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FEDERAL AGRICULTURAL MORTGAGE CORP

FEDERAL AGRICULTURAL MORTGAGE CORPAGMEarnings & Financial Report

NYSE · Financials · Federal & Federally-Sponsored Credit Agencies

The Federal Agricultural Mortgage Corporation, also known as Farmer Mac, is a stockholder-owned, federally chartered corporation established by the U.S. Congress in 1988 under the Agricultural Credit Act of 1987. It was created to establish a secondary market for agricultural real estate and housing mortgage loans, to increase liquidity and the availability of long-term, stable credit for farmers, ranchers, and rural communities.

What changed in FEDERAL AGRICULTURAL MORTGAGE CORP's 10-K — 2022 vs 2023

Top changes in FEDERAL AGRICULTURAL MORTGAGE CORP's 2023 10-K

468 paragraphs added · 459 removed · 355 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

63 edited+10 added−9 removed181 unchanged
A Farmer Mac Guaranteed Security. 2. An interest-only Farmer Mac Guaranteed Security retained as part of a structured securitization. 3. Other categories of Farmer Mac Guaranteed Securities that were sold by Farmer Mac to third parties.
(2) An interest-only Farmer Mac Guaranteed Security retained as part of a structured securitization. (3) Other categories of Farmer Mac Guaranteed Securities that were sold by Farmer Mac to third parties.
Due to the larger loan sizes and different credit risk profiles, Farmer Mac thoroughly analyzes each prospective Corporate AgFinance loan, including assessing the borrower's leverage, cash flows, liquidity, and revenue and margin trends, as well as evaluating the borrower's suppliers, customers, market share, and competition. Any underlying weaknesses are assessed and analyzed in conjunction with any compensating strengths.
Due to the larger loan sizes and different credit risk profiles, Farmer Mac thoroughly analyzes each prospective Corporate AgFinance loan, including assessing the borrower's leverage, cash flows, liquidity, revenue and margin trends, as well as evaluating the borrower's suppliers, customers, market share, and competition. Any underlying weaknesses are assessed and analyzed in conjunction with any compensating strengths.
Farmer Mac also continues to contract with other institutions to undertake most of the servicing responsibilities for the remaining portion of its Agricultural Finance mortgage loans in accordance with Farmer Mac's specified servicing requirements or in accordance with the servicing standards established by the servicing institution if the 12 institution's standards are acceptable to Farmer Mac.
Farmer Mac also continues to contract with other institutions to undertake most of the servicing responsibilities for the remaining portion of its Agricultural Finance mortgage loans in accordance with Farmer Mac's specified servicing requirements or in accordance with the servicing 12 standards established by the servicing institution if the institution's standards are acceptable to Farmer Mac.
Farmer Mac's Class B voting common stock, which has a limited market and trades infrequently, is not listed or quoted on any 18 exchange or other quotation system, and Farmer Mac is not aware of any publicly available quotations or prices for this class of common stock. • Class C non-voting common stock .
Farmer Mac's Class B voting common stock, which has a limited market and trades infrequently, is not listed or quoted on any exchange or other quotation system, and Farmer Mac is not aware of any publicly available quotations or prices for this class of common stock. 18 • Class C non-voting common stock .
Farmer Mac must comply with the higher of the minimum capital requirement and the risk-based capital requirement.
Farmer Mac must comply with the higher of the minimum capital requirement and the risk-based capital requirement.
Farmer Mac's philanthropic philosophy centers on supporting agriculture and rural communities and supporting the next generation of farmers and ranchers and financial professionals, including in the communities where our employees live. Code of Business Conduct and Ethics Farmer Mac's onboarding program includes a mandatory compliance session for every new hire and contract consultant within their first week.
Farmer Mac's philanthropic philosophy centers on supporting agriculture and rural communities and supporting the next generation of farmers and ranchers and financial professionals, including in the communities where Farmer Mac's employees live. Code of Business Conduct and Ethics Farmer Mac's onboarding program includes a mandatory compliance session for every new hire and contract consultant within their first week.
The charter does not impose any ownership restrictions on Farmer Mac's Class C non-voting common stock, so shares of this class are freely transferable. Farmer Mac uses Class C non-voting common stock for awards of equity-based compensation to officers, directors, and selected employees as part of the company's compensation programs.
