SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2025

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The interim unaudited consolidated financial statements of the Federal Agricultural Mortgage Corporation ("Farmer Mac") and subsidiaries have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). These interim unaudited consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the financial position and the results of operations and cash flows of Farmer Mac and subsidiaries for the interim periods presented. Certain information and footnote disclosures normally included in the annual consolidated financial statements have been omitted as permitted by SEC rules and regulations. The December 31, 2024 consolidated balance sheet presented in this report has been derived from Farmer Mac's audited 2024 consolidated financial statements. Management believes that the disclosures are adequate to present fairly the consolidated financial statements as of the dates and for the periods presented. These interim unaudited consolidated financial statements should be read in conjunction with the 2024 consolidated financial statements of Farmer Mac and subsidiaries included in Farmer Mac's Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 21, 2025. Results for interim periods are not necessarily indicative of those that may be expected for the fiscal year.

Principles of Consolidation

The consolidated financial statements include the accounts of Farmer Mac and its two subsidiaries: (1) Farmer Mac Mortgage Securities Corporation, whose principal activities are to facilitate the purchase and issuance of Farmer Mac Guaranteed Securities; and (2) Farmer Mac II LLC, which operated substantially all of the business related to the USDA Securities included in the Agricultural Finance line of business from 2010 through 2023 and continues to hold a "run-off" portfolio of USDA Securities. The consolidated financial statements also include the accounts of Variable Interest Entities ("VIEs") in which Farmer Mac determined itself to be the primary beneficiary.

Table 1.1


	Variable Interest Entities
	As of September 30, 2025
	Agricultural Finance		Treasury		Total
	(in thousands)
On-Balance Sheet:
Consolidated VIEs:
Loans held for investment in consolidated trusts, at amortized cost	$	2,205,213	$	—	$	2,205,213
Debt securities of consolidated trusts held by third parties (1)(2)	2,089,042		—		2,089,042
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Carrying value	79,302		—		79,302
Maximum exposure to loss (3)	79,027		—		79,027
Investment securities:
Carrying value (4)	—		4,769,276		4,769,276
Maximum exposure to loss (3)(4)	—		4,959,042		4,959,042
Off-Balance Sheet:
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Maximum exposure to loss (3)(5)(6)	392,358		—		392,358

(1)Includes borrower remittances of $1.4 million. The borrower remittances had not been passed through to third-party investors as of September 30, 2025.

(2)Includes $117.5 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 Agricultural Finance amount relates to unconsolidated trusts where Farmer Mac is not the primary beneficiary, either 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.

(6)Farmer Mac presents a liability for its obligation to stand ready under its guarantee in "Guarantee and commitment obligation" on the Consolidated Balance Sheets, which was $5.1 million as of September 30, 2025. The weighted average remaining maturity of the loans underlying the guarantee was 20.9 years as of September 30, 2025.


	Variable Interest Entities
	As of December 31, 2024
	Agricultural Finance		Treasury		Total
	(in thousands)
On-Balance Sheet:
Consolidated VIEs:
Loans held for investment in consolidated trusts, at amortized cost	$	2,038,283	$	—	$	2,038,283
Debt securities of consolidated trusts held by third parties (1)(2)	1,929,628		—		1,929,628
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Carrying value	59,317		—		59,317
Maximum exposure to loss (3)	58,985		—		58,985
Investment securities:
Carrying value (4)	—		4,212,258		4,212,258
Maximum exposure to loss (3)(4)	—		4,547,397		4,547,397
Off-Balance Sheet:
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Maximum exposure to loss (3)(5)(6)	426,310		—		426,310

(1)Includes borrower remittances of $4.7 million. The borrower remittances had not been passed through to third-party investors as of December 31, 2024.

(2)Includes $113.2 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.

(6)Farmer Mac presents a liability for its obligation to stand ready under its guarantee in "Guarantee and commitment obligation" on the Consolidated Balance Sheets, which was $5.6 million as of December 31, 2024. The weighted average remaining maturity of the loans underlying the guarantee was 21.2 years as of December 31, 2024.

Earnings Per Common Share

Basic earnings per common share ("EPS") is based on the daily weighted-average number of shares of common stock outstanding. Diluted earnings per common share is based on the daily weighted-average number of shares of common stock outstanding adjusted to include all potentially dilutive stock appreciation rights ("SARs") and unvested restricted stock unit awards. The following schedule reconciles basic and diluted EPS for the three and nine months ended September 30, 2025 and 2024:

Table 1.2


	For the Three Months Ended
	September 30, 2025					September 30, 2024
	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	$	48,700	10,934	$	4.45	$	42,312	10,883	$	3.89
Effect of dilutive securities(1)
SARs and restricted stock units	—		38	(0.01)		—		83	(0.03)
Diluted EPS	$	48,700	10,972	$	4.44	$	42,312	10,966	$	3.86

(1)For the three months ended September 30, 2025 and 2024, SARs and restricted stock units of 27,160 and 15,465, 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 September 30, 2025 and 2024, contingent shares of unvested restricted stock units of 27,580 and 29,918, 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.


	For the Nine Months Ended
	September 30, 2025					September 30, 2024
	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	$	141,855	10,921	$	12.99	$	129,580	10,869	$	11.93
Effect of dilutive securities(1)
SARs and restricted stock units	—		52	(0.06)		—		99	(0.11)
Diluted EPS	$	141,855	10,973	$	12.93	$	129,580	10,968	$	11.82

(1)For the nine months ended September 30, 2025 and 2024, SARs and restricted stock units of 53,955 and 36,033, respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because they were anti-dilutive. For the nine months ended September 30, 2025 and 2024, contingent shares of unvested restricted stock units of 28,865 and 29,918, 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.

