net spread Farmer Mac earns between its interest-earning assets and the related net funding costs of these assets. ~~Net~~As further explained below, net effective spread differs from net interest income and net interest yield because it excludes (1) the amortization of premiums and discounts on assets consolidated at fair value that are amortized as adjustments to yield in interest income over the contractual or estimated remaining lives of the underlying assets; and (2)by excluding certain items from net interest income and net interest expense related to consolidated trusts with beneficial interests owned by third parties, which are presented on Farmer Mac's consolidated balance sheets as "Loans held for investment in consolidated trusts, at amortized cost." Farmer Mac excludes fromyield and including certain other items that net ~~effective spread the premiums~~interest income and ~~discounts on assets consolidated at fair value because they either~~net interest yield do not ~~reflect actual cash premiums paid for the assets at acquisition or are not expected to have an economic effect on Farmer Mac's financial performance if the assets are held to maturity, as is expected.~~ contain.

Farmer Mac ~~also~~ 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. Accordingly, the excluded interest income and interest expense associated with consolidated trusts is reclassified to guarantee and commitment fees ~~for purposes of~~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 ~~principally~~ 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 "Gains on financial ~~derivatives and hedging activities"~~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.

~~Effective in fourth quarter 2017, Farmer Mac revised its methodology for calculating net~~

Net effective spread to also ~~include~~differs from net interest income and net interest yield because it includes the net effects of terminations or net settlements on financial derivatives, which consist of: (1) the net effects of cash settlements on agency forward contracts on the debt of other GSEs and ~~hedging activities.~~U.S. Treasury security futures that we use as short-term economic hedges on the issuance of debt; 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 ~~along with the accrual of contractual amounts due for undesignated financial derivatives described above,~~ is intended to reflect ~~management's~~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. ~~Specifically, these net effects of terminations or net settlements on financial derivatives and hedging activities include:~~

1. The net effects of cash settlements on agency forward contracts on the debt of other GSEs. These agency forward contracts are used as short-term economic hedges of the issuance of debt to manage interest rate risk on loans that Farmer Mac has committed to acquire but has not yet purchased. Farmer Mac records the realized gains or losses on settlements of agency forward contracts used as short-term economic hedges of the issuance of debt in the consolidated statements of operations in the period in which they occur. Under the revised methodology, for net effective spread 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. Previously, for core earnings purposes, these amounts had been deferred and amortized and were included within the "Other" item that is part of the "Revenues" component of core earnings.

2. The net effects of cash settlements on futures contracts involving U.S. Treasury securities. Similar to the net effects of cash settlements on agency forward contracts, the net effects of cash settlements on futures contracts involving U.S. Treasury securities are used as short-term economic hedges of the issuance of debt and are reported in the consolidated statements of operations in the period in which they occur. Under the revised methodology, for net effective spread 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. Previously, for core earnings purposes, these realized gains and losses had been recognized in the period in which they occurred within the "Other" item that is part of the "Revenues" component of core earnings.

3. The net effects of initial cash payments that Farmer Mac receives upon the inception of certain swaps. When there is no direct payment arrangement between a swap dealer counterparty and a debt dealer issuing Farmer Mac's medium-term notes for a particular transaction, Farmer Mac may receive an initial cash payment from the swap dealer at the inception of the swap to offset dollar-for-dollar the amount of the discount on the associated hedged debt. For GAAP purposes, changes in fair value of these swaps are recognized in "Gains on financial derivatives and hedging activities," whereas the offsetting discount on the associated hedged debt is amortized over the term of the debt as an adjustment to its yield. This results in a timing difference between the recognition of "Gains on financial derivatives and hedging activities" and the recognition of the discount in "Total interest expense." Additionally, the initial cash payments included in "Gains on financial derivatives and hedging activities" had been excluded from net effective spread, whereas the amortization of the discount included in interest expense had been a component of net effective spread. The initial cash payments received by Farmer Mac vary depending upon the number of the aforementioned type of swaps it executes during a quarter. Under the revised methodology, for net effective spread purposes, these initial cash payments are deferred and amortized as net yield adjustments over the term of the related debt, which generally ranges from 3 to 15 years, and offset the amortization of the discount on the associated hedged debt. Previously, for core earnings purposes, these initial cash payments had been recognized in the period in which they were received within the “Other” item that is part of the "Revenues" component of core earnings.

For a reconciliation of net interest income and net interest yield to net effective spread, see Table 710 in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Net Interest Income."

All prior period information has been recast to reflect the revised net effective spread methodology. This change in methodology had a corresponding effect on core earnings and core earnings per share. Reconciliations to recast core earnings, core earnings per share, and net effective spread for the years ended December 31, 2016 and 2015 are presented in the following tables.

~~Table 1~~

Reconciliation of Core Earnings to Core Earnings (Recast)
For the Year Ended December 31,
2016 2015
Dollars Per Basic Share Per Diluted Share Dollars Per Basic Share Per Diluted Share
(in thousands, except per share amounts)
Core Earnings $ 53,791
$ 5.13
$ 5.01
$ 46,975
$ 4.29
$ 4.15
Less reconciling items:
Net effects of terminations or net settlements on financial derivatives and hedging activities 479
0.05
0.04
(92 ) (0.01 ) (0.01 )
Income tax effect related to reconciling items (169 ) (0.02 ) (0.01 ) 32
—
—
Core Earnings (recast) $ 53,481
$ 5.10
$ 4.98
$ 47,035
$ 4.30
$ 4.16

Reconciliation of Net Effective Spread to Net Effective Spread (Recast)
For the Year Ended December 31,
2016 2015
Dollars Yield Dollars Yield
(dollars in thousands)
Net Effective Spread $ 125,102
0.86 % $ 119,380
0.87 %
Amortization of losses due to terminations or net settlements on financial derivatives and hedging activities (2,030 ) (0.02 )% (1,952 ) (0.02 )%
Net Effective Spread (recast) $ 123,072
0.84 % $ 117,428
0.85 %

Results of Operations

Farmer Mac's net income attributable to common stockholders for 2017 was $71.3 million ($6.60 per diluted common share), compared to $64.2 million ($5.97 per diluted common share) for 2016, and $47.4 million ($4.19 per diluted common share) for 2015. Farmer Mac's non-GAAP core earnings for 2017 were $65.6 million ($6.08 per diluted common share), compared to $53.5 million ($4.98 per diluted common share) for 2016, and $47.0 million ($4.16 per diluted common share) for 2015. For more information about the changes in net income attributable to common stockholders and core earnings, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Overview—Net Income and Core Earnings."

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:

7964

Reconciliation of Net Income Attributable to Common Stockholders to Core Earnings
For the Year Ended December 31,
2017 2016 2015
(in thousands, except per share amounts)
Net income attributable to common stockholders $ 71,300
$ 64,152
$ 47,371
Less reconciling items:

Gains on financial derivatives and hedging activities due to fair value changes 9,499
13,628
10,924
Unrealized (losses)/gains on trading securities (24 ) 1,460
1,220
Amortization of premiums/discounts and deferred gains on assets consolidated at fair value (1,327 ) (849 ) (1,319 )
Net effects of terminations or net settlements on financial derivatives and hedging activities⁽¹⁾
2,674
2,178
(699 )
Loss on retirement of Farmer Mac II LLC Preferred Stock⁽²⁾
—
—
(8,147 )
Re-measurement of net deferred tax asset due to enactment of new tax legislation (1,365 ) —
—
Income tax effect related to reconciling items (3,788 ) (5,746 ) (1,643 )
Sub-total 5,669
10,671
336
Core earnings $ 65,631
$ 53,481
$ 47,035

Composition of Core Earnings:
Revenues:
Net effective spread⁽³⁾
$ 141,303
$ 123,072
$ 117,428
Guarantee and commitment fees⁽⁴⁾
20,350
19,170
17,155
Other⁽⁵⁾
935
2,070
1,239
Total revenues 162,588
144,312
135,822

Credit related expense/(income) (GAAP):
Provision for losses 1,758
1,002
208
REO operating expenses 23
39
91
(Gains)/losses on sale of REO (1,748 ) (15 ) 1
Total credit related expense 33
1,026
300

Operating expenses (GAAP):
Compensation and employee benefits 24,233
22,772
22,047
General and administrative 15,959
15,109
13,111
Regulatory fees 2,500
2,463
2,413
Total operating expenses 42,692
40,344
37,571

Net earnings 119,863
102,942
97,951
Income tax expense⁽⁶⁾
41,215
36,313
32,595
Net (loss)/income attributable to non-controlling interest (GAAP) (165 ) (34 ) 5,139
Preferred stock dividends (GAAP) 13,182
13,182
13,182
Core earnings $ 65,631
$ 53,481
$ 47,035

Core earnings per share:
  Basic $ 6.20
$ 5.10
$ 4.30
  Diluted 6.08
4.98
4.16
Weighted-average shares:
  Basic 10,594
10,477
10,949
  Diluted 10,803
10,746
11,309
65

⁽¹⁾

Effective in fourth quarter 2017, Farmer Mac revised its methodology for calculating net effective spread, which is a component of core earnings, to also include the net effects of terminations or net settlements on financial derivatives and hedging activities. All prior period information has been recast to reflect the revised methodology. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures—Net Effective Spread."


⁽²⁾	~~Relates to the write-off of deferred issuance costs as a result of the retirement of Farmer II LLC Preferred Stock.~~


⁽³⁾	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 7 for a reconciliation of net interest income to net effective spread.


⁽⁴⁾	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.

⁽⁵⁾

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 hedging activities, 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.


⁽⁶⁾	Includes the tax impact of non-GAAP reconciling items between net income attributable to common stockholders and core earnings. The year ended December 31, 2017 includes $0.9 million of tax benefits resulting from the vesting of restricted stock and the exercise of SARs under new accounting guidance for stock-based awards that became effective in first quarter 2017.

(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.

Table 37


Reconciliation of GAAP Basic Earnings Per Share to Core Earnings - Basic Earnings Per Share
	For the Years Ended December 31,
		2023		2022		2021
		(in thousands, except per share amounts)
GAAP - Basic EPS		$	15.97	$	14.00	$	10.36
Less reconciling items:
Gains/(losses) on undesignated financial derivatives due to fair value changes (see Table 13)		0.49		1.25		(0.13)
(Losses)/gains on hedging activities due to fair value changes		(0.50)		0.50		(0.17)
Unrealized gains/(losses) on trading securities		0.18		(0.08)		(0.01)
Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value		0.02		—		0.01
Net effects of terminations or net settlements on financial derivatives		0.02		1.47		0.04

Income tax effect related to reconciling items		(0.04)		(0.66)		0.06
Sub-total		0.17		2.48		(0.20)
Core Earnings - Basic EPS		$	15.80	$	11.52	$	10.56

Shares used in per share calculation (GAAP and Core Earnings)		10,829		10,791		10,758


Reconciliation of GAAP Diluted Earnings Per Share to Core Earnings - Diluted Earnings Per Share
	For the Years Ended December 31,
		2023		2022		2021
		(in thousands, except per share amounts)
GAAP - Diluted EPS		$	15.81	$	13.87	$	10.27
Less reconciling items:
Gains/(losses) on undesignated financial derivatives due to fair value changes (see Table 13)		0.47		1.24		(0.13)
(Losses)/gains on hedging activities due to fair value changes		(0.49)		0.49		(0.17)
Unrealized gains/(losses) on trading securities		0.18		(0.08)		(0.01)
Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value		0.02		—		0.01
Net effects of terminations or net settlements on financial derivatives		0.02		1.45		0.05

Income tax effect related to reconciling items		(0.04)		(0.65)		0.05
Sub-total		0.16		2.45		(0.20)
Core Earnings - Diluted EPS		$	15.65	$	11.42	$	10.47

Shares used in per share calculation (GAAP and Core Earnings)		10,937		10,883		10,846

Reconciliation of GAAP Basic Earnings Per Share to Core Earnings Basic Earnings Per Share
For the Year Ended December 31,
2017 2016 2015
(in thousands, except per share amounts)
GAAP - Basic EPS $ 6.73
$ 6.12
4.33
Less reconciling items:
Gains on financial derivatives and hedging activities due to fair value changes 0.90
1.30
1.00
Unrealized (losses)/gains on trading securities —
0.14
0.11
Amortization of premiums/discounts and deferred gains on assets consolidated at fair value (0.13 ) (0.08 ) (0.12 )
Net effects of terminations or net settlements on financial derivatives and hedging activities 0.25
0.21
(0.07 )
Loss on retirement of Farmer Mac II LLC Preferred Stock —
—
(0.74 )
Re-measurement of net deferred tax asset due to enactment of new tax legislation (0.13 ) —
—
Income tax effect related to reconciling items (0.36 ) (0.55 ) (0.15 )
Sub-total 0.53
1.02
0.03
Core Earnings - Basic EPS $ 6.20
$ 5.10
$ 4.30

Shares used in per share calculation (GAAP and Core Earnings) 10,594
10,477
10,949

Reconciliation of GAAP Diluted Earnings Per Share to Core Earnings Diluted Earnings Per Share
For the Year Ended December 31,
2017 2016 2015
(in thousands, except per share amounts)
GAAP - Diluted EPS $ 6.60
$ 5.97
$ 4.19
Less reconciling items:
Gains on financial derivatives and hedging activities due to fair value changes 0.87
1.26
0.97
Unrealized (losses)/gains on trading securities —
0.14
0.11
Amortization of premiums/discounts and deferred gains on assets consolidated at fair value (0.12 ) (0.08 ) (0.12 )
Net effects of terminations or net settlements on financial derivatives and hedging activities 0.25
0.20
(0.06 )
Loss on retirement of Farmer Mac II LLC Preferred Stock —
—
(0.72 )
Re-measurement of net deferred tax asset due to enactment of new tax legislation (0.13 ) —
—
Income tax effect related to reconciling items (0.35 ) (0.53 ) (0.15 )
Sub-total 0.52
0.99
0.03
Core Earnings - Diluted EPS $ 6.08
$ 4.98
$ 4.16

Shares used in per share calculation (GAAP and Core Earnings) 10,803
10,746
11,309

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

1. ~~Gains~~Gains/(losses) on financial derivatives ~~and hedging activities~~ due to fair value ~~changes. The table below calculates the non-GAAP~~changes are presented by two reconciling ~~item for gains/~~items in Table 6 above: (a) Gains/(losses) on undesignated financial derivatives due to fair value changes; and (b) (Losses)/gains on hedging activities due to fair value changes.

~~Table 4~~

Non-GAAP Reconciling Items for Unrealized Gains/(Losses) on Financial Derivatives and Hedging Activities
   For the Year Ended December 31,
   2017 2016 2015
(in thousands)
Fair value hedges:
(Losses)/gains due to fair value changes (see Table 9) $ (719 ) $ 5,043
$ 9,065
No hedge designation:
  Gains due to fair value changes (see Table 9) 10,218
8,585
1,859
Gains on financial derivatives and hedging activities due to fair value changes

$ 9,499
$ 13,628
$ 10,924

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

3. ~~Amortization~~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).

4. The net ~~effect~~effects of terminations or net settlements on financial ~~derivatives and hedging activities.~~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. 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.

Initial cash payments received by Farmer Mac upon the inception of certain swaps. When there is no direct payment arrangement between a swap dealer counterparty and a debt dealer issuing Farmer Mac's medium-term notes for a particular transaction, Farmer Mac may receive an initial cash payment from the swap dealer at the inception of the swap to offset dollar-for-dollar the amount of the discount on the associated hedged debt. For GAAP purposes, changes in fair value of the swaps are recognized in "Gains on financial derivatives and hedging activities," whereas the economically offsetting discount on the associated hedged debt is amortized over the term of the debt as an adjustment to its yield. For core earnings purposes, these initial cash payments are deferred and amortized as net yield adjustments over the term of the related debt, which generally ranges from 3 to 15 years.

5. The loss on retirement of the Farmer Mac II LLC Preferred Stock. This loss in first quarter 2015 has been excluded from core earnings because it is not a frequently occurring transaction and is not indicative of future operating results. This is also consistent with Farmer Mac's previous treatment of these types of origination costs associated with securities underwriting that are capitalized and deferred during the life of the security.

6. Re-measurement of net deferred tax asset due to enactment of new tax legislation. This non-recurring, non-cash charge to income tax expense in fourth quarter 2017 was the result of a re-measurement by Farmer Mac of its net deferred tax asset at a lower federal corporate tax rate due to enactment of the new tax legislation on December 22, 2017. This charge has been excluded from core earnings because it is not the result of frequently occurring transactions, is not indicative of future operating results, and is a non-cash charge. Farmer Mac re-measured its net deferred tax asset at the newly-enacted 21 percent corporate tax rate which will be applied when temporary differences that gave rise to the net deferred tax asset will be realized or settled.

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

Net Interest Income. The following table provides information ~~regarding~~about interest-earning assets and funding for the years ended December 31, ~~2017, 2016,~~2023, 2022, and ~~2015.~~2021. 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.

~~Table 5~~

For the Year Ended
December 31, 2017 December 31, 2016 December 31, 2015
Average
Balance Income/
Expense Average
Rate Average
Balance Income/
Expense Average
Rate Average
Balance Income/
Expense Average
Rate
(dollars in thousands)
Interest-earning assets:
Cash and investments $ 2,703,306
$ 34,586
1.28 % $ 3,572,018
$ 27,042
0.76 % $ 3,310,948
$ 13,338
0.40 %
Loans, Farmer Mac Guaranteed Securities and USDA Securities⁽¹⁾
12,763,456
320,932
2.51 % 11,058,332
252,406
2.28 % 10,453,343
231,342
2.21 %
Total interest-earning assets 15,466,762
355,518
2.30 % 14,630,350
279,448
1.91 % 13,764,291
244,680
1.78 %
Funding:

Notes payable due within one year 5,148,548
49,318
0.96 % 7,304,519
37,648
0.52 % 6,013,079
13,472
0.22 %
Notes payable due after one year⁽²⁾
9,683,124
154,789
1.60 % 6,882,357
105,828
1.54 % 7,235,869
108,479
1.50 %
Total interest-bearing liabilities⁽³⁾
14,831,672
204,107
1.38 % 14,186,876
143,476
1.01 % 13,248,948
121,951
0.92 %
Net non-interest-bearing funding 635,090
—

443,474
—

515,343
—

Total funding 15,466,762
204,107
1.32 % 14,630,350
143,476
0.98 % 13,764,291
121,951
0.89 %
Net interest income/yield prior to consolidation of certain trusts 15,466,762
151,411
0.98 % 14,630,350
135,972
0.93 % 13,764,291
122,729
0.89 %
Net effect of consolidated trusts⁽⁴⁾
1,251,048
6,236
0.50 % 905,005
4,302
0.48 % 546,022
3,078
0.56 %
Net interest income/yield $ 16,717,810
$ 157,647
0.94 % $ 15,535,355
$ 140,274
0.90 % $ 14,310,313
$ 125,807
0.88 %
67


⁽¹⁾	~~Excludes interest income of $45.0 million~~, ~~$32.5 million, and $20.1 million in 2017, 2016, and 2015 respectively, related to consolidated trusts with beneficial interests owned by third parties.~~


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


⁽³⁾	~~Excludes interest expense of $38.8 million, $28.2 million, and 17.1 million in 2017, 2016, and 2015, respectively, related to consolidated trusts with beneficial interests owned by third parties.~~


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

The $17.3 million increase in net interest income for 2017 compared to 2016 was driven by net growth in Farm & Ranch loans, on-balance sheet AgVantage Securities, and USDA Securities. Another factor contributing to the increase was the effect of an increase in short-term interest rates on assets and liabilities indexed to LIBOR due to the Federal Reserve's decisions since December 2016 to raise the target range for the federal funds rate. This effect on net interest income occurred because interest expense used to calculate net interest income does not include all the funding expenses related to these assets, specifically the expense on financial derivatives not designated in hedge accounting relationships. This increase in short-term rates on assets and liabilities indexed to LIBOR did not have a similar effect on

Table 8

~~net effective spread because net effective spread includes~~


	For the Year Ended
	December 31, 2023						December 31, 2022						December 31, 2021
	Average Balance		Income/ Expense		Average Rate		Average Balance		Income/ Expense		Average Rate		Average Balance		Income/ Expense		Average Rate
	(dollars in thousands)
Interest-earning assets:
Cash and investments	$	5,894,515	$	287,144	4.87	%	$	5,236,118	$	82,659	1.58	%	$	4,726,552	$	18,660	0.39	%
Loans, Farmer Mac Guaranteed Securities and USDA Securities(1)	21,739,403		1,070,932		4.93	%	19,882,489		602,537		3.03	%	17,838,238		368,330		2.06	%
Total interest-earning assets	27,633,918		1,358,076		4.91	%	25,118,607		685,196		2.73	%	22,564,790		386,990		1.72	%
Funding:
Notes payable due within one year	3,274,799		150,666		4.60	%	2,876,452		48,481		1.69	%	3,779,689		3,820		0.10	%
Notes payable due after one year(2)	22,631,904		884,034		3.91	%	20,987,990		370,014		1.76	%	18,004,757		166,083		0.92	%
Total interest-bearing liabilities(3)	25,906,703		1,034,700		3.99	%	23,864,442		418,495		1.75	%	21,784,446		169,903		0.78	%
Net non-interest-bearing funding	1,727,215		—				1,254,165		—				780,344		—
Total funding	27,633,918		1,034,700		3.74	%	25,118,607		418,495		1.67	%	22,564,790		169,903		0.75	%
Net interest income/yield prior to consolidation of certain trusts	27,633,918		323,376		1.17	%	25,118,607		266,701		1.06	%	22,564,790		217,087		0.96	%
Net effect of consolidated trusts(4)	873,181		4,171		0.48	%	850,916		4,239		0.50	%	1,049,521		4,864		0.46	%
Net interest income/yield	$	28,507,099	$	327,547	1.15	%	$	25,969,523	$	270,940	1.04	%	$	23,614,311	$	221,951	0.94	%

(1)Excludes interest income of $34.2 million, $31.7 million, and $39.0 million in 2023, 2022, and 2021, respectively, related to consolidated trusts with beneficial interests owned by third parties (single-class).

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

(3)Excludes interest expense ~~from all funding~~of $30.0 million, $27.4 million, and $34.1 million in 2023, 2022, and 2021, respectively, related to ~~those assets, including interest expense from financial derivatives not designated in hedge accounting relationships. Also contributing to~~consolidated trusts with beneficial interests owned by third parties (single-class).

(4)Includes the ~~year-over-year increase was an increase in the net~~ effect of consolidated trusts resulting from an increase in securitization of Farm & Ranch loans throughout 2016 and 2017. Farmer Mac earns the difference between the interest income recognized on loans in consolidated trusts and the related interest expense recognized on debt securities of consolidated trusts heldwith beneficial interests owned by third parties. The increase in net interest income was offset in part by an increase in net yield adjustments related to amortization of premiums and discounts on assets consolidated at fair value. The 4 basis point increase in net interest yield in 2017 compared to 2016 was primarily attributable to a reduction in the average balance of lower-earning cash and cash equivalents and investment securities.parties (single-class).

The ~~$14.5~~$56.6 million increase in net interest income for 2016 compared to 2015 was due to several factors. One factor was the effect of an increase in short-term interest rates on assets and liabilities indexed to LIBOR due to the Federal Reserve's decision to raise the target range for the federal funds rate in fourth quarter 2015. As noted above, the effect on net interest income occurred because interest expense does not include the expense on financial derivatives not designated in hedge accounting relationships. Another factor contributing to the year-over-year increase in net interest income was anprimarily due to a $48.9 million decrease in funding costs and a $19.9 million increase ~~in the average outstanding balance of Farm & Ranch loans, USDA Securities, and AgVantage securities. Also contributing to the increase were (1) lower net yield adjustments~~ related to ~~amortization~~net new business volume. The decrease in funding costs was due to our disciplined funding strategies and higher nominal interest rates that have led to an upward repricing of ~~premiums~~our excess long-term capital that we raised when interest rates were at historical lows and ~~discounts on assets consolidated at fair value driven by slower prepayments on those assets and (2) an increase~~is held in ~~the net effect of consolidated trusts due~~our investment portfolio. The factors that contributed to an increase in ~~securitization activity~~net interest income were partially offset by an $11.2 million decrease in the fair value of ~~Farm & Ranch loans during 2016. The~~derivatives designated in fair value hedge accounting relationships (designated financial derivatives). In percentage terms, the 0.11% increase was ~~offset~~primarily attributable to a decrease of 0.16% in ~~part by (1) higher~~funding costs and a decrease of 0.04% in net ~~yield adjustments~~fair value changes from ~~amortization of purchase premiums on certain Farm & Ranch loans and (2) a tighter spread on a large AgVantage security that was refinanced in first quarter 2016 at a shorter maturity than~~designated financial derivatives.

For 2022 compared to 2021, the ~~original security. The 2 basis point~~$49.0 million year-over-year increase in net interest ~~yield for 2016 compared to 2015~~income was primarily ~~driven~~attributable to a $21.9 million increase from net new business volume, a $21.4 million decrease in funding costs due to increasing yields on interest-earning assets on our short-term investments that are funded by non-interest bearing excess equity, and a ~~lower average balance~~$6.1 million increase in ~~cash~~the fair value of designated financial derivatives. In percentage terms, the year-over-year 0.10% increase was primarily attributable to a decrease of 0.08% in funding costs and ~~cash equivalents primarily during the second half~~an increase of ~~2016.~~0.02% in net fair value changes from financial derivatives designated in hedge accounting relationships (designated financial derivatives).

The following table sets forth information ~~regarding~~about changes in the components of Farmer Mac's net interest income prior to consolidation of certain trusts for the periods indicated. For each category, information is provided on changes attributable to changes in volume (change in volume multiplied by ~~old~~prior rate), and

changes in rate (change in rate multiplied by old volume)~~. Combined rate/volume variances, the third element of the calculation, are~~, and then allocated based on ~~their~~the relative ~~size.~~size of rate and volume changes from the prior period.

Table 69


	2023 vs. 2022						2022 vs. 2021
	Increase/(Decrease) Due to						Increase/(Decrease) Due to
	Rate		Volume		Total		Rate		Volume		Total
	(in thousands)
Income from interest-earning assets:
Cash and investments	$	192,859	$	11,626	$	204,485	$	61,778	$	2,221	$	63,999
Loans, Farmer Mac Guaranteed Securities and USDA Securities	407,548		60,847		468,395		188,111		46,096		234,207
Total	600,407		72,473		672,880		249,889		48,317		298,206
Expense from other interest-bearing liabilities	577,519		38,686		616,205		230,931		17,661		248,592
Change in net interest income prior to consolidation of certain trusts(1)	$	22,888	$	33,787	$	56,675	$	18,958	$	30,656	$	49,614

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

2017 vs 2016 2016 vs 2015
Increase/(Decrease) Due to Increase/(Decrease) Due to
Rate Volume Total Rate Volume Total
(in thousands)
Income from interest-earning assets:
Cash and investments $ 15,303
$ (7,759 ) $ 7,544
$ 12,576
$ 1,128
$ 13,704
Loans, Farmer Mac Guaranteed Securities and USDA Securities 27,222
41,304
68,526
7,403
13,661
21,064
Total 42,525
33,545
76,070
19,979
14,789
34,768
Expense from other interest-bearing liabilities 53,847
6,784
60,631
12,535
8,990
21,525
Change in net interest income prior to consolidation of certain trusts⁽¹⁾
$ (11,322 ) $ 26,761
$ 15,439
$ 7,444
$ 5,799
$ 13,243


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

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) ~~including~~ expenses related to undesignated financial derivatives, ~~and hedging activities,~~ which consists 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) ~~including~~ the amortization of losses due to terminations or net settlements onof financial ~~derivatives~~derivatives; and ~~hedging activities; and (3)~~ excluding (1) the amortization of premiums and discounts on assets consolidated at fair value, ~~and~~(2) the net effects of consolidated trusts with beneficial interests owned by third ~~parties.~~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 ~~regarding the explanation of~~about net effective spread.

Table 710


	For the Years Ended December 31,
		2023	2022				2021
			Dollars		Yield		Dollars		Yield		Dollars		Yield
			(dollars in thousands)
Net interest income/yield			$	327,547	1.15	%	$	270,940	1.04	%	$	221,951	0.94	%
Net effects of consolidated trusts			(4,171)		0.02	%	(4,239)		0.02	%	(4,864)		0.02	%
Expense related to undesignated financial derivatives			(4,845)		(0.02)	%	(7,756)		(0.03)	%	2,841		0.01	%
Amortization of premiums/discounts on assets consolidated at fair value			(175)		—	%	(24)		—	%	(45)		—	%
Amortization of losses due to terminations or net settlements on financial derivatives			3,230		0.01	%	2,413		0.01	%	446		—	%
Fair value changes on fair value hedge relationships			5,394		0.02	%	(5,805)		(0.02)	%	339		0.01	%
Net effective spread			$	326,980	1.18	%	$	255,529	1.02	%	$	220,668	0.98	%

For the Year Ended December 31,
2017 2016 2015
Dollars Yield Dollars Yield Dollars Yield
(dollars in thousands)
Net interest income/yield $ 157,647
0.94 % $ 140,274
0.90 % $ 125,807
0.88 %
Net effects of consolidated trusts (6,236 ) 0.04 % (4,302 ) 0.03 % (3,078 ) 0.01 %
Expense related to undesignated financial derivatives (10,261 ) (0.07 )% (11,480 ) (0.07 )% (5,649 ) (0.04 )%
Amortization of premiums/discounts on assets consolidated at fair value 1,191
0.01 % 610
— % 2,300
0.02 %
Amortization of losses due to terminations or net settlements on financial derivatives and hedging activities (1,038 ) (0.01 )% (2,030 ) (0.02 )% (1,952 ) (0.02 )%
Net effective spread $ 141,303
0.91 % $ 123,072
0.84 % $ 117,428
0.85 %

~~Net~~The $71.5 million year-over-year increase in net effective spread was ~~$141.3~~primarily due to a $54.6 million ~~for 2017 compared~~decrease in non-GAAP funding costs, due to ~~$123.1~~our disciplined funding strategies and higher nominal interest rates that have led to an upward repricing of our excess capital that is held in our short-term investment

portfolio, and a $20.6 million ~~for 2016 and $117.4 million for 2015.~~increase related to net new business volume. In percentage terms, ~~net effective spread for 2017~~the year-over-year increase of 0.16% was ~~0.91 percent~~primarily attributable to a decrease in non-GAAP funding costs.

For 2022 compared to ~~0.84 percent for 2016 and 0.85 percent for 2015.~~

~~For 2017 compared to 2016,~~2021, the ~~$18.2~~$34.9 million year-over-year increase in net effective spread in dollars was primarily ~~attributable~~due to ~~(1) growth in on-balance sheet AgVantage securities, Farm & Ranch loans, and other~~a $23.6 million increase from net new business volume, ~~which increased net effective spread by approximately $15.1~~a $7.7 million decrease in ~~2017; and (2) changes in Farmer Mac's funding strategies and improvements in LIBOR-based short-term~~non-GAAP funding costs ~~for floating rate assets indexed to LIBOR, which added approximately $4.0 million in 2017. Net effective spread in percentage terms increased 7 basis points in 2017 compared to 2016 primarily~~ due to the decrease in the average balance of lower-earning cash and cash equivalents and investment securities, which added approximately 5 basis points to net effective spread. Also contributing to the increase were the effects of changes in Farmer Mac's funding strategy andincreasing yields on interest-earning assets on our short-term investments that are funded by non-interest bearing excess equity, a ~~favorable LIBOR-based funding market, which added approximately 3 basis points in 2017.~~

~~For 2016 compared to 2015, the $5.7~~$2.4 million increase in ~~dollars was attributable to growth~~net servicing revenue, and a $0.9 million increase in ~~outstanding business volume. The 1 basis point contraction in net effective spread in~~cash-basis interest income. In percentage terms, the year-over-year increase of 0.04% was primarily attributable to ~~a higher average balance~~an decrease of 0.03% in ~~lower-earning investment securities~~non-GAAP funding costs and an increase of 0.01% in ~~2016 compared to 2015.~~cash-basis interest income.

See Note 14 to the consolidated financial statements for more information ~~regarding~~about net interest income and net effective spread from Farmer Mac's individual business segments. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Supplemental Information" for quarterly net effective spread by line of business.

Provision for and Release of Allowance for ~~Loan~~ Losses and Reserve for Losses. The following table summarizes the components of Farmer Mac's total allowance for losses for ~~each year in~~ the three-year period ended December 31, ~~2017:~~2023:

Table 811




	Allowance for Losses		Reserve for Losses		Total Allowance for Losses
	(in thousands)
Balance as of December 31, 2020	$	14,298	$	3,277	$	17,575
Release of losses	(860)		(1,327)		(2,187)
Recovery	1,054		—		1,054

Balance as of December 31, 2021	$	14,492	$	1,950	$	16,442
Provision for/(release of) losses	1,323		(517)		806

Charge-offs	(84)		—		(84)
Balance as of December 31, 2022	$	15,731	$	1,433	$	17,164
Provision for losses	858		278		1,136


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

Allowance
for Loan
Losses Reserve
for Losses Total
Allowance
for Losses
(in thousands)
Balance as of January 1, 2015 $ 5,864
$ 4,263
$ 10,127
Provision for/(release of) losses 2,388
(2,180 ) 208
Charge-offs (3,772 ) —
(3,772 )
Balance as of December 31, 2015 $ 4,480
$ 2,083
$ 6,563
Provision for/(release of) losses 1,065
(63 ) $ 1,002
Charge-offs (130 ) —
(130 )
Balance as of December 31, 2016 $ 5,415
$ 2,020
$ 7,435
Provision for losses 1,708
50
1,758
Charge-offs (327 ) —
(327 )
Balance as of December 31, 2017 $ 6,796
$ 2,070
$ 8,866

As of December 31, 2017 and December 31, 2016, Farmer Mac's allowance for loan losses was $6.8 million and $5.4 million, respectively, and its reserve for losses was $2.1 million and $2.0 million, respectively.

The increase in the provision to the allowance for loan losses recorded during 2017 as compared to 2016, was attributable to (1) an increase in the general allowance due to overall net volume growth in on-balance sheet Farm & Ranch loans; and (2) an increase in the specific allowance for certain impaired on-balance sheet crop and permanent planting loans resulting from both an increase in the outstanding balance of such loans and downgrades in risk ratings on certain of those loans. The increase in the provision was offset in part by a modest decline in loss rates used to estimate probable losses. The increase in the provision to the reserve for losses recorded during 2017 as compared to 2016 was primarily attributable to an increase in the general reserve due to downgrades in risk ratings on certain unimpaired Agricultural Storage and Processing loans underlying LTSPCs. The increase in the provision to the reserve for losses was offset in part by a net decrease in the balance of loans underlying LTSPCs and off-balance sheet Farmer Mac Guaranteed Securities. The charge-offs recorded during 2017 were primarily related to two impaired crop loans with one borrower that were foreclosed and transitioned to REO during first quarter 2017. Farmer Mac had previously recorded a specific allowance of $0.2 million on these impaired crop loans as of December 31, 2016. During second quarter 2017, Farmer Mac sold the related properties for $5.4 million and recognized a $0.8 million gain on sale of REO.

The provisions to the allowance for loan losses recorded during 2016 were attributable to (1) an increase in the general allowance due to overall net volume growth in on-balance sheet Farm & Ranch loans; (2) downgrades in risk ratings for certain loans; and (3) an increase in the specific allowance for on-balance sheet impaired loans resulting from an increase in the outstanding balance of such loans. The releases from the reserve for losses recognized during 2016 were primarily attributable to the release of a specific reserve on an impaired livestock loan underlying an LTSPC that was required to be removed from the LTSPC pool by the originator during third quarter 2016, offset in part by provisions to the reserve for

~~losses attributable to an increase in the general reserve due to downgrades in risk rating on certain loans underlying LTSPCs.~~

The provisions to the allowance for loan losses recorded during 2015 were primarily attributable to the establishment of a specific allowance for two Agricultural Storage and Processing loans that financed one canola facility due to a downgrade in risk rating resulting from collateral shortfalls relative to the unpaid principal balance for such loans. In fourth quarter 2015, Farmer Mac purchased these defaulted Agricultural Storage and Processing loans under the terms of the applicable LTSPC agreement. As a result, Farmer Mac recognized a charge-off of $3.7 million in fourth quarter 2015. Farmer Mac had previously established a specific allowance of $3.6 million for these loans as of September 30, 2015. In January 2016, Farmer Mac received funds in the amount of $9.8 million to pay off these Agricultural Storage and Processing loans. The provisions to the total allowance for losses were offset by a reduction in the specific allowance for a permanent planting loan based on an updated appraised value of the collateral underlying that loan and by releases from the general reserve from the reserve for losses due to substantial paydowns of Agricultural Storage and Processing loans underlying LTSPCs resulting from repayments of these loans at par.

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

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

Guarantee and Commitment Fees. ~~Guarantee~~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, ~~were $14.1 million~~ for ~~2017, compared to$14.9 million~~the years ended December 31, 2023, 2022, and ~~$14.1 million, respectively, for 2016 and 2015. The decrease in guarantee~~2021:

Table 12


	For the Years Ended December 31,

		2023		2022		2021
		(dollars in thousands)
Contractual guarantee and commitment fees		$	15,084	$	14,235	$	12,669
Guarantee obligation amortization		4,331		5,913		7,257
Guarantee asset fair value changes		(2,703)		(7,108)		(7,257)
Guarantee and commitment fee income		$	16,712	$	13,040	$	12,669

Guarantee and commitment fees increased for ~~2017~~the year ended December 31, 2023 compared to ~~2016~~2022, which was ~~attributable~~due to the refinancing of a $1.0 billion AgVantage security with Metropolitan Life Insurance Company ("MetLife") in April 2017 into three new on-balance sheet AgVantage securities earning interest income. Previously, $970.0 million of the $1.0 billion AgVantage security that matured in April 2017 had been sold to third parties and reported as off-balance sheet business volume in the Institutional Credit line of business on which Farmer Mac earned a guarantee fee. Also contributing to the decrease was a lower average outstanding balance of off-balance sheet Farm & Ranch Guaranteed Securities and Farm & Ranch loans underlying LTSPCs. The decrease was offset in part by an increaseincreases in the average outstanding balance of ~~off-balance sheet Farmer Mac Guaranteed USDA Securities and an increase in~~LTSPCs during the ~~average outstanding balance of Rural Utilities loans underlying LTSPCs. The increase in~~period. As adjusted for the core earnings presentation, guarantee and commitment fees were $18.9 million for ~~2016~~the year ended December 31, 2023, compared to ~~2015 was attributable~~$18.1 million and $17.5 million for the years ended December 31, 2022, and 2021, respectively.

In Farmer Mac's presentation of core earnings, guarantee and commitment fees include interest income and interest expense related to consolidated trusts owned by third parties to reflect management's view that the ~~addition~~net interest income Farmer Mac earns is effectively a guarantee fee on those consolidated Farmer Mac Guaranteed Securities. Farmer Mac has also excluded guarantee asset fair value changes from the presentation of $0.5 billion in third quarter 2015 and $0.4 billion in second quarter 2016 of Rural Utilities loans under LTSPCs, offset in part by lower average outstanding balances of off-balance sheet Farm & Ranch Guaranteed Securities and Farm & Ranch loans underlying LTSPCs.

~~Gains on Financial Derivatives and Hedging Activities. The effect of unrealized and realized gains~~core earnings because these fluctuations are not expected to have a cumulative net impact on Farmer Mac's financial ~~derivatives~~condition or results of operations if Farmer Mac fulfills its guarantee obligation throughout the term of the guaranteed securities, as is expected.

For more information about net income attributable to common stockholders, the composition of core earnings, and ~~hedging activities was~~a reconciliation of net ~~gains~~income attributable to common stockholders to core earnings, see Table 6 in "Management's Discussion and Analysis of ~~$0.8 million for 2017, compared to net gains~~Financial Condition and Results of ~~$2.3 million~~Operations—Results of Operations." For more information about the non-GAAP measures Farmer Mac uses, see "Management's Discussion and ~~$2.5 million, respectively for 2016~~Analysis of Financial Condition and ~~2015.~~Results of Operations—Use of Non-GAAP Measures."

Gains on financial derivatives.The components of gains and losses on financial derivatives ~~and hedging activities~~ for the years ended December 31, ~~2017, 2016,~~2023, 2022, and ~~2015~~2021 are summarized in the following table:

Table 913


	For the Years Ended December 31,

		2023		2022		2021
		(dollars in thousands)
Gains/(losses) due to fair value changes		$	5,142	$	13,495	$	(1,431)
Accrual of contractual payments		(4,845)		(7,756)		2,841
Gains/(losses) due to terminations or net settlements		2,585		16,892		(1,086)
Gains on financial derivatives		$	2,882	$	22,631	$	324

For the Year Ended December 31,
2017 2016 2015
(in thousands)
Fair value hedges:
(Losses)/gains due to fair value changes:
Financial derivatives⁽¹⁾
$ 1,694
$ 25,365
$ 5,965
Hedged items (2,413 ) (20,322 ) 3,100
(Losses)/gains on fair value hedging activities (719 ) 5,043
9,065
Cash flow hedges:
Loss recognized (ineffective portion) (320 ) (353 ) (551 )
Losses on cash flow hedges (320 ) (353 ) (551 )
No hedge designation:
Gains due to fair value changes 10,218
8,585
1,859
Accrual of contractual payments (9,941 ) (11,127 ) (5,098 )
Gains/(losses) due to terminations or net settlements 1,515
163
(2,744 )
Gains/(losses) on financial derivatives not designated in hedging relationships 1,792
(2,379 ) (5,983 )
Gains on financial derivatives and hedging activities $ 753
$ 2,311
$ 2,531

⁽¹⁾

~~Included~~These changes in ~~the assessment of hedge effectiveness as of December 31, 2017, but excluded from the amounts in the table, were gains of $0.1 million for the year ended December 31, 2017, attributable to the~~ fair value of the swaps at the inception of the hedging relationship. Accordingly, the amounts recognized as hedge ineffectiveness for the year ended December 31, 2017 were gains of $0.6 million. The comparable amounts as of December 31, 2016 were losses of $5.2 million for the year ended December 31, 2016, attributable to the fair value of the swaps at the inception of the hedging relationship and, accordingly, gains of $0.2 million for the year ended December 31, 2016, attributable to hedge ineffectiveness. The comparable amounts as of December 31, 2015 were losses of $9.2 million for the year ended December 31, 2015, attributable to the fair value of the swaps at the inception of the hedging relationship and, accordingly, gains of $0.1 million for the year ended December 31, 2015, attributable to hedge ineffectiveness.

~~Changes in the fair values of Farmer Mac's open derivative positions for both designated and undesignated hedges are captured in the table above in "(Losses)/gains due to fair value changes" and~~ are primarily the result of fluctuations in long-term interest rates. For financial derivatives designated in fair value hedge accounting relationships, changes in the fair values of the hedged items attributable to the hedged risk are also included in the table above in "(Losses)/gains due to fair value changes." For financial derivatives designated in cash flow hedge accounting relationships, the ineffective portion of changes in fair value are included as "Losses on cash flow hedges" in the table above. The accrual of periodic cash settlements for interest paid or received from Farmer Mac's interest rate swaps that are ~~not designated in hedge accounting relationships~~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 ~~that are not designated in hedge accounting relationships~~ 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. When there is no direct payment arrangement between a swap dealer counterparty and a debt dealer issuing Farmer Mac's medium-term notes for a particular transaction, Farmer Mac may receive an initial cash payment from the swap dealer at the inception of the swap to offset dollar-for-dollar the amount of the discount on the associated hedged debt. Changes in the fair value of these swaps are recognized immediately in "Gains/(losses) on financial derivatives and hedging activities," whereas the offsetting discount on the hedged debt is amortized over the term of the debt as an adjustment to its yield. Thus, there is a timing difference between the recognition of these initial cash payments in "Gains/(losses) on financial derivatives and hedging activities" and the recognition of the discount in interest expense. There is also a presentation difference because the initial cash payments are

included in "Gains/(losses) on financial derivatives and hedging activities," whereas the amortization of the discount is included in interest expense. Additionally, the amounts of initial cash payments received by Farmer Mac vary depending upon the number of the aforementioned type of swaps it executes during a quarter.

~~(Losses)/gains on Trading Securities~~. During 2017, Farmer Mac recorded $24,000 of unrealized losses on trading securities, compared to unrealized gains of $1.5 million during 2016 and unrealized gains of $1.2 million during 2015. During 2017, all of the unrealized losses were related to financial assets that had been selected to be carried at fair value with the related changes in fair value included in earnings (i.e., the "fair value option"), compared to recorded losses of $0.3 million and recorded gains $0.8 million under the fair value option for 2016 and 2015.

~~Gains on Sale of Real Estate Owned. During 2017, Farmer Mac realized net gains of $1.7 million on sales of real estate owned properties compared to gains of $15,000 and losses of $1,000 for the 2016 and 2015, respectively.~~

~~Other Income~~. Other income totaled $0.8 million during 2017, compared to $1.8 million and $2.3 million, respectively, for 2016 and 2015. Other income during 2017 included the recognition of $0.4 million of appraisal fees received by Farmer Mac's consolidated appraisal company subsidiary, AgVisory, compared to $1.3 million and $0.6 million, respectively, for 2016 and 2015. As of May 1, 2017, Farmer Mac transferred its entire 65% ownership interest in AgVisory back to the limited liability company. Farmer Mac recognized a loss of approximately $0.1 million upon the transfer. Other income during 2017 included the recognition of $0.1 million of losses previously deferred in accumulated other comprehensive income related to fair value changes of certain available-for-sale securities contributed to Farmer Mac II LLC in 2010 and other miscellaneous items, compared to the recognition of $0.2 million of losses and $1.0 million of gains, respectively, of previously deferred losses or gains for 2016 and 2015.

~~Compensation and Employee Benefits~~. Compensation and employee benefits were $24.2 million in 2017, compared to $22.8 million and $22.0 million, respectively, in 2016 and 2015. The increase in compensation and employee benefits in 2017 compared to 2016 was due primarily to an increase in headcount and related employee health insurance costs and higher payouts of variable incentive compensation resulting from actual performance exceeding certain performance target amounts during 2017. The increase in compensation and employee benefits was offset in part by $1.3 million in recouped compensation costs related to the forfeiture of unvested equity awards and annual variable incentive compensation resulting from the termination of employment of Farmer Mac's former President and Chief Executive Officer in December 2017. The increase in compensation and employee benefits in 2016 compared to 2015 was due primarily to an increase in headcount and related employee health insurance costs.

~~General and Administrative Expenses~~. General and administrative expenses were $16.0 million for 2017, compared to $15.1 million and $13.1 million, respectively, for 2016 and 2015. The increase in general and administrative expenses for 2017 compared to 2016 was due primarily to higher expenses related to (1) continued technology and business infrastructure investments; (2) legal fees related to general corporate matters, including fees related to the termination of employment of Farmer Mac's former President and Chief Executive Officer in December 2017; (3) building lease expenses due to new leases for office space entered into during 2017; and (4) expenses related to business development efforts. The increase in general and administrative expenses in 2016 compared to 2015 was due primarily to higher

consulting fees and information services expenses related to corporate strategic initiatives, continued technology and business infrastructure investments, and expenses related to business development efforts.

~~Regulatory Fees~~. Regulatory fees, which consist of the fees paid to the Farm Credit Administration ("FCA"), an independent agency in the executive branch of the United States government that regulates Farmer Mac, were $2.5 million for 2017, compared to $2.5 million and $2.4 million, respectively, for 2016 and 2015. FCA advised Farmer Mac that its estimated fees for the federal fiscal year ending September 30, 2018 would remain at $2.5 million ($0.625 million per federal fiscal quarter), the same amount as compared to the prior federal fiscal year. After the end of a federal government fiscal year, FCA may revise its prior year estimated assessments to reflect actual costs incurred, and has issued both additional assessments and refunds in the past.

~~Income Tax Expense. Income tax expense was $46.4 million for 2017, compared to $42.1 million and $34.2 million, respectively, for 2016 and 2015.~~

The increase in income tax expense in 2017 compared to 2016 was primarily due to higher pre-tax income. Also contributing to the increase was a $1.4 million charge to income tax expense as a result of the re-measurement of Farmer Mac's net deferred tax asset due to the enactment of new tax legislation on December 22, 2017. Income tax expense for 2017 also reflected $0.9 million of tax benefits associated with stock-based compensation activity that is subject to ASU 2016-09, “~~Improvements to Employee Share-Based Payment Accounting,~~”adopted in first quarter 2017. The excess of Farmer Mac's effective income tax rate above the statutory rate in 2017 was primarily attributable to the non-recurring, non-cash charge related to the new tax legislation, which was offset in part by the tax benefits associated with stock-based compensation activity. See Note ~~2(l) and Note 10~~6 to the consolidated financial statements for more information about ~~income taxes and the impact of new tax legislation on~~ Farmer Mac's financial ~~position, results~~derivatives.

Gains on Sale of ~~operations and cash flows. More information about the adoption of ASU 2016-09and the effect on Farmer Mac's financial position, results of operations, and cash flows is included in Note 2(r) to the consolidated financial statements.~~Mortgage Loans

The increase in income tax expense in 2016 compared to 2015 was due to higher pre-tax income and two items that occurred during first quarter 2015 but did not recur during 2016: (1) the consolidated tax benefits recognized from the dividends declared onTable 14


	For the Years Ended December 31,
	2023		2022		2021
	(in thousands)
Gains on sale of mortgage loans	$	—	$	—	$	6,539

In 2021, Farmer Mac ~~II LLC Preferred Stock, which is included in the presentation of "Net income attributable to non-controlling interest" on the consolidated statements of operations on~~executed a pre-tax basis, and (2) the loss on retirement of the Farmer Mac II LLC Preferred Stock. These items were also the primary reasons why Farmer Mac's effective tax rate was lower than the statutory rate in 2015.

Farmer Mac estimates that its annual effective tax rate beginning in 2018 will be approximately 21 percent, which reflects the federal corporate income tax rate under the new tax legislation enacted in December 2017.

~~Loss on Retirement of Preferred Stock~~. On March 30, 2015, Farmer Mac II LLC redeemed all of the outstanding shares of Farmer Mac II LLC Preferred Stock, which, in turn, triggered the redemption of all of the outstanding related Farm Asset-Linked Capital Securities, or "FALConS," on that same day. As a result, Farmer Mac recognized an expense in first quarter 2015 of $8.1 million of deferred issuance costs related to those shares of Farmer Mac II LLC Preferred Stock as "Loss on retirement of preferred stock" on the consolidated statements of operations.

~~Business Volume. During~~ ~~2017, Farmer Mac added $4.7 billion of new business volume, compared to $4.4 billion in 2016 and $3.2 billion in 2015. Specifically, Farmer Mac:~~

~~purchased $2.4 billion of AgVantage securities;~~

~~purchased $1.1 billion of newly originated Farm & Ranch loans;~~

~~added $554.7 million~~structured securitization of Farm & Ranch loans ~~under LTSPCs;~~that resulted in a gain of $6.5 million from the sale of the pool of mortgage loans into the securitization vehicle.

~~purchased $369.8 million~~

Operating Expenses. The components of ~~USDA Securities;~~operating expenses for the years ended December 31, 2023, 2022, and 2021 are summarized in the following table:

~~issued $161.9 million~~

Table 15


	For the Years Ended December 31,

		2023		2022		2021
		(dollars in thousands)
Compensation and employee benefits		$	58,914	$	48,766	$	42,847
General and administrative		34,963		29,772		27,507
Regulatory fees		3,222		3,269		3,062
Total Operating Expenses		$	97,099	$	81,807	$	73,416

Compensation and Employee Benefits. The increase in compensation and employee benefits expenses for the year ended December 31, 2023 compared to 2022 was largely due to increased headcount. The increase in compensation and employee benefits expenses for 2022 compared to 2021 was due to increased headcount (full year impact of 32 net new hires in 2021 and 5 net new hires in 2022) and increased executive stock compensation.

General and Administrative Expenses (G&A). The increase in G&A expenses for the year ended December 31, 2023 compared to 2022 was primarily due to increased spending on software licenses and information technology and other consultants to support growth and strategic initiatives. One of those initiatives is a multi-year effort to replace Farmer Mac's platform for securities trades and to implement a treasury management system. That initiative is expected to be completed during the first half of 2024.

Income Tax Expense. The following table presents income tax expense and the effective income tax rate for the years ended December 31, 2023, 2022, and 2021:

Table 16


	For the Years Ended December 31,

		2023			2022			2021
		(dollars in thousands)
Income tax expense		$	53,098		$	47,535		$	36,372
Effective tax rate		21.0		%	21.1		%	21.1		%

Business Volume.