The charter does not impose any ownership restrictions on Farmer Mac's Class C non-voting common stock, so shares of this class are freely transferable. Farmer Mac uses Class C non-voting common stock for awards of equity-based compensation to officers, directors, and employees as part of the company's compensation programs.
Within those two lines of business are four segments: Corporate AgFinance, Farm & Ranch, Rural Utilities, and Renewable Energy, as shown in the table below: Agricultural Finance Rural Infrastructure Finance Farm & Ranch Corporate AgFinance Rural Utilities Renewable Energy Interest-earning assets Loans X X X X Loans held in securitization trusts 1 X AgVantage Securities 1 X X X Interest-only portions of agricultural mortgage-backed securities ("IO") 1 X USDA Securities X Products and services that earn fee income LTSPCs X X Unfunded commitments X X X X Structured securitization transactions 1 X Securitized loan servicing X Other Farmer Mac Guaranteed Securities 1 X X 1 These categories comprise "Farmer Mac Guaranteed Securities." The loans (and interests in those loans) eligible for Farmer Mac's secondary market activities in each of Farmer Mac's lines of business include: • For Farmer Mac's Agricultural Finance line of business, mortgage loans secured by first liens on real estate used in agricultural production or processing, including part-time farms and rural housing loans, as well as agricultural and rural development loans guaranteed by the United States Department of Agriculture ("USDA"); and • For Farmer Mac's Rural Infrastructure Finance line of business, loans by lenders organized as cooperatives to finance electrification and telecommunications systems and renewable energy providers or projects in rural areas.
Within those two lines of business are four segments: Corporate AgFinance, Farm & Ranch, Rural Utilities, and Renewable Energy, as shown in the table below: Agricultural Finance Rural Infrastructure Finance Farm & Ranch Corporate AgFinance Rural Utilities Renewable Energy Interest-earning assets Loans X X X X Loans held in securitization trusts (single-class) 1 X AgVantage Securities 1 X X X Interest-only portions of agricultural mortgage-backed securities ("IO") 1 X USDA Securities X Products and services that earn fee income LTSPCs X X Unfunded loan commitments X X X X Structured securitization transactions 1 X Loan servicing X Other Farmer Mac Guaranteed Securities 1 X 1 These categories comprise "Farmer Mac Guaranteed Securities." The loans (and interests in those loans) eligible for Farmer Mac's secondary market activities in each of Farmer Mac's lines of business include: • For Farmer Mac's Agricultural Finance line of business, mortgage loans secured by first liens on real estate used in agricultural production or processing, including part-time farms and rural housing loans, as well as agricultural and rural development loans guaranteed by the United States Department of Agriculture ("USDA"); and • For Farmer Mac's Rural Infrastructure Finance line of business, loans by lenders organized as cooperatives to finance electrification and telecommunications systems and renewable energy providers or projects in rural areas.
This hybrid work approach, which is grounded in the three core principles of community, collaboration, and communication, relies on managers and leaders to consider their unique team circumstances and determine an appropriate cadence for purposeful in-person presence.
This hybrid work approach, which is grounded in the three core principles of community, collaboration, and communication, relies on managers and leaders to consider their unique team circumstances and determine an appropriate cadence for purposeful in- 20 person presence.
Through providing efficient and competitive financing solutions, Farmer Mac has the potential to increase lending flexibility for rural credit markets, which may result in lower interest rates paid on loans made by lenders to rural and agricultural borrowers.
By providing efficient and competitive financing solutions, Farmer Mac has the potential to increase lending flexibility for rural credit markets, which may result in lower interest rates paid on loans made by lenders to rural and agricultural borrowers.
TREASURY Farmer Mac is authorized 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. Farmer Mac's charter provides that the U.S.
FARMER MAC'S AUTHORITY TO BORROW FROM THE U.S. TREASURY Farmer Mac is authorized 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. Farmer Mac's charter provides that the U.S.
Farmer Mac's debt obligations include discount notes and medium-term notes, including callable medium-term notes, all of which are unsecured general obligations of Farmer Mac. 23 Discount notes have original maturities of 1 year or less. Medium-term notes generally have maturities of 0.5 years to 25.0 years.
