Core Insights - Farmer Mac has completed a $308.1 million securitization of agricultural mortgage loans, marking its fourth transaction in the FARM series since 2021 [1] - The transaction, FARM 2024-1, consists of 443 agricultural mortgage loans with an aggregate outstanding principal balance of approximately $308.1 million [1] - The deal includes a $285.0 million senior tranche guaranteed by Farmer Mac and a $23.1 million unguaranteed subordinate tranche, with the senior tranche offering notes in three classes to provide diverse investment options [1] Market Demand and Investor Engagement - There was more than three times the demand for this offering, indicating strong institutional investor interest and market appetite for agricultural assets [2] - The successful expansion of the investor base and introduction of new classes of senior notes were aimed at addressing the cashflow demands of capital markets [2] Company Overview - Farmer Mac operates as a Government Sponsored Enterprise, enhancing access to credit for American agriculture and rural infrastructure [3] - The company provides innovative financial products that enable lenders to offer flexible financing to farmers, ranchers, agribusinesses, and rural infrastructure providers [3] - Farmer Mac's advantages include long-term financing, low cost of funds, low overhead costs, and high operational efficiency [3]

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Financial Data and Key Metrics Changes - In 2023, the company achieved a 28% growth in net effective spread to $327 million and a 38% growth in core earnings to $171 million, alongside a 10% growth in outstanding business volume to $28.5 billion [7][19][25] - The quarterly common stock dividend was increased by 27% to $1.40 per share, marking the 13th consecutive year of dividend increases [8][25] Business Line Data and Key Metrics Changes - The rural infrastructure line of business grew by $1.4 billion or 21% year-over-year to $8 billion, driven by new AgVantage facilities and growth in renewable energy and telecommunications portfolios [9] - The agricultural finance line of business increased by $1.2 billion or 6% year-over-year to $20.5 billion, primarily due to the acquisition of mortgage servicing rights and loan purchase growth [10] Market Data and Key Metrics Changes - The company provided $8.3 billion in liquidity and lending capacity to lenders serving rural America, reflecting a net year-over-year outstanding business volume growth of over $2.5 billion [9] - The telecommunications portfolio grew nearly 60% year-over-year, while the renewable energy segment more than doubled in size during the year [11] Company Strategy and Development Direction - The company aims to diversify its loan portfolio and serve more clearly defined market segments, which has proven beneficial through changing market cycles [9] - There is a focus on strategic talent acquisition in renewable energy and telecommunications to build expertise and capacity as market opportunities arise [11][16] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the increase in Farm & Ranch loan purchases in 2024, despite expectations of declining farm incomes due to elevated input costs and receding commodity prices [12][66] - The company is well-positioned to navigate ongoing market uncertainties and aims to be a reliable source of capital for stakeholders [15][29] Other Important Information - Operating expenses increased by 19% year-over-year due to headcount growth and technology investments, yet the efficiency ratio remained below the target of 30% at 27% [22][23] - The company maintained a strong credit profile with 90-day delinquencies at $35 million, reflecting a decrease both sequentially and year-over-year [24] Q&A Session Summary Question: What were the drivers of the margin in renewable energy and utilities? - Management indicated that improved pricing strategies and a growing reputation in the market contributed to the margin improvements in these segments [31][32] Question: What is the outlook for generating volumes from other farm credit system banks? - The company is actively engaging with various banks and associations within the farm credit system, expecting to find new business opportunities in the coming years [43][45] Question: What is the outlook for loan growth in the Farm & Ranch segment? - Management expressed optimism for enhanced growth in 2024 compared to 2023, driven by market dynamics and increased borrowing activity [70] Question: How does the company manage prepayment risk across different segments? - The company noted that prepayment risk is low across most segments, with a focus on maintaining a well-hedged balance sheet to mitigate any potential impacts [62] Question: What is the outlook for the farm economy and its impact on Farmer Mac? - Management anticipates a slight positive impact on Farmer Mac from the farm economy, despite expected declines in farm incomes, as it may stimulate additional borrowing activity [66]

Fourth Quarter 2023 Equity Investor FARMER MAC Forward-Looking Statements In addition to historical information, this presentation includes forward- NO OFFEROR SOLICITATION OF SECURITIES looking statements that reflect management’s current expectations for This presentation does not constitute an offer to sell or a solicitation of Farmer Mac’s future financial results, business prospects, and business an offer to buy any Farmer Mac security. Farmer Mac securities are developments. Forward-looking statements ...

Farmer Mac Reports 2023 Results WASHINGTON, D.C., February 23, 2024 — The Federal Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A), the nation's secondary market provider that increases the accessibility of financing for American agriculture and rural infrastructure, today announced its results for the fiscal quarter and year ended December 31, 2023. "In 2023, Farmer Mac recorded another year of remarkable success, marked by double-digit earnings growth, record net effective spread, and o ...