The following table sets forth the net growth or decrease in Farmer Mac's lines of business for the years ended December 31, 2023 and 2022:

Table 17


Net New Business Volume
		For the Years Ended
			December 31, 2023		December 31, 2022
	On or Off Balance Sheet		Net Growth/(Decrease)		Net Growth/(Decrease)
			(in thousands)
Agricultural Finance:
Farm & Ranch:
Loans	On-balance sheet		$	(17,300)	$	375,680
Loans held in consolidated trusts:
Beneficial interests owned by third-party investors (single-class)(1)	On-balance sheet		(44,006)		(33,705)
Beneficial interests owned by third-party investors (structured)(1)	On-balance sheet		264,691		296,658
IO-FMGS(2)	On-balance sheet		(1,213)		(1,675)
USDA Securities	On-balance sheet		(38,430)		(38,504)
AgVantage Securities(1)	On-balance sheet		230,000		880,000
LTSPCs and unfunded loan commitments	Off-balance sheet		177,634		235,155
Other Farmer Mac Guaranteed Securities(3)	Off-balance sheet		(48,351)		(77,405)
Loans serviced for others	Off-balance sheet		556,984		(2,051)
Total Farm & Ranch			$	1,080,009	$	1,634,153
Corporate AgFinance:
Loans	On-balance sheet		$	93,470	$	42,953
AgVantage Securities(1)	On-balance sheet		(70,721)		(7,864)
Unfunded loan commitments	Off-balance sheet		67,723		30,584
Total Corporate AgFinance			$	90,472	$	65,673
Total Agricultural Finance			$	1,170,481	$	1,699,826
Rural Infrastructure Finance:
Rural Utilities:
Loans	On-balance sheet		$	292,781	$	499,323
AgVantage Securities(1)	On-balance sheet		854,312		10,894
LTSPCs and unfunded loan commitments	Off-balance sheet		(24,814)		(44,245)
Other Farmer Mac Guaranteed Securities(3)	Off-balance sheet		(1,169)		(1,586)
Total Rural Utilities			$	1,121,110	$	464,386
Renewable Energy:
Loans	On-balance sheet		$	220,716	$	132,807
Unfunded loan commitments	Off-balance sheet		36,635		10,600
Total Renewable Energy			$	257,351	$	143,407
Total Rural Infrastructure Finance			$	1,378,461	$	607,793
Total			$	2,548,942	$	2,307,619

(1)Categories of Farmer Mac Guaranteed ~~USDA Securities; and~~Securities.

~~purchased $137.3 million~~(2)An interest-only Farmer Mac Guaranteed Security retained as part of ~~Rural Utilities loans.~~a structured securitization.

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

Farmer Mac's outstanding business volume was ~~$19.0~~$28.5 billion as of December 31, ~~2017, an~~2023, a net increase of ~~$1.6~~$2.5 billion ~~or 9.2 percent,~~ from December 31, ~~2016.~~2022 after taking into account all new business, maturities, and paydowns on existing assets.

The $1.1 billion net increase in Farm & Ranch during 2023 resulted from $5.0 billion of new purchases, commitments, and guarantees, partially offset by $3.9 billion of scheduled maturities and repayments. Included in the $5.0 billion of new volume is newly purchased servicing rights on $0.6 billion of loans (i.e., loans serviced for others). Loans serviced for others earn servicing fee income rather than interest income and are a component of outstanding business volume because they are assets under our management.

Farmer Mac also purchased a total of $2.7 billion in Farm & Ranch AgVantage Securities during 2023, which primarily reflected the refinancing of maturing securities. The $2.7 billion in gross purchases was partially offset by $2.5 billion in scheduled maturities.

The $90.5 million net increase in Corporate AgFinance during 2023 resulted from $0.9 billion of new purchases and unfunded loan commitments, which was partially offset by $0.8 billion of scheduled maturities, repayments, and paydowns on revolving commitments. Farmer Mac purchased a total of $578.1 million in loans, including draws on revolving commitments, which was partially offset by $484.6 million in scheduled maturities, repayments, and paydowns on revolving commitments. The increase in loan purchases was primarily due to Farmer Mac's continued focus to support loans to larger and more complex agribusinesses focused on food and fiber processing and other food supply chain production.

The $1.1 billion net increase in Rural Utilities during 2023 resulted from $2.0 billion of new purchases, unfunded loan commitments, and guarantees, which was partially offset by $0.9 billion of scheduled maturities and repayments. Farmer Mac purchased a total of $1.5 billion in AgVantage Securities, $232.5 million in telecommunications loans, and $297.6 million in electric distribution and generation and transmission loans. The $530.1 million in loan purchases was partially offset by $237.3 million in scheduled maturities and repayments. The net increase in loan purchases primarily reflected borrowers' normal-course capital expenditures related to maintaining and upgrading utility infrastructure as well as investments in broadband infrastructure, and Farmer Mac's continued focus to support telecommunications investment in rural America.

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

Farmer Mac's outstanding business volume was ~~driven by broad-based portfolio growth across most~~$25.9 billion as of ~~Farmer Mac's products~~December 31, 2022, a net increase of $2.3 billionfrom December 31, 2021 after taking into account all new business, scheduled maturities, and ~~lines of business, including~~paydowns on existing assets.

The $1.6 billion net increase in Farm & Ranch ~~loans, AgVantage securities, USDA Securities,~~during 2022 resulted from $6.9 billion of new purchases, commitments, and ~~Rural Utilities loans.~~

~~The $617.2 million net increase in AgVantage securities for 2017 was primarily driven~~guarantees, mostly offset by ~~net portfolio growth from two~~$5.3 billion of ~~Farmer Mac's long-standing issuers: (1) Rabo AgriFinance ("Rabo")~~scheduled maturities and ~~(2) National Rural Utilities Cooperative Finance Corporation ("CFC"), which increased their outstanding AgVantage business volume with~~repayments. Farmer Mac by $275.0 million and $205.8 million, respectively. The net growth from Rabo included shorter-term funding (less than one year), which was the first time Rabo has used Farmer Mac's AgVantage funding for its short-term funding needs. The remaining net increasepurchased a total of $1.4 billion in ~~AgVantage securities came from Farmer Mac's smaller institutional customers, which increased outstanding balances by $136.4 million in 2017, including transactions with two new counterparties.~~

~~Farmer Mac grew its Farm & Ranch loan portfolio by $684.3 million during 2017,~~loans, which was primarily driven by ~~an increase~~improved borrower economics albeit navigating a substantially higher interest rate environment. The $1.4 billion in ~~the average size of loans purchased, including several large loans with large borrowers. During 2017, Farmer Mac purchased 1,445~~gross Farm & Ranch ~~loans with an average unpaid principal balance~~loan purchases was partially offset by $1.1 billion in scheduled maturities and repayments.

Farmer Mac also purchased a total of ~~$781,000 compared to 1,467~~$4.2 billion in Farm & Ranch ~~loans purchased with~~AgVantage Securities during 2022, which primarily reflected the refinancing of maturing securities as well as financial counterparties seeking to add longer-term AgVantage securities to manage their asset-liability maturity profile given increases in credit spreads and interest rates. The $4.2 billion in gross purchases was partially offset by $3.3 billion in scheduled maturities. Of the AgVantage Securities that were acquired during 2022 and were still outstanding as of December 31, 2022, $470.0 million are scheduled to mature by June 30, 2023 and an ~~average unpaid principal balance of $665,000 during 2016.~~ additional $600.0 million are scheduled to mature by December 31, 2023.

The ~~$257.8~~$65.7 million net increase in ~~USDA Securities reflected an~~Corporate AgFinance during 2022 resulted from $546.6 million of new purchases and unfunded loan commitments, which was partially offset by $480.9 million of scheduled maturities, repayments, and sales. Farmer Mac purchased a total of $328.9 million in loans, which was partially offset by $276.9 million in scheduled maturities and repayments. The increase in ~~both USDA Securities securitized and sold to lenders in the form of Farmer Mac Guaranteed USDA Securities and USDA Securities retained on-balance sheet. Farmer Mac grew its Rural Utilities~~ loan ~~portfolio by $76.8 million, which~~purchases was primarily due to ~~the purchases of a few larger loans in competitive situations as a result of an improvement in~~ Farmer Mac's ~~pricing~~continued focus to support loans to larger and more complex agribusinesses focused on ~~these types~~food and fiber processing and other food supply chain production.

The $464.4 million net increase in Rural Utilities during 2022 resulted from $1.4 billion of new purchases, unfunded loan commitments, and guarantees, which was partially offset by $927.8 million of scheduled maturities and repayments. Farmer Mac purchased a total of $670.0 million in AgVantage Securities, $231.0 million in telecommunications loans, and $449.5 million in electric distribution and generation and transmission loans. The $680.5 million in loan purchases was partially offset by $181.2 million in scheduled maturities and repayments. The net increase in loan purchases primarily reflected borrowers' normal-course capital expenditures related to maintaining and upgrading utility infrastructure as well as investments in broadband infrastructure, and Farmer Mac's continued focus to support telecommunications investment in rural America.

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

The 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. The external factors include general market forces, competition, and our counterparties’ liquidity needs, access to alternative funding, desired products, and assessment of strategic factors. The internal factors include our assessment of profitability, mission fulfillment, credit risk, and customer relationships. For more information about potential growth opportunities in Farmer Mac's lines of business, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Outlook" in this report.

9276

In April 2017, Farmer Mac purchased and retained $1.0 billion of AgVantage securities issued by MetLife. MetLife used the proceeds from Farmer Mac's purchase of $1.0 billion in AgVantage securities to refinance an AgVantage security of the same amount that matured in April 2017. Previously, Farmer Mac held $30.0 million of the $1.0 billion AgVantage security that matured in April 2017 on-balance sheet and earned a spread between the interest income earned on that portion of the security and the related funding costs. The remaining $970.0 million of the $1.0 billion AgVantage security that matured in April 2017 had previously been sold to third parties and reported as off-balance sheet business volume in the Institutional Credit line of business on which Farmer Mac earned an annual guarantee fee of approximately 0.15 percent. For the newly purchased $1.0 billion in AgVantage securities, which are now held entirely on-balance sheet, Farmer Mac will earn weighted average annual net effective spread income of approximately 0.42 percent. The newly purchased AgVantage securities are comprised of three securities with separate maturities – $500.0 million of a one-year security, which features a monthly call option six months after the issuance date, $250.0 million of a two-year security, and $250.0 million of a three-year security.

The following table sets forth ~~purchases of non-delinquent eligible loans, new loans added under LTSPCs, and new guarantees~~information about the Farmer Mac Guaranteed Securities issued during the periods ~~indicated in the Farm & Ranch, USDA Guarantees, and Rural Utilities lines of business, as well as purchases of AgVantage securities in the Institutional Credit line of business:~~indicated:

Table 1018


	For the Years Ended December 31,
		2023		2022		2021
		(dollars in thousands)
AgVantage securities		$	4,284,405	$	4,990,483	$	3,919,907
Structured securitization transactions (not consolidated)		—		—		289,519
Loans securitized and held in consolidated trusts with beneficial interests owned by third parties (structured and single-class)		317,524		460,588		113,175

Total Farmer Mac Guaranteed Securities Issuances		$	4,601,929	$	5,451,071	$	4,322,601

New Business Volume – Farmer Mac Loan Purchases, Guarantees, LTSPCs, and AgVantage Securities
For the Year Ended December 31,
2017 2016 2015
(in thousands)
Farm & Ranch:
Loans $ 1,129,545
$ 966,023
$ 748,368
LTSPCs 554,743
399,095
427,795
USDA Guarantees:
USDA Securities 369,759
375,203
363,621
Farmer Mac Guaranteed USDA Securities 161,925
106,054
13,314
Rural Utilities:
Loans 137,341
50,491
108,337
LTSPCs —
441,404
522,262
Institutional Credit:
AgVantage Securities 2,383,912
2,098,852
743,158
Revolving floating rate AgVantage facility —
—
300,000
Total purchases, guarantees, LTSPCs, and AgVantage Securities $ 4,737,225
$ 4,437,122
$ 3,226,855

New business volume for loans purchased within the Farm & Ranch line of business in 2017 was substantially greater than in 2016. This was primarily due to an increase in borrower demand for long-term real estate financing, as farmers used equity in farmland assets to increase sources of operating capital, and an increase in the average size of loans purchased, including several large loans with large borrowers. The increase in new business volume for loans added under LTSPCs within the Farm & Ranch line of business in 2017 compared to 2016 reflected a large LTSPC pool added in fourth quarter 2017 with an existing customer and an increase in the average size of loans added under LTSPCs, despite the decrease in demand among Farm Credit System institutions for the LTSPC product. The increase in new business volume in the USDA Guarantees line of business in 2017 compared to 2016 reflected an increase

in lender usage of USDA guaranteed loan programs due to available federal funding for those programs. Loan purchase volume in the Rural Utilities line of business increased in 2017 compared to 2016 primarily as a result of an improvement in Farmer Mac's pricing for larger, more competitive loans to rural utilities borrowers and because CFC, Farmer Mac's only current rural utilities counterparty, is increasingly partnering with Farmer Mac in these more competitive situations. Farmer Mac did not add loans under LTSPCs in the Rural Utilities line of business during 2017, which reflects the absence of demand from CFC for the LTSPC product. Changes in AgVantage securities volume are primarily driven by the generally larger transaction sizes for that product and the fluctuating funding and liquidity needs of Farmer Mac's customer network and scheduled maturity amounts. The volume of new AgVantage securities was higher in 2017 compared to 2016 primarily due to the scheduled maturities for those periods and related refinancing activity, as Farmer Mac refinanced $1.5 billion of maturing AgVantage securities during 2017 compared to $1.3 billion in 2016.

~~Based on market conditions,~~ Farmer Mac either retains the loans it purchases or securitizes them and retains or sells Farmer Mac Guaranteed Securities backed by those securitized loans. ~~The weighted-average age of the Farm & Ranch non-delinquent eligible~~During 2023, Farmer Mac sold and securitized agricultural mortgage loans ~~purchased and retained (excluding the purchases of defaulted loans) during 2017 and 2016 was less than one year. Of those loans, 66 percentand 60 percent had principal amortization periods longer than the maturity date,~~in a structured securitization resulting in ~~balloon payments at maturity, with a weighted-average remaining term to maturity~~$281.0 million of ~~17.9 years and 17.7 years, respectively.~~

~~During 2017, 2016, and 2015, Farmer Mac securitized some of the Farm & Ranch loans it had purchased and sold the resulting~~ Farmer Mac Guaranteed ~~Securities~~Securities. Farmer Mac consolidates the assets and liabilities of the trust for this structured securitization. Farmer Mac does not consider the assets held by the related securitization trust to be available to satisfy the claims of the creditors of Farmer Mac and/or the depositor.

During 2023 and 2022, Farmer Mac realized no gains or losses from the securitization of loans that it holds in ~~the amounts of $363.5 million, $511.4 million, and $336.9 million, respectively.~~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. ~~In 2017, 2016, and 2015, $128.9~~

During 2021, Farmer Mac realized a $5.2 million ~~$273.6 million, and $255.3 million, respectively,~~gain after tax from the sale of Farmer Mac Guaranteed Securities ~~were sold to Zions First National Bank, which is a related party to Farmer Mac.~~in its structured securitization transaction.

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

~~Table 11~~

For the Year Ended December 31,
2017 2016 2015
(in thousands)
Loans securitized and sold as Farm & Ranch Guaranteed Securities $ 363,475
$ 511,393
$ 336,913
Farmer Mac Guaranteed USDA Securities 161,925
106,054
13,314
AgVantage Securities 2,383,912
2,098,852
743,158
Total Farmer Mac Guaranteed Securities issuances $ 2,909,312
$ 2,716,299
$ 1,093,385

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

Table 1219


Outstanding Business Volume
	On or Off Balance Sheet	As of December 31,
		2023		2022		2021
		(in thousands)
Agricultural Finance:
Farm & Ranch:
Loans	On-balance sheet	$	5,133,450	$	5,150,750	$	4,775,070
Loans held in consolidated trusts:
Beneficial interests owned by third-party investors (single-class)(1)	On-balance sheet	870,912		914,918		948,623
Beneficial interests owned by third-party investors (structured)(1)	On-balance sheet	561,349		296,658		—
IO-FMGS(2)	On-balance sheet	9,409		10,622		12,297
USDA Securities	On-balance sheet	2,368,872		2,407,302		2,445,806
AgVantage Securities(1)	On-balance sheet	5,835,000		5,605,000		4,725,000
LTSPCs and unfunded loan commitments	Off-balance sheet	2,999,943		2,822,309		2,587,154
Other Farmer Mac Guaranteed Securities(3)	Off-balance sheet	452,602		500,953		578,358
Loans serviced for others	Off-balance sheet	577,264		20,280		22,331
Total Farm & Ranch		$	18,808,801	$	17,728,792	$	16,094,639
Corporate AgFinance:
Loans	On-balance sheet	$	1,259,723	$	1,166,253	$	1,123,300
AgVantage Securities(1)	On-balance sheet	288,879		359,600		367,464
Unfunded loan commitments	Off-balance sheet	145,377		77,654		47,070
Total Corporate AgFinance		$	1,693,979	$	1,603,507	$	1,537,834
Total Agricultural Finance		$	20,502,780	$	19,332,299	$	17,632,473
Rural Infrastructure Finance:
Rural Utilities:
Loans	On-balance sheet	$	3,094,477	$	2,801,696	$	2,302,373
AgVantage Securities(1)	On-balance sheet	3,898,468		3,044,156		3,033,262
LTSPCs and unfunded loan commitments	Off-balance sheet	487,778		512,592		556,837
Other Farmer Mac Guaranteed Securities(3)	Off-balance sheet	—		1,169		2,755
Total Rural Utilities		$	7,480,723	$	6,359,613	$	5,895,227
Renewable Energy:
Loans	On-balance sheet	$	440,286	$	219,570	$	86,763
Unfunded loan commitments	Off-balance sheet	47,235		10,600		—
Total Renewable Energy		$	487,521	$	230,170	$	86,763
Total Rural Infrastructure Finance		$	7,968,244	$	6,589,783	$	5,981,990
Total		$	28,471,024	$	25,922,082	$	23,614,463

(1)A type of Farmer Mac Guaranteed Security.

(2)An interest-only Farmer Mac Guaranteed Security retained as part of a structured securitization.

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

Lines of Business - Outstanding Business Volume
As of December 31,
2017 2016 2015
(in thousands)
Farm & Ranch:
Loans $ 2,798,906
$ 2,381,488
$ 2,249,864
Loans held in trusts:
Beneficial interests owned by third party investors 1,399,827
1,132,966
708,111
LTSPCs 2,335,342
2,209,409
2,253,273
Guaranteed Securities 333,511
415,441
514,051
USDA Guarantees:
USDA Securities 2,068,017
1,954,800
1,876,451
Farmer Mac Guaranteed USDA Securities 284,197
139,575
41,826
Rural Utilities:
Loans 1,076,291
999,512
1,008,126
LTSPCs⁽¹⁾
806,342
878,598
522,864
Institutional Credit
AgVantage Securities 7,604,878
6,987,686
6,424,254
Revolving floating rate AgVantage facility⁽²⁾
300,000
300,000
300,000
Total $ 19,007,311
$ 17,399,475
$ 15,898,820
78


⁽¹⁾	As of December 31, 2017, 2016, and 2015, includes $20.0 million, $20.0 million, and $8.8 million, respectively, related to one-year loan purchase commitments on which Farmer Mac receives a nominal unused commitment fee.


⁽²⁾	During 2017, $100.0 million of this facility was drawn and subsequently repaid. During 2016 and 2015, this facility was not utilized. Farmer Mac receives a fixed fee based on the full dollar amount of the facility. If the counterparty draws on the facility, the amounts drawn will be in the form of AgVantage Securities, and Farmer Mac will earn interest income on those securities.

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 December 31, ~~2017:~~2023:

Table 1320


Schedule of Principal Amortization as of December 31, 2023
	Loans		Loans Underlying Off-Balance Sheet Farmer Mac Guaranteed Securities and LTSPCs		USDA Securities and Farmer Mac Guaranteed USDA Securities		Total
	(in thousands)
2024	$	613,695	$	344,092	$	111,958	$	1,069,745
2025	610,817		246,828		114,089		971,734
2026	585,917		310,052		119,223		1,015,192
2027	696,170		248,520		119,790		1,064,480
2028	814,868		299,813		120,020		1,234,701
Thereafter	8,038,730		2,483,552		1,983,870		12,506,152
Total	$	11,360,197	$	3,932,857	$	2,568,950	$	17,862,004

Schedule of Principal Amortization as of December 31, 2017
Loans Held Loans Underlying Off-Balance Sheet Farmer Mac Guaranteed Securities and LTSPCs USDA Securities and Farmer Mac Guaranteed USDA Securities Total
(in thousands)
2018 241,162
749,219
107,123
1,097,504
2019 234,966
218,473
104,035
557,474
2020 236,896
203,286
104,456
544,638
2021 245,362
216,539
106,408
568,309
2022 214,049
192,039
108,615
514,703
Thereafter 4,102,589
1,895,639
1,821,577
7,819,805
Total $ 5,275,024
$ 3,475,195
$ 2,352,214
$ 11,102,433

Of ~~the $19.0~~Farmer Mac's $28.5 billion outstanding principal balance of business volume ~~included in Farmer Mac's four lines of business~~ as of December 31, ~~2017, $7.9~~2023, $10.0 billion were AgVantage securities included in the ~~Institutional Credit line~~Agricultural Finance and Rural 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. The following table summarizes by maturity date the outstanding principal amount of both on- and off-balance sheet AgVantage securities as of December 31, ~~2017~~:2023:

Table 1421


AgVantage Balances by Year of Maturity
	As of
	December 31, 2023
	(in thousands)
2024	$	2,576,297
2025	1,676,625
2026	1,195,815
2027	1,048,898
2028	245,451
Thereafter(1)	3,279,261
Total	$	10,022,347

(1)Includes various maturities ranging from 2029 to 2044.

AgVantage Balances by Year of Maturity
As of
December 31, 2017
(in thousands)
2018⁽¹⁾
2,383,187
2019 1,118,419
2020 1,196,727
2021 1,066,491
2022 567,057
Thereafter⁽²⁾
1,572,997
Total $ 7,904,878


⁽¹⁾	~~Includes the expiration of the $300.0 million revolving floating rate AgVantage facility.~~


⁽²⁾	~~Includes various maturities ranging from 2023 to 2044.~~

The weighted-average remaining maturity of the outstanding AgVantage securities shown in the table above was ~~3.9~~4.2 years as of December 31, ~~2017~~. 2023.

9679

As part of fulfilling its guarantee obligations for Farm & Ranch Guaranteed Securities and commitments to purchase eligible loans underlying LTSPCs, Farmer Mac purchases defaulted loans, all of which are at least 90 days delinquent or in material non-monetary default at the time of purchase, out of the loan pools underlying those securities and LTSPCs, and records the purchased loans as such on its balance sheet. The purchase price for a defaulted loan purchased out of a pool of loans backing Farm & Ranch Guaranteed Securities is the then-current outstanding principal balance of the loan plus accrued and unpaid interest. The purchase price for a defaulted loan purchased under an LTSPC is the then-current outstanding principal balance of the loan, with accrued and unpaid interest on the defaulted loan payable out of any future loan payments or liquidation proceeds as received. The purchase price of a defaulted loan is not an indicator of the expected loss on that loan; many other factors affect expected loss, if any, on any loan so purchased. The delinquent loans purchased out of securitized pools during 2017, 2016, and 2015 had a weighted-average age of 4 years, 9 years, and 6 years, respectively. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk – Loans and Guarantees."

~~The following table presents Farmer Mac's purchases of defaulted loans underlying Farm & Ranch Guaranteed Securities and LTSPCs for the periods indicated:~~

~~Table 15~~

For the Year Ended December 31,
2017 2016 2015
(in thousands)
Defaulted loans purchased underlying Farm & Ranch Guaranteed Securities owned by third party investors $ 5,670
$ 2,118
$ 3,407
Defaulted loans purchased underlying LTSPCs 311
398
13,500
Total loan purchases $ 5,981
$ 2,516
$ 16,907

Related Party Transactions. As provided by Farmer Mac's statutory charter, only banks, insurance companies, and other financial institutions or similar entities may hold Farmer Mac's Class A voting common stock, and only institutions of the FCS may hold Farmer Mac's Class B voting common stock. Farmer Mac's charter also provides that holders of Class A voting common stock elect five members of Farmer Mac's 15-member board of directors and that holders of Class B voting common stock elect five members of the board of directors. The ownership of Farmer Mac's two classes of voting common stock is currently concentrated in a small number of institutions. Approximately ~~45 percent~~51% of the Class A voting common stock is held by ~~three~~four financial institutions, with ~~31 percent~~31% held by one institution. Approximately ~~97 percent~~97% of the Class B voting common stock is held by five FCS institutions (two of which are related to each other through a parent-subsidiary relationship).

Unlike some other GSEs, specifically other FCS institutions and the Federal Home Loan Banks, Farmer Mac is not structured as a cooperative owned exclusively by member institutions and established to provide services exclusively to its members. Farmer Mac, as a stockholder-owned, publicly-traded corporation, seeks to fulfill its mission of serving the financing needs of rural America in a ~~manner~~way that is consistent with providing a return on the investment of its stockholders, including those who do not directly participate in the secondary market provided by Farmer Mac. Farmer ~~Mac's policy is to~~Mac generally ~~require~~requires most financial institutions that participate in Farmer Mac's Agricultural Finance line of business to own a requisite amount of common stock, based on the size and type of ~~institution, to participate in the Farm & Ranch line of business.~~institution. As a result of this requirement, coupled with the ability of holders of Class A and Class B voting common stock to elect two-thirds of Farmer Mac's board of directors, Farmer Mac regularly conducts business with "related parties," including

institutions affiliated with members of Farmer Mac's board of directors and institutions that own large amounts of Farmer Mac's voting common stock. Farmer Mac has adopted a Code of Business Conduct and Ethics and other related corporate policies that ~~governs~~govern any conflicts of interest that may arise in these transactions, and Farmer Mac's policy is to require that any transactions with related parties be conducted in the ordinary course of business, with terms and conditions comparable to those available to any other counterparty not related to Farmer Mac.

The following table summarizes the material relationships between Farmer Mac and certain related parties. The related parties listed in the table below consist of (1) all holders of at least five percent of a class of Farmer Mac voting common stock as of December 31, ~~2017~~2023 and (2) other institutions that are considered "related parties" through an affiliation with a Farmer Mac director and that have conducted business with Farmer Mac during the two years ended December 31, ~~2017.~~2023. The table below does not specify any relationships based on the ownership of Farmer Mac's non-voting common stock or any series of preferred stock.

Table 16

Name of Institution

Ownership of

Farmer Mac Voting Common Stock

Affiliation with Any

Farmer Mac Directors

Primary Aspects of Institution's

Business Relationship with Farmer Mac

AgFirst Farm Credit Bank

84,024 shares of Class B voting common stock

(16.79% of outstanding Class B stock and 5.49% of total voting common stock outstanding)

None

In ~~both 2017~~2023 and ~~2016,~~2022, Farmer Mac earned approximately $1.4 million and $1.2 million, respectively, in fees attributable to transactions with AgFirst, primarily commitment fees for LTSPCs.

Name of Institution

Ownership of
Farmer Mac Voting Common Stock

Affiliation with Any
Farmer Mac Directors

Primary Aspects of Institution's
Business Relationship with Farmer Mac

AgriBank, FCB

201,621 shares of Class B voting common stock

(40.30% of outstanding Class B stock and 13.17% of total voting common stock outstanding)

None

Farmer Mac ~~director Richard H. Davidson is currently a director of~~did not conduct any business with AgriBank ~~and Farmer Mac director Douglas A. Felton is a former director of AgriBank.~~

~~No Farmer Mac business through any of its lines of business was conducted between the parties.~~during 2023 or 2022.

Bath State Bank

Less than 5% ownership

Farmer Mac director Dennis L. Brack isserves as a director of Bath State Bank and Bath State Bancorp, the holding company of Bath State Bank.

Farmer Mac purchased ~~$5.4~~$1.3 million and ~~$1.3 million in~~no USDA Securities from Bath State Bank in ~~2017~~2023 and ~~2016,~~2022, respectively.

Farmer Mac also purchased $0.3 million and $2.1 million in Agricultural Finance mortgage loans from Bath State Bank in 2023 and 2022, respectively.

~~Name of Institution~~

~~Ownership of~~

~~Farmer Mac Voting Common Stock~~

~~Affiliation with Any~~

~~Farmer Mac Directors~~

~~Primary Aspects of Institution's~~

~~Business Relationship with Farmer Mac~~

CoBank, ACB

163,253 shares of Class B voting common stock

(32.63% of outstanding Class B stock and 10.66% of total voting common stock outstanding)

Farmer Mac director ~~Douglas E. Wilhelm~~Everett M. Dobrinski served as ~~an executive officer~~a director of CoBank through December 2019. Although no longer a director of CoBank, Mr. Dobrinski served on CoBank's independent nominating committee until ~~June 30, 2012. Mr. Wilhelm is also currently a party to a services agreement with CoBank, under which he serves as an employee of CoBank.~~December 2023.

No Farmer Mac ~~business through any of its lines of business was conducted between the parties.~~

purchased $438.8 million and $376.0 million in loans from CoBank in 2023 and 2022, respectively.

In 2023 and 2022, CoBank retained $3.6 million and $3.5 million of servicing fees related to the loan participations sold to Farmer Mac, respectively.

Farm Credit Bank of Texas (FCBT)

38,503 shares of Class B voting common stock

(7.70% of outstanding Class B stock and 2.51% of total voting common stock outstanding)

None

Farmer Mac director Thomas W. Hill served as an executive officer of FCBT until November 2010. Mr. Hill is also currently a party to a services agreement with FCBT, under which he serves as an employee of FCBT.

In ~~2017~~2023 and ~~2016,~~2022, Farmer Mac earned approximately ~~$1.0~~$3.4 million and ~~$1.1~~$2.9 million, respectively, in fees attributable to transactions with FCBT, primarily commitment fees for LTSPCs.

In ~~2017~~both 2023 and ~~2016,~~2022, FCBT retained approximately ~~$0.2~~$0.1 million ~~and $0.3 million, respectively, in servicing fees for its work as a Farmer Mac central servicer.~~

~~First Dakota National Bank (First Dakota)~~

~~Less than 5% ownership~~

~~Farmer Mac director Dennis Everson is a director of First Dakota and also served as Branch Administration Director of First Dakota until December 2012.~~

~~Farmer Mac purchased $28.5 million and $24.7 million in loans from First Dakota in 2017 and 2016, respectively, and entered into $0.4 million of new LTPSCs with First Dakota in 2017 and none in 2016.~~

~~In 2017 and 2016, First Dakota retained approximately $1.2 million and $1.1 million, respectively,~~ in servicing fees for its work as a Farmer Mac servicer.

Matthew 25 Management Corp.

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

None

Farmer Mac did not conduct any business with Matthew 25 Management Corp. during 2023 or 2022.

National Rural Utilities Cooperative Finance Corporation (CFC)

81,500 shares of Class A voting common stock

(7.91% of outstanding Class A stock and 5.32% of total voting common stock outstanding)

None

Transactions with CFC ~~represent 100 percent~~represented 37.1% and 46.7% of ~~business volume~~loans under the Rural ~~Utilities~~Infrastructure Finance line of business ~~since its inception in 2008,~~during 2023 and ~~100 percent of the AgVantage securities secured by Rural Utilities loans that have been issued to date.~~2022, respectively.

~~Transactions with CFC during 2017~~In 2023 and 2016 represented 10.3 percent and 16.7 percent, respectively, of Farmer Mac's total purchases for those years. Transactions with CFC represented 24.6 percent and 25.7 percent, respectively, of Farmer Mac's total outstanding business volume as of December 31, 2017 and 2016.

~~Name of Institution~~

~~Ownership of~~

~~Farmer Mac Voting Common Stock~~

~~Affiliation with Any~~

~~Farmer Mac Directors~~

~~Primary Aspects of Institution's~~

~~Business Relationship with Farmer Mac~~

~~In both 2017 and 2016, Farmer Mac earned guarantee fees of approximately $0.1 million attributable to transactions with CFC. In 2017 and 2016,~~2022, Farmer Mac earned commitment fees of approximately ~~$2.2~~$1.0 million and ~~$2.0~~$1.1 million, respectively, attributable to transactions with CFC.

In ~~2017~~2023 and ~~2016,~~2022, Farmer Mac earned interest income of ~~$43.9~~$143.5 million and ~~$27.6~~$79.4 million, respectively, attributable to AgVantage transactions with CFC.

In ~~2017~~2023 and ~~2016,~~2022, CFC retained approximately ~~$3.5~~$3.7 million and ~~$3.3~~$3.4 million ~~respectively,~~ in servicing fees for its work as a Farmer Mac ~~central servicer.~~servicer, respectively.

Name of Institution

Ownership of
Farmer Mac Voting Common Stock

Affiliation with Any
Farmer Mac Directors

Primary Aspects of Institution's
Business Relationship with Farmer Mac

CFC is currently the only servicer of rural utilities loans and loans underlying LTSPCs in the Rural Utilities line of business and securing AgVantage securities in the Institutional Credit line of business.

The Vanguard Group, Inc.

~~56,376~~53,805 shares of Class A voting common stock

(~~5.47%~~5.22% of outstanding Class A stock and ~~3.68%~~3.51% of total voting common stock outstanding)

None

~~None~~

No Farmer Mac did not conduct any business ~~through any of its lines of business was conducted between the parties.~~

with The Vanguard Group during 2023 or 2022.

Zions ~~First~~Bancorporation, National ~~Bank~~Association (Zions)

322,100 shares of Class A voting common stock

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

None

In ~~2017~~2023 and ~~2016,~~2022, Farmer Mac's purchases of on-balance sheet Agricultural Finance mortgage loans from Zions ~~under the Farm & Ranch line of business~~ represented approximately ~~11.2 percent~~9.5% and ~~15.9 percent,~~12.9%, respectively, of ~~Farm & Ranch~~Agricultural Finance mortgage loan purchase volume for those years. Those purchases represented ~~7.5 percent~~6.9% and ~~11.2 percent,~~9.6%, respectively, of total ~~Farm & Ranch~~Agricultural Finance mortgage loan business volume (excluding AgVantage and USDA Securities) for those years. The purchases of USDA Securities from Zions ~~under the USDA Guarantees line of business~~ represented approximately ~~3.8 percent~~0.1% and ~~3.4 percent,~~1.5%, respectively, of the USDA Guarantees ~~line of business~~ purchases for the ~~year~~years ended December 31, ~~2017~~2023 and ~~2016. Farmer Mac did not purchase AgVantage securities from Zions for the year ended December 31, 2017 and 2016.~~2022. Transactions with Zions represented ~~5.0 percent~~3.1% and ~~5.3 percent,~~3.5%, respectively, of Farmer Mac's total outstanding business volume (excluding loans serviced for others) as of December 31, ~~2017~~2023 and ~~2016.~~2022.

In ~~2017~~2023 and ~~2016,~~2022, Zions retained approximately ~~$11.5~~$11.2 million and ~~$9.9~~$10.4 million, respectively, in servicing fees for its work as a Farmer Mac servicer.

As discussed in more detail in Note ~~2(q)~~2(o) to the consolidated financial statements, Farmer Mac’s consolidated financial statements include the accounts of ~~VIEs~~variable interest entities ("VIEs") in which Farmer Mac determines itself to

~~100~~

be the primary beneficiary, including securitization trusts where Farmer Mac shares the power to make decisions ~~regarding~~about default mitigation with a related party. If that related party status changes, consolidation or deconsolidation of securitization trusts may occur. For more information about related party transactions, see Note 3 to the consolidated financial statements.

~~Outlook~~82

Outlook

Business Outlook

Products and Portfolio.Farmer Mac ~~continues to provide~~serves a ~~stable source of~~vital role in serving rural America by offering liquidity, capital, and risk management tools as ~~the~~a secondary market that ~~helps meet~~help increase the accessibility of financing ~~needs of~~for American agriculture and rural ~~America. While the pace~~infrastructure. The growth trajectory of Farmer ~~Mac's growth will depend on~~Mac is closely tied to the capital and liquidity needs of the ~~participants~~lending institutions serving agriculture and rural infrastructure businesses and the overall financial health of borrowers in these sectors. Despite significant increases in market interest rates over the ~~rural financing business,~~past two years and global and economic volatility, Farmer Mac ~~foresees opportunities~~was able to increase outstanding business volume and net effective spread by 9.8% and 28.0%, respectively, in 2023. The increase in outstanding business volume and net effective spread primarily reflects Farmer Mac's effective and active asset-liability and capital management strategies, the diversification of Farmer Mac’s business model, and the resiliency of the agriculture and rural infrastructure sectors.

Several factors continue to influence business volume growth dynamics. The rise in market interest rates that have persisted over the past few years has had a direct impact on Farmer Mac’s Farm & Ranch product interest rates, and there generally exists an inverse correlation between Farm & Ranch new loan purchase volumes and changes in Farm & Ranch product interest rates, with higher product interest rates slowing portfolio loan prepayments. The net effect of these forces contributed to positive Farm & Ranch loan purchase portfolio growth in 2023 as new Farm & Ranch loan purchases outpaced loan prepayments, although the overall net Farm & Ranch loan purchase portfolio growth was below prior years, primarily because of the continued higher product interest rate environment. Future changes in monetary policy and sustained elevated product interest rates are anticipated to influence the demand for ~~continued~~Agricultural Finance mortgage loans and the pace of repayments. Farmer Mac experienced significant momentum in its wholesale finance product during 2023, driven by volatile market credit spreads resulting in greater liquidity and diversification needs from our counterparties. This momentum could continue into 2024 and will be determined by market interest rates and credit spreads, overall economic conditions, and the relative value of Farmer Mac’s products versus the broader market. Corporate AgFinance loan purchases and unfunded commitments increased 12.9% in 2023 to $1.4 billion despite volatile transaction velocity throughout 2023 due to market and economic uncertainty. The Rural Infrastructure Finance segments showed substantial business volume growth ~~across all four~~in 2023, driven by counterparty demand for wholesale funding, increased investment activity in telecommunications and rural broadband borrowers, and additional financing for renewable energy projects. Finally, Farmer Mac increased assets under management through the expansion of its ~~lines~~servicing platform through loan pool purchases and purchases of ~~business, driven~~loan servicing rights for loans owned by ~~several key factors:~~other entities.

AsOpportunities for profitable future growth include Farmer Mac's crucial role in alleviating liquidity, equity capital, and return-on-equity capital challenges faced by agricultural and rural utilities lenders face increased equity capital requirements under regulatory frameworks or rating agency requirements, or seek to reduce exposure due to lending limits or concentration limits, Farmer Mac can provide relief for those institutions throughinfrastructure lenders. The suite of offerings encompasses loan and portfolio purchases, participations, guarantees, ~~or LTSPCs.~~

While lending opportunities in the rural utilities industry generally remain moderate, Farmer Mac believes there is opportunity for growth among larger rural utilities borrowers because CFC, the only lender that currently participates in Farmer Mac's Rural Utilities line ofLTSPCs, wholesale funding, and securitizations. Ongoing business increasingly partners with Farmer Mac to provide competitive pricing for transactions with these borrowers. Farmer Mac also believes that there are growth opportunities within its Institutional Credit line of business because it provides a competitive source of debt funding for CFC.

~~As a result of targeted marketing~~ and ~~brand awareness initiatives,~~ product development efforts ~~and the emergence of~~continue to attract institutional investors ~~within agriculture,~~and nontraditional lenders, resulting in the diversification of Farmer Mac's ~~lender network and Institutional Credit~~ customer base ~~continues to expand, which may generate additional~~and product set, potentially generating increased product demand ~~for Farmer Mac's products~~ from new sources. Farmer Mac’s improved loan servicing capabilities enhance our loan portfolio purchase value proposition, adding new product offerings to an increasingly diverse customer base.

~~Consolidation, expansion, and vertical integration occurring across many sectors of the agricultural industry and in agricultural banking, coupled with Farmer Mac's new and expanded business~~

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

for loan purchases, risk management solutions, and wholesale funding. This growth may lead to an increase in ~~Farmer Mac's loan purchase volume and~~ the average transaction size within Farmer ~~Mac's Farm & Ranch line~~Mac’s lines of business. The financing needs arising from mergers, acquisitions, consolidation, and vertical integration in the agricultural and rural infrastructure industries present further opportunities for Farmer Mac’s loan purchase products and other financing solutions. Furthermore, investments supporting consumer and food supply demand may increase financing needs in the food and agriculture supply chain, potentially requiring incremental capital support through the secondary market. Deepening relationships with eligible rural infrastructure counterparties are expected to continue to create opportunities to support fiber and broadband-related projects, rural telecommunications investments, and renewable energy projects.

Operations. Throughout 2023, Farmer Mac was not affected by the liquidity concerns that affected many regional and national banks due to fluctuations caused by elevated interest rates and deposit withdrawals. Unlike depository institutions, Farmer Mac's funding strategies do not rely on deposits, allowing us to navigate beyond short-term liquidity disruptions and to take advantage of increased opportunities in a competitive lending environment. Our funding advantage over regional and national banks is also aided by the fact that our debt has a contractual term to maturity and that only we have the ability to call our callable debt before its original maturity date when market conditions are beneficial to Farmer Mac. In contrast, depository institutions largely rely on demand deposit accounts in which the depositors hold the right to withdraw at any time. Because of these differences in funding strategies, certain economic disruptions may have a positive impact on Farmer Mac’s funding costs relative to the overall market.

The increase in short-term rates during the last two years has provided an asymmetric benefit to Farmer Mac's earnings as a result of effective capital allocation and interest rate risk strategies. Our proactive equity capital allocation strategies help to limit any downside effect to earnings when rates decline. Farmer Mac's fundamental asset-liability management approach, which matches the duration and convexity of assets and liabilities in all rate environments, also helps to minimize earnings volatility during periods of short-term interest rate fluctuations.

In addition to active asset-liability management, Farmer Mac's business may benefit from natural business hedges that help mitigate vulnerability to effects from interest rate volatility. When interest rates rise, prepayments tend to decline, but interest earned on excess cash and capital increases, maintaining Farmer Mac's strong market access without relying on deposits. Conversely, when interest rates decline, loan purchase volume often increases, but prepayments tend to rise as well. Farmer Mac manages its interest rate risk by issuing callable debt and maintaining market-based credit spreads. Although these natural business dynamics may not be perfect offsets, they often effectively counterbalance to mitigate volatility from changes in short-term interest rates.

Farmer Mac ~~believes that these growth opportunities will be important~~expects continued increases in ~~replacing income earned on~~its operating expenses over the ~~loans and other assets~~next several years as ~~they mature, pay down, or are reinvested at potentially lower spreads.~~

~~Expense Outlook~~. ~~Farmer Mac continues~~we continue to expand ~~its~~our investments in human capital, technology, and business infrastructure to increase capacity and efficiency as ~~it seeks~~we seek to accommodate ~~the aforementioned~~ growth opportunities and achieve ~~its~~our long-term strategic objectives. ~~Accordingly,~~Investments in infrastructure and funding platforms to support strategic objectives are expected to allow Farmer Mac ~~expects~~to scale more efficiently with future portfolio and earnings growth. These investments will likely help improve product delivery and funding efficiency, potentially creating additional benefits for future growth.

Another focus of our infrastructure investments will be a continued effort to expand our servicing capabilities and to enhance the ~~annual increases in its operating expenses to be above historical averages over the next several years. Specifically,~~efficiency and effectiveness of processes associated with loan onboarding and servicing. Farmer Mac ~~believes that aggregate compensation~~will continue to leverage technology enhancements and ~~employee benefits~~servicing

standardization efforts to drive scalability and ~~general~~consistency. In 2023, Farmer Mac’s servicing portfolios grew by more than 50% in both number of loans serviced and ~~administrative expenses will increase approximately 15 percent in 2018 relative~~outstanding balances. Servicing capabilities also increased to ~~2017, with increases likely~~incorporate new features as we started servicing eligible loans on behalf of others. Technology enhancements are planned for 2024 to ~~remain elevated in 2019.~~

~~CEO Search~~. ~~In December 2017,~~continue to incorporate all Farmer Mac ~~appointed Lowell L. Junkins, the chairman of its board of directors,~~loan portfolios onto our servicing platform and to ~~serve~~provide flexibility in accessing loan portfolio information, as ~~the Acting President~~well as streamlining operational workflows.

Agricultural Finance Industry Outlook

Farm Incomes. Overall farm incomes fell in 2023 and ~~CEO of Farmer Mac following the termination of employment of Farmer Mac's former President and CEO while Farmer Mac conducts a search for a successor. Shortly~~are forecast to fall again in 2024 after ~~that appointment, the board of directors formed a CEO search committee~~

~~101~~

consisting of six board members to lead a thorough search process. Since its formation, the search committee has been soliciting stakeholder feedback, developing a CEO profile and position description, and evaluating executive search firms. The CEO search committee recently selected an executive search firm and will seek to recommend board approval of areaching new ~~President and CEO with appropriate qualifications and expertise~~highs in ~~a timely manner.~~

~~Agricultural Industry~~. The agricultural industry includes many diverse sectors that respond in different ways to changes in economic conditions. Those individual sectors often are affected differently, sometimes positively and sometimes negatively, by prevailing domestic and global economic factors and regional weather conditions. This results in cycles where one or more sectors may be under stress while others are not. The profitability of agricultural sectors is also affected by commodity inventories and their associated market prices, which can vary largely as a result of global production trends, weather patterns, access to water supply, and harvest conditions that may affect both domestic and global supplies.

Net cash income, as reported by the USDA and one of its benchmark measures of economic activity in the agricultural industry, has declined significantly since reaching a cyclical peak in 2013. However, changes in farm income levels are largely localized and depend on producer region and commodity production type.2022. The USDA estimates that ~~aggregate~~ net cash farm income ~~levels rose~~climbed 34% to $202.2 billion in ~~2017~~2022, a new all-time high. The primary driver of increased profitability in 2022 was higher cash revenues, in contrast to 2019 and 2020, when elevated government support payments supported farm incomes. Although the USDA estimates that net cash farm income decreased 21% in 2023 and will decrease another 24% in 2024 due to lower commodity prices and elevated farm expenses, the average of 2023 and 2024 farm income projections are 10% higher than the 10-year average, demonstrating the continued strength in farm profitability. Grain commodity ~~quantities sold~~prices may see increased volatility in 2024 due to changing global supply levels, but some livestock and ~~stabilizing commodity prices. Farmland~~animal protein sectors may see offsetting benefits from lower feed costs, particularly the cattle sector. Demand for corn and soybean by-products could see a boost in 2024 as renewable diesel and sustainable aviation fuel markets mature. Farm expenses could also abate somewhat in 2024, with lower expected feed, fertilizer, and fuel costs partially offset by higher expected interest, labor, and rental rates.

Land Values. Record-setting farm incomes in 2021 and 2022, combined with historically low interest rates in 2020 and 2021, drove a rapid rise in land values ~~have weakened~~and a decrease in farm delinquencies and bankruptcies. Momentum for farmland values persisted throughout 2023 due to high levels of farm liquidity and a constrained supply of farmland for sale. Land value survey data from the USDA show a 7.4% increase in average farm real estate values from June 2022 to June 2023. Annual farm real estate value gains were highest in the ~~Midwest region, where producers are most exposed to changes~~Northern Plains (13.7%) and the Southern Plains (9.4%) but also strong in the ~~grain markets. In this region, data released by~~Lake states (8.2%), the ~~USDA indicates an average decline~~Corn Belt (7.1%), and the Southeast (5.7%). Farmland value growth rates moderated in the second half of 2023 in the face of continued higher market interest rates. The Federal Reserve Bank of Chicago AgLetter reported a 5% gain in farmland values in the Seventh District (primarily Iowa, Indiana, Illinois, and Wisconsin) between October 2022 and October 2023. Data from the Federal Reserve Bank of ~~between 0.5 percent~~Kansas City show a similar rise in land values in the Tenth District (primarily Kansas, Missouri, Nebraska, and ~~1.8 percent~~Oklahoma) during that same period. Growth rates in ~~2017. In all other regions,~~land values could moderate slightly into 2024 due to compressing farm profitability and a continued elevated interest rate environment, although a low supply of available farmland ~~values appear to be flat to increasing. For example, data released by~~and strong demand for the ~~USDA indicates that Pacific state~~asset class across a wide variety of investors could help maintain balance in the farmland ~~values increased an average of 8.7 percent in 2017.~~ transaction markets.

While regional averages for farmland values generally provide a good barometer for the overall ~~movement~~changes in U.S. farmland values, economic forces affecting land markets are highly localized, and some markets may experience greater volatility in farmland values than state or national averages indicate.

~~Agricultural export demand also depends significantly~~ Based on exchange rates. A strengthening U.S. dollar relative to other worldwide currencies causes American agricultural commodities to be less competitive globally, thereby diminishing their global demand and driving down producer profits. Conversely, a weakening U.S. dollar reduces the cost of American agricultural commodities worldwide, causing them to be more competitive in global markets. The U.S. dollar weakened by more than 10 percent during 2017, as measured by the U.S. Dollar Index, which has recently enhanced the competitiveness of U.S. agricultural exports. However, a slowdown in global economic growth or changes in trade policies and agreements could adversely affect the demand for certain U.S. agricultural exports, which may result in downward pressure on commodity prices.

The U.S. experienced several severe weather events and natural disasters in 2017. Although severe weather events and natural disasters may damage a borrower’s property used in agricultural production,our robust collateral underwriting standards, we believe that damage may not affect a borrower’s ability to repay its obligations due to risk mitigating payments available in many cases from property and casualty insurance, crop insurance, and government disaster relief. Farmer Mac is not aware of any loans in its portfolio that are currently experiencing distress due to the weather events that occurred in 2017 and believes that these events are not likely to have a material impact on the quality or performance of Farmer Mac’sour loan ~~portfolio.~~

In recent years, the 90-day delinquencies and credit losses in Farmer Mac's portfolio have remained low compared to their historical averages. However, some indications of stress have emerged, as the volume of Farmer Mac's substandard assets has generally increased since 2015 and 90-day delinquencies have

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generally increased throughout 2017. Both measures have increased compared to the historically favorable levels observed in recent years. To date, the increases in these two measures have not yet translated into rising credit losses. Farmer Mac believes that any losses associated with the current agricultural credit cycle will be moderated by the strength and diversity of its portfolio, which Farmer Mac believes is adequately collateralized. Farmer Mac believes that its portfolio remains sufficiently diversified, both geographically and by commodity, and that its portfolio has been underwritten to high credit quality standards. Accordingly, Farmer Mac believes that its portfoliocollateral is well-positioned to endure reasonably foreseeable volatility in farmland values due to external factors.

Markets and ~~commodity prices. Farmer Mac also continues~~Weather. Exogenous factors facing farm and food producers can create uncertainty and market instability within the sector. Some of the external market conditions that could adversely affect the farm and food sectors in 2024 include foreign trade and trade policy, supply chain disruptions, and

environmental conditions. The U.S. agricultural sector has become increasingly dependent on foreign markets as a source of demand, making trade policy an important consideration for farms and food. The USDA projects that U.S. agriculture exports will drop to ~~closely monitor sector profitability,~~$169.5 billion in 2024, a 14% decrease relative to peak levels in 2022. Through November 2023, agricultural export values were down approximately 11% in 2023 compared to 2022. The value of the U.S. dollar relative to other major currencies fell 3% in 2023, but economic and geopolitical uncertainties such as conflicts in Eastern Europe and the Middle East increased U.S. dollar volatility during the year. A strong U.S. dollar could potentially be a headwind for farm, food, fiber, and fuel exports heading into 2024. Slower global growth could also be a headwind for consumer-oriented products like animal proteins, dairy, fruits, and nuts, and Ukrainian corn and wheat production may eventually stabilize.

Severe weather conditions and long-term environmental change continue to shape agricultural ~~land~~sectors. The U.S. experienced 28 separate billion-dollar weather disasters in 2023, the highest number of billion-dollar weather disasters on record, as tracked by the National Oceanic and Atmospheric Administration. Many of those events affected agriculture, including midwestern storms, flooding, western wildfires, excessive heat, and drought. Federal crop insurance provides a strong mitigator against this risk, but farmers and ranchers face increasingly severe weather incidents. Long and persistent heat and drought conditions affected agricultural production regions in the western and midwestern parts of the United States in 2021 and 2022. There was a sizable improvement in conditions in 2023 for large portions of the West Coast, especially California, but drought conditions have intensified in other areas of the country. Approximately 14% of the continental U.S. was classified as being in severe to exceptional drought as of January 2, 2024, according to data from the National Center for Environmental Information. For loans in other areas that commonly experience exceptional drought (primarily in California), Farmer Mac's underwriting standards include an assessment of anticipated long-term water availability for the related property and how water availability impacts the collateral value and ~~geographic trends~~the borrower's liquidity position to ~~tailor underwriting practices~~mitigate that risk.

Ag Processing and Food Supply Chain. The production of food, feed, fiber, and biofuels has been economically viable in the past few years, but some factors may change in 2024. Rising consumer inflation boosted the profitability of the food processing and supply chains in 2021 and 2022. Lower consumer prices increased the volume of consumer spending but also limited the profit expansion of food and fiber businesses. Biofuels have gained more demand due to ~~changing conditions. For more information about the loan balances, loan-to-value ratios, 90-day delinquencies,~~low-carbon regulations in several states and ~~substandard asset rate~~incremental tax benefits for the ~~Farm & Ranch loans~~production of renewable diesel and sustainable aviation fuel. A large amount of planned biofuel projects and new facilities for 2024 and 2025 could raise the prices of raw materials such as corn and soybeans. A strong U.S. dollar, trade issues, and a high risk of global economic turmoil could pose challenges for these sectors in 2024. Nonetheless, consumer spending remains strong at the beginning of 2024, creating favorable conditions for value-added food, feed, fiber, and biofuel consumption. Credit demand in these sectors could grow in the next few quarters if interest rate policy moderates, inflation rises again, or economic uncertainty clears up.