Farmer Mac's debt obligations include discount notes and medium-term notes, including callable medium-term notes, all of which are unsecured general obligations of Farmer Mac. Discount notes have original maturities of 1 year or less. Medium-term notes generally have maturities of 0.5 years to 25.0 years.
Agricultural Finance Farmer Mac provides a secondary market for eligible loans in Farmer Mac's Agricultural Finance line of business by (1) purchasing and retaining eligible loans and securities, (2) guaranteeing the payment of principal and interest on securities that represent interests in, or obligations secured by, pools of eligible loans, (3) servicing (including as master servicer) eligible loans purchased or securitized by Farmer Mac, and (4) issuing LTSPCs for designated eligible loans.
Agricultural Finance Farmer Mac provides a secondary market for eligible loans in Farmer Mac's Agricultural Finance line of business by (1) purchasing and retaining eligible loans and securities, (2) guaranteeing the payment of principal and interest on securities that represent interests in, or obligations secured by, pools of eligible loans, (3) servicing (including as master servicer) eligible loans, and (4) issuing LTSPCs for designated eligible loans.
Farmer Mac would be required to repurchase any of its debt obligations held by the U.S. Treasury within a "reasonable time." As of December 31, 2022, Farmer Mac had not used this borrowing authority and does not expect to use this borrowing authority in the future.
Farmer Mac would be required to repurchase any of its debt obligations held by the U.S. Treasury within a "reasonable time." As of December 31, 2023, Farmer Mac had not used this borrowing authority and does not expect to use this borrowing authority in the future.
Some LTSPCs contain risk sharing arrangements for pools of loans that provide for the counterparty to absorb up to a specified amount (typically between one and five percent of the original principal balance of the loan pool) of any losses incurred on the loans in the pool.
Some LTSPCs contain risk sharing arrangements for pools of loans that provide for the counterparty to absorb up to a specified amount (typically between one percent and three percent of the original principal balance of the loan pool) of any losses incurred on the loans in the pool.
All employees also take annual training on and recertification of our Code of Business Conduct and Ethics, which encompasses the following core principles: (1) promoting a safe workplace and a respectful and inclusive culture, (2) conducting business lawfully, fairly, and objectively, (3) communicating responsibly and protecting information, (4) conducting business diligently and being a good corporate citizen, and (5) how to report actual or suspected misconduct.
All employees also take annual training on and recertification of Farmer Mac's Code of Business Conduct and Ethics, which encompasses the following core principles: (1) promoting a safe workplace and a respectful and inclusive culture, (2) conducting business lawfully, fairly, and objectively, (3) communicating responsibly and protecting information, (4) conducting business diligently and being a good corporate citizen, and (5) how to report actual or suspected misconduct.
Farmer Mac is compensated for these activities 9 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 commitment fees earned on loans in LTSPCs and on unfunded loan commitments.
Farmer Mac is compensated for these activities through net interest income on loans and securities held on balance sheet, guarantee fees earned on securities issued to third parties, servicing fees 9 on securitized loans and loans serviced for others, and commitment fees earned on loans in LTSPCs and on unfunded loan commitments.
Underwriting and Collateral Standards - Corporate AgFinance Farmer Mac experiences direct credit exposure to borrowers on Agricultural Finance mortgage loans in Farmer Mac’s Corporate AgFinance reportable operating segment (referred to as “Corporate AgFinance loans”) through its loan purchases and unfunded commitments.
Underwriting and Collateral Standards - Corporate AgFinance Farmer Mac accepts direct credit exposure to borrowers on Agricultural Finance mortgage loans in Farmer Mac’s Corporate AgFinance reportable operating segment (referred to as “Corporate AgFinance loans”) through its loan purchases and unfunded commitments.
As of December 31, 2022, Farmer Mac had repurchased approximately 673,000 shares of Class C non-voting common stock at a cost of approximately $19.8 million under the share repurchase program since 2015.
As of December 31, 2023, Farmer Mac had repurchased approximately 673,000 shares of Class C non-voting common stock at a cost of approximately $19.8 million under the share repurchase program since 2015.
Farmer Mac's charter directs FCA to classify Farmer Mac within one of four enforcement levels to determine compliance with the capital standards established by Farmer Mac's charter. As of December 31, 2022, Farmer Mac was classified as within level I – the highest compliance level.
