FEDERAL AGRICULTURAL MORTGAGE CORP

3. FINANCIAL DERIVATIVES

The following tables summarize information related to Farmer Mac's financial derivatives on a gross basis without giving consideration to master netting arrangements. The table below includes accrued interest on cleared swaps, but excludes $38.1 million and $24.2 million of accrued interest receivable and $1.5 million and $2.4 million of accrued interest payable on uncleared swaps as of June 30, 2026 and December 31, 2025, respectively. The aforementioned accrued interest on uncleared swaps is included within Accrued Interest Receivable and Accrued Interest Payable on the consolidated balance sheets.

Table 3.1

(1)Amounts represent the application of the netting requirements that allow Farmer Mac to settle positive and negative positions, including accrued interest, held or placed with the same clearing agent.

(1)Amounts represent the application of the netting requirements that allow Farmer Mac to settle positive and negative positions, including accrued interest, held or placed with the same clearing agent.

As of June 30, 2026, Farmer Mac expects to reclassify $7.4 million after-tax from accumulated other comprehensive income to earnings over the next twelve months related to cash flow hedges. This amount could differ from amounts actually recognized due to changes in interest rates, hedge de-designations, and the addition of other hedges after June 30, 2026.

The following tables summarize the net income/(expense) recognized in the Consolidated Statements of Operations related to derivatives for the three and six months ended June 30, 2026, and 2025:

Table 3.2

The following table displays the carrying amount of the hedged items and associated cumulative basis adjustment related to the application of hedge accounting that is included in the carrying amount of hedged assets and liabilities in fair value hedging relationships as of June 30, 2026 and December 31, 2025:

Table 3.3

(1)Amortized cost of $8.9 billion and $8.0 billion as of June 30, 2026 and December 31, 2025, respectively.

(2)As of June 30, 2026, closed portfolio of loans hedged under the portfolio layer method had an amortized cost of $0.8 billion, of which $66.2 million was designated as the hedged item. The remaining amount of amortized cost is from hedges not designated under the portfolio layer method. There were no portfolio layer hedges as of December 31, 2025.

(3)Carrying amount represents amortized cost.

The following tables present the fair value of financial assets and liabilities, based on the terms of Farmer Mac's master netting arrangements as of June 30, 2026 and December 31, 2025:

Table 3.4

(1)Amounts presented may not agree to the consolidated balance sheet related to counterparties not subject to master netting agreements.

(2)Any over-collateralization at an individual clearing agent and/or counterparty level is not included in the determination of the net amount. As of June 30, 2026, Farmer Mac had additional net exposure of $309.8 million due to instances where Farmer Mac's collateral to a counterparty exceeded the net derivative position and $2.2 million due to instances where Farmer Mac's collateral from a counterparty exceeded the net derivative position.

(1)Amounts presented may not agree to the consolidated balance sheet related to counterparties not subject to master netting agreements.

(2)Any over-collateralization at an individual clearing agent and/or counterparty level is not included in the determination of the net amount. As of December 31, 2025, Farmer Mac had additional net exposure of $235.0 million due to instances where Farmer Mac's collateral to a counterparty exceeded the net derivative position and $16.9 million due to instances where Farmer Mac's collateral from a counterparty exceeded the net derivative position.

Farmer Mac records posted cash as a reduction in the outstanding balance of cash and cash equivalents and an increase in the balance of prepaid expenses and other assets. Any investment securities posted as collateral are included in the investment securities balances on the Consolidated Balance Sheets. If Farmer Mac had breached certain provisions of the derivative contracts as of June 30, 2026 or December 31, 2025, it could have been required to settle its obligations under the agreements, but would not have been required to post additional collateral. As of June 30, 2026 and December 31, 2025, there wereno financial derivatives in a net payable position where Farmer Mac was required to pledge collateral which the counterparty had the right to sell or repledge.

Of Farmer Mac's $28.7 billion notional amount of interest rate swaps outstanding as of June 30, 2026, $20.8 billion were cleared through the Chicago Mercantile Exchange ("CME"). Of Farmer Mac's $25.5 billion notional amount of interest rate swaps outstanding as of December 31, 2025, $19.4 billion were cleared through the CME.

