FEDERAL AGRICULTURAL MORTGAGE CORP
For the period ended Jun 30, 2025. Filed Aug 7, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 7, 2025
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Item 2. Results of Operations
Reconciliations of net income attributable to common stockholders and EPS to core earnings and Core EPS are presented in the following tables along with information about the composition of core earnings:
Table 6
| Reconciliation of Net Income Attributable to Common Stockholders to Core Earnings | ||
|---|---|---|
| For the Three Months Ended | ||
| June 30, 2025 | June 30, 2024 | |
| (in thousands, except per share amounts) | ||
| Net income attributable to common stockholders | $49,170 | $40,313 |
| Less reconciling items: | ||
| Losses on undesignated financial derivatives due to fair value changes (see Table 13) | (639) | (359) |
| Gains on hedging activities due to fair value changes | 2,709 | 2,604 |
| Unrealized losses on trading securities | (65) | (87) |
| Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value | 25 | 26 |
| Net effects of terminations or net settlements on financial derivatives | 255 | (1,505) |
| Income tax effect related to reconciling items | (480) | (143) |
| Sub-total | 1,805 | 536 |
| Core earnings | $47,365 | $39,777 |
| Composition of Core Earnings: | ||
| Revenues: | ||
| Net effective spread(1) | $93,893 | $83,596 |
| Guarantee and commitment fees(2) | 5,874 | 5,256 |
| Gain on sale of investment securities (GAAP) | — | 1,052 |
| Loss on sale of mortgage loan (GAAP) | — | (1,147) |
| Other(3) | 742 | 481 |
| Total revenues | 100,509 | 89,238 |
| Credit related expense/(income) (GAAP): | ||
| Provision for losses | 7,812 | 6,230 |
| REO operating expenses | 148 | — |
| Gains on REO | (87) | — |
| Total credit related expense/(income) | 7,873 | 6,230 |
| Operating expenses (GAAP): | ||
| Compensation and employee benefits | 17,631 | 14,840 |
| General and administrative | 10,859 | 8,904 |
| Regulatory fees | 1,000 | 725 |
| Total operating expenses | 29,490 | 24,469 |
| Net earnings | 63,146 | 58,539 |
| Income tax expense(4) | 10,114 | 11,970 |
| Preferred stock dividends (GAAP) | 5,667 | 6,792 |
| Core earnings | $47,365 | $39,777 |
| Core EPS: | ||
| Basic | $4.33 | $3.66 |
| Diluted | $4.32 | $3.63 |
| Weighted-average shares: | ||
| Basic | 10,933 | 10,879 |
| Diluted | 10,963 | 10,956 |
(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 more information and 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.
| Reconciliation of Net Income Attributable to Common Stockholders to Core Earnings | ||
|---|---|---|
| For the Six Months Ended | ||
| June 30, 2025 | June 30, 2024 | |
| (in thousands, except per share amounts) | ||
| Net income attributable to common stockholders | $93,155 | $87,268 |
| Less reconciling items: | ||
| (Losses)/gains on undesignated financial derivatives due to fair value changes (see Table 13) | (3,212) | 1,324 |
| Gains on hedging activities due to fair value changes | 3,808 | 5,606 |
| Unrealized losses on trading securities | (56) | (101) |
| Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value | 53 | 57 |
| Net effects of terminations or net settlements on financial derivatives | (815) | (1,697) |
| Income tax effect related to reconciling items | 46 | (1,090) |
| Sub-total | (176) | 4,099 |
| Core earnings | $93,331 | $83,169 |
| Composition of Core Earnings: | ||
| Revenues: | ||
| Net effective spread(1) | $183,883 | $166,640 |
| Guarantee and commitment fees(2) | 11,362 | 10,238 |
| Gain on sale of investment securities (GAAP) | — | 1,052 |
| Loss on sale of mortgage loan (GAAP) | — | (1,147) |
| Other(3) | 2,057 | 1,558 |
| Total revenues | 197,302 | 178,341 |
| Credit related expense/(income) (GAAP): | ||
| Provision for losses | 9,395 | 4,360 |
| REO operating expenses | 148 | — |
| Gain on REO | (19) | — |
| Total credit related expense/(income) | 9,524 | 4,360 |
| Operating expenses (GAAP): | ||
