FEDERAL AGRICULTURAL MORTGAGE CORP

Previous wording

Farmer Mac's business activities, financial performance, and results of operations are, by their nature, subject to risks and uncertainties, including those related to the agricultural industry, infrastructure industries, access to the capital markets, the political and regulatory environment, the level of prevailing interest rates, and overall market conditions. The following risk factors should be considered along with "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of this report, including the risks and uncertainties described in the "Forward-Looking Statements" section. Because new risk factors likely will emerge from time to time, management can neither predict all potential risk factors nor assess the effects of those factors on Farmer Mac's business, operating results, and financial condition or how much any factor, or combination of factors, may affect Farmer Mac's actual results and financial condition. If any of the following risks materialize, Farmer Mac's business, financial condition, or results of operations could be materially and adversely affected. Farmer Mac undertakes no obligation to update or revise this risk factor discussion, unless required by applicable law.

Current wording

Our business activities, financial performance, and results of operations are, by their nature, subject to risks and uncertainties, including those related to the agricultural industry, infrastructure industries, access to the capital markets, the political and regulatory environment, the level of prevailing interest rates, and overall market conditions. The following risk factors should be considered along with MD&A in Item 7 of this report, including the risks and uncertainties described in the "Forward-Looking Statements" section. Because new risk factors likely will emerge from time to time, management can neither predict all potential risk factors nor assess the effects of those factors on our business, operating results, and financial condition or how much any factor, or combination of factors, may affect our actual results and financial condition. If any of the following risks materialize, our business, financial condition, or results of operations could be materially and adversely affected. We undertake no obligation to update or revise this risk factor discussion, unless required by applicable law.

Previous wording

Economic stress caused by disruptive global events, such as geopolitical instability, and natural or human-caused disasters, may materially and adversely affect Farmer Mac's business, operations, operating results, financial condition, liquidity, or capital levels and may heighten other risk factors in this report.

Current wording

Economic stress caused by disruptive global events, such as geopolitical instability, and natural or human-caused disasters, may materially and adversely affect our business, operations, operating results, financial condition, liquidity, or capital levels and may heighten other risk factors in this report.

Previous wording

In a tightly-linked global economy, recent or continuing disruptive global events have contributed and may continue to contribute to economic stress on America’s agricultural producers and infrastructure by disrupting or transforming markets, systems, or resources that America’s farmers, ranchers, and rural service providers rely on to remain profitable. This includes supply chain disruptions that prevent producers from accessing critical resources or that inhibit exports, inflationary effects that put downward pressure on demand for agricultural products or that may increase production expenses, and higher interest rates that may increase the risk that Farmer Mac’s borrowers may default on their loans. Depending on the severity and frequency of these types of disruptive events, as well as the capability of governments and global markets to effectively mitigate the resulting negative effects, a prolonged period of economic stress, including a broader economic downturn or recession, could ensue from these events, which could increase stress on Farmer Mac’s borrowers and their ability to remain profitable and make payments on their loans.

Current wording

In a tightly-linked global economy, recent or continuing disruptive global events have contributed and may continue to contribute to economic stress on America’s agricultural producers and infrastructure by disrupting or transforming markets, systems, or resources that America’s farmers, ranchers, and rural service providers rely on to remain profitable. This includes supply chain disruptions that prevent producers from accessing critical resources or that inhibit exports, inflationary effects that put downward pressure on demand for agricultural products or that may increase production expenses, and higher interest rates that may increase the risk that our borrowers may default on their loans. Depending on the severity and frequency of these types of disruptive events, as well as the capability of governments and global markets to effectively mitigate the resulting negative effects, a prolonged period of economic stress, including a broader economic downturn or recession, could ensue from these events, which could increase stress on our borrowers and their ability to remain profitable and make payments on their loans.

Previous wording

Farmer Mac assumes the ultimate credit risk of borrower defaults on its agricultural mortgage and infrastructure loan assets, and Farmer Mac's earnings, which come from net interest income, guarantee fees, and commitment fees on those assets, depend significantly on their performance. Widespread and sustained repayment shortfalls on loans in Farmer Mac's portfolio could result in losses, particularly if the value of the available collateral does not cover Farmer Mac's exposure, and could materially and adversely affect Farmer Mac’s business, operations, operating results, financial condition, liquidity, or capital levels. The occurrence of these disruptive events and resulting negative economic effects may also heighten other risk factors described in this report.

Current wording

Unless we have transferred the credit risk to a third party, we assume the ultimate credit risk of borrower defaults on our agricultural mortgage and infrastructure loan assets, and our earnings, which come from net interest income, guarantee fees, and commitment fees on those assets, depend significantly on their performance. Widespread and sustained repayment shortfalls on loans in our portfolio could result in losses, particularly if the value of the available collateral does not cover our exposure, and could materially and adversely affect our business, operations, operating results, financial condition, liquidity, or capital levels. The occurrence of these disruptive events and resulting negative economic effects may also heighten other risk factors described in this report.

Previous wording

Weather-related events or other natural or environmental disasters could have a material adverse effect on Farmer Mac’s business, operating results, or financial condition.

Current wording

Weather-related events or other natural or environmental disasters could have a material adverse effect on our business, operating results, or financial condition.

