XML 23 R13.htm IDEA: XBRL DOCUMENT

Loans

9 Months Ended

Sep. 30, 2023

Farmer Mac classifies loans as either held for investment or held for sale. Loans held for investment are recorded at the unpaid principal balance, net of unamortized premium or discount and other cost basis adjustments. Loans held for sale are reported at the lower of cost or fair value determined on a pooled

basis. As of both September 30, 2023 and December 31, 2022, Farmer Mac had no loans held for sale.

Under the Agricultural Finance line of business, Farmer Mac has two segments – Farm & Ranch and Corporate AgFinance. The segments are characterized by similarities in risk attributes and the manner in which Farmer Mac monitors and assesses credit risk.

The following table includes loans held for investment and displays the composition of the loan balances as of September 30, 2023 and December 31, 2022:

Table 5.1


	As of September 30, 2023						As of December 31, 2022
	Unsecuritized		In Consolidated Trusts		Total		Unsecuritized		In Consolidated Trusts		Total
	(in thousands)
Agricultural Finance loans
Farm & Ranch	$	4,987,818	$	1,422,854	$	6,410,672	$	5,150,750	$	1,211,576	$	6,362,326
Corporate AgFinance	1,223,777		—		1,223,777		1,166,253		—		1,166,253
Total Agricultural Finance loans	6,211,595		1,422,854		7,634,449		6,317,003		1,211,576		7,528,579
Rural Infrastructure Finance loans	3,342,713		—		3,342,713		3,021,266		—		3,021,266
Total unpaid principal balance(1)	9,554,308		1,422,854		10,977,162		9,338,269		1,211,576		10,549,845
Unamortized premiums, discounts, fair value hedge basis adjustment, and other cost basis adjustments	(423,375)		—		(423,375)		(329,290)		—		(329,290)
Total loans	9,130,933		1,422,854		10,553,787		9,008,979		1,211,576		10,220,555
Allowance for losses	(16,162)		(452)		(16,614)		(14,629)		(460)		(15,089)
Total loans, net of allowance	$	9,114,771	$	1,422,402	$	10,537,173	$	8,994,350	$	1,211,116	$	10,205,466

(1)Unpaid principal balance is the basis of presentation in disclosures of outstanding balances for Farmer Mac's lines of business.

Allowance for Losses

The following table is a summary, by asset type, of the allowance for losses as of September 30, 2023 and December 31, 2022:

Table 5.2


	September 30, 2023		December 31, 2022
	Allowance for Losses		Allowance for Losses
	(in thousands)
Loans:
Agricultural Finance loans
Farm & Ranch	$	3,910	$	4,044
Corporate AgFinance	3,678		2,731
Total Agricultural Finance Loans	7,588		6,775
Rural Infrastructure Finance loans	9,026		8,314
Total	$	16,614	$	15,089

The following is a summary of the changes in the allowance for losses for the three and nine months ended September 30, 2023 and 2022:

Table 5.3



	September 30, 2023								September 30, 2022
	Agricultural Finance loans						Rural Infrastructure Finance loans(3)		Agricultural Finance loans						Rural Infrastructure Finance loans(3)
	Farm & Ranch(1)		Corporate AgFinance(2)		Total				Farm & Ranch(1)		Corporate AgFinance(2)		Total
	(in thousands)
For the Three Months Ended
Beginning Balance	$	3,935	$	7,367	$	11,302	$	5,446	$	2,265	$	1,750	$	4,015	$	8,388
(Release of)/provision for losses	(25)		(3,689)		(3,714)		3,580		(153)		334		181		418
Charge-offs	—		—		—		—		—		—		—		—
Ending Balance	$	3,910	$	3,678	$	7,588	$	9,026	$	2,112	$	2,084	$	4,196	$	8,806

For the Nine Months Ended
Beginning Balance	$	4,044	$	2,731	$	6,775	$	8,314	$	2,882	$	560	$	3,442	$	10,599
(Release of)/provision for losses	(134)		947		813		712		(686)		1,524		838		(1,793)
Charge-offs	—		—		—		—		(84)		—		(84)		—
Ending Balance	$	3,910	$	3,678	$	7,588	$	9,026	$	2,112	$	2,084	$	4,196	$	8,806

(1)As of September 30, 2023 and 2022, allowance for losses for Agricultural Finance Farm & Ranch loans includes $1.1 million and no allowance for collateral dependent assets secured by agricultural real estate, respectively.

(2)As of September 30, 2023 and 2022, allowance for losses for Agricultural Finance Corporate AgFinance loans includes $0.0 million and $1.7 million allowance for collateral dependent assets secured by agricultural real estate, respectively.

(3)As of both September 30, 2023 and 2022, allowance for losses for Rural Infrastructure Finance loans includes no allowance for collateral dependent assets.

The $3.6 million net provision to the allowance for the Rural Infrastructure Finance portfolio during the quarter ended September 30, 2023 was primarily attributable to a single telecommunications loan that was downgraded to substandard during the quarter. The $3.7 million net release from the allowance for the Agricultural Finance mortgage loan portfolio during the quarter ended September 30, 2023 was primarily attributable to the full payoff of a single collateral dependent storage and processing loan.