| Compensation and employee benefits | 35,383 | 33,097 |
| General and administrative | 21,617 | 17,159 |
| Regulatory fees | 2,000 | 1,450 |
| Total operating expenses | 59,000 | 51,706 |
| Net earnings | 128,778 | 122,275 |
| Income tax expense(4) | 24,114 | 25,523 |
| Preferred stock dividends (GAAP) | 11,333 | 13,583 |
| Core earnings | $93,331 | $83,169 |
| Core EPS: | ||
| Basic | $8.55 | $7.66 |
| Diluted | $8.51 | $7.59 |
| Weighted-average shares: | ||
| Basic | 10,915 | 10,863 |
| Diluted | 10,973 | 10,966 |
(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 more information and 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
| Reconciliation of GAAP Basic EPS to Core Earnings - Basic EPS | ||||
|---|---|---|---|---|
| For the Three Months Ended | For the Six Months Ended | |||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |
| (in thousands, except per share amounts) | ||||
| GAAP - Basic EPS | $4.50 | $3.71 | $8.53 | $8.04 |
| Less reconciling items: | ||||
| (Losses)/gains on undesignated financial derivatives due to fair value changes (see Table 13) | (0.06) | (0.03) | (0.29) | 0.12 |
| Gains on hedging activities due to fair value changes | 0.25 | 0.24 | 0.35 | 0.52 |
| Unrealized losses on trading securities | (0.01) | (0.01) | (0.01) | (0.01) |
| Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value | — | — | 0.01 | 0.01 |
| Net effects of terminations or net settlements on financial derivatives | 0.03 | (0.14) | (0.08) | (0.16) |
| Income tax effect related to reconciling items | (0.04) | (0.01) | — | (0.10) |
| Sub-total | 0.17 | 0.05 | (0.02) | 0.38 |
| Core Earnings - Basic EPS | $4.33 | $3.66 | $8.55 | $7.66 |
| Shares used in per share calculation (GAAP and Core Earnings) | 10,933 | 10,879 | 10,915 | 10,863 |
| Reconciliation of GAAP Diluted EPS to Core Earnings - Diluted EPS | ||||
|---|---|---|---|---|
| For the Three Months Ended | For the Six Months Ended | |||
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |
| (in thousands, except per share amounts) | ||||
| GAAP - Diluted EPS | $4.48 | $3.68 | $8.49 | $7.96 |
| Less reconciling items: | ||||
| (Losses)/gains on undesignated financial derivatives due to fair value changes (see Table 13) | (0.06) | (0.03) | (0.29) | 0.12 |
| Gains on hedging activities due to fair value changes | 0.25 | 0.24 | 0.35 | 0.51 |
| Unrealized losses on trading securities | (0.01) | (0.01) | (0.01) | (0.01) |
| Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value | — | — | — | 0.01 |
| Net effects of terminations or net settlements on financial derivatives | 0.02 | (0.14) | (0.07) | (0.16) |
| Income tax effect related to reconciling items | (0.04) | (0.01) | — | (0.10) |
| Sub-total | 0.16 | 0.05 | (0.02) | 0.37 |
| Core Earnings - Diluted EPS | $4.32 | $3.63 | $8.51 | $7.59 |
| Shares used in per share calculation (GAAP and Core Earnings) | 10,963 | 10,956 | 10,973 | 10,966 |
The non-GAAP reconciling items between net income attributable to common stockholders and core earnings are:
(Losses)/gains on financial derivatives due to fair value changes, including: (a) (Losses)/gains on undesignated financial derivatives due to fair value changes; and (b) Gains on hedging activities due to fair value changes.
Unrealized losses on trading securities are reported on Farmer Mac's Consolidated Statements of Operations and represent changes during the period in fair values for trading assets remaining on our balance sheet as of the end of the reporting period.
The net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value reflects the amortization recorded during the reporting period on those assets for which the premium, discount, or deferred gain was a result of consolidation accounting rather than a cash transaction.
The net effects of terminations or net settlements on financial derivatives relate to forward contracts on the debt of other GSEs and futures contracts on U.S. Treasury securities, which 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 our results of operations.