4. LOANS

Under the Agricultural Finance line of business, Farmer Mac hastwo segments – Farm & Ranch and Corporate AgFinance. Farmer Mac monitors and assesses credit risk for each segment, recognizing the different credit risk profiles within each segment.

The following table includes loans held for investment and displays the composition of the loan balances as of June 30, 2026 and December 31, 2025:

Table 4.1

(1)Unpaid principal balance is the basis of presentation in disclosures of outstanding balances for Farmer Mac's lines of business.

Allowance for Losses

The following table is a summary, by asset type, of the allowance for losses as of June 30, 2026 and December 31, 2025:

Table 4.2

The following is a summary of the changes in the allowance for losses for the three and six months ended June 30, 2026 and 2025:

Table 4.3

(1)As of June 30, 2026 and 2025, the allowance for losses for Agricultural Finance Farm & Ranch loans includes $7.6 million and $1.7 million allowance for collateral dependent assets ("CDA") secured by agricultural real estate, respectively.

(2)As of June 30, 2026 and 2025 the allowance for losses for Agricultural Finance Corporate AgFinance loans includes $0.0 million and $1.0 million allowance for CDA secured by agricultural real estate, respectively.

(3)As of June 30, 2026 and 2025 the allowance for losses for Infrastructure Finance loans includes $5.2 million and $0.0 million allowance for CDA.

The $7.0 million and $11.4 million provision to the allowance during the three and six months ended June 30, 2026 is primarily attributed to new volume growth across all of our segments and portfolio credit migration.

The $7.7 million and $9.5 million net provision to the allowance during the three and six months ended June 30, 2025 was primarily attributable to borrower specific downgrades and new volume growth.

The following table presents the unpaid principal balances by delinquency status of Farmer Mac's loans as of June 30, 2026 and December 31, 2025:

Table 4.4

(2)Includes loans that are 90 days or more past due, in foreclosure, or in bankruptcy with at least one missed payment, excluding loans performing under either their original loan terms or a court-approved bankruptcy plan.

(3)Includes $52.4 million of nonaccrual loans for which there was no associated allowance. During the three and six months ended June 30, 2026, Farmer Mac received $12.2 million and $15.8 million, respectively, in interest on nonaccrual loans.

(2)Primarily consists of loans that are 90 days or more past due, in foreclosure, or in bankruptcy with at least one missed payment, excluding loans performing under either their original loan terms or a court-approved bankruptcy plan.

(3)Includes $59.2 million of nonaccrual loans for which there was no associated allowance. During the year ended December 31, 2025, Farmer Mac received $6.5 million in interest on nonaccrual loans.

Credit Quality Indicators

The following tables present credit quality indicators related to Agricultural Finance mortgage loans and Infrastructure Finance loans held as of June 30, 2026 and December 31, 2025, by year of origination:

Table 4.5

Loan Modifications to Borrowers Experiencing Financial Difficulty

As part of its loss mitigation activities, Farmer Mac may agree to modify the contractual terms of loans to borrowers experiencing financial difficulty. These modifications generally consist of payment deferrals and, less frequently, term extensions.

The impact of modifications granted to borrowers experiencing financial difficulty and their subsequent performance is incorporated into Farmer Mac’s allowance methodology. Post-modification performance is monitored through payment performance, delinquency status, risk ratings, collateral values, and collection activity, with changes in these factors reflected in the allowance for credit losses.

The disclosures below are presented beginning in the current period. Comparable prior-period information has not been presented because the related activity was not material in prior periods.

The following table presents the amortized cost and the weighted average financial effect of modifications, as of June 30, 2026 granted to Agricultural Finance and Infrastructure Finance borrowers experiencing financial difficulty during the three and six months ended June 30, 2026:

Table 4.6

(1)Amounts presented are the amortized cost of modified loans, excluding modified loans that were paid off, charged off, or otherwise liquidated as of June 30, 2026.

