FEDERAL AGRICULTURAL MORTGAGE CORP

Farmer Mac is driven by its mission to increase the accessibility of financing to provide vital liquidity for American agriculture and infrastructure. Our secondary market provides liquidity to our nation's agricultural and infrastructure businesses, supporting a vibrant and strong rural America. We offer a wide range of solutions to help meet financial institutions’ growth, liquidity, risk management, and capital relief needs across diverse markets, including agriculture, agribusiness, broadband infrastructure, power and utilities, and renewable energy. We are uniquely positioned to facilitate competitive access to financing that fuels growth, innovation, and prosperity in America's rural and agricultural communities. Farmer Mac also serves as a critical investment tool for a number of entities – such as states, counties, municipalities, pension funds, banks, public trust funds, and credit unions – by offering investment opportunities that may diversify their investment portfolios and provide possibilities to earn a competitive return on their investment dollars.

During first quarter 2025, Farmer Mac:

•provided $1.8 billion in liquidity and lending capacity to lenders serving rural America;

•maintained strong liquidity in our investment portfolio well above regulatory requirements; and

•maintained our strong capital position, well above regulatory requirements, and uninterrupted access to the debt capital markets.

The discussion below of Farmer Mac's financial information includes "non-GAAP measures," which are measures of financial performance not presented in accordance with generally accepted accounting principles in the United States ("GAAP"). 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."

Net Income and Core Earnings

The following table shows our net income attributable to common stockholders and core earnings for the periods presented. Core earnings and core earnings per share are non-GAAP measures that differ from net income attributable to common stockholders and earnings per common share, respectively, by excluding the effects of fair value fluctuations and specified infrequent or unusual transactions.

Table 1

The $6.9 million sequential decrease in net income attributable to common stockholders was primarily attributable to a $5.5 million after-tax decrease in the fair value of financial derivatives, a $2.6 million decrease in federal income tax benefit from the purchase of renewable energy investment tax credits that occurred in fourth quarter 2024 and did not recur in first quarter 2025, and a $1.9 million after-tax decrease in net interest income. These decreases were partially offset by a $1.8 million after-tax decrease in the provision for credit losses, and a $0.8 million after-tax decrease in an unrealized loss on a mortgage loan held for sale that occurred in fourth quarter 2024 and did not recur in first quarter 2025.

The $3.0 million year-over-year decrease in net income attributable to common stockholders for first quarter 2025 compared to first quarter 2024 was primarily attributable to a $3.7 million after-tax decrease in the fair value of financial derivatives and a $2.7 million after-tax increase in the provision for credit losses. These factors were partially offset by a $3.6 million after-tax increase in net interest income.

The $2.4 million sequential increase in core earnings was primarily attributable to a $1.9 million after-tax increase in net effective spread, a $1.8 million after-tax decrease in the provision for credit losses, and a $0.9 million after-tax decrease in unrealized loss on mortgage loan held for sale, partially offset by a $2.6 million decrease in federal income tax benefit from the purchase of renewable energy investment tax credits.

The $2.6 million year-over-year increase in core earnings for first quarter 2025 compared to 2024 was due to a $5.5 million after-tax increase in net effective spread, partially offset by a $2.7 million after-tax increase in provision for credit losses.

For more information about net income attributable to common stockholders, the composition of core earnings, and a reconciliation of net income attributable to common stockholders to core earnings, see "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."

Net Interest Income and Net Effective Spread

The following table shows our net interest income and net effective spread in both dollars and percentage yield or spread for the periods presented. Farmer Mac uses net effective spread, a non-GAAP measure, as an alternative to net interest income because management believes it is a useful metric that reflects the economics of the net spread between all the assets owned by Farmer Mac and all related funding, including any associated derivatives, some of which may not be included in net interest income.

Table 2

The $2.4 million sequential decrease in net interest income was primarily due to a $4.6 million decrease in the fair value of derivatives designated in fair value hedge accounting relationships (designated financial derivatives) and an increase of $0.6 million in funding costs. These factors were partially offset by a $2.8 million increase from net new business volume. In percentage terms, the sequential decrease was 0.06%, which was primarily attributable to the decrease in the fair value of designated financial derivatives.

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 $2.5 million sequential increase in net effective spread was primarily attributable to net new business volume.

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.

For more information about Farmer Mac's use of net effective spread as a financial measure, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures." For a reconciliation of net interest income to net effective spread, see Table 10 in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Net Interest Income."

Business Volume

Our 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 net increase was primarily attributable to a net increase of $0.7 billion in the Infrastructure Finance line of business, partially offset by a net decrease of $0.5 billion in the Agricultural Finance line of business.

For more information about Farmer Mac's business volume, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Business Volume."

Capital

Table 3

The increase in capital in excess of the minimum capital level required was primarily attributable to an increase in retained earnings.

Credit Quality

The following table presents Agricultural Finance on- and off-balance sheet substandard assets, in dollars and as a percentage of the respective portfolio as of March 31, 2025 and December 31, 2024:

Table 4

The increase of $61.1 million in on-balance sheet substandard assets during first quarter was primarily driven by credit downgrades in agricultural storage and processing, crops, and permanent plantings.

As of both March 31, 2025 and December 31, 2024, there were two substandard assets with a cumulative outstanding balance of $42.2 million and $42.5 million, respectively, in the Infrastructure Finance portfolio.

For an analysis of current loan-to-value ratios across substandard and other internally assigned risk ratings, see Table 25 in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk—Loans and Guarantees."

The following table presents 90-day delinquencies for the on- and off-balance sheet Agricultural Finance portfolios in dollars and as a percentage of the respective balance sheet category as of March 31, 2025 and December 31, 2024:

Table 5

On-balance sheet Agricultural Finance assets 90 or more days delinquent increased in permanent plantings, crops, livestock, and part-time farms. Off-balance sheet Agricultural Finance assets 90 days or more delinquent decreased in crops, permanent plantings, and livestock. The top ten borrower exposures over 90 days delinquent in either the on- or off-balance sheet Agricultural Finance portfolio represented over half of the aggregate 90-day delinquencies as of March 31, 2025.

As of both March 31, 2025 and December 31, 2024, there were no 90-day delinquencies in Farmer Mac's portfolio of Infrastructure Finance loan purchases and loans underlying LTSPCs.

For more information about Farmer Mac's credit metrics, including 90-day delinquencies, the total allowance for losses, and substandard assets, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk—Loans and Guarantees."