Net Interest Income. The following table provides information about interest-earning assets and funding for the three and six months ended June 30, 2025 and 2024. 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 excluded from the average balances of interest-earning assets and interest-bearing liabilities and, instead, is disclosed in the net effect of consolidated trusts along with the associated net interest income.
Table 8
| For the Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| June 30, 2025 | June 30, 2024 | |||||
| AverageBalance | Income/Expense | AverageRate | AverageBalance | Income/Expense | AverageRate | |
| (dollars in thousands) | ||||||
| Interest-earning assets: | ||||||
| Cash and investments | $7,557,352 | $88,985 | 4.71% | $6,229,727 | $84,538 | 5.43% |
| Loans, Farmer Mac Guaranteed Securities and USDA Securities(1) | 23,958,468 | 300,072 | 5.01% | 23,229,634 | 309,277 | 5.33% |
| Total interest-earning assets | 31,515,820 | 389,057 | 4.94% | 29,459,361 | 393,815 | 5.35% |
| Funding: | ||||||
| Total interest-bearing liabilities(2) | 29,437,344 | 293,247 | 3.98% | 27,458,620 | 307,846 | 4.48% |
| Net non-interest-bearing funding | 2,078,476 | — | 2,000,741 | — | ||
| Total funding | 31,515,820 | 293,247 | 3.72% | 29,459,361 | 307,846 | 4.18% |
| Net interest income/yield prior to consolidation of certain trusts | 31,515,820 | 95,810 | 1.22% | 29,459,361 | 85,969 | 1.17% |
| Net effect of consolidated trusts(3) | 870,136 | 987 | 0.45% | 907,509 | 1,371 | 0.60% |
| Net interest income/yield | $32,385,956 | $96,797 | 1.20% | $30,366,870 | $87,340 | 1.15% |
(1)Excludes interest income of $10.0 million and $9.9 million in second quarter 2025 and 2024, respectively, related to consolidated trusts with beneficial interests owned by third parties (single-class).
(2)Excludes interest expense of $9.0 million and $8.5 million in second 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).
| For the Six Months Ended | ||||||
|---|---|---|---|---|---|---|
| June 30, 2025 | June 30, 2024 | |||||
| AverageBalance | Income/Expense | AverageRate | AverageBalance | Income/Expense | AverageRate | |
| (dollars in thousands) | ||||||
| Interest-earning assets: | ||||||
| Cash and investments | $7,377,693 | $172,293 | 4.67% | $6,237,051 | $169,462 | 5.43% |
| Loans, Farmer Mac Guaranteed Securities and USDA Securities(1) | 23,800,045 | 588,283 | 4.94% | 23,035,820 | 611,679 | 5.31% |
| Total interest-earning assets | 31,177,738 | 760,576 | 4.88% | 29,272,871 | 781,141 | 5.34% |
| Funding: | ||||||
| Total interest-bearing liabilities(2) | 29,061,297 | 574,838 | 3.96% | 27,299,257 | 609,856 | 4.47% |
| Net non-interest-bearing funding | 2,116,441 | — | 1,973,614 | — | ||
| Total funding | 31,177,738 | 574,838 | 3.69% | 29,272,871 | 609,856 | 4.17% |
| Net interest income/yield prior to consolidation of certain trusts | 31,177,738 | 185,738 | 1.19% | 29,272,871 | 171,285 | 1.17% |
| Net effect of consolidated trusts(3) | 870,801 | 1,998 | 0.46% | 880,196 | 2,423 | 0.55% |
| Net interest income/yield | $32,048,539 | $187,736 | 1.17% | $30,153,067 | $173,708 | 1.15% |
(1)Excludes interest income of $19.9 million and $18.9 million in the first half of 2025 and 2024, respectively, related to consolidated trusts with beneficial interests owned by third parties (single-class).
(2)Excludes interest expense of $17.9 million and $16.5 million in the first half of 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 $9.5 million year-over-year increase in net interest income for second quarter 2025 compared to second quarter 2024 was primarily attributable to a $7.4 million increase from net new business volume.
The $14.0 million increase in net interest income for the six months ended June 30, 2025, compared to the same period in the prior year was primarily attributable to a $13.8 million increase from net new business volume.
