FEDERAL AGRICULTURAL MORTGAGE CORP

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 5

(1)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.

(2)NES is a non-GAAP measure. See MD&A—Use of Non-GAAP Measures—Net Effective Spread for more information and Table 9 for a reconciliation of NII to NES.

(3)Includes NII of $4.1 million and $4.5 million for the years ended December 31, 2025 and 2024, respectively, related to consolidated trusts owned by third parties reclassified from net interest income to guarantee and commitment fees.

(4)Reflects reconciling adjustments for the reclassification to exclude expenses related to undesignated financial derivatives 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.

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

Table 6

The following sections provide more detail about specific components of our results of operations.

Net Interest Income. The following tables provide information about interest-earning assets and funding, composition of changes in NII due to rate and volume, and a reconciliation of NII to NES for the years ended December 31, 2025 and 2024. See MD&A—Use of Non-GAAP Measures—Net Effective Spread for more information about the differences between NII and NES. Our interest-earning assets include:

•"Liquidity investments", which are defined as cash, cash equivalents (including U.S. Treasury securities, operational deposits, and other short-term money market instruments), and other investment securities (including securities guaranteed by the U.S. Government and its agencies or by GSEs and asset backed securities) that can be drawn upon for liquidity needs. For additional details regarding our liquidity investments, see MD&A—Liquidity and Capital Resources.

•"Program Assets" are those assets that fulfill our mission to increase the accessibility of financing to provide vital liquidity for American agriculture and rural infrastructure, and include Eligible Loans, Farmer Mac Guaranteed Securities and USDA Securities.

Table 7

Table 8

Table 9

The year-over-year increase of $36.9 million in NII and $43.5 million in NES for 2025 were primarily attributable to the same drivers, which include a $34.3 million increase related to net new business volume and a $7.0 million increase due to a net increase of $182.3 million in non-interest-bearing funding primarily attributable to strong growth in retained earnings during 2025. The year-over-year increase in NII was further offset by a $4.8 million decrease in the fair value of designated financial derivatives, the impact of which is excluded from NES. The increase in yield attributable to net new business volume was comprised of $23.9 million due to growth in the Infrastructure Finance loans and $16.8 million due to growth in the Agricultural Finance loans, partially offset by a decrease of $6.4 million due to a net decrease in AgVantage securities.

See Note 12—Business Segment Reporting to the consolidated financial statements for more information about NII and NES from our business segments. See MD&A—Supplemental Information for quarterly NES by line of business.

Provision for and Release of Allowance for Losses. The following table summarizes the components of our total allowance for losses for the two-year period ended December 31, 2025:

Table 10

Our allowance for loan loss increased $14.3 million from December 31, 2024 to December 31, 2025, primarily due to $32.9 million in provision expense offset by $20.9 million in charge-offs. The provision expense is attributable to some individually significant credit deteriorations in our Corporate AgFinance and Broadband Infrastructure portfolios and year-over-year volume growth.

For additional information, see Note 7—Loans to the consolidated financial statements and MD&A—Risk Management—Credit Risk—Loans and Guarantees.

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

Table 11

These changes in fair value are primarily the result of fluctuations in 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 "(Losses)/gains due to terminations or net settlements" in the table above. See Note 5—Financial Derivatives to the consolidated financial statements for more information about our financial derivatives.

Operating Expenses. The following table summarizes components of operating expenses for the years ended December 31, 2025 and 2024:

Table 12

The year-over-year increase in compensation and employee benefits expenses for the year ended December 31, 2025 was largely due to increased head count and increased bonus accruals associated with strong financial performance compared to targets in 2025.

The year-over-year increase in general and administrative expenses for the year ended December 31, 2025 was primarily attributable to an increase in information technology infrastructure costs, transactional legal fees, and hiring expenses.

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

Table 13

The year-over-year decrease in income tax expense and the effective tax rate for the year ended December 31, 2025 is primarily attributable to increased purchases of renewable energy investment tax credits, which totaled $61.5 million during 2025 compared to $29.2 million in 2024. The purchases of the 2025 tax credits were at prices that range from approximately $0.91 to $0.94 per $1.00 of credit, resulting in a benefit of $4.8 million, whereas the 2024 purchases, were priced at $0.91 per $1.00 of credit, resulting in a $2.6 million benefit.

