SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2024

Schedule of Consolidation of Variable Interest Entities

Table 1.1


	Consolidation of Variable Interest Entities
	As of March 31, 2024
	Agricultural Finance		Treasury		Total
	(in thousands)
On-Balance Sheet:
Consolidated VIEs:
Loans held for investment in consolidated trusts, at amortized cost	$	1,409,397	$	—	$	1,409,397
Debt securities of consolidated trusts held by third parties (1)(2)	1,325,289		—		1,325,289
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Carrying value	51,906		—		51,906
Maximum exposure to loss (3)	51,616		—		51,616
Investment securities:
Carrying value (4)	—		3,735,413		3,735,413
Maximum exposure to loss (3)(4)	—		3,936,368		3,936,368
Off-Balance Sheet:
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Maximum exposure to loss (3)(5)	443,843		—		443,843

(1)Includes borrower remittances of $1.1 million. The borrower remittances had not been passed through to third-party investors as of March 31, 2024.

(2)Includes $85.1 million in unamortized discount related to structured securitization transactions.

(3)Farmer Mac uses unpaid principal balance and outstanding face amount of investment securities to represent maximum exposure to loss.

(4)Includes auction-rate certificates, government-sponsored enterprise ("GSE")-guaranteed mortgage-backed securities, and other mission related investments.

(5)The amount under the Agricultural Finance line of business relates to unconsolidated trusts where it was determined that Farmer Mac was either not the primary beneficiary due to shared power with an unrelated party or a subordinate class majority holder has the unilateral right to remove Farmer Mac as Master Servicer without cause.


	Consolidation of Variable Interest Entities
	As of December 31, 2023
	Agricultural Finance		Treasury		Total
	(in thousands)
On-Balance Sheet:
Consolidated VIEs:
Loans held for investment in consolidated trusts, at amortized cost	$	1,432,261	$	—	$	1,432,261
Debt securities of consolidated trusts held by third parties (1)(2)	1,351,069		—		1,351,069
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Carrying value	46,343		—		46,343
Maximum exposure to loss (3)	45,952		—		45,952
Investment securities:
Carrying value (4)	—		3,676,555		3,676,555
Maximum exposure to loss (3)(4)	—		3,862,006		3,862,006
Off-Balance Sheet:
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Maximum exposure to loss (3)(5)	452,602		—		452,602

(1)Includes borrower remittances of $6.0 million. The borrower remittances had not been passed through to third-party investors as of December 31, 2023.

(2)Includes $87.1 million in unamortized discount related to a structured securitization transaction.

(3)Farmer Mac uses unpaid principal balance and outstanding face amount of investment securities to represent maximum exposure to loss.

(4)Includes auction-rate certificates, government-sponsored enterprise ("GSE")-guaranteed mortgage-backed securities, and other mission related investments.

Schedule of Basic and Diluted EPS

The following schedule reconciles basic and diluted EPS for the three months ended March 31, 2024 and 2023:

Table 1.2


	For the Three Months Ended
	March 31, 2024					March 31, 2023
	Net Income		Weighted-Average Shares	$ per Share		Net Income		Weighted-Average Shares	$ per Share
	(in thousands, except per share amounts)
Basic EPS
Net income attributable to common stockholders	$	46,955	10,847	$	4.33	$	40,244	10,802	$	3.73
Effect of dilutive securities(1)
SARs and restricted stock units	—		122	(0.05)		—		116	(0.04)
Diluted EPS	$	46,955	10,969	$	4.28	$	40,244	10,918	$	3.69

(1)For the three months ended March 31, 2024 and 2023, SARs and restricted stock units of 49,371 and 62,709 respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because they were anti-dilutive. For the three months ended March 31, 2024 and 2023, contingent shares of unvested restricted stock units of 29,918 and 32,282 respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because performance conditions had not yet been met.

Schedule of Accumulated Other Comprehensive Income, Net of Tax

The following table presents the changes in accumulated other comprehensive income ("AOCI"), net of tax, by component for the three months ended March 31, 2024 and 2023.