Farmer Mac's charter directs FCA to classify Farmer Mac within one of four enforcement levels to determine compliance with the capital standards established by Farmer Mac's charter. As of December 31, 2023, Farmer Mac was classified as within level I – the highest compliance level.
Treasury is required to purchase Farmer Mac's debt obligations up to the authorized limit if Farmer Mac certifies that: • a portion of the guarantee fees assessed by Farmer Mac has been set aside as a reserve against losses arising out of Farmer Mac's guarantee activities in an amount determined by Farmer Mac's board of directors to be necessary and such reserve has been exhausted (that amount was $119.6 million as of December 31, 2022); and • the proceeds of such obligations are needed to fulfill Farmer Mac's guarantee obligations.
Treasury is required to purchase Farmer Mac's debt obligations up to the authorized limit if Farmer Mac certifies that: • a portion of the guarantee fees assessed by Farmer Mac has been set aside as a reserve against losses arising out of Farmer Mac's guarantee activities in an amount determined by Farmer Mac's board of directors to be necessary and such reserve has been exhausted (that amount was $129.6 million as of December 31, 2023); and • the proceeds of such obligations are needed to fulfill Farmer Mac's guarantee obligations.
As of December 31, 2022, the following shares of Farmer Mac preferred stock were outstanding: • 3,000,000 shares of Series C Preferred Stock, all of which were issued in June 2014; • 4,000,000 shares of Series D Preferred Stock, all of which were issued in May 2019; • 3,180,000 shares of Series E Preferred Stock, all of which were issued in May 2020; • 4,800,000 shares of Series F Preferred Stock, all of which were issued in August 2020; and • 5,000,000 shares of Series G Preferred Stock, all of which were issued in May 2021.
As of December 31, 2023, the following shares of Farmer Mac preferred stock were outstanding: • 3,000,000 shares of Series C Preferred Stock, all of which were issued in June 2014; • 4,000,000 shares of Series D Preferred Stock, all of which were issued in May 2019; • 3,180,000 shares of Series E Preferred Stock, all of which were issued in May 2020; • 4,800,000 shares of Series F Preferred Stock, all of which were issued in August 2020; and 25 • 5,000,000 shares of Series G Preferred Stock, all of which were issued in May 2021.
Farmer Mac's Code of Business Conduct and Ethics was refreshed in May 2022 while maintaining this principles-based approach. Our Code of Business Conduct and Ethics is available at www.farmermac.com and is not incorporated by reference into this report.
Farmer Mac's Code of Business Conduct and Ethics was refreshed in May 2023 while maintaining this principles-based approach. Farmer Mac's Code of Business Conduct and Ethics is available at www.farmermac.com and is not incorporated by reference into this report.
However, an internal policy approved by Farmer Mac's 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 ($132.3 million as of December 31, 2022).
However, an internal policy approved by Farmer Mac's 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 ($145.2 million as of December 31, 2023).
Farmer Mac's charter requires Farmer Mac to maintain in its accounts a portion of the guarantee fees it receives from its guarantee activities as a reserve against losses. As of December 31, 2022, this reserve against losses arising from Farmer Mac's guarantee activities was $119.6 million.
Farmer Mac's charter requires Farmer Mac to maintain in its accounts a portion of the guarantee fees it receives from its guarantee activities as a reserve against losses. As of December 31, 2023, this reserve against losses arising from Farmer Mac's guarantee activities was $129.6 million.
For more information on Farmer Mac's capital requirements, see "Business—Government Regulation of Farmer Mac—Capital Standards." The following table presents the dividends declared and paid on Series C Preferred Stock during and after 2022: Date Dividend Declared Per Share Amount For Period Beginning For Period Ending Date Paid February 24, 2022 $0.3750 January 18, 2022 April 17, 2022 April 17, 2022 May 18, 2022 $0.3750 April 18, 2022 July 17, 2022 July 17, 2022 August 10, 2022 $0.3750 July 18, 2022 October 17, 2022 October 17, 2022 November 9, 2022 $0.3750 October 18, 2022 January 17, 2023 January 17, 2023 February 22, 2023 $0.3750 January 18, 2023 April 17, 2023 * * The dividend declared on February 22, 2023 is scheduled to be paid on April 17, 2023. 26 The following table presents the dividends declared and paid on Series D Preferred Stock during and after 2022: Date Dividend Declared Per Share Amount For Period Beginning For Period Ending Date Paid February 24, 2022 $0.35625 January 18, 2022 April 17, 2022 April 17, 2022 May 18, 2022 $0.35625 April 18, 2022 July 17, 2022 July 17, 2022 August 10, 2022 $0.35625 July 18, 2022 October 17, 2022 October 17, 2022 November 9, 2022 $0.35625 October 18, 2022 January 17, 2023 January 17, 2023 February 22, 2023 $0.35625 January 18, 2023 April 17, 2023 * * The dividend declared on February 22, 2023 is scheduled to be paid on April 17, 2023.