The $0.7 million net provision to the allowance for the Rural Infrastructure Finance portfolio during the nine months ended September 30, 2023 was primarily attributable to a single telecommunications loan that was downgraded to substandard during the most recent quarter. The $0.8 million net provision to the allowance for the Agricultural Finance mortgage loan portfolio during the nine months ended September 30, 2023 was primarily attributable to increased loan volume and certain risk rating downgrades.

The net provision to the allowance for Rural Infrastructure Finance loan losses of $0.4 million recorded

during third quarter 2022 was primarily attributable to net new loan volume. The $0.2 million net

provision to the allowance for the Agricultural Finance mortgage loan portfolio during third quarter 2022

was primarily attributable to the deterioration of a single agricultural storage and processing loan.

The $1.8 million net release from the allowance for the Rural Infrastructure Finance portfolio for the nine

months ended September 30, 2022 was primarily attributable to improvements in forecasts of future

economic conditions, and a first quarter risk rating upgrade on a single loan. The risk rating upgrade on

that loan reflected that borrower's successful securitization of its large payable that arose during the arctic

freeze that struck Texas in February 2021. The $0.8 million net provision to the allowance for the

Agricultural Finance mortgage loan portfolio for the nine months ended September 30, 2022 was

primarily attributable to a risk rating downgrade on a single agricultural storage and processing loan.

The following table presents the unpaid principal balances by delinquency status of Farmer Mac's loans and non-performing assets as of September 30, 2023 and December 31, 2022:

Table 5.4


	As of September 30, 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	$	6,319,094	$	15,652	$	5,321	$	6,739	$	27,712	$	63,866	$	6,410,672
Corporate AgFinance	1,223,777		—		—		—		—		—		1,223,777
Total Agricultural Finance loans	7,542,871		15,652		5,321		6,739		27,712		63,866		7,634,449
Rural Infrastructure Finance loans	3,342,713		—		—		—		—		—		3,342,713
Total	$	10,885,584	$	15,652	$	5,321	$	6,739	$	27,712	$	63,866	$	10,977,162

(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)Includes loans in consolidated trusts with beneficial interests owned 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 court-approved bankruptcy plan.

(4)Includes $23.8 million of nonaccrual loans for which there was no associated allowance. During the three and nine months ended September 30, 2023, Farmer Mac received $0.4 million and $1.9 million in interest on nonaccrual loans, respectively.


	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 basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.

(2)Includes loans in consolidated trusts with beneficial interests owned by third parties that are 90 days or more past due.

(4)Includes $22.0 million of nonaccrual loans for which there was no associated allowance. During the year ended December 31, 2022, Farmer Mac received $5.6 million in interest on nonaccrual loans.

Credit Quality Indicators

The following tables present credit quality indicators related to Agricultural Finance mortgage loans and Rural Infrastructure Finance loans held as of September 30, 2023 and December 31, 2022, by year of origination:

Table 5.5


	As of September 30, 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	$	346,745	$	1,143,457	$	1,633,550	$	1,129,203	$	317,213	$	1,077,958	$	379,009	$	6,027,135
Special mention(2)	49,039		48,891		61,030		12,530		19,164		29,464		13,430		233,548
Substandard(3)	520		20,900		7,514		21,626		23,690		64,942		10,797		149,989
Total	$	396,304	$	1,213,248	$	1,702,094	$	1,163,359	$	360,067	$	1,172,364	$	403,236	$	6,410,672


For the Three Months Ended September 30, 2023:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—



For the Nine Months Ended September 30, 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 September 30, 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	$	180,030	$	98,524	$	262,572	$	123,685	$	99,696	$	113,758	$	240,977	$	1,119,242
Special mention(2)	—		14,625		15,632		50,856		20,347		1,021		2,054		104,535
Substandard(3)	—		—		—		—		—		—		—		—
Total	$	180,030	$	113,149	$	278,204	$	174,541	$	120,043	$	114,779	$	243,031	$	1,223,777


For the Three Months Ended September 30, 2023:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

For the Nine Months Ended September 30, 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 September 30, 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	$	450,241	$	694,635	$	189,385	$	598,689	$	711,794	$	610,062	$	58,413	$	3,313,219
Special mention(2)	—		—		—		—		—		—		—		—
Substandard(3)	—		29,494		—		—		—		—		—		29,494
Total	$	450,241	$	724,129	$	189,385	$	598,689	$	711,794	$	610,062	$	58,413	$	3,342,713

For the Three Months Ended September 30, 2023:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—



For the Nine Months Ended September 30, 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, 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 Three Months Ended September 30, 2022:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—



For the Nine Months Ended September 30, 2022:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	(84)	$	—	$	(84)

(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, 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 Three Months Ended September 30, 2022:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—



For the Nine Months Ended September 30, 2022:
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, 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 Three Months Ended September 30, 2022:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—



For the Nine Months Ended September 30, 2022:
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.