Financial Performance - As of December 31, 2023, Farmer Mac's total outstanding business volume was $28.5 billion, an increase from $25.9 billion in 2022, representing a growth of approximately 6.5%[34] - The Agricultural Finance line of business accounted for $20.5 billion of the total volume, up from $19.3 billion in 2022, reflecting an increase of about 6.1%[35] - The Rural Infrastructure Finance line of business reached $8.0 billion, compared to $6.6 billion in 2022, marking a growth of approximately 21.0%[35] - Farmer Mac's AgVantage Securities, a key product, had an outstanding balance of $5.8 billion as of December 31, 2023, up from $5.6 billion in 2022[35] - Farmer Mac declared dividends of $1.10 per share for each quarter in 2023, with an additional dividend of $1.40 scheduled for March 2024[111] - The quarterly dividend for Q1 2024 is $1.40 per share, representing a 27% increase from the 2023 quarterly dividend payout[222] - The increase in dividend payout was influenced by Farmer Mac's strong capital position and consistent earnings outlook[222] Capital and Liquidity - Farmer Mac's Tier 1 capital was reported at $145.2 million as of December 31, 2023, which limits cumulative direct credit exposure to any one borrower or group of related borrowers to 10%[38] - As of December 31, 2023, Farmer Mac maintained a reserve against losses of $129.6 million related to its guarantee activities[101] - Farmer Mac's risk-based capital requirement was $186.4 million, with regulatory capital of $1.5 billion exceeding this amount by approximately $1.3 billion[136] - Farmer Mac's Tier 1 capital ratio was 15.4% as of December 31, 2023, significantly above the required minimum of 7.0%[143] - Farmer Mac is required to maintain a liquidity reserve sufficient to fund at least 90 days of maturing obligations[145] - The company has a share repurchase program with a remaining authorization of up to $9.8 million, having repurchased approximately 673,000 shares at a cost of about $19.8 million since 2015[110] Risk Management - Farmer Mac's credit risk may increase due to declines in collateral values securing loans, which could adversely affect financial condition[154] - Concentrations in Farmer Mac's loan portfolio may increase exposure to credit risk, particularly in specific commodities or geographic regions[156] - Farmer Mac's contingent liabilities related to LTSPCs and guaranteed securities amounted to $4.1 billion as of December 31, 2023, representing potential exposure if all underlying loans defaulted[159] - The company has implemented methodologies to assess credit risk for Renewable Energy loans, focusing on projected debt service requirements and collateral analysis[67] - Economic stress from global events, such as geopolitical instability, may adversely affect Farmer Mac's borrowers and their ability to repay loans[149] Workforce and Culture - As of December 31, 2023, Farmer Mac employed 185 people, reflecting a net increase of 27 employees (17%) compared to year-end 2022[84] - Farmer Mac has experienced a 73% increase in geographic diversity in its workforce since early 2020, employing personnel in 27 states across the United States[85] - In 2023, Farmer Mac received a Top Workplaces USA national award and six cultural excellence awards in categories such as innovation and employee appreciation[87] - Farmer Mac's turnover rate decreased to 6.4% in 2023 from 12.3% in 2022, indicating improved employee retention despite a competitive job market[93] - The company is building talent pipelines through partnerships with academic institutions and community organizations as part of its workforce strategy[92] Cybersecurity and Operational Risks - Farmer Mac's existing cybersecurity defenses may not be sufficient to prevent unauthorized access, leading to potential financial and reputational risks[176] - The company has implemented a variety of processes and technologies to manage cybersecurity risks, including regular training for all employees and specialized training for those with elevated privileges[211] - Farmer Mac's cybersecurity program is overseen by a dedicated subcommittee of the board, which meets monthly to discuss cybersecurity risks and initiatives[208] - The company maintains a privacy and security incident response program to prepare for and recover from cybersecurity incidents, including regular tabletop exercises[205] - Farmer Mac's reliance on third-party service providers for data management exposes it to risks of unauthorized access and potential reputational damage[177] Market and Economic Conditions - The Federal Reserve increased the target range for the federal funds rate by 5.25% since 2022, impacting Farmer Mac's interest income and overall financial condition[183] - Changes in interest rates could create cash flow mismatches, adversely affecting Farmer Mac's earnings and financial stability[183] - In 2023, the U.S. experienced 28 separate billion-dollar weather disasters, impacting agricultural producers and rural infrastructure[151] - Approximately 14% of the continental U.S. was classified as being in severe to exceptional drought as of January 2, 2024, affecting agricultural productivity[151] Corporate Governance - Farmer Mac's charter requires compliance with minimum capital, critical capital, and risk-based capital standards, overseen by its board of directors[81] - The company must develop and submit an annual capital plan to OSMO, addressing capital adequacy and stress scenarios[142] - Political risks may materially affect Farmer Mac's operations, as its statutory charter can be amended by Congress at any time[196] - The concentration of voting common stock ownership among a few institutions may lead to conflicts of interest that could affect Farmer Mac's strategic direction[168]

Agriculture is a huge part of the American economy. Today, there are more than two million farms across the U.S. that contribute $1.26 trillion to U.S. gross domestic product (GDP), a 5.4% share. Additionally, 10% of American workers are employed directly or indirectly in the agriculture sector, with more than 2.5 million people working directly on farms. The top three U.S. farm products are cattle, corn and soybeans. And America is one of the biggest exporters of agriculture products in the world, sending ...

Federal Agricultural Mortgage Corporation (NYSE:AGM) Q3 2023 Results Conference Call November 6, 2023 4:30 PM ET Company Participants Jalpa Nazareth - Senior Director, IR and Finance Strategy Brad Nordholm - President and Chief Executive Officer Aparna Ramesh - Executive Vice President and Chief Financial Officer Zack Carpenter - Chief Business Officer Marc Crady - Chief Credit Officer Conference Call Participants Bose George - KBW Bill Ryan - Seaport Research Partners Brendan McCarthy - Sidoti Chip Oat - C ...