(2)Represents the weighted average of payment deferrals and term extensions, in months, as a result of the modification granted.

(3)The unfunded lending commitments on the modifications granted during the six months ended June 30, 2026 were $2.2 million.

(4)There were no modifications within the Corporate AgFinance segment during the periods presented above.

The following table presents the performance of the loans under the modified terms as of June 30, 2026, of loan modifications granted during the six months preceding June 30, 2026:

Table 4.7

(1)Current loan amounts are presented based on contractual amortized cost, while past due loan amounts are presented at the contractual amortized cost less charge-offs.

(2)Amounts presented are the amortized cost of modified loans, excluding modified loans that were paid off, charged off, or otherwise liquidated as of June 30, 2026.

Farmer Mac generally considers modifications to borrowers experiencing financial difficulty to have subsequently defaulted when the modified loan becomes 90 days past due following the modification. Loans that subsequently defaulted during both the three and six month periods ended June 30, 2026 totaled $11.0 million.

5. GUARANTEES AND COMMITMENTS

Farmer Mac has recorded a liability for its obligation to stand ready under Farmer Mac's long-term standby purchase commitments ("LTSPCs") in the guarantee and commitment obligation on the consolidated balance sheets. The following table presents Farmer Mac's liability, the maximum principal amount of potential undiscounted future payments that Farmer Mac could be requested to make under all LTSPCs (excluding offsets from recourse provisions, third-party recoveries, or loan collateral), the weighted-average remaining maturity of loans underlying LTSPCs, and the amount of the reserve for losses for the periods indicated:

Table 5.1

6. NOTES PAYABLE

Farmer Mac's borrowings consist of discount notes and medium-term notes, both of which are unsecured general obligations of Farmer Mac. Discount notes generally have original maturities of 1 year or less, whereas medium-term notes generally have original maturities of 0.5 years to 25.0 years.

The following tables set forth information related to Farmer Mac's borrowings as of June 30, 2026 and December 31, 2025:

Table 6.1

The maximum amount of Farmer Mac's discount notes outstanding at any month end during each of the six months ended June 30, 2026 and 2025 was $2.2 billion and $2.1 billion, respectively.

Callable medium‑term notes give Farmer Mac the option to redeem the debt at par value on specified call dates or, depending on the instrument, periodically on or after a specified call date. The following table summarizes by maturity date the amounts and weighted average interest rate for Farmer Mac debt callable in 2026 as of June 30, 2026:

Table 6.2

The following schedule summarizes the earliest interest rate reset date, or debt maturities, of total borrowings outstanding as of June 30, 2026, including callable and non-callable medium-term notes, assuming callable notes are redeemed at the initial call date:

Table 6.3

During the six months ended June 30, 2026 and 2025, Farmer Mac called $1.6 billion and $1.2 billion of callable medium-term notes, respectively.

Authority to Borrow from the U.S. Treasury

Farmer Mac's statutory Charter authorizes it to borrow up to $1.5 billion from the U.S. Treasury through the issuance of debt obligations to the U.S. Treasury. Any funds borrowed from the U.S. Treasury may be used solely to fulfill Farmer Mac's guarantee obligations. The Charter provides that the U.S. Treasury is required to purchase debt obligations up to the authorized limit if Farmer Mac certifies that:

•a portion of the guarantee fees have been set aside as a reserve against losses arising from guarantee activities in an amount determined by Farmer Mac's board of directors to be necessary and such reserve has been exhausted; and

•the proceeds of the purchase of such obligations are needed to fulfill Farmer Mac's guarantee obligations.

Any debt obligations issued by Farmer Mac under this authority would bear interest at a rate determined by the U.S. Treasury, taking into consideration the average rate on outstanding marketable obligations of the United States as of the last day of the last calendar month ending before the date of the purchase of the obligations from Farmer Mac. The Charter requires Farmer Mac to repurchase any of its debt obligations held by the U.S. Treasury within a reasonable time. As of June 30, 2026, Farmer Mac had not used this borrowing authority.

