FEDERAL AGRICULTURAL MORTGAGE CORP

Reconciliations of Farmer Mac's net income attributable to common stockholders to core earnings and core earnings per share are presented in the following tables along with information about the composition of core earnings:

Table 6

(1)Net effective spread is a non-GAAP measure. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures—Net Effective Spread" for an explanation of net effective spread. See Table 10 for a reconciliation of net interest income to net effective spread.

(2)Includes interest income and interest expense related to consolidated trusts owned by third parties reclassified from net interest income to guarantee and commitment fees to reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee on the consolidated Farmer Mac Guaranteed Securities.

(3)Reflects reconciling adjustments for the reclassification to exclude expenses related to interest rate swaps not designated as hedges and terminations or net settlements on financial derivatives, and reconciling adjustments to exclude fair value adjustments on financial derivatives and trading assets and the recognition of deferred gains over the estimated lives of certain Farmer Mac Guaranteed Securities and USDA Securities.

(4)Includes the tax impact of non-GAAP reconciling items between net income attributable to common stockholders and core earnings.

Table 7

The non-GAAP reconciling items between net income attributable to common stockholders and core earnings are:

1. (Losses)/gains on financial derivatives due to fair value changes are presented by two reconciling items in Table 6 above: (a) (Losses)/gains on undesignated financial derivatives due to fair value changes; and (b) Gains on hedging activities due to fair value changes.

2. Unrealized gains/(losses) on trading securities. The unrealized gains/(losses) on trading securities are reported on Farmer Mac's consolidated statements of operations, which represent changes during the period in fair values for trading assets remaining on Farmer Mac's balance sheet as of the end of the reporting period.

3. The net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value. The amount of this non-GAAP reconciling item is the recorded amount of premium, discount, or deferred gain amortization during the reporting period on those assets for which the premium, discount, or deferred gain was based on the application of an accounting principle (e.g., consolidation of variable interest entities) rather than on a cash transaction (e.g., a purchase price premium or discount).

4. The net effects of terminations or net settlements on financial derivatives. These terminations or net settlements relate to:

•Forward contracts on the debt of other GSEs and futures contracts on U.S. Treasury securities. These contracts are used as a short-term economic hedge of the issuance of debt. For GAAP purposes, realized gains or losses on settlements of these contracts are reported in the consolidated statements of operations in the period in which they occur. For core earnings purposes, these realized gains or losses are deferred and amortized as net yield adjustments over the term of the related debt, which generally ranges from 3 to 15 years.

The following sections provide more detail about specific components of Farmer Mac's results of operations.

Net Interest Income. The following table provides information about interest-earning assets and funding for the three months ended March 31, 2025 and 2024. The average balance of non-accruing loans is included in the average balance of loans, Farmer Mac Guaranteed Securities, and USDA Securities presented, though the related income is accounted for on a cash basis. Therefore, as the average balance of non-accruing loans and the income received increases or decreases, the net interest income and yield will fluctuate accordingly. The average balance of loans in consolidated trusts with beneficial interests owned by third parties (single-class) and for which Farmer Mac guarantees all classes of securities issued is disclosed in the net effect of consolidated trusts and is not included in the average balances of interest-earning assets and interest-bearing liabilities. The interest income and expense associated with these trusts are shown in the net effect of consolidated trusts.

Table 8

(1)Excludes interest income of $9.9 million and $9.0 million in first quarter 2025 and 2024, respectively, related to consolidated trusts with beneficial interests owned by third parties (single-class).

(2)Excludes interest expense of $8.9 million and $7.9 million in first quarter 2025 and 2024, respectively, related to consolidated trusts with beneficial interests owned by third parties (single-class).

(3)Includes the effect of consolidated trusts with beneficial interests owned by third parties (single-class).

The $4.6 million year-over-year increase in net interest income for first quarter 2025 compared to first quarter 2024 was primarily attributable to a $6.4 million increase from net new business volume and a $0.6 million decrease in funding costs, partially offset by a $1.9 million decrease in the fair value of designated financial derivatives.

The following table sets forth information about changes in the components of Farmer Mac's net interest income prior to consolidation of certain trusts for the periods indicated. For each category, information is provided on changes attributable to changes in volume (change in volume multiplied by prior rate), and changes in rate (change in rate multiplied by old volume), and then allocated based on the relative size of rate and volume changes from the prior period.

Table 9

(1)Excludes the effect of debt in consolidated trusts with beneficial interests owned by third parties (single-class).

The following table presents a reconciliation of net interest income and net interest yield to net effective spread. Net effective spread is measured by: including (1) expenses related to undesignated financial derivatives, which consists of income or expense related to contractual amounts due on financial derivatives not designated in hedge relationships (the income or expense related to financial derivatives designated in hedge accounting relationships is already included in net interest income), and (2) the amortization of losses due to terminations or net settlements of financial derivatives; and excluding (1) the amortization of premiums and discounts on assets consolidated at fair value, (2) the net effects of consolidated trusts with beneficial interests owned by third parties (single-class), and (3) the fair value changes of financial derivatives and corresponding financial assets or liabilities in fair value hedge relationships. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures—Net Effective Spread" for more information about net effective spread.