Previous wording

In addition to the general risks posed by adverse weather conditions, Farmer Mac’s exposure to credit risk and the market value of loan collateral is potentially subject to risks associated with farmers and ranchers facing increasing, as well as increasingly-severe, weather incidents. The U.S. experienced 27 separate billion-dollar weather disasters in 2024, surpassed only by the 28 billion-dollar weather disasters in 2023, both of which significantly exceeded the previous high set in 2020 (which had 22 billion-dollar weather disasters) as the highest level in the more than 40 years tracked by the National Oceanic and Atmospheric Administration ("NOAA"). Many climatologists predict increases in average temperatures, more extreme temperatures, and increases in volatile weather over time. These physical changes may prompt changes in regulations or consumer preferences, which in turn could have negative consequences for the business models of borrowers, such as increasing costs, reducing the value of assets, and increasing operating expenses. At the end of 2024, approximately 70% of the United States is classified as experiencing some level of drought or dryness according to the National Drought Mitigation Center, USDA, and NOAA. The effects of severe weather events could make some agricultural properties less suitable for farming or for other alternative uses. Extended periods of drought and dryness can reduce agricultural productivity, cause lasting damage to permanent crops like fruit and tree nuts, and result in producers leaving some fields fallow due to lack of water. These and other effects of severe weather could have an adverse impact on farming operations and the value of loan collateral, which could have a material adverse effect on Farmer Mac’s business, operating results, or financial condition.

Current wording

In addition to the general risks posed by adverse weather conditions, our exposure to credit risk and the market value of loan collateral is potentially subject to risks associated with farmers and ranchers facing increasing, (in both frequency and severity), weather incidents. The U.S. experienced 23 separate billion- dollar weather disasters in 2025, surpassed only by the 27 billion-dollar weather disasters in 2024 and the 28 billion-dollar weather disasters in 2023, both of which significantly exceeded the previous high set in 2020 (which had 22 billion-dollar weather disasters) as the highest level in the more than 40 years tracked by the National Oceanic and Atmospheric Administration. Many climatologists predict increases in average temperatures, more extreme temperatures, and increases in volatile weather over time. These physical changes may prompt changes in regulations or consumer preferences, which in turn could have negative consequences for the business models of borrowers, such as increasing costs, reducing the value of assets, and increasing operating expenses. The effects of severe weather events could make some agricultural properties less suitable for farming or for other alternative uses. Extended periods of drought and dryness can reduce agricultural productivity, cause lasting damage to permanent crops like fruit and tree nuts, and result in producers leaving some fields fallow due to lack of water. These and other effects of severe weather could have an adverse impact on farming operations and the value of loan collateral, which could have a material adverse effect on our business, operating results, or financial condition.

Previous wording

Political and other external factors outside of Farmer Mac's or borrowers' control may impair borrowers' profitability and ability to repay their loans in Farmer Mac's portfolio, which could have a material adverse effect on Farmer Mac's financial condition, results of operations, liquidity, or capital levels.

Current wording

Political and other external factors outside of our or borrowers' control may impair borrowers' profitability and ability to repay their loans in our portfolio, which could have a material adverse effect on our financial condition, results of operations, liquidity, or capital levels.

Previous wording

Potential shifts in U.S. trade policies, tax policies, environmental regulations, and immigration laws with the change in U.S. political leadership could result in significant impacts on agricultural producers and the broader agricultural sector, as well as the infrastructure sector. These changes could lead to both favorable and unfavorable conditions, influencing trade dynamics, the strength of the U.S. dollar, labor costs and availability, and regulatory frameworks. Infrastructure borrowers (particularly those involved in renewable energy projects) may experience delays in completing current projects or future investments in renewable energy and battery storage projects as well as deployment of fiber and broadband infrastructure in rural areas. The agricultural and infrastructure sectors may experience varying degrees of disruption and adaptation in response to these evolving policies, and these changes could increase the uncertainty and volatility of profitability in the agriculture and infrastructure sectors in the near-term.

Current wording

Changes in U.S. trade policies (including tariffs and trade restrictions), tax policies, environmental regulations, and immigration laws could result in significant impacts on agricultural producers and the broader agricultural sector, as well as the infrastructure sector. These changes could lead to both favorable and unfavorable conditions, influencing trade dynamics, the strength of the U.S. dollar, labor costs and availability, and regulatory frameworks. Infrastructure borrowers (particularly those involved in renewable energy projects) may experience delays in completing current projects or future investments in renewable energy and battery storage projects as well as deployment of fiber and broadband infrastructure in rural areas. The agricultural and infrastructure sectors may experience varying degrees of disruption and adaptation in response to political developments and these evolving policies, and these changes could increase the uncertainty and volatility of profitability in the agriculture and infrastructure sectors in the near-term.

Previous wording

Other external factors beyond Farmer Mac's or borrowers' control could impair borrowers' profitability, such as volatility in demand for agricultural products or electricity in rural areas; variability in borrowers' input costs; increased competition among producers due to oversupply or available alternatives; and adverse changes in interest rates and land values. Any of these factors could put downward pressure on the value and profitability of a farming, agribusiness, or rural utilities operation, which could then inhibit the related borrower's repayment capacity on one or more loans that Farmer Mac may have from that borrower in its portfolio. A significant number of defaults, or a single default from a large borrower exposure, stemming from one or more of these factors could have a material adverse effect on Farmer Mac's financial condition, results of operations, liquidity, or capital levels.