PART I [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents Farmer Mac's unaudited consolidated financial statements and detailed notes for periods ended September 30, 2023, and December 31, 2022 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Summarizes Farmer Mac's financial position, including assets, liabilities, and equity, as of September 30, 2023, and December 31, 2022 Consolidated Balance Sheets (in thousands) | Metric | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | **Assets:** | | | | | | Total Assets | $28,311,381 | $27,333,110 | $978,271 | 3.58% | | Cash and cash equivalents | $782,318 | $861,002 | $(78,684) | -9.14% | | Total Investment Securities | $4,924,253 | $4,628,268 | $295,985 | 6.39% | | Total Farmer Mac Guaranteed Securities | $9,216,111 | $8,628,380 | $587,731 | 6.81% | | Total USDA Securities | $2,323,657 | $2,411,601 | $(87,944) | -3.65% | | Total loans, net of allowance | $10,537,173 | $10,205,466 | $331,707 | 3.25% | | **Liabilities & Equity:** | | | | | | Total Liabilities | $26,926,114 | $26,061,152 | $864,962 | 3.32% | | Notes payable | $25,123,545 | $24,469,113 | $654,432 | 2.67% | | Total Equity | $1,385,267 | $1,271,958 | $113,309 | 8.91% | | Total Liabilities and Equity | $28,311,381 | $27,333,110 | $978,271 | 3.58% | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Details Farmer Mac's financial performance, including interest income, expense, net interest income, and net income for specified periods Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended Sep 30, 2023 (in thousands) | Three Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------- | | Total interest income | $381,811 | $193,790 | $188,021 | 97.02% | | Total interest expense | $294,168 | $125,937 | $168,231 | 133.58% | | Net interest income | $87,643 | $67,853 | $19,790 | 29.17% | | Net income | $58,137 | $41,418 | $16,719 | 40.37% | | Net income attributable to common stockholders | $51,345 | $34,627 | $16,718 | 48.28% | | Basic earnings per common share | $4.74 | $3.21 | $1.53 | 47.66% | | Diluted earnings per common share | $4.69 | $3.18 | $1.51 | 47.48% | | Metric | Nine Months Ended Sep 30, 2023 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------- | :------- | | Total interest income | $1,040,915 | $449,121 | $591,794 | 131.77% | | Total interest expense | $795,537 | $251,816 | $543,721 | 215.92% | | Net interest income | $245,378 | $197,305 | $48,073 | 24.37% | | Net income | $152,384 | $134,726 | $17,658 | 13.11% | | Net income attributable to common stockholders | $132,010 | $114,352 | $17,658 | 15.44% | | Basic earnings per common share | $12.20 | $10.61 | $1.59 | 14.98% | | Diluted earnings per common share | $12.08 | $10.51 | $1.57 | 14.94% | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Presents Farmer Mac's comprehensive income, including net income and other comprehensive income/loss, for specified periods Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended Sep 30, 2023 (in thousands) | Three Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------ | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------- | | Net income | $58,137 | $41,418 | $16,719 | 40.37% | | Other comprehensive (loss)/income net of tax | $(1,488) | $(14,105) | $12,617 | -89.45% | | Comprehensive income | $56,649 | $27,313 | $29,336 | 107.48% | | Metric | Nine Months Ended Sep 30, 2023 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------ | :-------------------------------------- | :-------------------------------------- | :-------------------- | :------- | | Net income | $152,384 | $134,726 | $17,658 | 13.11% | | Other comprehensive (loss)/income net of tax | $15,004 | $(67,442) | $82,446 | -122.25% | | Comprehensive income | $167,388 | $67,284 | $100,104 | 148.79% | [Consolidated Statements of Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Equity) Outlines changes in Farmer Mac's equity, retained earnings, and accumulated other comprehensive loss for specified periods Consolidated Statements of Equity (in thousands) | Metric | As of Sep 30, 2023 (in thousands) | As of Dec 31, 2022 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------- | :------- | | Total Equity | $1,385,267 | $1,271,958 | $113,309 | 8.91% | | Retained Earnings | $794,814 | $698,530 | $96,284 | 13.78% | | Accumulated Other Comprehensive Loss, net of tax | $(35,839) | $(50,843) | $15,004 | -29.51% | - The increase in total equity was primarily due to net income and other comprehensive income, partially offset by cash dividends paid on preferred and common stock. For the nine months ended September 30, 2023, net income contributed **$152,384 thousand**, and other comprehensive income (net of tax) contributed **$15,004 thousand**[19](index=19&type=chunk)[20](index=20&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Summarizes Farmer Mac's cash flows from operating, investing, and financing activities for the nine months ended September 30, 2023, and 2022 Consolidated Statements of Cash Flows (in thousands) | Metric | Nine Months Ended Sep 30, 2023 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :-------------------------------------- | :-------------------------------------- | :-------------------- | :------- | | Net cash provided by operating activities | $542,648 | $706,258 | $(163,610) | -23.17% | | Net cash used in investing activities | $(1,280,405) | $(2,050,891) | $770,486 | -37.57% | | Net cash provided by financing activities | $659,073 | $1,304,082 | $(645,009) | -49.46% | | Net change in cash and cash equivalents | $(78,684) | $(40,551) | $(38,133) | 94.04% | | Cash and cash equivalents at end of period | $782,318 | $868,234 | $(85,916) | -9.89% | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations of Farmer Mac's accounting policies, financial instruments, loans, guarantees, and business segments [1. Summary of Significant Accounting Policies](index=11&type=section&id=1.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines Farmer Mac's accounting policies, including consolidation, EPS, comprehensive income, and recently adopted accounting guidance - Farmer Mac consolidates its two subsidiaries (Farmer Mac Mortgage Securities Corporation and Farmer Mac II LLC) and Variable Interest Entities (VIEs) where it is the primary beneficiary[25](index=25&type=chunk) Basic and Diluted EPS Reconciliation (Three Months Ended September 30) | Metric | Sep 30, 2023 | Sep 30, 2022 | | :--------------------------------------- | :----------- | :----------- | | Net income attributable to common stockholders | $51,345 | $34,627 | | Basic EPS | $4.74 | $3.21 | | Diluted EPS | $4.69 | $3.18 | Basic and Diluted EPS Reconciliation (Nine Months Ended September 30) | Metric | Sep 30, 2023 | Sep 30, 2022 | | :--------------------------------------- | :----------- | :----------- | | Net income attributable to common stockholders | $132,010 | $114,352 | | Basic EPS | $12.20 | $10.61 | | Diluted EPS | $12.08 | $10.51 | - The adoption of ASU 2022-02 (Financial Instruments-Credit Losses) and ASU 2022-01 (Fair Value Hedging - Portfolio Layer Method) did not have a material effect on Farmer Mac's financial position, results of operations, or cash flows[36](index=36&type=chunk) [2. Investment Securities](index=19&type=section&id=2.%20Investment%20Securities) Details Farmer Mac's available-for-sale and held-to-maturity investment securities, including fair value and unrealized gains/losses Total Investment Securities (As of September 30, 2023) | Category | Amortized Cost (in thousands) | Fair Value (in thousands) | Unrealized Gains (in thousands) | Unrealized Losses (in thousands) | | :----------------------- | :---------------------------- | :------------------------ | :------------------------------ | :------------------------------- | | Available-for-sale | $5,114,476 | $4,873,414 | $2,088 | $(243,123) | | Held-to-maturity | $45,032 | $45,962 | $930 | $0 | - Unrealized losses on available-for-sale investment securities as of September 30, 2023, totaled **$243.1 million**, primarily due to widening market spreads and interest rate changes. However, all securities in an unrealized loss position were backed by the U.S. government or a GSE, or had at least an 'AA+' credit rating, and Farmer Mac expects these losses to be recoverable[41](index=41&type=chunk) Available-for-Sale Securities by Remaining Contractual Maturity (As of September 30, 2023) | Maturity | Amortized Cost (in thousands) | Fair Value (in thousands) | Weighted Average Yield | | :-------------------------- | :---------------------------- | :------------------------ | :--------------------- | | Due within one year | $589,475 | $584,714 | 1.35% | | Due after one year through five years | $1,171,601 | $1,135,888 | 4.06% | | Due after five years through ten years | $2,534,914 | $2,358,496 | 4.39% | | Due after ten years | $818,486 | $794,316 | 5.61% | | Total | $5,114,476 | $4,873,414 | 4.16% | [3. Farmer Mac Guaranteed Securities and USDA Securities](index=22&type=section&id=3.