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LOANS

6 Months Ended

Jun. 30, 2024

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 June 30, 2024 and December 31, 2023, Farmer Mac had no loans held for sale.

During second quarter 2024, Farmer Mac sold a portion of a Corporate AgFinance agricultural storage and processing loan at a loss of $1.1 million to reduce the overall exposure to the borrower. Farmer Mac sold

$7.0 million of the overall $14.4 million loan leaving a remaining exposure of $7.4 million as of June 30, 2024.

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 June 30, 2024 and December 31, 2023:

Table 5.1


	As of June 30, 2024						As of December 31, 2023
	Unsecuritized		In Consolidated Trusts		Total		Unsecuritized		In Consolidated Trusts		Total
	(in thousands)
Agricultural Finance loans
Farm & Ranch	$	5,138,819	$	1,761,355	$	6,900,174	$	5,133,450	$	1,432,261	$	6,565,711
Corporate AgFinance	1,286,167		—		1,286,167		1,259,723		—		1,259,723
Total Agricultural Finance loans	6,424,986		1,761,355		8,186,341		6,393,173		1,432,261		7,825,434
Rural Infrastructure Finance loans	3,979,238		—		3,979,238		3,534,763		—		3,534,763
Total unpaid principal balance(1)	10,404,224		1,761,355		12,165,579		9,927,936		1,432,261		11,360,197
Unamortized premiums, discounts, fair value hedge basis adjustment, and other cost basis adjustments	(362,571)		—		(362,571)		(304,817)		—		(304,817)
Total loans	10,041,653		1,761,355		11,803,008		9,623,119		1,432,261		11,055,380
Allowance for losses	(15,891)		(609)		(16,500)		(15,588)		(443)		(16,031)
Total loans, net of allowance	$	10,025,762	$	1,760,746	$	11,786,508	$	9,607,531	$	1,431,818	$	11,039,349

(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 June 30, 2024 and December 31, 2023:

Table 5.2


	June 30, 2024		December 31, 2023
	Allowance for Losses		Allowance for Losses
	(in thousands)
Loans:
Agricultural Finance loans
Farm & Ranch	$	4,676	$	3,936
Corporate AgFinance	4,014		2,948
Total Agricultural Finance loans	8,690		6,884
Rural Infrastructure Finance loans	7,810		9,147
Total	$	16,500	$	16,031

The following is a summary of the changes in the allowance for losses for the three and six months ended June 30, 2024 and 2023:

Table 5.3



	June 30, 2024								June 30, 2023
	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	$	4,535	$	2,569	$	7,104	$	7,184	$	3,933	$	7,039	$	10,972	$	4,701
Provision for losses	242		5,387		5,629		626		2		328		330		745
Charge-offs	(101)		(3,942)		(4,043)		—		—		—		—		—
Ending Balance	$	4,676	$	4,014	$	8,690	$	7,810	$	3,935	$	7,367	$	11,302	$	5,446

For the Six Months Ended
Beginning Balance	$	3,936	$	2,948	$	6,884	$	9,147	$	4,044	$	2,731	$	6,775	$	8,314
Provision for/(release of) losses	841		5,008		5,849		(1,337)		(109)		4,636		4,527		(2,868)
Charge-offs	(101)		(3,942)		(4,043)		—		—		—		—		—
Ending Balance	$	4,676	$	4,014	$	8,690	$	7,810	$	3,935	$	7,367	$	11,302	$	5,446

(1)As of June 30, 2024 and 2023, the allowance for losses for Agricultural Finance Farm & Ranch loans includes $1.2 million and $1.1 million allowance for collateral dependent assets secured by agricultural real estate, respectively.

(2)As of June 30, 2024 and 2023, the allowance for losses for Agricultural Finance Corporate AgFinance loans includes $0.0 million and $4.6 million allowance for collateral dependent assets secured by agricultural real estate, respectively.

(3)As of both June 30, 2024 and 2023, the allowance for losses for Rural Infrastructure Finance loans includes no allowance for collateral dependent assets.

The $0.6 million net provision to the allowance for the Rural Infrastructure Finance portfolio during the quarter ended June 30, 2024 was primarily attributable to renewable energy loans that extended their pre-construction phase, which has higher expected loss assumptions than their operating phase. The $5.6 million net provision to the allowance for the Agricultural Finance mortgage loan portfolio during the quarter ended June 30, 2024 was primarily attributable to a permanent planting loan that is in bankruptcy and of which $3.9 million was deemed uncollectible. Accordingly, a charge-off in the amount of $3.9 million was recorded in connection with that loan. The remaining provision during the quarter was attributable to increased loan volume.

The $1.3 million net release from the allowance for the Rural Infrastructure Finance portfolio during the six months ended June 30, 2024 was primarily attributable to a single telecommunications loan that completed a restructuring during first quarter, which resulted in an improved collateral position and a paydown of approximately 15% of its previously unpaid principal balance. The $5.8 million net provision to the allowance for the Agricultural Finance mortgage loan portfolio during the six months ended June 30, 2024 was primarily attributable to the permanent planting loan mentioned above and increased loan volume.