Current wording

Other external factors beyond our or borrowers' control could impair borrowers' profitability, such as volatility in demand for agricultural products or electricity in rural areas; variability in borrowers' input costs; increased competition among producers due to oversupply or available alternatives; and adverse changes in interest rates and land values. Any of these factors could put downward pressure on the value and profitability of a farming, agribusiness, or rural infrastructure operation, which could then inhibit the related borrower's repayment capacity on one or more loans from that borrower in our portfolio. A significant number of defaults, or a single default from a large borrower exposure, stemming from one or more of these factors could have a material adverse effect on our financial condition, results of operations, liquidity, or capital levels.

Previous wording

A decline in the value of collateral securing loans in Farmer Mac's portfolio or a decline in the value of Farmer Mac's borrowers could increase the probability of loss in the event of default, which could have a material adverse effect on Farmer Mac's financial condition, results of operations, liquidity, or capital levels.

Current wording

A decline in the value of collateral securing loans in our portfolio or a decline in the value of our borrowers could increase the probability of loss in the event of default, which could have a material adverse effect on our financial condition, results of operations, liquidity, or capital levels.

Previous wording

Farmer Mac's credit risk may increase due to a decline in the collateral values securing the loans in Farmer Mac's portfolio. Specialized or highly improved collateral, such as storage and processing facilities, permanent plantings, rural utilities, broadband, and renewable energy facilities, increase the risk of undercollateralization in a default scenario because producers requiring specialized or highly improved collateral are generally less able to adapt their operations or switch functional production when faced with adverse conditions. Highly improved properties also face higher risk of loss in a default scenario, as the pool of potential purchasers in a sale or foreclosure action may be smaller for a highly improved property than for a property that is adaptable to multiple uses. If a borrower defaults and Farmer Mac forecloses on a loan secured by property that is specialized or highly improved, Farmer Mac has experienced, and may in the future experience, losses if the value of the property has dropped significantly since origination or if there is a limited pool of potential purchasers willing to purchase the property at the price necessary for Farmer Mac to recoup its investment. Farmer Mac's credit risk may also increase due to a decline in the enterprise value of borrowers whose loans have been underwritten based on the estimated value of the borrower as a going concern. External market factors outside of the borrower's control may cause stress in the related industry, such as decrease in market demand, disruptions in supply chain, geopolitical or regulatory action, or increased market competition. A borrower's management decisions, such as poorly executed acquisitions or growth strategies or inability to adapt to changing market conditions, may also adversely affect that borrower's ability to repay its loan. In these scenarios, the borrower may experience downward pressure on cash flows and liquidity, which not only may contribute to an increased risk of default, but also could decrease the borrower's enterprise value. Farmer Mac has incurred, and may in the future incur, losses if the value of the collateral securing a loan or the enterprise value of a borrower is less than the outstanding principal balance of Farmer Mac's loan at the time of foreclosure or sale, liquidation, or other disposition of the business. If losses caused by declines in collateral value or borrower enterprise value occur across a large number of loans, or across loans with large principal balances in the aggregate, this could have a material adverse effect on Farmer Mac's financial condition, results of operations, liquidity, or capital levels.

Current wording

Our credit risk may increase due to a decline in the collateral values securing the loans in our portfolio. Specialized or highly improved collateral, such as storage and processing facilities, permanent plantings, rural utilities, broadband, and renewable energy facilities, increase the risk of undercollateralization in a default scenario because producers requiring specialized or highly improved collateral are generally less able to adapt their operations or switch functional production when faced with adverse conditions. Highly improved properties also face higher risk of loss in a default scenario, as the pool of potential purchasers in a sale or foreclosure action may be smaller for a highly improved property than for a property that is adaptable to multiple uses. If a borrower defaults and we foreclose on a loan secured by property that is specialized or highly improved, we have experienced, and may in the future experience, losses if the value of the property has dropped significantly since origination or if there is a limited pool of potential purchasers willing to purchase the property at the price necessary for us to recoup our investment. Our credit risk may also increase due to a decline in the enterprise value of borrowers whose loans have been underwritten based on the estimated value of the borrower as a going concern. External market factors outside of the borrower's control may cause stress in the related industry, such as decrease in market demand, disruptions in supply chain, geopolitical or regulatory action, or increased market competition. A borrower's management decisions, such as poorly executed acquisitions or growth strategies or inability to adapt to changing market conditions, may also adversely affect that borrower's ability to repay its loan. In these scenarios, the borrower may experience downward pressure on cash flows and liquidity, which not only may contribute to an increased risk of default, but also could decrease the borrower's enterprise value. We have incurred, and may in the future incur, losses if the value of the collateral securing a loan or the enterprise value of a borrower is less than the outstanding principal balance of the loan at the time of foreclosure or sale, liquidation, or other disposition of the business. If losses caused by declines in collateral value or borrower enterprise value occur across a large number of loans, or across loans with large principal balances in the aggregate, this could have a material adverse effect on our financial condition, results of operations, liquidity, or capital levels.

Previous wording

Concentrations in Farmer Mac's loan or investment portfolios, or to one or more borrowers or counterparties, may increase Farmer Mac's exposure to credit risk, which could materially and adversely affect its business, operating results, and financial condition.