%20Farmer%20Mac%20Guaranteed%20Securities%20and%20USDA%20Securities) Provides details on Farmer Mac Guaranteed Securities and USDA Securities, including classification, cost, fair value, and unrealized gains/losses Total Farmer Mac Guaranteed Securities and USDA Securities (As of September 30, 2023) | Category | Amortized Cost (in thousands) | Fair Value (in thousands) | Unrealized Gains (in thousands) | Unrealized Losses (in thousands) | | :----------------------------------- | :---------------------------- | :------------------------ | :------------------------------ | :------------------------------- | | Held-to-maturity | $6,479,965 | $6,043,583 | $4,719 | $(440,905) | | Available-for-sale | $5,536,437 | $5,058,697 | $409 | $(477,775) | | Trading | $1,371 | $1,302 | $0 | $(69) | - On July 1, 2023, Farmer Mac transferred **$2.7 billion** of AgVantage Securities from available-for-sale to held-to-maturity, reflecting its intent and ability to hold them until maturity. This resulted in a cost basis adjustment of **$31.9 million** in unrealized losses retained in AOCI[45](index=45&type=chunk) - The credit exposure related to Farmer Mac's USDA Securities is covered by the full faith and credit guarantee of the United States of America, minimizing credit risk[48](index=48&type=chunk) [4. Financial Derivatives](index=25&type=section&id=4.%20Financial%20Derivatives) Describes Farmer Mac's use of financial derivatives for risk management, detailing their fair value, notional amounts, and hedge designations - Farmer Mac uses financial derivatives (interest rate swaps, Treasury futures) to protect against market price and interest rate movements, not for trading or speculation[54](index=54&type=chunk) Financial Derivatives Summary (As of September 30, 2023) | Type | Notional Amount (in thousands) | Fair Value Asset (in thousands) | Fair Value Liability (in thousands) | | :----------------------- | :----------------------------- | :------------------------------ | :-------------------------------- | | Fair value hedges | $21,954,955 | $3,077 | $(190,364) | | Cash flow hedges | $563,000 | $27,510 | $(372) | | No hedge designation | $1,941,908 | $1,389 | $(794) | | Total | $24,460,267 | $28,855 | $(188,362) | - As of September 30, 2023, Farmer Mac expects to reclassify **$16.6 million** (after-tax) from accumulated other comprehensive income to earnings over the next twelve months related to cash flow hedges[58](index=58&type=chunk) - Of Farmer Mac's **$24.5 billion** notional amount of interest rate swaps outstanding as of September 30, 2023, **$19.5 billion** were cleared through the Chicago Mercantile Exchange (CME), reducing exposure to individual counterparties[69](index=69&type=chunk) [5. Loans](index=33&type=section&id=5.%20Loans) Details Farmer Mac's loan portfolio, categorized by type, allowance for losses, delinquency status, and credit quality indicators Loans Held for Investment (As of September 30, 2023) | Category | Unsecuritized (in thousands) | In Consolidated Trusts (in thousands) | Total (in thousands) | | :-------------------------- | :--------------------------- | :---------------------------------- | :------------------- | | Agricultural Finance loans | $6,211,595 | $1,422,854 | $7,634,449 | | Rural Infrastructure Finance loans | $3,342,713 | $0 | $3,342,713 | | Total unpaid principal balance | $9,554,308 | $1,422,854 | $10,977,162 | | Allowance for losses | $(16,162) | $(452) | $(16,614) | Allowance for Losses (As of September 30, 2023) | Category | Allowance for Losses (in thousands) | | :-------------------------- | :-------------------------------- | | Agricultural Finance loans | $7,588 | | Rural Infrastructure Finance loans | $9,026 | | Total | $16,614 | - The **$3.6 million** net provision to the allowance for the Rural Infrastructure Finance portfolio during Q3 2023 was primarily due to a single telecommunications loan downgraded to substandard. The **$3.7 million** net release from the allowance for the Agricultural Finance mortgage loan portfolio was primarily due to the full payoff of a single collateral-dependent storage and processing loan[75](index=75&type=chunk) Delinquency Status of Loans (As of September 30, 2023) | Category | Current (in thousands) | 30-59 Days Past Due (in thousands) | 60-89 Days Past Due (in thousands) | 90 Days and Greater Past Due (in thousands) | Nonaccrual Loans (in thousands) | Total Loans (in thousands) | | :-------------------------- | :--------------------- | :--------------------------------- | :--------------------------------- | :------------------------------------ | :------------------------------ | :------------------------- | | Agricultural Finance loans | $7,542,871 | $15,652 | $5,321 | $6,739 | $63,866 | $7,634,449 | | Rural Infrastructure Finance loans | $3,342,713 | $0 | $0 | $0 | $0 | $3,342,713 | | Total | $10,885,584 | $15,652 | $5,321 | $6,739 | $63,866 | $10,977,162 | [6. Guarantees and Commitments](index=40&type=section&id=6.%20Guarantees%20and%20Commitments) Details Farmer Mac's off-balance sheet guarantees and commitments, including exposure, obligations, and reserve for losses Outstanding Off-Balance Sheet Farmer Mac Guaranteed Securities | Category | As of Sep 30, 2023 (in thousands) | As of Dec 31, 2022 (in thousands) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Agricultural Finance | $455,681 | $500,953 | | Rural Infrastructure Finance | $1,098 | $1,169 | | Total | $456,779 | $502,122 | Guarantee and Commitment Obligation & LTSPCs | Metric | As of Sep 30, 2023 (in thousands) | As of Dec 31, 2022 (in thousands) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Guarantee and commitment obligation | $6,053 | $6,461 | | LTSPCs Guarantee and commitment obligation | $41,554 | $40,121 | | LTSPCs Maximum principal amount | $3,613,934 | $3,423,155 | Reserve for Losses (LTSPCs and Farmer Mac Guaranteed Securities) | Category | As of Sep 30, 2023 (in thousands) | As of Dec 31, 2022 (in thousands) | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Agricultural Finance | $1,412 | $819 | | Rural Infrastructure Finance | $248 | $614 | | Total | $1,660 | $1,433 | - The provision for the reserve for losses in the Agricultural Finance LTSPC portfolio during the nine months ended September 30, 2023, was primarily due to an updated estimate of expected losses based on additional available loss-given-default industry data. Conversely, the Rural Infrastructure Finance LTSPC portfolio saw a release from the reserve for losses due to similar updated estimates[94](index=94&type=chunk) [7. Notes Payable](index=46&type=section&id=7.