FEDERAL AGRICULTURAL MORTGAGE CORP

The Federal Agricultural Mortgage Corporation, known as Farmer Mac, is a stockholder-owned, federally chartered government-sponsored enterprise established under Title VIII of the Farm Credit Act of 1971, serving a public purpose by providing a secondary market for loans made to borrowers in rural America. Congress has charged Farmer Mac with the mission of increasing the accessibility of financing to provide vital liquidity for American agriculture and rural infrastructure. The company operates within the agricultural and rural infrastructure finance industry, and its secondary market activities are designed to increase the accessibility of financing at competitive interest rates to America's rural communities and agricultural sectors, while providing borrowers with the benefits of capital markets pricing and product innovation. Farmer Mac is an institution of the Farm Credit System but is not liable for any debt or obligation of any other institution of the FCS, and none of FCA, the FCS, or any other individual institution of the FCS is liable for any of Farmer Mac's debt or obligations.

Farmer Mac is the only federally-chartered corporation established to provide a secondary market for agricultural mortgage loans, infrastructure loans, and USDA Securities, but faces competition from commercial and investment banks, insurance companies, other FCS institutions, financial funds, and certain government programs. The company also competes indirectly with originators of Eligible Loans that would prefer to retain the loans they originate. Farmer Mac's ability to compete is affected by the overall supply of capital available to agricultural and infrastructure borrowers, the types and variety of products offered by competitors, changes in the levels of available capital and liquidity of lending institutions, the existence of alternative sources of funding and credit enhancement, the rate of growth in the market for Eligible Loans, and demand for its products. The company's ability to obtain competitive funding in the debt markets is essential to maintaining its market share and competitive position, and competition for debt investors with other debt-issuing institutions such as the FCS, Federal Home Loan Banks, Fannie Mae, Freddie Mac, and highly-rated financial institutions can affect the price and volume at which Farmer Mac issues debt.

Farmer Mac generates revenue through two primary sources: net interest income and guarantee and commitment fees received for outstanding guaranteed securities and long-term standby purchase commitments. The company funds its purchases of Eligible Loans and securities primarily by issuing debt obligations of various maturities in the public capital markets, and also uses the proceeds of debt issuance to fund liquidity investments that must comply with policies adopted by its board of directors and with FCA regulations. Farmer Mac's secondary market activities include purchasing eligible loans directly from lenders, guaranteeing and purchasing securities issued by lenders and other financial institutions that obtain funding by pledging pools of Eligible Loans, issuing and guaranteeing securities that represent interests in or obligations secured by pools of Eligible Loans, servicing Eligible Loans, and providing long-term standby purchase commitments for Eligible Loans. The company's customer segments include lenders who may need capital, liquidity, portfolio diversification, and access to a wide variety of loan products, as well as institutional investors in agricultural assets that qualify as eligible collateral under its Charter.

Farmer Mac's business consists of seven reportable operating segments: Farm & Ranch, Corporate AgFinance, Power & Utilities, Broadband Infrastructure, Renewable Energy, Funding, and Investments, organized under two lines of business: Agricultural Finance and Infrastructure Finance. The Agricultural Finance line of business includes the Farm & Ranch segment, which covers AgVantage securities, USDA Securities, and Farm & Ranch loans, and the Corporate AgFinance segment, which includes loans and AgVantage securities to larger and more complex farming operations, agribusinesses focused on food and fiber processing, and other supply chain production. The Infrastructure Finance line of business encompasses the Power & Utilities segment, which includes loans to rural electric generation and transmission cooperatives and distribution cooperatives, the Broadband Infrastructure segment, which includes Eligible Loans to telecommunications facilities for rural fiber, cable/broadband, tower, wireless, local exchange carrier, and data center projects, and the Renewable Energy segment, which includes Eligible Loans to rural electric solar and wind energy projects and renewable gas projects. The Broadband Infrastructure and Renewable Energy segments represent newer markets for Farmer Mac and offer opportunities for higher yielding assets, with higher yields reflecting the increased credit risk inherent in these sectors.

Within the Agricultural Finance line of business, Farmer Mac provides a secondary market for Eligible Loans by purchasing and retaining Eligible Loans and securities, guaranteeing the payment of principal and interest on securities that represent interests in or obligations secured by pools of Eligible Loans, servicing Eligible Loans, and issuing LTSPCs for designated Eligible Loans. The company is compensated through net interest income on loans and securities held on balance sheet, guarantee fees earned on securities issued to third parties, servicing fees on securitized loans and loans serviced for others, and commitment fees earned on loans in LTSPCs and on unfunded loan commitments. The maximum loan size for an eligible Agricultural Finance mortgage loan secured by more than 2,000 acres of agricultural real estate was $17.4 million ¹ as of December 31, 2025. An internal policy approved by the board of directors limits the cumulative direct credit exposure to any one borrower or group of related borrowers on loans secured by 2,000 acres or less of agricultural real estate to 10% of Farmer Mac's Tier 1 capital, which was $170.6 million ² as of December 31, 2025. The AgVantage securities product line involves guaranteeing and purchasing securities issued by lenders and other financial institutions that are secured by pools of Eligible Loans, and the LTSPC program is a credit enhancement alternative to direct loan purchases for Farm & Ranch loans that allows approved lenders to retain the cash flow benefits of their loans while transferring credit risk to Farmer Mac. Some LTSPCs contain risk sharing arrangements for pools of loans that provide for the counterparty to absorb up to a specified amount, typically between 1% and 3% ³ of the original principal balance of the loan pool, of any losses before Farmer Mac absorbs any losses. The aggregate amount of guarantee fees received depends on the amount of securities outstanding and on the applicable guarantee fee rate, which the Charter caps at 50 basis points ⁴ per year.