The following table sets forth information about changes in the components of Farmer Mac's net interest income for the periods indicated prior to consolidation of trusts with beneficial interests owned by third parties (single-class) and for which Farmer Mac guarantees all classes of securities issued. 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
| For the Six Months Ended June 30, 2025Compared to Same Period in 2024 | |||
|---|---|---|---|
| Increase/(Decrease) Due to | |||
| Rate | Volume | Total | |
| (in thousands) | |||
| Income from interest-earning assets: | |||
| Cash and investments | $(25,698) | $28,529 | $2,831 |
| Loans, Farmer Mac Guaranteed Securities and USDA Securities | (57,622) | 19,798 | (37,824) |
| Total | (83,320) | 48,327 | (34,993) |
| Expense from other interest-bearing liabilities | (72,756) | 37,738 | (35,018) |
| Change in net interest income prior to consolidation of certain trusts(1) | $(10,564) | $10,589 | $25 |
(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 to net effective spread. Net effective spread is measured by including: (1) expenses related to undesignated financial derivatives, which consist of income or expense related to contractual amounts due on financial derivatives not designated in hedge accounting 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
| For the Three Months Ended · For the Six Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |||||
| Dollars | Yield | Dollars | Yield | Dollars | Yield | Dollars | Yield | |
| (dollars in thousands) | ||||||||
| Net interest income | $96,797 | 1.20% | $87,340 | 1.15% | $187,736 | 1.17% | $173,708 | 1.15% |
| Net effects of consolidated trusts | (987) | 0.02% | (1,371) | 0.02% | (1,998) | 0.02% | (2,423) | 0.02% |
| Expense related to undesignated financial derivatives | (208) | —% | (486) | (0.01)% | 110 | —% | (521) | —% |
| Amortization of premiums/discounts on assets consolidated at fair value | (22) | —% | (21) | —% | (47) | —% | (48) | —% |
| Amortization of losses due to terminations or net settlements on financial derivatives | 1,022 | 0.01% | 738 | 0.01% | 1,890 | 0.01% | 1,530 | 0.01% |
| Fair value changes on fair value hedge relationships | (2,709) | (0.04)% | (2,604) | (0.03)% | (3,808) | (0.02)% | (5,606) | (0.04)% |
| Net effective spread | $93,893 | 1.19% | $83,596 | 1.14% | $183,883 | 1.18% | $166,640 | 1.14% |
The $10.3 million, or 5 basis point, year-over-year increase in net effective spread for second quarter 2025 compared to second quarter 2024 was primarily due to a $7.4 million increase from net new business volume, a $1.4 million contribution from our Investments segment and a $1.4 million decrease in funding costs.
The $17.3 million, or 4 basis point, increase in net effective spread for the six months ended June 30, 2025, compared to the same period in the prior year, was primarily due to a $13.8 million increase in net new business volume, reflecting continued growth in the Renewable Energy and Broadband Infrastructure segments, a $2.8 million contribution from the Investments segment, and a $0.5 million decrease in 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 and six months ended June 30, 2025 and 2024:
Table 11
| As of June 30, 2025 | As of June 30, 2024 | |||||
|---|---|---|---|---|---|---|
| AllowanceforLosses | Reservefor Losses | TotalAllowancefor Losses | AllowanceforLosses | Reservefor Losses | TotalAllowancefor Losses | |
| (in thousands) | ||||||
| For the Three Months Ended | ||||||
| Beginning Balance | $25,437 | $1,521 | $26,958 | $14,788 | $1,642 | $16,430 |
| Provision for losses | 7,713 | 99 | 7,812 | 6,179 | 51 | 6,230 |
| Charge-offs | (2,840) | — | (2,840) | (4,043) | — | (4,043) |
| Recovery | 40 | — | 40 | — | — | — |
| Ending Balance | $30,350 | $1,620 | $31,970 | $16,924 | $1,693 | $18,617 |
| For the Six Months Ended | ||||||
| Beginning Balance | $23,670 | $1,622 | $25,292 | $16,589 | $1,711 | $18,300 |
| Provision for/(release of) losses | 9,397 | (2) | 9,395 | 4,378 | (18) | 4,360 |
| Charge-offs | (2,840) | — | (2,840) | (4,043) | — | (4,043) |
| Recovery | 123 | — | 123 | — | — | — |
| Ending Balance | $30,350 | $1,620 | $31,970 | $16,924 | $1,693 | $18,617 |
During second quarter 2025, we recorded a $7.8 million net provision to the total allowance for losses of which $2.8 million resulted from two specific borrower relationships for a permanent planting loan and a crop loan. During second quarter 2025, we recorded a charge-off of $2.8 million related to these two specific borrower relationships to reflect the amount of each loan that we deemed uncollectible. The remaining $5.0 million net provision recorded during the second quarter 2025 was due to downgrades in Infrastructure Finance, declining economic forecast factors of commercial and industrial loan performance and agricultural land values, and new volume growth in Broadband Infrastructure and Renewable Energy.