%20Notes%20Payable) Provides details on Farmer Mac's borrowings, including discount notes and medium-term notes, their rates, maturity, and callable debt Notes Payable (As of September 30, 2023) | Category | Amount Outstanding (in thousands) | Weighted-Average Rate | | :-------------------------- | :-------------------------------- | :-------------------- | | Due within one year: | | | | Discount notes | $1,535,856 | 5.30% | | Medium-term notes | $947,466 | 4.75% | | Current portion of medium-term notes | $5,472,893 | 2.49% | | Total due within one year | $7,956,215 | 3.30% | | Due after one year: | | | | Medium-term notes | $17,646,272 | 2.90% | | Total principal net of discounts | $25,602,487 | 3.03% | Debt Callable in 2023 by Maturity (As of September 30, 2023) | Maturity | Amount (in thousands) | Weighted-Average Rate | | :--------- | :-------------------- | :-------------------- | | 2024 | $816,830 | 3.66% | | 2025 | $664,046 | 2.33% | | 2026 | $1,012,989 | 1.57% | | 2027 | $560,204 | 2.27% | | Thereafter | $1,161,379 | 2.51% | | Total | $4,215,448 | 2.45% | - Farmer Mac has statutory authority to borrow up to **$1.5 billion** from the U.S. Treasury to fulfill guarantee obligations but had not used this authority as of September 30, 2023[106](index=106&type=chunk) [8. Equity](index=48&type=section&id=8.%20Equity) Covers Farmer Mac's common stock, dividend payments, share repurchase program, and capital requirements, highlighting strong capital position - Farmer Mac paid a quarterly dividend of **$1.10 per share** on all classes of common stock during each quarter of 2023, an increase from **$0.95 per share** in 2022[108](index=108&type=chunk) - The share repurchase program for Class C non-voting common stock was renewed in February 2023, authorizing up to **$9.8 million** in repurchases with an expiration date of February 2025. No repurchases were made in Q3 2023[109](index=109&type=chunk)[110](index=110&type=chunk) Capital Position | Metric | As of Sep 30, 2023 (in thousands) | As of Dec 31, 2022 (in thousands) | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Minimum capital requirement | $840,100 | $805,900 | | Core capital level | $1,421,106 | $1,322,801 | | Capital in excess of minimum capital level | $581,053 | $516,882 | [9. Fair Value Disclosures](index=50&type=section&id=9.%20Fair%20Value%20Disclosures) Provides fair value measurements for assets and liabilities, categorized by hierarchy, detailing valuation techniques and unobservable inputs Assets and Liabilities Measured at Fair Value (As of September 30, 2023) | Category | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------- | :------------------- | | **Assets:** | | | | | | Total Available-for-sale Investment Securities | $1,002,458 | $3,851,923 | $19,033 | $4,873,414 | | Total Farmer Mac Guaranteed Securities | $0 | $0 | $5,058,697 | $5,058,697 | | Total USDA Securities | $0 | $0 | $1,302 | $1,302 | | Financial derivatives | $81 | $28,774 | $0 | $28,855 | | Guarantee Asset | $0 | $0 | $5,963 | $5,963 | | Total Assets at fair value | $1,002,539 | $3,880,697 | $5,084,995 | $9,968,231 | | **Liabilities:** | | | | | | Financial derivatives | $12 | $188,350 | $0 | $188,362 | | Total Liabilities at fair value | $12 | $188,350 | $0 | $188,362 | - Level 3 assets represent **18% of total assets** and **50% of financial instruments** measured at fair value as of September 30, 2023[115](index=115&type=chunk) Significant Unobservable Inputs for Level 3 Assets (As of September 30, 2023) | Financial Instrument | Valuation Technique | Unobservable Input | Range (Weighted Average) | | :---------------------------------------------------- | :------------------ | :----------------- | :----------------------- | | AgVantage Farmer Mac Guaranteed Securities | Discounted cash flow | Discount rate | 5.4% - 6.0% (5.7%) | | Farmer Mac Guaranteed Securities | Discounted cash flow | Discount rate | 8.5% | | | | CPR | 3% | | USDA Securities | Discounted cash flow | Discount rate | 5.9% - 6.1% (6.0%) | | | | CPR | 11% - 11% (11%) | | Guarantee Asset | Discounted cash flow | Discount rate | 8.5% | | | | CPR | 3% | - Fair values for loans, Farmer Mac Guaranteed Securities, and USDA Securities are internally modeled using discounted projected cash flows, with key assumptions including prepayment speeds, forward yield curves, and discount rates. These are classified as Level 3[129](index=129&type=chunk) [10. Business Segment Reporting](index=58&type=section&id=10.%20Business%20Segment%20Reporting) Presents Farmer Mac's core earnings by business segment, reconciling segment core earnings to consolidated net income Segment Core Earnings (Three Months Ended September 30, 2023) | Segment | Segment Core Earnings (in thousands) | | :-------------------------- | :--------------------------------- | | Farm & Ranch | $30,054 | | Corporate AgFinance | $9,497 | | Rural Utilities | $2,468 | | Renewable Energy | $875 | | Funding | $27,189 | | Investments | $424 | | Corporate | $(25,319) | | Reconciling Adjustments | $6,157 | | Consolidated Net Income | $51,345 | Segment Core Earnings (Nine Months Ended September 30, 2023) | Segment | Segment Core Earnings (in thousands) | | :-------------------------- | :--------------------------------- | | Farm & Ranch | $90,288 | | Corporate AgFinance | $17,469 | | Rural Utilities | $14,404 | | Renewable Energy | $2,480 | | Funding | $77,935 | | Investments | $477 | | Corporate | $(76,819) | | Reconciling Adjustments | $5,776 | | Consolidated Net Income | $132,010 | - Core earnings differ from GAAP net income by excluding the effects of fair value fluctuations and specified infrequent or unusual transactions, providing a useful alternative measure for understanding economic performance[136](index=136&type=chunk)[139](index=139&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=63&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on Farmer Mac's financial condition, operations, risk management, liquidity, and capital for Q3 2023 [Forward-Looking Statements](index=63&type=section&id=FORWARD-LOOKING%20STATEMENTS) Identifies forward-looking statements and cautions that actual results may differ due to market conditions, regulatory changes, and economic trends - Forward-looking statements address Farmer Mac's prospects for earnings, business volume growth, trends in net interest income and spread, credit quality, economic and market trends, expenses, investment securities, asset impairments, capital position, and future dividend payments[149](index=149&type=chunk) - Key uncertainties that could cause actual results to differ include the availability and terms of debt and equity financing, legislative/regulatory developments, fluctuations in asset fair value, lender interest in products, growth in agricultural/rural infrastructure indebtedness, economic conditions (inflation, interest rates, trade policies, supply chain, commodity prices), financial market developments, Federal Reserve monetary policy, and other factors affecting lending or repayment capacity (weather, climate change, real estate values)[150](index=150&type=chunk) [Overview](index=65&type=section&id=Overview) Highlights Farmer Mac's mission, increased net income, strong liquidity, and capital, and $2.3 billion in liquidity provided to rural lenders in Q3 2023 - Farmer Mac's mission is to drive economic opportunity by increasing financing accessibility for American agriculture and rural infrastructure, serving as the nation's secondary market for these loans[152](index=152&type=chunk) - During Q3 2023, Farmer Mac increased net income and core earnings, maintained strong liquidity and capital well