Rural Infrastructure Finance Industry Outlook

Power and Energy. Economic conditions affecting rural power and electricity markets typically follow those in the general economy. According to data from the U.S. Energy Information Administration, sales and the revenue from the sale of electricity to customers have slowed, with an annual decrease in sales of 1.1% and an increase in revenue of 2.9%, respectively, in the last 12 months through November 2023 compared to November 2022. This decrease in sales was driven by a drop in the residential electricity sector. The average price of electricity to industrial customers increased 2.0% in November 2023 relative to 2022. Higher energy input prices, such as natural gas and coal, became a headwind in 2022. Natural gas

prices rose consistently in 2021 and 2022 because of reduced supply and additional demand for U.S. liquified natural gas from European countries. Coal prices also rapidly increased in 2022, driven by higher natural gas prices and additional overseas demand to offset limited Russian coal exports. Oil and natural gas price volatility moderated throughout 2023, but geopolitical uncertainty in the Middle East and Eastern Europe could increase volatility in 2024. Despite higher input costs, power producers are generally able to pass cost increases through higher retail electricity prices, as evidenced by the increase in retail electricity price increases throughout 2022 and parts of 2023. Through December 31, 2023, Farmer Mac had not observed material degradation in the financial performance of its rural utilities portfolio, and that portfolio has never had a serious delinquency or default since its inception. Credit demand for electric cooperatives will likely be tied to ongoing normal-course capital expenditures related to maintaining and upgrading utility infrastructure. These growth opportunities may be affected by the demand for electric power in rural areas, capital expenditures by electric cooperatives driven by regulatory or technological changes, the changing interest rate environment, increased policy initiatives to support rural connectivity, and competitive dynamics within the rural utilities cooperative finance industry. Generally, these investments are expected to continue at historical levels based on the replacement and modernization of existing infrastructure.

Telecommunications. Rural telecommunication connectivity has proven to be of vital economic importance in the last decade, as more households and agricultural enterprises require more data and connectivity to thrive. The rapid growth in digital technologies, including the ongoing interest and investment in artificial intelligence, advancements in cloud computing, and wireless network densification, will require significantly more computing and storage capabilities as well as investment in additional fiber network capacity. These industry tailwinds are creating additional investments in rural telecommunications infrastructure by cooperative and non-cooperative providers, which is aided by access to many federally funded programs, such as USDA's Broadband Equity Access and Deployment Program (BEAD), the Federal Communications Commission's Rural Digital Opportunity Fund (RDOF), the USDA’s ReConnect program, and the USDA’s Telecommunications Infrastructure Loan and Loan Guarantee program. 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 and wireless broadband increasingly important to rural economic opportunity and precision agriculture.

Renewable Energy. Growth in renewable energy generation and deployment of energy storage technologies has the potential to continue to deepen Farmer Mac's ~~portfolio~~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 48% in the next five years, compared to total electric capacity growth of 10%. The rising cost of fossil fuel-based inputs combined with the falling costs of renewable power generation may hasten this increase in capacity along with recently enacted legislation, such as the Inflation Reduction Act of ~~December 31, 2017, see "Management's Discussion~~2022 that incentivizes domestic production in clean energy technologies such as solar and ~~Analysis~~wind. Because of ~~Financial Condition~~these policy tailwinds, analytics from Bloomberg New Energy Finance (BNEF) estimate that investors will install nearly 400 gigawatts of renewable energy capacity between 2023 and ~~Results of Operations—Risk Management—Credit Risk – Loans~~2030. BNEF analysis also anticipates that nearly $2.5 trillion will be invested in renewable projects between 2021 and ~~Guarantees."~~2050. If realized, growth in renewable energy capacity has the potential to broaden Farmer Mac's customer base focused on financing renewable energy projects and companies. In response to this expected growth, Farmer Mac has hired industry-specialized staff and deployed new financing products tailored to the renewable energy sector, which represents a new and growing market opportunity for Farmer Mac.

Legislative and Regulatory Outlook. Farmer Mac continues to monitor ~~the establishment~~potential legislative and ~~evolution of legislation and regulations, as well as the status of various international trade agreements and partnerships,~~regulatory changes that could affect farmers, ranchers, rural lenders, and rural America in general. The Tax Cuts and Jobs Act, signed into law in December 2017, may result in lower overall effective tax rates for U.S. farmers and ranchers, thereby improving after-tax returns for farming operations. The Agricultural Act of 2014, also referred to as the U.S. Farm Bill, expires in September 2018, at which time it is likely to be replaced by new legislation. Various federal agricultural policies, including those affecting crop subsidies, crop insurance, commodity support programs, and other aspects of agricultural production, in effect under the current U.S. Farm Bill may be altered with the enactment of new legislation. New legislation and regulations focused on groundwater management practices, including in California, may result in tighter restrictions on groundwater usage that could negatively affect agricultural producers in the future. Finally, as the Trump administration and the U.S. Congress continue their review of existing regulations and the promotion of new legislative or regulatory proposals and policies, Farmer Mac will monitor the effects that any changes in legislation or regulation could have on Farmer Mac or its ~~customers.~~stakeholders, including:

•On November 16, 2023, President Biden signed into law a one-year extension of the 2018 farm bill. The extension (through September 30, 2024) will give Congress more time to reauthorize and update a variety of programs impacting farm profitability, agricultural credit, and rural infrastructure. A farm bill is a critical piece of legislation for a variety of Farmer Mac's ~~marketing and brand awareness initiatives directed towards~~customers. Congress has started an extensive process to review programs that are included in the ~~Farm & Ranch line of business focus on lenders that have demonstrated a commitment to agricultural lending based on their lending history.~~farm bill in preparation for reauthorization. Farmer Mac ~~directs~~is seeking changes to its ~~outreach efforts~~charter in this farm bill reauthorization to ~~these~~enhance its partnerships and services in support of lenders ~~through direct personal contact, which is facilitated through~~serving farmers, ranchers, agribusinesses, and rural infrastructure. Because the source of Farmer Mac's ~~frequent participation in state~~charter is federal statute, any proposed changes to the text of our charter are subject to approval by Congress and ~~national banking conferences, its alliances with~~being signed into law by the ~~American Bankers Association~~President of the United States.

•On October 5, 2023, FCA approved a final rule on cyber risk management. The rule requires an assessment of internal and external risk factors, identification of potential systems and software vulnerabilities, the establishment of a risk management program for the risks identified, development of a cyber risk training program, policies for managing third-party relationships, and the ~~Independent Community Bankers~~establishment of ~~America, and its business relationships with~~board reporting requirements. The effective date of the final rule is January 1, 2025.

•The FCA's proposed 2023 regulatory agenda includes a proposed rulemaking to review Farmer Mac's regulatory capital framework. The FCA's regulatory agenda estimates that proposed rulemaking in May 2024, although this timeline may change. Farmer Mac's management team will continue to monitor the FCA's process for this potential rulemaking.

•Two of the three members of the ~~Farm Credit System. Farmer Mac's initiatives~~FCA board are currently serving in holdover status because their terms have expired. These board members will continue to ~~increase~~serve in their roles until replacements are nominated by the ~~awareness of Farmer Mac~~President and ~~its products within~~confirmed by the agricultural lender community and the larger agricultural industry have included hosting events on relevant agricultural lending topics, participating on speaker panels at agriculture-related regional and national conferences, and distributing original content about conditions in the agricultural economy. In the Farm & Ranch line of business, Farmer Mac is experiencing stronger demand for its loan products. Demand for Farmer Mac's secondary market tools could also increase as rural lenders adapt to new and changing regulations, which may require lenders to obtain more liquidity and capital to continue their lending practices.U.S. Senate.

Farmer Mac also directs marketing efforts towards the agricultural industry by trying to identify and develop relationships with potential issuers of AgVantage securities, including insurance company agricultural lenders, agricultural finance companies, and bank and non-bank agricultural lenders such as agricultural mortgage funds, who can pledge loans as collateral to obtain financing as part of Farmer Mac's Institutional Credit line of business. As part of these efforts, Farmer Mac has increased its focus on

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wholesale financing for institutional investors in agricultural assets that qualify as eligible collateral under Farmer Mac's charter. Farmer Mac has tailored a version of its AgVantage product to this type of issuer, which is referred to as the Farm Equity AgVantage product. Farmer Mac also offers other AgVantage products tailored to fund investors in agricultural mortgages. Farmer Mac directs its outreach efforts to these potential issuers through its business relationships within the agricultural community and through executive outreach to institutions whose profile presents opportunity to benefit from wholesale financing. As institutional investment in agricultural assets continues to grow, Farmer Mac believes that it is in a unique position to help increase access to capital for these types of counterparties and thereby provide a new source of capital to benefit rural America. Farmer Mac designed the Farm Equity AgVantage product to provide an efficient, low-cost source of financing tailored to meet the needs of institutional investors that can be adapted to many different types of organizational structures and for both public and private institutional investors. Farmer Mac believes there is opportunity to expand this type of business as both the trend toward institutional investment in agricultural assets and awareness of the Farm Equity AgVantage and other AgVantage product offerings continue to grow.For more information about the Farm Equity AgVantage product, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk – Institutional" in this report.

~~Rural Utilities Industry~~. Demand for capital within the rural utilities industry generally remains moderate, which has resulted in an ongoing high level of competition between rural utilities cooperative lenders that could suppress loan growth opportunities for those lenders, including lenders that participate in Farmer Mac's Rural Utilities line of business. Although competitive pressures remain within the rural utilities lending industry, Farmer Mac believes there is opportunity for growth among larger rural utilities borrowers because CFC increasingly partners with Farmer Mac to provide competitive pricing for transactions with these borrowers. Farmer Mac also believes there are growth opportunities within its Institutional Credit line of business because the wholesale funding rates that Farmer Mac provides may be highly competitive compared to other available sources of debt funding for rural utilities cooperative lenders.

Balance Sheet Review

~~Assets~~.The following table summarizes Farmer Mac's ~~total assets~~balance sheet as of ~~December 31, 2017 were $17.8 billion, compared to $15.6 billion as of December 31, 2016.~~the periods indicated:

Table 23


	As of				Change
	December 31, 2023		December 31, 2022		$		%
	(in thousands)
Assets
Cash and cash equivalents	$	888,707	$	861,002	$	27,705	3	%
Investment securities	4,979,504		4,628,268		351,236		8	%
Farmer Mac Guaranteed Securities	9,745,548		8,628,380		1,117,168		13	%
USDA Securities	2,355,412		2,411,601		(56,189)		(2)	%
Loans, net of allowance	9,607,531		8,994,350		613,181		7	%
Loans held in trusts	1,431,818		1,211,116		220,702		18	%
Other	515,862		598,393		(82,531)		(14)	%
Total assets	$	29,524,382	$	27,333,110	$	2,191,272	8	%
Liabilities
Notes Payable	$	26,336,542	$	24,469,113	$	1,867,429	8	%
Debt securities of consolidated trusts held by third parties	1,351,069		1,181,948		169,121		14	%
Other	424,908		410,091		14,817		4	%
Total liabilities	$	28,112,519	$	26,061,152	$	2,051,367	8	%
Total equity	1,411,863		1,271,958		139,905		11	%
Total liabilities and equity	$	29,524,382	$	27,333,110	$	2,191,272	8	%

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

As of December 31, 2017, Farmer Mac had $0.3 billion of cash and cash equivalents and $2.3 billion of investment securities compared to $0.3 billion of cash and cash equivalents and $2.5 billion of investment securities. As of December 31, 2017, Farmer Mac had $7.6 billion of Farmer Mac Guaranteed Securities, $5.3 billion of loans, net of allowance, and $2.1 billion of USDA Securities. This compares to $6.0 billion of Farmer Mac Guaranteed Securities, $4.5 billion of loans, net of allowance, and $2.0 billion of USDA Securities as of December 31, 2016.

Liabilities. ~~Farmer Mac's total liabilities were $17.1 billion as of December 31, 2017, compared to $15.0 billion as of December 31, 2016.~~ The increase in total liabilities was primarily ~~attributable~~due to an increase in total notes ~~payable.~~

~~Equity. As~~payable to fund the acquisition of ~~December 31, 2017,~~ Farmer Mac had total equity of $708.1 million, which is comprised entirely of stockholders' equity. As of December 31, 2016, Farmer Mac had total equity of $643.6 million, comprised of stockholders' equity of $643.4 millionGuaranteed Securities, loan volume, and ~~non-controlling interest of $0.2 million. As of May 1, 2017, Farmer Mac transferred its entire 65% ownership interest~~investment portfolio assets, including those held in ~~AgVisory back to the limited liability company and recognized a loss of approximately $0.1 million, after-tax, upon the transfer.~~consolidated trusts.

Equity. The increase in total equity ~~during 2017~~ was ~~a result of~~primarily due to an increase in retained earnings and ~~accumulated other comprehensive income. The~~an increase in accumulated other comprehensive ~~income was due to increases in fair value on certain floating-rate AgVantage securities.~~income.

~~In addition, Farmer Mac elected to adopt ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~,"for the year ended December 31, 2017. This change in accounting principle resulted in an increase to "Accumulated other comprehensive income, net of tax" and a corresponding decrease to "Retained earnings" of $9.1 million. See Note 2(r) to the consolidated financial statements for more information about the adoption of ASU 2018-02 and the effect on Farmer Mac's consolidated financial statements.

Risk Management

Credit Risk – Loans and Guarantees. Farmer Mac is exposed to credit risk resulting from the inability of borrowers to repay their loans in conjunction with a deficiency in the value of the collateral relative to the outstanding balance of the loan and the costs of liquidation. Farmer Mac is exposed to credit risk on:

Agricultural Finance - Direct Credit Exposure

~~loans held;~~

~~loans underlying Farmer Mac Guaranteed Securities; and~~

~~loans underlying LTSPCs.~~

Farmer Mac generally assumes 100 percent of the credit risk on loans held and loans underlying LTSPCs in the Farm & Ranch and Rural Utilities lines of business and loans underlying Farm & Ranch Guaranteed Securities. Farmer Mac has direct credit exposure to the loans in non-AgVantage transactions but only indirect credit exposure to loans that secure AgVantage transactions because AgVantage securities represent a general obligation of an issuer that is, in turn, secured by eligible loans. Non-AgVantage transactions like loan purchases, LTSPCs, and "pass-through" guaranteed securities that represent beneficial interests in the underlying loans do not include a general obligation of a counterparty as a separate source of repayment. For the reasons described in more detail below, Farmer Mac excludes its assets in the USDA Guarantees line of business, the loans in the Rural Utilities line of business, and AgVantage securities in the Institutional Credit line of business from the loan-level credit risk metrics it discloses.

Farmer Mac's direct credit exposure to ~~Farm & Ranch~~Agricultural Finance mortgage loans ~~held and loans underlying Farm & Ranch Guaranteed Securities and LTSPCs~~ as of December 31, ~~2017~~2023 was ~~$6.9~~$11.2 billion across 48 states. Farmer Mac ~~has established~~applies credit underwriting standards and methodologies to help assess exposures to loan purchases, which may include collateral valuation, financial metrics, and ~~documentation standards for~~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 ~~real estate~~ mortgage loans, Farmer Mac has implemented methodologies and ~~believes~~parameters that ~~these standards mitigate the~~help assess credit risk of loss from borrower defaults and provide guidance about the management, administration, and conduct of underwriting and appraisals to all participating and potential lenders. These standards were developed based on ~~industry practices for agricultural real estate mortgage loans~~the appropriate sector, borrower construct, and are designed to assess the creditworthiness of the borrower, as well as the value of the collateral securing the loan. Farmer Mac evaluates and adjusts these standards on an ongoing basis based on current and anticipated market conditions.

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

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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 December 31, 2023, were $34.7 million (0.31% of the Agricultural Finance mortgage loan portfolio to ~~Rural Utilities~~which Farmer Mac has direct credit exposure), compared to $43.5 million (0.41% of the Agricultural Finance mortgage loan portfolio) as of December 31, 2022. Those 90-day delinquencies consisted of 23 delinquent loans as of December 31, 2023, compared to 37 delinquent loans as of December 31, 2022. The decrease in the number of 90-day delinquencies was primarily driven by decreased delinquencies in agricultural storage and processing, and was partially offset by increased delinquencies in crops, permanent plantings, part-time farms, and livestock. The top ten borrower exposures over 90 days delinquent represented over half of the 90-day delinquencies as of December 31, 2023. Farmer Mac believes that it remains adequately collateralized on its delinquent loans.

Farmer Mac's 90-day delinquency rate as of December 31, 2023 was below Farmer Mac's historical average. In the near-term, our delinquency rate may exceed our historical average due to changes in the agricultural or general economy or unforeseen and idiosyncratic events like adverse weather events. Farmer Mac's 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.

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:

Table 24


	Agricultural Finance Mortgage Loans		90-Day Delinquencies		Percentage
	(dollars in thousands)
As of:
December 31, 2023	$	11,223,276	$	34,677	0.31	%
September 30, 2023	11,014,678		42,443		0.39	%
June 30, 2023	10,826,201		45,368		0.42	%
March 31, 2023	10,680,419		70,646		0.66	%
December 31, 2022	10,719,571		43,498		0.41	%
September 30, 2022	10,508,549		44,232		0.42	%
June 30, 2022	10,128,083		20,623		0.20	%
March 31, 2022	9,879,978		55,847		0.57	%
December 31, 2021	9,811,749		47,307		0.48	%

Across all of Farmer Mac's lines of business, 90-day delinquencies represented 0.12% of total outstanding business volume as of December 31, 2023, compared to 0.17% as of December 31, 2022 and 0.20% as of December 31, 2021.

The following table presents outstanding Agricultural Finance mortgage loans and 90-day delinquencies as of December 31, 2023 by year of origination, geographic region, commodity/collateral type, original loan-to-value ratio, and range in the size of borrower exposure:

Table 25


Agricultural Finance Mortgage Loans 90-Day Delinquencies as of December 31, 2023
	Distribution of Agricultural Loans		Agricultural Loans		90-Day Delinquencies(1)		Percentage
	(dollars in thousands)
By year of origination:
2013 and prior	6	%	$	718,725	$	2,982	0.41	%
2014	2	%	198,726		1,102		0.55	%
2015	3	%	318,518		9,585		3.01	%
2016	5	%	512,420		2,871		0.56	%
2017	5	%	513,356		1,262		0.25	%
2018	5	%	595,089		2,409		0.40	%
2019	7	%	820,410		551		0.07	%
2020	18	%	1,964,250		5,232		0.27	%
2021	23	%	2,616,354		931		0.04	%
2022	15	%	1,735,928		7,752		0.45	%
2023	11	%	1,229,500		—		0.45	%
Total	100	%	$	11,223,276	$	34,677	0.31	%
By geographic region(2):
Northwest	13	%	$	1,397,173	$	1,837	0.13	%
Southwest	31	%	3,438,077		17,422		0.51	%
Mid-North	26	%	2,966,948		2,626		0.09	%
Mid-South	17	%	1,942,663		10,355		0.53	%
Northeast	4	%	439,449		1,296		0.29	%
Southeast	9	%	1,038,966		1,141		0.11	%
Total	100	%	$	11,223,276	$	34,677	0.31	%
By commodity/collateral type:
Crops	49	%	$	5,475,379	$	20,994	0.38	%
Permanent plantings	22	%	2,460,486		6,252		0.25	%
Livestock	19	%	2,124,438		4,116		0.19	%
Part-time farm	4	%	490,975		3,315		0.68	%
Ag. Storage and Processing	6	%	655,279		—		—	%
Other	—	%	16,719		—		—	%
Total	100	%	$	11,223,276	$	34,677	0.31	%
By original loan-to-value ratio:
0.00% to 40.00%	16	%	$	1,761,182	$	551	0.03	%
40.01% to 50.00%	22	%	2,480,809		9,227		0.37	%
50.01% to 60.00%	35	%	3,877,916		18,980		0.49	%
60.01% to 70.00%	20	%	2,291,423		5,118		0.22	%
70.01% to 80.00%(3)	2	%	247,698		801		0.32	%
80.01% to 90.00%(3)	—	%	24,752		—		—	%
Enterprise Value(4)	5	%	539,496		—		—	%
Total	100	%	$	11,223,276	$	34,677	0.31	%
By size of borrower exposure(5):
Less than $1,000,000	25	%	$	2,845,173	$	5,033	0.18	%
$1,000,000 to $4,999,999	37	%	4,185,109		20,059		0.48	%
$5,000,000 to $9,999,999	15	%	1,664,029		—		—	%
$10,000,000 to $24,999,999	13	%	1,444,359		9,585		0.66	%
$25,000,000 and greater	10	%	1,084,606		—		—	%
Total	100	%	$	11,223,276	$	34,677	0.31	%

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

(2)Geographic regions: Northwest (AK, ID, MT, OR, WA, WY); Southwest (AZ, CA, CO, HI, NM, NV, UT); Mid-North (IA, IL, IN, MI, MN, NE, ND, SD, WI); Mid-South (AR, KS, LA, MO, OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NH, NJ, NY, OH, PA, RI, VA, VT, WV); Southeast (AL, FL, GA, MS, NC, SC, TN).

(3)Primarily part-time farm loans. Loans with an original loan-to-value ratio of greater than 80% are required to have private mortgage insurance.

(4)"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.

(5)Includes aggregated loans to single borrowers or borrower-related entities.

Another indicator that Farmer Mac considers in analyzing the credit quality of its Agricultural Finance mortgage loans is the level of internally-rated "substandard" assets, both in dollars and as a percentage of the outstanding portfolio. 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 December 31, 2023, Farmer Mac's Agricultural Finance mortgage loans (to which it has direct credit exposure) comprising substandard assets were $186.0 million (1.7% of the portfolio), compared to $209.4 million (2.0% of the portfolio) as of December 31, ~~2017 was $1.9 billion across 39 states, of which $1.4 billion were~~2022. Those substandard assets comprised 206 loans to electric distribution cooperatives and $0.5 billion were loans to generation and transmission ("G&T") cooperatives. Farmer Mac has developed different underwriting standards for rural utilities loans that depend on whether direct or indirect credit exposure is assumed on a loan and whether the borrower is an electric distribution cooperative or a G&T cooperative. See "Business—Farmer Mac's Lines of Business—Rural Utilities—Underwriting." Asas of December 31, ~~2017, there were no delinquencies in Farmer Mac's portfolio of Rural Utilities~~2023 and 243 loans and Farmer Mac has not experienced any credit losses on Rural Utilities loans since Congress authorized Farmer Mac's Rural Utilities line of business in 2008. Based on this performance, Farmer Mac excludes the loans in the Rural Utilities line of business from the credit risk metrics it discloses.

Farmer Mac has indirect credit exposure to the Farm & Ranch loans and Rural Utilities loans that secure AgVantage securities included in the Institutional Credit line of business. Farmer Mac's AgVantage securities are general obligations of institutions approved by Farmer Mac and are secured by current loans in an amount at least equal to the outstanding principal amount of the related security. Accordingly, Farmer Mac excludes the loans that secure AgVantage securities from the credit risk metrics it discloses because Farmer Mac has only indirect credit risk on those loans and because of the other characteristics of AgVantage securities that mitigate credit risk. Those characteristics include a general obligation of an issuing institution approved by Farmer Mac, the required collateralization level for the securities, the requirement for delinquent loans to be removed from the pool of pledged loans and replaced with current eligible loans, and in some cases, the requirement for the counterparty to comply with specified financial covenants for the life of the related AgVantage security. Asas of December 31, ~~2017,~~2022.

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

The percentage of Agricultural Finance substandard assets within the portfolio as of December 31, 2023 was below the historical average. Farmer ~~Mac had not experienced any~~Mac's average Agricultural Finance substandard assets as a percentage of its Agricultural Finance mortgage loans over the last 15 years is approximately 4%. The highest substandard asset rate observed during the last 15 years occurred in 2010 at approximately 8%, which coincided with an increase in substandard loans within Farmer Mac's ethanol portfolio. If Farmer Mac's substandard asset rate increases from current levels, it is likely that Farmer Mac's provision to the allowance for loan losses and the reserve for losses will also increase.

Although some credit losses ~~on any AgVantage securities and does not expect~~are inherent to ~~incur any such losses in~~ the ~~future. See "Management's Discussion and Analysis~~business of ~~Financial Condition and Results of Operations—Risk Management—Credit Risk – Institutional" for more information about Farmer Mac's credit risk on AgVantage securities.~~

The credit exposure of Farmer Mac and Farmer Mac II LLC on USDA Securities, including those underlying Farmer Mac Guaranteed USDA Securities, is covered by the full faith and credit of the United States. Therefore,agricultural lending, Farmer Mac believes that losses associated with the current agricultural credit cycle will be moderated by the strength and diversity of its Agricultural Finance portfolio, which Farmer Mac ~~and Farmer Mac II LLC have little or no credit risk exposure in the USDA Guarantees line of business because of the USDA guarantee. As of~~ ~~December 31, 2017, neither Farmer Mac nor Farmer Mac II LLC had experienced any credit losses on any business under the USDA Guarantees line of business, and neither expects to incur any such losses in the future.~~believes is adequately collateralized.

Loans in the Farm & Ranch line of business are all secured by first liens on agricultural real estate. Accordingly, Farmer Mac's exposure on a loan is limited to the difference between (1) the total of the accrued interest, advances, and the principal balance of a loan and (2) the value of the property less the cost to sell. Measurement of that excess or shortfall is the best predictor and determinant of loss, compared to other measures that evaluate the efficiency of a particular farm operator. For example, debt service ratios depend upon farm operator efficiency and leverage, which can vary widely within a geographic region or commodity type or based upon an operator's business and farming skills. Thus,Within Agricultural Finance, Farmer Mac considers a Farm & Ranch loan's original loan-to-value ratio as one of many factors in evaluating loss severity. This ratio is calculated by dividing the loan principal balance at the time of guarantee, purchase, or commitment by the appraised value at the date of loan origination or, when available, updated appraised value at the time of guarantee, purchase, or commitment. Other factors Farmer Mac considers include, but are not limited to, other underwriting standards, commodity and farming forecasts, and regional economic and agricultural conditions.

~~105~~

Loan-to-value ratios depend ~~upon~~on the market value of a property, as determined in accordance with Farmer Mac's collateral valuation standards. As of December 31, ~~2017~~2023 and ~~2016,~~2022, the average unpaid ~~loan balance~~principal balances for ~~loans outstanding in the~~ Farm & Ranch ~~line~~loans outstanding and to which Farmer Mac has direct credit exposure was $804,000 and $806,000, respectively. Farmer Mac calculates the "original loan-to-value" ratio of ~~business was $642,000 and $611,000, respectively. The~~a loan by dividing the original ~~loan-to-value ratio is based on~~loan principal balance by the original appraised ~~value that has~~property value. This calculation does not ~~been indexed~~reflect any amortization of the original loan balance or any adjustment to the original appraised value to provide a current market ~~value or reflect amortization of loans. As of second quarter 2017, Farmer Mac revised its calculation of the~~value. The original loan-to-value ratio of ~~a loan to combine for~~ any cross-collateralized ~~loans: (1) the original loan principal balance amounts in the numerator; and (2) the original appraised property values in the denominator. In previous periods, the ratio was~~loans is calculated on a combined basis rather than on a loan-by-loan ~~basis without considering the effects of any cross-collateralization. Prior period ratios of original loan-to-value have been recalculated to conform to this revised calculation.~~basis. The weighted-average original loan-to-value ratio for Farm & Ranch mortgage loans purchased during ~~2017~~2023 was ~~50 percent,~~51%, compared to ~~53 percent~~50% for loans purchased during ~~2016.~~2022. The weighted-average original loan-to-value ratio for ~~all~~ Farm & Ranch mortgage loans ~~held~~ and ~~all~~ loans underlying off-balance sheet ~~Farm & Ranch~~Farmer Mac Guaranteed Securities and LTSPCs was ~~approximately 51 percent~~52% and 51% as of ~~both~~ December 31, ~~2017~~2023 and ~~2016.~~

2022, respectively. The weighted-average original loan-to-value ratio for all 90-day delinquencies was ~~52 percent~~56% and ~~55 percent, respectively,~~46% as of December 31, ~~2017~~2023 and ~~2016.~~2022, respectively.

The weighted-average current loan-to-value ratio ~~which is the loan-to-value~~(the loan to-value ratio based on original appraised value ~~but which reflects~~and current outstanding loan ~~amortization since purchase,~~amount adjusted to reflect amortization) for ~~Farm & Ranch~~Agricultural Finance mortgage loans ~~held~~ and loans underlying off-balance sheet ~~Farm & Ranch~~Farmer Mac Guaranteed Securities and LTSPCs was ~~approximately 45 percent~~47% and ~~44 percent~~46% as of December 31, ~~2017~~2023 and ~~2016,~~2022, respectively.

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

Table 26


Agricultural Finance Mortgage Loans current loan-to-value ratio by internally assigned risk rating as of December 31, 2023
	Acceptable		Special Mention		Substandard		Total
	(in thousands)
Current loan-to-value ratio(1):
0.00% to 40.00%	$	2,941,132	$	58,143	$	48,923	$	3,048,198
40.01% to 50.00%	2,808,638		95,906		41,127		2,945,671
50.01% to 60.00%	2,888,136		78,501		44,403		3,011,040
60.01% to 70.00%	1,335,688		58,715		30,072		1,424,475
70.01% to 80.00%	188,582		28,425		17,555		234,562
80.01% and greater	15,963		—		3,871		19,834
Enterprise Value(2)	507,885		31,611		—		539,496
Total	$	10,686,024	$	351,301	$	185,951	$	11,223,276

(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.

(2)"Enterprise Value" loans are generally secured by all business assets and common stock (in addition to first lien mortgages) of the borrower and the value of the borrowing entity depends on its ability to generate recurring positive cash flow. Enterprise Value is the estimated value of the borrower as a going concern, which is estimated using one ore more valuation techniques such as discounted cash flow, cash flow multiples, asset liquidation, or other valuation techniques.

The following table presents Farmer Mac's cumulative net credit losses relative to the cumulative original balance for ~~loan~~all Agricultural Finance mortgage loans as of December 31, 2023 by year of origination, geographic region, and commodity/collateral type. The purpose of this table is to present information about realized losses relative to ~~cover estimated probable losses on loans held and a reserve for losses to cover estimated probable losses on loans underlying LTSPCs and off-balance sheet~~original Farm & Ranch ~~Guaranteed Securities.~~purchases, guarantees, and commitments.

Table 27


Agricultural Finance Mortgage Loans Credit Losses Relative to Cumulative
Original Loans, Guarantees, and LTSPCs as of December 31, 2023
	Cumulative Original Loans, Guarantees and LTSPCs		Cumulative Net Credit Losses/(Recoveries)		Cumulative Loss Rate
	(dollars in thousands)
By year of origination:
2013 and prior	$	18,730,988	$	33,785	0.18	%
2014	1,097,131		—		—	%
2015	1,251,414		(516)		(0.04)	%
2016	1,599,533		903		0.06	%
2017	1,709,852		4,311		0.25	%
2018	1,403,244		—		—	%
2019	1,630,441		—		—	%
2020	2,934,102		—		—	%
2021	3,346,715		—		—	%
2022	2,003,044				—	%
2023	1,419,621				—	%
Total	$	37,126,085	$	38,483	0.10	%
By geographic region(1):
Northwest	$	4,705,793	$	12,094	0.26	%
Southwest	12,434,219		8,542		0.07	%
Mid-North	9,213,586		17,165		0.19	%
Mid-South	5,361,636		(613)		(0.01)	%
Northeast	1,921,518		323		0.02	%
Southeast	3,489,333		972		0.03	%
Total	$	37,126,085	$	38,483	0.10	%
By commodity/collateral type:
Crops	$	17,023,194	$	3,790	0.02	%
Permanent plantings	8,028,667		9,783		0.12	%
Livestock	8,158,577		3,836		0.05	%
Part-time farm	1,936,477		1,090		0.06	%
Ag. Storage and Processing	1,810,339		19,984		1.10	%
Other	168,831		—		—	%
Total	$	37,126,085	$	38,483	0.10	%

(1)Geographic regions: Northwest (AK, ID, MT, OR, WA, WY); Southwest (AZ, CA, CO, HI, NM, NV, UT); Mid-North (IA, IL, IN, MI, MN, NE, ND, SD, WI); Mid-South (AR, KS, LA, MO, OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NH, NJ, NY, OH, PA, RI, VA, VT, WV); Southeast (AL, FL, GA, MS, NC, SC, TN).

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

Table 28


	As of December 31, 2023
	Agricultural Finance Mortgage Loans Concentrations by Commodity Type within Geographic Region
	Crops			Permanent Plantings			Livestock			Part-time Farm			Ag. Storage and Processing			Other			Total
	(dollars in thousands)
By geographic region(1):
Northwest	$	711,850		$	232,794		$	300,766		$	116,082		$	35,658		$	23		$	1,397,173
	6.4		%	2.1		%	2.7		%	1.0		%	0.3		%	—		%	12.5		%
Southwest	730,660			1,848,059			605,245			115,172			123,674			15,267			3,438,077
	6.5		%	16.5		%	5.4		%	1.0		%	1.2		%	0.1		%	30.7		%
Mid-North	2,392,197			10,635			264,769			82,100			216,004			1,243			2,966,948
	21.3		%	0.1		%	2.4		%	0.7		%	1.9		%	—		%	26.4		%
Mid-South	1,104,414			83,432			625,700			67,730			61,387			—			1,942,663
	9.8		%	0.7		%	5.6		%	0.6		%	0.5		%	—		%	17.2		%
Northeast	187,279			42,835			69,641			48,936			90,758			—			439,449
	1.7		%	0.4		%	0.6		%	0.4		%	0.8		%	—		%	3.9		%
Southeast	348,979			242,731			258,317			60,955			127,798			186			1,038,966
	3.1		%	2.2		%	2.4		%	0.5		%	1.1		%	—		%	9.3		%
Total	$	5,475,379		$	2,460,486		$	2,124,438		$	490,975		$	655,279		$	16,719		$	11,223,276
	48.8		%	22.0		%	19.1		%	4.2		%	5.8		%	0.1		%	100.0		%

Table 29


	As of December 31, 2023
	Agricultural Loans Cumulative Credit Losses by Origination Year and Commodity Type
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Total
	(in thousands)
By year of origination:
2013 and prior	$	3,427	$	9,783	$	3,836	$	1,066	$	15,673	$	33,785
2014	—		—		—		—		—		—
2015	(540)		—		—		24		—		(516)
2016	903		—		—		—		—		903
2017	—		—		—		—		4,311		4,311
2018	—		—		—		—		—		—
2019	—		—		—		—		—		—
2020	—		—		—		—		—		—
2021	—		—		—		—		—		—
2022	—		—		—		—		—		—
2023	—		—		—		—		—		—
Total	$	3,790	$	9,783	$	3,836	$	1,090	$	19,984	$	38,483

For more information about the credit quality of Farmer ~~Mac uses to determine~~Mac's Agricultural Finance mortgage loans and the ~~level of its~~associated allowance for losses ~~is described in~~please refer to Note ~~2(j)~~8 and Note 12 to the consolidated financial statements. Management believes that this methodology produces a reasonable estimate of probable losses, as of the balance sheet date, for all loans held and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs.

~~The following table summarizes the components of Farmer Mac's total allowance for losses as of December 31, 2017 and 2016:~~

~~Table 17~~

As of December 31, 2017 As of December 31, 2016
(in thousands)
Allowance for loan losses $ 6,796
$ 5,415
Reserve for losses:

Off-balance sheet Farm & Ranch Guaranteed Securities 257
226
LTSPCs 1,813
1,794
Total allowance for losses $ 8,866
$ 7,435

~~106~~

~~The following table summarizes the changes in the components of Farmer Mac's total allowance for each year in the five-year period ended December 31, 2017~~

~~Table 18~~

Allowance
for Loan
Losses Reserve
for Losses Total
Allowance
for Losses
(in thousands)
Balance as of January 1, 2013 $ 11,351
$ 5,539
$ 16,890
(Release of)/provision for losses (481 ) 929
448
Charge-offs (4,004 ) —
(4,004 )
Balance as of December 31, 2013 $ 6,866
$ 6,468
$ 13,334
Release of losses (961 ) (2,205 ) (3,166 )
Charge-offs (86 ) $ —
(86 )
Recoveries 45
—
45
Balance as of December 31, 2014 $ 5,864
$ 4,263
$ 10,127
Provision for/(release of) losses 2,388
(2,180 ) 208
Charge-offs (3,772 ) —
(3,772 )
Balance as of December 31, 2015 $ 4,480
$ 2,083
$ 6,563
Provision for/(release of) losses

1,065
(63 ) 1,002
Charge-offs (130 ) —
(130 )
Balance as of December 31, 2016 $ 5,415
$ 2,020
$ 7,435
Provision for losses 1,708
50
1,758
Charge-offs (327 ) $ —
(327 )
Balance as of December 31, 2017 $ 6,796
$ 2,070
$ 8,866

Activity affecting the allowance for loan losses and reserve for losses is discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Provision for and Release of Allowance for Loan Losses and Reserve for Losses." ~~As of December 31, 2017,~~

Rural Infrastructure Finance - Direct Credit Exposure

Farmer Mac's total allowance for losses totaled $8.9 million, or 0.13 percent of the outstanding principal balance of Farm & Ranch loans held for investment and loans underlying LTSPCs and off-balance sheet Farm & Ranch Guaranteed Securities, compareddirect credit exposure to $7.4 million, or 0.12 percent, as of December 31, 2016. The $1.5 million increase in the total allowance for losses was primarily attributable to net volume growth in Farm & Ranch loans and downgrades in risk ratings, which caused a net increase to the specific allowance for certain impaired on-balance sheet crop and permanent plantings loans.

As of December 31, 2017, Farmer Mac individually evaluated $33.9 million of the $147.1 million of recorded investment in impaired assets for collateral shortfalls against updated appraised values, other updated collateral valuations, or discounted values. For the remaining $113.2 million of impaired assets for which updated valuations were not available, Farmer Mac evaluated them in the aggregate in consideration of their similar risk characteristics and historical statistics. Farmer Mac recorded specific allowances of $2.9 million for undercollateralized assets as of December 31, 2017. Farmer Mac's general allowances were $6.0 million as of December 31, 2017.

The charge-offs recorded during 2017 were primarily related to two impaired crop loans, with one borrower, that were foreclosed and transitioned to REO during first quarter 2017. Farmer Mac had previously recorded a specific allowance of $0.2 million on these impaired crop loans as of December 31, 2016. In second quarter 2017, Farmer Mac sold the related properties for $5.4 million and recognized a $0.8 million gain on the sale of the REO.

~~107~~

~~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. As of~~ ~~December 31, 2017, Farmer Mac's 90-day delinquencies were $48.4 million (0.71 percent of the Farm & Ranch portfolio), compared to $21.0 million (0.34 percent of the Farm & Ranch portfolio) as of~~ ~~December 31, 2016. Those 90-day delinquencies were comprised of 51 delinquent loans as of~~ ~~December 31, 2017~~, compared with 38 delinquent loans as of December 31, 2016. The increase in 90-day delinquencies, as compared to as of December 31, 2016, is primarily attributable to the delinquency of several larger loans and certain crop and permanent planting loans mostly due to factors specific to the borrower and not related to macroeconomic factors in the agricultural economy. In particular, $15.3 million in permanent planting loans to a single borrower became delinquent in first quarter 2017 and accounts for over half of the increase in 90-day delinquencies. Farmer Mac believes it is adequately collateralized on this exposure. Farmer Mac's 90-day delinquencies have historically fluctuated from quarter to quarter, both in dollars and as a percentage of the outstanding Farm & Ranch portfolio, with higher levels generally observed at the end of the first and third quarters and lower levels generally observed at the end of the second and fourth quarters of each year as a result of the annual (January 1st) and semi-annual (January 1st and July 1st) payment terms of most Farm & Ranch loans. Farmer Mac believes that it remains adequately collateralized on these loans. Farmer Mac expects that over time its 90-day delinquency rate will revert closer to Farmer Mac's historical average (which it did as of third quarter 2017), and possibly exceed it, due to macroeconomic factors and the cyclical nature of the agricultural economy. Farmer Mac's average 90-day delinquency rate as a percentage of its Farm & Ranch portfolio over the last 15 years is approximately 1 percent. The highest 90-day delinquency rate observed during that period occurred in 2009 at approximately 2 percent, which coincided with increased delinquencies in loans within Farmer Mac's then-held ethanol loan portfolio that Farmer Mac no longer holds. Although the vast majority of the year-over-year increase in 90-day delinquencies is due to borrower-specific factors, other factors such as macroeconomic trends and the cyclical nature of the agricultural economy could contribute to an increase in 90-day delinquencies in the future.

~~The following table presents historical information regarding Farmer Mac's 90-day delinquencies in the Farm & Ranch line of business compared to the principal balance of all Farm & Ranch~~Rural Infrastructure Finance loans held and loans underlying ~~off-balance sheet Farm & Ranch Guaranteed Securities~~LTSPCs as of December 31, 2023 was $4.1 billion across 45 states. For more information about Farmer Mac's underwriting and ~~LTSPCs:~~collateral valuation standards for Rural Infrastructure Finance loans, see "Business—Farmer Mac's Lines of Business—Rural Infrastructure Finance—Underwriting and Collateral Standards." As of December 31, 2023, there were no delinquencies in Farmer Mac's portfolio of Rural Infrastructure Finance loans. As of December 31, 2023, there was one telecommunications loan classified as substandard, with an unpaid principal balance of $29.4 million.

~~Table 19~~

Farm & Ranch Line of Business 90-Day
Delinquencies Percentage
(dollars in thousands)
As of:
December 31, 2017 $ 6,867,586
$ 48,444
0.71 %
September 30, 2017 6,557,030
66,381
1.01 %
June 30, 2017 6,426,518
41,901
0.65 %
March 31, 2017 6,240,467
50,807
0.81 %
December 31, 2016 6,139,304
21,038
0.34 %
September 30, 2016 6,004,728
18,377
0.31 %
June 30, 2016 5,830,533
22,093
0.38 %
March 31, 2016 5,713,789
34,680
0.61 %
December 31, 2015 5,725,299
32,136
0.56 %

~~When analyzing the overall risk profile of its lines of business,~~ Farmer Mac ~~takes into account more than~~evaluates credit risk of Rural Infrastructure assets by reviewing a variety of borrower credit risk characteristics. These characteristics can include (but is not limited to) financial metrics, internal risk ratings, ratings assigned by ratings agencies, types of customers served, sources of power supply, and the ~~Farm & Ranch loan delinquency percentages provided above.~~ regulatory environment.

The ~~lines~~following table disaggregates Farmer Mac’s portfolio of ~~business also include AgVantage securities~~Rural Infrastructure loans by portfolio segment and ~~Rural Utilities loans held and underlying LTSPCs, neither of which have any~~by internally assigned risk ratings.

~~108~~96

Table 30


	As of December 31, 2023
	Rural Infrastructure Finance portfolio by internally assigned risk rating
	Acceptable		Special Mention		Substandard		Total
	(in thousands)
Distribution Cooperative	$	2,396,940	$	—	$	—	$	2,396,940
Generation and Transmission Cooperative	678,354		—		—		678,354
Renewable Energy	487,521		—		—		487,521
Telecommunications	467,711		9,850		29,400		506,961
Rural Infrastructure Total	$	4,030,526	$	9,850	$	29,400	$	4,069,776

~~delinquencies,~~

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

Other Considerations Regarding Credit Risk Related to Loans and Guarantees

The credit exposure on USDA Securities, ~~which are backed~~including those underlying Farmer Mac Guaranteed USDA Securities, is guaranteed by the full faith and credit of the United States. ~~Across all of~~Therefore, Farmer ~~Mac's lines~~Mac believes that we have little or no credit risk exposure to the USDA Securities in the Agricultural Finance line of business ~~90-day delinquencies represented 0.25 percent of total outstanding business volume as of December 31, 2017, compared to 0.12 percent as of December 31, 2016.~~

~~109~~

~~The following table presents outstanding Farm & Ranch loans held and loans underlying LTSPCs and off-balance sheet Farm & Ranch Guaranteed Securities and 90-day delinquencies as of~~ ~~December 31, 2017~~ ~~by year of origination, geographic region, commodity/collateral type, original loan-to-value ratio, and range in the size of borrower exposure:~~

~~Table 20~~

Farm & Ranch 90-Day Delinquencies as of December 31, 2017
Distribution of Farm & Ranch Line of Business Farm & Ranch Line of Business
90-Day Delinquencies⁽¹⁾
Percentage
(dollars in thousands)
By year of origination:
2007 and prior 11 % $ 752,033
$ 7,860
1.05 %
2008 2 % 172,998
550
0.32 %
2009 2 % 106,427
482
0.45 %
2010 3 % 174,235
1,136
0.65 %
2011 4 % 249,293
767
0.31 %
2012 9 % 589,919
—
— %
2013 12 % 850,314
1,578
0.19 %
2014 10 % 658,571
20,055
₍₂₎
3.05 %
2015 13 % 871,938
10,604
₍₃₎
1.22 %
2016 16 % 1,174,003
3,920
0.33 %
2017 18 % 1,267,855
1,492
0.12 %
Total 100 % $ 6,867,586
$ 48,444
0.71 %
By geographic region⁽⁴⁾:

Northwest 11 % $ 740,991
$ 4,222
0.57 %
Southwest 30 % 2,093,213
4,933
0.24 %
Mid-North 33 % 2,244,094
5,799
0.26 %
Mid-South 13 % 908,603
13,187
1.45 %
Northeast 4 % 296,264
1,433
0.48 %
Southeast 9 % 584,421
18,870
3.23 %
Total 100 % $ 6,867,586
$ 48,444
0.71 %
By commodity/collateral type:

Crops 53 % $ 3,657,945
$ 21,853
0.60 %
Permanent plantings 20 % 1,367,563
18,833
1.38 %
Livestock 20 % 1,334,958
3,835
0.29 %
Part-time farm 6 % 433,628
3,923
0.90 %
Ag. Storage and Processing 1 % 58,761
—
— %
Other —
14,731
—
— %
Total 100 % $ 6,867,586
$ 48,444
0.71 %
By original loan-to-value ratio⁽⁵⁾:

0.00% to 40.00% 19 % $ 1,322,422
$ 5,206
0.39 %
40.01% to 50.00% 25 % 1,733,671
11,294
0.65 %
50.01% to 60.00% 35 % 2,385,605
28,822
1.21 %
60.01% to 70.00% 17 % 1,150,914
2,240
0.19 %
70.01% to 80.00%⁽⁶⁾
4 % 248,799
882
0.35 %
80.01% to 90.00%⁽⁶⁾
— % 26,175
—
— %
Total 100 % $ 6,867,586
$ 48,444
0.71 %
By size of borrower exposure⁽⁷⁾:

Less than $1,000,000 35 % $ 2,379,596
$ 10,536
0.44 %
$1,000,000 to $4,999,999 38 % 2,627,617
12,808
0.49 %
$5,000,000 to $9,999,999 13 % 867,574
9,815
₍₃₎
1.13 %
$10,000,000 to $24,999,999 8 % 584,896
15,285
₍₂₎
2.61 %
$25,000,000 to $50,000,000 6 % 407,903
—
— %
Total 100 % $ 6,867,586
$ 48,444
0.71 %


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

~~110~~


⁽²⁾	Includes $15.3 million of permanent planting loans with one borrower located in the Southeast who became 90-days delinquent during first quarter 2017. The original combined loan-to-value ratio of these two permanent planting loans was between 50.01% to 60.00%.


⁽³⁾	Includes $9.8 million related to two crop loans located in the Mid-South that became 90 days delinquent as a result of a bankruptcy filed by one borrower. These two loans with the same borrower had separate underlying collateral with original loan-to-value ratios between 40.01% to 50.00% and 50.01% to 60.00%, respectively.


⁽⁴⁾	Geographic regions: Northwest (AK, ID, MT, OR, WA, WY); Southwest (AZ, CA, CO, HI, NM, NV, UT); Mid-North (IA, IL, IN, MI, MN, NE, ND, SD, WI); Mid-South (AR, KS, LA, MO, OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NH, NJ, NY, OH, PA, RI, VA, VT, WV); Southeast (AL, FL, GA, MS, NC, SC, TN).

⁽⁵⁾

As of second quarter 2017, Farmer Mac revised its calculation of the original loan-to-value ratio of a loan to combine for any cross-collateralized loans: (i) the original loan principal balance amounts in the numerator; and (ii) the original appraised property values in the denominator. In previous periods, the ratio was calculated on a loan-by-loan basis without considering the effects of any cross-collateralization. Prior period information has been reclassified to conform to the current period calculation and presentation.


⁽⁶⁾	~~Primarily part-time farm loans. Loans with an original loan-to-value ratio of greater than 80% are required to have private mortgage insurance.~~


⁽⁷⁾	~~Includes aggregated loans to single borrowers or borrower-related entities.~~

~~Another indicator that Farmer Mac considers in analyzing the credit quality of its Farm & Ranch portfolio is the level of internally-rated "substandard" assets, both in dollars and as a percentage~~because of the outstanding Farm & Ranch portfolio. 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.USDA guarantee. As of December 31, 2017, Farmer Mac's substandard assets were $221.3 million (3.2 percent of the Farm & Ranch portfolio), compared to $165.2 million (2.7 percent of the Farm & Ranch portfolio) as of December 31, 2016. Those substandard assets were comprised of 307 loans as of December 31, 2017 and 287 loans as of December 31, 2016. The $56.1 million increase from year-end 2016 was primarily driven by credit downgrades in on-balance sheet loans. The new substandard asset volume from year-end 2016 includes several large exposures and also represents a relatively diverse set of commodities.2023, Farmer Mac expects that over time its substandard asset rate will eventually revert closer to, and possibly exceed, Farmer Mac's historical average due to macroeconomic factors and the cyclical nature of the agricultural economy. Farmer Mac's average substandard assets as a percentage of its Farm & Ranch portfolio over the last 15 years is approximately 4 percent. The highest substandard asset rate observed during that period occurred in 2010 at approximately 8 percent, which coincided with an increase in substandard loans within Farmer Mac's then-held ethanol portfolio thathad not experienced any credit losses on any USDA Securities or Farmer Mac ~~no longer holds. If~~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's substandard asset rate continues to increase from current levels, it is likely that Farmer Mac's provision to the~~Mac does not provide an allowance for ~~loan~~ losses ~~and the reserve for losses will also increase.~~

Although some credit losses are inherent to the business of agricultural lending, Farmer Mac believes that any losses associated with the current agricultural credit cycle will be moderated by the strength and diversity ofon its portfolio which Farmer Mac believes is adequately collateralized. See Note 8 to the consolidated financial statements for more information regarding credit quality indicators related to Farm & Ranch loans held and loans underlying LTSPCs and off-balance sheet Farm & Ranch Guaranteedof USDA Securities.

~~111~~

The following table presents Farmer Mac's cumulative net credit losses relative to the cumulative original balance for all Farm & Ranch loans purchased and loans underlying LTSPCs and off-balance sheet Farm & Ranch Guaranteed Securities as of ~~December 31, 2017~~ by year of origination, geographic region, and commodity/collateral type. The purpose of this information is to present information regarding losses relative to original Farm & Ranch purchases, guarantees, and commitments.

~~Table 21~~

Farm & Ranch Credit Losses Relative to Cumulative
Original Loans, Guarantees, and LTSPCs as of December 31, 2017
Cumulative Original Loans, Guarantees and LTSPCs Cumulative Net Credit Losses/(Recoveries) Cumulative Loss Rate
(dollars in thousands)
By year of origination:
2007 and prior $ 13,315,157
$ 25,094
0.19 %
2008 817,237
3,370
0.41 %
2009 549,250
1,578
0.29 %
2010 662,387
5
— %
2011 768,959
3,661
0.48 %
2012 1,152,645
—
— %
2013 1,410,440
—
— %
2014 952,578
—
— %
2015 1,094,229
(540 ) (0.05 )%
2016 1,343,880
—
— %
2017 1,344,265

— %
Total $ 23,411,027
$ 33,168
0.14 %
By geographic region⁽¹⁾:

Northwest $ 3,086,468
$ 11,191
0.36 %
Southwest 8,113,941
8,167
0.10 %
Mid-North 5,932,095
12,830
0.22 %
Mid-South 2,801,098
(211 ) (0.01 )%
Northeast 1,394,583
185
0.01 %
Southeast 2,082,842
1,006
0.05 %
Total $ 23,411,027
$ 33,168
0.14 %
By commodity/collateral type:

Crops $ 10,701,811
$ 2,887
0.03 %
Permanent plantings 4,959,802
9,402
0.19 %
Livestock 5,580,280
3,877
0.07 %
Part-time farm 1,339,933
1,329
0.10 %
Ag. Storage and Processing 671,874
15,673
2.33 %
Other 157,327
—
— %
Total $ 23,411,027
$ 33,168
0.14 %


⁽¹⁾	Geographic regions: Northwest (AK, ID, MT, OR, WA, WY); Southwest (AZ, CA, CO, HI, NM, NV, UT); Mid-North (IA, IL, IN, MI, MN, NE, ND, SD, WI); Mid-South (AR, KS, LA, MO, OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NH, NJ, NY, OH, PA, RI, VA, VT, WV); Southeast (AL, FL, GA, MS, NC, SC, TN).