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."
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 and six months ended June 30, 2025 and 2024:
Table 12
| For the Three Months Ended · For the Six Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| Change | Change | |||||||
| June 30, 2025 | June 30, 2024 | $ | % | June 30, 2025 | June 30, 2024 | $ | % | |
| (dollars in thousands) | ||||||||
| Contractual guarantee and commitment fees | $4,795 | $3,945 | $850 | 22% | $9,224 | $7,849 | $1,375 | 18% |
| Guarantee obligation amortization | 1,572 | 1,270 | 302 | 24% | 3,328 | 3,052 | 276 | 9% |
| Guarantee asset fair value changes | (1,551) | (1,418) | (133) | (9)% | (3,257) | (3,187) | (70) | 2% |
| Guarantee and commitment fee income | $4,816 | $3,797 | $1,019 | 27% | $9,295 | $7,714 | $1,581 | 20% |
Guarantee and commitment fee income increased for the three and six months ended June 30, 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 $5.9 million and $11.4 million for the three and six months ended June 30, 2025, respectively, compared to $5.3 million and $10.2 million for the three and six months ended June 30, 2024, respectively.
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."
Gains/(losses) on financial derivatives. The components of gains and losses on financial derivatives for the three and six months ended June 30, 2025 and 2024 are summarized in the following table:
Table 13
| For the Three Months Ended · For the Six Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| Change | Change | |||||||
| June 30, 2025 | June 30, 2024 | $ | % | June 30, 2025 | June 30, 2024 | $ | % | |
| (dollars in thousands) | ||||||||
| (Losses)/gains on undesignated financial derivatives due to fair value changes | $(639) | $(359) | $(280) | 78% | $(3,212) | $1,324 | $(4,536) | (343)% |
| Accrual of contractual payments | (208) | (486) | 278 | (57)% | 110 | (521) | 631 | (121)% |
| Gains/(losses) due to terminations or net settlements | 927 | (954) | 1,881 | (197)% | 546 | (523) | 1,069 | (204)% |
| Gains/(losses) on financial derivatives | $80 | $(1,799) | $1,879 | (104)% | $(2,556) | $280 | $(2,836) | (1013)% |
These changes in fair value are primarily the result of fluctuations in long-term interest rates. 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/(losses) due to terminations or net settlements" in the table above. See Note 4 to the consolidated financial statements for more information about our financial derivatives.
Operating Expenses. The components of operating expenses for the three and six months ended June 30, 2025 and 2024 are summarized in the following table:
Table 14
| For the Three Months Ended · For the Six Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| Change | Change | |||||||
| June 30, 2025 | June 30, 2024 | $ | % | June 30, 2025 | June 30, 2024 | $ | % | |
| (dollars in thousands) | ||||||||
| Compensation and employee benefits | $17,631 | $14,840 | $2,791 | 19% | $35,383 | $33,097 | $2,286 | 7% |
| General and administrative | 10,859 | 8,904 | 1,955 | 22% | 21,617 | 17,159 | 4,458 | 26% |
| Regulatory fees | 1,000 | 725 | 275 | 38% | 2,000 | 1,450 | 550 | 38% |
| Total Operating Expenses | $29,490 | $24,469 | $5,021 | 21% | $59,000 | $51,706 | $7,294 | 14% |
The increase in compensation and employee benefits expenses for the three and six months ended June 30, 2025 compared to 2024 was largely due to increased headcount.