above regulatory requirements, and provided **$2.3 billion** in liquidity and lending capacity to rural America[153](index=153&type=chunk) - Performance in Q3 2023 was driven by the resilience of the farm economy, increased business volume at higher spreads, disciplined interest rate risk management, and effective capital strategies[155](index=155&type=chunk) Net Income Attributable to Common Stockholders and Core Earnings (in thousands) | Metric | Sep 30, 2023 | Jun 30, 2023 | Sep 30, 2022 | | :--------------------------------------- | :----------- | :----------- | :----------- | | Net income attributable to common stockholders | $51,345 | $40,421 | $34,627 | | Core earnings | $45,188 | $42,162 | $33,392 | - Net income attributable to common stockholders increased **$16.7 million** year-over-year, driven by higher net interest income, guarantee fees, and fair value of undesignated financial derivatives, partially offset by increased operating expenses[158](index=158&type=chunk) Net Interest Income and Net Effective Spread (in thousands) | Metric | Sep 30, 2023 | Jun 30, 2023 | Sep 30, 2022 | | :-------------------- | :----------- | :----------- | :----------- | | Net interest income | $87,643 | $78,677 | $67,853 | | Net interest yield % | 1.22% | 1.12% | 1.04% | | Net effective spread | $83,424 | $81,832 | $65,641 | | Net effective spread % | 1.20% | 1.20% | 1.03% | - Outstanding business volume reached **$27.7 billion** as of September 30, 2023, a net increase of **$0.9 billion** from June 30, 2023, primarily from Rural Infrastructure Finance and Agricultural Finance[166](index=166&type=chunk) Capital Position (in thousands) | Metric | Sep 30, 2023 | Dec 31, 2022 | | :--------------------------------------- | :----------- | :----------- | | Core capital | $1,421,106 | $1,322,801 | | Capital in excess of minimum capital level | $581,053 | $516,882 | - On-balance sheet substandard assets decreased by **$6.4 million** in Q3 2023, primarily due to the payoff of an agricultural storage and processing loan. Off-balance sheet substandard assets decreased by **$8.1 million** due to credit upgrades[169](index=169&type=chunk) [Use of Non-GAAP Measures](index=69&type=section&id=Use%20of%20Non-GAAP%20Measures) Defines and explains Farmer Mac's non-GAAP measures: core earnings, core EPS, and net effective spread, used for economic performance assessment - Farmer Mac uses non-GAAP measures like 'core earnings,' 'core earnings per share,' and 'net effective spread' to understand economic performance, transaction economics, and business trends, as they exclude fair value fluctuations and specified infrequent or unusual transactions[173](index=173&type=chunk)[175](index=175&type=chunk) - Net effective spread differs from net interest income by excluding interest income/expense from consolidated trusts (reclassified as guarantee fees) and fair value changes of financial derivatives in hedge relationships. It includes accruals of contractual amounts on undesignated financial derivatives and net effects of terminations/settlements on financial derivatives[177](index=177&type=chunk)[178](index=178&type=chunk)[180](index=180&type=chunk) [Results of Operations](index=71&type=section&id=Results%20of%20Operations) Analyzes Farmer Mac's financial performance, including net interest income, provision for losses, fees, expenses, and business volume growth Reconciliation of Net Income Attributable to Common Stockholders to Core Earnings (Three Months Ended September 30) | Metric | Sep 30, 2023 (in thousands) | Sep 30, 2022 (in thousands) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Net income attributable to common stockholders | $51,345 | $34,627 | | Less reconciling items (sub-total) | $6,157 | $1,235 | | Core earnings | $45,188 | $33,392 | Reconciliation of Net Income Attributable to Common Stockholders to Core Earnings (Nine Months Ended September 30) | Metric | Sep 30, 2023 (in thousands) | Sep 30, 2022 (in thousands) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Net income attributable to common stockholders | $132,010 | $114,352 | | Less reconciling items (sub-total) | $5,776 | $24,451 | | Core earnings | $126,234 | $89,901 | - The **$48.1 million** year-over-year increase in net interest income for the nine months ended September 30, 2023, was primarily due to a **$40.3 million** decrease in funding costs and a **$17.0 million** increase from net new business volume, partially offset by a **$7.7 million** decrease in fair value of designated derivatives[193](index=193&type=chunk) Net Interest Income/Yield to Net Effective Spread (Nine Months Ended September 30) | Metric | Sep 30, 2023 (Dollars in thousands) | Sep 30, 2023 (Yield %) | Sep 30, 2022 (Dollars in thousands) | Sep 30, 2022 (Yield %) | | :------------------------------------ | :---------------------------------- | :--------------------- | :---------------------------------- | :--------------------- | | Net interest income/yield | $245,378 | 1.16% | $197,305 | 1.03% | | Net effective spread | $242,429 | 1.18% | $184,426 | 1.00% | - During the three months ended September 30, 2023, Farmer Mac recorded a **$0.2 million** release from the allowance for losses, primarily due to a collateral-dependent agricultural storage and processing loan payoff, partially offset by a rural infrastructure loan downgrade[200](index=200&type=chunk) Guarantee and Commitment Fee Income (in thousands) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------------------- | :------------------------------ | :------------------------------ | :--------- | :--------- | | Guarantee and commitment fee income | $5,520 | $2,644 | $2,876 | 109% | | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Guarantee and commitment fee income | $12,942 | $9,551 | $3,391 | 36% | Operating Expenses (in thousands) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------------------- | :------------------------------ | :------------------------------ | :--------- | :--------- | | Compensation and employee benefits | $14,103 | $11,648 | $2,455 | 21% | | General and administrative | $9,100 | $6,919 | $2,181 | 32% | | Regulatory fees | $831 | $812 | $19 | 2% | | Total Operating Expenses | $24,034 | $19,379 | $4,655 | 24% | | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | Change ($) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Compensation and employee benefits | $43,391 | $36,661 | $6,730 | 18% | | General and administrative | $26,047 | $21,717 | $4,330 | 20% | | Regulatory fees | $2,497 | $2,437 | $60 | 2% | | Total Operating Expenses | $71,935 | $60,815 | $11,120 | 18% | - The increase in compensation and employee benefits was largely due to increased headcount, while the rise in General and Administrative expenses was primarily due to increased spending on software licenses, IT, and other consultants to support growth and strategic initiatives[209](index=209&type=chunk)[210](index=210&type=chunk) Net New Business Volume (Three Months Ended September 30) | Line of Business | Sep 30, 2023 (in thousands) | Sep 30, 2022 (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Farm & Ranch | $345,332 | $607,348 | | Corporate AgFinance | $60,550 | $67,475 | | Rural Utilities | $506,403 | $124,200 | | Renewable Energy | $2,674 | $48,224 | | Total | $914,959 | $847,247 | - Farmer Mac's outstanding business volume was **$27.7 billion** as of September 30, 2023, a net increase of **$0.9 billion** from June 30, 2023. This increase was primarily driven by a **$0.5 billion** net increase in