Table 1.3


	As of March 31, 2024								As of March 31, 2023
	Available-for-Sale Securities		Held-to-Maturity Securities		Cash Flow Hedges		Total		Available-for-Sale Securities		Held-to-Maturity Securities		Cash Flow Hedges		Total
	(in thousands)













For the Three Months Ended:
Beginning Balance	$	(68,447)	$	(8,724)	$	37,026	$	(40,145)	$	(115,561)	$	16,357	$	48,361	$	(50,843)
Other comprehensive income/(loss) before reclassifications	31,565		—		9,256		40,821		525		—		(5,452)		(4,927)
Amounts reclassified from AOCI	(4)		(500)		(4,290)		(4,794)		(5)		(618)		(3,469)		(4,092)
Net comprehensive income/(loss)	31,561		(500)		4,966		36,027		520		(618)		(8,921)		(9,019)
Ending Balance	$	(36,886)	$	(9,224)	$	41,992	$	(4,118)	$	(115,041)	$	15,739	$	39,440	$	(59,862)

Schedule of Reclassification out of Accumulated Other Comprehensive Income

The following table presents other comprehensive income activity, the impact on net income of amounts reclassified from each component of AOCI, and the related tax impact for the three months ended March 31, 2024 and 2023:

Table 1.4


	For the Three Months Ended
	March 31, 2024						March 31, 2023
	Before Tax		Provision (Benefit)		After Tax		Before Tax		Provision (Benefit)		After Tax
	(in thousands)
Other comprehensive income:
Available-for-sale-securities:
Unrealized holding gains on available-for-sale securities	$	39,957	$	8,392	$	31,565	$	664	$	139	$	525
Less reclassification adjustments included in:
Other income(1)	(5)		(1)		(4)		(6)		(1)		(5)
Total	$	39,952	$	8,391	$	31,561	$	658	$	138	$	520
Held-to-maturity securities:
Less reclassification adjustments included in:
Net interest income(2)	$	(634)	$	(134)	$	(500)	$	(782)	$	(164)	$	(618)
Total	$	(634)	$	(134)	$	(500)	$	(782)	$	(164)	$	(618)
Cash flow hedges
Unrealized gains/(losses) on cash flow hedges	$	11,717	$	2,461	$	9,256	$	(6,901)	$	(1,449)	$	(5,452)
Less reclassification adjustments included in:
Net interest income(3)	(5,431)		(1,141)		(4,290)		(4,391)		(922)		(3,469)
Total	$	6,286	$	1,320	$	4,966	$	(11,292)	$	(2,371)	$	(8,921)
Other comprehensive income/(loss)	$	45,604	$	9,577	$	36,027	$	(11,416)	$	(2,397)	$	(9,019)

(1)Represents amortization of deferred gains related to certain available-for-sale USDA Securities and Farmer Mac Guaranteed USDA Securities.

(2)Relates to the amortization of unrealized gains or losses prior to the reclassification of these securities from available-for-sale to held-to-maturity. The amortization of unrealized gains or losses reported in AOCI for held-to-maturity securities will be offset by the amortization of the premium or discount created from the transfer into held-to-maturity securities, which occurred at fair value. These unrealized gains or losses will be recorded over the remaining life of the security with no impact on future net income.

(3)Relates to the recognition of unrealized gains and losses on cash flow hedges recorded in AOCI.

Schedule of Recently Adopted Accounting Guidance

Recently Adopted Accounting Guidance


Standard	Description	Date of Adoption	Effect on Consolidated Financial Statements
ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method	The amendments in this Update permit an entity to elect to account for their tax equity investments using the proportional amortization method if certain conditions are met, regardless of the tax credit program from which the income tax credits are received.	January 1, 2024	The adoption of this Update did not have a material effect on Farmer Mac's financial position, results of operations, or cash flows.

Recently Issued Accounting Guidance, Not Yet Adopted Within Our Consolidated Financial Statements


Standard	Description	Effect on Consolidated Financial Statements
ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures	The amendments in this Update require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. This Update also requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The amendments should be applied retrospectively. Early adoption is permitted.	Farmer Mac is still assessing the effect on our annual consolidated financial statement disclosures, however, adoption will not have a material impact on Farmer Mac's financial position, results of operations, or cash flows.
ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures	The Update provides guidance on improvements to annual income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. Additionally, public entities must provide a separate disclosure for any reconciling item that meets a quantitative threshold. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The amendments should be applied on a prospective basis. Early adoption is permitted.	Farmer Mac is still assessing the impact of the new accounting standard but does not expect that adoption of the new guidance will have a material impact on Farmer Mac's financial position, results of operations, or cash flows.

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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