The increase in G&A expenses for the three and six months ended June 30, 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 and six months ended June 30, 2025 and 2024:
Table 15
| For the Three Months Ended · For the Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Change · Change | |||||||||||
| June 30, 2025 · June 30, 2024 · $ · % · June 30, 2025 · June 30, 2024 · $ · % | |||||||||||
| (dollars in thousands) | |||||||||||
| Income tax expense | $10,594 | $12,113 | $(1,519) | (13)% | $24,068 | $26,613 | $(2,545) | (10)% | |||
| Effective tax rate | 16.2% | 20.5% | (4.3)% | 18.7% | 20.9% | (2.2)% | |||||
The decrease in the effective tax rate in 2025 is primarily attributable to the purchase of $35.6 million in renewable energy investment tax credits during the second quarter 2025. The purchases of renewable energy investment tax credits have been at prices of approximately $0.91 per $1.00 of credit and resulted in a benefit in the amount of $3.2 million.
Business Volume. The following table sets forth the net growth or decrease in our lines of business for the three and six months ended June 30, 2025 and 2024:
Table 16
| Net New Business Volume | |||||
|---|---|---|---|---|---|
| For the Three Months Ended · For the Six Months Ended | |||||
| On or Off Balance Sheet | June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |
| Net Growth/(Decrease) · Net Growth/(Decrease) · Net Growth/(Decrease) · Net Growth/(Decrease) | |||||
| (in thousands) | |||||
| Agricultural Finance: | |||||
| Farm & Ranch: | |||||
| Loans | On-balance sheet | $129,535 | $(108,724) | $215,870 | $5,369 |
| Loans held in consolidated trusts: | |||||
| Beneficial interests owned by third-party investors (single-class)(1) | On-balance sheet | (6,812) | 51,444 | (7,873) | 37,688 |
| Beneficial interests owned by third-party investors (structured)(1) | On-balance sheet | 276,386 | 300,514 | 244,844 | 291,406 |
| IO-FMGS(2) | On-balance sheet | (168) | (170) | (341) | (347) |
| USDA Securities | On-balance sheet | 49,790 | 4,556 | 56,224 | (9,422) |
| AgVantage Securities(1) | On-balance sheet | (230,000) | (560,000) | (735,000) | (400,000) |
| LTSPCs and unfunded loan commitments | Off-balance sheet | (10,829) | (77,051) | (51,023) | (192,619) |
| Other Farmer Mac Guaranteed Securities(3) | Off-balance sheet | (15,123) | (7,021) | (27,142) | (15,780) |
| Loans serviced for others | Off-balance sheet | (69,389) | 47 | (84,622) | (20,595) |
| Total Farm & Ranch | $123,390 | $(396,405) | $(389,063) | $(304,300) | |
| Corporate AgFinance: | |||||
| Loans | On-balance sheet | $79,394 | $27,661 | $68,922 | $26,444 |
| AgVantage Securities(1) | On-balance sheet | (7,790) | (9,738) | (20,359) | 70,748 |
| Unfunded loan commitments | Off-balance sheet | (7,444) | 32,676 | 17,255 | 25,722 |
| Total Corporate AgFinance | $64,160 | $50,599 | $65,818 | $122,914 | |
| Total Agricultural Finance | $187,550 | $(345,806) | $(323,245) | $(181,386) | |
| Infrastructure Finance: | |||||
| Power & Utilities: | |||||
| Loans | On-balance sheet | $142,321 | $79,313 | $276,220 | $130,857 |
| AgVantage Securities(1) | On-balance sheet | (19,700) | (19,279) | 255,706 | (38,454) |
| LTSPCs and unfunded loan commitments | Off-balance sheet | (10,233) | (22,297) | (40,938) | (63,698) |
| Total Power & Utilities | $112,388 | $37,737 | $490,988 | $28,705 | |
| Broadband Infrastructure: | |||||
| Loans | On-balance sheet | $90,912 | $52,852 | $126,541 | $15,326 |
| Unfunded loan commitments | Off-balance sheet | 108,694 | 33,161 | 245,434 | 36,719 |
| Total Broadband Infrastructure | $199,606 | $86,013 | $371,975 | $52,045 | |
| Renewable Energy: | |||||
| Loans | On-balance sheet | $142,433 | $160,320 | $307,412 | $298,292 |
| Unfunded loan commitments | Off-balance sheet | 189,939 | (27,155) | 217,099 | 89,659 |
| Total Renewable Energy | $332,372 | $133,165 | $524,511 | $387,951 | |
| Total Infrastructure Finance | $644,366 | $256,915 | $1,387,474 | $468,701 | |
| Total | $831,916 | $(88,891) | $1,064,229 | $287,315 | |
(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 $30.6 billion as of June 30, 2025, a net increase of $0.8 billion from March 31, 2025 after taking into account all new business, maturities, sales, and paydowns on existing assets.