Rural Infrastructure Finance and a **$0.4 billion** net increase in Agricultural Finance[166](index=166&type=chunk)[214](index=214&type=chunk) Outstanding Business Volume (in thousands) | Line of Business | As of Sep 30, 2023 | As of Dec 31, 2022 | | :-------------------------- | :----------------- | :----------------- | | Agricultural Finance | $20,203,141 | $19,332,299 | | Rural Infrastructure Finance | $7,448,870 | $6,589,783 | | Total | $27,652,011 | $25,922,082 | [Outlook](index=89&type=section&id=Outlook) Anticipates profitable growth from liquidity needs, customer base expansion, larger transactions, and rural infrastructure, with rising operating expenses - Farmer Mac expects positive momentum in wholesale volume refinancing activity in Q4 2023, with most maturing AgVantage Securities expected to be refinanced[235](index=235&type=chunk) - Opportunities for profitable growth are foreseen due to lenders managing liquidity/capital, an expanding and diversifying customer base, growing relationships with larger lenders, and deepening business in Rural Infrastructure Finance (broadband, renewable energy)[236](index=236&type=chunk) - Farmer Mac is insulated from bank liquidity concerns as it is not a depository institution and relies on debt capital markets, which could provide a funding advantage in competitive lending environments[237](index=237&type=chunk) - The agricultural economy experienced favorable conditions in Q3 2023 with mixed commodity prices and easing input price inflation, though overall farm incomes are expected to trend lower in 2023 after reaching new highs in 2022[242](index=242&type=chunk)[244](index=244&type=chunk) - Rural infrastructure industry prospects are varied; electric cooperatives expect continued capital expenditures, while telecommunications infrastructure investment is robust due to federally funded programs. Renewable energy generation is expected to grow significantly, driven by falling costs and policy tailwinds like the Inflation Reduction Act[253](index=253&type=chunk)[254](index=254&type=chunk) - Farmer Mac is monitoring legislative and regulatory changes, including the reauthorization of the farm bill (seeking charter enhancements), a final rule on cyber risk management (effective Jan 1, 2025), and a proposed rulemaking on Farmer Mac's regulatory capital framework by May 2024[256](index=256&type=chunk) [Balance Sheet Review](index=95&type=section&id=Balance%20Sheet%20Review) Summarizes Farmer Mac's balance sheet changes, with asset and liability increases driven by new business volume, and equity growth from retained earnings Balance Sheet Summary (in thousands) | Metric | Sep 30, 2023 | Dec 31, 2022 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | :--------- | | Total assets | $28,311,381 | $27,333,110 | $978,271 | 4% | | Total liabilities | $26,926,114 | $26,061,152 | $864,962 | 3% | | Total equity | $1,385,267 | $1,271,958 | $113,309 | 9% | - The increase in total assets was primarily attributable to new Farmer Mac Guaranteed Securities volume, new loan volume (including those held in consolidated trusts), and a larger investment portfolio[257](index=257&type=chunk) - The increase in total liabilities was primarily due to an increase in total notes payable to fund the acquisition of Farmer Mac Guaranteed Securities and loan volume[258](index=258&type=chunk) - The increase in total equity was primarily due to an increase in retained earnings and an increase in accumulated other comprehensive income[258](index=258&type=chunk) [Risk Management](index=95&type=section&id=Risk%20Management) Details Farmer Mac's credit risk for loans/guarantees and interest rate risk, including portfolio analysis, delinquency, and duration matching strategies - Farmer Mac's direct credit exposure to Agricultural Finance mortgage loans was **$11.0 billion** across 48 states as of September 30, 2023[260](index=260&type=chunk) Agricultural Finance Mortgage Loans 90-Day Delinquencies (in thousands) | As of | Mortgage Loans | 90-Day Delinquencies | Percentage | | :----------------- | :--------------- | :------------------- | :--------- | | Sep 30, 2023 | $11,014,678 | $42,443 | 0.39% | | Jun 30, 2023 | $10,826,201 | $45,368 | 0.42% | | Dec 31, 2022 | $10,719,571 | $43,498 | 0.41% | - Agricultural Finance substandard assets were **$180.2 million** (**1.6%** of the portfolio) as of September 30, 2023, a decrease from **$209.4 million** (**2.0%** of the portfolio) as of December 31, 2022[267](index=267&type=chunk) - The weighted-average original loan-to-value ratio for Farm & Ranch mortgage loans and loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs was **50%** as of September 30, 2023[271](index=271&type=chunk) Agricultural Finance Mortgage Loans Cumulative Credit Losses (As of September 30, 2023) | Category | Cumulative Original Loans, Guarantees and LTSPCs (in thousands) | Cumulative Net Credit Losses/(Recoveries) (in thousands) | Cumulative Loss Rate | | :-------------------------- | :---------------------------------------------------- | :------------------------------------------------------- | :------------------- | | By year of origination: | | | | | 2013 and prior | $18,729,043 | $33,785 | 0.18% | | Total | $36,718,225 | $38,483 | 0.10% | | By commodity/collateral type: | | | | | Ag. Storage and Processing | $1,730,020 | $19,984 | 1.16% | | Crops | $16,890,404 | $3,790 | 0.02% | - As of September 30, 2023, there were no delinquencies in Farmer Mac's Rural Infrastructure Finance loan portfolio. One telecommunications loan with an unpaid principal balance of **$29.5 million** was downgraded to substandard[279](index=279&type=chunk) - Farmer Mac manages interest rate risk by funding asset purchases with debt and financial derivatives that have similar duration and convexity characteristics, aiming for stable earnings across various interest rate environments[300](index=300&type=chunk) MVE and NES Sensitivity Analysis (Percentage Change from Base Case) | Interest Rate Scenario | MVE (Sep 30, 2023) | MVE (Dec 31, 2022) | NES (Sep 30, 2023) | NES (Dec 31, 2022) | | :--------------------- | :----------------- | :----------------- | :----------------- | :----------------- | | +100 basis points | (4.0)% | (3.7)% | (0.2)% | 0.4% | | -100 basis points | 3.5% | 2.7% | 0.1% | (0.6)% | - As of September 30, 2023, Farmer Mac's duration gap was **positive 3.8 months**, indicating that the duration of its interest-earning assets was slightly greater than its debt and financial derivatives[312](index=312&type=chunk) [Liquidity and Capital Resources](index=112&type=section&id=Liquidity%20and%20Capital%20Resources) Outlines Farmer Mac's funding sources, liquidity management, and capital requirements, emphasizing debt market access and regulatory compliance - Farmer Mac's primary funding sources are debt issuances, guarantee/commitment fees, net effective spread, and loan/security repayments. It maintains steady access to debt capital markets[324](index=324&type=chunk) - As of September 30, 2023, Farmer Mac had **297 days of liquidity**, well above the minimum 90 days required by Liquidity and Investment Regulations[326](index=326&type=chunk) Liquidity Assets (in thousands) | Category | As of Sep 30, 2023 | As of Dec 31, 2022 | | :------------------------------------ | :----------------- | :----------------- | | Cash and cash equivalents | $782,318 | $861,002 | | Investment securities (Guaranteed by U.S. Government and its agencies) | $1,348,081 | $1,444,650 | | Investment securities (Guaranteed by GSEs) | $3,551,332 | $3,160,919 | | Investment securities (Asset-backed securities) | $19,033 | $19,027 | | Total | $5,700,764 | $5,485,598 | - Farmer Mac was in compliance with its statutory capital requirements as of September 30, 2023, classified as 'level 1' (highest compliance level). Its Tier 1 capital ratio was **16.0%** as of September 30, 2023[328](index=328&type=chunk)[329](index=329&type=chunk) [Other Matters](index=114&type=section&id=Other%20Matters) States that there are no other matters to report [Supplemental Information](index=114&type=section&id=Supplemental%20Information) Provides additional quarterly and annual data on new business volume, asset repayments, outstanding volume, and net effective spread by segment New Business Volume by Quarter (in thousands) | Quarter Ended | Agricultural Finance (Farm & Ranch) | Agricultural Finance (Corporate AgFinance) | Rural Infrastructure Finance (Rural Utilities) | Rural Infrastructure Finance (Renewable Energy) | Total | | :-------------- | :---------------------------------- | :----------------------------------------- | :------------------------------------------- | :--------------------------------------------- | :------ | | Sep 30, 2023 | $1,384,273 | $275,932 | $607,979 | $17,390 | $2,285,574 | | Jun 30, 2023 | $1,574,169 | $218,136 | $294,292 | $71,611 | $2,158,208 | | Mar 31, 2023 | $750,040 | $203,211 | $683,232 | $89,747 | $1,726,230 | | Dec 31, 2022 | $1,114,255 | $165,395 | $140,222 | $43,737 | $1,463,609 | | Sep 30, 2022 | $1,927,209 | $169,932 | $547,117 | $61,653 | $2,705,911 | Repayments of Assets by Quarter (in thousands) | Quarter Ended | Agricultural Finance (Farm & Ranch) | Agricultural Finance (Corporate AgFinance) | Rural Infrastructure Finance (Rural Utilities) | Rural Infrastructure Finance (Renewable Energy) | Total | | :-------------- | :---------------------------------- | :----------------------------------------- | :------------------------------------------- | :--------------------------------------------- | :------ | | Sep 30, 2023 | $1,031,183 | $215,382 | $101,576 | $14,716 | $1,362,857 | | Jun 30, 2023 | $1,146,987 | $137,362 | $572,082 | $52,203 | $1,908,634 | | Mar 31, 2023 | $510,964 | $206,736 | $153,163 | $11,424 | $882,287 | | Dec 31, 2022 | $584,221 | $196,674 | $76,872 | $9,809 | $867,576 | | Sep 30, 2022 | $1,021,343 | $102,457 | $422,917 | $13,429 | $1,560,146 | Outstanding Business Volume by Quarter (in thousands) | As of | Agricultural Finance (Farm & Ranch) | Agricultural Finance (Corporate AgFinance) | Rural Infrastructure Finance (Rural Utilities) | Rural Infrastructure Finance (Renewable Energy) | Total | | :------ | :---------------------------------- | :----------------------------------------- | :------------------------------------------- | :--------------------------------------------- | :------ | | Sep 30, 2023 | $18,461,835 | $1,741,306 | $7,118,295 | $330,575 | $27,652,011 | | Jun 30, 2023 | $18,116,503 | $1,680,756 | $6,611,892 | $327,901 | $26,737,052 | | Mar 31, 2023 | $17,685,961 | $1,599,982 | $6,889,682 | $308,493 | $26,484,118 | | Dec 31, 2022 | $17,728,792 | $1,603,507 | $6,359,613 | $230,170 | $25,922,082 | | Sep 30, 2022 | $17,199,347 | $1,634,786 | $6,296,263 | $196,242 | $25,326,638 | Net Effective Spread by Segment (Three Months Ended September 30, 2023) | Segment | Dollars (in thousands) | Yield % | | :-------------------------- | :--------------------- | :------ | | Farm & Ranch | $32,718 | 0.97% | | Corporate AgFinance | $8,250 | 2.05% | | Rural Utilities | $6,362 | 0.39% | | Renewable Energy | $1,150 | 1.46% | | Funding | $34,412 | 0.49% | | Investments | $532 | 0.04% | | Net Effective Spread | $83,424 | 1.20% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=119&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Addresses Farmer Mac's market risk exposure, primarily from interest rate changes, managed through financial transactions and monitoring - Farmer Mac is exposed to market risk from changes in interest rates and manages this risk through financial transactions, including derivatives, and by monitoring its exposure[340](index=340&type=chunk) [Item 4. Controls and Procedures](index=120&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms effectiveness of disclosure controls and procedures and absence of material changes in internal control over financial reporting - Farmer Mac's disclosure controls and procedures were evaluated and deemed effective as of September 30, 2023, by management, including the CEO and CFO[343](index=343&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended September 30, 2023[344](index=344&type=chunk) PART II [Item 1. Legal Proceedings](index=121&type=section&id=Item%201.%20Legal%20Proceedings) States that there are no legal proceedings to report [Item 1A. Risk Factors](index=121&type=section&id=Item%201A.%20Risk%20Factors) Directs readers to detailed risk factor information in the 'Forward-Looking Statements' section and the 2022 Annual Report - Information about risk factors is referenced in the 'Forward-Looking Statements' section of this report and in Farmer Mac's 2022 Annual Report[348](index=348&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=121&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Reports on unregistered sales of Class C common stock to directors and time-vested restricted stock units to employees - Farmer Mac issued **451 shares** of Class C non-voting common stock to directors in July 2023, based on the closing price of **$143.74 per share** on June 30, 2023[349](index=349&type=chunk) - On September 29, 2023, Farmer Mac granted **2,979 time-vested restricted stock units (RSUs)** of Class C non-voting common stock to 77 employees, vesting in three equal installments on March 31, 2024, 2025, and 2026[350](index=350&type=chunk) [Item 3. Defaults Upon Senior Securities](index=121&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) States that there are no defaults upon senior securities to report [Item 4. Mine Safety Disclosures](index=122&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) States that mine safety disclosures are not applicable to Farmer Mac [Item 5. Other Information](index=122&type=section&id=Item%205.%20Other%20Information) Reports no directors or executive officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or executive officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarterly period ended September 30, 2023[354](index=354&type=chunk) [Item 6. Exhibits](index=123&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including organizational documents, stock certificates, and officer certifications - Exhibits include organizational documents (Title VIII of the Farm Credit Act, By-Laws), specimen certificates for Class A, B, C common stock and Preferred Stock Series C, D, E, F, G, certifications of principal executive and financial officers (31.1, 31.2, 32), and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[356](index=356&type=chunk)

Federal Agricultural Mortgage Corporation (NYSE:AGM) Q2 2023 Earnings Conference Call August 7, 2023 8:30 AM ET Company Participants Jalpa Nazareth - Senior Director, IR and Finance Strategy Brad Nordholm - President and Chief Executive Officer Aparna Ramesh - Executive Vice President and Chief Financial Officer Conference Call Participants Bill Ryan - Seaport Research Partners Brendan McCarthy - Sidoti Operator Good day, and welcome to the Farmer Mac Second Quarter 2023 Earnings Conference Call. [Operator ...