
3.	RELATED PARTY TRANSACTIONS

Farmer Mac considers an entity to be a related party if (1) the entity holds at least five percent of a class of Farmer Mac voting common stock or (2) the institution has an affiliation with a Farmer Mac director and conducts material business with Farmer Mac. 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 statutory charter also provides that Class A stockholders elect five members of Farmer Mac's 15-member board of directors and that Class B stockholders elect five members of the board of directors. Additionally, in order to participate in the Farmer Mac I program, a financial institution must own a requisite amount of the Corporation's common stock, based on the size and type of institution. As a result of these requirements, Farmer Mac conducts business with related parties in the normal course of Farmer Mac's business. All related party transactions were conducted with terms and conditions comparable to those available to any other program participant not related to Farmer Mac.

Zions First National Bank:

The following transactions occurred between Farmer Mac and Zions First National Bank or its affiliates ("Zions"), which is the largest holder of Farmer Mac Class A voting common stock and a major holder of Class C non-voting common stock during 2012, 2011, and 2010:



	For the Year Ended December 31,
	2012		2011		2010
	(in thousands)
Unpaid Principal Balance:
Purchases:
Loans	$	168,826	$	125,088	$	176,288
USDA-guaranteed portions	14,415		5,218		5,775
Sales of Farmer Mac Guaranteed Securities	5,327		—		5,695

The purchases of loans from Zions under the Farm & Ranch line of business represented approximately 29.6 percent, 25.2 percent, and 46.1 percent of Farm & Ranch loan purchase volume for the years ended December 31, 2012, 2011, and 2010, respectively, and 8.8 percent, 4.5 percent, and 11.4 percent, respectively, of total Farm & Ranch purchases. The purchases of USDA-guaranteed portions from Zions under the USDA Guarantees line of business represented approximately 3.0 percent of that program's purchases for the year ended December 31, 2012 and 1.3 percent for the years ended December 31, 2011 and 2010. Zions represented 4.7 percent of Farmer Mac's outstanding book of business at December 31, 2012 and 2011.

Farmer Mac or Zions received the applicable amounts shown below with respect to transactions between the two parties in 2012, 2011, and 2010:



	For the Year Ended December 31,
	2012		2011		2010
	(in thousands)
Guarantee fees received by Farmer Mac	$	633	$	940	$	1,210
Servicing fees retained by Zions	1,980		1,870		1,678

Farmer Mac and Zions were parties to interest rate swap contracts having an aggregate outstanding notional amount of approximately $49.3 million and $72.7 million as of December 31, 2012 and 2011, respectively. As of December 31, 2012 and 2011, Farmer Mac had net interest payable to Zions under those contracts of approximately $0.5 million and $1.0 million, respectively. Zions acted as dealer with respect to approximately $37.0 million and $220.9 million par value of Farmer Mac discount notes during 2011 and 2010, respectively, and none in 2012. The related commissions Farmer Mac paid to Zions for these services were immaterial.

AgFirst Farm Credit Bank:

Farmer Mac has a related party relationship with AgFirst Farm Credit Bank ("AgFirst"), resulting from AgFirst being a holder of approximately 16.8 percent of Farmer Mac Class B voting common stock.

AgFirst entered into $16.8 million, $8.6 million, and $116.2 million of LTSPC transactions in 2012, 2011, and 2010, respectively, and the aggregate balance of LTSPCs outstanding as of December 31, 2012, 2011, and 2010 was $186.5 million, $225.0 million, and $387.9 million, respectively. Farmer Mac received from AgFirst $0.8 million, $1.0 million, and $1.5 million in commitment fees in 2012, 2011, and 2010, respectively, and had $0.1 million of commitment fees receivable as of December 31, 2012 and 2011.

AgFirst owns certain securities backed by rural housing loans for which Farmer Mac is the second-loss guarantor for the last ten percent. As of December 31, 2012, 2011, and 2010, the outstanding balance of those securities owned by AgFirst was $168.1 million, $231.4 million, and $299.0 million, respectively. Farmer Mac received guarantee fees of $0.5 million in 2012 and $0.4 million in 2011 and 2010, with respect to those securities.

Servicing fees retained by AgFirst for its work as a Farmer Mac central servicer and guarantee fees Farmer Mac earned on Farmer Mac I Guaranteed Securities held by AgFirst were immaterial in 2012, 2011, and 2010.

AgStar Financial Services, ACA:

Farmer Mac had a related party relationship with AgStar Financial Services, ACA ("AgStar") during 2010 resulting from a former member of Farmer Mac's board of directors being the President and Chief Executive Officer of AgStar. Effective in June 2010, AgStar was no longer a related party because the President and Chief Executive Officer of AgStar was no longer a member of Farmer Mac's board of directors. Amounts, where presented for 2010, represent activity for the entire year.

In 2010, AgStar retained $1.4 million in servicing fees for its work as a Farmer Mac central servicer. Farmer Mac purchased from AgStar $0.1 million of defaulted loans pursuant to the terms of an LTSPC agreement in 2010, and sold Farmer Mac I Guaranteed Securities to AgStar in the amount of $2.9 million. Those sales did not result in a gain or loss to Farmer Mac.

During 2010, AgStar entered into $30.3 million of new LTSPCs. Farmer Mac received commitment fees of $1.1 million for the year ended December 31, 2010. During 2010, no existing LTSPCs were converted to Farmer Mac I Guaranteed Securities. The outstanding principal balance of previously converted securities as of December 31, 2009 was $449.2 million. Farmer Mac received $1.7 million in guarantee fees on those securities during 2010.