Current wording

Concentrations in our loan or investment portfolios, or to one or more borrowers or counterparties, may increase our exposure to credit risk, which could materially and adversely affect our business, operating results, and financial condition.

Previous wording

Farmer Mac's exposure to credit risk may increase due to concentrations in its loan portfolio, which can include concentrated exposure to particular commodities, geographic regions, or collateral types, as well as concentrations in processing and manufacturing segments of agricultural supply chains or in rural utilities or renewable energy industries. Widespread weakening in the financial condition of borrowers within a particular geographic region that produce particular commodities or rely on particular collateral, that engage in processes or production that depend on a fluid supply chain, or that produce or provide a specialized infrastructure service or product could negatively affect Farmer Mac’s financial condition if sufficient diversity in these areas does not successfully mitigate concentration risk.

Current wording

Our exposure to credit risk may increase due to concentrations in our loan portfolio, which can include concentrated exposure to particular commodities, geographic regions, or collateral types, as well as concentrations in processing and manufacturing segments of agricultural supply chains or in rural utilities or renewable energy industries. Widespread weakening in the financial condition of borrowers within a particular geographic region that produce particular commodities or rely on particular collateral, that engage in processes or production that depend on a fluid supply chain, or that produce or provide a specialized infrastructure service or product could negatively affect our financial condition if sufficient diversity in these areas does not successfully mitigate concentration risk.

Previous wording

Farmer Mac's exposure to credit risk may also increase due to concentrated exposure to a particular borrower or counterparty. Farmer Mac’s portfolio consists of loans varying in size and by borrower, including large exposures ($25 million or more) to individual borrowers. The default of any one of these borrowers could negatively affect Farmer Mac's financial condition. Farmer Mac also has concentrated exposures to individual business counterparties on AgVantage securities, which are general obligations of institutional counterparties secured by eligible loans held by the issuing institution. Although AgVantage securities are collateralized by eligible loans in a principal amount equal to or greater than the principal amount of the securities outstanding, Farmer Mac could suffer losses if the market value of the loan collateral declines and the counterparty defaults. Taking possession of the loan collateral upon a default by the AgVantage counterparty could also result in higher current expected credit losses for Farmer Mac's loans held on balance sheet, as well as increased capital requirements. As of December 31, 2024, $7.6 billion of the $8.5 billion of AgVantage securities outstanding had been issued by three counterparties. A default by any of these counterparties could have a significant adverse effect on Farmer Mac's business, operating results, and financial condition.

Current wording

Our exposure to credit risk may also increase due to concentrated exposure to a particular borrower or counterparty. Our portfolio consists of loans varying in size and by borrower, including large exposures ($25 million or more) to individual borrowers. The default of any one of these borrowers could negatively affect our financial condition. We also have concentrated exposures to individual business counterparties on AgVantage securities, which are general obligations of institutional counterparties secured by Eligible Loans held by the issuing institution. Although AgVantage securities are collateralized by Eligible Loans in a principal amount equal to or greater than the principal amount of the securities outstanding, we could suffer losses if the market value of the loan collateral declines and the counterparty defaults. Taking possession of the loan collateral upon a default by the AgVantage counterparty could also result in higher current expected credit losses for our loans held on balance sheet, as well as increased capital requirements. As of December 31, 2025, $7.6 billion of the $8.4 billion of AgVantage securities outstanding had been issued by three counterparties. A default by any of these counterparties could have a significant adverse effect on Farmer Mac's business, operating results, and financial condition.

Previous wording

Farmer Mac's exposure to credit risk may also increase due to concentrated exposure to one or more investment types or counterparties in the investment portfolio Farmer Mac maintains for liquidity. This investment portfolio consists primarily of cash and cash equivalents, U.S. Treasury securities, investment securities guaranteed by U.S. Government agencies and GSEs, and asset-backed securities backed primarily by U.S. Government-guaranteed loans. Farmer Mac regularly reviews concentration limits to ensure that its investments are appropriately diversified and comply with policies approved by Farmer Mac's board of directors and with applicable FCA regulations, but Farmer Mac is still exposed to credit risk from issuers of the investment securities it holds, particularly to issuers to whom Farmer Mac may have a higher concentration of exposure relative to the rest of Farmer Mac's investment portfolio. For example, as of December 31, 2024, Farmer Mac held at fair value $4.3 billion of investment securities guaranteed by GSEs. A default by multiple issuers of investment securities held by Farmer Mac or by a single issuer of investment securities in which Farmer Mac is more heavily concentrated could have an adverse effect on Farmer Mac's business, operating results, and financial condition.

Current wording

Our exposure to credit risk may also increase due to concentrated exposure to one or more investment types or counterparties in the investment portfolio we maintain for liquidity. This investment portfolio consists primarily of cash and cash equivalents, U.S. Treasury securities, investment securities guaranteed by U.S. Government agencies and GSEs, and asset-backed securities backed primarily by U.S. Government-guaranteed loans. We regularly review concentration limits to ensure that our investments are appropriately diversified and comply with policies approved by our board of directors and with applicable FCA regulations, but we are still exposed to credit risk from issuers of the investment securities we hold, particularly to issuers to whom we may have a higher concentration of exposure relative to the rest of our investment portfolio. For example, as of December 31, 2025, we held at fair value $4.9 billion of investment securities guaranteed by GSEs. A default by multiple issuers of investment securities we hold or by a single issuer of investment securities in which we are more heavily concentrated could have an adverse effect on our business, operating results, and financial condition.