During 2025, Farmer Mac exceeded $30 billion in outstanding business volume, provided $10.5 billion ⁵ in liquidity and lending capacity to lenders serving rural America, and added $100.0 million ⁶ in equity through the issuance of 4.0 million ⁷ shares of 6.500% non-cumulative perpetual Series H preferred stock. The company maintained strong liquidity in its investment portfolio with a monthly average of 301 days ⁸ of liquidity during 2025, well above the regulatory requirement of a minimum of 90 days of liquidity. Farmer Mac maintained its strong capital position with capital of $0.7 billion ⁹ in excess of the minimum regulatory capital requirement and maintained uninterrupted access to the debt capital markets. On August 5, 2025, the board of directors revised the terms of the share repurchase program to increase the total authorized amount of repurchases from the then-remaining $9.8 million ¹⁰ to $50.0 million ¹¹, and to extend the expiration date of the program to August 5, 2027. During 2025, Farmer Mac repurchased 78,481 ¹² shares of Class C non-voting common stock at a cost of approximately $12.9 million ¹³ under the amended repurchase program. As of December 31, 2025, $37.1 million ¹⁴ remains available for repurchase under the program. The company also executed two structured securitization transactions backed by Farm & Ranch loans for which $613.6 million ¹⁵ of Farmer Mac Guaranteed Securities were issued.

Net income attributable to common stockholders for 2025 was $182.493 million ¹⁶, compared to $180.428 million ¹⁷ in 2024, a year-over-year increase of $2.1 million ¹⁸. Core earnings, a non-GAAP measure, were $182.949 million ¹⁹ for 2025, compared to $171.630 million ²⁰ in 2024, an increase of $11.3 million ²¹. Net interest income increased by $36.9 million ²² to $390.734 million ²³ in 2025 from $353.867 million ²⁴ in 2024, while net effective spread increased by $43.5 million ²⁵ to $383.041 million ²⁶ in 2025 from $339.564 million ²⁷ in 2024. The provision for credit losses increased by $21.3 million ²⁸ to $32.860 million ²⁹ in 2025 from $11.579 million ³⁰ in 2024, and operating expenses increased by $14.4 million ³¹ to $119.801 million ³² in 2025 from $105.386 million ³³ in 2024. Outstanding business volume was $33.4 billion ³⁴ as of December 31, 2025, a net increase of $3.8 billion ³⁵ from December 31, 2024, primarily attributable to a $2.8 billion ³⁶ increase in the Infrastructure Finance line of business.

Farmer Mac expects continued strong interest in data centers, broadband expansion, and constructing and completing renewable energy projects before the sunset of tax credits, along with the overall need for energy generation and transmission capacity for rural America, to provide significant opportunities for Infrastructure Finance, and the company expects these opportunities to persist into future years. The financing needs arising from mergers, acquisitions, consolidation, and vertical integration in the agricultural and infrastructure industries present further opportunities for loan purchase products and other financing solutions. Deepening relationships with eligible infrastructure counterparties are expected to continue to create opportunities to support fiber and broadband-related transactions, including significant market activity and investments in wholesale data centers and renewable energy projects. As of December 31, 2025, Farmer Mac has calculated approximately $80 million ³⁷ of remaining capacity to use renewable energy tax credits to apply against its 2025 federal corporate income tax liability and to carry back to the prior three years. Through December 31, 2025, the company has purchased approximately $91.0 million ³⁸ in renewable energy investment tax credits at prices that range from approximately $0.91 to $0.94 ³⁹ per $1.00 of credit.

Farmer Mac expects opportunities for profitable future business volume growth from its potential role in alleviating liquidity, capital, and return-on-equity challenges faced by agricultural and infrastructure lenders, with its suite of offerings including loan and loan portfolio purchases, participations, guarantees, LTSPCs, wholesale funding, and risk-transfer financial securities. Ongoing business and product development efforts continue to attract private lenders, institutional investors, and non-traditional originators, resulting in the diversification of the customer base and product set, which could potentially generate increased product demand from new sources. Growing relationships with larger agriculture lenders, industry consolidation, interest rates, and market volatility, as well as financial institutions' focus on capital efficiency and liquidity, are expected to continue to provide increased opportunities for loan purchase, risk management, and wholesale funding solutions. Investments supporting consumer and food supply demand may increase financing needs in the food and agriculture supply chain, potentially requiring incremental capital support through the secondary market.