7. EQUITY

Common Stock

During the first and second quarters of 2026, Farmer Mac paid a quarterly dividend of $1.60 per share on all classes of its common stock. For each quarter in 2025, Farmer Mac paid a quarterly dividend of $1.50 per share on all classes of its common stock.

On May 13, 2026, Farmer Mac's board of directors revised the terms of the share repurchase program to extend the expiration date of the program to May 31, 2028.

During the first half of 2026, Farmer Mac repurchased 47,319 shares of Class C non-voting common stock at a cost of approximately $7.1 million. As of June 30, 2026, $30.0 million remain available for repurchase under the program.

Preferred Stock

In May 2026, Farmer Mac issued 4.0 million shares of 6.875% non-cumulative perpetual Series I preferred stock, par value $25.00 per share. Farmer Mac incurred direct costs of $3.2 million related to the issuance of the Series I preferred stock. The dividend rate on the Series I preferred stock will remain at a non-cumulative, fixed rate of 6.875% per year, when, as, and if a dividend is declared by the Board of Directors of Farmer Mac, for so long as the Series I preferred stock remains outstanding. The Series I preferred stock has no maturity date, but Farmer Mac has the option to redeem the preferred stock at any time on any dividend payment date on and after July 17, 2031.

Capital Requirements

Farmer Mac is required to comply with the higher of the minimum capital requirement and the risk-based capital requirement. As of both June 30, 2026 and December 31, 2025, the minimum capital requirement was greater than the risk-based capital requirement. Farmer Mac's ability to declare and pay dividends could be restricted if it fails to comply with applicable capital requirements.

As of June 30, 2026, Farmer Mac's minimum capital requirement was $1.1 billion and its core capital level was $1.9 billion, which was $730.7 million above the minimum capital requirement as of that date. As of December 31, 2025, Farmer Mac's minimum capital requirement was $1.0 billion and its core capital level was $1.7 billion, which was $677.7 million above the minimum capital requirement as of that date.

In accordance with a rule of the Farm Credit Administration ("FCA") on Farmer Mac's capital planning, and as part of Farmer Mac's capital plan, Farmer Mac has adopted a policy for maintaining a sufficient level of Tier 1 capital (consisting of retained earnings, paid-in-capital, common stock, and qualifying preferred stock) and imposing restrictions on Tier 1-eligible dividends and any discretionary bonus payments in the event that this capital falls below specified thresholds.

8. FAIR VALUE DISCLOSURES

Fair Value Classification and Transfers

The following tables present information about Farmer Mac's assets and liabilities measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025, respectively, and indicate the fair value hierarchy of the valuation techniques used by Farmer Mac to determine such fair value:

Table 8.1

(1)Level 3 assets represent 20% of total assets and 52% of financial instruments measured at fair value.

(2) Represents a retained beneficial interest related to transfers of financial assets.

(1)Level 3 assets represent 19% of total assets and 49% of financial instruments measured at fair value.

(2) Represents a retained beneficial interest related to transfers of financial assets.

There were no material assets or liabilities measured at fair value on a non-recurring basis as of June 30, 2026 or December 31, 2025.

Transfers in and/or out of the different levels within the fair value hierarchy are based on the fair values of the assets and liabilities as of the beginning of the reporting period. During the three and six months ended June 30, 2026 and 2025, there were no transfers within the fair value hierarchy.

The following tables present additional information about assets and liabilities measured at fair value on a recurring basis for which Farmer Mac has used significant unobservable inputs to determine fair value. Net transfers in and/or out of Level 3 are based on the fair values of the assets and liabilities as of the beginning of the reporting period. There were no liabilities measured at fair value using significant unobservable inputs during the three and six months ended June 30, 2026 and 2025.