Previous wording

Farmer Mac Guaranteed Securities and LTSPCs expose Farmer Mac to significant contingent liabilities, and Farmer Mac's ability to fulfill its obligations under its guarantees and LTSPCs may be limited.

Current wording

Our Guaranteed Securities and LTSPCs expose us to significant contingent liabilities, and our ability to fulfill our obligations under our guarantees and LTSPCs may be limited.

Previous wording

Farmer Mac's guarantee and purchase commitment obligations to third parties, including LTSPCs and securities guaranteed by Farmer Mac, are obligations of Farmer Mac only and are not backed by the full faith and credit of the United States, FCA, or any other agency or instrumentality of the United States other than Farmer Mac. As of December 31, 2024, Farmer Mac had $4.5 billion of contingent liabilities related to LTSPCs and securities issued to third parties and guaranteed by Farmer Mac, which represents Farmer Mac's exposure if all loans underlying these LTSPCs and guarantees defaulted and Farmer Mac recovered no value from the related collateral. If this were to occur, the funds available for payment on these guarantees and LTSPCs could be substantially less than the aggregate amount of the corresponding liabilities. As of December 31, 2024, Farmer Mac held cash, cash equivalents, and other investment securities with a fair value of $7.0 billion that could be used as a source of funds for payment on its obligations, including its guarantee and LTSPC obligations. Although Farmer Mac believes that it remains well-collateralized on the assets underlying its guarantee and LTSPC obligations to third parties and that the estimated probable losses for these obligations remain low relative to the amount available for payment of claims on these obligations, Farmer Mac's total contingent liabilities for these obligations could exceed the amount it may have available for payment of Farmer Mac's obligations, including claims on Farmer Mac's contingent obligations. See "Management's Discussion and Analysis—Risk Management—Credit Risk – Loans and Guarantees" for more information on Farmer Mac's management of credit risk.

Current wording

Our guarantee and purchase commitment obligations to third parties, including LTSPCs and securities that we guarantee, are solely our obligations and are not backed by the full faith and credit of the United States, FCA, or any other agency or instrumentality of the United States other than Farmer Mac. As of December 31, 2025, we had $5.4 billion of contingent liabilities related to LTSPCs and securities issued to third parties that we guarantee, which represents our exposure if all loans underlying these LTSPCs and guarantees defaulted and we recovered no value from the related collateral. If this were to occur, the funds available for payment on these guarantees and LTSPCs could be substantially less than the aggregate amount of the corresponding liabilities. As of December 31, 2025, we held cash, cash equivalents, and other investment securities with a fair value of $7.8 billion that could be used as a source of funds for payment on our obligations, including our guarantee and LTSPC obligations. Although we believe that we remain well-collateralized on the assets underlying our guarantee and LTSPC obligations to third parties and that the estimated probable losses for these obligations remain low relative to the amount available for payment of claims on these obligations, our total contingent liabilities for these obligations could exceed the amount we may have available for payment of our obligations, including claims on contingent obligations. See MD&A—Risk Management—Credit Risk – Loans and Guarantees for more information on our management of credit risk.

Previous wording

Farmer Mac is exposed to counterparty risk on both its cleared and non-cleared swaps transactions that could materially and adversely affect its business, operating results, and financial condition.

Current wording

We are exposed to counterparty risk on both our cleared and non-cleared swaps transactions that could materially and adversely affect our business, operating results, and financial condition.

Previous wording

Farmer Mac uses interest rate swap contracts and hedging arrangements to manage its interest rate risk. Farmer Mac clears a significant portion of its interest rate swaps through a swap clearinghouse and uses the services of a futures commission merchant to post and receive mark-to-market margin amounts. Farmer Mac also transacts non-cleared (bilateral) derivative contracts directly with swap counterparties and posts and receives collateral to secure the market value of those contracts. A failure of any of these counterparties could cause intra-day disruption for Farmer Mac's swap operations if the failure were to prompt a termination of all or part of Farmer Mac's swap positions or if Farmer Mac were unable to quickly access margin or collateral amounts. These conditions could be exacerbated in volatile market conditions, in which the market could move against Farmer Mac's position before Farmer Mac had time to reposition its swaps. These events could have a negative effect on Farmer Mac's operations and liquidity and could expose Farmer Mac to more interest rate risk, which could materially and adversely affect its business, operating results, and financial condition. As of December 31, 2024, the aggregate notional balance of Farmer Mac's cleared swaps was $19.1 billion, and the aggregate notional balance of Farmer Mac's non-cleared swaps was $5.7 billion.

Current wording

We use interest rate swap contracts and hedging arrangements to manage our interest rate risk. We clear a significant portion of our interest rate swaps through a swap clearinghouse and use the services of a futures commission merchant to post and receive mark-to-market margin amounts. We also transact non-cleared (bilateral) derivative contracts directly with swap counterparties and post and receive collateral to secure the market value of those contracts. A failure of any of these counterparties could cause intra-day disruption for our swap operations if the failure were to prompt a termination of all or part of our swap positions or if we were unable to quickly access margin or collateral amounts. These conditions could be exacerbated in volatile market conditions, in which the market could move against our position before we have time to reposition our swaps. These events could have a negative effect on our operations and liquidity and could expose us to more interest rate risk, which could materially and adversely affect our business, operating results, and financial condition. As of December 31, 2025, the aggregate notional balance of our cleared swaps was $19.4 billion, and the aggregate notional balance of our non-cleared swaps was $6.0 billion.