The filing does not contain specific margin trajectory or efficiency targets with exact figures.

Farmer Mac anticipates ongoing increases in operating expenses over the next several years, aligned with its planned expansion of investments in technology, business infrastructure, and human capital. These investments are designed to enhance capacity and efficiency in support of market growth opportunities and long-term strategic objectives. The company plans to implement technology enhancements and process re-engineering over the next several years to continue to incorporate all of its loan portfolios onto its servicing platform and to provide flexibility in accessing loan portfolio information, increase standardization of data and processing, and streamline operational workflows. Another focus of planned infrastructure investments is a continued effort to expand servicing capabilities and to enhance the efficiency of processes associated with loan onboarding and servicing.

The filing does not contain specific R&D spending levels, capital expenditure plans, or dividend policy figures beyond the declared dividends.

The farm profitability outlook remains varied for 2026, with total net cash farm income rebounding slightly in 2025, rising 8% ⁴⁰ relative to 2024 according to the USDA, and the USDA's initial forecast for 2026 shows farm incomes rising another 3% ⁴¹ relative to 2025. However, that expected overall improvement obscures a bifurcation across agricultural sectors, with crop producers facing headwinds from tepid commodity prices and elevated input costs that have compressed margins, while livestock producers are expected to benefit again in 2026 from robust consumer and export demand and falling feed costs. Shifts in the outlook for trade could have a meaningful impact on commodity prices and farm incomes, with the current USDA forecast showing U.S. agricultural exports dropping modestly in 2026. Constraints on cash flow and additional market volatility could cause loan delinquencies to rise above historical averages, most likely in commodities experiencing negative market conditions such as some grains and permanent crops.

Recent changes to tax policy may alter the trajectory and velocity of investments in U.S. renewable energy, as H.R. 1, the 'One Big Beautiful Bill Act' signed into law on July 4, 2025, phases out tax credits that have been routinely used to support renewable power project investments. Under H.R. 1's phase-outs of future renewable energy investment tax credits, projects eligible for renewable energy investment tax credits generally must be placed in service by December 31, 2027 ⁴² unless construction begins by July 4, 2026 ⁴³. Changes in tax policy, trade, and immigration laws, as well as energy cost and availability, could result in significant challenges and opportunities to infrastructure borrowers, potentially leading to delays in completing current projects and slowing future investments in renewable energy and battery storage projects as well as the deployment of fiber and broadband infrastructure in rural areas. Any lack of availability or increased costs of components or technology that results from tariffs or trade restrictions also could lead to delays in completion or slow future investments in infrastructure projects.

Farmer Mac faces material credit risk from concentrated exposures, as $7.6 billion ⁴⁴ of the $8.4 billion ⁴⁵ of AgVantage securities outstanding as of December 31, 2025 had been issued by three counterparties, and a default by any of these counterparties could have a significant adverse effect on the company's business, operating results, and financial condition. The company also has significant contingent liabilities related to LTSPCs and securities issued to third parties that it guarantees, totaling $5.4 billion ⁴⁶ as of December 31, 2025, which represents its exposure if all loans underlying these LTSPCs and guarantees defaulted and no value was recovered from the related collateral. Farmer Mac is exposed to interest rate risk through its derivative portfolio, with an aggregate notional balance of cleared swaps of $19.4 billion ⁴⁷ and non-cleared swaps of $6.0 billion ⁴⁸ as of December 31, 2025, and changes in interest rates could require the company to post significant collateral, as it posted $2.1 million ⁴⁹ of cash and $250.6 million ⁵⁰ of investment securities as collateral for derivatives in net liability positions as of December 31, 2025. The company's business depends on continued access to the U.S. financial markets, and the loss of business from key counterparties could decrease revenues, as ten institutions generated approximately 55% ⁵¹ of loan purchase volume in the Agricultural Finance line of business in 2025, and approximately 90.6% ⁵² of the $8.4 billion ⁵³ outstanding principal amount of AgVantage securities were issued by three institutions as of December 31, 2025.

Management's message emphasizes Farmer Mac's mission-driven role in providing liquidity to American agriculture and rural infrastructure, highlighting that during 2025 the company exceeded $30 billion in outstanding business volume, provided $10.5 billion ⁵⁴ in liquidity and lending capacity to lenders serving rural America, and added $100.0 million ⁵⁵ in equity through the issuance of 4.0 million ⁵⁶ shares of 6.500% non-cumulative perpetual Series H preferred stock. The strategic priorities emphasized for the period ahead include continued expansion in Infrastructure Finance, particularly in data centers, broadband, and renewable energy projects, ongoing investment in technology, business infrastructure, and human capital to enhance capacity and efficiency, and maintaining strong capital and liquidity positions. Management notes that the company's growth trajectory is closely tied to the capital and liquidity needs of lending institutions serving agriculture and infrastructure businesses and the overall financial health of borrowers in these sectors, and that opportunities for profitable future business volume growth include alleviating liquidity, capital, and return-on-equity challenges faced by agricultural and infrastructure lenders.