Analysis of portfolio performance indicates that commodity type is the primary determinant of Farmer Mac's exposure to loss on a given loan. Within most commodity groups, certain geographic areas allow greater economies of scale or proximity to markets than others and, consequently, may result in more successful operations within the commodity group. Certain geographic areas also offer better growing conditions and market access than others and, consequently, may result in more versatile and more successful operators within a given commodity group. Farmer Mac's board of directors has established policies regarding geographic and commodity concentration to maintain adequate diversification and measure concentration risk.

~~112~~

In Farmer Mac's experience, the degree to which the collateral for a commodity group is single-use or highly improved is a more significant determinant of the probability of ultimate losses on a given loan than diversity of geographic location within a commodity group. Commodity groups that tend to be single-use or highly improved include permanent plantings (for example, nut crops), agricultural storage and processing facilities (for example, canola plants and grain processing facilities), and certain livestock facilities (for example, dairy facilities). The versatility of a borrower's operation (and in the case of persisting adverse economic conditions, the borrower's ability to switch commodity groups) will more likely result in profitability for the borrower and, consequently, a lower risk of decreased value for the underlying collateral. Producers of agricultural commodities that require highly improved property are generally less able to adapt their operations when faced with adverse economic conditions. In addition, in the event of a borrower's default, the prospective sale value of the collateral is more likely to decrease and the related loan may become undercollateralized. This analysis is consistent with corresponding commodity analyses, which indicate that Farmer Mac has experienced higher loss and collateral deficiency rates in permanent planting loans and agricultural storage and processing loans, for which the collateral is typically highly improved and specialized.

~~113~~

The following tables present concentrations of Farm & Ranch loans held and loans underlying LTSPCs and off-balance sheet Farm & Ranch Guaranteed Securities by commodity type within geographic region and cumulative credit losses by origination year and commodity type:

~~Table 22~~

As of December 31, 2017
Farm & Ranch Concentrations by Commodity Type within Geographic Region
Crops Permanent
Plantings Livestock Part-time
Farm Ag. Storage and
Processing Other Total
(dollars in thousands)
By geographic region⁽¹⁾:

Northwest $ 356,732
$ 97,501
$ 223,429
$ 63,079
$ —
$ 250
$ 740,991
5.2 % 1.4 % 3.3 % 0.9 % — % — % 10.8 %
Southwest 516,489
1,050,625
422,784
73,711
20,272
9,332
2,093,213
7.5 % 15.3 % 6.1 % 1.1 % 0.3 % 0.1 % 30.4 %
Mid-North 1,903,087
17,291
191,197
111,368
17,958
3,193
2,244,094
27.7 % 0.3 % 2.8 % 1.6 % 0.3 % — % 32.7 %
Mid-South 557,559
19,869
270,266
54,138
6,259
512
908,603
8.1 % 0.3 % 3.9 % 0.8 % 0.1 % — % 13.2 %
Northeast 135,718
24,145
56,141
75,229
5,031
—
296,264
2.0 % 0.3 % 0.9 % 1.1 % 0.1 % — % 4.4 %
Southeast 188,360
158,132
171,141
56,103
9,241
1,444
584,421
2.7 % 2.3 % 2.5 % 0.8 % 0.1 % 0.1 % 8.5 %
Total $ 3,657,945
$ 1,367,563
$ 1,334,958
$ 433,628
$ 58,761
$ 14,731
$ 6,867,586
53.2 % 19.9 % 19.5 % 6.3 % 0.9 % 0.2 % 100.0 %


⁽¹⁾	Geographic regions: Northwest (AK, ID, MT, OR, WA, WY); Southwest (AZ, CA, CO, HI, NM, NV, UT); Mid-North (IA, IL, IN, MI, MN, NE, ND, SD, WI); Mid-South (AR, KS, LA, MO, OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NH, NJ, NY, OH, PA, RI, VA, VT, WV); Southeast (AL, FL, GA, MS, NC, SC, TN).

~~Table 23~~

As of December 31, 2017

Farm & Ranch Cumulative Credit Losses by Origination Year and Commodity Type
Crops Permanent
Plantings Livestock Part-time
Farm Ag. Storage and
Processing Total
(in thousands)
By year of origination:
2007 and Prior $ 703
$ 9,184
$ 3,803
$ 1,206
$ 10,198
$ 25,094
2008 2,626
—
—
123
621
3,370
2009 98
218
69
—
1,193
1,578
2010 —
—
5
—
—
5
2011 —
—
—
—
3,661
3,661
2012 —
—
—
—
—
—
2013 —
—
—
—
—
—
2014 —
—
—
—
—
—
2015 (540 ) —
—
—
—
(540 )
2016 —
—
—
—
—
—
2017 —
—
—
—
—
—
Total $ 2,887
$ 9,402
$ 3,877
$ 1,329
$ 15,673
$ 33,168

~~114~~

Farmer Mac regularly conducts detailed, statistical stress tests of its portfolio for credit risk and compares those results to current and historical credit quality metrics and to the various statutory, regulatory, and Farmer Mac's board of directors' capital policy metrics. Farmer Mac's methodologies for pricing its guarantee and commitment fees, managing credit risk, and providing adequate allowances for losses consider all of the foregoing factors and information.

Farmer Mac requires ~~approved~~many lenders to make representations and warranties ~~regarding~~about the conformity of ~~eligible agricultural~~Agricultural Finance mortgage ~~and rural utilities~~ loans to Farmer Mac's standards, the accuracy of loan data provided to Farmer Mac, and other requirements related to the loans. Sellers who make these representations and warranties are responsible to Farmer Mac for breaches of those representations and ~~warranties, and~~warranties. Farmer Mac has the ability to require a seller to cure, replace, or repurchase a loan sold or transferred to Farmer Mac if any breach of a representation or warranty is discovered that was material to Farmer Mac's decision to purchase the loan or that directly or indirectly causes a default or potential loss on a loan sold or transferred by the seller to Farmer Mac. During the previous three years ended December 31, ~~2017, Farmer Mac has required one seller to repurchase a total of two loans aggregating $0.8 million for~~2023, there have been no breaches of representations and warranties ~~made about those two loans, both of which repurchases occurred during first quarter 2016.~~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 ~~lenders,~~sellers, Farmer Mac also underwrites ~~all of~~ the ~~agricultural real estate~~Agricultural Finance mortgage loans (other than rural housing and part-time farm mortgage loans) and ~~rural utilities~~Rural Infrastructure Finance loans ~~that~~on which it ~~holds in its portfolio.~~has direct credit exposure. For rural housing and part-time farm mortgage loans, Farmer Mac relies on representations and warranties from the seller that those loans conform to Farmer Mac's specified underwriting ~~criteria without exception.~~criteria. For more information about Farmer Mac's loan eligibility requirements and underwriting standards, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Loan Eligibility," "Business—Farmer Mac's Lines of Business—Agricultural Finance—Underwriting and Collateral Standards—Farm & ~~Ranch—Loan Eligibility"~~Ranch," "Business—Farmer Mac's Lines of Business—Agricultural Finance—Underwriting and Collateral Standards—Corporate AgFinance," and "Business—Farmer Mac's Lines of Business—Rural ~~Utilities—Loan Eligibility.~~Infrastructure Finance—Underwriting and Collateral Standards."

Under contracts with Farmer Mac and in consideration for servicing fees, Farmer Mac-approved ~~central~~ servicers service loans in accordance with Farmer Mac's requirements. ~~Central servicers~~Servicers are responsible to Farmer Mac for ~~serious~~material errors in the servicing of those loans. If a ~~central~~ servicer materially breaches the terms of its servicing

agreement with Farmer Mac, such as failing to forward payments received or releasing collateral without Farmer Mac's consent, or experiences insolvency or bankruptcy, the servicer is responsible for any corresponding damages to Farmer Mac and, in most cases, Farmer Mac has the right to terminate the servicing relationship for a particular loan or the entire portfolio serviced by the ~~central~~ servicer. ~~In addition,~~ Farmer Mac also can proceed against the ~~central~~ servicer in arbitration or exercise any remedies available to it under law. During the previous three years ended December 31, ~~2017,~~2023, Farmer Mac had not exercised any remedies or taken any formal action against any ~~central~~ servicers. For more information about Farmer Mac's servicing requirements, see "Business—Farmer Mac's Lines of Business—~~Farm & Ranch—~~Agricultural Finance—Loan Servicing" and "Business—Farmer Mac's Lines of Business—Rural ~~Utilities—~~Infrastructure Finance—Lenders and Loan Servicing."

Credit Risk – ~~Institutional~~Counterparty Risk. Farmer Mac is exposed to credit risk arising from its business relationships with other institutions, ~~including:~~which include:

•issuers of AgVantage securities;

•approved lenders and servicers; and

•interest rate swap counterparties.

Farmer Mac approves AgVantage counterparties and manages institutional credit risk related to those AgVantage counterparties by requiring them to meet Farmer Mac's standards for creditworthiness for the particular counterparty type and transaction. The required collateralization level is established ~~at the time~~when the AgVantage facility is entered into with the counterparty and does not change during the life of the AgVantage securities issued under the ~~facility.~~facility without Farmer Mac's consent. In AgVantage transactions, the corporate obligor is

~~115~~

typically required to remove from the pool of pledged collateral ~~any loan~~loans that ~~becomes more than 30 days~~become and remain (within specified parameters) delinquent in the payment of principal or interest and to substitute an eligible ~~loan~~loans that isare current in payment or pay down the AgVantage securities to maintain the minimum required collateralization level.

In the event of a default on ~~the general obligation,~~an AgVantage security, Farmer Mac would have recourse to the pledged collateral and have rights to the ongoing borrower payments of principal and interest. As a result, Farmer Mac has indirect credit exposure to the Agricultural Finance mortgage loans and Rural Infrastructure loans that secure AgVantage securities. For ~~Farm Equity~~ AgVantage counterparties ~~and smaller~~that are institutional real estate investors or financial funds orand other similar entities, Farmer Mac also typically requires that the counterparty ~~generally~~ (1) maintain a higher collateralization level, through either a higher overcollateralization percentage or lower loan-to-value ratio thresholds ~~and higher overcollateralization than required for traditional AgVantage securities~~ and (2) comply with specified financial covenants for the life of the related AgVantage security to avoid default. As of December 31, 2023, 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—~~Institutional Credit—~~Agricultural Finance—Other Products – Agricultural Finance—AgVantage Securities" and "Business—Farmer Mac's Lines of Business—Rural Infrastructure Finance—Other Products – Rural Infrastructure Finance—AgVantage Securities."

The unpaid principal balance of outstanding on-balance sheet AgVantage securities secured by loans eligible for the ~~Farm & Ranch~~Agricultural Finance line of business totaled ~~$5.1~~$6.1 billion as of December 31, ~~2017~~2023 and ~~$3.7~~$6.0 billion as of December 31, ~~2016~~.2022. The unpaid principal balance of on-balance sheet AgVantage securities secured by loans eligible for the Rural ~~Utilities~~Infrastructure Finance line of business totaled ~~$2.5~~$3.9 billion as of December 31, ~~2017~~2023 and ~~$2.3~~$3.0 billion as of December 31, ~~2016~~.2022. The unpaid principal balance of outstanding off-balance sheet AgVantage securities totaled ~~$0.3 billion as of~~ ~~December 31, 2017~~ ~~and $1.3 billion~~$0.0 million as of December 31, ~~2016. The decrease in the unpaid principal balance~~2023 and $1.2 million as of outstanding off-balance sheet AgVantage securities from year-end 2016 was attributable to the refinancing of a $1.0 billion AgVantage security that matured in April 2017 into three new on-balance sheet AgVantage securities. Previously, $970.0 million of this $1.0 billion maturing AgVantage security was reported as off-balance sheet business volume because it was owned by third party investors. For more information about this AgVantage transaction, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Business Volume."December 31, 2022.

The following table provides information about the issuers of AgVantage securities ~~as well as~~and the required collateralization levels for those transactions as of December 31, ~~2017~~2023 and ~~2016:~~2022:

Table 2431


	As of December 31, 2023		As of December 31, 2022
Counterparty	Balance		Required Collateralization	Balance		Required Collateralization
	(dollars in thousands)
AgVantage:
CFC	$	3,898,468	100%	$	3,045,325	100%
MetLife	2,050,000		103%	2,050,000		103%
Rabo AgriFinance	3,085,000		105%	2,855,000		105%
Other(1)	988,879		100% to 125%	1,059,600		100% to 125%
Total outstanding	$	10,022,347		$	9,009,925

(1)Consists of AgVantage securities issued by 8 and 12 different issuers as of December 31, 2023 and 2022, respectively.

As of December 31, 2017 As of December 31, 2016
Counterparty Balance Credit Rating Required Collateralization Balance Credit Rating Required Collateralization
(dollars in thousands)
AgVantage:
MetLife $ 2,550,000
AA- 103% $ 2,550,000
AA- 103%
CFC⁽¹⁾
2,800,188
A 100% 2,594,402
A 100%
Rabo AgriFinance 2,075,000
None 106% 1,800,000
None 106%
Other⁽²⁾
199,959

⁽³⁾
106% to 125% 86,373

⁽³⁾
106% to 125%
Farm Equity AgVantage⁽⁴⁾
279,731
None 110% 256,911
None 110%
Total outstanding $ 7,904,878
$ 7,287,686


⁽¹⁾	~~Includes $300.0 million related to a revolving floating rate AgVantage facility. Farmer Mac receives a fixed fee based on the full dollar amount of the facility.~~


⁽²⁾	~~Consists of AgVantage securities issued by 6 different issuers as of both December 31, 2017 and 2016.~~


⁽³⁾	~~Consists of AgVantage securities from 6 different issuers without a credit rating as of both December 31, 2017 and 2016.~~


⁽⁴⁾	~~Consists of AgVantage securities from 5 different issuers as of December 31, 2017 and 3 different issuers as of December 31, 2016.~~

Farmer Mac manages institutional credit risk related to lenders and servicers by requiring those institutions to meet Farmer Mac's standards for creditworthiness. Farmer Mac monitors the financial condition of those institutions by evaluating financial statements and ~~bank~~ credit rating agency reports. For more information about Farmer Mac's lender eligibility requirements, see "Business—Farmer

~~116~~

Mac's Lines of Business—~~Farm & Ranch—Approved~~ Agricultural Finance—Lenders" and "Business—Farmer Mac's Lines of Business—Rural ~~Utilities—Approved Lenders.~~Infrastructure Finance—Lenders and Loan Servicing."

Farmer Mac manages institutional credit risk related to its interest rate swap counterparties through collateralization provisions contained in each of its swap agreements that ~~varies~~vary based on the market value of its ~~swaps~~swap portfolio with each counterparty. ~~Furthermore,~~ Farmer Mac isand its interest rate swap counterparties are required to fully collateralize ~~its~~their derivatives positions without any minimum threshold for cleared swap transactions, as well as for non-cleared swap transactions entered into after March 1, ~~2017, the effective date of new rules that established zero threshold requirements for the exchange of variation margin between Farmer Mac and its swap dealer counterparties in such transactions.~~2017. Farmer Mac transacts interest rate swaps with multiple counterparties to ~~ensure a more even distribution~~reduce counterparty credit exposure concentration. Farmer Mac's usage of ~~institutional credit risk related~~cleared derivatives has increased over time as has its exposure to ~~its swap transactions. As a result~~clearinghouses. The usage of mandatory clearing rules for certain interest rate derivative transactions enacted under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), Farmer Mac uses the clearing process for cleared swap transactions ~~as another mechanism for managing its derivative counterparty risk.~~reduces Farmer Mac's exposure to individual counterparties with the central clearinghouse acting to settle the change in value of contracts on a daily basis. Credit risk related to interest rate swap contracts is discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Interest Rate Risk" and Note 6 to the consolidated financial statements.

Credit Risk–Other Investments. As of December 31, ~~2017~~,2023, Farmer Mac had ~~$0.3~~$0.9 billion of cash and cash equivalents and ~~$2.3~~$5.0 billion of investment securities. The management of the credit risk inherent in these investments is governed by Farmer Mac's internal policies as well as ~~FCA regulations, which establish limitations on dollar amount, issuer concentration, and credit quality. Those regulations can be found at 12 C.F.R. §§ 652.1-652.45 (the "Liquidity~~Liquidity and Investment ~~Regulations").~~Regulations. In addition to establishing a portfolio of highly liquid investments as an available source of cash, the goals of Farmer Mac's investment policies are designed to minimize Farmer Mac's exposure to financial market volatility, preserve capital, and support Farmer Mac's access to the debt markets.

The Liquidity and Investment Regulations and Farmer Mac's internal policies ~~generally~~ require ~~each~~that investments held in Farmer Mac's investment ~~or issuer~~portfolio meet the following creditworthiness standards: (1) at a minimum, at least one obligor of anthe investment ~~to be highly rated by a nationally recognized statistical rating organization ("NRSRO"). Investments in mortgage securities and asset-backed securities are required to~~must have a ~~rating in~~very strong capacity to meet financial commitments for the ~~highest NRSRO category. Corporate debt securities with maturities of no more than five years but more than three years are required to be rated in one~~life of the ~~two highest categories; corporate debt securities with maturities~~investment, even under severely adverse or stressful conditions, and generally present a very low risk of ~~three years or less are required~~default; (2) if the obligor whose capacity to ~~be rated~~meet financial commitments is being relied upon to meet the standard set forth in ~~one~~subparagraph (1) is located outside of ~~the three highest categories. Some investments do not require a rating, such as U.S. Treasury securities and other obligations fully insured by~~

the United States, the investment must also be fully guaranteed by a U.S. government agency; and (3) the investment must exhibit low credit risk and other risk characteristics consistent with the purpose or a government agency or diversified investment funds regulated under the Investment Company Act of 1940. Investments in diversified investment funds are further limited to those funds that are holding only instruments approvedpurposes for ~~direct investment by Farmer Mac.~~which it is held.

The Liquidity and Investment Regulations and Farmer Mac's internal policies also establish concentration limits, which are intended to limit exposure to any ~~one counterparty. Although the~~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 ~~and uncollateralized financial derivatives~~ to ~~25 percent~~10% of Farmer Mac's regulatory capital ~~(as~~($147.0 million as of December 31, ~~2017, 25 percent of Farmer Mac's regulatory capital was~~ ~~$166.5 million~~),2023). However, Farmer Mac's current policy limits this total credit exposure to ~~5 percent~~5% of its regulatory capital ~~(as~~($73.5 million as of December 31, ~~2017, 5 percent of Farmer Mac's regulatory capital was $33.3 million)~~2023). These exposure limits do not apply to obligations of ~~the United States~~U.S. government agencies or GSEs, ~~though~~although Farmer ~~Mac is restricted by~~Mac's current policy restricts investing more than 100% of regulatory capital in the senior non-convertible debt securities of any one GSE.

Although the Liquidity and ~~Investment~~Investments Regulations ~~and its own policy from investing more than 100 percent~~do not establish limits on the maximum amount, expressed as a percentage of ~~its regulatory capital~~Farmer Mac's investment portfolio, that can be invested in ~~any one GSE.~~each eligible asset class, Farmer Mac's internal policies set forth asset class limits as part of Farmer Mac's overall risk management framework.

~~117~~

On February 23, 2016, FCA published a proposed rule in the Federal Register to amend the Liquidity and Investment Regulations to comply with Section 939A of the Dodd-Frank Act by removing references and requirements relating to credit ratings and replacing them with other standards of creditworthiness, as well as to revise the eligibility criteria and exposure limits for certain types of investments. Farmer Mac submitted comments on this proposed rule to FCA on April 25, 2016 and expects a final rule to be issued during 2018. Farmer Mac expects that it will be able to successfully adapt to FCA's proposed amendments of the Liquidity and Investment Regulations.

Interest Rate Risk. Farmer Mac is subject to interest rate risk on all interest-earning assets ~~retained~~ on its balance sheet because of ~~possible~~ timing differences in the cash flows due to maturity, paydown, or repricing of the assets and related liabilities. This risk is primarily related to loans held, Farmer Mac Guaranteed Securities (excluding AgVantage securities), and USDA Securities due to the ability of borrowers to prepay their loans before the scheduled maturities, thereby increasing the risk of asset and liability cash flow mismatches.debt together with financial derivatives. Cash flow mismatches ~~in a~~due to changing interest ~~rate environment~~rates can reduce the earnings of Farmer Mac if assets ~~repay~~prepay sooner than expected and the resulting cash flows must be reinvested in lower-yielding investments when Farmer Mac's funding costs cannot be correspondingly ~~reduced, or~~reduced. Alternatively, Farmer Mac could realize a decline in income if assets repay more slowly than ~~expected~~originally forecasted and the associated maturing debt must be replaced by ~~higher-cost debt. As discussed below, Farmer Mac manages this~~debt issuances at higher interest ~~rate risk by funding assets purchased with liabilities matching the duration and cash flow characteristics of the assets purchased.~~rates.

Interest Rate Risk Management

The goal of interest rate risk management at Farmer Mac is to ~~create and maintain~~manage the balance sheet in a ~~portfolio~~manner that generates stable earnings and value across a variety of interest rate environments. Recognizing that interest rate ~~sensitivity~~sensitivities may change with the passage of time and as interest rates change, Farmer Mac regularly assesses this exposure ~~on a regular basis~~ and, if necessary, ~~readjusts~~adjusts its portfolio of interest-earning assets, debt, and ~~liabilities by:~~financial derivatives.

~~purchasing assets in~~Farmer Mac's objective is to maintain its exposure to interest rate risk within appropriate limits, as approved by Farmer Mac's board of directors. Farmer Mac's management-level Asset and Liability Committee ("ALCO") provides oversight, establishes guidelines, and approves strategies to maintain interest rate risk within the ~~ordinary course of business;~~board-established limits.

~~refinancing existing liabilities; or~~

~~using financial derivatives to alter the characteristics of existing assets or liabilities.~~

Farmer Mac's primary strategy for managing interest rate risk is to fund asset purchases with ~~liabilities~~debt that together with financial derivatives have similar duration and convexity characteristics and help mitigate impacts from interest rate changes across the yield curve. As part of this strategy, Farmer Mac seeks to issue debt securities across a variety of maturities that together with financial derivatives closely align the forecasted debt and financial derivative cash ~~flow characteristics so that they will perform similarly as interest rates change. To match these characteristics,~~ flows with forecasted asset cash flows.

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

100

issued to ~~offset the~~mitigate prepayment risk associated with ~~some loans. By using a blend of liabilities that includes callable debt, the interest rate sensitivities of the liabilities tend to increase or decrease~~certain interest-earning assets held on balance sheet. In general, as interest rates ~~change in a manner similar~~decline, prepayments typically increase, and Farmer Mac is able to ~~changes in the~~economically extinguish certain callable debt issuances. In addition, Farmer Mac enters into financial derivatives, primarily interest rate ~~sensitivities of the assets. Farmer Mac also uses financial derivatives~~swaps, to better match the durations of Farmer Mac's assets and liabilities, thereby reducing overall sensitivity to changing interest ~~rate sensitivity.~~rates.

Taking into consideration the prepayment provisions and the default probabilities associated with its ~~loan~~portfolio of interest-earning assets, Farmer Mac ~~uses prepayment~~incorporates behavioral models ~~to project~~when projecting and ~~value~~valuing cash flows associated with these assets. ~~Because~~In recognition that borrowers' behaviors in various interest rate environments may change over time, Farmer Mac periodically evaluates the effectiveness of these models compared to actual prepayment experience

~~118~~

and adjusts and refines the models as necessary to improve the precision of ~~subsequent~~future prepayment forecasts.

Yield maintenance provisions and other prepayment penalties contained in certain agricultural real estate mortgage loans and most rural utilities loans reduce, but do not eliminate, prepayment risk. Those provisions require borrowers to make an additional payment when they prepay their loans, thus compensating Farmer Mac for the shortened duration of the prepaid loan. As of ~~December 31, 2017, approximately~~ ~~2 percent~~ of the total outstanding balance of loans in the Farm & Ranch line of business where Farmer Mac either owned the loan or the beneficial interest in the underlying loan had yield maintenance provisions or other forms of prepayment protection (together covering ~~4 percent~~ ~~of all loans with fixed interest rates). Of the Farm & Ranch loans purchased in~~ ~~2017~~, ~~5 percent~~ had yield maintenance or another form of prepayment protection. As of December 31, 2017, none of Farmer Mac's USDA Securities had yield maintenance provisions; however, 4 percent contained other prepayment penalties. Of the USDA Securities purchased in 2017, 10 percent contained various forms of prepayment penalties. As of December 31, 2017, 65 percent of the Rural Utilities loans owned by Farmer Mac had yield maintenance provisions. Of the Rural Utilities loans purchased in 2017, 84 percent contained prepayment penalties.

Farmer Mac's purchases of eligible loan assets expose Farmer Mac to interest rate risk arising primarily from uncertainty as to when the borrowers will repay the outstanding principal balance on the related loans. Generally, the values of Farmer Mac's eligible loan assets, and the debt issued to fund these assets, increase when interest rates decline, and their values decrease as interest rates rise. Furthermore, changesChanges in interest rates may affect ~~loan prepayment rates~~the timing of asset prepayments which may, in turn, ~~affect~~impact durations and values of the ~~loans.~~assets. Declining interest rates generally ~~increase prepayment rates,~~result in increased prepayments, which shortens the duration of these assets, while rising interest rates ~~tend to slow loan~~generally result in lower prepayments, thereby extending the duration of the ~~loans.~~assets.

Farmer Mac is ~~also~~ subject to interest rate risk on loans ~~that Farmer Mac~~and securities it has committed to acquire but not yet purchased (other than delinquent loans purchased through ~~LTSPCs) but has not yet purchased.~~LTSPCs or loans designated for securitization under a forward purchase agreement). When Farmer Mac commits to purchase ~~those loans,~~these assets, it is exposed to interest rate risk between the time it commits to purchase the loans and the time it ~~either:~~

issues debt to ~~retain~~fund the ~~loans in its portfolio; or~~

~~sells Farmer Mac Guaranteed Securities backed by the~~purchase of these loans.

Farmer Mac manages the interest rate risk exposure related to these loans ~~and the related issuance of Farmer Mac Guaranteed Securities or debt, through the use of forward sale contracts on the debt securities of other GSEs and/or~~by entering into exchange-traded futures contracts involving U.S. Treasury ~~securities.~~securities and other financial derivatives. Similarly, when Farmer Mac ~~uses U.S. Treasury futures contracts as a hedge against~~commits to sell certain assets, the ~~level of interest rates, while forward sale contracts on GSE securities reduce its~~associated interest rate exposure ~~to changes in both~~is primarily managed with exchange-traded futures contracts involving U.S. Treasury ~~rates~~securities and spreads on Farmer Mac debt and certain Farmer Mac Guaranteed Securities. Issuing debt to fund the loans as investments does not fully eliminate interest rate risk due to the possible timing differences in the cash flows of the assets and related liabilities, as discussed above.other financial derivatives.

Farmer Mac's ~~$0.3~~$0.9 billion of cash and cash equivalents held as of December 31, 2023 mature within three ~~months and are funded with discount notes having similar maturities.~~months. As of December 31, ~~2017~~, ~~$2.18~~2023, $3.1 billion of the $~~2.26~~$5.0 billion of investment securities (~~96 percent~~(61%) were floating rate securities with rates that adjust within one year or fixed rate securities with original maturities between three months and one year. ~~Those~~Farmer Mac's floating rate investment securities are funded with floating rate debt. The fixed rate investment securities are generally funded in a manner consistent with Farmer Mac's overall funding strategy that approximates a duration and convexity match.

~~119~~101

~~funded with effectively floating rate debt that closely matches the rate adjustment dates of the associated investments. As of~~ ~~December 31, 2017, Farmer Mac had outstanding discount notes of $1.7 billion, medium-term notes that mature within one year of~~ ~~$6.4 billion, and medium-term notes that mature after one year of~~ ~~$7.4 billion~~.

New Business Volume
Farm & Ranch USDA Guarantees Rural Utilities Institutional Credit
Loans LTSPCs USDA Securities Loans LTSPCs AgVantage Total
(in thousands)
For the quarter ended:
December 31, 2017 $ 204,917
$ 282,809
$ 100,024
$ 15,000
$ —
$ 234,753
$ 837,503
September 30, 2017 298,274
102,774
131,298
70,000
—
290,995
893,341
June 30, 2017 312,217
55,899
169,261
25,000
—
1,296,757
1,859,134
March 31, 2017 314,137
113,261
131,101
27,341
—
561,407
1,147,247
December 31, 2016 243,692
117,265
129,343
10,800
20,000
247,154
768,254
September 30, 2016 282,690
155,657
119,201
20,000
—
528,234
1,105,782
June 30, 2016 241,093
58,156
133,745
10,000
421,404
396,245
1,260,643
March 31, 2016 198,548
68,017
98,968
9,691
—
927,219
1,302,443
December 31, 2015 245,252
185,919
72,442
46,082
—
14,391
564,086

For the year ended:
December 31, 2017 1,129,545
554,743
531,684
137,341
—
2,383,912
4,737,225
December 31, 2016 966,023
399,095
481,257
50,491
441,404
2,098,852
4,437,122
109

~~129~~

Table 38


Repayments of Assets
	Agricultural Finance				Rural Infrastructure Finance
	Farm & Ranch		Corporate AgFinance		Rural Utilities		Renewable Energy		Total
	(in thousands)
For the quarter ended:
Scheduled	$	827,122	$	133,468	$	53,614	$	69,040	$	1,083,244
Unscheduled	106,041		102,131		18,469		—		226,641
December 31, 2023	$	933,163	$	235,599	$	72,083	$	69,040	$	1,309,885

Scheduled	$	922,223	$	110,383	$	80,998	$	14,716	$	1,128,320
Unscheduled	108,960		104,999		20,578		—		234,537
September 30, 2023	$	1,031,183	$	215,382	$	101,576	$	14,716	$	1,362,857

Scheduled	$	1,050,480	$	81,386	$	558,944	$	52,203	$	1,743,013
Unscheduled	96,507		55,976		13,138		—		165,621
June 30, 2023	$	1,146,987	$	137,362	$	572,082	$	52,203	$	1,908,634

Scheduled	$	279,676	$	78,482	$	95,809	$	11,424	$	465,391
Unscheduled	231,288		128,254		57,354		—		416,896
March 31, 2023	$	510,964	$	206,736	$	153,163	$	11,424	$	882,287

Scheduled	$	447,976	$	64,308	$	75,671	$	9,809	$	597,764
Unscheduled	136,245		132,366		1,201		—		269,812
December 31, 2022	$	584,221	$	196,674	$	76,872	$	9,809	$	867,576

Scheduled	$	724,580	$	38,018	$	422,917	$	13,429	$	1,198,944
Unscheduled	296,763		64,439		—		—		361,202
September 30, 2022	$	1,021,343	$	102,457	$	422,917	$	13,429	$	1,560,146

Scheduled	$	1,114,779	$	42,162	$	159,491	$	7,898	$	1,324,330
Unscheduled	286,303		30,203		1,791		—		318,297
June 30, 2022	$	1,401,082	$	72,365	$	161,282	$	7,898	$	1,642,627

Scheduled	$	1,535,369	$	39,480	$	266,349	$	7,790	$	1,848,988
Unscheduled	434,794		60,947		397		—		496,138
March 31, 2022	$	1,970,163	$	100,427	$	266,746	$	7,790	$	2,345,126

Scheduled	$	928,663	$	205,778	$	816,802	$	18,526	$	1,969,769
Unscheduled	318,024		48,042		—		—		366,066
December 31, 2021	$	1,246,687	$	253,820	$	816,802	$	18,526	$	2,335,835

For the year ended:
Scheduled	$	3,079,501	$	403,719	$	789,365	$	147,383	$	4,419,968
Unscheduled	542,796		391,360		109,539		—		1,043,695
December 31, 2023	$	3,622,297	$	795,079	$	898,904	$	147,383	$	5,463,663

Scheduled	$	3,822,704	$	183,968	$	924,428	$	38,926	$	4,970,026
Unscheduled	1,154,105		287,955		3,389		—		1,445,449
December 31, 2022	$	4,976,809	$	471,923	$	927,817	$	38,926	$	6,415,475

~~Table 31~~

Repayments of Assets by Line of Business
Farm & Ranch USDA Guarantees Rural Utilities Institutional Credit
Loans Guaranteed Securities LTSPCs USDA Securities Loans LTSPCs AgVantage Total
(in thousands)
For the quarter ended:
Scheduled $ 25,848
$ 14,371
$ 36,806
—
$ 22,381
—
$ 315
—
$ 13,621
—
$ 231,717
$ 345,059
Unscheduled 49,229
6,941
43,975
—
24,385
—
4,876
—
—
—
—
129,406
December 31, 2017 $ 75,077
$ 21,312
$ 80,781
$ 46,766
$ 5,191
$ 13,621
$ 231,717
$ 474,465

Scheduled $ 61,961
$ 6,735
$ 21,409
$ 24,163
$ 27,191
$ 39,816
$ 100,571
$ 281,846
Unscheduled 49,894
5,861
124,676
45,192
457
—
—
226,080
September 30, 2017 $ 111,855
$ 12,596
$ 146,085
$ 69,355
$ 27,648
$ 39,816
$ 100,571
$ 507,926

Scheduled $ 21,687
$ 9,116
$ 41,821
$ 35,169
$ —
$ 9,885
$ 1,166,922
$ 1,284,600
Unscheduled 51,442
10,737
47,262
46,776
—
—
4,000
160,217
June 30, 2017 $ 73,129
$ 19,853
$ 89,083
$ 81,945
$ —
$ 9,885
$ 1,170,922
$ 1,444,817

Scheduled $ 70,394
$ 16,184
$ 48,375
$ 36,322
$ 26,909
$ 8,934
$ 161,451
$ 368,569
Unscheduled 114,811
11,985
64,486
39,457
814
—
102,059
333,612
March 31, 2017 $ 185,205
$ 28,169
$ 112,861
$ 75,779
$ 27,723
$ 8,934
$ 263,510
$ 702,181

Scheduled $ 20,566
$ 15,209
$ 21,546
$ 21,325
$ —
$ 15,929
$ 311,739
$ 406,314
Unscheduled 47,156
10,767
111,137
34,477
4,427
—
2,240
210,204
December 31, 2016 $ 67,722
$ 25,976
$ 132,683
$ 55,802
$ 4,427
$ 15,929
$ 313,979
$ 616,518

Scheduled $ 47,221
$ 7,954
$ 39,192
$ 22,626
$ 26,522
$ 58,177
$ 559,895
$ 761,587
Unscheduled 85,583
17,108
67,094
36,099
2,108
—
5,000
212,992
September 30, 2016 $ 132,804
$ 25,062
$ 106,286
$ 58,725
$ 28,630
$ 58,177
$ 564,895
$ 974,579

Scheduled $ 10,769
$ 9,876
$ 34,610
$ 34,434
$ 82
$ 7,424
$ 66,699
$ 163,894
Unscheduled 64,184
8,947
54,119
68,535
—
—
—
195,785
June 30, 2016 $ 74,953
$ 18,823
$ 88,729
$ 102,969
$ 82
$ 7,424
$ 66,699
$ 359,679

Scheduled $ 42,555
$ 17,866
$ 42,619
$ 42,969
$ 25,966
$ 4,140
$ 589,847
$ 765,962
Unscheduled 91,510
10,883
72,642
44,694
—
—
—
219,729
March 31, 2016 $ 134,065
$ 28,749
$ 115,261
$ 87,663
$ 25,966
$ 4,140
$ 589,847
$ 985,691

Scheduled $ 6,689
$ 16,884
$ 26,265
$ 18,981
$ 11,234
$ 4,165
$ 15,154
$ 99,372
Unscheduled 59,280
22,534
78,250
33,809
—
—
—
193,873
December 31, 2015 $ 65,969
$ 39,418
$ 104,515
$ 52,790
$ 11,234
$ 4,165
$ 15,154
$ 293,245

For the year ended:
Scheduled $ 179,890
$ 46,406
$ 148,411
$ 118,035
$ 54,415
$ 72,256
$ 1,660,661
$ 2,280,074
Unscheduled 265,376
35,524
280,399
155,810
6,147
—
106,059
849,315
December 31, 2017 $ 445,266
$ 81,930
$ 428,810
$ 273,845
$ 60,562
$ 72,256
$ 1,766,720
$ 3,129,389

Scheduled $ 121,111
$ 50,905
$ 137,967
$ 121,354
$ 52,570
$ 85,670
$ 1,528,180
$ 2,097,757
Unscheduled 288,433
47,705
304,992
183,805
6,535
—
7,240
838,710
December 31, 2016 $ 409,544
$ 98,610
$ 442,959
$ 305,159
$ 59,105
$ 85,670
$ 1,535,420
$ 2,936,467

~~130~~110

Table 39


Outstanding Business Volume
	Agricultural Finance				Rural Infrastructure Finance
	Farm & Ranch		Corporate AgFinance		Rural Utilities		Renewable Energy		Total
	(in thousands)
As of:
December 31, 2023	$	18,808,801	$	1,693,979	$	7,480,723	$	487,521	$	28,471,024
September 30, 2023	18,461,835		1,741,306		7,118,295		330,575		27,652,011
June 30, 2023	18,116,503		1,680,756		6,611,892		327,901		26,737,052
March 31, 2023	17,685,961		1,599,982		6,889,682		308,493		26,484,118
December 31, 2022	17,728,792		1,603,507		6,359,613		230,170		25,922,082
September 30, 2022	17,199,347		1,634,786		6,296,263		196,242		25,326,638
June 30, 2022	16,591,999		1,567,311		6,172,063		148,018		24,479,391
March 31, 2022	16,575,595		1,540,760		6,006,446		120,609		24,243,410
December 31, 2021	16,094,639		1,537,834		5,895,227		86,763		23,614,463

Table 3240


On-Balance Sheet Outstanding Business Volume
	Fixed Rate		5- to 10-Year ARMs & Resets		1-Month to 3-Year ARMs		Total Held in Portfolio
	(in thousands)
As of:
December 31, 2023	$	14,133,794	$	3,171,672	$	6,455,359	$	23,760,825
September 30, 2023	13,727,280		3,019,317		6,255,690		23,002,287
June 30, 2023	13,721,129		3,003,560		5,493,104		22,217,793
March 31, 2023	13,607,740		3,020,229		5,924,032		22,552,001
December 31, 2022	13,693,810		3,031,288		5,251,427		21,976,525
September 30, 2022	13,810,162		2,960,596		4,644,958		21,415,716
June 30, 2022	13,798,771		2,939,467		3,993,956		20,732,194
March 31, 2022	14,174,611		2,858,521		3,443,816		20,476,948
December 31, 2021	13,228,675		2,896,014		3,695,269		19,819,958

Lines of Business - Outstanding Business Volume
Farm & Ranch USDA Guarantees Rural Utilities Institutional Credit
Loans Guaranteed Securities LTSPCs USDA Securities Loans LTSPCs AgVantage Total
(in thousands)
As of:
December 31, 2017 $ 4,198,733
$ 333,511
$ 2,335,342
$ 2,352,214
$ 1,076,291
$ 806,342
$ 7,904,878
$ 19,007,311
September 30, 2017 4,068,893
354,823
2,133,314
2,298,956
1,066,482
819,963
7,901,842
18,644,273
June 30, 2017 3,882,474
367,419
2,176,625
2,237,013
1,024,130
859,779
7,711,418
18,258,858
March 31, 2017 3,643,386
387,272
2,209,809
2,149,697
999,130
869,664
7,585,583
17,844,541
December 31, 2016 3,514,454
415,441
2,209,409
2,094,375
999,512
878,598
7,287,686
17,399,475
September 30, 2016 3,338,484
441,417
2,224,827
2,020,834
993,139
874,527
7,354,511
17,247,739
June 30, 2016 3,188,598
466,479
2,175,456
1,960,358
1,001,769
932,704
7,391,172
17,116,536
March 31, 2016 3,022,458
485,302
2,206,029
1,929,582
991,851
518,724
7,061,626
16,215,572
December 31, 2015 2,957,975
514,051
2,253,273
1,918,277
1,008,126
522,864
6,724,254
15,898,820
111

~~Table 33~~

On-Balance Sheet Outstanding Business Volume
Fixed Rate 5- to 10-Year ARMs & Resets 1-Month to 3-Year ARMs Total Held in Portfolio
(in thousands)
As of:
December 31, 2017 $ 7,158,014
$ 2,499,203
$ 5,309,126
$ 14,966,343
September 30, 2017 6,921,477
2,447,923
5,426,757
14,796,157
June 30, 2017 6,722,463
2,406,120
5,226,982
14,355,565
March 31, 2017 5,373,283
2,330,819
5,255,146
12,959,248
December 31, 2016 5,346,011
2,274,535
4,888,291
12,508,837
September 30, 2016 5,278,332
2,212,946
4,869,765
12,361,043
June 30, 2016 5,201,386
2,157,342
4,867,336
12,226,064
March 31, 2016 4,942,566
2,296,767
4,468,045
11,707,378
December 31, 2015 4,923,163
2,271,960
4,118,366
11,313,489

~~131~~

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

Table 3441


	Net Effective Spread(1)
	Agricultural Finance								Rural Infrastructure Finance								Treasury
	Farm & Ranch				Corporate AgFinance				Rural Utilities				Renewable Energy				Funding				Investments				Net Effective Spread
	Dollars		Yield		Dollars		Yield		Dollars		Yield		Dollars		Yield		Dollars		Yield		Dollars		Yield		Dollars		Yield
	(dollars in thousands)
For the quarter ended:
December 31, 2023(2)	$	33,329	0.98	%	$	8,382	2.06	%	$	7,342	0.43	%	$	1,540	1.69	%	$	33,361	0.47	%	$	597	0.04	%	$	84,551	1.19	%
September 30, 2023	32,718		0.97	%	8,250		2.05	%	6,362		0.39	%	1,150		1.46	%	34,412		0.49	%	532		0.04	%	83,424		1.20	%
June 30, 2023	34,388		1.03	%	7,444		1.92	%	5,808		0.38	%	1,100		1.47	%	32,498		0.48	%	594		0.04	%	81,832		1.20	%
March 31, 2023	32,465		0.97	%	7,148		1.94	%	5,507		0.36	%	858		1.53	%	31,738		0.47	%	(543)		(0.04)	%	77,173		1.15	%
December 31, 2022(2)	32,770		0.98	%	7,471		1.94	%	4,960		0.34	%	935		1.76	%	27,656		0.42	%	(2,689)		(0.19)	%	71,103		1.07	%
September 30, 2022	33,343		1.04	%	7,600		1.99	%	4,220		0.30	%	705		1.97	%	22,564		0.36	%	(2,791)		(0.21)	%	65,641		1.03	%
June 30, 2022	32,590		1.05	%	6,929		1.87	%	3,733		0.27	%	468		1.78	%	18,508		0.30	%	(1,282)		(0.10)	%	60,946		0.99	%
March 31, 2022	30,354		1.02	%	7,209		1.96	%	3,159		0.23	%	375		1.69	%	16,738		0.28	%	4		—	%	57,839		0.97	%
December 31, 2021	28,998		0.99	%	6,321		1.84	%	2,521		0.19	%	356		1.53	%	15,979		0.28	%	158		0.01	%	54,333		0.94	%

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

(2)See Note 14 to the consolidated financial statements for a reconciliation of GAAP net interest income by segment to net effective spread by segment for the years ended December 31, 2023 and 2022.

Net Effective Spread by Line of Business
Farm & Ranch USDA Guarantees Rural Utilities Institutional Credit Corporate
Net Effective Spread⁽¹⁾
Dollars Yield Dollars Yield Dollars Yield Dollars Yield Dollars Yield Dollars Yield
(dollars in thousands)
For the quarter ended:
December 31, 2017⁽²⁾
$ 12,396
1.80 % $ 4,979
0.93 % $ 3,057
1.14 % $ 14,800
0.78 % $ 2,235
0.35 % $ 37,467
0.93 %
September 30, 2017 11,303
1.73 % 4,728
0.90 % 2,765
1.07 % 14,455
0.78 % 2,725
0.41 % 35,976
0.91 %
June 30, 2017 11,158
1.77 % 4,551
0.87 % 2,669
1.06 % 14,467
0.81 % 2,489
0.36 % 35,334
0.91 %
March 31, 2017 10,511
1.77 % 4,561
0.89 % 2,568
1.04 % 12,615
0.82 % 2,271
0.32 % 32,526
0.90 %
December 31, 2016⁽²⁾
10,131
1.75 % 5,152
1.04 % 2,530
1.02 % 11,636
0.78 % 1,999
0.26 % 31,448
0.88 %
September 30, 2016 10,476
1.86 % 4,994
1.03 % 2,541
1.01 % 11,431
0.75 % 2,239
0.24 % 31,681
0.85 %
June 30, 2016 9,644
1.74 % 4,392
0.92 % 2,459
0.98 % 11,412
0.77 % 2,596
0.29 % 30,503
0.83 %
March 31, 2016 9,238
1.67 % 4,118
0.87 % 2,438
0.99 % 11,093
0.80 % 2,553
0.26 % 29,440
0.81 %
December 31, 2015 9,168
1.68 % 4,332
0.92 % 2,747
1.10 % 10,902
0.80 % 2,306
0.26 % 29,455
0.84 %
112

⁽¹⁾

Net effective spread is a non-GAAP measure. Effective in fourth quarter 2017, Farmer Mac revised its methodology for calculating net effective spread to also include the net effects of terminations or net settlements on financial derivatives and hedging activities. All prior period information has been recast to reflect the revised net effective spread methodology. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures—Net Effective Spread" for more information regarding the explanation of net effective spread.


⁽²⁾	See Note 14 to the consolidated financial statements for a reconciliation of GAAP net interest income by line of business to net effective spread by line of business for the years ended December 31, 2017 and 2016.

~~132~~

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

Table 3542


	Core Earnings by Quarter End
	December 2023		September 2023		June 2023		March 2023		December 2022		September 2022		June 2022		March 2022		December 2021
	(in thousands)
Revenues:
Net effective spread	$	84,551	$	83,424	$	81,832	$	77,173	$	71,103	$	65,641	$	60,946	$	57,839	$	54,333
Guarantee and commitment fees	4,865		4,828		4,581		4,654		4,677		4,201		4,709		4,557		4,637
Gains on sale of mortgage loans	—		—		—		—		—		—		—		—		6,539
Other	767		1,056		409		1,067		390		473		307		514		241
Total revenues	90,183		89,308		86,822		82,894		76,170		70,315		65,962		62,910		65,750

Credit related expense/(income):
(Release of)/provision for losses	(575)		(181)		1,142		750		1,945		450		(1,535)		(54)		(1,428)
REO operating expenses	—		—		—		—		819		—		—		—		—

Total credit related expense/(income)	(575)		(181)		1,142		750		2,764		450		(1,535)		(54)		(1,428)

Operating expenses:
Compensation and employee benefits	15,523		14,103		13,937		15,351		12,105		11,648		11,715		13,298		11,246
General and administrative	8,916		9,100		9,420		7,527		8,055		6,919		7,520		7,278		8,492
Regulatory fees	725		831		831		835		832		812		813		812		812
Total operating expenses	25,164		24,034		24,188		23,713		20,992		19,379		20,048		21,388		20,550

Net earnings	65,594		65,455		61,492		58,431		52,414		50,486		47,449		41,576		46,628
Income tax expense	13,881		13,475		12,539		12,756		11,210		10,303		9,909		9,024		9,809
Preferred stock dividends	6,791		6,792		6,791		6,791		6,791		6,791		6,792		6,791		6,792
Core earnings	$	44,922	$	45,188	$	42,162	$	38,884	$	34,413	$	33,392	$	30,748	$	25,761	$	30,027

Reconciling items:
(Losses)/gains on undesignated financial derivatives due to fair value changes	$	(836)	$	2,921	$	2,141	$	916	$	1,596	$	6,441	$	2,846	$	2,612	$	(1,242)
(Losses)/gains on hedging activities due to fair value changes	(3,598)		3,210		(4,901)		(105)		(148)		(624)		428		5,687		(2,079)
Unrealized (losses)/gains on trading assets	(37)		1,714		(57)		359		31		(757)		(285)		94		(76)
Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value	88		29		29		29		57		24		(62)		20		71
Net effects of terminations or net settlements on financial derivatives	(800)		(79)		583		523		1,268		(3,522)		2,536		15,512		(429)


Income tax effect related to reconciling items	1,089		(1,638)		464		(362)		(590)		(327)		(1,148)		(5,024)		789
Net income attributable to common stockholders	$	40,828	$	51,345	$	40,421	$	40,244	$	36,627	$	34,627	$	35,063	$	44,662	$	27,061

Item 7A.Quantitative and Qualitative Disclosures About Market Risk

Core Earnings by Quarter Ended
December 2017 September 2017 June 2017 March 2017 December 2016 September 2016 June 2016 March 2016 December 2015
(in thousands)
Revenues:
Net effective spread $ 37,467
$ 35,976
$ 35,334
$ 32,526
$ 31,448
$ 31,681
$ 30,503
$ 29,440
$ 29,455
Guarantee and commitment fees 5,157
4,935
4,942
5,316
5,158
4,533
4,810
4,669
4,730
Other 69
274
107
485
545
713
466
346
267
Total revenues 42,693
41,185
40,383
38,327
37,151
36,927
35,779
34,455
34,452

Credit related (income)/expense:
Provision for/(release of) losses 464
384
466
444
512
(31 ) 458
63
(49 )
REO operating expenses —
—
23
—
—
—
—
39
44
(Gains)/losses on sale of REO (964 ) (32 ) (757 ) 5
—
(15 ) —
—
—
Total credit related (income)/expense (500 ) 352
(268 ) 449
512
(46 ) 458
102
(5 )

Operating expenses:
Compensation and employee benefits 5,247
5,987
6,682
6,317
5,949
5,438
5,611
5,774
5,385
General and administrative 4,348
3,890
3,921
3,800
4,352
3,474
3,757
3,526
3,238
Regulatory fees 625
625
625
625
625
613
612
613
613
Total operating expenses 10,220
10,502
11,228
10,742
10,926
9,525
9,980
9,913
9,236

Net earnings 32,973
30,331
29,423
27,136
25,713
27,448
25,341
24,440
25,221
Income tax expense 11,796
10,268
10,307
8,844
9,189
9,577
8,979
8,568
8,876
Net (loss)/income attributable to non-controlling interest⁽¹⁾
—
—
(150 ) (15 ) 28
(18 ) (16 ) (28 ) (60 )
Preferred stock dividends 3,296
3,295
3,296
3,295
3,296
3,295
3,296
3,295
3,296
Core earnings $ 17,881
$ 16,768
$ 15,970
$ 15,012
$ 13,200
$ 14,594
$ 13,082
$ 12,605
$ 13,109

Reconciling items:
(Losses)/gains on financial derivatives and hedging activities due to fair value changes (264 ) 2,737
2,221
4,805
17,233
1,460
(2,076 ) (2,989 ) 2,743
Unrealized gains/(losses) on trading assets 60
—
(2 ) (82 ) (474 ) 1,182
394
358
696
Amortization of premiums/discounts and deferred gains on assets consolidated at fair value (129 ) (954 ) (117 ) (127 ) (40 ) (157 ) (371 ) (281 ) (263 )
Net effects of terminations or net settlements on financial derivatives and hedging activities 632
862
232
948
2,150
238
398
(608 ) (217 )
Re-measurement of net deferred tax asset due to enactment of new tax legislation (1,365 ) —
—
—
—
—
—
—
—
Income tax effect related to reconciling items (105 ) (926 ) (816 ) (1,941 ) (6,604 ) (953 ) 579
1,232
(1,036 )
Net income attributable to common stockholders $ 16,710
$ 18,487
$ 17,488
$ 18,615
$ 25,465
$ 16,364
$ 12,006
$ 10,317
$ 15,032


⁽¹⁾	~~As of May 1, 2017, Farmer Mac transferred its entire 65% ownership interest in AgVisory back to the limited liability company.~~

~~133~~


~~Item 7A.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~

Farmer Mac is exposed to market risk from changes in interest rates. Farmer Mac manages this market risk by entering into various financial transactions, including financial derivatives, and by monitoring and measuring its exposure to changes in interest rates. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Interest Rate Risk" for more information about Farmer Mac's exposure to interest rate risk and its strategies to manage that risk. For

113

information ~~regarding~~about Farmer Mac's use of financial derivatives and related accounting policies, see Note 6 to the consolidated financial statements.