Previous wording

Farmer Mac's business, operating results, financial condition, and capital levels may be materially and adversely affected by external factors that may affect the demand for Farmer Mac's secondary market, the price or marketability of Farmer Mac's products, or Farmer Mac's ability to offer its products and services.

Current wording

Our business, operating results, financial condition, and capital levels may be materially and adversely affected by external factors that may affect the demand for our secondary market, the price or marketability of our products, or our ability to offer our products and services.

Previous wording

Farmer Mac's business, operating results, financial condition, and capital levels may be materially and adversely affected by external factors that may affect the price or marketability of Farmer Mac's products and services or Farmer Mac's ability to offer its products and services, including, but not limited to:

Current wording

Our business, operating results, financial condition, and capital levels may be materially and adversely affected by external factors that may affect the price or marketability of our products and services or our ability to offer our products and services, including, but not limited to:

Previous wording

•competitive pressures in Farmer Mac's loan purchase and guarantee activities or in the issuance of its debt securities;

Current wording

•competitive pressures in our loan purchase and guarantee activities or in the issuance of our debt securities;

Previous wording

•changes in interest rates that may increase Farmer Mac's funding costs;

Current wording

•changes in interest rates that may increase our funding costs;

Previous wording

•market or customer perception of Farmer Mac's reputation;

Current wording

•market or customer perception of our reputation;

Previous wording

•legislative or regulatory developments adversely affecting Farmer Mac's ability to offer new products, the ability or motivation of lenders to participate in Farmer Mac's lines of business, or the cost of related corporate activities;

Current wording

•legislative or regulatory developments adversely affecting our ability to offer new products, the ability or motivation of lenders to participate in our lines of business, or the cost of related corporate activities;

Previous wording

An inability to access the equity and debt capital markets could have a material adverse effect on Farmer Mac's business, operating results, financial condition, liquidity, and capital levels.

Current wording

An inability to access the equity and debt capital markets could have a material adverse effect on our business, operating results, financial condition, liquidity, and capital levels.

Previous wording

Farmer Mac's ability to operate its business, meet its obligations, generate asset volume growth, and fulfill its statutory mission depends on Farmer Mac's continued access to the U.S. financial markets at favorable rates and terms to remain adequately capitalized through the issuance of equity and with adequate access to liquidity through the issuance of debt securities. The issuance of debt securities is Farmer Mac's primary source for repaying or refinancing existing debt and to fund contingent liabilities, as needed. Farmer Mac's ability to access the debt and equity markets to raise capital, fund its assets, repay debt, and earn net interest income depends on market perception of Farmer Mac. If Farmer Mac were unable to access the U.S. financial markets to issue equity or debt securities at favorable rates and terms, Farmer Mac's business, operating results, liquidity, or financial condition could be adversely affected.

Current wording

Our ability to operate our business, meet our obligations, generate asset volume growth, and fulfill our statutory mission depends on our continued access to the U.S. financial markets at favorable rates and terms to remain adequately capitalized through the issuance of equity and with adequate access to liquidity through the issuance of debt securities. The issuance of debt securities is our primary source for repaying or refinancing existing debt and to fund contingent liabilities, as needed. Our ability to access the debt and equity markets to raise capital, fund our assets, repay debt, and earn net interest income depends on market perception of Farmer Mac. If we are unable to access the U.S. financial markets to issue equity or debt securities at favorable rates and terms, our business, operating results, liquidity, or financial condition could be adversely affected.

Previous wording

The loss of business from key business counterparties or customers, including AgVantage counterparties, could weaken Farmer Mac's business and decrease its revenues and profits.

Current wording

The loss of business from key business counterparties or customers, including AgVantage counterparties, could weaken our business and decrease our revenues and profits.

Previous wording

Farmer Mac's business and ability to generate revenues and profits largely depends on its ability to purchase eligible loans or place eligible loans under guarantees or LTSPCs and to purchase or guarantee AgVantage securities. Farmer Mac conducts a significant portion of its business with a few business counterparties. This concentration of business could potentially result in increased variability in Farmer Mac's business as existing assets pay down or mature and the status and needs of Farmer Mac's customers evolve. In 2024, ten institutions generated approximately 65% of loan purchase volume in the Agricultural Finance line of business. Between December 31, 2023 and December 31, 2024, the outstanding balance of Farmer Mac's AgVantage securities decreased by approximately $1.5 billion. As of December 31, 2024, approximately 89.1% of the $8.5 billion outstanding principal amount of AgVantage securities (of which $1.6 billion and $1.2 billion will be maturing in 2025 and 2026, respectively) were issued by three institutions. As of December 31, 2024, transactions with two institutions represented nearly all of the business volume under Farmer Mac's Infrastructure Finance line of business. Farmer Mac's ability to maintain the current relationships with its business counterparties or customers and the business generated by those business counterparties or customers is significant to Farmer Mac's business. As a result, the loss of business from any one of Farmer Mac's key business counterparties could decrease Farmer Mac's revenues and profitability. Farmer Mac may be unable to replace the loss of business of a key business counterparty or customer with alternate sources of business due to limitations on the types of assets eligible for Farmer Mac's secondary market, which could adversely affect Farmer Mac's business and decrease its revenues and profits.