The $0.7 million net provision to the allowance for the Rural Infrastructure Finance portfolio during the

quarter ended June 30, 2023 was primarily attributable to increased telecommunications loan volume. The

$0.3 million net provision to the allowance for the Agricultural Finance mortgage loan portfolio during the

quarter ended June 30, 2023 was primarily attributable to increased storage and processing loan volume.

The $2.9 million net release from the allowance for the Rural Infrastructure Finance portfolio during the

six months ended June 30, 2023 was primarily attributable to an updated estimate of expected losses based

on newly available loss-given-default industry data. The $4.5 million net provision to the allowance for

the Agricultural Finance mortgage loan portfolio during the six months ended June 30, 2023 was primarily

attributable to declining valuation of a single agricultural storage and processing loan, due to its ongoing

bankruptcy proceedings, and an updated estimate of expected losses based on additional availability of

loss-given-default industry data.

The following table presents the unpaid principal balances by delinquency status of Farmer Mac's loans and non-performing assets as of June 30, 2024 and December 31, 2023:

Table 5.4


	As of June 30, 2024
	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	$	6,770,778	$	21,101	$	6,711	$	19,767	$	47,579	$	81,817	$	6,900,174
Corporate AgFinance	1,271,132		—		—		—		—		15,035		1,286,167
Total Agricultural Finance loans	8,041,910		21,101		6,711		19,767		47,579		96,852		8,186,341
Rural Infrastructure Finance loans	3,979,238		—		—		—		—		—		3,979,238
Total	$	12,021,148	$	21,101	$	6,711	$	19,767	$	47,579	$	96,852	$	12,165,579

(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 (single-class) 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 $26.2 million of nonaccrual loans for which there was no associated allowance. During the three and six months ended June 30, 2024, Farmer Mac received $1.2 million and $1.7 million, in interest on nonaccrual loans, respectively.


	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 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 (single-class) by third parties 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, 2023, Farmer Mac received $2.6 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 June 30, 2024 and December 31, 2023, by year of origination:

Table 5.5


	As of June 30, 2024
	Year of Origination:
	2024		2023		2022		2021		2020		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Agricultural Finance - Farm & Ranch loans(1):
Internally Assigned Risk Rating:
Acceptable	$	492,566	$	487,709	$	1,117,947	$	1,597,313	$	1,066,209	$	1,323,782	$	369,423	$	6,454,949
Special mention(2)	30,336		97,476		32,482		28,695		14,252		31,330		6,010		240,581
Substandard(3)	—		21,686		32,285		20,273		34,754		77,176		18,470		204,644
Total	$	522,902	$	606,871	$	1,182,714	$	1,646,281	$	1,115,215	$	1,432,288	$	393,903	$	6,900,174

For the Three Months Ended June 30, 2024:
Current period charge-offs	$	—	$	—	$	—	$	101	$	—	$	—	$	—	$	101

For the Six Months Ended June 30, 2024:
Current period charge-offs	$	—	$	—	$	—	$	101	$	—	$	—	$	—	$	101

(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 June 30, 2024
	Year of Origination:
	2024		2023		2022		2021		2020		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Agricultural Finance - Corporate AgFinance(1):
Internally Assigned Risk Rating:
Acceptable	$	72,344	$	158,535	$	76,550	$	245,625	$	95,662	$	211,201	$	237,897	$	1,097,814
Special mention(2)	—		44,623		—		14,990		76,367		13,490		23,848		173,318
Substandard(3)	—		—		7,530		—		—		—		7,505		15,035
Total	$	72,344	$	203,158	$	84,080	$	260,615	$	172,029	$	224,691	$	269,250	$	1,286,167

For the Three Months Ended June 30, 2024:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	3,942	$	3,942

For the Six Months Ended June 30, 2024:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	3,942	$	3,942

(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 June 30, 2024
	Year of Origination:
	2024		2023		2022		2021		2020		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Rural Infrastructure Finance loans(1):
Internally Assigned Risk Rating:
Acceptable	$	441,378	$	547,120	$	649,907	$	188,592	$	570,283	$	1,272,743	$	274,551	$	3,944,574
Special mention(2)	—		—		34,664		—		—		—		—		34,664
Substandard(3)	—		—		—		—		—		—		—		—
Total	$	441,378	$	547,120	$	684,571	$	188,592	$	570,283	$	1,272,743	$	274,551	$	3,979,238

For the Three Months Ended June 30, 2024:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

For the Six Months Ended June 30, 2024:
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)
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 Three Months Ended June 30, 2023:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

For the Six Months Ended June 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, 2023
	Year of Origination:
	2023		2022		2021		2020		2019		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Agricultural Finance - Corporate AgFinance loans(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 Three Months Ended June 30, 2023:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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

For the Six Months Ended June 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.