~~Item 8.~~	~~Financial Statements~~

Item 8.Financial Statements

Management's Report on Internal Control over Financial Reporting

The management of Farmer Mac is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed under the supervision of Farmer Mac's Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Farmer Mac's financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Farmer Mac's internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Farmer Mac; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Farmer Mac are being made only in accordance with authorizations of management and directors of Farmer Mac; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of Farmer Mac's assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of Farmer Mac's Chief Executive Officer and Chief Financial Officer, Farmer Mac's management assessed the effectiveness of Farmer Mac's internal control over financial reporting as of December 31, ~~2017.~~2023. In making this assessment, Farmer Mac's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013). Based on its evaluation under the COSO criteria, management concluded that Farmer Mac's internal control over financial reporting as of December 31, ~~2017~~2023 was effective.

Farmer Mac's independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited the effectiveness of Farmer Mac's internal control over financial reporting as of December 31, ~~2017,~~2023, as stated in their report appearing below.

~~134~~114

Report of Independent Registered Public Accounting Firm

To theBoard of Directors and Stockholders

of the Federal Agricultural Mortgage ~~Corporation:~~Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of the Federal Agricultural Mortgage Corporation and its subsidiaries (the “Company”) as of December 31, ~~2017~~2023 and ~~2016~~2022, and the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, ~~2017,~~2023, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, ~~2017,~~2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, ~~2017~~2023 and ~~2016,~~2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2017~~2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2017,~~2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying ~~Management's~~Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ~~("PCAOB")~~(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial

reporting,

~~135~~115

~~reporting,~~ assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of AgVantage Farmer Mac Guaranteed Securities

As disclosed by management, the Company guarantees and purchases general obligations of lenders and other financial institutions that are secured by pools of the types of loans eligible for purchase under Farmer Mac's Agricultural Finance or Rural Infrastructure Finance lines of business, which are referred to as AgVantage securities. As described in Notes 5 and 13 to the consolidated financial statements, the total unpaid principal balance of AgVantage securities as of December 31, 2023 was $10.0 billion, and the fair value of the AgVantage securities of December 31, 2023 was $9.6 billion. The fair value of AgVantage securities is estimated using a discounted cash flow model. The significant unobservable input used is the discount rate commensurate with the risks involved.

The principal considerations for our determination that performing procedures relating to the valuation of AgVantage securities is a critical audit matter are (i) the high degree of audit effort in performing procedures and evaluating audit evidence related to the discount rate assumption used by management in

116

the valuation of the AgVantage securities, and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of AgVantage securities, including controls over the model, data and assumption. These procedures also included, among others, (i) the involvement of professionals with specialized skill and knowledge to assist in developing an independent range of prices for a sample of AgVantage securities, and (ii) comparing management’s estimate to the independently developed range to evaluate the reasonableness of management’s estimate. Developing the independent range of prices involved testing the completeness and accuracy of data provided by management and independently developing the discount rate assumption.

/s/ PricewaterhouseCoopers LLP

~~McLean, VA~~Washington, District of Columbia

~~March 8, 2018~~February 23, 2024

We have served as the Company’s auditor since 2010.

~~136~~117

FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	As of
	As of									As of
	December 31, 2017			December 31, 2016				December 31, 2023	December 31, 2022
	(in thousands)							(in thousands)
Assets:							Assets:
Cash and cash equivalents	$	302,022		$	265,229
Investment securities:							Investment securities:
Available-for-sale, at fair value	2,215,405			2,515,851
Available-for-sale, at fair value (amortized cost of $5,060,135 and $4,769,426, respectively)
Held-to-maturity, at amortized cost	45,032			—
Other investments
Total Investment Securities	2,260,437			2,515,851
Farmer Mac Guaranteed Securities:							Farmer Mac Guaranteed Securities:
Available-for-sale, at fair value	5,471,914			4,853,685
Available-for-sale, at fair value (amortized cost of $5,825,433 and $8,019,495, respectively)
Held-to-maturity, at amortized cost	2,126,274			1,149,231
Total Farmer Mac Guaranteed Securities	7,598,188			6,002,916
USDA Securities:							USDA Securities:
Trading, at fair value	13,515			20,388
Held-to-maturity, at amortized cost	2,117,850			2,009,225
Total USDA Securities	2,131,365			2,029,613
Loans:							Loans:

Loans held for investment, at amortized cost
Loans held for investment, at amortized cost
Loans held for investment, at amortized cost	3,873,755			3,379,884
Loans held for investment in consolidated trusts, at amortized cost	1,399,827			1,132,966
Allowance for loan losses	(6,796		)	(5,415		)
Allowance for losses
Total loans, net of allowance	5,266,786			4,507,435
Real estate owned, at lower of cost or fair value	139			1,528

Financial derivatives, at fair value	7,093			23,182
Interest receivable (includes $17,373 and $12,584, respectively, related to consolidated trusts)	155,278			122,782
Financial derivatives, at fair value
Financial derivatives, at fair value
Accrued interest receivable (includes $16,764 and $12,514, respectively, related to consolidated trusts)
Guarantee and commitment fees receivable	39,895			38,871
Deferred tax asset, net	2,048			12,291
Prepaid expenses and other assets	29,023			86,322
Total Assets	$	17,792,274		$	15,606,020

Liabilities and Equity:
Liabilities and Equity:
Liabilities and Equity:
Liabilities:							Liabilities:
Notes payable:
Due within one year	$	8,089,826		$	8,440,123
Due after one year	7,432,790			5,222,977
Total notes payable	15,522,616			13,663,100

Notes payable

Notes payable

Notes payable
Debt securities of consolidated trusts held by third parties	1,404,945			1,142,704
Financial derivatives, at fair value	26,599			58,152
Accrued interest payable (includes $14,631 and $10,881, respectively, related to consolidated trusts)	75,402			49,700
Accrued interest payable (includes $9,407 and $8,081, respectively, related to consolidated trusts)
Guarantee and commitment obligation	38,400			37,282
Accounts payable and accrued expenses	14,096			9,415

Reserve for losses
Reserve for losses
Reserve for losses	2,070			2,020
Total Liabilities	17,084,128			14,962,373
Commitments and Contingencies (Note 12)							Commitments and Contingencies (Note 12)
Equity:							Equity:
Preferred stock:							Preferred stock:
Series A, par value $25 per share, 2,400,000 shares authorized, issued and outstanding	58,333			58,333
Series B, par value $25 per share, 3,000,000 shares authorized, issued and outstanding	73,044			73,044
Series C, par value $25 per share, 3,000,000 shares authorized, issued and outstanding	73,382			73,382
Series D, par value $25 per share, 4,000,000 shares authorized, issued and outstanding
Series E, par value $25 per share, 3,180,000 shares authorized, issued and outstanding
Series F, par value $25 per share, 4,800,000 shares authorized, issued and outstanding
Series G, par value $25 per share, 5,000,000 shares authorized, issued and outstanding
Common stock:							Common stock:
Class A Voting, $1 par value, no maximum authorization, 1,030,780 shares outstanding	1,031			1,031
Class B Voting, $1 par value, no maximum authorization, 500,301 shares outstanding	500			500
Class C Non-Voting, $1 par value, no maximum authorization, 9,087,670 shares and 9,007,481 shares outstanding, respectively	9,088			9,008
Class C Non-Voting, $1 par value, no maximum authorization, 9,310,872 shares and 9,270,265 shares outstanding, respectively
Additional paid-in capital	118,979			118,655
Accumulated other comprehensive income, net of tax	51,085			33,758
Accumulated other comprehensive loss, net of tax
Retained earnings	322,704			275,714
Total Stockholders' Equity	708,146			643,425
Non-controlling interest	—			222
Total Equity	708,146			643,647
Total Liabilities and Equity	$	17,792,274		$	15,606,020

As of December 31, 2017 As of December 31, 2016
Unsecuritized In Consolidated Trusts Total Unsecuritized In Consolidated Trusts Total
(in thousands)
Farm & Ranch $ 2,798,906
$ 1,399,827
$ 4,198,733
$ 2,381,488
$ 1,132,966
$ 3,514,454
Rural Utilities 1,076,291
—
1,076,291
999,512
—
999,512
Total unpaid principal balance⁽¹⁾
3,875,197
1,399,827
5,275,024
3,381,000
1,132,966
4,513,966
Unamortized premiums, discounts and other cost basis adjustments (1,442 ) —
(1,442 ) (1,116 ) —
(1,116 )
Total loans 3,873,755
1,399,827
5,273,582
3,379,884
1,132,966
4,512,850
Allowance for loan losses (5,493 ) (1,303 ) (6,796 ) (4,437 ) (978 ) (5,415 )
Total loans, net of allowance $ 3,868,262
$ 1,398,524
$ 5,266,786
$ 3,375,447
$ 1,131,988
$ 4,507,435


⁽¹⁾	~~Unpaid principal balance is the basis of presentation in disclosures of outstanding balances for Farmer Mac's lines of business.~~

Allowance for Losses

~~Farm & Ranch~~

~~Farmer Mac maintains an~~The following table is a summary, by asset type, of the allowance for losses presented in two components on its consolidated balance sheets: (1) an allowance for loan losses to account for estimated probable losses on loans held, and (2) a reserve for losses to account for estimated probable losses on loans underlying LTSPCs and off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities). Farmer Mac's total allowance for losses was $8.9 million as of December 31, ~~2017~~2023 and ~~$7.4 million as of December 31, 2016. See Note 12 for more information about off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs.~~ 2022:

Table 8.2


	December 31, 2023		December 31, 2022
	Allowance for Losses		Allowance for Losses
	(in thousands)
Loans:
Agricultural Finance loans
Farm & Ranch	$	3,936	$	4,044
Corporate AgFinance	2,948		2,731
Total Agricultural Finance Loans	6,884		6,775
Rural Infrastructure Finance loans	9,147		8,314
Total	$	16,031	$	15,089

~~176~~

The following is a summary of the changes in the ~~total~~ allowance for losses for each year in the three-year period ended December 31, ~~2017:~~2023:

Table ~~8.2~~8.3



	Agricultural Finance loans						Rural Infrastructure Finance loans(3)
	Farm & Ranch(1)		Corporate AgFinance(2)		Total
	(in thousands)
Balance as of December 31, 2020	$	3,404	$	341	$	3,745	$	10,087
(Release of)/provision for losses	(1,576)		219		(1,357)		512
Recovery	1,054		—		1,054		—
Balance as of December 31, 2021	$	2,882	$	560	$	3,442	$	10,599
Provision for/(release of) losses	1,246		2,171		3,417		(2,285)
Charge-offs	(84)		—		(84)		—
Balance as of December 31, 2022	$	4,044	$	2,731	$	6,775	$	8,314
(Release of)/provision for losses	(108)		217		109		833
Charge-offs	—		—		—		—
Balance as of December 31, 2023	$	3,936	$	2,948	$	6,884	$	9,147

Allowance
for Loan
Losses Reserve
for Losses Total
Allowance
for Losses
(in thousands)
Balance as of December 31, 2014 $ 5,864
$ 4,263
$ 10,127
Provision for/(release of) losses 2,388
(2,180 ) 208
Charge-offs (3,772 ) —
(3,772 )
Balance as of December 31, 2015 $ 4,480
$ 2,083
$ 6,563
Provision for/(release of) losses 1,065
(63 ) 1,002
Charge-offs (130 ) —
(130 )
Balance as of December 31, 2016 $ 5,415
$ 2,020
$ 7,435
Provision for/(release of) losses 1,708
50
1,758
Charge-offs (327 ) —
(327 )
Balance as of December 31, 2017 $ 6,796
$ 2,070
$ 8,866

~~During 2017, Farmer Mac recorded net provisions to its~~(1)As of December 31, 2023 and 2022, the allowance for ~~loan~~ losses for Agricultural Finance Farm & Ranch loans includes $1.0 million and ~~reserve~~$1.9 million allowance for collateral dependent assets secured by agricultural real estate, respectively.

(2)As of December 31, 2023 and 2022, the allowance for losses ~~of $1.7~~for Agricultural Finance Corporate AgFinance loans includes $0.0 million and ~~$0.1~~$2.4 million allowance for collateral dependent assets secured by agricultural real estate, respectively.

(3)As of December 31, 2023 and 2022, the allowance for losses for Rural Infrastructure Finance loans includes no allowance for collateral dependent assets.

The $0.8 million net ~~provisions~~provision to the allowance for ~~loan losses recorded during 2017 were primarily attributable to (1) an increase in~~ the general allowance due to overall net volume growth in on-balance sheet Farm & Ranch loans, and (2) an increase in the specific allowance for certain impaired on-balance sheet crop and permanent planting loans resulting from both an increase in the outstanding balance of such loans and downgrades in risk ratings on certain of those loans. The net provision to the reserve for losses recorded during 2017 was primarily attributable to an increase in the general reserve due to downgrades in risk ratings on certain unimpaired Agricultural Storage and Processing loans underlying LTSPCs. Farmer Mac recorded $0.3 million of charge-offs to its allowance for loan losses during 2017.

During 2016, Farmer Mac recorded provisions to its allowance for loan losses of $1.1 million and releases to its reserve for losses of $0.1 million. The provisions to the allowance for loan losses recorded during 2016 were attributable to an increase in the general allowance due to overall net volume growth in on-balance sheet Farm & Ranch loans and downgrades in risk ratings for certain loans. The releases to the reserve for losses recordedRural Infrastructure Finance portfolio during the year ended December 31, ~~2016 were~~2023 was primarily attributable to ~~the release of~~ a ~~specific reserve on an impaired livestock~~single telecommunications loan ~~underlying an LTSPC~~ that was ~~required~~downgraded to ~~be removed from~~substandard during the ~~LTSPC pool by the originator during 2016. Farmer Mac recorded~~year. The $0.1 million ~~of charge-offs to its allowance for loan losses during 2016.~~

~~During 2015, Farmer Mac recorded provisions to its allowance for loan losses of $2.4 million and releases to its reserve for losses of $2.2 million. The provisions~~net provision to the allowance for the Agricultural Finance mortgage loan portfolio during the year ended December 31, 2023 was primarily attributable to increased loan volume.

The $2.3 million net release from the allowance for the Rural Infrastructure Finance portfolio during the year ended December 31, 2022 was primarily attributable to a risk rating upgrade on a single loan and improvements in forecasts of future economic conditions. The risk rating upgrade on that loan reflected

162

that borrower's successful securitization of its large payable that arose during the arctic freeze that struck Texas in February 2021. The $3.4 million net provision to the allowance for the Agricultural Finance mortgage loan portfolio during the year ended December 31, 2022 was primarily attributable to a risk rating downgrade on a single agricultural storage and processing loan, due to its ongoing bankruptcy proceedings.

The provision to the allowance for Rural Infrastructure Finance loan losses of $0.5 million recorded

during ~~2015 were~~the year ended 2021 was primarily attributable to the ~~establishment~~impact of a specific allowance for two Agricultural Storage and Processing loans that financed one canola facility. Farmer Mac recognized a charge-off of $3.7 million in fourth quarter 2015 on those loans. The provisions to the ~~allowance for losses were~~ Texas Arctic Freeze, partially

offset by the ~~reduction in~~impact of improving economic factor forecasts. The $1.4 million release from the ~~specific~~ allowance

for the Agricultural Finance mortgage loan portfolio during the year ended 2021 was primarily attributable

to a ~~permanent planting loan based~~recovery on the ~~updated appraised value~~payoff of the ~~collateral underlying such~~agricultural storage and processing loan secured by a specialized poultry

facility that had been partially charged off in 2020 and ~~releases to the general reserve from the reserve for losses due to substantial paydowns of Agricultural Storage and Processing loansunderlying LTSPCs due to repayments of these loans at par.~~improving economic factor forecasts.

~~177~~

~~The following tables present the changes in the total allowance for losses for the years ended December 31, 2017, 2016, and 2015 by commodity type:~~

~~Table 8.3~~

For the Year Ended December 31, 2017
Crops Permanent
Plantings Livestock Part-time
Farm Ag. Storage and
Processing Other Total
(in thousands)
Beginning Balance $ 3,365
$ 1,723
$ 1,375
$ 405
$ 533
$ 34
$ 7,435
Provision for/(release of) losses 944
816
(151 ) 92
73
(16 ) 1,758
Charge-offs (228 ) (70 ) (13 ) (16 ) —
—
(327 )
Ending Balance $ 4,081
$ 2,469
$ 1,211
$ 481
$ 606
$ 18
$ 8,866

For the Year Ended December 31, 2016
Crops Permanent
Plantings Livestock Part-time
Farm Ag. Storage and
Processing Other Total
(in thousands)
Beginning Balance $ 2,791
$ 931
$ 1,781
$ 408
$ 649
$ 3
$ 6,563
Provision for/(release of) losses 574
792
(406 ) 127
(116 ) 31
1,002
Charge-offs —
—
—
(130 ) —
—
(130 )
Ending Balance $ 3,365
$ 1,723
$ 1,375
$ 405
$ 533
$ 34
$ 7,435

For the Year Ended December 31, 2015
Crops Permanent
Plantings Livestock Part-time
Farm Ag. Storage and
Processing Other Total
(in thousands)
Beginning Balance $ 2,519
$ 2,159
$ 1,423
$ 467
$ 3,552
$ 7
$ 10,127
Provision for/(release of) losses 272
(1,228 ) 358
52
758
(4 ) 208
Charge-offs —
—
—
(111 ) (3,661 ) —
(3,772 )
Ending Balance $ 2,791
$ 931
$ 1,781
$ 408
$ 649
$ 3
$ 6,563

~~178~~

The following tables present the unpaid principal balances of loans held and loans underlying LTSPCs and off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities) and the related total allowance for losses by impairment method and commodity type as of December 31, 2017 and 2016:

~~Table 8.4~~

As of December 31, 2017
Crops Permanent
Plantings Livestock Part-time
Farm Ag. Storage and
Processing Other Total
(in thousands)
Ending Balance:
Collectively evaluated for impairment:
On-balance sheet $ 2,344,821
$ 794,478
$ 635,768
$ 269,337
$ 13,023
$ 9,030
$ 4,066,457
Off-balance sheet 1,236,392
532,666
678,642
155,627
45,738
4,981
2,654,046
Total $ 3,581,213
$ 1,327,144
$ 1,314,410
$ 424,964
$ 58,761
$ 14,011
$ 6,720,503
Individually evaluated for impairment:
On-balance sheet $ 67,828
$ 38,180
$ 17,766
$ 7,858
$ —
$ 644
$ 132,276
Off-balance sheet 8,904
2,239
2,782
806
—
76
14,807
Total $ 76,732
$ 40,419
$ 20,548
$ 8,664
$ —
$ 720
$ 147,083
Total Farm & Ranch loans:
On-balance sheet $ 2,412,649
$ 832,658
$ 653,534
$ 277,195
$ 13,023
$ 9,674
$ 4,198,733
Off-balance sheet 1,245,296
534,905
681,424
156,433
45,738
5,057
2,668,853
Total $ 3,657,945
$ 1,367,563
$ 1,334,958
$ 433,628
$ 58,761
$ 14,731
$ 6,867,586
Allowance for Losses:

Collectively evaluated for impairment:
On-balance sheet $ 2,104
$ 1,101
$ 738
$ 287
$ 44
$ 11
$ 4,285
Off-balance sheet 546
305
231
48
562
5
1,697
Total $ 2,650
$ 1,406
$ 969
$ 335
$ 606
$ 16
$ 5,982
Individually evaluated for impairment:
On-balance sheet $ 1,207
$ 1,006
$ 172
$ 126
$ —
$ —
$ 2,511
Off-balance sheet 224
57
70
20
—
2
373
Total $ 1,431
$ 1,063
$ 242
$ 146
$ —
$ 2
$ 2,884
Total Farm & Ranch loans:
On-balance sheet $ 3,311
$ 2,107
$ 910
$ 413
$ 44
$ 11
$ 6,796
Off-balance sheet 770
362
301
68
562
7
2,070
Total $ 4,081
$ 2,469
$ 1,211
$ 481
$ 606
$ 18
$ 8,866

~~179~~

As of December 31, 2016
Crops Permanent
Plantings Livestock Part-time
Farm Ag. Storage and
Processing Other Total
(in thousands)
Ending Balance:
Collectively evaluated for impairment:
On-balance sheet $ 2,115,450
$ 569,360
$ 537,859
$ 183,660
$ 11,545
$ 8,894
$ 3,426,768
Off-balance sheet 1,241,851
437,575
752,473
131,889
36,506
4,503
2,604,797
Total $ 3,357,301
$ 1,006,935
$ 1,290,332
$ 315,549
$ 48,051
$ 13,397
$ 6,031,565
Individually evaluated for impairment:
On-balance sheet $ 41,648
$ 27,770
$ 10,658
$ 7,610
$ —
$ —
$ 87,686
Off-balance sheet 11,549
2,735
4,854
915
—
—
20,053
Total $ 53,197
$ 30,505
$ 15,512
$ 8,525
$ —
$ —
$ 107,739
Total Farm & Ranch loans:
On-balance sheet $ 2,157,098
$ 597,130
$ 548,517
$ 191,270
$ 11,545
$ 8,894
$ 3,514,454
Off-balance sheet 1,253,400
440,310
757,327
132,804
36,506
4,503
2,624,850
Total $ 3,410,498
$ 1,037,440
$ 1,305,844
$ 324,074
$ 48,051
$ 13,397
$ 6,139,304
Allowance for Losses:

Collectively evaluated for impairment:
On-balance sheet $ 2,000
$ 652
$ 735
$ 193
$ 22
$ 28
$ 3,630
Off-balance sheet 420
281
241
54
511
6
1,513
Total $ 2,420
$ 933
$ 976
$ 247
$ 533
$ 34
$ 5,143
Individually evaluated for impairment:
On-balance sheet $ 613
$ 770
$ 270
$ 132
$ —
$ —
$ 1,785
Off-balance sheet 332
20
129
26
—
—
507
Total $ 945
$ 790
$ 399
$ 158
$ —
$ —
$ 2,292
Total Farm & Ranch loans:
On-balance sheet $ 2,613
$ 1,422
$ 1,005
$ 325
$ 22
$ 28
$ 5,415
Off-balance sheet 752
301
370
80
511
6
2,020
Total $ 3,365
$ 1,723
$ 1,375
$ 405
$ 533
$ 34
$ 7,435

~~180~~

The following tables present by commodity type the unpaid principal balances, recorded investment, and specific allowance for losses related to impaired loans and the recorded investment in loans on nonaccrual status as of December 31, 2017 and 2016:

~~Table 8.5~~

As of December 31, 2017
Crops Permanent
Plantings Livestock Part-time
Farm Ag. Storage and
Processing Other Total
(in thousands)
Impaired Loans:
With no specific allowance:
Recorded investment $ 14,417
$ 3,272
$ 11,171
$ 1,953
$ —
$ 644
$ 31,457
Unpaid principal balance 14,418
3,273
11,172
1,953
—
644
31,460
With a specific allowance:

Recorded investment⁽¹⁾
62,309
37,143
9,376
6,710
—
76
115,614
Unpaid principal balance 62,314
37,146
9,376
6,711
—
76
115,623
Associated allowance 1,431
1,063
242
146
—
2
2,884
Total:

Recorded investment 76,726
40,415
20,547
8,663
—
720
147,071
Unpaid principal balance 76,732
40,419
20,548
8,664
—
720
147,083
Associated allowance 1,431
1,063
242
146
—
2
2,884

Recorded investment of loans on nonaccrual status⁽²⁾
$ 27,630
$ 25,701
$ 5,333
$ 4,929
$ —
$ —
$ 63,593


⁽¹⁾	Impairment analysis was performed in the aggregate in consideration of similar risk characteristics of the assets and historical statistics on $113.2 million (77 percent) of impaired loans as of December 31, 2017, which resulted in a specific allowance of $2.7 million.


⁽²⁾	~~Includes $15.7 million of loans that are less than 90 days delinquent but which have not met Farmer Mac's performance criteria for returning to accrual status.~~

As of December 31, 2016
Crops Permanent
Plantings Livestock Part-time
Farm Ag. Storage and
Processing Other Total
(in thousands)
Impaired Loans:
With no specific allowance:
Recorded investment $ 20,761
$ 3,683
$ 1,054
$ 1,970
$ —
$ —
$ 27,468
Unpaid principal balance 20,816
3,688
1,055
1,975
—
—
27,534
With a specific allowance:

Recorded investment⁽¹⁾
32,326
26,748
14,322
6,535
—
—
79,931
Unpaid principal balance 32,381
26,817
14,457
6,550
—
—
80,205
Associated allowance 945
790
399
158
—
—
2,292
Total:

Recorded investment 53,087
30,431
15,376
8,505
—
—
107,399
Unpaid principal balance 53,197
30,505
15,512
8,525
—
—
107,739
Associated allowance 945
790
399
158
—
—
2,292

Recorded investment of loans on nonaccrual status⁽²⁾
$ 13,405
$ 10,785
$ 2,696
$ 5,256
$ —
$ —
$ 32,142


⁽¹⁾	Impairment analysis was performed in the aggregate in consideration of similar risk characteristics of the assets and historical statistics on $76.5 million (71 percent) of impaired loans as of December 31, 2016, which resulted in a specific allowance of $1.6 million.


⁽²⁾	~~Includes $12.4 million of loans that are less than 90 days delinquent but which have not met Farmer Mac's performance criteria for returning to accrual status.~~

~~181~~

The following table presents the unpaid principal balances by ~~commodity type~~delinquency status of Farmer Mac's loans and non-performing assets as of December 31, 2023 and 2022:

Table 8.4


	As of December 31, 2023
	Accruing
	Current		30-59 Days		60-89 Days		90 Days and Greater(2)		Total Past Due		Nonaccrual loans(3)(4)		Total Loans
	(in thousands)
Loans(1):
Agricultural Finance loans
Farm & Ranch	$	6,470,205	$	15,326	$	3,953	$	10,991	$	30,270	$	65,236	$	6,565,711
Corporate AgFinance	1,259,723		—		—		—		—		—		1,259,723
Total Agricultural Finance loans	7,729,928		15,326		3,953		10,991		30,270		65,236		7,825,434
Rural Infrastructure Finance loans	3,534,763		—		—		—		—		—		3,534,763
Total	$	11,264,691	$	15,326	$	3,953	$	10,991	$	30,270	$	65,236	$	11,360,197

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

(2)Includes loans in consolidated trusts with beneficial interests owned by third parties (single-class) that are 90 days or more past due.

(4)Includes $25.7 million of nonaccrual loans for which there was no associated allowance. During the year ended December 31, ~~2017 and 2016:~~

~~Table 8.6~~

December 31, 2017
Crops Permanent
Plantings Livestock Part-time
Farm Ag. Storage and
Processing Other Total
(in thousands)
For the Year Ended:
Average recorded investment in impaired loans $ 71,154
$ 37,597
$ 15,913
$ 8,135
$ —
$ 381
$ 133,180
Income recognized on impaired loans 696
530
238
289
—
—
1,753

December 31, 2016
Crops Permanent
Plantings Livestock Part-time
Farm Ag. Storage and
Processing Other Total
(in thousands)
For the Year Ended:
Average recorded investment in impaired loans $ 33,252
$ 24,737
$ 14,450
$ 8,396
$ 1,968
$ —
$ 82,803
Income recognized on impaired loans 136
866
238
329
—
—
1,569

~~A modification to the contractual terms of a loan that results in granting a concession to a borrower experiencing financial difficulties is considered a troubled debt restructuring ("TDR").~~2023, Farmer Mac ~~has granted a concession when, as a result~~received $2.6 million in interest on nonaccrual loans.

163


	As of December 31, 2022
	Accruing
	Current		30-59 Days		60-89 Days		90 Days and Greater(2)		Total Past Due		Nonaccrual loans(3)(4)		Total Loans
	(in thousands)
Loans(1):
Agricultural Finance loans
Farm & Ranch	$	6,287,326	$	10,066	$	392	$	1,140	$	11,598	$	63,402	$	6,362,326
Corporate AgFinance	1,150,690		—		—		—		—		15,563		1,166,253
Total Agricultural Finance loans	7,438,016		10,066		392		1,140		11,598		78,965		7,528,579
Rural Infrastructure Finance loans	3,021,266		—		—		—		—		—		3,021,266
Total	$	10,459,282	$	10,066	$	392	$	1,140	$	11,598	$	78,965	$	10,549,845

(1)Amounts represent unpaid principal balance of risk-rated loans, which is the ~~restructuring, it does not expect~~basis Farmer Mac uses to ~~collect all amounts~~analyze its portfolio, and recorded investment of past due loans.

(2)Includes loans in consolidated trusts with beneficial interests owned (single-class) by third parties that are 90 days or more past due.

(3)Includes loans that are 90 days or more past due, in foreclosure, or in bankruptcy with at least one missed payment, excluding loans performing under either their original loan terms or a ~~timely manner, including interest accrued at the original contract rate. In making its determination~~court-approved bankruptcy plan.

(4)Includes $22.0 million of whether a borrower is experiencing financial difficulties, Farmer Mac considers several factors, including whether (1) the borrower has declared or is in the process of declaring bankruptcy, (2) there is substantial doubt as to whether the borrower will continue to be a going concern, and (3) the borrower can obtain funds from other sources at an effective interest rate at or near a current market interest rate for debt with similar risk characteristics. Farmer Mac evaluates TDRs similarly to other impairednonaccrual loans for ~~purposes of the allowance for losses.~~

~~For~~which there was no associated allowance. During the year ended December 31, 2017, the recorded investment of loans determined to be troubled debt restructurings ("TDRs") was $0.2 million both before and after restructuring. For the year ended December 31 2016, there were no TDRs. For the year ended December 31, 2015, the recorded investment of loans determined to be TDRs was $1.1 million both before and after restructuring. As of December 31, 2017 and 2016, there were no TDRs identified during the previous 12 months that were in default under the modified terms. The impact of TDRs on Farmer Mac's allowance for loan losses was immaterial for the year ended December 31, 2017 and 2016.

~~When particular criteria are met, such as the default of the borrower,~~2022, Farmer Mac becomes entitled to purchase the defaulted loans underlying Farmer Mac Guaranteed Securities (commonly referred to as "removal-of-account" provisions). Farmer Mac records all such defaulted loans at their unpaid principal balance during the periodreceived $5.6 million in ~~which Farmer Mac becomes entitled to purchase the loans and, therefore, regains effective control over the transferred~~interest on nonaccrual loans. In accordance with the terms of all LTSPCs, Farmer Mac acquires loans that are either 90 days or 120 days delinquent (depending on the provisions of the applicable agreement) upon the request of the counterparty. Subsequent to the purchase, these defaulted

~~182~~

~~loans are treated as nonaccrual loans and, therefore, interest is accounted for on the cash basis. Any decreases in expected cash flows are recognized as impairment.~~

The following tables present information related to Farmer Mac's acquisition of defaulted loans for the years ended December 31, 2017, 2016, and 2015 and the outstanding balances and carrying amounts of all such loans as of December 31, 2017 and 2016:

~~Table 8.7~~

For the Year Ended December 31,
2017 2016 2015
($ in thousands)
Unpaid principal balance at acquisition date:
Loans underlying LTSPCs $ 311
$ 398
$ 13,500
Loans underlying off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities) 5,670
2,118
3,407
Total unpaid principal balance at acquisition date 5,981
2,516
16,907
Contractually required payments receivable 6,018
2,544
17,036
Impairment recognized subsequent to acquisition 60
208
3,772
Recovery/release of allowance for all outstanding acquired defaulted loans 171
67
1,019

Number of defaulted loans purchased 13
8
6

As of
December 31, 2017 December 31, 2016
(in thousands)
Outstanding balance $ 18,866
$ 14,669
Carrying amount 17,691
13,069

~~183~~

Net credit losses and 90-day delinquencies as of and for the periods indicated for loans held and loans underlying off-balance sheet securities representing interests in pools of eligible Farm & Ranch loans ("Farm & Ranch Guaranteed Securities") and LTSPCs are presented in the table below. As of December 31, 2017, there were no delinquencies and no probable losses inherent in Farmer Mac's Rural Utilities loan portfolio and Farmer Mac had not experienced credit losses on any Rural Utilities loans.

~~Table 8.8~~

90-Day Delinquencies⁽¹⁾
Net Credit (Recoveries)/Losses
As of For the Year Ended
December 31, 2017 December 31, 2016 December 31, 2017 December 31, 2016 December 31, 2015
(in thousands)
On-balance sheet assets:
Farm & Ranch:
Loans $ 47,881
$ 19,757
$ (1,397 ) $ 154
$ 3,853
Total on-balance sheet $ 47,881
$ 19,757
$ (1,397 ) $ 154
$ 3,853
Off-balance sheet assets:

Farm & Ranch:

LTSPCs $ 563
$ 1,281
$ —
$ —
$ —
Total off-balance sheet $ 563
$ 1,281
$ —
$ —
$ —
Total $ 48,444
$ 21,038
$ (1,397 ) $ 154
$ 3,853


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

Of the $47.9 million of on-balance sheet loans reported as 90-day delinquencies as of December 31, 2017, $0.3 million were loans subject to "removal-of-account" provisions. Of the $19.8 million of on-balance sheet loans reported as 90-day delinquencies as of December 31, 2016, $0.1 million were loans subject to "removal-of-account" provisions.

~~Rural Utilities~~

No allowance for losses has been provided for Farmer Mac's Rural Utilities line of business based on the performance of the loans in this line of business and the credit quality of the collateral supporting these loans, as well as Farmer Mac's counterparty risk analysis. As of December 31, 2017, there were no delinquencies or probable losses inherent in Farmer Mac's Rural Utilities loans held or underlying LTSPCs.

~~184~~

Credit Quality Indicators

The following tables present credit quality indicators related to ~~Farm & Ranch~~Agricultural Finance mortgage loans ~~held~~ and Rural Infrastructure Finance loans ~~underlying LTSPCs and off-balance sheet Farm & Ranch Guaranteed Securities~~held as of December 31, ~~2017~~2023 and ~~2016:~~ 2022, by year of origination:

Table ~~8.9~~8.5


	As of December 31, 2023
	Year of Origination:
	2023		2022		2021		2020		2019		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Agricultural Finance - Farm & Ranch loans(1):
Internally Assigned Risk Rating:
Acceptable	$	530,956	$	1,137,226	$	1,653,780	$	1,120,917	$	323,922	$	1,068,862	$	385,766	$	6,221,429
Special mention(2)	70,524		46,529		27,957		11,591		4,782		21,257		8,777		191,417
Substandard(3)	3,357		23,987		10,164		17,395		28,942		58,606		10,414		152,865
Total	$	604,837	$	1,207,742	$	1,691,901	$	1,149,903	$	357,646	$	1,148,725	$	404,957	$	6,565,711







For the Year Ended December 31, 2023:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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

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

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

As of December 31, 2017
Crops Permanent
Plantings Livestock Part-time
Farm Ag. Storage and
Processing Other Total
(in thousands)
Credit risk profile by internally assigned grade⁽¹⁾

On-balance sheet:
Acceptable $ 2,274,912
$ 771,600
$ 617,527
$ 260,854
$ 13,023
$ 9,030
$ 3,946,946
Special mention⁽²⁾
70,063
22,878
18,405
8,483
—
—
119,829
Substandard⁽³⁾
67,674
38,180
17,602
7,858
—
644
131,958
Total on-balance sheet $ 2,412,649
$ 832,658
$ 653,534
$ 277,195
$ 13,023
$ 9,674
$ 4,198,733
Off-Balance Sheet:
Acceptable $ 1,132,196
$ 478,573
$ 634,633
$ 150,906
$ 42,723
$ 4,294
$ 2,443,325
Special mention⁽²⁾
76,778
26,134
31,451
1,647
—
169
136,179
Substandard⁽³⁾
36,322
30,198
15,340
3,880
3,015
594
89,349
Total off-balance sheet $ 1,245,296
$ 534,905
$ 681,424
$ 156,433
$ 45,738
$ 5,057
$ 2,668,853
Total Ending Balance:
Acceptable $ 3,407,108
$ 1,250,173
$ 1,252,160
$ 411,760
$ 55,746
$ 13,324
$ 6,390,271
Special mention⁽²⁾
146,841
49,012
49,856
10,130
—
169
256,008
Substandard⁽³⁾
103,996
68,378
32,942
11,738
3,015
1,238
221,307
Total $ 3,657,945
$ 1,367,563
$ 1,334,958
$ 433,628
$ 58,761
$ 14,731
$ 6,867,586

Commodity analysis of past due loans⁽¹⁾

On-balance sheet $ 21,702
$ 18,833
$ 3,835
$ 3,511
$ —
$ —
$ 47,881
Off-balance sheet 151
—
—
412
—
—
563
90 days or more past due $ 21,853
$ 18,833
$ 3,835
$ 3,923
$ —
$ —
$ 48,444
164


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


⁽²⁾	~~Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.~~


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

~~185~~


	As of December 31, 2023
	Year of Origination:
	2023		2022		2021		2020		2019		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Agricultural Finance - Corporate AgFinance(1):
Internally Assigned Risk Rating:
Acceptable	$	207,279	$	97,922	$	261,992	$	123,158	$	99,352	$	112,947	$	254,325	$	1,156,975
Special mention(2)	—		14,522		15,408		50,822		20,333		—		1,663		102,748
Substandard(3)	—		—		—		—		—		—		—		—
Total	$	207,279	$	112,444	$	277,400	$	173,980	$	119,685	$	112,947	$	255,988	$	1,259,723





For the Year Ended December 31, 2023:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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

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

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


	As of December 31, 2023
	Year of Origination:
	2023		2022		2021		2020		2019		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Rural Infrastructure Finance loans(1):
Internally Assigned Risk Rating:
Acceptable	$	618,946	$	681,272	$	187,746	$	593,841	$	701,937	$	611,548	$	100,223	$	3,495,513
Special mention(2)	—		9,850		—		—		—		—		—		9,850
Substandard(3)	—		29,400		—		—		—		—		—		29,400
Total	$	618,946	$	720,522	$	187,746	$	593,841	$	701,937	$	611,548	$	100,223	$	3,534,763






For the Year Ended December 31, 2023:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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

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

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

As of December 31, 2016
Crops Permanent
Plantings Livestock Part-time
Farm Ag. Storage and
Processing Other Total
(in thousands)
Credit risk profile by internally assigned grade⁽¹⁾

On-balance sheet:
Acceptable $ 2,080,227
$ 568,221
$ 504,784
$ 179,288
$ 11,545
$ 8,894
$ 3,352,959
Special mention⁽²⁾
35,223
1,139
33,075
4,372
—
—
73,809
Substandard⁽³⁾
41,648
27,770
10,658
7,610
—
—
87,686
Total on-balance sheet $ 2,157,098
$ 597,130
$ 548,517
$ 191,270
$ 11,545
$ 8,894
$ 3,514,454
Off-Balance Sheet
Acceptable $ 1,201,144
$ 403,256
$ 724,056
$ 125,440
$ 34,537
$ 3,916
$ 2,492,349
Special mention⁽²⁾
20,422
16,881
15,341
2,344
—
6
54,994
Substandard⁽³⁾
31,834
20,173
17,930
5,020
1,969
581
77,507
Total off-balance sheet $ 1,253,400
$ 440,310
$ 757,327
$ 132,804
$ 36,506
$ 4,503
$ 2,624,850
Total Ending Balance:
Acceptable $ 3,281,371
$ 971,477
$ 1,228,840
$ 304,728
$ 46,082
$ 12,810
$ 5,845,308
Special mention⁽²⁾
55,645
18,020
48,416
6,716
—
6
128,803
Substandard⁽³⁾
73,482
47,943
28,588
12,630
1,969
581
165,193
Total $ 3,410,498
$ 1,037,440
$ 1,305,844
$ 324,074
$ 48,051
$ 13,397
$ 6,139,304

Commodity analysis of past due loans⁽¹⁾

On-balance sheet $ 13,449
$ 3,245
$ 669
$ 2,394
$ —
$ —
$ 19,757
Off-balance sheet 373
407
38
463
—
—
1,281
90 days or more past due $ 13,822
$ 3,652
$ 707
$ 2,857
$ —
$ —
$ 21,038
165


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


⁽²⁾	~~Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.~~


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

~~186~~


	As of December 31, 2022
	Year of Origination:
	2022		2021		2020		2019		2018		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Agricultural Finance - Farm & Ranch loans(1):
Internally Assigned Risk Rating:
Acceptable	$	1,157,829	$	1,704,547	$	1,187,474	$	360,704	$	242,491	$	947,535	$	385,503	$	5,986,083
Special mention(2)	91,099		68,260		25,629		11,254		5,325		17,797		2,452		221,816
Substandard(3)	3,094		8,814		22,976		23,937		17,845		67,654		10,107		154,427
Total	$	1,252,022	$	1,781,621	$	1,236,079	$	395,895	$	265,661	$	1,032,986	$	398,062	$	6,362,326






For the Year Ended December 31, 2022:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	(84)	$	—	$	(84)

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

~~The following table sets forth the geographic and commodity/collateral diversification, the range of original loan-to-value ratios, and the range~~(2)Assets in the ~~size~~"Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.

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


	As of December 31, 2022
	Year of Origination:
	2022		2021		2020		2019		2018		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Agricultural Finance - Corporate AgFinance loans(1):
Internally Assigned Risk Rating:
Acceptable	$	145,263	$	299,729	$	221,560	$	108,230	$	76,454	$	44,827	$	232,107	$	1,128,170
Special mention(2)	—		—		—		20,698		—		—		2,145		22,843
Substandard(3)	—		—		4,598		—		—		—		10,642		15,240
Total	$	145,263	$	299,729	$	226,158	$	128,928	$	76,454	$	44,827	$	244,894	$	1,166,253






For the Year Ended December 31, 2022:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

(1)Amounts represent unpaid principal balance of ~~borrower exposure for all Farm & Ranch~~risk-rated loans, ~~held~~which is the basis Farmer Mac uses to analyze its portfolio, and ~~loans underlying off-balance sheet Farm & Ranch Guaranteed Securities~~recorded investment of past due loans.

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

(3)Substandard assets have a well-defined weakness or weaknesses and ~~LTSPCs as of December 31, 2017 and 2016:~~there is a distinct possibility that some loss will be sustained if deficiencies are not corrected.

~~Table 8.10~~

As of
December 31, 2017 December 31, 2016
(in thousands)
By commodity/collateral type:
Crops $ 3,657,945
$ 3,410,498
Permanent plantings 1,367,563
1,037,440
Livestock 1,334,958
1,305,844
Part-time farm 433,628
324,074
Ag. Storage and Processing 58,761
48,051
Other 14,731
13,397
Total $ 6,867,586
$ 6,139,304
By geographic region⁽¹⁾:

Northwest $ 740,991
$ 657,403
Southwest 2,093,213
1,791,745
Mid-North 2,244,094
2,104,867
Mid-South 908,603
837,121
Northeast 296,264
229,679
Southeast 584,421
518,489
Total $ 6,867,586
$ 6,139,304
By original loan-to-value ratio⁽²⁾:

0.00% to 40.00% $ 1,322,422
$ 1,220,432
40.01% to 50.00% 1,733,671
1,466,047
50.01% to 60.00% 2,385,605
2,078,099
60.01% to 70.00% 1,150,914
1,167,395
70.01% to 80.00% 248,799
191,664
80.01% to 90.00% 26,175
15,667
Total $ 6,867,586
$ 6,139,304
By size of borrower exposure⁽³⁾:

Less than $1,000,000 $ 2,379,596
$ 2,195,103
$1,000,000 to $4,999,999 2,627,617
2,398,843
$5,000,000 to $9,999,999 867,574
782,171
$10,000,000 to $24,999,999 584,896
469,681
$25,000,000 to $50,000,000 407,903
293,506
Total $ 6,867,586
$ 6,139,304
166


⁽¹⁾	Geographic regions: Northwest (AK, ID, MT, OR, WA, WY); Southwest (AZ, CA, CO, HI, NM, NV, UT); Mid-North (IA, IL, IN, MI, MN, NE, ND, SD, WI); Mid-South (AR, KS, LA, MO, OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NH, NJ, NY, OH, PA, RI, VA, VT, WV); Southeast (AL, FL, GA, MS, NC, SC, TN).

⁽²⁾

As of second quarter 2017, Farmer Mac revised its calculation of the original loan-to-value ratio of a loan to combine for any cross-collateralized loans: (i) the original loan principal balance amounts in the numerator and (ii) the original appraised property values in the denominator. In previous periods, the ratio was calculated on a loan-by-loan basis without considering the effects of any cross-collateralization. Prior period information has been reclassified to conform to the current period calculation and presentation.


⁽³⁾	~~Includes multiple loans to the same borrower or borrower-related entities.~~

~~187~~


	As of December 31, 2022
	Year of Origination:
	2022		2021		2020		2019		2018		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Rural Infrastructure Finance loans(1):
Internally Assigned Risk Rating:
Acceptable	$	741,021	$	220,420	$	629,223	$	739,270	$	7,932	$	649,830	$	33,570	$	3,021,266
Special mention(2)	—		—		—		—		—		—		—		—
Substandard(3)	—		—		—		—		—		—		—		—
Total	$	741,021	$	220,420	$	629,223	$	739,270	$	7,932	$	649,830	$	33,570	$	3,021,266






For the Year Ended December 31, 2022:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

~~The original loan-to-value ratio is calculated by dividing the loan~~(1)Amounts represent unpaid principal balance atof risk-rated loans, which is the ~~time~~basis Farmer Mac uses to analyze its portfolio, and recorded investment of ~~guarantee, purchase,~~past due loans.

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

(3)Substandard assets have a well-defined weakness or ~~commitment by the appraised value at the date of loan origination or, when available, the updated appraised value at the time of guarantee, purchase, or commitment. Current loan-to-value ratios may~~weaknesses and there is a distinct possibility that some loss will be ~~higher or lower than the original loan-to-value ratios.~~sustained if deficiencies are not corrected.

9.EQUITY


9.	~~EQUITY~~

Common Stock

Farmer Mac has three classes of common stock outstanding:

•Class A voting common stock, which may be held only by banks, insurance companies, and other financial institutions or similar entities that are not institutions of the Farm Credit System. By federal statute, no holder of Class A voting common stock may directly or indirectly be a beneficial owner of more than ~~33 percent~~33% of the outstanding shares of Class A voting common stock.

•Class B voting common stock, which may be held only by institutions of the Farm Credit System. There are no restrictions on the maximum holdings of Class B voting common stock.

•Class C non-voting common stock, which has no ownership restrictions.

On September 8, 2015, Farmer Mac's board of directors approved a share repurchase program authorizing Farmer Mac to repurchase up to $25 million of its outstanding Class C non-voting common stock through September 8, 2017. As of December 31, 2017, Farmer Mac had repurchased approximately 668,000 shares of Class C non-voting common stock at a cost of approximately $19.6 million pursuant to the share repurchase program. In August 2017, Farmer Mac's board of directors approved the continuation of the share repurchase program on its existing terms through August 2019 for the repurchase of up to $5.4 million of Farmer Mac's outstanding Class C non-voting common stock, which is the amount that was remaining under the share repurchase program originally authorized in third quarter 2015.

During ~~2017, 2016,~~2023, 2022, and ~~2015,~~2021, Farmer Mac paid a quarterly dividend of ~~$0.36, $0.26,~~$1.10, $0.95, and ~~$0.16, respectively,~~$0.88 per share on all classes of its common stock. Farmer Mac's ability to declare and pay dividends on its common stock could be restricted if it fails to comply with applicable capital requirements.

Except for the period from March 16, 2020 to March 10, 2021, Farmer Mac has had a common stock repurchase program in place since third quarter 2015. On March 10, 2021, Farmer Mac's board of directors reinstated the share repurchase program on its previous terms (with a remaining authorization of up to $9.8 million in stock repurchases) and extended the expiration date of the program to March 2023. Farmer Mac did not repurchase any shares of its Class C non-voting common stock during that two-year period. In March 2023, Farmer Mac's board of directors renewed the share repurchase program on its

167

previous terms (with a remaining authorization of up to $9.8 million in stock repurchases) and extended the expiration date of the program to March 2025. Farmer Mac did not repurchase any shares of its Class C non-voting common stock during 2023. As of December 31, 2023, Farmer Mac had repurchased approximately 673,000 shares of Class C non-voting common stock at a cost of approximately $19.8 millionunder the share repurchase program since 2015.

Preferred Stock

On January 17, 2013, Farmer Mac issued 2.4 million shares of 5.875 percent Non-Cumulative Preferred Stock, Series A (the "Series A Preferred Stock"). On March 25, 2014, Farmer Mac issued 3.0 million shares of 6.875 percent Non-Cumulative Preferred Stock, Series B (the "Series B Preferred Stock"). On June 20, 2014, Farmer Mac issued 3.0 million shares of 6.000 percent Fixed-to-Floating Rate Non-Cumulative Preferred Stock,The following table presents the Series C ~~(the "Series C Preferred Stock"). The Series A~~ Preferred Stock, the Series BD Preferred Stock, the Series E Preferred Stock, the Series F Preferred Stock, and the Series CG Preferred Stock (collectively referred to as the "Outstanding Preferred Stock") ~~each has a par value~~as of $25.00 per share and a liquidation preference of $25.00 per share. The Series A Preferred Stock and the Series B Preferred Stock pay an annual dividend rate of 5.875 percent and 6.875 percent, respectively, for the life of the securities. December 31, 2023:

Table 9.1


Name	Issuance Date	Issuance Cost		Shares Issued	Annual Dividend Rate(2)		Liquidation Value Per Share		First Possible Redemption Date(3)
Series C(1)	June 20, 2014	$	1,618,583	3,000,000	6.000	%	$	25.00	July 18, 2024
Series D	May 13, 2019	$	3,340,456	4,000,000	5.700	%	$	25.00	July 17, 2024
Series E	May 20, 2020	$	2,496,750	3,180,000	5.750	%	$	25.00	July 17, 2025
Series F	August 20, 2020	$	3,839,902	4,800,000	5.250	%	$	25.00	October 17, 2025
Series G	May 27, 2021	$	3,661,677	5,000,000	4.875	%	$	25.00	July 17, 2026

(1)The Series C Preferred Stock pays an annual dividend rate of ~~6.000 percent~~6.00% from the date of issuance to and including the quarterly payment date occurring on July 17, 2024, and thereafter, at a floating rate equal to three-month LIBOR plus ~~3.26~~

~~188~~

~~percent.~~3.26%, which Farmer Mac has the right, but not the obligation, to redeem the Series A Preferred Stock at any time on and after January 17, 2018, the Series B Preferred Stock at any time on and after April 17, 2019, and the Series C Preferred Stock at any time on and after July 18, 2024, all at a price equalexpects will be converted to the ~~then-applicable liquidation preference.~~ Term Loan Secured Overnight Financing Rate published by CME Group Benchmark Administration, Ltd., plus a spread adjustment based on the tenor of the securities, if not redeemed prior to that payment date.

(2)Dividends on all series of Outstanding Preferred Stock are non-cumulative, which means that if Farmer Mac's board of directors has not declared a dividend before the applicable dividend payment date for any dividend period, such dividend will not be paid or cumulate, and Farmer Mac will have no obligation to pay dividends for such dividend period, whether or not dividends on any series of Outstanding Preferred Stock are declared for any future dividend period.

(3)Farmer Mac ~~incurred direct costs of $1.7 million related~~has the right but not the obligation to redeem.

The following tables present the issuance of the Series A Preferred Stock, direct costs of $1.9 million related to the issuance of the Series B Preferred Stock, and direct costs of $1.6 million related to the issuance of the Series C Preferred Stock. As of December 31, 2017,quarterly dividends paid by Farmer Mac ~~had 2.4 million shares of Series A Preferred Stock outstanding, 3.0 millionshares of Series B Preferred Stock outstanding, and 3.0 millionof Series C Preferred Stock outstanding.~~

~~For 2017, 2016 and 2015, Farmer Mac paid the following quarterly dividends~~ on its outstanding preferred ~~stock:~~during 2023, 2022, and 2021:

~~$0.3672~~Table 9.2


	2023
	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C	$	0.3750	$	0.3750	$	0.3750	$	0.3750
5.700% Non-Cumulative Preferred Stock, Series D	0.3563		0.3563		0.3563		0.3563
5.750% Non-Cumulative Preferred Stock, Series E	0.3594		0.3594		0.3594		0.3594
5.250% Non-Cumulative Preferred Stock, Series F	0.3281		0.3281		0.3281		0.3281
4.875% Non-Cumulative Preferred Stock, Series G	0.3047		0.3047		0.3047		0.3047

168


	2022
	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C	$	0.3750	$	0.3750	$	0.3750	$	0.3750
5.700% Non-Cumulative Preferred Stock, Series D	0.3563		0.3563		0.3563		0.3563
5.750% Non-Cumulative Preferred Stock, Series E	0.3594		0.3594		0.3594		0.3594
5.250% Non-Cumulative Preferred Stock, Series F	0.3281		0.3281		0.3281		0.3281
4.875% Non-Cumulative Preferred Stock, Series G	0.3047		0.3047		0.3047		0.3047


	2021
	1st Quarter		2nd Quarter(1)		3rd Quarter		4th Quarter
6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C	$	0.3750	$	0.3750	$	0.3750	$	0.3750
5.700% Non-Cumulative Preferred Stock, Series D	0.3563		0.3563		0.3563		0.3563
5.750% Non-Cumulative Preferred Stock, Series E	0.3594		0.3594		0.3594		0.3594
5.250% Non-Cumulative Preferred Stock, Series F	0.3281		0.3281		0.3281		0.3281
4.875% Non-Cumulative Preferred Stock, Series G	—		0.1693		0.3047		0.3047

(1)For second quarter 2021, dividend payment includes $0.1693 per share on ~~its 5.875% Non-Cumulative~~the Series G Preferred Stock ~~Series A;~~for the period from but not including May 27, 2021 (issuance date) to and including July 17, 2021.