Comprehensive Income

Comprehensive income represents all changes in stockholders' equity except those resulting from investments by or distributions to stockholders, and is comprised of net income and unrealized gains and losses on available-for-sale securities, certain held-to-maturity securities transferred from the available-for-sale classification, and cash flow hedges, net of related taxes.

The following table presents the changes in accumulated other comprehensive income ("AOCI"), net of tax, by component for the three and nine months ended September 30, 2025 and 2024.

Table 1.3


	As of September 30, 2025								As of September 30, 2024
	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	$	(32,113)	$	(9,240)	$	23,688	$	(17,665)	$	(41,062)	$	(8,972)	$	40,893	$	(9,141)
Other comprehensive income/(loss) before reclassifications	14,912		—		309		15,221		20,820		—		(9,663)		11,157
Amounts reclassified from AOCI	(2)		(147)		(2,838)		(2,987)		(3)		(350)		(4,217)		(4,570)
Net comprehensive income/(loss)	14,910		(147)		(2,529)		12,234		20,817		(350)		(13,880)		6,587
Ending Balance	$	(17,203)	$	(9,387)	$	21,159	$	(5,431)	$	(20,245)	$	(9,322)	$	27,013	$	(2,554)

For the Nine Months Ended:
Beginning Balance	$	(37,575)	$	(9,226)	$	34,654	$	(12,147)	$	(68,447)	$	(8,724)	$	37,026	$	(40,145)
Other comprehensive income/(loss) before reclassifications	20,379		—		(4,676)		15,703		49,042		—		2,755		51,797
Amounts reclassified from AOCI	(7)		(161)		(8,819)		(8,987)		(840)		(598)		(12,768)		(14,206)
Net comprehensive income/(loss)	20,372		(161)		(13,495)		6,716		48,202		(598)		(10,013)		37,591
Ending Balance	$	(17,203)	$	(9,387)	$	21,159	$	(5,431)	$	(20,245)	$	(9,322)	$	27,013	$	(2,554)

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 and nine months ended September 30, 2025 and 2024:

Table 1.4


	For the Three Months Ended
	September 30, 2025						September 30, 2024
	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	$	18,876	$	3,964	$	14,912	$	26,354	$	5,534	$	20,820
Less reclassification adjustments included in:
Other income(1)	(2)		—		(2)		(4)		(1)		(3)
Total	$	18,874	$	3,964	$	14,910	$	26,350	$	5,533	$	20,817
Held-to-maturity securities:
Less reclassification adjustments included in:
Net interest income(2)	$	(186)	$	(39)	$	(147)	$	(443)	$	(93)	$	(350)
Total	$	(186)	$	(39)	$	(147)	$	(443)	$	(93)	$	(350)
Cash flow hedges
Unrealized gains/(losses) on cash flow hedges	$	391	$	82	$	309	$	(12,232)	$	(2,569)	$	(9,663)
Less reclassification adjustments included in:
Net interest income(3)	(3,593)		(755)		(2,838)		(5,337)		(1,120)		(4,217)
Total	$	(3,202)	$	(673)	$	(2,529)	$	(17,569)	$	(3,689)	$	(13,880)
Other comprehensive income	$	15,486	$	3,252	$	12,234	$	8,338	$	1,751	$	6,587

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

(2)Represents amortization of unrealized gain/loss reported in AOCI prior to the reclassification of certain securities from available-for-sale to held-to-maturity, which occurred at fair value. The unrealized gain/loss will be amortized over the securities' remaining life with no impact on future net income.

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


	For the Nine Months Ended
	September 30, 2025						September 30, 2024
	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	$	25,797	$	5,418	$	20,379	$	62,079	$	13,037	$	49,042
Less reclassification adjustments included in:
Gains on sale of available-for-sale investment securities(1)	—		—		—		(1,052)		(221)		(831)
Other income(2)	(8)		(1)		(7)		(12)		(3)		(9)
Total	$	25,789	$	5,417	$	20,372	$	61,015	$	12,813	$	48,202
Held-to-maturity securities:
Less reclassification adjustments included in:
Net interest income(3)	$	(204)	$	(43)	$	(161)	$	(757)	$	(159)	$	(598)
Total	$	(204)	$	(43)	$	(161)	$	(757)	$	(159)	$	(598)
Cash flow hedges
Unrealized (losses)/gains on cash flow hedges	$	(5,920)	$	(1,244)	$	(4,676)	$	3,488	$	733	$	2,755
Less reclassification adjustments included in:
Net interest income(4)	(11,163)		(2,344)		(8,819)		(16,163)		(3,395)		(12,768)
Total	$	(17,083)	$	(3,588)	$	(13,495)	$	(12,675)	$	(2,662)	$	(10,013)
Other comprehensive income	$	8,502	$	1,786	$	6,716	$	47,583	$	9,992	$	37,591

(1)Represents unrealized gains and losses on sales of available-for-sale securities.

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

(3)Represents amortization of unrealized gain/loss reported in AOCI prior to the reclassification of certain securities from available-for-sale to held-to-maturity, which occurred at fair value. The unrealized gain/loss will be amortized over the securities' remaining life with no impact on future net income.

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

New Accounting Standards

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


Standard	Description	Effect on Consolidated Financial Statements
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 either a prospective or retrospective 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.
ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses	In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption 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.
ASU 2025-06, Intangibles - Goodwill and Other - Internal-use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software	The Update amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. It removes all references to "development stages" and establishes new criteria to be met for the entity to begin capitalizing software costs. New guidance is then given for how to evaluate whether the probable-to-complete recognition threshold has been met. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption 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.

Reclassifications

Certain reclassifications of prior period information were made to conform to the current period presentation. The reclassifications of prior period information were not material to the consolidated financial statements.