The National Rural Utilities Cooperative Financial Corporation:

Farmer Mac considers the National Rural Utilities Cooperative Financial Corporation ("CFC") a related party due to its ownership of approximately 7.9 percent of Class A voting common stock. The following transactions occurred between Farmer Mac and CFC during 2012, 2011, and 2010:



Farmer Mac Loan Purchases and Guarantees
	For the Year Ended December 31,
	2012		2011		2010
	(in thousands)
Rural Utilities:
Loans	$	166,117	$	203,789	$	313,028
On-balance sheet Farmer Mac Guaranteed Securities	383,406		—		650,000
Off-balance sheet Farmer Mac Guaranteed Securities	—		2,796		2,924
Total purchases and guarantees	$	549,523	$	206,585	$	965,952

Those transactions with CFC represented 100 percent of Farmer Mac's loan purchase and guarantee volume under the Rural Utilities program for 2012, 2011, and 2010 and represented 18.6 percent, 6.1 percent, and 32.5 percent of total purchases for 2012, 2011, and 2010, respectively. Of Farmer Mac's total outstanding book of business at December 31, 2012 and 2011, CFC represented 18.0 percent and 19.7 percent, respectively. As of December 31, 2012 and for the year then ended, Farmer Mac had guarantee fees receivable of $0.7 million from CFC and earned guarantee fees of $4.4 million. As of December 31, 2011 and for the year then ended, Farmer Mac had guarantee fees receivable of $1.1 million from CFC and earned guarantee fees of $5.4 million. As of December 31, 2010 and for the year then ended, Farmer Mac had guarantee fees receivable of $1.2 million from CFC and earned guarantee fees of $6.0 million.

Farmer Mac also had interest receivable of $5.7 million and $8.2 million as of December 31, 2012 and 2011, respectively, and earned interest income of $28.0 million, $30.9 million, and $32.7 million during 2012, 2011, and 2010, respectively, related to its AgVantage transactions with CFC.

Farm Credit Bank of Texas:

Farmer Mac has a related party relationship with Farm Credit Bank of Texas resulting from the bank being a holder of approximately 7.7 percent of Farmer Mac Class B voting common stock. During 2012 and 2011, Farmer Mac did not enter into any new LTSPCs with Farm Credit Bank of Texas. During 2010, Farm Credit Bank of Texas entered into $26.4 million of new LTSPCs. Farmer Mac received from Farm Credit Bank of Texas commitment fees of $0.3 million, $0.3 million, and $1.7 million, respectively, for the years ended December 31, 2012, 2011, and 2010. Commitment fees receivable were immaterial at December 31, 2012 and 2011. The aggregate amount of LTSPCs outstanding as of December 31, 2012 and 2011 was $75.1 million and $96.7 million, respectively. In 2012, 2011, and 2010, Farm Credit Bank of Texas retained $0.6 million, $0.8 million, and $0.9 million, respectively, in servicing fees for its work as a Farmer Mac central servicer.

Farm Credit West:

Farmer Mac had a related party relationship with Farm Credit West, ACA during 2012, 2011, and 2010 resulting from a member of Farmer Mac's board of directors being the Executive Vice President of Farm Credit West. Effective in June 2012, Farm Credit West was no longer a related party because the Executive Vice President of Farm Credit West was no longer a member of Farmer Mac's board of directors. Amounts, where presented for 2012, represent activity for the entire year.

During 2012, 2011, and 2010, Farm Credit West entered into $8.1 million, $2.1 million, and $0.5 million, respectively, of new LTSPCs. Farmer Mac received from Farm Credit West commitment fees of $0.3 million for each of the years ended December 31, 2012, 2011, and 2010. Commitment fees receivable were immaterial at December 31, 2012 and 2011. During 2003 and 2006, Farm Credit West, ACA converted $722.3 million and $129.0 million, respectively, of existing LTSPCs to Farmer Mac I Guaranteed Securities. The aggregate amount of LTSPCs outstanding as of December 31, 2012 and 2011 was $95.4 million and $98.3 million, respectively. The outstanding principal balance of the converted securities as of December 31, 2012 and 2011 was $420.9 million and $498.1 million, respectively. Farmer Mac understands that the current owner of some of those Farmer Mac Guaranteed Securities is CoBank, FCB. Farmer Mac received $1.9 million, $2.3 million, and $2.6 million in guarantee fees on those securities during 2012, 2011, and 2010, respectively. In 2012, 2011, and 2010, Farm Credit West retained $0.9 million, $1.0 million, and $1.9 million, respectively, in servicing fees for its work as a Farmer Mac central servicer.

Other Related Party Transactions:

Farmer Mac purchased $37.1 million, $29.7 million, and $27.0 million in loans from First Dakota Bank in 2012, 2011, and 2010, respectively, and $4.4 million, $10.6 million, and $4.6 million in USDA-guaranteed securities from Bath State Bank in 2012, 2011, and 2010, respectively. Farmer Mac received immaterial guarantee fees from First Dakota Bank in the years ended December 31, 2012 and 2011, compared to $0.2 million in the year ended December 31, 2010. Farmer Mac received immaterial guarantee fees from Bath State Bank in the years ended December 31, 2012 and 2011, compared to $0.1 million for the year ended December 31, 2010. AgGeorgia Farm Credit, ACA ("AgGeorgia") is a related party for 2012. Farmer Mac entered into $51.5 million of new LTSPCs with AgGeorgia and received $0.1 million of commitment fees during 2012. These institutions had a related party relationship with Farmer Mac resulting from a member of Farmer Mac's board of directors being affiliated with the entity in some respect.

Farmer Mac owned $78.5 million par value of preferred stock and $70.0 million of subordinated debt issued by CoBank as of December 31, 2012 and 2011, respectively. Farmer Mac has a related party relationship with CoBank because CoBank is a major holder of Farmer Mac Class B voting common stock.