~~$0.4297 per share on its 6.875% Non-Cumulative Preferred Stock, Series B; and~~

~~$0.3750 per share on its 6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C.~~

Farmer Mac's ability to declare and pay dividends on its preferred stock could be restricted if it fails to comply with applicable capital requirements. Farmer Mac's preferred stock is included as a component of core capital for regulatory and statutory capital compliance measurements.

~~Non-Controlling Interest in Farmer Mac II LLC~~

On January 25, 2010, Farmer Mac completed a private offering of $250.0 million of securities issued by a newly formed Delaware statutory trust. The trust securities, called Farm Asset-Linked Capital Securities or "FALConS," represented undivided beneficial ownership interests in 250,000 shares of non-cumulative perpetual preferred stock (the "Farmer Mac II LLC Preferred Stock") of Farmer Mac's subsidiary, Farmer Mac II LLC, a Delaware limited liability company. The Farmer Mac II LLC Preferred Stock had a liquidation preference of $1,000 per share. On May 14, 2014, Farmer Mac purchased $6.0 million of FALConS from certain holders. On March 30, 2015, Farmer Mac II LLC redeemed all of the outstanding shares of Farmer Mac II LLC Preferred Stock which, in turn, triggered the redemption of all of the outstanding FALConS on that same day. Farmer Mac recognized an expense of $8.1 million in deferred issuance costs upon the retirement of the Farmer Mac II LLC Preferred Stock. The accrual of declared dividends on Farmer Mac II LLC Preferred Stock prior to its redemption is presented in "Net income attributable to non-controlling interest" on the consolidated statements of operations on a pre-tax basis and the consolidated tax benefit is included in "Income tax expense" on the consolidated statements of operations.

Equity-Based Incentive Compensation Plans

Farmer Mac's Amended and Restated 2008 Omnibus Incentive Compensation Plan authorizes the ~~grants~~grant of restricted stock ~~stock options,~~units and SARs, among other alternative forms of equity-based compensation, to Farmer Mac's directors, officers, and ~~other~~ employees. SARs awarded to officers and employees vest annually in thirds. Farmer Mac has not granted SARs to directors since 2008. If not exercised or ~~terminated~~cancelled earlier

~~189~~

due to the termination of employment, SARs granted to officers or employees expire after 10 years from the grant date. For all SARs granted, the exercise price is equal to the closing price of Farmer Mac's Class C non-voting common stock on the date of grant. SARs granted during ~~2017~~2023, 2022, and 2021 have ana weighted average exercise price ~~of $60.84~~ per share ~~SARs granted during 2016 have an exercise price~~ of ~~$35.75 per share,~~$135.12, $120.38 and ~~SARs granted during 2015 have exercise prices ranging from $28.17 to $32.39 per share.~~$88.68, respectively. During ~~2017, 2016,~~2023, 2022, and ~~2015,~~2021, restricted stock unit awards were granted to employees, officers, and directors with a vesting ~~period~~periods of one ~~year,~~ to ~~officers with a vesting period of three years provided certain performance targets are met, to officers vesting annually in thirds, and to employees with a vesting period of~~ three years.

169

The following tables summarize ~~stock options,~~ SARs and non-vested restricted stock unit activity for the years ended December 31, ~~2017, 2016,~~2023, 2022, and ~~2015:~~2021:

Table ~~9.1~~9.3


	For the Years Ended December 31,
	2023			2022			2021
	SARs	Weighted- Average Exercise Price		SARs	Weighted- Average Exercise Price		SARs	Weighted- Average Exercise Price
Outstanding, beginning of year	132,163	$	75.82	130,409	$	66.10	116,417	$	57.16
Granted	16,761	135.12		18,432	120.38		28,575	88.68
Exercised	(22,972)	56.82		(16,678)	49.04		(14,583)	38.99
Canceled	—	—		—	—		—	—
Outstanding, end of year	125,952	87.18		132,163	75.82		130,409	66.10
Exercisable at end of year	87,378	73.15		83,054	63.12		72,106	52.85

	For the Years Ended December 31,
	2023			2022			2021
	Non-vested Restricted Stock Units	Weighted- Average Grant Date Fair Value		Non-vested Restricted Stock Units	Weighted- Average Grant Date Fair Value		Non-vested Restricted Stock Units	Weighted- Average Grant Date Fair Value
Outstanding, beginning of year	100,025	$	91.84	103,891	$	78.55	83,956	$	71.76
Granted	59,745	135.56		38,668	120.14		53,358	88.92
Canceled	(62)	88.68		(2,711)	97.44		(1,184)	79.82
Vested and issued	(45,355)	78.12		(39,823)	84.25		(32,239)	77.98
Outstanding, end of year	114,353	120.13		100,025	91.84		103,891	78.55

For the Year Ended December 31,
2017 2016 2015
Stock
Options
and
SARs Weighted-
Average
Exercise
Price Stock
Options
and
SARs Weighted-
Average
Exercise
Price Stock
Options
and
SARs Weighted-
Average
Exercise
Price
Outstanding, beginning of year 367,535
$ 30.18
747,573
$ 26.68
718,143
$ 25.12
Granted 24,657
60.84
51,975
35.75
119,110
32.25
Exercised (111,278 ) 31.47
(431,346 ) 24.77
(86,680 ) 21.32
Canceled (117,642 ) 31.55
(667 ) 35.60
(3,000 ) 30.05
Outstanding, end of year 163,272
32.95
367,535
30.18
747,573
26.68
Exercisable at end of year 93,085
28.57
208,274
27.41
543,698
24.34

For the Year Ended December 31,
2017 2016 2015
Non-vested
Restricted
Stock Weighted-
Average
Grant Date
Fair Value Non-vested
Restricted
Stock Weighted-
Average
Grant Date
Fair Value Non-vested
Restricted
Stock Weighted-
Average
Grant Date
Fair Value
Outstanding, beginning of year 138,497
$ 34.63
132,651
$ 32.12
103,772
$ 31.24
Granted 45,828
59.79
76,617
36.33
76,616
32.14
Canceled (28,815 ) 42.15
(1,360 ) 35.75
—
—
Vested and issued (60,495 ) 34.77
(69,411 ) 31.69
(47,737 ) 30.25
Outstanding, end of year 95,015
44.39
138,497
34.63
132,651
32.12

The cancellations of ~~stock options,~~ SARs and non-vested restricted stock units during ~~2017, 2016,~~2023, 2022, and ~~2015~~2021 were due to unvested awards terminating in accordance with the provisions of the applicable equity compensation plans or award agreements upon directors' or employees' departures from Farmer Mac.

~~Farmer Mac generally receives cash when stock options are exercised.~~ Cash is not received from exercises of SARs or the vesting and issuance of restricted ~~stock. Farmer Mac received $0.2 million from the exercise of~~ stock ~~options during 2017, $0.5 million during 2016,~~units. During 2023, 2022, and ~~$1.7 million during 2015. During 2017, 2016, and 2015,~~2021, the reduction of income taxes payable as a result of the deduction for the

~~190~~

exercise of ~~stock options and~~ SARs and the vesting ~~or accelerated tax elections~~ of restricted stock units was ~~$2.6~~$1.7 million, ~~$3.6~~$1.2 million, and ~~$0.8~~$0.9 million, respectively. ~~Also reflected during 2017 was $0.9 million of tax benefits recognized in income tax expense associated with stock compensation activity that was subject to ASU 2016-09 accounting guidance, “Improvements to Employee Share-Based Payment Accounting,~~”~~adopted in first quarter 2017. More information about the adoption of ASU 2016-09~~

During 2023, 2022, and ~~the effect on Farmer Mac's financial position, results of operations, and cash flows is included in Note 2(r).~~

~~During 2017, 2016, and 2015~~2021, Farmer Mac recorded a net decrease to additional paid-in capital of ~~$2.6 million,~~ $3.1 million, $1.9 million, and ~~$0.6~~$1.3 million, respectively,related to stock-based compensation awards.

Farmer Mac has a policy that permits directors of Farmer Mac to elect to receive shares of Class C non-voting common stock in lieu of cash retainers. During 2017, Farmer Mac issued 698 shares of Class C non-voting common stock with a fair value of $41,000 to the 4 directors who made that election. During 2016, Farmer Mac issued 1,130 shares of Class C non-voting common stock with a fair value of $41,000 to the 4 directors who made that election. During 2015, Farmer Mac issued 491 shares of Class C non-voting common stock with a fair value of $14,000 to the 4 directors who made that election.

170

As of December 31, ~~2017,~~2023, Farmer Mac had no stock options outstanding. The following tables summarize information ~~regarding~~about SARs and non-vested restricted stock units outstanding as of December 31, ~~2017:~~2023:

Table ~~9.2~~9.4


SARs:
	Outstanding		Exercisable		Vested or Expected to Vest
Range of Exercise Prices	SARs	Weighted- Average Remaining Contractual Life	SARs	Weighted- Average Remaining Contractual Life	SARs	Weighted- Average Remaining Contractual Life
$25.00 - $39.99	18,735	1.6 years	18,735	1.6 years	18,735	1.6 years
40.00 - 54.99	—	0.0 years	—	0.0 years	—	0.0 years
55.00 - 69.99	3,381	3.3 years	3,381	3.3 years	3,381	3.3 years
70.00 - 84.99	39,642	5.8 years	39,642	5.8 years	39,642	5.8 years
85.00 - 99.99	29,001	6.6 years	19,476	6.3 years	29,001	6.6 years
100.00 - 114.99	—	0.0 years	—	0.0 years	—	0.0 years
115.00 - 129.99	18,432	8.2 years	6,144	8.2 years	18,432	8.2 years
130.00 - 144.99	16,761	9.3 years	—	0.0 years	16,761	9.3 years
	125,952		87,378		125,952

Non-vested Restricted Stock Units:
	Outstanding		Expected to Vest
Weighted- Average Grant-Date Fair Value	Non-vested Restricted Stock Units	Weighted-Average Remaining Contractual Life	Non-vested Restricted Stock Units	Weighted-Average Remaining Contractual Life
$80.00 - $94.99	30,182	0.3 years	30,450	0.1 years
95.00 - 109.99	219	0.3 years	219	0.3 years
110.00 - 124.99	24,779	1.3 years	24,779	1.3 years
125.00 - 139.99	56,194	2.3 years	56,194	2.3 years
140.00 - 154.99	2,979	2.3 years	2,979	2.3 years
	114,353		114,621

Outstanding Exercisable Vested or Expected to Vest
Range of
Exercise Prices SARs Weighted-
Average Remaining Contractual Life SARs Weighted-
Average Remaining Contractual Life SARs Weighted-
Average Remaining Contractual Life
$5.00 - $14.99 11,000
2.5 years 11,000
2.5 years 11,000
2.5 years
15.00 - 24.99 14,000
4.0 years 14,000
4.0 years 14,000
4.0 years
25.00 - 34.99 82,689
6.8 years 46,163
6.5 years 82,689
6.8 years
35.00 - 44.99 41,588
7.5 years 21,922
6.9 years 41,588
7.5 years
45.00 - 54.99 —
0.0 years —
0.0 years —
0.0 years
55.00 - 64.99 13,995
9.3 years —
0.0 years 13,995
9.3 years
163,272
93,085
163,272

Outstanding Expected to Vest

  Weighted-
Average
Grant-Date
Fair Value Non-vested Restricted Stock Weighted-Average Remaining Contractual
Life Non-vested Restricted Stock Weighted-Average Remaining Contractual
Life

$25.00 - $34.99 6,778
0.1 years 6,778
0.1 years
35.00 - 44.99 50,882
1.5 years 50,882
1.5 years
45.00 - 54.99 —
0.0 years —
0.0 years
55.00 - 64.99 37,355
2.3 years 37,355
2.3 years
95,015
95,015

~~191~~

~~The weighted average exercise price of the 163,272 SARs vested or expected to vest as of December 31, 2017 was $32.95.~~

As of December 31, ~~2017~~2023 and ~~2016,~~2022, the intrinsic value of ~~options,~~ SARs, and non-vested restricted stock units outstanding, exercisable, and vested or expected to vest was ~~$14.8~~$35.0 million and ~~$17.4~~$16.3 million, respectively. During ~~2017, 2016,~~2023, 2022, and ~~2015,~~2021, the total intrinsic value of ~~options and~~ SARs exercised was ~~$3.8~~$2.4 million, ~~$7.6~~$1.1 million, and $0.9 million, respectively. As of December 31, ~~2017,~~2023, there was ~~$2.3~~$7.7 million of total unrecognized compensation cost related to non-vested SARs and restricted stock unit awards. This cost is expected to be recognized over a weighted-average period of ~~1.7~~1.9 years.

The weighted-average grant date fair values of ~~options,~~ SARs and restricted stock unit awards granted in ~~2017, 2016,~~2023, 2022, and ~~2015~~2021 were ~~$44.93, $25.11,~~$114.68, $91.94, and ~~$17.97~~$65.48 per share, respectively. Under the fair value-based method of accounting for stock-based compensation cost, Farmer Mac recognized compensation expense of ~~$2.7~~$6.8 million, ~~$3.3~~$4.6 million, and ~~$3.3~~$4.3 million during ~~2017, 2016,~~2023, 2022, and ~~2015,~~2021, respectively.

171

The fair ~~values~~value of ~~stock options and~~ SARs ~~were~~was estimated using the Black-Scholes option pricing model based on the following assumptions:

Table ~~9.3~~9.5


	For the Year Ended December 31,
	2023	2022	2021
Risk-free interest rate	4.1%	1.9%	0.9%
Expected years until exercise	6 years	6 years	6 years
Expected stock volatility	36.6%	37.4%	39.1%
Dividend yield	3.3%	3.2%	4.0%

For the Year Ended December 31,
2017 2016 2015
Risk-free interest rate 2.3% 1.5% 1.2%
Expected years until exercise 6 years 5 years 4 years
Expected stock volatility 34.8% 34.7% 38.0%
Dividend yield 2.4% 2.9% 2.0%

The risk-free interest rates used in the model were based on the U.S. Treasury yield curve in effect at the grant date. Farmer Mac used historical data to estimate the timing of option exercises and stock option cancellation rates used in the model. Expected volatilities were based on historical volatility of Farmer Mac's Class C non-voting common stock. The dividend yields were based on the expected dividends as a percentage of the value of Farmer Mac's Class C non-voting common stock on the grant date.

Because ~~restricted~~ stock ~~awards~~ will be issued upon the vesting of restricted stock units regardless of the stock price, expected stock volatility is not considered in determining grant date fair value. Restricted stock unit awards also accrue dividends which are paid at vesting. The weighted-average grant date fair value of the restricted stock units awarded in ~~2017, 2016,~~2023, 2022, and ~~2015~~2021 was ~~$59.79, $36.33,~~$135.56, $120.14, and ~~$32.14~~$88.92 per ~~share,~~unit, respectively, which is based on the closing price of ~~the~~Farmer Mac's Class C non-voting stock on the date granted.

Capital Requirements

~~Farmer Mac is subject to the following capital requirements:~~

Statutory minimum capital requirement – Farmer Mac's statutory minimum capital level is an amount of core capital (stockholders' equity less accumulated other comprehensive income) equal to the sum of 2.75 percent of Farmer Mac's aggregate on-balance sheet assets, as

~~192~~

~~calculated for regulatory purposes, plus 0.75 percent of the aggregate off-balance sheet obligations of Farmer Mac, specifically including:~~


◦	~~the unpaid principal balance of outstanding Farmer Mac Guaranteed Securities;~~


◦	~~instruments issued or guaranteed by Farmer Mac that are substantially equivalent to Farmer Mac Guaranteed Securities, including LTSPCs; and~~


◦	~~other off-balance sheet obligations of Farmer Mac.~~

~~Statutory critical capital requirement – Farmer Mac's critical capital level is an amount of core capital equal to 50 percent of the total minimum capital requirement at that time.~~

Risk-based capital requirement – Farmer Mac's charter directs the Farm Credit Administration ("FCA"), an independent agency in the executive branch of the United States government that regulates Farmer Mac, to establish a risk-based capital stress test for Farmer Mac, using specified stress-test parameters.

Farmer Mac is required to comply with the higher of the minimum capital requirement and the risk-based capital requirement. As of both December 31, ~~2017~~2023 and ~~2016,~~2022, the minimum capital requirement was greater than the risk-based capital requirement. Farmer Mac's ability to declare and pay dividends could be restricted if it fails to comply with applicable capital requirements.

As of December 31, ~~2017,~~2023, Farmer Mac's minimum capital requirement was ~~$520.3~~$862.6 million and its core capital level was ~~$657.1 million,~~$1.5 billion, which was ~~$136.8~~$589.4 million above the minimum capital requirement as of that date. As of December 31, ~~2016,~~2022, Farmer Mac's minimum capital requirement was ~~$466.5~~$805.9 million and its core capital level was ~~$609.7 million,~~$1.3 billion, which was ~~$143.2~~$516.9 million above the minimum capital requirement as of that date.

In accordance with ~~FCA's~~a rule of the Farm Credit Administration ("FCA") on Farmer Mac's capital planning, and as part of Farmer Mac's capital plan, Farmer Mac 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) and imposing restrictions on Tier 1-eligible dividends and any discretionary bonus payments in the event that this capital falls below specified thresholds.


~~10.~~	~~INCOME TAXES~~

172

10.INCOME TAXES

Farmer Mac is subject to federal corporate income taxes but is exempt from state and local corporate income taxes. The components of the federal corporate income tax expense for the years ended December 31, ~~2017, 2016,~~2023, 2022, and ~~2015~~2021 were as follows:

Table 10.1


	For the Year Ended December 31,						For the Year Ended December 31,
	2017		2016		2015		2023	2022	2021
	(in thousands)						(in thousands)
Current income tax expense	$	43,148	$	37,954	$	30,247
Deferred income tax (benefit)/expense	3,221		4,103		3,992
Deferred income tax expense
Income tax expense	$	46,369	$	42,057	$	34,239

A reconciliation of income tax at the statutory federal corporate income tax rate to the income tax expense for the years ended December 31, ~~2017, 2016,~~2023, 2022, and ~~2015~~2021 is as follows:

~~193~~

Table 10.2


	For the Year Ended December 31,
	2023			2022			2021
	(dollars in thousands)
Tax expense at statutory rate	$	53,151		$	47,393		$	36,217
Excess tax benefits related to stock-based awards	(924)			(401)			(300)

Other	871			543			455
Income tax expense	$	53,098		$	47,535		$	36,372
Statutory tax rate	21.0		%	21.0		%	21.0		%

173

For the Year Ended December 31,
2017 2016 2015
(dollars in thousands)
Tax expense at statutory rate $ 45,740
$ 41,775
$ 37,827
Re-measurement of net deferred tax asset due to enactment of new tax legislation 1,365
—
—
Excess tax benefits related to stock-based awards (860 ) —
—
Income from non-controlling interest —
—
(1,874 )
Loss on retirement of preferred stock —
—
(1,901 )
Valuation allowance 4
21
33
Other 120
261
154
Income tax expense $ 46,369
$ 42,057
$ 34,239
Statutory tax rate 35.0 % 35.0 % 35.0 %

The components of the deferred tax assets and liabilities as of December 31, ~~2017~~2023 and ~~2016~~2022 were as follows:

Table 10.3


	As of December 31,							As of December 31,
	2017			2016				2023	2022
	(in thousands)							(in thousands)
Deferred tax assets:							Deferred tax assets:
Basis differences related to financial derivatives	$	6,800		$	15,917
Basis differences related to hedged items	5,661			9,307
Basis difference related to hedge items
Unrealized losses on available-for-sale securities
Allowance for losses	1,862			2,602
Compensation and Benefits
Stock-based compensation	532			1,648
Capital loss carryforwards and other-than-temporary impairment	36			56

Capital loss carryforwards

Capital loss carryforwards

Capital loss carryforwards
Valuation allowance	(36		)	(56		)
Compensation and Benefits	778			1,222
Other	74			2
Total deferred tax assets	15,707			30,698
Deferred tax liability:							Deferred tax liability:
Unrealized gains on securities	12,376			16,889
Basis differences related to financial derivatives
Unrealized gains on cash flow hedges
Basis difference related to structured securitizations

Other

Other

Other	1,283			1,518
Total deferred tax liability	13,659			18,407
Net deferred tax asset	$	2,048		$	12,291

A valuation allowance is required to reduce a deferred tax asset to an amount that is more likely than not to be realized. Future realization of the tax benefit from a deferred tax asset depends on the existence of sufficient taxable income of the appropriate character. After the evaluation of both positive and negative objective evidence regarding the likelihood that its deferred tax assets will be realized, Farmer Mac established a valuation allowance of ~~$36,000~~$35,000 and ~~$56,000, respectively,~~$32,000, as of December 31, ~~2017~~2023 and ~~2016,~~2022, respectively, which was attributable to capital loss carryforwards on investment securities. Farmer Mac did not establish a valuation allowance for the remainder of its deferred tax assets because it believes it is more likely than not that those deferred tax assets will be realized. In determining its deferred tax asset valuation allowance, Farmer Mac considered its taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryback and carryforward periods available under the tax law

~~194~~

and the impact of possible tax planning strategies. On December 31, 2016, $5.9 million of capital loss carryforwards expired and Farmer Mac removed $2.1 million of corresponding deferred tax assets and the related deferred tax asset valuation allowance. As of December 31, ~~2017,~~2023, no capital loss carryforwards expired. As of December 31, ~~2017,~~2023, the amount of capital loss carryforwards was $0.2 million. These capital loss carryforwards will expire beginning in ~~2021~~2024.

Deferred tax assets are measured at rates in effect when they arise. To the extent rates change, the deferred tax asset will be adjusted to reflect the new rate. A reduction in corporate tax rates would result in a reduction in the value of the deferred tax asset. The Tax Cuts and Jobs Act was enacted on December 22, 2017. This new legislation provides for significant changes to the U.S. Internal Revenue Code of 1986, as amended, that was in effect through the end of 2017 and includes a reduction of the federal corporate income tax rate from 35 percent to 21 percent, effective January 1, 2018. As a result of this reduction in the federal corporate income tax rate, Farmer Mac re-measured its net deferred tax asset at the newly enacted 21 percent federal corporate income tax rate and thus reduced its value by $1.4 million. Accordingly, Farmer Mac recorded an increase to income tax expense of $1.4 million or an increase of 1.04 percent in Farmer Mac's effective tax rate for 2017. As of December 31, 2017, Farmer Mac has completed the accounting for the income tax effects related to the new tax legislation. See Note 2(l) for more information about the accounting policy for income taxes.

As of December 31, ~~2017~~2023 and ~~2016,~~2022, Farmer Mac did not identify any uncertain tax positions.

Farmer Mac did not ~~incur~~have any unrecognized tax benefits for the years ended December 31, ~~2017, 2016,~~2023, 2022, and ~~2015.~~2021.

Tax years ~~2015~~2020 through ~~2017~~2023 remain subject to examination.


~~11.~~	~~EMPLOYEE BENEFITS~~

174

11.EMPLOYEE BENEFITS

Farmer Mac makes contributions to a defined contribution retirement plan for all of its employees. Farmer Mac contributed ~~13.2 percent~~13.2% of the lesser of an employee's gross salary and the maximum compensation permitted under the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") ($~~270,000~~330,000 for ~~2017, $265,000~~2023, $305,000 for ~~2016,~~2022, and ~~$265,000~~$290,000 for ~~2015)~~2021), plus ~~5.7 percent~~5.7% of the difference between: (1) the lesser of the gross salary and the amount established under ~~EGTRRA;~~EGTRRA and (2) the Social Security Taxable Wage Base. Employees are fully vested after having been employed for approximately 3 years. Expenses for this plan for the years ended December 31, ~~2017, 2016,~~2023, 2022, and ~~2015~~2021 were ~~$1.5~~$3.6 million, ~~$1.3~~$3.1 million, and ~~$1.2~~$2.7 million, respectively.

Farmer Mac established a Nonqualified Deferred Compensation Plan ~~(the "NQDC~~("NQDC Plan") for its executive officers effective May 1, 2017. Under the NQDC Plan, Farmer Mac credits the account of each participant each calendar year with an amount equal to ~~18.9 percent~~18.9% of the difference ~~between (i)~~between: (1) the amount established under EGTRRA and ~~(ii)~~(2) a participant’s gross annual base salary, which for purposes of calculating employer credits under the NQDC Plan is capped at ~~$700,000 for Farmer Mac’s Chief Executive Officer and $500,000~~$750,000 for all other participants. This fixed contribution percentage is the same formula used for determining employer contributions to Farmer Mac’s defined contribution retirement plan based on an employee’s gross annual base salary that is above the amount established under EGTRRA for that year. Expenses for the NQDC Plan were $0.1 million, $0.2 million, and $0.2 million, respectively, for the ~~year~~years ended December 31, ~~2017 were $0.1 million.~~2023, 2022, and 2021.

12.GUARANTEES AND COMMITMENTS

~~195~~


~~12.~~	~~GUARANTEES AND LONG-TERM STANDBY PURCHASE COMMITMENTS~~

Farmer Mac offers two credit enhancement alternatives to direct loan purchases that allow approved lenders the ability to retain the cash flow benefits of their loans and increase their liquidity and lending capacity: (1) Farmer Mac Guaranteed Securities and (2) LTSPCs, both of which are available through each of the ~~Farm & Ranch, USDA Guarantees,~~Agricultural Finance and Rural ~~Utilities, and Institutional Credit~~Infrastructure Finance lines of ~~business, and (2) LTSPCs, which are available through the Farm & Ranch or the Rural Utilities lines of~~ business. LTSPCs and securitization trusts where Farmer Mac is not the primary beneficiary result in the creation of off-balance sheet obligations for Farmer Mac. Farmer Mac records, at the inception of an off-balance sheet guarantee or LTSPC, a liability for the fair value of its obligation to stand ready to perform under the terms of each guarantee or LTSPC and an asset that is equal to the fair value of the fees that will be received over the life of each guarantee or LTSPC. The fair values of the guarantee obligation and asset at inception are based on the present value of expected cash flows using management's best estimate of certain key assumptions, which include prepayment speeds, forward yield curves, and discount rates commensurate with the risks involved. Because the cash flows of these instruments may be interest rate path dependent, these values and projected discount rates are derived using a Monte Carlo simulation model. The guarantee obligation and corresponding asset are subsequently amortized into guarantee and commitment fee income in relation to the decline in the unpaid principal balance on the underlying agricultural real estate mortgage and rural utilities loans.

The contractual terms of Farmer Mac's off-balance sheet guarantees and LTSPCs range from less than 1 year to 30 years. However, the actual term of each guarantee or LTSPC may be significantly less than the contractual term based on the prepayment characteristics of the related loans. Farmer Mac's maximum potential exposure under these off-balance sheet guarantees and LTSPCs is ~~comprised of~~ the unpaid principal balance of the underlying loans. ~~Guarantees issued or modified on or after January 1, 2003 are recorded in the consolidated balance sheets.~~ Farmer Mac's maximum potential exposure was ~~$4.0~~$4.1 billion and ~~$4.9~~$3.9 billion as of December 31, ~~2017~~2023 and 2016, respectively. Farmer Mac's maximum potential exposure for guarantees issued prior to January 1, 2003, which are not recorded on the consolidated balance sheets, was $28.0 million and $40.1 million as of December 31, 2017 and 2016,2022, respectively. The maximum exposure from these guarantees and LTSPCs is not representative of the actual loss Farmer Mac is likely to incur, based on historical loss experience. In the event Farmer Mac was required to make payments under its guarantees or LTSPCs, Farmer Mac would have the right to enforce the terms of the loans, and in the event of default, would have access to the underlying collateral. For information on Farmer Mac's methodology for determining the reserve for losses for its financial guarantees, see Note ~~2(j) and Note 8.~~2(h). The following table presents changes in Farmer Mac's guarantee and commitment obligations in the consolidated balance sheets for the years ended December 31, ~~2017, 2016,~~2023, 2022, and ~~2015:~~2021:

~~Table 12.1~~

For the Year Ended December 31,
2017 2016 2015
(in thousands)
Beginning balance, January 1 $ 37,282
$ 38,609
$ 37,925
Additions to the guarantee and commitment obligation⁽¹⁾
7,683
6,725
8,207
Amortization of the guarantee and commitment obligation (6,565 ) (8,052 ) (7,523 )
Ending balance, December 31 $ 38,400
$ 37,282
$ 38,609
175


⁽¹⁾	~~Represents the fair value of the guarantee and commitment obligation at inception.~~

~~196~~

Table 12.1


	For the Years Ended December 31,
	2023		2022		2021
	(in thousands)
Beginning balance, January 1	$	46,582	$	43,926	$	35,535
Additions to the guarantee and commitment obligation(1)	5,312		8,569		15,648
Amortization of the guarantee and commitment obligation	(4,331)		(5,913)		(7,257)
Ending balance, December 31	$	47,563	$	46,582	$	43,926

(1)Represents the fair value of the guarantee and commitment obligation at inception.

Off-Balance Sheet Farmer Mac Guaranteed Securities

Agricultural real estate mortgage loans, rural utilities loans, and other related assets may be placed into trusts to securitize the transferred assets and the Farmer Mac-guaranteed beneficial interests in the trusts are sold to investors. Farmer Mac is obligated under its guarantee to ensure that the investors receive timely payments of principal and interest based on the underlying loans, regardless of whether the trust has actually received such scheduled loan payments. As consideration for Farmer Mac's assumption of the credit risk on these securities, Farmer Mac receives guarantee fees that are recognized as earned on an accrual basis over the life of the loans and based upon the outstanding balance of the Farmer Mac Guaranteed Security.

Farmer Mac is required to perform under its obligation when the underlying loans for the off-balance sheet Farmer Mac Guaranteed Securities do not make their scheduled installment payments. When a loan underlying a Farm & Ranch Guaranteed Security becomes 90 days or more past due, Farmer Mac may, in its sole discretion, repurchase the loan from the trust and generally does repurchase such loans, thereby reducing the principal balance of the outstanding Farm & Ranch Guaranteed Security.

The following table presents the maximum principal amount of potential undiscounted future payments that Farmer Mac could be required to make under all off-balance sheet Farmer Mac Guaranteed Securities as of December 31, ~~2017~~2023 and ~~2016,~~2022, not including offsets provided by any recourse provisions, recoveries from third parties, or collateral for the underlying loans:

Table 12.2


Outstanding Balance of Off-Balance Sheet Farmer Mac Guaranteed Securities
	As of December 31, 2023		As of December 31, 2022
	(in thousands)
Agricultural Finance
Farmer Mac Guaranteed Securities	$	452,602	$	500,953
Rural Infrastructure Finance
Farmer Mac Guaranteed Securities	—		1,169
Total off-balance sheet Farmer Mac Guaranteed Securities	$	452,602	$	502,122

Outstanding Balance of Off-Balance Sheet Farmer Mac Guaranteed Securities
As of December 31, 2017 As of December 31, 2016
(in thousands)
Farm & Ranch:
Guaranteed Securities $ 333,511
$ 415,441
USDA Guarantees:
Farmer Mac Guaranteed USDA Securities 254,217
103,976
Institutional Credit:

AgVantage Securities 11,556
983,214
Revolving floating rate AgVantage facility⁽¹⁾
300,000
300,000
Total off-balance sheet Farmer Mac Guaranteed Securities $ 899,284
$ 1,802,631


⁽¹⁾	~~Relates to a revolving floating rate AgVantage facility subject to specified contractual terms. Farmer Mac receives a fixed fee based on the full dollar amount of the facility.~~

If Farmer Mac repurchases a loan that is collateral for a Farmer Mac Guaranteed Security, Farmer Mac would have the right to enforce the terms of the loan, and in the event of a default, would have access to the underlying collateral. Farmer Mac typically recovers its investment in the defaulted loans purchased either through borrower payments, loan payoffs, payments by third parties, or foreclosure and sale of the property securing the loans.

Farmer Mac has recourse to the USDA for any amounts advanced for the timely payment of principal and interest on Farmer Mac Guaranteed USDA Securities. That recourse is the USDA guarantee, a full-faith-and-credit obligation of the United States that becomes enforceable if a lender fails to repurchase the USDA-guaranteed portion from its owner within 30 days after written demand from the owner when (a) the borrower under the guaranteed loan is in default not less than 60 days in the payment of any principal

~~197~~

or interest due on the USDA-guaranteed portion, or (b) the lender has failed to remit to the owner the payment made by the borrower on the USDA-guaranteed portion or any related loan subsidy within 30 days after the lender's receipt of the payment.

Eligible loans and other eligible assets may be placed into trusts ~~to securitize~~that are used as vehicles for the securitization of the transferred assets and the Farmer Mac-guaranteed beneficial interests in the trusts are sold to investors.

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

Table 12.3


	For the Year Ended December 31,									For the Year Ended December 31,
	2017			2016			2015			2023	2022	2021
	(in thousands)									(in thousands)
Proceeds from new securitizations	$	519,219		$	609,347		$	336,913
Guarantee fees received	2,610			3,552			4,028
Purchases of assets from the trusts	(5,670		)	(2,118		)	(3,407		)

Farmer Mac ~~has recorded~~presents a liability for its obligation to stand ready under ~~the~~its guarantee in ~~the guarantee~~"Guarantee and commitment ~~obligation~~obligation" on the consolidated balance sheets. ~~This~~The following table presents the liability ~~approximated $3.6 million as of December 31, 2017~~ and ~~$5.5 million as of December 31, 2016. As of December 31, 2017 and 2016,~~ the weighted-average remaining maturity of all loans underlying off-balance sheet Farmer Mac Guaranteed Securities, excluding AgVantage securities, was 10.0 years and 10.7 years, respectively. As of December 31, 2017 and 2016, the weighted-average remaining maturity of the off-balance sheet AgVantage securities was 0.8 years and 0.7 years, respectively.Securities:

176

Table 12.4


	As of December 31, 2023		As of December 31, 2022
	(dollars in thousands)
Guarantee and commitment obligation	$	5,969	$	6,461
Weighted average remaining maturity:
Farmer Mac Guaranteed Securities	21.9 years		21.4 years
AgVantage Securities	0.0 years		2.0 years

Long-Term Standby Purchase Commitments

An LTSPC is a commitment by Farmer Mac to purchase eligible loans from an identified pool of loans under specified circumstances set forth in the applicable agreement, either for cash or in exchange for Farmer Mac Guaranteed Securities, on one or more undetermined future dates. As consideration for its assumption of the credit risk on loans underlying an LTSPC, Farmer Mac receives a commitment fee payable monthly in arrears.

An LTSPC permits a lender to nominate from its portfolio an identified pool of loans for participation in the Farm & Ranch or the Rural Utilities line of business, which are retained in the lender's portfolio and serviced by the lender. Farmer Mac reviews the loan pool to confirm that it conforms to Farmer Mac's underwriting standards. Upon Farmer Mac's approval of the eligible loans, the lender effectively transfers the credit risk on those loans to Farmer Mac, thereby reducing the lender's credit and concentration risk exposures and, consequently, its regulatory capital requirements and its loss reserve requirements. Credit risk is transferred through Farmer Mac's commitment to purchase the identified loans from the counterparty based on Farmer Mac's original credit review and acceptance of the credit risk on the loans.

The specific events or circumstances that would require Farmer Mac to purchase some or all of the loans subject to LTSPCs include: (1) the failure of the borrower under any loan to make installment payments under that loan for a period of either 90 days or 120 days (depending on the provisions of the applicable agreement); or (2) the determination by the holder of the LTSPC to sell or exchange some or all of the loans under the LTSPC to Farmer Mac.

~~198~~

Farmer Mac ~~purchases loans subject~~has recorded a liability for its obligation to ~~an LTSPC at:~~

~~par if~~stand ready under the ~~loans become delinquent for either 90 days or 120 days (depending~~commitment in the guarantee and commitment obligation on the ~~agreement) or are in material non-monetary default, with accrued and unpaid interest on~~consolidated balance sheets. The following table presents the ~~defaulted loans payable out of any future loan payments or liquidation proceeds; or~~

~~fair value or in exchange for Farm & Ranch Guaranteed Securities (in~~liability, the ~~Farm & Ranch line of business, if the loans are not delinquent), in accordance with the terms of the applicable agreement.~~

~~The~~ maximum principal amount of potential undiscounted future payments that Farmer Mac could be requested to make under all LTSPCs, not including offsets provided by any recourse provisions, recoveries from third parties, or collateral for the underlying loans, ~~was $3.1 billion~~ as ~~of both December 31, 2017 and 2016, respectively.~~

~~As of December 31, 2017 and 2016,~~well as the weighted-average remaining maturity of all loans underlying ~~LTSPCs was 15.3 years and 15.1 years, respectively. For those~~LTSPCs:

Table 12.5


	As of December 31, 2023		As of December 31, 2022
	(dollars in thousands)
Guarantee and commitment obligation(1)	$	41,594	$	40,121
Maximum principal amount	3,680,333		3,423,155
Weighted-average remaining maturity	14.5 years		15.3 years

(1) Relates to LTSPCs issued or modified on or after January 1, 2003, Farmer Mac has recorded a liability for its obligation to stand ready under the commitment in the guarantee and commitment obligation on the consolidated balance sheets. This liability approximated $34.8 million as of December 31, 2017 and $31.8 million ~~as of~~ ~~December 31, 2016.~~2003.

Commitments

Farmer Mac enters into mandatory and optional delivery commitments to purchase loans. Most loan purchase commitments entered into by Farmer Mac are mandatory commitments, in which Farmer Mac charges a fee to extend or cancel the commitment. As of December 31, ~~2017~~2023 and ~~2016,~~2022, commitments to purchase ~~Farm & Ranch~~Agricultural Finance loans and USDA Guarantees totaled ~~$46.3~~$31.0 million and ~~$114.5~~$9.9 million, respectively, all of which were mandatory commitments. Farmer Mac also has unfunded commitments and letters of credit under which Farmer Mac earns a nominal fee for the obligation to provide funding at a future date. As of December 31, ~~2017,~~2023 and 2022, Farmer Mac had $261.2 million and $130.2 million of these unfunded commitments ~~to purchase~~and letters of credit under the Agricultural Finance and Rural ~~Utilities loans totaled $8.0 million. As~~Infrastructure lines of ~~December 31, 2016, there were no commitments to purchase Rural Utilities loans.~~business. Any optional loan purchase commitments are sold forward under optional commitments to deliver Farmer Mac Guaranteed Securities that may be canceled by Farmer Mac without penalty.

~~Rental expense~~

177

Reserve for Losses - LTSPCs and Farmer ~~Mac's office space for each~~Mac Guaranteed Securities

The following table is a summary, by asset type, of the ~~years ended December 31, 2017, 2016, and 2015 was $1.6 million~~, ~~$1.3 million, and $1.3 million, respectively. The future minimum lease payments under Farmer Mac's non-cancellable leases~~reserve for ~~its office space and other contractual obligations~~losses as of December 31, ~~2017 are as follows:~~2023 and 2022:

Table 12.6


	December 31, 2023		December 31, 2022
	Reserve for Losses		Reserve for Losses
	(in thousands)
Agricultural Finance	$	1,471	$	819
Rural Infrastructure Finance	240		614
Total	$	1,711	$	1,433

The following is a summary of the changes in the reserve for losses for the three-year period ended December 31, 2023:

Table ~~12.4~~12.7




	Agricultural Finance loans		Rural Infrastructure Finance loans
	Reserve for Losses		Reserve for Losses
	(in thousands)
Balance as of December 31, 2020(1)	$	2,097	$	1,180
Release of losses	(1,029)		(298)
Balance as of December 31, 2021	$	1,068	$	882
Release of losses	(249)		(268)
Balance as of December 31, 2022	$	819	$	614
Release of losses	652		(374)
Balance as of December 31, 2023	$	1,471	$	240

(1) Reserve for losses reflects the adoption of ASU 2016-13, "Financial Instruments - Credit Losses," in first quarter 2020.

The provision for the reserve for losses in the Agricultural Finance LTSPC portfolio recorded during the year ended December 31, 2023 was primarily due to an updated estimate of expected losses based on additional available industry data. The release from the reserve for losses in the Rural Infrastructure Finance LTSPC portfolio recorded during the year ended December 31, 2023 was primarily due to an updated estimate of expected losses based on additional available loss-given-default industry data.

The release from the reserve for losses in the Rural Infrastructure Finance LTSPC portfolio recorded during the year ended December 31, 2022 was primarily due to decreased volume and ratings upgrades. The release from the reserve for losses in the Agricultural Finance LTSPC portfolio was primarily due to ratings upgrades.

The release from the reserve for losses in both the Agricultural Finance and Rural Infrastructure Finance

LTSPC and Farmer Mac Guaranteed portfolios recorded during the year ended December 31, 2021 was

primarily due to improving economic factor forecasts and ratings upgrades.

The following table presents the unpaid principal balances by delinquency status of Agricultural Finance and Rural Infrastructure loans underlying LTSPCs and Farmer Mac Guaranteed Securities as of December 31, 2023 and 2022:

Future Minimum Lease Payments Other Contractual Obligations
(in thousands)
2018 $ 1,814
$ 1,869
2019 1,931
835
2020 1,925
676
2021 1,965
193
2022 2,011
—
Thereafter 3,305
—
Total $ 12,951
$ 3,573
178

~~199~~

Table 12.8


	As of December 31, 2023
	Current		30-59 Days		60-89 Days		90 Days and Greater(1)		Total Past Due		Total Loans
	(in thousands)
Agricultural Finance:	$	3,390,918	$	2,776	$	2,366	$	1,784	$	6,926	$	3,397,844
Rural Infrastructure Finance:	535,013		—		—		—		—		535,013
Total	$	3,925,931	$	2,776	$	2,366	$	1,784	$	6,926	$	3,932,857

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


	As of December 31, 2022
	Current		30-59 Days		60-89 Days		90 Days and Greater(1)		Total Past Due		Total Loans
	(in thousands)
Agricultural Finance:	$	3,174,939	$	11,614	$	622	$	3,817	$	16,053	$	3,190,992
Rural Infrastructure Finance:	523,192		—		—		—		—		523,192
Total	$	3,698,131	$	11,614	$	622	$	3,817	$	16,053	$	3,714,184

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

Credit Quality Indicators

The following tables present credit quality indicators related to Agricultural Finance and Rural Infrastructure loans underlying LTSPCs and Farmer Mac Guaranteed Securities as of December 31, 2023 and 2022, by year of origination:

179

Table 12.9


	As of December 31, 2023
	Year of Origination:
	2023		2022		2021		2020		2019		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Agricultural Finance:
Internally Assigned Risk Rating:
Acceptable	$	169,429	$	246,441	$	515,396	$	534,395	$	264,815	$	1,185,811	$	391,335	$	3,307,622
Special mention(1)	—		71		2,466		872		531		44,631		8,565		57,136
Substandard(2)	—		—		—		131		1,536		26,328		5,091		33,086
Total	$	169,429	$	246,512	$	517,862	$	535,398	$	266,882	$	1,256,770	$	404,991	$	3,397,844






For the Year Ended December 31, 2023:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

(1)Assets in the table above include minimum amounts due under non-cancellable agreements to purchase goods or services that are enforceable and legally binding and specify all significant terms. These agreements include, among others, agreements for the provision of consulting services, information technology support, equipment maintenance, and financial analysis software and services. The amounts actually paid under these agreements will likely be higher"Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.

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


	As of December 31, 2023
	Year of Origination:
	2023		2022		2021		2020		2019		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Rural Infrastructure Finance:
Internally Assigned Risk Rating:
Acceptable	$	—	$	—	$	—	$	—	$	—	$	419,190	$	115,823	$	535,013
Special mention(1)	—		—		—		—		—		—		—		—
Substandard(2)	—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	419,190	$	115,823	$	535,013






For the Year Ended December 31, 2023:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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

(2)Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some ~~of these agreements under which the ultimate obligation owed is determined by reference to actual usage or hours worked.~~

loss will be sustained if deficiencies are not corrected.

~~200~~180


	As of December 31, 2022
	Year of Origination:
	2022		2021		2020		2019		2018		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Agricultural Finance:
Internally Assigned Risk Rating:
Acceptable	$	202,998	$	496,269	$	535,798	$	254,293	$	207,379	$	1,107,834	$	296,508	$	3,101,079
Special mention(1)	—		1,319		1,778		—		1,198		42,680		3,205		50,180
Substandard(2)	—		—		176		—		3,588		32,597		3,372		39,733
Total	$	202,998	$	497,588	$	537,752	$	254,293	$	212,165	$	1,183,111	$	303,085	$	3,190,992






For the Year Ended December 31, 2022:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


~~13.~~	~~FAIR VALUE DISCLOSURES~~

~~Fair Value Measurement~~

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (also referred to as an exit price). In determining fair value, Farmer Mac uses various valuation approaches, including market and income based approaches. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. When available, the fair value of Farmer Mac's financial instruments is based on quoted market prices, valuation techniques that use observable market-based inputs, or unobservable inputs that are corroborated by market data. Pricing information obtained from third parties is internally validated for reasonableness prior to use(1)Assets in the ~~consolidated financial statements. Farmer Mac's accounting policies for fair value measurement~~"Special mention" category generally have potential weaknesses due to performance issues but are ~~discussed in Note 2(p).~~currently considered to be adequately secured.

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

~~Fair value measurements related to financial instruments that are reported at fair value~~


	As of December 31, 2022
	Year of Origination:
	2022		2021		2020		2019		2018		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Rural Infrastructure Finance:
Internally Assigned Risk Rating:
Acceptable	$	—	$	—	$	—	$	—	$	—	$	470,659	$	52,533	$	523,192
Special mention(1)	—		—		—		—		—		—		—		—
Substandard(2)	—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	470,659	$	52,533	$	523,192






For the Year Ended December 31, 2022:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

(1)Assets in the ~~consolidated financial statements each period~~"Special mention" category generally have potential weaknesses due to performance issues but are ~~referred~~currently considered to ~~as recurring fair value measurements. Fair value measurements related to financial instruments~~be adequately secured.

(2)Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not ~~reported at fair value each period but are subject to fair value adjustments in certain circumstances are referred to as nonrecurring fair value measurements.~~corrected.

181

13.FAIR VALUE DISCLOSURES

Fair Value Classification and Transfers

The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. The hierarchy gives highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The following three levels are used to classify fair value measurements:


~~Level 1~~	~~Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.~~


~~Level 2~~	~~Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly.~~


~~Level 3~~	~~Prices or valuations that require unobservable inputs that are significant to the fair value measurement.~~

Farmer Mac performs a detailed analysis of the assets and liabilities carried at fair value to determine the appropriate level based on the transparency of the inputs used in the valuation techniques. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Farmer Mac's assessment of the significance of a particular input to the fair value measurement of an instrument requires judgment and consideration of factors specific to the instrument. While Farmer Mac believes its valuation methods are appropriate and consistent with those of other market participants, using different methodologies or assumptions to determine fair value could result in a materially different estimate of fair value for some financial instruments.

~~201~~

The following ~~is a description of the fair value techniques used for instruments measured at fair value as well as the general classification of such instruments pursuant to the valuation hierarchy described above.~~

~~Recurring Fair Value Measurements and Classification~~

~~Available-for-Sale and Trading Investment Securities~~

~~The fair value of investments in U.S. Treasuries is based on unadjusted quoted prices in active markets. Farmer Mac classifies these fair value measurements as "Level 1."~~

For a significant portion of Farmer Mac's investment portfolio, including most asset-backed securities, corporate debt securities, senior agency debt securities, Government/GSE guaranteed mortgage-backed securities, and preferred stock issued by GSEs, fair value is primarily determined using a reputable and nationally recognized third-party pricing service. The prices obtained are non-binding and generally representative of recent market trades. The fair value of certain asset-backed and Government guaranteed mortgage-backed securities are estimated based on quotations from brokers or dealers. Farmer Mac corroborates its primary valuation source by obtaining a secondary price from another independent third-party pricing service. Farmer Mac classifies these fair value measurements as "Level 2."

For certain investment securities that are thinly traded or not quoted, Farmer Mac estimates fair value using internally-developed models that employ a discounted cash flow approach. Farmer Mac maximizes the use of observable market data, including prices of financial instruments with similar maturities and characteristics, interest rate yield curves, measures of volatility and prepayment rates. Farmer Mac generally considers a market to be thinly traded or not quoted if the following conditions exist: (1) there are few transactions for the financial instruments; (2) the prices in the market are not current; (3) the price quotes vary significantly either over time or among independent pricing services or dealers; or (4) there is limited availability of public market information. Farmer Mac classifies these fair value measurements as "Level 3."

~~Available-for-Sale and Trading Farmer Mac Guaranteed Securities and USDA Securities~~

Farmer Mac estimates the fair value of its Farmer Mac Guaranteed Securities and USDA Securities by discounting the projected cash flows of these instruments at projected interest rates. The fair values are based on thetables present value of expected cash flows using management's best estimate of certain key assumptions, which include prepayment speeds, forward yield curves, and discount rates commensurate with the risks involved. Farmer Mac classifies these fair value measurements as Level 3 because there is limited market activity and therefore little or no price transparency. On a sample basis, Farmer Mac corroborates the fair value of its Farmer Mac Guaranteed Securities and USDA Securities by obtaining a secondary valuation from an independent third-party service.

~~Financial Derivatives~~

~~The fair value of exchange-traded U.S. Treasury futures is based on unadjusted quoted prices for identical financial instruments. Farmer Mac classifies these fair value measurements as Level 1.~~

~~202~~

Farmer Mac's derivative portfolio consists primarily of interest rate swaps and forward sales contracts on the debt of other GSEs. Farmer Mac estimates the fair value of these financial instruments primarily based upon the counterparty valuations. Farmer Mac internally values its derivative portfolio using a discounted cash flow valuation technique and obtains a secondary valuation for certain interest rate swaps to corroborate the counterparty valuations. Farmer Mac also regularly reviews the counterparty valuations as part of the collateral exchange process. Farmer Mac classifies these fair value measurements as Level 2.

Certain basis swaps are non-standard interest rate swap structures and are therefore internally modeled using significant assumptions and unobservable inputs, resulting in Level 3 classification. Farmer Mac uses a discounted cash flow valuation technique, using management's best estimate of certain key assumptions, which include prepayment speeds, forward yield curves, and discount rates commensurate with the risks involved.

As of December 31, 2017 and 2016, the consideration of Farmer Mac's and the counterparties' credit risk resulted in an adjustment of $40,000 and $0.1 million to the valuations of Farmer Mac's derivative portfolio. See Note 2(h) and Note 6 for more information about ~~Farmer Mac's derivative portfolio.~~

~~Nonrecurring Fair Value Measurements and Classification~~

~~Loans Held for Investment~~

Certain loans in Farmer Mac's held for investment loan portfolio are measured at fair value when they are determined to be impaired. For these impaired loans, the fair value of the loan generally is based on the fair value of the underlying property, which is determined by recent third-party appraisals. Farmer Mac uses net realizable value (fair value less estimated costs to sell) as a reasonable estimate of fair value and classifies the fair values as Level 3 measurements in the tables below.

When recent third-party appraisals are not available, Farmer Mac measures loan impairment in the aggregate in consideration of the similar risk characteristics of the assets and historical statistics, and does not include these impaired loans in the tables below.

~~Real Estate Owned~~

Farmer Mac initially records REO properties at net realizable value and subsequently measures them at the lower of carrying value or net realizable value. The fair value of the REO generally is based on third-party appraisals. Farmer Mac classifies the REO fair values as Level 3 measurements. Farmer Mac uses net realizable value as a reasonable estimate of fair value in the tables below.

~~Fair Value Classification and Transfers~~

~~As of December 31, 2017,~~ Farmer Mac's assets and liabilities ~~recorded~~measured at fair value ~~included financial instruments valued at $5.5 billion whose~~on a recurring basis as of December 31, 2023 and 2022, respectively, and indicate the fair ~~values were estimated~~value hierarchy of the valuation techniques used by ~~management in the absence of readily determinable~~Farmer Mac to determine such fair ~~values (i.e., level 3). These financial instruments measured as~~ value:

Table 13.1


Assets and Liabilities Measured at Fair Value as of December 31, 2023
	Level 1		Level 2		Level 3(1)		Total
	(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	—	$	—	$	19,082	$	19,082


Floating rate Government/GSE guaranteed mortgage-backed securities	—		2,424,434		—		2,424,434
Fixed rate GSE guaranteed mortgage-backed securities	—		1,569,615		—		1,569,615

Floating rate U.S. Treasuries	49,968		—		—		49,968
Fixed rate U.S. Treasuries	855,832		—		—		855,832
Total Available-for-sale Investment Securities	905,800		3,994,049		19,082		4,918,931
Farmer Mac Guaranteed Securities:
Available-for-sale:
AgVantage	—		—		5,522,712		5,522,712
Farmer Mac Guaranteed Securities	—		—		9,767		9,767
Total Farmer Mac Guaranteed Securities	—		—		5,532,479		5,532,479
USDA Securities:
Trading	—		—		1,241		1,241
Total USDA Securities	—		—		1,241		1,241
Financial derivatives	11		37,467		—		37,478
Guarantee Asset	—		—		5,831		5,831
Total Assets at fair value	$	905,811	$	4,031,516	$	5,558,633	$	10,495,960
Liabilities:
Financial derivatives	$	91	$	117,040	$	—	$	117,131
Total Liabilities at fair value	$	91	$	117,040	$	—	$	117,131

(1) Level 3 ~~represented 31 percent~~assets represent 19% of total assets and ~~71 percent~~52% of financial instruments measured at fair value as of December 31, 2017. As of December 31, 2016, Farmer Mac's assets and liabilities recorded at fair value included financial instruments valued at $4.9 billion whose fair values were estimated by management in the absence of readily determinable fair values. These financial instruments measured as level 3

value.