Business Volume. The following table presents our outstanding volume in each line of business as of the dates indicated:

Table 14

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

The following table presents the net growth or decrease in our lines of business for the years ended December 31, 2025 and 2024:

Table 15

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

Our outstanding business volume was $33.4 billion as of December 31, 2025, a net increase of $3.8 billion from December 31, 2024 which was primarily attributable to increases in the Infrastructure Finance portfolio after taking into account all new business, maturities, sales, and paydowns on existing assets.

The increase in outstanding business volume during 2025 was attributable to a $2.8 billion increase in outstanding business volume in the Infrastructure Finance portfolio and a $1.0 billion increase in the Agricultural Finance portfolio.

The increase in the Infrastructure Finance portfolio consisted of a $1.1 billion increase in Power & Utilities, a $0.7 billion increase in Broadband Infrastructure, and a $1.0 billion increase in Renewable Energy. These increases in volume were primarily driven by $4.7 billion in new purchases, partially offset by $1.9 billion in scheduled maturities and repayments during the year.

The increase in the Agricultural Finance portfolio during 2025 primarily consisted of a $1.0 billion increase in Farm & Ranch, resulting from net growth of $1.6 billion in loans, loans held in consolidated trusts and LTSPCs and unfunded loan commitments, which was partially offset by a net decrease in Farm & Ranch AgVantage Securities of $0.5 billion. Total Corporate AgFinance volume remained relatively flat when comparing December 31, 2025 to December 31, 2024, as net growth in loans was substantially offset by maturities of AgVantage securities that counterparties did not re-issue.

The level and composition of our 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 external and internal factors. 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 our lines of business, see MD&A—Outlook in this report.

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 December 31, 2025:

Table 16

Of the $33.4 billion outstanding business volume as of December 31, 2025, $8.4 billion were AgVantage securities included in the Agricultural Finance and Infrastructure Finance lines of business. Unlike business volume from our other products, 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 periodic AgVantage securities volume are primarily driven by the larger transaction size typical for that product, scheduled maturity amounts for a particular period, the liquidity needs of our AgVantage counterparties, and changes in the pricing and availability of wholesale funding from other sources. 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 December 31, 2025:

Table 17

(1)Includes various maturities ranging from 2031 to 2055.

The weighted-average remaining maturity of the outstanding AgVantage securities shown in the table above was 5.7 years as of December 31, 2025.

Related Party Transactions. As provided by our statutory Charter, only banks, insurance companies, and other financial institutions or similar entities may hold our Class A voting common stock, and only institutions of the FCS may hold our Class B voting common stock. Our Charter also provides that holders of Class A voting common stock elect five members of our 15-member board of directors and that holders of Class B voting common stock elect five members of the board of directors. The ownership of our two classes of voting common stock is currently concentrated in a small number of institutions. Approximately 48% of the Class A voting common stock is held by three financial institutions, with 31% held by one institution. Approximately 97% of the Class B voting common stock is held by five FCS institutions (two of which are related to each other through a parent-subsidiary relationship).

Unlike some other GSEs, specifically other FCS institutions and the Federal Home Loan Banks, we are not structured as a cooperative owned exclusively by member institutions and established to provide services exclusively to its members. As a stockholder-owned, publicly-traded corporation, we seek to fulfill our mission of serving the financing needs of rural America in a way that is consistent with providing a return on the investment of our stockholders, including those who do not directly participate in our secondary market activities. We generally require most financial institutions that participate in our Agricultural Finance line of business to own a requisite amount of common stock, based on the size and type of institution. As a result of this requirement, coupled with the ability of holders of Class A and Class B voting common stock to elect two-thirds of our board of directors, we regularly conduct business with institutions affiliated with members of Farmer Mac's board of directors and institutions that own large amounts of our voting common stock. We have adopted a Code of Business Conduct and Ethics and other related corporate policies that govern any conflicts of interest that may arise in these transactions, and our policy is to require that any transactions with related parties be conducted in the ordinary course of business, with terms and conditions comparable to those available to any other unrelated counterparty.

The following table summarizes our material relationships with related parties. These related parties consist of all holders of more than ten percent of our total voting common stock outstanding as of December 31, 2025.

Table 18

For more information about related party transactions, see Note 3—Related Party Transactions to the consolidated financial statements.