The $0.1 billion net increase in Farm & Ranch during second quarter 2025 was primarily attributable to net loan growth partially offset by maturities of AgVantage securities that counterparties did not re-issue.
The $0.1 billion net increase in Power & Utilities during second quarter 2025 was primarily attributable to loan purchases.
The $0.2 billion net increase in Broadband Infrastructure during second quarter 2025 was primarily attributable to $0.3 billion in loan purchases and commitments, partially offset by repayments.
The $0.3 billion net increase in Renewable Energy during second quarter 2025 was primarily attributable to $0.5 billion in loan purchases and commitments, partially offset by repayments. 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 June 30, 2024, a net increase of $0.1 billion from March 31, 2024 after taking into account all new business, maturities, and paydowns on existing assets.
The $0.4 billion net decrease in Farm & Ranch during second quarter 2024 resulted from $1.1 billion of
scheduled maturities and repayments, partially offset by $0.7 billion of new purchases, commitments, and
guarantees. Included in the $0.7 billion is the purchase of $390.2 million of Farm & Ranch loans.
Scheduled loan maturities and repayments in the aggregate amount of $133.1 million partially offset those
purchases.
During second quarter 2024, a total of $0.8 billion in Farm & Ranch AgVantage Securities matured
without refinancing, which primarily reflected slower loan growth resulting in less liquidity needs from
Farmer Mac's AgVantage counterparties. The $0.8 billion in maturities and repayments were partially
offset by $0.2 billion in new purchases.
The $0.1 billion net increase in Corporate AgFinance during second 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, sales, and paydowns on revolving commitments. Included in the
$0.3 billion is $243.7 million of purchases of Corporate AgFinance loans and unfunded commitments,
which was partially offset by $172.4 million of scheduled repayments. The net increase in Corporate
AgFinance loan purchases and unfunded commitments primarily reflected a more active market for
agribusiness transactions during the quarter.
The $37.7 million net increase in Power & Utilities during second quarter 2024 resulted from $133.0 million of new purchases and unfunded loan commitments, which was partially offset by $95.2 million of scheduled maturities and repayments.
The $0.1 billion net increase in Broadband Infrastructure during second quarter 2024 resulted from $102.1 million of new purchases and unfunded commitments, which was partially offset by $16.1 million of scheduled maturities and repayments.