Table 10

The $6.9 million year-over-year increase in net effective spread for first quarter 2025 compared to first quarter 2024 was primarily due to a $6.4 million increase from net new business volume and a $0.6 million decrease in funding costs. In percentage terms, the year-over-year increase of 0.03% was primarily attributable to the shift in the composition of new business volume towards higher-yielding assets, partially offset by increased funding costs.

See Note 10 to the consolidated financial statements for more information about net interest income and net effective spread from Farmer Mac's individual business segments. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Supplemental Information" for quarterly net effective spread by line of business.

Provision for and Release of Allowance for Losses and Reserve for Losses. The following table summarizes the components of Farmer Mac's total allowance for losses for the three month period ended March 31, 2025 and 2024:

Table 11

See Notes 5 and 6 to the consolidated financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk—Loans and Guarantees."

During first quarter 2025, we recorded a $1.6 million net provision to the total allowance for losses primarily due to new loan volume in the Infrastructure Finance and Agricultural Finance lines of business.

Guarantee and Commitment Fees. The following table presents guarantee and commitment fees, which compensate Farmer Mac for assuming the credit risk on loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs, for the three months ended March 31, 2025 and 2024:

Table 12

Guarantee and commitment fee income increased for the three months ended March 31, 2025 compared to 2024, which was primarily attributable to increased business volume in unused commitments in the Infrastructure Finance line of business. As adjusted for the non-GAAP core earnings presentation, guarantee and commitment fees were $5.5 million for the three months ended March 31, 2025, compared to $5.0 million for the three months ended March 31, 2024.

In Farmer Mac's presentation of non-GAAP core earnings, guarantee and commitment fees include interest income and interest expense related to consolidated trusts owned by third parties to reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee on those consolidated Farmer Mac Guaranteed Securities. Farmer Mac has also excluded changes in the fair values of guarantee assets from the presentation of core earnings because management does not expect these fluctuations to have a cumulative net impact on Farmer Mac's financial condition, results of operations, or cash flows if Farmer Mac fulfills its guarantee obligation throughout the term of the guaranteed securities, as is expected.

For more information about net income attributable to common stockholders, the composition of non-GAAP core earnings, and a reconciliation of net income attributable to common stockholders to core earnings, see Table 6 in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations." For more information about the non-GAAP measures Farmer Mac uses, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures."

(Losses)/gains on financial derivatives. The components of gains and losses on financial derivatives for the three months ended March 31, 2025 and 2024 are summarized in the following table:

Table 13

These changes in fair value are primarily the result of fluctuations in long-term interest rates. The accrual of periodic cash settlements for interest paid or received from Farmer Mac's interest rate swaps that are undesignated financial derivatives is shown as income or expense related to financial derivatives. Payments or receipts to terminate undesignated derivative positions or net cash settled forward sales contracts on the debt of other GSEs and undesignated U.S. Treasury security futures and initial cash payments received upon the inception of certain undesignated swaps are included in "Gains due to terminations or net settlements" in the table above. See Note 4 to the consolidated financial statements for more information about Farmer Mac's financial derivatives.

Operating Expenses. The components of operating expenses for the three months ended March 31, 2025 and 2024 are summarized in the following table:

Table 14

Compensation and Employee Benefits. The decrease in compensation and employee benefits expenses for the quarter ended March 31, 2025 compared to 2024 was primarily attributable to lower short-term incentive compensation awards.

General and Administrative Expenses (G&A). The increase in G&A expenses for the quarter ended March 31, 2025 compared to 2024 was primarily attributable to an increase in information technology infrastructure costs, transactional legal fees, hiring expenses, and servicing advance expenses.

Income Tax Expense. The following table presents income tax expense and the effective income tax rate for the three months ended March 31, 2025 and 2024:

Table 15

Business Volume.

The following table sets forth the net growth or decrease in Farmer Mac's lines of business for the three months ended March 31, 2025 and 2024:

Table 16

(1)Categories of Farmer Mac Guaranteed Securities.

(2)An interest-only Farmer Mac Guaranteed Security retained as part of a structured securitization.

(3)Other categories of Farmer Mac Guaranteed Securities that were sold by Farmer Mac to third parties.

Farmer Mac's outstanding business volume was $29.8 billion as of March 31, 2025, a net increase of $0.2 billion from December 31, 2024 after taking into account all new business, maturities, sales, and paydowns on existing assets.

The $0.5 billion net decrease in Farm & Ranch during first quarter 2025 was primarily attributable to maturities of AgVantage securities that our counterparties did not re-issue. This activity primarily reflected slower loan growth resulting in less liquidity needs from Farmer Mac's AgVantage counterparties than in previous periods.

The $0.4 billion net increase in Power & Utilities during first quarter 2025 was primarily attributable to the purchase of a $0.3 billion AgVantage security.