~~203~~182


Assets and Liabilities Measured at Fair Value as of December 31, 2022
	Level 1		Level 2		Level 3(1)		Total
	(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	—	$	—	$	19,027	$	19,027

Floating rate Government/GSE guaranteed mortgage-backed securities	—		2,392,540		—		2,392,540
Fixed rate GSE guaranteed mortgage-backed securities	—		1,048,386		—		1,048,386
Fixed rate U.S. Treasuries	1,119,611		—		—		1,119,611
Total Available-for-sale Investment Securities	1,119,611		3,440,926		19,027		4,579,564
Farmer Mac Guaranteed Securities:
Available-for-sale:
AgVantage	—		—		7,599,379		7,599,379
Farmer Mac Guaranteed Securities	—		—		7,847		7,847
Total Farmer Mac Guaranteed Securities	—		—		7,607,226		7,607,226
USDA Securities:
Trading	—		—		1,767		1,767
Total USDA Securities	—		—		1,767		1,767
Financial derivatives	—		37,409		—		37,409
Guarantee Asset	—		—		4,467		4,467
Total Assets at fair value	$	1,119,611	$	3,478,335	$	7,632,487	$	12,230,433
Liabilities:
Financial derivatives	$	142	$	175,184	$	—	$	175,326
Total Liabilities at fair value	$	142	$	175,184	$	—	$	175,326

~~represented 31 percent~~(1) Level 3 assets represent 28% of total assets and ~~65 percent~~62% of financial instruments measured at fair value.

There were no material assets or liabilities measured at fair value on a non-recurring basis as of December 31, ~~2016.~~2023 or 2022.

Transfers in and/or out of the different levels within the fair value hierarchy are based on the fair values of the assets and liabilities as of the beginning of the reporting period. During ~~2017~~the years ended December 31, 2023 and 2022, there was one transfer within fair value hierarchy from Level 2 to Level 3 for the fair value measurement of a fixed-rate GSE guaranteed mortgage-backed security (interest-only strip). The transfer to Level 3 was because unobservable inputs became significant to the overall estimate of the fair value of the security as of March 31, 2017. There were no transfers within the fair value hierarchy for fair value measurements of Farmer Mac's investment securities, Farmer Mac Guaranteed Securities, USDA Securities, and financial derivatives during 2016 or 2015. See Note 2(b) and Note 5 for information about the transfer of available-for-sale USDA and Farmer Mac Guaranteed USDA securities to held-to-maturity as of October 1, 2016.

The following tables present information about Farmer Mac's assets and liabilities measured at fair value on a recurring and non-recurring basis as of December 31, 2017 and 2016, respectively, and indicate the fair value hierarchy of the valuation techniques used by Farmer Mac to determine such fair value:

~~Table 13.1~~

Assets and Liabilities Measured at Fair Value as of December 31, 2017
Level 1 Level 2 Level 3 Total
(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans $ —
$ —
$ 18,814
$ 18,814
Floating rate asset-backed securities —
34,210
—
34,210
Floating rate Government/GSE guaranteed mortgage-backed securities —
1,290,187
—
1,290,187
Fixed rate GSE guaranteed mortgage-backed securities —
486
4,333
4,819
Fixed rate senior agency debt —
99,951
—
99,951
Fixed rate U.S. Treasuries 767,424
—
—
767,424
Total Investment Securities 767,424
1,424,834
23,147
2,215,405
Farmer Mac Guaranteed Securities:

Available-for-sale:

AgVantage —
—
5,471,914
5,471,914
Total Farmer Mac Guaranteed Securities —
—
5,471,914
5,471,914
USDA Securities:

Trading —
—
13,515
13,515
Total USDA Securities —
—
13,515
13,515
Financial derivatives —
7,093
—
7,093
Total Assets at fair value $ 767,424
$ 1,431,927
$ 5,508,576
$ 7,707,927
Liabilities:

Financial derivatives $ 36
$ 26,563
140,449
$ —
$ 26,599
Total Liabilities at fair value $ 36
$ 26,563
$ —
$ 26,599
Non-recurring:

Assets:

Loans held for investment $ —
$ —
$ 508
$ 508
Total Non-recurring Assets at fair value $ —
$ —
$ 508
$ 508

hierarchy.

~~204~~183

Assets and Liabilities Measured at Fair Value as of December 31, 2016
Level 1 Level 2 Level 3 Total
(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans $ —
$ —
$ 17,730
$ 17,730
Floating rate asset-backed securities —
43,851
—
43,851
Floating rate corporate debt securities —
10,041
—
10,041
Floating rate Government/GSE guaranteed mortgage-backed securities —
1,361,029
—
1,361,029
Fixed rate GSE guaranteed mortgage-backed securities —
7,625
—
7,625
Floating rate GSE subordinated debt —
66,953
—
66,953
Fixed rate senior agency debt —
187,133
—
187,133
Fixed rate U.S. Treasuries 821,489
—
—
821,489
Total available-for-sale 821,489
1,676,632
17,730
2,515,851
Farmer Mac Guaranteed Securities:

Available-for-sale:

AgVantage —
—
4,853,685
4,853,685
Total Farmer Mac Guaranteed Securities —
—
4,853,685
4,853,685
USDA Securities:

Trading —
—
20,388
20,388
Total USDA Securities —
—
20,388
20,388
Financial derivatives —
23,182
—
23,182
Total Assets at fair value $ 821,489
$ 1,699,814
$ 4,891,803
$ 7,413,106
Liabilities:

Financial derivatives $ 155
$ 57,997
140,449
$ —
$ 58,152
Total Liabilities at fair value $ 155
$ 57,997
$ —
$ 58,152
Non-recurring:

Assets:

Loans held for investment $ —
$ —
$ 2,799
$ 2,799
REO —
—
349
349
Total Non-recurring Assets at fair value $ —
$ —
$ 3,148
$ 3,148

~~205~~

The following tables present additional information about assets and liabilities measured at fair value on a recurring basis for which Farmer Mac has used significant unobservable inputs to determine fair value. Net transfers in and/or out of Level 3 are based on the fair values of the assets and liabilities as of the beginning of the reporting period. There were no liabilities measured at fair value using significant unobservable inputs during the years ended December 31, ~~2017~~2023, 2022, and ~~2016.~~2021.

Table 13.2


Level 3 Assets and Liabilities Measured at Fair Value for the Year Ended December 31, 2023
	Beginning Balance		Purchases		Settlements		Allowance for Losses		Realized and unrealized (losses)/gains included in Income		Unrealized gains included in Other Comprehensive Income		Transfers Out(1)		Ending Balance
	(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	19,027	$	—	$	—	$	6	$	—	$	49	$	—	$	19,082
Total available-for-sale	19,027		—		—		6		—		49		—		19,082
Farmer Mac Guaranteed Securities:
Available-for-sale:
AgVantage	7,599,379		2,084,650		(1,561,507)		230		89,629		(5,573)		(2,684,096)		5,522,712
Farmer Mac Guaranteed Securities	7,847		—		(1,213)		—		—		3,133		—		9,767
Total available-for-sale	7,607,226		2,084,650		(1,562,720)		230		89,629		(2,440)		(2,684,096)		5,532,479
USDA Securities:

Trading	1,767		—		(550)		—		24		—		—		1,241
Total USDA Securities	1,767		—		(550)		—		24		—		—		1,241
Guarantee and commitment obligations:
Guarantee Asset	4,467		—		(590)		—		1,954		—		—		5,831
Total Guarantee and commitment obligations	4,467		—		(590)		—		1,954		—		—		5,831
Total Assets at fair value	$	7,632,487	$	2,084,650	$	(1,563,860)	$	236	$	91,607	$	(2,391)	$	(2,684,096)	$	5,558,633

(1) Includes $2.7 billion of AgVantage Securities transferred from available-for-sale to held-to-maturity on July 1, 2023.

Level 3 Assets and Liabilities Measured at Fair Value for the Year Ended December 31, 2017
Beginning
Balance Transfers in Purchases Sales Settlements Realized and
Unrealized (Losses) included
in Income Unrealized
Gains/(Losses)
included in Other
Comprehe- nsive
Income Ending
Balance
(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans $ 17,730
—
$ —
$ —
$ —
$ —
$ 1,084
$ 18,814
Fixed rate GSE guaranteed mortgage-backed securities —
7,041
—
—
(444 ) —
(2,264 ) 4,333
Total available-for-sale 17,730
7,041
—
—
(444 ) —
(1,180 ) 23,147
Farmer Mac Guaranteed Securities:

Available-for-sale:

AgVantage 4,853,685
—
1,134,132
—
(526,650 ) (7,625 ) 18,372
5,471,914
Total available-for-sale 4,853,685
—
1,134,132
—
(526,650 ) (7,625 ) 18,372
5,471,914
USDA Securities:

Available-for-sale —
—
155,744
(155,744 ) —
—
—
—
Trading⁽¹⁾
20,388
—
—
—
(6,849 ) (24 ) —
13,515
Total USDA Securities 20,388
—
155,744
(155,744 ) (6,849 ) (24 ) —
13,515
Total Assets at fair value $ 4,891,803
$ 7,041
$ 1,289,876
$ (155,744 ) $ (533,943 ) $ (7,649 ) $ 17,192
$ 5,508,576
184


⁽¹⁾	~~Includes unrealized gains of $0.1 million attributable to assets still held as of December 31, 2017 that are recorded in "(Losses)/gains on trading securities~~."

~~206~~


Level 3 Assets and Liabilities Measured at Fair Value for the Year Ended December 31, 2022
	Beginning Balance		Purchases		Settlements		Allowance for Losses		Realized and unrealized losses included in Income		Unrealized losses included in Other Comprehensive Income		Ending Balance
	(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	19,254	$	—	$	—	$	19	$	—	$	(246)	$	19,027
Total available-for-sale	19,254		—		—		19		—		(246)		19,027
Farmer Mac Guaranteed Securities:
Available-for-sale:
AgVantage	6,316,145		3,411,665		(1,526,303)		(283)		(552,907)		(48,938)		7,599,379
Farmer Mac Guaranteed Securities	12,414		—		(1,675)		—		—		(2,892)		7,847
Total available-for-sale	6,328,559		3,411,665		(1,527,978)		(283)		(552,907)		(51,830)		7,607,226
USDA Securities:

Trading	4,401		—		(2,583)		—		(51)		—		1,767
Total USDA Securities	4,401		—		(2,583)		—		(51)		—		1,767
Guarantee and commitment obligations:
Guarantee Asset	6,237		—		(903)		—		(867)		—		4,467
Total Guarantee and commitment obligations	6,237		—		(903)		—		(867)		—		4,467
Total Assets at fair value	$	6,358,451	$	3,411,665	$	(1,531,464)	$	(264)	$	(553,825)	$	(52,076)	$	7,632,487

Level 3 Assets and Liabilities Measured at Fair Value for the Year Ended December 31, 2016
Beginning
Balance Purchases Sales Settlements Realized and
Unrealized Gains/(losses) included
in Income Unrealized(Losses)/Gains
included in Other
Comprehe-nsive
Income Transfers Out Ending
Balance
(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans $ 44,924
$ —
$ (26,806 ) $ —
$ 6
$ (394 ) $ —
$ 17,730
Total available-for-sale 44,924
—
(26,806 ) —
6
(394 ) —
17,730
Trading:

Floating rate asset-backed securities⁽¹⁾
491
—
—
(2,213 ) 1,722
—
—
—
Total trading 491
—
—
(2,213 ) 1,722
—
—
—
Total Investment Securities 45,415
—
(26,806 ) (2,213 ) 1,728
(394 ) —
17,730
Farmer Mac Guaranteed Securities:

Available-for-sale:

AgVantage 4,121,244
1,430,392
—
(706,446 ) —
(20,944 ) 29,439
—
4,853,685
Farmer Mac Guaranteed USDA Securities⁽²⁾
31,361
4,100
—
(3,240 ) —
603
(32,824 ) —
Total Farmer Mac Guaranteed Securities 4,152,605
1,434,492
—
(709,686 ) (20,944 ) 30,042
(32,824 ) 4,853,685
USDA Securities:

Available-for-sale 1,888,344
391,240
(97,954 ) (237,262 ) —
35,959
(1,980,327 ) —
Trading⁽³⁾
28,975
—
—
(8,325 ) (262 ) —
—
20,388
Total USDA Securities 1,917,319
391,240
(97,954 ) (245,587 ) (262 ) 35,959
(1,980,327 ) 20,388
Total Assets at fair value $ 6,115,339
$ 1,825,732
$ (124,760 ) $ (957,486 ) $ (19,478 ) $ 65,607
$ (2,013,151 ) $ 4,891,803
185


⁽¹⁾	~~None of the unrealized gains are attributable to assets still held as of December 31, 2016 and are recorded in "(Losses)/gains on trading securities~~."


⁽²⁾	~~Includes $32.8 million of Farmer Mac Guaranteed USDA Securities and $2.0 billion of USDA Securities transferred from available-for-sale to held-to-maturity on October 1, 2016.~~


⁽³⁾	~~Includes unrealized losses of $0.3 million attributable to assets still held as of December 31, 2016 that are recorded in "(Losses)/gains on trading securities~~."

~~207~~


Level 3 Assets and Liabilities Measured at Fair Value for the Year Ended December 31, 2021
	Beginning Balance		Purchases		Settlements		Allowance for Losses		Realized and unrealized losses included in Income		Unrealized gains included in Other Comprehensive Income		Ending Balance
	(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	19,171	$	—	$	—	$	(16)	$	—	$	99	$	19,254
Total available-for-sale	19,171		—		—		(16)		—		99		19,254
Farmer Mac Guaranteed Securities:
Available-for-sale:
AgVantage	6,947,701		1,143,115		(1,614,598)		47		(176,064)		15,944		6,316,145
Farmer Mac Guaranteed Securities	—		12,560		(263)		—		—		117		12,414
Total available-for-sale	6,947,701		1,155,675		(1,614,861)		47		(176,064)		16,061		6,328,559
USDA Securities:

Trading	6,695		—		(2,178)		—		(116)		—		4,401
Total USDA Securities	6,695		—		(2,178)		—		(116)		—		4,401
Guarantee and commitment obligations:
Guarantee Asset	—		6,237		—		—		—		—		6,237
Total Guarantee and commitment obligations	—		6,237		—		—		—		—		6,237
Total Assets at fair value	$	6,973,567	$	1,161,912	$	(1,617,039)	$	31	$	(176,180)	$	16,160	$	6,358,451

Level 3 Assets and Liabilities Measured at Fair Value for the Year Ended December 31, 2015
Beginning
Balance Purchases Sales Settlements Realized and
Unrealized (Losses)/Gains included
in Income Unrealized
Gains/(Losses)
included in Other
Comprehen-sive
Income Ending
Balance
(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans $ 40,576
$ —
$ —
$ —
$ (100 ) $ 4,448
$ 44,924
Total available-for-sale 40,576
—
—
—
(100 ) 4,448
44,924
Trading:

Floating rate asset-backed securities⁽¹⁾
689
—
—
(657 ) 459
—
491
Total trading 689
—
—
(657 ) 459
—
491
Total Investment Securities 41,265
—
—
(657 ) 359
4,448
45,415
Farmer Mac Guaranteed Securities:

Available-for-sale:

AgVantage 3,631,662
678,566
—
(138,687 ) 3,090
(53,387 ) 4,121,244
Farmer Mac Guaranteed USDA Securities 27,619
13,314
—
(9,482 ) —
(90 ) 31,361
Total Farmer Mac Guaranteed Securities 3,659,281
691,880
—
(148,169 ) 3,090
(53,477 ) 4,152,605
USDA Securities:

Available-for-sale 1,731,222
363,621
—
(233,385 ) —
26,886
1,888,344
Trading⁽²⁾
40,310
—
—
(12,096 ) 761
—
28,975
Total USDA Securities 1,771,532
363,621
—
(245,481 ) 761
26,886
1,917,319
Total Assets at fair value $ 5,472,078
$ 1,055,501
$ —
$ (394,307 ) $ 4,210
$ (22,143 ) $ 6,115,339
186


⁽¹⁾	~~Unrealized gains are attributable to assets still held as of December 31, 2015 and are recorded in "(Losses)/gains on trading securities~~"


⁽²⁾	~~Includes unrealized gains of $0.9 million attributable to assets still held as of December 31, 2015 that are recorded in "(Losses)/gains on trading securities~~."

~~208~~

The following tables present additional information about the significant unobservable inputs, such as discount rates and constant prepayment rates ("CPR"), used in the fair value measurements categorized in ~~level~~Level 3 of the fair value hierarchy as of December 31, ~~2017~~2023 and ~~2016.~~2022:

Table 13.3

As of December 31, 2023

Financial Instruments

Fair Value

Valuation Technique

Unobservable Input

Range (Weighted-Average)

(in thousands)

Assets:

Investment securities:

Floating rate auction-rate certificates backed by Government guaranteed student loans

19,082

Indicative bids

Range of broker quotes

97.0% - 97.0% (97.0%)

Farmer Mac Guaranteed Securities:

AgVantage

5,522,712

Discounted cash flow

Discount rate

4.7% - 5.4% (5.0%)

Farmer Mac Guaranteed Securities

9,767

Discounted cash flow

Discount rate

8.3%

CPR

USDA Securities

1,241

Discounted cash flow

Discount rate

5.4% - 5.4% (5.4%)

CPR

12% - 12% (12%)

Guarantee Asset

5,831

Discounted cash flow

Discount rate

8.3%

CPR

As of December 31, 2022

Financial Instruments

Fair Value

Valuation Technique

Unobservable Input

Range (Weighted-Average)

(in thousands)

Assets:

Investment securities:

Floating rate auction-rate certificates backed by Government guaranteed student loans

19,027

Indicative bids

Range of broker quotes

96.8% - 96.8% (96.8%)

Farmer Mac Guaranteed Securities:

AgVantage

7,599,379

Discounted cash flow

Discount rate

4.7% - 6.1% (5.1%)

Farmer Mac Guaranteed Securities

7,847

Discounted cash flow

Discount rate

4.8% - 5.3% (5.1%)

CPR

USDA Securities

1,767

Discounted cash flow

Discount rate

5.1% - 5.7% (5.3%)

CPR

19% - 27% (25%)

Guarantee Asset

4,467

Discounted cash flow

Discount rate

5.4% - 5.9% (5.7%)

CPR

The significant unobservable input used in the fair value measurements of AgVantage Farmer Mac Guaranteed Securities is the discount rate commensurate with the risks involved. Typically, significant increases (decreases) in this input in isolation may result in materially lower (higher) fair value measurements. Generally, in a rising interest rate environment, Farmer Mac would expect average discount rates to increase. Conversely, in a declining interest rate environment, Farmer Mac would expect average discount rates to decrease. CPR are not presented in the table above for AgVantage securities

187

As of December 31, 2017
Financial Instruments Fair Value Valuation Technique Unobservable Input Range (Weighted-Average)
(in thousands)
Assets:
Investment securities:
Floating rate auction-rate certificates backed by Government guaranteed student loans $ 18,814
Indicative bids Range of broker quotes 95.5% - 95.5% (95.5%)
Fixed rate GSE guaranteed mortgage-backed securities $ 4,333
Discounted cash flow Discount rate 2.9%
CPR 0 %
Farmer Mac Guaranteed Securities:
AgVantage $ 5,471,914
Discounted cash flow Discount rate 2.1% - 3.4% (2.4%)

USDA Securities $ 13,515
Discounted cash flow Discount rate 3.6% - 5.4% (5.0%)
CPR 7% - 19% (17%)
because they generally have fixed maturity dates when the secured general obligations are due and do not prepay.

As of December 31, 2016
Financial Instruments Fair Value Valuation Technique Unobservable Input Range (Weighted-Average)
(in thousands)
Assets:
Investment securities:
Floating rate auction-rate certificates backed by Government guaranteed student loans $ 17,730
Indicative bids Range of broker quotes 90.0% - 90.0% (90.0%)
Farmer Mac Guaranteed Securities:
AgVantage $ 4,853,685
Discounted cash flow Discount rate 1.5% - 3.3% (1.9%)

USDA Securities $ 20,388
Discounted cash flow Discount rate 4.0% - 5.3% (5.0%)
CPR 13% - 18% (17%)

The significant unobservable inputs used in the fair value measurements of ~~Farmer Mac Guaranteed Securities and~~ USDA Securities are the prepayment ~~rates~~rate and discount ~~rates~~rate commensurate with the risks involved. Typically, significant increases (decreases) in any of these inputs in isolation may result in materially lower (higher) fair value measurements. Generally, in a rising interest rate environment, Farmer Mac would expect average discount rates to increase and would likely expect a corresponding decrease in forecasted prepayment rates. Conversely, in a declining interest rate environment, Farmer Mac would expect average discount rates to decrease and would likely expect a corresponding increase in forecasted prepayment rates. Prepayment rates are not presented in the table above for AgVantage securities because they generally do not pay down principal based on amortization schedules but instead typically have fixed maturity dates when the secured general obligations are due.

~~209~~

Disclosures on Fair Value of Financial Instruments

The following table sets forth the estimated fair values and carrying values for financial assets, liabilities, and guarantees and commitments as of December 31, ~~2017~~2023 and ~~2016:~~2022:

Table 13.4


	As of December 31, 2023				As of December 31, 2022
	Fair Value		Carrying Amount		Fair Value		Carrying Amount
	(in thousands)
Financial assets:
Cash and cash equivalents	$	888,707	$	888,707	$	861,002	$	861,002
Investment securities	4,981,249		4,979,504		4,630,701		4,628,268
Farmer Mac Guaranteed Securities	9,710,074		9,745,548		8,573,781		8,628,380
USDA Securities	2,036,046		2,355,412		2,099,445		2,411,601
Loans	10,426,021		11,039,349		9,666,710		10,205,466
Financial derivatives	37,478		37,478		37,409		37,409
Guarantee and commitment fees receivable	58,465		49,832		50,653		47,151
Financial liabilities:
Notes payable	25,670,971		26,336,542		23,591,330		24,469,113
Debt securities of consolidated trusts held by third parties	1,268,563		1,351,069		1,106,837		1,181,948
Financial derivatives	117,131		117,131		175,326		175,326
Guarantee and commitment obligations	56,195		47,563		50,083		46,582

As of December 31, 2017 As of December 31, 2016
Fair Value Carrying
Amount Fair Value Carrying
Amount
(in thousands)
Financial assets:
Cash and cash equivalents $ 302,022
$ 302,022
$ 265,229
$ 265,229
Investment securities 2,260,969
2,260,437
2,515,851
2,515,851
Farmer Mac Guaranteed Securities 7,588,806
7,598,188
6,006,694
6,002,916
USDA Securities 2,076,396
2,131,365
1,934,023
2,029,613
Loans 5,279,225
5,266,786
4,481,019
4,507,435
Financial derivatives 7,093
7,093
23,182
23,182
Guarantee and commitment fees receivable:
LTSPCs 33,871
35,718
34,720
32,656
Farmer Mac Guaranteed Securities 4,323
4,177
6,197
6,215
Financial liabilities:
Notes payable:
Due within one year 8,079,309
8,089,826
8,439,515
8,440,123
Due after one year 7,445,545
7,432,790
5,260,497
5,222,977
Debt securities of consolidated trusts held by third parties 1,386,652
1,404,945
1,107,513
1,142,704
Financial derivatives 26,599
26,599
58,152
58,152
Guarantee and commitment obligations:
LTSPCs 32,976
34,824
33,860
31,796
Farmer Mac Guaranteed Securities 3,722
3,576
5,467
5,486

The carrying value of cash and cash equivalents is a reasonable estimate of their approximate fair value and is classified as Level 1. ~~Investment securities primarily~~The fair value of investments in U.S. Treasuries are valued based on unadjusted quoted prices in active markets and are classified as Level 1. A significant portion of Farmer Mac's investment portfolio is valued using a reputable nationally recognized third-party pricing service. The prices obtained are non-binding and generally representative of recent market trades and are classified as Level 2. Farmer Mac internally models the fair value of its loan portfolio, including loans held for investment and loans held for investment in consolidated trusts, Farmer Mac Guaranteed Securities, and USDA Securities by discounting the projected cash flows of these instruments at projected interest rates. The fair values are based on the present value of expected cash flows using management's best estimate of certain key assumptions, which include prepayment speeds, forward yield curves and discount rates commensurate with the risks involved. These fair value measurements do not take into consideration the fair value of the underlying property and are classified as Level 3. Financial derivatives primarily are valued using ~~unadjusted counterparty valuations~~the market standard methodology of netting the discounted future fixed cash payments (or

188

receipts) and the discounted expected variable cash receipts (or payments) and are classified as Level 2. The fair value of the guarantee fees receivable/obligation and debt securities of consolidated trusts are estimated based on the present value of expected future cash flows of the underlying mortgage assets using management's best estimate of certain key assumptions, which include prepayments speeds, forward yield curves, and discount rates commensurate with the risks involved and are classified as Level 3. Notes payable are valued by discounting the expected cash flows of these instruments using a yield curve derived from market prices observed for similar agency securities and are also classified as Level 3. Because the cash flows of Farmer Mac's financial instruments may be interest rate path dependent, estimated fair values and projected discount rates for Level 3 financial instruments

~~210~~

are derived using a Monte Carlo simulation model. Different market assumptions and estimation methodologies could significantly affect estimated fair value amounts.


~~14.~~	~~BUSINESS SEGMENT REPORTING~~

14.BUSINESS SEGMENT REPORTING

The following table presents the alignment of the Farmer Mac's operations consist of four operating segments – Farm & Ranch, USDA Guarantees, Rural Utilities, and Institutional Credit. The Institutional Credit segment comprises Farmer Mac's purchases and guarantees of AgVantage securities related to general obligations of lenders that are secured by pools of eligible loans.seven segments:

Farmer Mac uses these four segments to manage business risk, and each segment is based on distinct products and distinct business activities. In addition to these four operating segments, a corporate segment is presented. That segment represents activity in Farmer Mac's investment portfolio and other corporate activities. Each operating segment's financial results include directly attributable revenues and expenses. Corporate charges for administrative expenses that are not directly attributable to an operating segment are allocated to each segment based on headcount.

Agricultural Finance

Rural Infrastructure Finance

Treasury

Farm & Ranch

Corporate AgFinance

Rural Utilities

Renewable Energy

Funding

Investments

Corporate

Farmer Mac uses core earnings to measure corporate economic performance and develop financial plans because, in management's view, core earnings is a useful alternative measure in understanding Farmer Mac's economic performance, transaction economics, and business trends. Core earnings principally differs from net income attributable to common stockholders by excluding the effects of fair value fluctuations, which are not expected to have a cumulative net impact on financial condition or results of operations reported in accordance with generally accepted accounting principles ("GAAP") if the related financial instruments are held to maturity, as is generally expected. Core earnings also differs from net income attributable to common stockholders by excluding specified infrequent or unusual transactions that Farmer Mac believes are not indicative of future operating results and that may not reflect the trends and economic financial performance of Farmer Mac's core business. This corporate economic performance measure may not be comparable to similarly labeled measures disclosed by other companies.

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

consolidated basis. Accordingly, the core earnings for Farmer Mac's ~~reportable operating~~ segments ~~will~~would differ from ~~the~~any stand-alone financial statements of Farmer Mac's subsidiaries. These differences ~~will~~would be due to various factors, including the exclusion of unrealized gains and losses related to fair value changes of trading assets and financial derivatives, as well as the allocation of certain expenses such as operating expenses, dividends and interest expense related to the issuance of capital and the issuance of indebtedness managed at the corporate level. ~~The allocation of general and administrative expenses that are not directly attributable to an operating segment may also result in differences.~~

~~211~~

The following tables present core earnings for Farmer Mac's ~~operating~~ segments and a reconciliation to consolidated net income for the years ended December 31, ~~2017, 2016~~2023, 2022, and ~~2015:~~2021.

189

Table 14.1


Core Earnings by Business Segment
For the Year Ended December 31, 2023
	Agricultural Finance				Rural Infrastructure				Treasury				Corporate
	Farm & Ranch		Corporate AgFinance		Rural Utilities		Renewable Energy		Funding		Investments				Reconciling Adjustments			Consolidated Net Income
	(in thousands)
Net interest income	$	137,079	$	31,224	$	25,187	$	4,648	$	128,415	$	994	$	—	$	—		$	327,547
Less: reconciling adjustments(1)(2)(3)	(4,179)		—		(168)		—		3,594		186		—		567			—
Net effective spread	132,900		31,224		25,019		4,648		132,009		1,180		—		567			—
Guarantee and commitment fees	17,415		283		1,133		97		—		—		—		(2,216)			16,712

Other income/(expense)(3)	2,952		35		—		—		3		29		280		3,778			7,077
Total revenues	153,267		31,542		26,152		4,745		132,012		1,209		280		2,129			351,336

Release of/(provision for) losses	145		(207)		(581)		(219)		—		4		—		—			(858)

(Provision for)/release of reserve for losses	(652)		—		374		—		—		—		—		—			(278)
Operating expenses	—		—		—		—		—		—		(97,099)		—			(97,099)
Total non-interest expense	(652)		—		374		—		—		—		(97,099)		—			(97,377)
Core earnings before income taxes	152,760		31,335		25,945		4,526		132,012		1,213		(96,819)		2,129		(4)	253,101
Income tax (expense)/benefit	(32,079)		(6,581)		(5,449)		(951)		(27,721)		(255)		20,385		(447)			(53,098)
Core earnings before preferred stock dividends	120,681		24,754		20,496		3,575		104,291		958		(76,434)		1,682		(4)	200,003
Preferred stock dividends	—		—		—		—		—		—		(27,165)		—			(27,165)

Segment core earnings/(losses)	$	120,681	$	24,754	$	20,496	$	3,575	$	104,291	$	958	$	(103,599)	$	1,682	(4)	$	172,838

Total Assets	$	15,052,606	$	1,566,906	$	7,002,620	$	443,772	$	—	$	5,342,089	$	116,389	$	—		$	29,524,382
Total on- and off-balance sheet program assets at principal balance	$	18,808,801	$	1,693,979	$	7,480,723	$	487,521	$	—	$	—	$	—	$	—		$	28,471,024

Core Earnings by Business Segment
For the Year Ended December 31, 2017
Farm & Ranch USDA Guarantees
Rural
Utilities
Institutional Credit Corporate Reconciling
Adjustments Consolidated Net Income
(in thousands)
Net interest income $ 54,290
$ 21,106
$ 11,598
$ 59,842
$ 10,811
$ —
$ 157,647
Less: reconciling adjustments^(1)(2)(3)(4)
(8,922 ) (2,287 ) (539 ) (3,505 ) (1,091 ) 16,344
—
Net effective spread 45,368
18,819
11,059
56,337
9,720
16,344
—
Guarantee and commitment fees⁽²⁾
17,175
456
1,914
805
—
(6,236 ) 14,114
Other income/(expense)⁽³⁾⁽⁵⁾
2,449
43
20
—
171
715
3,398
Non-interest income/(loss) 19,624
499
1,934
805
171
(5,521 ) 17,512

Provision for loan losses (1,708 ) —
—
—
—
—
(1,708 )

Provision for reserve for losses (50 ) —
—
—
—
—
(50 )
Other non-interest expense (16,554 ) (4,384 ) (2,430 ) (6,439 ) (12,908 ) —
(42,715 )
Non-interest expense⁽⁶⁾
(16,604 ) (4,384 ) (2,430 ) (6,439 ) (12,908 ) —
(42,765 )
Core earnings before income taxes 46,680
14,934
10,563
50,703
(3,017 ) 10,823
⁽⁷⁾
130,686
Income tax (expense)/benefit (16,338 ) (5,227 ) (3,696 ) (17,746 ) 1,792
(5,154 )
⁽⁸⁾
(46,369 )
Core earnings before preferred stock dividends and attribution of income to non-controlling interest 30,342
9,707
6,867
32,957
(1,225 ) 5,669
⁽⁷⁾
84,317
Preferred stock dividends —
—
—
—
(13,182 ) —
(13,182 )
Non-controlling interest —
—
—
—
165
—
165
Segment core earnings/(losses) $ 30,342
$ 9,707
$ 6,867
$ 32,957
$ (14,242 ) $ 5,669
⁽⁷⁾
$ 71,300

Total assets at carrying value $ 4,274,693
$ 2,195,189
$ 1,088,986
$ 7,627,749
$ 2,605,657
$ —
$ 17,792,274
Total on- and off-balance sheet program assets at principal balance $ 6,867,586
$ 2,352,214
$ 1,882,633
$ 7,904,878
$ —
$ —
$ 19,007,311
(1)Includes the amortization of premiums and discounts on assets consolidated at fair value, originally included in interest income, to reflect core earnings amounts.


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


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


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

⁽⁴⁾

Effective in fourth quarter 2017, Farmer Mac revised its methodology for calculating net effective spread, a component of core earnings, to also include the net effects of gains/(losses) due to terminations or net settlements on financial derivatives and hedging activities. All prior period information has been recast to reflect the revised methodology. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures—Net Effective Spread."

⁽⁵⁾

Includes reconciling adjustments for fair value adjustments on financial derivatives and trading assets. Also includes a reconciling adjustment related to the recognition of deferred gains over the estimated lives of certain Farmer Mac Guaranteed Securities and USDA Securities. In 2016 and prior periods, fair value adjustments on financial derivatives included variation margin payment amounts because those amounts were considered to be collateral of the related exposure and were accounted for as unrealized gains or losses. However, effective first quarter 2017, CME implemented a change in its rules related to the exchange of variation margin, whereby variation margin payments are considered to be a partial settlement of the respective derivatives contracts rather than as pledged collateral, and accounted for as realized gains and losses. See Note 4 for more information about this rule change. Farmer Mac believes that even though these variation margin amounts are now accounted for as realized gains or losses on financial derivatives and hedging activities as a result of the CME rule change, their economic character will remain the same as they were before the change. This is not expected to have a cumulative net impact on Farmer Mac's financial condition or results of operations reported in accordance with GAAP because the related financial instruments are expected to be held to maturity. Therefore, beginning in 2017, this reconciling adjustment includes realized gains and losses on financial derivatives centrally cleared through CME resulting from the exchange of variation margin. As a result, core earnings subsequent to 2016 will be presented on a consistent basis with core earnings in 2016 and prior periods.


⁽⁶⁾	~~Includes directly attributable costs and an allocation of indirectly attributable costs based on staffing.~~


⁽⁷⁾	Net adjustments to reconcile to the corresponding income measures: core earnings before income taxes reconciled to income before income taxes; core earnings before preferred stock dividends and attribution of income to non-controlling interest reconciled to net income; and segment core earnings reconciled to net income attributable to common stockholders.


⁽⁸⁾	Includes the non-recurring, non-cash charge to income tax expense resulting from the re-measurement of the net deferred tax asset at a reduced corporate federal income tax rate due to the enactment of new tax legislation on December 22, 2017. See "Notes to Consolidated Financial Statements—Income Taxes."

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

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

(4)Net adjustments to reconcile to the corresponding income measures: core earnings before income taxes reconciled to income before income taxes; core earnings before preferred stock dividends reconciled to net income; and segment core earnings reconciled to net income attributable to common stockholders.

~~212~~190


Core Earnings by Business Segment
For the Year Ended December 31, 2022
	Agricultural Finance				Rural Infrastructure				Treasury				Corporate
	Farm & Ranch		Corporate AgFinance		Rural Utilities		Renewable Energy		Funding		Investments				Reconciling Adjustments			Consolidated Net Income
	(in thousands)


Net interest income	$	133,218	$	29,209	$	16,175	$	2,483	$	96,613	$	(6,758)	$	—	$	—		$	270,940
Less: reconciling adjustments(1)(2)(3)	(4,161)		—		(103)		—		(11,147)		—		—		15,411			—
Net effective spread	129,057		29,209		16,072		2,483		85,466		(6,758)		—		15,411			—
Guarantee and commitment fees	16,718		139		1,238		49		—		—		—		(5,104)			13,040

Other income/(expense)(3)	1,420		261		—		—		—		—		3		23,447			25,131
Total revenues	147,195		29,609		17,310		2,532		85,466		(6,758)		3		33,754			309,111

(Provision for)/release of losses	(1,463)		(2,136)		2,751		(494)		—		19		—		—			(1,323)

Release of reserve for losses	247		—		270		—		—		—		—		—			517
Operating expenses	(819)		—		—		—		—		—		(81,807)		—			(82,626)
Total non-interest expense	(572)		—		270		—		—		—		(81,807)		—			(82,109)
Core earnings before income taxes	145,160		27,473		20,331		2,038		85,466		(6,739)		(81,804)		33,754		(4)	225,679
Income tax (expense)/benefit	(30,482)		(5,768)		(4,268)		(428)		(17,949)		1,416		17,033		(7,089)			(47,535)
Core earnings before preferred stock dividends	114,678		21,705		16,063		1,610		67,517		(5,323)		(64,771)		26,665		(4)	178,144
Preferred stock dividends	—		—		—		—		—		—		(27,165)		—			(27,165)

Segment core earnings/(losses)	$	114,678	$	21,705	$	16,063	$	1,610	$	67,517	$	(5,323)	$	(91,936)	$	26,665	(4)	$	150,979

Total Assets	$	14,623,596	$	1,541,151	$	5,867,517	$	219,609	$	—	$	4,806,010	$	275,227	$	—		$	27,333,110
Total on- and off-balance sheet program assets at principal balance	$	17,728,792	$	1,603,507	$	6,359,613	$	230,170	$	—	$	—	$	—	$	—		$	25,922,082

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

Core Earnings by Business Segment
For the Year Ended December 31, 2016
Farm & Ranch USDA Guarantees Rural
Utilities Institutional Credit Corporate
Reconciling
Adjustments
Consolidated Net Income
(in thousands)
Net interest income $ 47,219
$ 21,865
$ 11,739
$ 48,756
$ 10,695
$ —
$ 140,274
Less: reconciling adjustments^(1)(2)(3)(4)
(7,729 ) (3,210 ) (1,771 ) (3,184 ) (1,308 ) 17,202
—
Net effective spread 39,490
18,655
9,968
45,572
9,387
17,202
—
Guarantee and commitment fees⁽²⁾
15,542
101
1,694
1,833
—
(4,302 ) 14,868
Other income/(expense)⁽³⁾⁽⁵⁾
539
222
2
—
1,322
3,515
5,600
Non-interest income/(loss) 16,081
323
1,696
1,833
1,322
(787 ) 20,468

Provision for loan losses (1,065 ) —
—
—
—
—
(1,065 )

Provision for reserve for losses 63
—
—
—
—
—
63
Other non-interest expense (16,206 ) (4,200 ) (2,856 ) (3,786 ) (13,335 ) —
(40,383 )
Non-interest expense⁽⁶⁾
(16,143 ) (4,200 ) (2,856 ) (3,786 ) (13,335 ) —
(40,320 )
Core earnings before income taxes 38,363
14,778
8,808
43,619
(2,626 ) 16,415
⁽⁷⁾
119,357
Income tax (expense)/benefit (13,428 ) (5,173 ) (3,083 ) (15,265 ) 636
(5,744 ) (42,057 )
Core earnings before preferred stock dividends and attribution of income to non-controlling interest 24,935
9,605
5,725
28,354
(1,990 ) 10,671
⁽⁷⁾
77,300
Preferred stock dividends —
—
—
—
(13,182 ) —
(13,182 )
Non-controlling interest —
—
—
—
34
—
34
Segment core earnings/(losses) $ 24,935
$ 9,605
$ 5,725
$ 28,354
$ (15,138 ) $ 10,671
⁽⁷⁾
$ 64,152

Total assets at carrying value $ 3,582,098
$ 2,096,503
$ 1,012,014
$ 6,008,574
$ 2,906,831
$ —
$ 15,606,020
Total on- and off-balance sheet program assets at principal balance 6,139,304
2,094,375
1,878,110
7,287,686
—
—
$ 17,399,475
191


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


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


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

⁽⁴⁾


⁽⁵⁾	Includes reconciling adjustments for fair value adjustments on financial derivatives and trading assets. Also includes a reconciling adjustment related to the recognition of deferred gains over the estimated lives of certain Farmer Mac Guaranteed Securities and USDA Securities.


⁽⁶⁾	~~Includes directly attributable costs and an allocation of indirectly attributable costs based on staffing.~~


⁽⁷⁾	Net adjustments to reconcile to the corresponding income measures: core earnings before income taxes reconciled to income before income taxes; core earnings before preferred stock dividends and attribution of income to non-controlling interest reconciled to net income; and segment core earnings reconciled to net income attributable to common stockholders.

~~213~~


Core Earnings by Business Segment
For the Year Ended December 31, 2021
	Agricultural Finance				Rural Infrastructure				Treasury				Corporate
	Farm & Ranch		Corporate AgFinance		Rural Utilities		Renewable Energy		Funding		Investments				Reconciling Adjustments			Consolidated Net Income
	(in thousands)


Net interest income	$	118,289	$	27,081	$	8,224	$	1,219	$	66,581	$	557	$	—	$	—		$	221,951
Less: reconciling adjustments(1)(2)(3)	(4,753)		—		(157)		—		3,627		—		—		1,283			—
Net effective spread	113,536		27,081		8,067		1,219		70,208		557		—		1,283			—
Guarantee and commitment fees	16,178		48		1,287		20		—		—		—		(4,864)			12,669
Gain on sale of mortgage loans	6,539		—		—		—		—		—		—		—			6,539
Other income/(expense)(3)	1,966		—		5		—		—		—		(291)		851			2,531
Total revenues	138,219		27,129		9,359		1,239		70,208		557		(291)		(2,730)			243,690

Release of/(provision for) losses	1,574		(210)		(291)		(198)		—		(15)		—		—			860

Release of reserve for losses	1,034		—		293		—		—		—		—		—			1,327
Operating expenses	—		—		—		—		—		—		(73,416)		—			(73,416)
Total non-interest expense	1,034		—		293		—		—		—		(73,416)		—			(72,089)
Core earnings before income taxes	140,827		26,919		9,361		1,041		70,208		542		(73,707)		(2,730)		(4)	172,461
Income tax (expense)/benefit	(29,574)		(5,653)		(1,965)		(219)		(14,744)		(114)		15,325		572			(36,372)
Core earnings before preferred stock dividends	111,253		21,266		7,396		822		55,464		428		(58,382)		(2,158)		(4)	136,089
Preferred stock dividends	—		—		—		—		—		—		(24,677)		—			(24,677)

Segment core earnings/(losses)	$	111,253	$	21,266	$	7,396	$	822	$	55,464	$	428	$	(83,059)	$	(2,158)	(4)	$	111,412

Total Assets	$	13,112,193	$	1,507,848	$	5,344,707	$	87,553	$	—	$	5,012,827	$	55,881	$	—		$	25,121,009
Total on- and off-balance sheet program assets at principal balance	$	16,094,640	$	1,537,834	$	5,895,226	$	86,763	$	—	$	—	$	—	$	—		$	23,614,463

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

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Core Earnings by Business Segment
For the Year Ended December 31, 2015
Farm & Ranch USDA Guarantees
Rural
Utilities
Institutional Credit Corporate Reconciling
Adjustments Consolidated Net Income
(in thousands)
Net interest income $ 43,271
$ 17,750
$ 11,728
$ 44,971
$ 8,087
$ —
$ 125,807
Less: reconciling adjustments^(1)(2)(3)(4)
(5,308 ) (638 ) (723 ) (1,512 ) (198 ) 8,379
—
Net effective spread 37,963
17,112
11,005
43,459
7,889
8,379
—
Guarantee and commitment fees⁽²⁾
15,076
17
397
1,665
—
(3,078 ) 14,077
Other income/(expense)⁽³⁾⁽⁵⁾
1,039
100
25
—
74
4,826
6,064
Non-interest income/(loss) 16,115
117
422
1,665
74
1,748
20,141

Provision for loan losses (2,388 ) —
—
—
—
—
(2,388 )

Release of reserve for losses 2,180
—
—
—
—
—
2,180
Other non-interest expense (16,876 ) (3,449 ) (3,364 ) (2,109 ) (11,864 ) —
(37,662 )
Non-interest expense⁽⁶⁾
(14,696 ) (3,449 ) (3,364 ) (2,109 ) (11,864 ) —
(35,482 )
Core earnings before income taxes 36,994
13,780
8,063
43,015
(3,901 ) 10,127
⁽⁷⁾
108,078
Income tax (expense)/benefit (12,956 ) (4,826 ) (2,828 ) (15,038 ) 3,053
(1,644 ) (34,239 )
Core earnings before preferred stock dividends and attribution of income to non-controlling interest 24,038
8,954
5,235
27,977
(848 ) 8,483
⁽⁷⁾
73,839
Preferred stock dividends —
—
—
—
(13,182 ) —
(13,182 )
Non-controlling interest —
—
—
—
(5,139 ) —
(5,139 )
Loss on retirement of preferred stock —
—
—
—
—
(8,147 ) (8,147 )
Segment core earnings/(losses) $ 24,038
$ 8,954
$ —
$ 5,235
$ —
$ 27,977
$ —
$ (19,169 ) $ —
$ 336
⁽⁷⁾
$ 47,371

Total assets at carrying value $ 3,041,386
$ 1,977,609
$ 1,019,279
$ 5,420,195
$ 4,081,885
$ —
$ 15,540,354
Total on- and off-balance sheet program assets at principal balance $ 5,725,299
$ 1,918,277
$ 1,530,990
$ 6,724,254
$ —
$ 15,898,820


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


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


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

⁽⁴⁾


⁽⁵⁾	Includes reconciling adjustments for fair value adjustments on financial derivatives and trading assets. Also includes a reconciling adjustment related to the recognition of deferred gains over the estimated lives of certain Farmer Mac Guaranteed Securities and USDA Securities.


⁽⁶⁾	~~Includes directly attributable costs and an allocation of indirectly attributable costs based on staffing.~~


⁽⁷⁾	Net adjustments to reconcile to the corresponding income measures: core earnings before income taxes reconciled to income before income taxes; core earnings before preferred stock dividends and attribution of income to non-controlling interest reconciled to net income; and segment core earnings reconciled to net income attributable to common stockholders.

~~214~~


~~15.~~	~~QUARTERLY FINANCIAL INFORMATION (UNAUDITED)~~

~~Table 15.1~~

2017 Quarter Ended
Dec. 31 Sept. 30 June 30 Mar. 31
(in thousands, except per share amounts)
Interest income:
Interest income $ 111,371
$ 104,497
$ 98,047
$ 86,617
Interest expense 70,088
64,935
58,316
49,546
Net interest income 41,283
39,562
39,731
37,071
Provision for loan losses (474 ) (270 ) (327 ) (637 )
Net interest income after provision for loan losses 40,809
39,292
39,404
36,434
Non-interest income:

Guarantee and commitment fees 3,484
3,314
3,472
3,844
(Losses)/gains on financial derivatives and hedging activities (1,777 ) 661
(617 ) 2,486
Gains/(losses) on trading assets 60
—
(2 ) (82 )
Gains on sale of available-for-sale investment securities —
89
—
—
Gains/(losses) on sale of real estate owned 964
32
757
(5 )
Other (loss)/income (58 ) 203
134
553
Non-interest income 2,673
4,299
3,744
6,796
Non-interest expense 10,210
10,616
11,390
10,549
Income before income taxes 33,272
32,975
31,758
32,681
Income tax expense 13,266
11,193
11,124
10,786
Net income 20,006
21,782
20,634
21,895
Less: Net loss attributable to non-controlling
interest —
—
150
15
Net income attributable to Farmer Mac 20,006
21,782
20,784
21,910
Preferred stock dividends (3,296 ) (3,295 ) (3,296 ) (3,295 )
Net income attributable to common stockholders $ 16,710
$ 18,487
$ 17,488
$ 18,615

Earnings per common share:

Basic earnings per common share $ 1.57
$ 1.74
$ 1.65
$ 1.76
Diluted earnings per common share $ 1.55
$ 1.71
$ 1.62
$ 1.73

~~215~~

2016 Quarter Ended
Dec. 31 Sept. 30 June 30 Mar. 31
(in thousands, except per share amounts)
Interest income:
Interest income $ 81,241
$ 79,532
$ 77,236
$ 73,891
Interest expense 44,528
43,969
42,878
40,251
Net interest income 36,713
35,563
34,358
33,640
Provision for loan losses (461 ) (191 ) (364 ) (49 )
Net interest income after provision for loan losses 36,252
35,372
33,994
33,591
Non-interest income/(loss):
Guarantee and commitment fees 3,789
3,798
3,655
3,626
Gains/(losses) on financial derivatives and hedging activities 15,390
(1,601 ) (4,696 ) (6,782 )
(Losses)/gains on trading assets (474 ) 1,182
394
358
Losses on sale of available-for-sale investment securities —
—
—
(9 )
Gains on sale of real estate owned —
15
—
—
Other income 602
707
413
101
Non-interest income/(loss) 19,307
4,101
(234 ) (2,706 )
Non-interest expense 10,977
9,303
10,074
9,966
Income before income taxes 44,582
30,170
23,686
20,919
Income tax expense 15,793
10,529
8,400
7,335
Net income 28,789
19,641
15,286
13,584
Less: Net income)/loss attributable to non-controlling
interest (28 ) 18
16
28
Net income attributable to Farmer Mac 28,761
19,659
15,302
13,612
Preferred stock dividends (3,296 ) (3,295 ) (3,296 ) (3,295 )
Net income attributable to common stockholders $ 25,465
$ 16,364
$ 12,006
$ 10,317

Earnings per common share:
Basic earnings per common share $ 2.42
$ 1.56
$ 1.15
$ 0.99
Diluted earnings per common share $ 2.38
$ 1.54
$ 1.13
$ 0.94


~~Item 9.~~	~~Changes in and Disagreements with Accountants on Accounting and Financial Disclosure~~

None.

192


~~Item 9A.~~	~~Controls and Procedures~~

Item 9A.Controls and Procedures

Management's Evaluation of Disclosure Controls and Procedures. Farmer Mac maintains disclosure controls and procedures designed to ensure that information required to be disclosed in its periodic filings under the Securities Exchange Act of 1934 ~~(the “Exchange~~(“Exchange Act”), including this Annual Report on Form 10-K, is recorded, processed, summarized, and reported on a timely basis. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed under the Exchange Act is accumulated and communicated to Farmer Mac's management on a timely basis to allow decisions ~~regarding~~about required disclosure. Management, including Farmer Mac's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of Farmer Mac's disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, ~~2017.~~2023.

Farmer Mac carried out the evaluation of the effectiveness of its disclosure controls and procedures, required by paragraph (b) of Exchange Act Rules 13a-15 and 15d-15, under the supervision and with the

~~216~~

participation of management, including the Chief Executive Officer and Chief Financial Officer. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that Farmer Mac's disclosure controls and procedures were effective as of December 31, ~~2017.~~2023.

Management's Report on Internal Control Over Financial ~~Reporting.~~Reporting. See "Financial Statements—

Management's Report on Internal Control Over Financial Reporting" in Item 8 of this Annual Report on Form 10-K.

Attestation Report of Independent Registered Public Accounting Firm. See "Financial Statements—

Report of Independent Registered Public Accounting Firm" in Item 8 of this Annual Report on Form ~~10-K.~~10-

Changes in Internal Control Over Financial Reporting. There were no changes in Farmer Mac's internal control over financial reporting during the three months ended December 31, ~~2017~~2023 that have materially affected, or are reasonably likely to materially affect, Farmer Mac's internal control over financial reporting.

Item 9B.Other Information

~~(a) None.~~Director and Officer Trading Arrangements

None of Farmer Mac's directors or executive officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the three months ended December 31, 2023.

Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not Applicable.

193

PART III


~~Item 10.~~	~~Directors, Executive Officers, and Corporate Governance~~

Item 10.Directors, Executive Officers, and Corporate Governance

The information required by this Item is incorporated by reference to Farmer Mac's definitive proxy statement to be filed on or about April ~~2, 2018.~~17, 2024.

Item 11.Executive Compensation

The information required by this Item is incorporated by reference to Farmer Mac's definitive proxy statement to be filed on or about April ~~2, 2018.~~17, 2024.

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is incorporated by reference to Farmer Mac's definitive proxy statement to be filed on or about April ~~2, 2018.~~17, 2024.