The $0.1 billion net increase in Renewable Energy during second quarter 2024 primarily reflects
$271.9 million in loan purchases and unfunded commitments, partially offset by $138.7 million 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 period to period. 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
| For the Three Months Ended | For the Six Months Ended | |||
|---|---|---|---|---|
| June 30, 2025 | June 30, 2024 | June 30, 2025 | June 30, 2024 | |
| (dollars in thousands) | ||||
| AgVantage securities | $129,250 | $274,650 | $434,125 | $686,200 |
| Loans securitized and held in consolidated trusts with beneficial interests owned by third parties (structured and single-class) | 314,403 | 314,545 | 340,426 | 330,481 |
| Total Farmer Mac Guaranteed Securities Issuances | $443,653 | $589,195 | $774,551 | $1,016,681 |
During the three and six months ended June 30, 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 and six months ended June 30, 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
| Outstanding Business Volume | |||
|---|---|---|---|
| On or Off Balance Sheet | As of June 30, 2025 | As of December 31, 2024 | |
| (in thousands) | |||
| Agricultural Finance: | |||
| Farm & Ranch: | |||
| Loans | On-balance sheet | $5,630,602 | $5,414,732 |
| Loans held in consolidated trusts: | |||
| Beneficial interests owned by third-party investors (single-class)(1) | On-balance sheet | 877,422 | 885,295 |
| Beneficial interests owned by third-party investors (structured)(1) | On-balance sheet | 1,397,832 | 1,152,988 |
| IO-FMGS(2) | On-balance sheet | 8,369 | 8,710 |
| USDA Securities | On-balance sheet | 2,458,647 | 2,402,423 |
| AgVantage Securities(1) | On-balance sheet | 3,985,000 | 4,720,000 |
| LTSPCs and unfunded loan commitments | Off-balance sheet | 3,019,531 | 3,070,554 |
| Other Farmer Mac Guaranteed Securities(3) | Off-balance sheet | 399,168 | 426,310 |
| Loans serviced for others | Off-balance sheet | 441,334 | 525,956 |
| Total Farm & Ranch | $18,217,905 | $18,606,968 | |
| Corporate AgFinance: | |||
| Loans | On-balance sheet | $1,450,596 | $1,381,674 |
| AgVantage Securities(1) | On-balance sheet | 259,938 | 280,297 |
| Unfunded loan commitments | Off-balance sheet | 242,989 | 225,734 |
| Total Corporate AgFinance | $1,953,523 | $1,887,705 | |
| Total Agricultural Finance | $20,171,428 | $20,494,673 | |
| Infrastructure Finance: | |||
| Power & Utilities: | |||
| Loans | On-balance sheet | $3,162,796 | $2,886,576 |
| AgVantage Securities(1) | On-balance sheet | 3,776,849 | 3,521,143 |
| LTSPCs and unfunded loan commitments | Off-balance sheet | 360,709 | 401,647 |
| Total Power & Utilities | $7,300,354 | $6,809,366 | |
| Broadband Infrastructure: | |||
| Loans | On-balance sheet | $748,748 | $622,207 |
| Unfunded loan commitments | Off-balance sheet | 425,693 | 180,259 |
| Total Broadband Infrastructure | $1,174,441 | $802,466 | |
| Renewable Energy: | |||
| Loans | On-balance sheet | $1,573,112 | $1,265,700 |
| Unfunded loan commitments | Off-balance sheet | 367,924 | 150,825 |
| Total Renewable Energy | $1,941,036 | $1,416,525 | |
| Total Infrastructure Finance | $10,415,831 | $9,028,357 | |
| Total | $30,587,259 | $29,523,030 | |
(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 June 30, 2025:
Table 19
| Schedule of Principal Amortization as of June 30, 2025 | ||||
|---|---|---|---|---|
| Loans · Loans Underlying Off-Balance Sheet Farmer Mac Guaranteed Securities and LTSPCs · USDA Securities and Farmer Mac Guaranteed USDA Securities · Total | ||||
| (in thousands) | ||||
| 2025 | $459,205 | $303,466 | $58,637 | $821,308 |
| 2026 | 862,985 | 547,190 | 121,076 | 1,531,251 |
| 2027 | 805,531 | 470,382 | 119,185 | 1,395,098 |
| 2028 | 1,110,330 | 316,160 | 119,369 | 1,545,859 |
| 2029 | 1,041,891 | 432,635 | 120,317 | 1,594,843 |
| Thereafter | 10,561,166 | 2,564,519 | 2,101,725 | 15,227,410 |
| Total | $14,841,108 | $4,634,352 | $2,640,309 | $22,115,769 |
Of the $30.6 billion outstanding business volume as of June 30, 2025, $8.0 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, we expect business volumes in AgVantage securities to continue to fluctuate. The following table summarizes by maturity date the outstanding principal amount of AgVantage securities as of June 30, 2025:
Table 20
| AgVantage Balances by Year of Maturity | |
|---|---|
| As of | |
| June 30, 2025 | |
| (in thousands) | |
| 2025 | $1,140,844 |
| 2026 | 1,328,515 |
| 2027 | 1,191,393 |
| 2028 | 693,367 |
| 2029 | 1,058,784 |
| Thereafter(1) | 2,608,884 |
| Total | $8,021,787 |
(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 June 30, 2025.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.