Table 8.2

The following tables present additional information about the significant unobservable inputs, such as discount rates and constant prepayment rates ("CPR"), used in the fair value measurements categorized in Level 3 of the fair value hierarchy as of June 30, 2026 and December 31, 2025:

Table 8.3

Disclosures on Fair Value of Financial Instruments

The following table sets forth the estimated fair values and carrying values for financial assets, liabilities, and guarantees and commitments as of June 30, 2026 and December 31, 2025:

Table 8.4

9. BUSINESS SEGMENT REPORTING

The following table presents Farmer Mac'sseven segments:

The Chief Executive Officer serves as the Chief Operating Decision Maker ("CODM"). The CODM reviews segment core earnings to make decisions about allocating resources and to assess the financial performance of the segments. The main difference between core earnings and net income is the exclusion of the effects of fair value fluctuations. These fluctuations are not expected to have a cumulative net impact on Farmer Mac's financial condition or results of operations reported in accordance with GAAP if the related financial instruments are held to maturity, as is expected. Another difference is that core earnings excludes specified infrequent or unusual transactions that are not indicative of future operating results and that may not reflect the trends and economic financial performance of Farmer Mac's core business. The CODM also looks at changes in the segments' on- and off-balance sheet unpaid principal balances to assess the performance of the segments.

The following tables present segment core earnings and assets for the three and six months ended June 30, 2026 and 2025.

Table 9.1

(2)Includes the amortization of premiums and discounts on assets consolidated at fair value, originally included in interest income, to reflect core earnings amounts; the reclassification of interest expense related to interest rate swaps not designated as hedges, which are included in "Gains/(losses) on financial derivatives" on the consolidated financial statements, to determine the effective funding cost for each operating segment; and excludes the fair value changes of financial derivatives and the corresponding assets or liabilities designated in fair value hedge accounting relationships.

(3)Includes the reclassification of interest income and interest expense from consolidated trusts owned by third parties to guarantee and commitment fees, to reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee.

(2)Includes the amortization of premiums and discounts on assets consolidated at fair value, originally included in interest income, to reflect core earnings amounts; the reclassification of interest expense related to interest rate swaps not designated as hedges, which are included in "Gains/(losses) on financial derivatives" on the consolidated financial statements, to determine the effective funding cost for each operating segment; and excludes the fair value changes of financial derivatives and the corresponding assets or liabilities designated in fair value hedge accounting relationships.

(3)Includes the reclassification of interest income and interest expense from consolidated trusts owned by third parties to guarantee and commitment fees, to reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee.

(2)Includes the amortization of premiums and discounts on assets consolidated at fair value, originally included in interest income, to reflect core earnings amounts; the reclassification of interest expense related to interest rate swaps not designated as hedges, which are included in "Gains/(losses) on financial derivatives" on the consolidated financial statements, to determine the effective funding cost for each operating segment; and excludes the fair value changes of financial derivatives and the corresponding assets or liabilities designated in fair value hedge accounting relationships.

(3)Includes the reclassification of interest income and interest expense from consolidated trusts owned by third parties to guarantee and commitment fees, to reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee.

(2)Includes the amortization of premiums and discounts on assets consolidated at fair value, originally included in interest income, to reflect core earnings amounts; the reclassification of interest expense related to interest rate swaps not designated as hedges, which are included in "Gains/(losses) on financial derivatives" on the consolidated financial statements, to determine the effective funding cost for each operating segment; and excludes the fair value changes of financial derivatives and the corresponding assets or liabilities designated in fair value hedge accounting relationships.

(3)Includes the reclassification of interest income and interest expense from consolidated trusts owned by third parties to guarantee and commitment fees, to reflect management's view that the net interest income Farmer Mac earns is effectively a guarantee fee.

10. INCOME TAXES

During the three and six months ended June 30, 2026, Farmer Mac purchased $21.4 million and $66.4 million, respectively, of renewable energy investment tax credits at prices ranging from approximately $0.91 to $0.93 per $1.00 of credit, resulting in a benefit of $2.0 million and $6.3 million, respectively. During both the three and six months ended June 30, 2025, Farmer Mac purchased $35.6 million in renewable energy investment tax credits at prices of approximately $0.91 per $1.00 of credit. All of the renewable energy investment tax credits purchased are with projects that have been placed into service. As a result of these purchases, Farmer Mac recognized a tax benefit of $3.2 million for both the three and six months ended June 30, 2025.