Current wording

Our business and ability to generate revenues and profits largely depends on our ability to purchase Eligible Loans or place Eligible Loans under guarantees or LTSPCs and to purchase or guarantee AgVantage securities. We conduct a significant portion of our business with a few business counterparties. This concentration of business could potentially result in increased variability in our business as existing assets pay down or mature and the status and needs of our customers evolve. In 2025, ten institutions generated approximately 55% of loan purchase volume in the Agricultural Finance line of business. Between December 31, 2024 and December 31, 2025, the outstanding balance of our AgVantage securities decreased by approximately $0.1 billion. As of December 31, 2025, approximately 90.6% of the $8.4 billion outstanding principal amount of AgVantage securities (of which $1.2 billion and $0.9 billion will be maturing in 2026 and 2027, respectively) were issued by three institutions. As of December 31, 2025, transactions with two institutions represented nearly all of the business volume under our Infrastructure Finance line of business. Our ability to maintain the current relationships with our business counterparties or customers and the business generated by those business counterparties or customers is significant to our business. As a result, the loss of business from any one of our key business counterparties could decrease our revenues and profitability. We may be unable to replace the loss of business of a key business counterparty or customer with alternate sources of business due to limitations on the types of assets eligible for our secondary market, which could adversely affect our business and decrease our revenues and profits.

Previous wording

Farmer Mac's efforts to expand product offerings and services to its customers exposes Farmer Mac to operational risk that could materially and adversely affect its business, operating results, or financial condition.

Current wording

Our efforts to expand product offerings and services to our customers expose us to business, operational and other risks that could materially and adversely affect our business, operating results, or financial condition.

Previous wording

As the needs of Farmer Mac's customer base and rural America evolve, Farmer Mac seeks to respond by offering new products and services to meet these needs. As Farmer Mac expands its product offerings and services, it is exposed to operational risk in implementing these new products and services. New products and services may require new operational processes, which often require new internal controls to manage new risks that these new processes present. If these controls are insufficient or ineffective to manage the risks inherent in these new processes, or if there is human error in executing these new controls either due to their novelty or otherwise, Farmer Mac could face financial loss, reputational damage, or regulatory enforcement, which could materially and adversely affect Farmer Mac's business, operating results, or financial condition.

Current wording

As the needs of our customer base and rural America evolve, we seek to respond by offering new products and services to meet these needs. We invest significant time and resources in developing and marketing new products and services. Initial timetables for the introduction and development of new products or services may not be achieved, and profitability targets may not prove feasible. External factors, such as compliance with laws and regulations, competitive alternatives, and shifting consumer preferences, may also impact the successful implementation of a new product or service. Further, as we expand our product offerings and services, we are exposed to operational risk in implementing these new products and services. New products and services may require new operational processes, which often require new internal controls to manage new risks that these new processes present. If these controls are insufficient or ineffective to manage the risks inherent in these new processes, or if there is human error in executing these new controls either due to their novelty or otherwise, we could face financial loss, reputational damage, or regulatory enforcement, which could materially and adversely affect our business, operating results, or financial condition.

Previous wording

The inadequacy or failure of Farmer Mac's operational systems, cybersecurity program, internal controls or processes, or infrastructure, or those of third parties, could have a material adverse effect on Farmer Mac's business, operating results, or financial condition.

Current wording

The inadequacy or failure of our operational systems, cybersecurity program, internal controls or processes, or infrastructure, or those of third parties, could have a material adverse effect on our business, operating results, or financial condition.

Previous wording

Farmer Mac is exposed to operational risk due to the complex nature of its business operations and the processes and systems used to undertake its business activities and comply with regulatory requirements. Operational risk includes the risk of loss to Farmer Mac resulting from:

Current wording

We are exposed to operational risk due to the complex nature of our business operations and the processes and systems used to undertake our business activities and comply with regulatory requirements. Operational risk includes the risk of loss resulting from:

Previous wording

•Farmer Mac's inability to successfully implement enhancements to any of these or migrate to new systems or infrastructure;

Current wording

•inability to successfully implement enhancements to any of these or migrate to new systems or infrastructure;

Previous wording

•any cybersecurity incident or compromise of Farmer Mac's information systems or security measures (including of its third parties), or the unauthorized access and/or acquisition of data;

Current wording

•any cybersecurity incident or compromise of our information systems or security measures (including of our third parties), or the unauthorized access and/or acquisition of data;

Previous wording

Farmer Mac relies on business processes that largely depend on people, technology, and the use of complex systems and models to manage its business, process a high volume of daily transactions, and generate the records on which Farmer Mac's financial statements are based. Inadequacies or failures in Farmer Mac's internal processes, personnel, systems, cybersecurity program, or infrastructure could lead to a significant disruption to business operations; unauthorized access to, or acquisition, destruction, alteration, release, theft, or loss of, confidential, proprietary, or personal data; fraud on Farmer Mac's business and customers; extortion; financial and economic loss or costs; errors in its financial statements; impairment of its liquidity; harm to its employees, customers, or vendors; liability or service interruptions to its customers; loss of customers or vendors; violation of data protection laws and other litigation and legal risk; increased regulatory or legislative scrutiny; or reputational damage.