Item 13.Certain Relationships and Related Transactions and Director Independence

The information required by this Item is incorporated by reference to Farmer Mac's definitive proxy statement to be filed on or about April ~~2, 2018.~~17, 2024.

Item 14.Principal Accountant Fees and Services

The information required by this Item is incorporated by reference to Farmer Mac's definitive proxy statement to be filed on or about April ~~2, 2018.~~17, 2024.

~~217~~

PART IV


~~Item 15.~~	~~Exhibits and Financial Statement Schedules~~

Item 15.Exhibits and Financial Statement Schedules


~~(a)~~	~~(1) Financial Statements.~~

a. (1) Financial Statements.

Refer to Item 8 above.

(2) Financial Statement Schedules.

There are no schedules because they are not applicable, not required, or the information required to be set

forth therein is included in the consolidated financial statements or in notes thereto.

~~218~~


*		3.1			—
*	~~3.1~~	—	Title VIII of the Farm Credit Act of 1971, as most recently amended ~~by the Food, Conservation and Energy Act of 2008~~on June 18, 2020 (Previously filed as Exhibit 3.1 to Form 10-Q filed August ~~12, 2008)~~10, 2020).
*		3.2		~~3.2~~	—	—	Amended and Restated By-Laws of the Registrant (Previously filed as Exhibit ~~3.1~~3.2 to Form ~~8-K~~10-K filed ~~August 9, 2017)~~February 24, 2023).
*		4.1		~~4.1~~	—	—	Specimen Certificate for Farmer Mac Class A Voting Common Stock (Previously filed as Exhibit 4.1 to Form 10-Q filed May 15, 2003).
*		4.2		~~4.2~~	—	—	Specimen Certificate for Farmer Mac Class B Voting Common Stock (Previously filed as Exhibit 4.2 to Form 10-Q filed May 15, 2003).

194

4.3

~~4.3~~

—

Specimen Certificate for Farmer Mac Class C Non-Voting Common Stock (Previously filed as Exhibit 4.3 to Form 10-Q filed May 15, 2003).

4.4

~~4.4~~

—

~~Specimen Certificate for 5.875% Non-Cumulative Preferred Stock, Series A (Previously filed as Exhibit 4.4.1 to Form 10-Q filed May 9, 2013).~~

~~4.4.1~~

—

~~Certificate of Designation of Terms and Conditions of 5.875% Non-Cumulative Preferred Stock, Series A (Previously filed as Exhibit 4.1 to Form 8-A filed January 17, 2013).~~

~~4.5~~

—

~~Specimen Certificate for 6.875% Non-Cumulative Preferred Stock, Series B (Previously filed as Exhibit 4.5 to Form 10-Q filed May 12, 2014).~~

~~4.5.1~~

—

~~Certificate of Designation of Terms and Conditions of 6.875% Non-Cumulative Preferred Stock, Series B (Previously filed as Exhibit 4.1 to Form 8-A filed March 25, 2014).~~

~~4.6~~

—

Specimen Certificate for 6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C (Previously filed as Exhibit 4.6 to Form 10-Q filed August 11, 2014).

4.4.1

~~4.6.1~~

—

Certificate of Designation of Terms and Conditions of 6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C (Previously filed as Exhibit 4.1 to Form 8-A filed June 20, 2014).

4.5

—

Specimen Certificate for 5.700% Non-Cumulative Preferred Stock, Series D (Previously filed as Exhibit 4.7 to Form 10-Q filed August 1, 2019).

4.5.1

—

Certificate of Designation of Terms and Conditions of 5.700% Non-Cumulative Preferred Stock, Series D (Previously filed as Exhibit 4.1 to Form 8-A filed May 13, 2019).

4.6

—

Specimen Certificate for 5.750% Non-Cumulative Preferred Stock, Series E (Previously filed as Exhibit 4.7 to Form 10-Q filed August 10, 2020).

4.6.1

—

Certificate of Designation of Terms and Conditions of 5.750% Non-Cumulative Preferred Stock, Series E (Previously filed as Exhibit 4.1 to Form 8-A filed May 20, 2020).

4.7

—

Specimen Certificate for 5.250% Non-Cumulative Preferred Stock, Series F (Previously filed as Exhibit 4.8 to Form 10-Q filed November 9, 2020).

4.7.1

—

Certificate of Designation of Terms and Conditions of 5.250% Non-Cumulative Preferred Stock, Series F (Previously filed as Exhibit 4.1 to Form 8-A filed August 20, 2020).

4.8

Specimen Certificate for 4.875% Non-Cumulative Preferred Stock, Series G (Previously filed as Exhibit 4.8 to Form 10-Q filed August 5, 2021).

4.8.1

Certificate of Designation of Terms and Conditions of 4.875% Non-Cumulative Preferred Stock, Series G (Previously filed as Exhibit 4.1 to Form 8-A filed May 27, 2021).

4.9

—

Description of the Registrant's securities that are registered under Section 12 of the Securities Exchange Act of 1934 (Previously filed as Exhibit 4.9 to Form 10-Q filed August 5, 2021).

†*

10.1

Employment Agreement dated as of October 15, 2018 between Bradford T. Nordholm and the Registrant (Previously filed as Exhibit 10.1 to Form 8-K filed October 1, 2019).

†*

—

10.1.1

First Amendment to Amended Employment Agreement dated as of September 28, 2022 between Bradford T. Nordholm and the Registrant (Previously filed as Exhibit 10.1 to Form 8-K filed October 4, 2022).

†*

10.2

Form of Time-Based Restricted Stock Units Award Agreement for grants made to executive officers on or after March 2, 2021. (Previously filed as Exhibit 10.1 to Form 8-K filed March 8, 2021).

†*

10.2.1

Form of Time-Based Restricted Stock Units Award Agreement for grants made to directors on or after March 2, 2021 (Previously filed as Exhibit 10.2 to Form 8-K filed March 8, 2021).

†*

10.2.2

Amended and Restated 2008 Omnibus Incentive Plan (Previously filed as Exhibit ~~10.1~~10.2 to Form 10-Q filed ~~May 10, 2017)~~August 9, 2018).

†*

10.2.3

~~10.1.1~~

—

~~Form of SARs Award Agreement under the 2008 Omnibus Incentive Plan for grants made prior to April 1, 2012 (Previously filed as Exhibit 10 to Form 8-K filed June 11, 2008).~~

†*

~~10.1.2~~

—

~~Form of SARs Award Agreement under the 2008 Omnibus Incentive Plan for grants made from April 1, 2012 to March 31, 2013 (Previously filed as Exhibit 10.1 to Form 8-K filed April 6, 2012).~~

†*

~~10.1.3~~

—

Form of SARs Award Agreement under the 2008 Omnibus Incentive Plan for grants made from April 1, 2013 to March 31, 2015 (Previously filed as Exhibit 10.1 to Form 8-K filed April 5, 2013).

†*

10.2.4

~~10.1.4~~

—

Form of SARs Award Agreement under the 2008 Omnibus Incentive Plan for grants made on or after April 1, 2015 (Previously filed as Exhibit 10.1 to Form 8-K filed on April 3, 2015).

†*

10.3

~~10.1.5~~

—

~~Form of Restricted Stock Agreement (Officers) under the 2008 Omnibus Incentive Plan for grants made prior to April 1, 2012 (Previously filed as Exhibit 10.1 to Form 8-K filed June 10, 2009).~~

†*

~~10.1.6~~

—

Form of Restricted Stock Agreement (Officers) under the 2008 Omnibus Incentive Plan for grants made from April 1, 2012 to March 31, 2013 (Previously filed as Exhibit 10.2 to Form 8-K filed April 6, 2012).

†*

~~10.1.7~~

—

~~Form of Restricted Stock Agreement (Directors) under the 2008 Omnibus Incentive Plan (Previously filed as Exhibit 10.3 to Form 8-K filed April 6, 2012).~~

†*

~~10.1.8~~

—

~~Form of Time-Based Restricted Stock Award Agreement for grants made to non-directors from April 1, 2013 to March 31, 2015 (Previously filed as Exhibit 10.2 to Form 8-K filed April 5, 2013).~~



*	~~Incorporated by reference to the indicated prior filing.~~
**	~~Filed with this report.~~
#	~~Portions of this exhibit have been omitted pursuant to a request for confidential treatment.~~
†	~~Management contract or compensatory plan.~~

~~219~~

†*

~~10.1.9~~

—

~~Form of Time-Based Restricted Stock Award Agreement for grants made to non-directors on or after April 1, 2015 (Previously filed as Exhibit 10.3 to Form 8-K filed on April 3, 2015).~~

†*

~~10.1.10~~

—

~~Form of Performance-Based Restricted Stock Award Agreement for grants made to non-directors from April 1, 2013 to March 31, 2015 (Previously filed as Exhibit 10.2 to Form 8-K filed April 5, 2013).~~

†*

~~10.1.11~~

—

~~Form of Performance-Based Restricted Stock Award Agreement for grants made to non-directors on or after April 1, 2015 (Previously filed as Exhibit 10.2 to Form 8-K filed on April 3, 2015).~~

†*

~~10.2~~

—

Federal Agricultural Mortgage Corporation Amended and Restated Executive Officer Severance Plan (effective January 16, 2020) (Previously filed as Exhibit 10.1 to Form 8-K filed ~~November 3, 2016)~~January 23, 2020).

†*

10.4

~~10.3~~

—

Form of Participation Agreement to the Federal Agricultural Mortgage Corporation Amended and Restated Executive Officer Severance Plan (effective January 16, 2020) (Previously filed as Exhibit 10.2 to Form 8-K filed ~~November 3, 2016)~~January 23, 2020).

†*

10.5

~~10.4~~

—

Nonqualified Deferred Compensation Plan (effective May 1, 2017) (Previously filed as Exhibit 10.2 to Form 10-Q filed May 10, 2017).

†*

10.6

~~10.5~~

—

Adoption Agreement of the Nonqualified Deferred Compensation Plan (effective May 1, 2017) (Previously filed as Exhibit 10.3 to Form 10-Q filed May 10, 2017).

†**

10.7

~~10.6~~Amended Adoption Agreement of the Nonqualified Deferred Compensation Plan, effective November 15, 2023.

†*

—

10.8

Form of Indemnification Agreement for Directors (Previously filed as Exhibit 10.1 to Form 8-K filed April 9, 2008).

†**

10.9

~~10.7~~

—

Description of compensation agreement between the Registrant and its directors, effective January 1, ~~2018.~~202 4 .

195

10.10

~~10.8~~

—

Amended and Restated Master Central Servicing Agreement between Zions First National Bank and the Registrant, dated as of May 1, 2004 (Previously filed as Exhibit 10.11.2 to Form 10-Q filed August 9, 2004).

10.10.1

~~10.8.1~~

—

Amendment No. 1 to Amended and Restated Master Central Servicing Agreement between Zions First National Bank and the Registrant, dated as of June 1, 2009 (Previously filed as Exhibit 10.11.1 to Form 10-Q filed August 10, 2009).

10.10.2

~~10.8.2~~

—

Amendment No. 2 to Amended and Restated Master Central Servicing Agreement between Zions First National Bank and the Registrant, dated as of August 25, 2010 (Previously filed as Exhibit 10.11.2 to Form 10-Q filed November 9, 2010).

10.11

~~10.9~~

—

~~Loan Closing File Review Agreement between Zions First National Bank and the Registrant, dated as of May 1, 2004 (Previously filed as Exhibit 10.12 to Form 10-Q filed November 9, 2005).~~

~~10.10~~

—

~~Sublease Agreement between Mayer Brown LLP and the Registrant, dated as of December 6, 2010 (Previously filed as Exhibit 10.43 to Form 10-K/A filed June 1, 2011).~~

~~10.11~~

—

Master Trust, Sale and Servicing Agreement between CFC Advantage, LLC, National Rural Utilities Cooperative Finance Corporation, U.S. Bank National Association, and the Registrant, dated as of October 20, 2006 (Previously filed as Exhibit 10.22 to Form 10-Q filed
~~August 9, 2010).~~

~~10.12~~

—

Registration Rights Agreement Series 2007-1 between CFC Advantage, LLC, National Rural Utilities Cooperative Finance Corporation, and the Registrant, dated as of February 15, 2007 (Previously filed as Exhibit 10.23 to Form 10-Q filed August 9, 2010).

~~10.13~~

—

Registration Rights Agreement Series 2007-2 between CFC Advantage, LLC, National Rural Utilities Cooperative Finance Corporation, and the Registrant, dated as of August 10, 2007(Previously filed as Exhibit 10.24 to Form 10-Q filed August 9, 2010).

~~10.14~~

—

Amended and Restated Note Purchase Agreement between Farmer Mac Mortgage Securities Corporation, National Rural Utilities Cooperative Finance Corporation, and the Registrant, dated as of March 24, 2011 (Previously filed as Exhibit 10.22 to Form 10-Q filed May 10, 2011).

10.11.1

~~10.14.1~~

—

Amended and Restated First Supplemental Note Purchase Agreement between Farmer Mac Mortgage Securities Corporation, National Rural Utilities Cooperative Finance Corporation, and the Registrant, dated as of January 8, 2015 (Previously filed as Exhibit 10.1 to Form 8-K filed January 13, 2015).


*
*10.11.2		~~Incorporated by reference to the indicated prior filing.~~
**		~~Filed with this report.~~
#	~~Portions of this exhibit have been omitted pursuant to a request for confidential treatment.~~
†	~~Management contract or compensatory plan.~~

~~220~~

~~10.15~~

—

~~Setoff Rights Letter~~Second Amended and Restated First Supplemental Note Purchase Agreement between Farmer Mac Mortgage Securities Corporation, National Rural Utilities Cooperative Finance ~~Corporation, Farmer Mac Mortgage Securities~~ Corporation, and the Registrant, dated as of ~~March 24, 2011~~February 26, 2018 (Previously filed as Exhibit ~~10.24~~10.1 to Form 10-Q filed May 10, ~~2011)~~2018).

10.11.3

~~10.16~~Third Amended and Restated First Supplemental Note Purchase Agreement between Farmer Mac Mortgage Securities Corporation, National Rural Utilities Cooperative Finance Corporation, and the Registrant, dated as of May 20, 2021 (Previously filed as Exhibit 10.1 to Form 8-K filed May 20, 2021).

—

10.11.4

Fourth Amended and Restated First Supplemental Note Purchase Agreement between Farmer Mac Mortgage Securities Corporation, National Rural Utilities Cooperative Finance Corporation, and the Registrant, dated as of June 15, 2022 (Previously filed as Exhibit 10.1 to Form 8-K filed June 21, 2022).

10.12

Amended and Restated Master Sale and Servicing Agreement between National Rural Utilities Cooperative Finance Corporation and the Registrant, dated as of August 12, 2011 (Previously filed as Exhibit 10.26 to Form 10-Q filed November 9, 2011).

10.12.1

~~10.17~~

—

Amendment No. 1 to Amended and Restated Master Sale and Servicing Agreement between National Rural Utilities Cooperative Finance Corporation and the Registrant, dated as of November 28, 2016 (Previously filed as Exhibit 10.17 to Form 10-K filed March 9, 2017).

10.13

~~10.18~~

—

Credit Support Agreement between National Rural Utilities Cooperative Finance Corporation and the Registrant, dated as of September 1, 2009 (Previously filed as Exhibit 10.38 to Form 10-Q filed August 9, 2010).

~~10.19~~

—

Indenture between National Rural Utilities Cooperative Finance Corporation, U.S. Bank National Association, and the Registrant, dated as of September 1, 2009 (Previously filed as Exhibit 10.39 to Form 10-Q filed August 9, 2010).

~~10.20~~

—

Master Note Purchase Agreement between Farmer Mac Mortgage Securities Corporation, National Rural Utilities Cooperative Finance Corporation, and the Registrant, dated as of July 31, 2015 (Previously filed as Exhibit 10.1 to Form 10-Q filed November 9, 2015).

~~10.21~~

Amended and Restated First Supplemental Note Purchase Agreement between Farmer Mac Mortgage Securities Corporation, National Rural Utilities Cooperative Finance Corporation, and the Registrant, dated as of March 15, 2016 (Previously filed as Exhibit 10.1 to Form 10-Q filed May 10, 2016).

~~10.22~~

—

Second Amended, Restated and Consolidated Pledge Agreement between Farmer Mac Mortgage Securities Corporation, National Rural Utilities Cooperative Finance Corporation, U.S. Bank National Association, and the Registrant, dated as of July 31, 2015 (Previously filed as Exhibit 10.3 to Form 10-Q filed November 9, 2015).

10.14

~~10.23~~

—

Long Term Standby Commitment to Purchase between National Rural Utilities Cooperative Finance Corporation and the Registrant, dated as of August 31, 2015 (Previously filed as Exhibit 10.4 to Form 10-Q filed November 9, 2015).

10.14.1

~~10.24~~

—

Amendment No. 1 to Long Term Standby Commitment to Purchase between National Rural Utilities Cooperative Finance Corporation and the Registrant, dated as of May 31, 2016 (Previously filed as Exhibit 10.1 to Form 10-Q filed August 9, 2016).

10.15

21Loan Participation Servicing Agreement between National Rural Utilities Cooperative Finance Corporation, National Cooperative Services Corporation, and the Registrant, dated as of September 26, 2019 (Previously filed as Exhibit 10 to Form 8-K filed October 9, 2019).

—

10.16

Master Non-Recourse Loan Participation Agreement between National Rural Utilities Cooperative Finance Corporation and the Registrant, dated as of February 3, 2020 (Previously filed as Exhibit 10.1 to Form 8-K filed February 7, 2020).

10.17

Loan Participation and Servicing Agreement between National Rural Utilities Cooperative Finance Corporation and the Registrant, dated as of February 3, 2020 (Previously filed as Exhibit 10.2 to Form 8-K filed February 7, 2020).

10.18

Master Non-Recourse Loan Participation Agreement between CoBank, ACB, CoBank, FCB, and the Registrant, dated as of February 13, 2019 (Previously filed as Exhibit 10.1 to Form 8-K filed February 20, 2019).

10.19

Loan Participation and Servicing Agreement between CoBank, ACB and the Registrant, dated as of February 13, 2019 (Previously filed as Exhibit 10.2 to Form 8-K filed February 20, 2019).

List of the Registrant's subsidiaries (Previously filed as Exhibit 21 to Form 10-K filed March 8, 2018).

31.1

~~31.1~~

—

Certification of Registrant's principal executive officer relating to the Registrant's ~~Annual~~Quarterly Report on Form ~~10-K~~10-K for the year ended ~~December~~D ecember 31 ~~2017,~~, 2023, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

~~31.2~~

—

Certification of Registrant's principal financial officer relating to the Registrant's ~~Annual~~Quarterly Report on Form ~~10-K~~10-K for the year ended December 31 ~~2017,~~, 2023, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

196

—

Certification of Registrant's principal executive officer and principal financial officer relating to the Registrant's ~~Annual~~Quarterly Report on Form ~~10-K~~10-K for the year ended December 31 ~~2017,~~, 2023, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

97.1

—

Policy relating to recovery of erroneously awarded compensation, as required by applicable listing standards adopted pursuant to 17 CFR 240.10D-1

101.INS

—

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

—

Inline XBRL Taxonomy Extension Schema

101.CAL

—

Inline XBRL Taxonomy Extension Calculation

101.DEF

—

Inline XBRL Taxonomy Extension Definition

101.LAB

—

Inline XBRL Taxonomy Extension Label

101.PRE

—

Inline XBRL Taxonomy Extension Presentation

104

—

Cover Page Inline Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document included as Exhibit 101


*
*	Incorporated by reference to the indicated prior filing.
**		Filed with this report.
#		Portions of this exhibit have been omitted pursuant to a request for confidential treatment.
†		Management contract or compensatory plan.

Item 16.Form 10-K Summary

~~221~~


~~Item 16.~~	~~Form 10-K Summary~~

None.

197

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FEDERAL AGRICULTURAL MORTGAGE CORPORATION


/s/ Bradford T. Nordholm				February 23, 2024
By:		Bradford T. Nordholm
~~/s/ Lowell L. Junkins~~			~~March 8, 2018~~
~~By:~~	~~Lowell L. Junkins~~	~~Date~~
	~~Acting~~ President and
	Chief Executive Officer
		(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name

Title

Date

~~Name~~

~~Title~~

~~Date~~

/s/ Lowell L. Junkins

~~Chairman~~Chair of the Board ~~and Director~~of Directors

~~March 8, 2018~~February 23, 2024

Lowell L. Junkins

/s/ ~~Lowell L. Junkins~~Bradford T. Nordholm

~~Acting~~ President and Chief Executive Officer

~~March 8, 2018~~February 23, 2024

~~Lowell L. Junkins~~Bradford T. Nordholm

~~Officer~~

(Principal Executive Officer)

/s/ ~~R. Dale Lynch~~Aparna Ramesh

Executive Vice President – Chief Financial

~~March 8, 2018~~February 23, 2024

~~R. Dale Lynch~~Aparna Ramesh

Officer and Treasurer

(Principal Financial Officer)

/s/ Gregory N. Ramsey

~~Controller~~Vice President – Chief Accounting Officer

~~March 8, 2018~~February 23, 2024

Gregory N. Ramsey

(Principal Accounting Officer)

198

~~222~~

Name

Title

Date

~~Name~~

~~Title~~

~~Date~~

/s/ Dennis L. Brack

Director

~~March 8, 2018~~February 23, 2024

Dennis L. Brack

/s/ Chester J. Culver

Director

~~March 8, 2018~~February 23, 2024

Chester J. Culver

/s/ Richard H. Davidson

Director

~~Director~~

~~March 8, 2018~~February 23, 2024

Richard H. Davidson

/s/ Everett M. Dobrinski

Director

February 23, 2024

Everett M. Dobrinski

/s/ James R. Engebretsen

Director

~~March 8, 2018~~February 23, 2024

James R. Engebretsen

~~/s/ Dennis A. Everson~~

~~Director~~

~~March 8, 2018~~

~~Dennis A. Everson~~

/s/ Sara L. Faivre

Director

~~March 8, 2018~~February 23, 2024

Sara L. Faivre

/s/ Amy H. Gales

Director

February 23, 2024

Amy H. Gales

~~/s/ Douglas A. Felton~~

~~Director~~

~~March 8, 2018~~

~~Douglas A. Felton~~

/s/ ~~Douglas L. Flory~~

~~Director~~

~~March 8, 2018~~

~~Douglas L. Flory~~

~~/s/ Thomas W. Hill~~

~~Director~~

~~March 8, 2018~~

~~Thomas W. Hill~~

~~/s/~~ Mitchell A. Johnson

Director

~~Director~~

~~March 8, 2018~~February 23, 2024

Mitchell A. Johnson

/s/ Eric T. McKissack

Director

February 23, 2024

Eric T. McKissack

/s/ Robert G. Sexton

Director

February 23, 2024

Robert G. Sexton

/s/ Charles A. Stones

Director

February 23, 2024

Charles A. Stones

/s/ ~~Clark B. Maxwell~~Roy H. Tiarks

Director

~~March 8, 2018~~February 23, 2024

~~Clark B. Maxwell~~Roy H. Tiarks

/s/ Todd P. Ware

Director

February 23, 2024

Todd P. Ware

/s/ LaJuana S. Wilcher

Director

February 23, 2024

~~/s/ Bruce J. Sherrick~~LaJuana S. Wilcher

~~Director~~

~~March 8, 2018~~

~~Bruce J. Sherrick~~

~~/s/ Myles J. Watts~~

~~Director~~

~~March 8, 2018~~

~~Myles J. Watts~~

~~/s/ Douglas E. Wilhelm~~

~~Director~~

~~March 8, 2018~~

~~Douglas E. Wilhelm~~

~~223~~199



Federally chartered instrumentality of the United States		52-1578738
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

1999 K Street, N.W., 4th Floor, ~~Washington, D.C.~~
Washington,	DC	20006
(Address of principal executive offices)		(Zip code)



Large accelerated filer	o☒		Accelerated filer		x☐
Non-accelerated filer		o☐		Smaller reporting company		o☐
				Emerging growth company		☐



	Forward-Looking Statements			4
PART I					6
Item 1.			Business		6
			General		6
			Farmer Mac's ~~Lines~~Line of Business		138
			~~Farm & Ranch~~Competition		1417
			~~USDA Guarantees~~Capital and Corporate Governance		2518
			~~Rural Utilities~~Human Capital		2720
			~~Institutional Credit~~Available Information		3123
			Funding of Guarantee and LTSPC Obligations		3423
			Financing		3524
			Debt Issuance		3524
			Equity Issuance		3624
			Farmer Mac's Authority to Borrow from the U.S. Treasury		3928
			Government Regulation of Farmer Mac		4029
			General		4029
			Office of Secondary Market Oversight		4029
			Capital Standards		4130
			Liquidity Requirements		32
Item ~~1A.~~1 A .			Risk Factors		4434
Item ~~1B.~~1 B .			Unresolved Staff Comments		6148
~~Item 2.~~I tem 1C.			~~Properties~~C ybersecurity		6149
Item 3.2.			~~Legal Proceedings~~Properties		6151
Item 3.			Legal Proceedings		52
Item 4.			Mine Safety Disclosures		6152
PART II						625 1
Item 5.			Market for Registrant's Common Equity, Related ~~Stockholders~~Stockholder Matters, and Issuer Purchases of Equity Securities		6253
Item 6.			~~Selected Financial Data~~[Reserved]		655 3
Item 7.			Management's Discussion and Analysis of Financial Condition and Results of Operations		6656
			Overview		6656
			Critical Accounting ~~Policies and~~ Estimates		7261
			Use of Non-GAAP Measures		7562
			Results of Operations		7964
			Outlook		~~101~~83
			Balance Sheet Review		~~104~~89
			Risk Management		~~104~~89
			Liquidity and Capital Resources		~~124~~105
			~~Regulatory~~Other Matters		~~128~~109
			~~Other Matters~~		~~129~~
	Supplemental Information	~~129~~109
Item ~~7A.~~7 A .			Quantitative and Qualitative Disclosures About Market Risk		~~134~~113
Item 8.			Financial Statements		~~134~~114
			~~Management's Report on Internal Controls Over Financial Reporting~~		~~134~~
	~~Report of Independent Registered Public Accounting Firm~~	~~135~~


	Consolidated Statements of Operations	~~138~~119
	Consolidated Statements of Comprehensive Income	~~139~~120
	Consolidated Statements of Equity	~~140~~121
	Consolidated Statements of Cash Flows	~~141~~122
	Notes to Consolidated Financial Statements	~~142~~123
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~216~~192
Item ~~9A.~~9 A .	Controls and Procedures	~~216~~193
Item ~~9B.~~9 B .	Other Information	~~217~~193
~~PART III~~Item 9 C .	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	~~217~~193
PART III		194
Item 10.	Directors, Executive Officers, and Corporate Governance	~~217~~194
Item 11.	Executive Compensation	~~217~~194
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~217~~194
Item 13.	Certain Relationships and Related Transactions and Director Independence	~~217~~194
Item 14.	Principal Accountant Fees and Services	~~217~~194
PART IV			~~218~~194
Item 15.	Exhibits ~~and Financial Statement Schedules~~	~~218~~194
Item 16.	Form 10-K Summary	~~222~~197
Signatures		~~222~~197



Capital Conservation Buffer	Payout Percentage
(percentage of risk-weighted assets)		(percentage of four quarters' accumulated core earnings)
greater than 2.5%		No limitation
greater than 1.875% to and including 2.5%		60%
greater than 1.25% to and including 1.875%		40%
greater than 0.625% to and including 1.25%		20%
equal to or less than 0.625%		0% (no payout permitted)


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



FEDERAL AGRICULTURAL MORTGAGE CORPORATION
(Exact name of registrant as specified in its charter)


(202)			872-7700

~~(202) 872-7700~~
(Registrant's telephone number, including area code)


Auditor Firm ID: 238			Auditor Name: PricewaterhouseCoopers LLP			Auditor Location: Washington DC, USA



	Sales Prices
	Class A Stock				Class C Stock
	High		Low		High		Low
	(per share)
2018
First quarter (through March 1, 2018)	$	79.30	$	72.22	$	82.74	$	74.55
2017
Fourth quarter	$	76.34	$	66.62	$	80.27	$	67.02
Third quarter	75.00		62.47		74.77		63.26
Second quarter	65.86		51.55		68.08		53.94
First quarter	69.45		54.51		61.95		55.05
2016
Fourth quarter	$	62.00	$	43.48	$	58.72	$	39.72
Third quarter	52.38		36.60		42.32		33.95
Second quarter	41.61		34.99		43.50		32.62
First quarter	38.00		26.09		40.00		26.36



	As of December 31,
Summary of Financial Condition:	2017			2016			2015			2014			2013
	(dollars in thousands)
Cash and cash equivalents	$	302,022		$	265,229		$	1,210,084		$	1,363,387		$	749,313
Investment securities	2,260,437			2,515,851			2,775,516			1,939,188			2,484,075
Farmer Mac Guaranteed Securities	7,598,188			6,002,916			5,426,621			5,453,901			5,091,600
USDA Securities	2,131,365			2,029,613			1,917,319			1,771,532			1,612,013
Loans, net	5,266,786			4,507,435			3,962,044			3,520,075			3,193,248
Total assets	17,792,274			15,606,020			15,540,354			14,287,821			13,361,780
Notes payable:
Due within one year	8,089,826			8,440,123			9,111,461			7,353,953			7,338,781
Due after one year	7,432,790			5,222,977			4,967,036			5,471,186			5,001,169
Total liabilities	17,084,128			14,962,373			14,986,634			13,505,992			12,787,311
Stockholders' equity	708,146			643,425			553,517			545,801			332,616
Non-controlling interest⁽¹⁾	—			222			203			236,028			241,853
Capital:
Statutory minimum capital requirement	$	520,271		$	466,498		$	462,070		$	421,328		$	398,531
Core capital	657,061			609,667			564,536			766,296			590,671
Capital in excess of minimum capital requirement	136,790			143,169			102,466			344,968			192,140
Selected Financial Ratios:
Return on average assets⁽²⁾	0.43		%	0.41		%	0.32		%	0.28		%	0.55		%
Return on average common equity⁽³⁾	16.64		%	16.78		%	13.83		%	12.42		%	28.17		%
Average equity to assets⁽⁴⁾	4.05		%	3.84		%	3.69		%	3.18		%	2.63		%
Average total equity to assets⁽⁵⁾	4.05		%	3.84		%	4.48		%	4.91		%	4.49		%
Tier 1 capital ratio⁽⁶⁾	12.6		%	12.7		%	10.5		%	11.3		%	6.7		%



	For the Year Ended December 31,
Summary of Operations:	2017			2016			2015			2014			2013
	(in thousands, except per share amounts)
Interest Income:
Net interest income after provision for loan losses	$	155,939		$	139,209		$	123,419		$	71,308		$	109,934
Non-interest income:
Guarantee and commitment fees	14,114			14,868			14,077			14,694			15,627
Gains on financial derivatives, hedging activities and trading assets	729			3,771			3,751			16,983			30,945
Gains/(losses) on asset sales and debt repurchases	89			(9		)	9			(238		)	3,575
Gains/(losses) on the sale of real estate owned	1,748			15			(1		)	137			1,236
Other income	832			1,823			2,305			1,714			3,057
Non-interest income	17,512			20,468			20,141			33,290			54,440
Non-interest expense	42,765			40,320			35,482			31,492			33,107
Income before income taxes	130,686			119,357			108,078			73,106			131,267
Income tax expense	46,369			42,057			34,239			2,824			33,752
Net income	84,317			77,300			73,839			70,282			97,515
Less: Net loss/(income) attributable to non-controlling interest	165			34			(5,139		)	(22,192		)	(22,187		)
Preferred stock dividends	(13,182		)	(13,182		)	(13,182		)	(9,839		)	(3,495		)
Loss on retirement of preferred stock	—			—			(8,147		)	—			—
Net income attributable to common stockholders	$	71,300		$	64,152		$	47,371		$	38,251		$	71,833
Allowance for Losses Activity:
Provision for/(release of) losses	$	1,758		$	1,002		$	208		$	(3,166	)	$	448
Net charge-offs	327			130			3,772			41			4,004
Ending balance	8,866			7,435			6,563			10,127			13,334
Earnings Per Common Share and Dividends:
Basic earnings per common share	$	6.73		$	6.12		$	4.33		$	3.50		$	6.64
Diluted earnings per common share	6.60			5.97			4.19			3.37			6.41
Common stock dividends per common share	1.44			1.04			0.64			0.56			0.48



	2017 vs 2016								2016 vs 2015
	Increase/(Decrease) Due to								Increase/(Decrease) Due to
	Rate			Volume			Total		Rate		Volume		Total
	(in thousands)
Income from interest-earning assets:
Cash and investments	$	15,303		$	(7,759	)	$	7,544	$	12,576	$	1,128	$	13,704
Loans, Farmer Mac Guaranteed Securities and USDA Securities	27,222			41,304			68,526		7,403		13,661		21,064
Total	42,525			33,545			76,070		19,979		14,789		34,768
Expense from other interest-bearing liabilities	53,847			6,784			60,631		12,535		8,990		21,525
Change in net interest income prior to consolidation of certain trusts⁽¹⁾	$	(11,322	)	$	26,761		$	15,439	$	7,444	$	5,799	$	13,243



	Allowance for Loan Losses			Reserve for Losses			Total Allowance for Losses
	(in thousands)
Balance as of January 1, 2015	$	5,864		$	4,263		$	10,127
Provision for/(release of) losses	2,388			(2,180		)	208
Charge-offs	(3,772		)	—			(3,772		)
Balance as of December 31, 2015	$	4,480		$	2,083		$	6,563
Provision for/(release of) losses	1,065			(63		)	$	1,002
Charge-offs	(130		)	—			(130		)
Balance as of December 31, 2016	$	5,415		$	2,020		$	7,435
Provision for losses	1,708			50			1,758
Charge-offs	(327		)	—			(327		)
Balance as of December 31, 2017	$	6,796		$	2,070		$	8,866



Schedule of Principal Amortization as of December 31, 2017
	Loans Held		Loans Underlying Off-Balance Sheet Farmer Mac Guaranteed Securities and LTSPCs		USDA Securities and Farmer Mac Guaranteed USDA Securities		Total
	(in thousands)
2018	241,162		749,219		107,123		1,097,504
2019	234,966		218,473		104,035		557,474
2020	236,896		203,286		104,456		544,638
2021	245,362		216,539		106,408		568,309
2022	214,049		192,039		108,615		514,703
Thereafter	4,102,589		1,895,639		1,821,577		7,819,805
Total	$	5,275,024	$	3,475,195	$	2,352,214	$	11,102,433



	As of December 31, 2017		As of December 31, 2016
	(in thousands)
Allowance for loan losses	$	6,796	$	5,415
Reserve for losses:
Off-balance sheet Farm & Ranch Guaranteed Securities	257		226
LTSPCs	1,813		1,794
Total allowance for losses	$	8,866	$	7,435



	Farm & Ranch Line of Business		90-Day Delinquencies		Percentage
	(dollars in thousands)
As of:
December 31, 2017	$	6,867,586	$	48,444	0.71	%
September 30, 2017	6,557,030		66,381		1.01	%
June 30, 2017	6,426,518		41,901		0.65	%
March 31, 2017	6,240,467		50,807		0.81	%
December 31, 2016	6,139,304		21,038		0.34	%
September 30, 2016	6,004,728		18,377		0.31	%
June 30, 2016	5,830,533		22,093		0.38	%
March 31, 2016	5,713,789		34,680		0.61	%
December 31, 2015	5,725,299		32,136		0.56	%



Farm & Ranch 90-Day Delinquencies as of December 31, 2017
	Distribution of Farm & Ranch Line of Business		Farm & Ranch Line of Business		90-Day Delinquencies⁽¹⁾			Percentage
	(dollars in thousands)
By year of origination:
2007 and prior	11	%	$	752,033	$	7,860		1.05	%
2008	2	%	172,998		550			0.32	%
2009	2	%	106,427		482			0.45	%
2010	3	%	174,235		1,136			0.65	%
2011	4	%	249,293		767			0.31	%
2012	9	%	589,919		—			—	%
2013	12	%	850,314		1,578			0.19	%
2014	10	%	658,571		20,055		₍₂₎	3.05	%
2015	13	%	871,938		10,604		₍₃₎	1.22	%
2016	16	%	1,174,003		3,920			0.33	%
2017	18	%	1,267,855		1,492			0.12	%
Total	100	%	$	6,867,586	$	48,444		0.71	%
By geographic region⁽⁴⁾:
Northwest	11	%	$	740,991	$	4,222		0.57	%
Southwest	30	%	2,093,213		4,933			0.24	%
Mid-North	33	%	2,244,094		5,799			0.26	%
Mid-South	13	%	908,603		13,187			1.45	%
Northeast	4	%	296,264		1,433			0.48	%
Southeast	9	%	584,421		18,870			3.23	%
Total	100	%	$	6,867,586	$	48,444		0.71	%
By commodity/collateral type:
Crops	53	%	$	3,657,945	$	21,853		0.60	%
Permanent plantings	20	%	1,367,563		18,833			1.38	%
Livestock	20	%	1,334,958		3,835			0.29	%
Part-time farm	6	%	433,628		3,923			0.90	%
Ag. Storage and Processing	1	%	58,761		—			—	%
Other	—		14,731		—			—	%
Total	100	%	$	6,867,586	$	48,444		0.71	%
By original loan-to-value ratio⁽⁵⁾:
0.00% to 40.00%	19	%	$	1,322,422	$	5,206		0.39	%
40.01% to 50.00%	25	%	1,733,671		11,294			0.65	%
50.01% to 60.00%	35	%	2,385,605		28,822			1.21	%
60.01% to 70.00%	17	%	1,150,914		2,240			0.19	%
70.01% to 80.00%⁽⁶⁾	4	%	248,799		882			0.35	%
80.01% to 90.00%⁽⁶⁾	—	%	26,175		—			—	%
Total	100	%	$	6,867,586	$	48,444		0.71	%
By size of borrower exposure⁽⁷⁾:
Less than $1,000,000	35	%	$	2,379,596	$	10,536		0.44	%
$1,000,000 to $4,999,999	38	%	2,627,617		12,808			0.49	%
$5,000,000 to $9,999,999	13	%	867,574		9,815		₍₃₎	1.13	%
$10,000,000 to $24,999,999	8	%	584,896		15,285		₍₂₎	2.61	%
$25,000,000 to $50,000,000	6	%	407,903		—			—	%
Total	100	%	$	6,867,586	$	48,444		0.71	%



	As of December 31, 2017
	Farm & Ranch Concentrations by Commodity Type within Geographic Region
	Crops			Permanent Plantings			Livestock			Part-time Farm			Ag. Storage and Processing			Other			Total
	(dollars in thousands)
By geographic region⁽¹⁾:
Northwest	$	356,732		$	97,501		$	223,429		$	63,079		$	—		$	250		$	740,991
	5.2		%	1.4		%	3.3		%	0.9		%	—		%	—		%	10.8		%
Southwest	516,489			1,050,625			422,784			73,711			20,272			9,332			2,093,213
	7.5		%	15.3		%	6.1		%	1.1		%	0.3		%	0.1		%	30.4		%
Mid-North	1,903,087			17,291			191,197			111,368			17,958			3,193			2,244,094
	27.7		%	0.3		%	2.8		%	1.6		%	0.3		%	—		%	32.7		%
Mid-South	557,559			19,869			270,266			54,138			6,259			512			908,603
	8.1		%	0.3		%	3.9		%	0.8		%	0.1		%	—		%	13.2		%
Northeast	135,718			24,145			56,141			75,229			5,031			—			296,264
	2.0		%	0.3		%	0.9		%	1.1		%	0.1		%	—		%	4.4		%
Southeast	188,360			158,132			171,141			56,103			9,241			1,444			584,421
	2.7		%	2.3		%	2.5		%	0.8		%	0.1		%	0.1		%	8.5		%
Total	$	3,657,945		$	1,367,563		$	1,334,958		$	433,628		$	58,761		$	14,731		$	6,867,586
	53.2		%	19.9		%	19.5		%	6.3		%	0.9		%	0.2		%	100.0		%



	As of December 31, 2017
	Farm & Ranch Cumulative Credit Losses by Origination Year and Commodity Type
	Crops			Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Total
	(in thousands)
By year of origination:
2007 and Prior	$	703		$	9,184	$	3,803	$	1,206	$	10,198	$	25,094
2008	2,626			—		—		123		621		3,370
2009	98			218		69		—		1,193		1,578
2010	—			—		5		—		—		5
2011	—			—		—		—		3,661		3,661
2012	—			—		—		—		—		—
2013	—			—		—		—		—		—
2014	—			—		—		—		—		—
2015	(540		)	—		—		—		—		(540		)
2016	—			—		—		—		—		—
2017	—			—		—		—		—		—
Total	$	2,887		$	9,402	$	3,877	$	1,329	$	15,673	$	33,168


	Percentage Change in MVE from Base Case
Interest Rate Scenario	As of December 31, 2023		As of December 31, 2022
+100 basis points	(3.6)	%	(3.7)	%
-100 basis points	2.9	%	2.7	%


	Percentage Change in NES from Base Case
Interest Rate Scenario	As of December 31, 2023		As of December 31, 2022
+100 basis points	—	%	0.4	%
-100 basis points	0.8	%	(0.6)	%


	One Year or Less		One to Three Years		Three to Five Years		Over Five Years		Total
	(in thousands)
Discount notes(1)	$	1,768,539	$	—	$	—	$	—	$	1,768,539
Medium-term notes(1)	6,353,538		9,354,027		5,666,797		3,495,980		24,870,342
Interest payments on fixed rate medium-term notes(2)	553,339		710,935		369,933		310,559		1,944,766
Interest payments on floating rate medium-term notes(3)	137,144		149,402		70,673		32,457		389,676


⁽¹⁾	Future events, including additional issuance of discount notes and medium-term notes and refinancing of those notes, could cause actual payments to differ significantly from these amounts. For more information regarding discount notes and medium-term notes, see Note 7 to the consolidated financial statements.


⁽²⁾	Interest payments on callable medium-term notes are calculated based on contractual maturity. Future calls of these notes could cause actual interest payments to differ significantly from the amounts presented.


⁽³⁾	Calculated using the effective interest rates as of December 31, 2017. As a result, these amounts do not reflect the effects of changes in the contractual interest rates effective on future interest rate reset dates.


⁽⁴⁾	Includes amounts due under non-cancellable operating leases for office space and office equipment. See Note 12 to the consolidated financial statements for more information regarding Farmer Mac's minimum lease payments for office space.


⁽¹⁾	~~As of both December 31, 2017 and 2016, includes $20.0 million related to one-year loan purchase commitments on which Farmer Mac receives a nominal unused commitment fee.~~


Outstanding Balance of LTSPCs and Off-Balance Sheet Farmer Mac Guaranteed Securities
	As of December 31,
	2023		2022
	(in thousands)
Agricultural Finance:
Corporate AgFinance:
Unfunded loan commitments	$	145,377	$	77,654
Farm & Ranch:
LTSPCs and unfunded loan commitments	2,999,943		2,822,309
Farmer Mac Guaranteed Securities	452,602		500,953
Total Agricultural Finance obligations	3,597,922		3,400,916
Rural Infrastructure:
Rural Utilities:
LTSPCs and unfunded loan commitments	487,778		512,592
Farmer Mac Guaranteed Securities	—		1,169
Renewable Energy:
Unfunded loan commitments	47,235		10,600
Total Rural Infrastructure obligations	535,013		524,361
Total off-balance sheet	$	4,132,935	$	3,925,277


New Business Volume
	Agricultural Finance				Rural Infrastructure Finance
	Farm & Ranch		Corporate AgFinance		Rural Utilities		Renewable Energy		Total
	(in thousands)
For the quarter ended:
December 31, 2023	$	1,282,045	$	188,272	$	434,511	$	225,986	$	2,130,814
September 30, 2023	1,384,273		275,932		607,979		17,390		2,285,574
June 30, 2023	1,574,169		218,136		294,292		71,611		2,158,208
March 31, 2023	750,040		203,211		683,232		89,747		1,726,230
December 31, 2022	1,114,255		165,395		140,222		43,737		1,463,609
September 30, 2022	1,927,209		169,932		547,117		61,653		2,705,911
June 30, 2022	1,418,397		107,916		326,899		35,307		1,888,519
March 31, 2022	2,452,539		103,353		377,965		41,636		2,975,493
December 31, 2021	2,075,540		411,838		631,338		12,594		3,131,310

For the year ended:
December 31, 2023	$	4,990,527	$	885,551	$	2,020,014	$	404,734	$	8,300,826
December 31, 2022	6,912,400		546,596		1,392,203		182,333		9,033,532



New Business Volume
	Farm & Ranch				USDA Guarantees		Rural Utilities				Institutional Credit
	Loans		LTSPCs		USDA Securities		Loans		LTSPCs		AgVantage		Total
	(in thousands)
For the quarter ended:
December 31, 2017	$	204,917	$	282,809	$	100,024	$	15,000	$	—	$	234,753	$	837,503
September 30, 2017	298,274		102,774		131,298		70,000		—		290,995		893,341
June 30, 2017	312,217		55,899		169,261		25,000		—		1,296,757		1,859,134
March 31, 2017	314,137		113,261		131,101		27,341		—		561,407		1,147,247
December 31, 2016	243,692		117,265		129,343		10,800		20,000		247,154		768,254
September 30, 2016	282,690		155,657		119,201		20,000		—		528,234		1,105,782
June 30, 2016	241,093		58,156		133,745		10,000		421,404		396,245		1,260,643
March 31, 2016	198,548		68,017		98,968		9,691		—		927,219		1,302,443
December 31, 2015	245,252		185,919		72,442		46,082		—		14,391		564,086

For the year ended:
December 31, 2017	1,129,545		554,743		531,684		137,341		—		2,383,912		4,737,225
December 31, 2016	966,023		399,095		481,257		50,491		441,404		2,098,852		4,437,122



Core Earnings by Quarter Ended
	December 2017			September 2017			June 2017			March 2017			December 2016			September 2016			June 2016			March 2016			December 2015
	(in thousands)
Revenues:
Net effective spread	$	37,467		$	35,976		$	35,334		$	32,526		$	31,448		$	31,681		$	30,503		$	29,440		$	29,455
Guarantee and commitment fees	5,157			4,935			4,942			5,316			5,158			4,533			4,810			4,669			4,730
Other	69			274			107			485			545			713			466			346			267
Total revenues	42,693			41,185			40,383			38,327			37,151			36,927			35,779			34,455			34,452

Credit related (income)/expense:
Provision for/(release of) losses	464			384			466			444			512			(31		)	458			63			(49		)
REO operating expenses	—			—			23			—			—			—			—			39			44
(Gains)/losses on sale of REO	(964		)	(32		)	(757		)	5			—			(15		)	—			—			—
Total credit related (income)/expense	(500		)	352			(268		)	449			512			(46		)	458			102			(5		)

Operating expenses:
Compensation and employee benefits	5,247			5,987			6,682			6,317			5,949			5,438			5,611			5,774			5,385
General and administrative	4,348			3,890			3,921			3,800			4,352			3,474			3,757			3,526			3,238
Regulatory fees	625			625			625			625			625			613			612			613			613
Total operating expenses	10,220			10,502			11,228			10,742			10,926			9,525			9,980			9,913			9,236

Net earnings	32,973			30,331			29,423			27,136			25,713			27,448			25,341			24,440			25,221
Income tax expense	11,796			10,268			10,307			8,844			9,189			9,577			8,979			8,568			8,876
Net (loss)/income attributable to non-controlling interest⁽¹⁾	—			—			(150		)	(15		)	28			(18		)	(16		)	(28		)	(60		)
Preferred stock dividends	3,296			3,295			3,296			3,295			3,296			3,295			3,296			3,295			3,296
Core earnings	$	17,881		$	16,768		$	15,970		$	15,012		$	13,200		$	14,594		$	13,082		$	12,605		$	13,109

Reconciling items:
(Losses)/gains on financial derivatives and hedging activities due to fair value changes	(264		)	2,737			2,221			4,805			17,233			1,460			(2,076		)	(2,989		)	2,743
Unrealized gains/(losses) on trading assets	60			—			(2		)	(82		)	(474		)	1,182			394			358			696
Amortization of premiums/discounts and deferred gains on assets consolidated at fair value	(129		)	(954		)	(117		)	(127		)	(40		)	(157		)	(371		)	(281		)	(263		)
Net effects of terminations or net settlements on financial derivatives and hedging activities	632			862			232			948			2,150			238			398			(608		)	(217		)
Re-measurement of net deferred tax asset due to enactment of new tax legislation	(1,365		)	—			—			—			—			—			—			—			—
Income tax effect related to reconciling items	(105		)	(926		)	(816		)	(1,941		)	(6,604		)	(953		)	579			1,232			(1,036		)
Net income attributable to common stockholders	$	16,710		$	18,487		$	17,488		$	18,615		$	25,465		$	16,364		$	12,006		$	10,317		$	15,032



												Accumulated
									Additional			Other
	Preferred Stock			Common Stock					Paid-In			Comprehensive			Retained			Non-controlling			Total
	Shares	Amount		Shares		Amount			Capital			Income/(Loss)			Earnings			Interest			Equity
	(in thousands)
Balance as of January 1, 2015	8,400	$	204,759	10,937		$	10,937		$	113,559		$	15,533		$	201,013		$	236,028		$	781,829
Net income/(loss):
Attributable to Farmer Mac	—	—		—		—			—			—			68,700			—			68,700
Attributable to non-controlling interest	—	—		—		—			—			—			—			(214		)	(214		)
Other comprehensive income, net of tax	—	—		—		—			—			(26,552		)	—			—			(26,552		)
Cash dividends:
Preferred stock	—	—		—		—			—			—			(13,182		)	—			(13,182		)
Common stock	—	—		—		—			—			—			(7,000		)	—			(7,000		)
Issuance of Class C Common Stock	—	—		112		112			1,620			—			—			—			1,732
Repurchase of Class C Common Stock	—	—		(362	)	(362		)	—			—			(10,156		)	—			(10,518		)
Stock-based compensation cost	—	—		—		—			3,269			—			—			—			3,269
Other stock-based award activity	—	—		—		—			(586		)	—			—			—			(586		)
Investment in subsidiary - non-controlling interest	—	—		—		—			—			—			—			242			242
Redemption of Farmer Mac II LLC preferred stock	—	—		—		—			—			—			(8,147		)	(235,853		)	(244,000		)
Balance as of December 31, 2015	8,400	$	204,759	10,687		$	10,687		$	117,862		$	(11,019	)	$	231,228		$	203		$	553,720
Net income/(loss):
Attributable to Farmer Mac	—	—		—		—			—			—			77,334			—			77,334
Attributable to non-controlling interest	—	—		—		—			—			—			—			(34		)	(34		)
Other comprehensive income, net of tax	—	—		—		—			—			44,777			—			—			44,777
Cash dividends:
Preferred stock	—	—		—		—			—			—			(13,182		)	—			(13,182		)
Common stock	—	—		—		—			—			—			(10,885		)	—			(10,885		)
Issuance of Class C Common Stock	—	—		159		159			534			—			—			—			693
Repurchase of Class C Common Stock	—	—		(307	)	(307		)	—			—			(8,781		)	—			(9,088		)
Stock-based compensation cost	—	—		—		—			3,343			—			—			—			3,343
Other stock-based award activity	—	—		—		—			(3,084		)	—			—			—			(3,084		)
Investment in subsidiary - non-controlling interest	—	—		—		—			—			—			—			53			53
Balance as of December 31, 2016	8,400	$	204,759	10,539		$	10,539		$	118,655		$	33,758		$	275,714		$	222		$	643,647
Net income/(loss):
Attributable to Farmer Mac	—	—		—		—			—			—			84,482			—			84,482
Attributable to non-controlling interest	—	—		—		—			—			—			—			(165		)	(165		)
Other comprehensive income, net of tax	—	—		—		—			—			8,274			—			—			8,274
Reclassification of stranded tax effects due to enactment of new tax legislation	—	—		—		—			—			9,053			(9,053		)	—			—
Cash dividends:
Preferred stock	—	—		—		—			—			—			(13,182		)	—			(13,182		)
Common stock	—	—		—		—			—			—			(15,257		)	—			(15,257		)
Issuance of Class C Common Stock	—	—		80		80			231			—			—			—			311
Stock-based compensation cost	—	—		—		—			2,701			—			—			—			2,701
Other stock-based award activity	—	—		—		—			(2,608		)	—			—			—			(2,608		)
Redemption of interest in subsidiary	—	—		—		—			—			—			—			(57		)	(57		)
Balance as of December 31, 2017	8,400	$	204,759	10,619		$	10,619		$	118,979		$	51,085		$	322,704		$	—		$	708,146


Cash paid during the period for:
Interest	582,960	269,327	198,593
Income taxes	48,000	33,800	36,300
Non-cash activity:
Loans securitized as Farmer Mac Guaranteed Securities	36,497	162,875	113,175
Loans held for investment transferred to consolidated trusts	281,027	297,713	—

Reclassification of loans held for investment to loans held for sale	—	—	301,551