The $0.2 billion net increase in Broadband Infrastructure during first quarter 2025 was primarily attributable to $0.2 billion of new commitments.

The $0.2 billion net increase in Renewable Energy during first quarter 2025 was primarily attributable to $0.3 billion in loan purchases and commitments. The net increase in Renewable Energy loan purchases and commitments primarily reflects the continued strong demand for renewable power generation and storage.

Farmer Mac's outstanding business volume was $28.8 billion as of March 31, 2024, a net increase of $0.4 billion from December 31, 2023 after taking into account all new business, maturities, and paydowns on existing assets.

The $0.1 billion net increase in Farm & Ranch during first quarter 2024 resulted from $0.7 billion of new

purchases, commitments, and guarantees, partially offset by $0.6 billion of scheduled maturities and

repayments. Included in the $0.7 billion is the purchase of $0.3 billion of Farm & Ranch loans, which

included the acquisition of a pool of loans totaling $0.1 billion from a single agricultural lender. That

agricultural lender's capital planning provided the opportunity to purchase that pool of loans. Scheduled

loan maturities and repayments in the aggregate amount of $0.2 billion partially offset those purchases.

Farmer Mac also purchased a total of $0.3 billion in Farm & Ranch AgVantage Securities during first

quarter 2024, which primarily reflected the refinancing of maturing securities and opportunistic new

purchases. The $0.3 billion in gross purchases was partially offset by $0.1 billion in scheduled maturities.

The $0.1 billion net increase in Corporate AgFinance during first quarter 2024 resulted from $0.3 billion

of new purchases and unfunded loan commitments, which was partially offset by $0.2 billion of scheduled

maturities, repayments, and paydowns on revolving commitments. Included in the $0.3 billion is $0.1

billion of purchases of Corporate AgFinance AgVantage Securities, which was partially offset by $0.1

billion of scheduled maturities.

The $0.3 billion net increase in Renewable Energy during first quarter 2024 primarily reflects

$0.3 billion in loan purchases and unfunded commitments, partially offset by $0.1 billion in

repayments. The net increase in Renewable Energy loan purchases and unfunded commitments primarily

reflects the continued strong demand for renewable power generation and storage.

The level and composition of Farmer Mac’s outstanding business volume is based on the relationship between new business, loan sales, scheduled maturities, and repayments on existing assets from year to year. This relationship in turn depends on a variety of factors both internal and external to Farmer Mac. The external factors include general market forces, competition, and our counterparties’ liquidity needs, access to alternative funding, desired products, and assessment of strategic factors. The internal factors include our assessment of profitability, mission fulfillment, credit risk, and customer relationships. For more information about potential growth opportunities in Farmer Mac's lines of business, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Outlook" in this report.

The following table sets forth information about the Farmer Mac Guaranteed Securities issued during the periods indicated:

Table 17

During the three months ended March 31, 2025 and 2024, Farmer Mac realized no gains or losses from the securitization of loans that it holds in consolidated trusts. Farmer Mac consolidates these loans and presents them as "Loans held for investment in consolidated trusts, at amortized cost" on the consolidated balance sheets.

During the three months ended March 31, 2025 and 2024, Farmer Mac realized no gains or losses from the issuance of Farmer Mac Guaranteed USDA Securities or AgVantage Securities.

The following table sets forth information about outstanding volume in each of Farmer Mac's lines of business as of the dates indicated:

Table 18

(1)A type of Farmer Mac Guaranteed Security.

(2)An interest-only Farmer Mac Guaranteed Security retained as part of a structured securitization.

(3)Other categories of Farmer Mac Guaranteed Securities that were sold by Farmer Mac to third parties.

The following table summarizes by maturity date the scheduled principal amortization of loans held, loans underlying off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities) and LTSPCs, USDA Securities, and Farmer Mac Guaranteed USDA Securities as of March 31, 2025:

Table 19

Of Farmer Mac's $29.8 billion outstanding principal balance of business volume as of March 31, 2025, $8.3 billion were AgVantage securities included in the Agricultural Finance and Infrastructure Finance lines of business. Unlike business volume in the form of purchased loans, USDA Securities, and loans underlying LTSPCs and non-AgVantage Farmer Mac Guaranteed Securities, most AgVantage securities do not require periodic payments of principal based on amortization schedules and instead have fixed maturity dates when the secured general obligation is due. Changes in quarterly AgVantage securities volume are primarily driven by the generally larger transaction sizes for that product, scheduled maturity amounts for a particular quarter, the liquidity needs of Farmer Mac’s AgVantage counterparties, and changes in the pricing and availability of wholesale funding. Based on these factors, Farmer Mac expects its business volumes in AgVantage securities to continue to be volatile. The following table summarizes by maturity date the outstanding principal amount of both on- and off-balance sheet AgVantage securities as of March 31, 2025:

Table 20

(1)Includes various maturities ranging from 2030 to 2044.

The weighted-average remaining maturity of the outstanding AgVantage securities shown in the table above was 4.8 years as of March 31, 2025.