Current wording

We rely on business processes that largely depend on people, technology, and the use of complex systems and models to manage our business, process a high volume of daily transactions, and generate the records on which our financial statements are based. Inadequacies or failures in our internal processes, personnel, systems, cybersecurity program, or infrastructure could lead to a significant disruption to business operations; unauthorized access to, or acquisition, destruction, alteration, release, theft, or loss of, confidential, proprietary, or personal data; fraud on our business and customers; extortion; financial and economic loss or costs; errors in our financial statements; impairment of our liquidity; harm to our employees, customers, or vendors; liability or service interruptions to our customers; loss of customers or vendors; violation of data protection laws and other litigation and legal risk; increased regulatory or legislative scrutiny; or reputational damage.

Previous wording

The potential for operational risk exposure also exists as a result of Farmer Mac's interactions with, and reliance on, third parties. Farmer Mac's business relies on its ability to process, evaluate, and interpret significant amounts of information, much of which third parties provide or process. Yet Farmer Mac's ability to implement safeguards preventing disruption or unauthorized access to third-party systems or infrastructure is more limited than for its own systems or infrastructure. If the financial, accounting, data processing, backup, information technology, or other operating systems and infrastructure of third parties with whom Farmer Mac interacts or upon whom it relies fail to operate properly, are subject to unauthorized access or improper use, or are disrupted, then Farmer Mac may be impacted in the same manner as it would be due to inadequacies or failures in Farmer Mac's own internal processes, personnel, systems, cybersecurity program, or infrastructure.

Current wording

The potential for operational risk exposure also exists as a result of our interactions with, and reliance on, third parties and we are aware of cybersecurity incidents involving third parties in the past. Our business relies on our ability to process, evaluate, and interpret significant amounts of information, much of which third parties provide or process. Yet our ability to implement safeguards preventing disruption or unauthorized access to third-party systems or infrastructure is more limited than for our own systems or infrastructure. Although we have not experienced a material loss due to a breach of third party systems, unauthorized access to a third party service provider's information technology assets or data may significantly impact our operations in the same manner as incidents on our own systems. If the financial, accounting, data processing, backup, information technology, or other operating systems and infrastructure of third parties with whom we interact or upon whom we rely fail to operate properly, are subject to unauthorized access or improper use, or are disrupted, then we may be impacted in the same manner as we would be due to inadequacies or failures in our own internal processes, personnel, systems, cybersecurity program, or infrastructure.

Previous wording

Farmer Mac’s internal loan servicing function and reliance on third-party servicers exposes Farmer Mac to operational risks that could adversely affect its business, operating results, or financial condition.

Current wording

Our internal loan servicing function and reliance on third-party servicers exposes us to operational risks that could adversely affect our business, operating results, or financial condition.

Previous wording

Effective and reliable loan servicing is essential for Farmer Mac to successfully operate its business. Starting in 2021, Farmer Mac expanded its internal loan servicing function through two strategic acquisitions that included the loan servicing rights for a sizeable portion of Farmer Mac’s Agricultural Finance mortgage loan and USDA Securities portfolios, as well as servicing rights for eligible agricultural mortgage loans that are held by an unrelated third party. Farmer Mac has also acquired experienced servicing personnel and an operational servicing platform during that time. This expansion of servicing responsibilities and personnel has required Farmer Mac to implement processes and controls for a business function that Farmer Mac has previously not operated and still has limited experience executing and managing. Farmer Mac also continues to rely on experienced third-party servicers to service the portion of Farmer Mac’s Agricultural Finance mortgage loan portfolio not serviced directly by Farmer Mac. Although Farmer Mac has established servicing standards and requirements to which these third-party servicers are required by contract to adhere and on which they must report to Farmer Mac, Farmer Mac does not manage the processes and controls of these third-party servicers. The ineffective implementation, operation, or oversight of one or more of the servicing processes or controls employed by Farmer Mac or any of its third-party servicers could expose Farmer Mac to operational risk that could adversely affect Farmer Mac’s business, operating results, or financial condition.

Current wording

Effective and reliable loan servicing is essential for us to successfully operate our business. We service a sizable portion of our Agricultural Finance mortgage loan and USDA Securities portfolios, as well as eligible agricultural mortgage loans that are held by an unrelated third party. We also continue to rely on experienced third-party servicers to service the portion of our Agricultural Finance mortgage loan portfolio that we do not service directly. Although we have established servicing standards and requirements to which these third-party servicers are required by contract to adhere and on which they must report to us, we do not manage the processes and controls of these third-party servicers. The ineffective implementation, operation, or oversight of one or more of the servicing processes or controls we employ or any of our third-party servicers could expose us to operational risk that could adversely affect our business, operating results, or financial condition.

Previous wording

A deficiency, failure, interruption, or breach in Farmer Mac's or its service providers' technology and information systems, infrastructure, or cybersecurity program, including the occurrence of a cybersecurity incident, could adversely affect Farmer Mac's business, operating results, or financial condition.

Current wording

A deficiency, failure, interruption, or breach in our or our service providers' technology and information systems, infrastructure, or cybersecurity program, including the occurrence of a cybersecurity incident, could adversely affect our business, operating results, or financial condition.