For more information on Farmer Mac's capital requirements, see "Business—Government Regulation of Farmer Mac—Capital Standards." 26 The following table presents the dividends declared and paid on Series C Preferred Stock during and after 2023: Date Dividend Declared Per Share Amount For Period Beginning For Period Ending Date Paid February 22, 2023 $0.3750 January 18, 2023 April 17, 2023 April 17, 2023 May 3, 2023 $0.3750 April 18, 2023 July 17, 2023 July 17, 2023 August 9, 2023 $0.3750 July 18, 2023 October 17, 2023 October 17, 2023 November 8, 2023 $0.3750 October 18, 2023 January 17, 2024 January 17, 2024 February 21, 2024 $0.3750 January 18, 2024 April 17, 2024 * * The dividend declared on February 21, 2024 is scheduled to be paid on April 17, 2024.
The following table presents the dividends declared and paid on Series E Preferred Stock during and after 2022: Date Dividend Declared Per Share Amount For Period Beginning For Period Ending Date Paid February 24, 2022 $0.359375 January 18, 2022 April 17, 2022 April 17, 2022 May 18, 2022 $0.359375 April 18, 2022 July 17, 2022 July 17, 2022 August 10, 2022 $0.359375 July 18, 2022 October 17, 2022 October 17, 2022 November 9, 2022 $0.359375 October 18, 2022 January 17, 2023 January 17, 2023 February 22, 2023 $0.359375 January 18, 2023 April 17, 2023 * * The dividend declared on February 22, 2023 is scheduled to be paid on April 17, 2023.
The following table presents the dividends declared and paid on Series E Preferred Stock during and after 2023: Date Dividend Declared Per Share Amount For Period Beginning For Period Ending Date Paid February 22, 2023 $0.359375 January 18, 2023 April 17, 2023 April 17, 2023 May 3, 2023 $0.359375 April 18, 2023 July 17, 2023 July 17, 2023 August 9, 2023 $0.359375 July 18, 2023 October 17, 2023 October 17, 2023 November 8, 2023 $0.359375 October 18, 2023 January 17, 2024 January 17, 2024 February 21, 2024 $0.359375 January 18, 2024 April 17, 2024 * * The dividend declared on February 21, 2024 is scheduled to be paid on April 17, 2024.
Farmer Mac also performs qualitative assessments typically focused on the project sponsor's credentials and experience, off-take (cash flow) considerations, and concentration and other market considerations. Farmer Mac also typically undertakes a review of the project contracts and agreements for each Renewable Energy loan.
Farmer Mac also performs qualitative assessments typically focused on the project sponsor's credentials and experience, off-take (cash flow) considerations, and concentration and other market considerations. Farmer Mac also typically reviews the project contracts and agreements for each Renewable Energy loan.
Farmer Mac's secondary market activities include: • purchasing eligible loans directly from lenders (including participation interests, syndicated notes, revolving and non-revolving credit facilities, and unfunded commitments to make advances on loans); • purchasing securities that are issued by lenders and guaranteed by Farmer Mac and that are secured by eligible loans (Farmer Mac refers to these securities as "AgVantage," a registered trademark of Farmer Mac); • issuing and guaranteeing securities that represent interests in, or obligations secured by, pools of eligible loans (together with AgVantage, Farmer Mac refers to these securities as "Farmer Mac Guaranteed Securities"); • servicing (including as master servicer) eligible loans purchased or securitized by Farmer Mac; and • providing long-term standby purchase commitments ("LTSPCs") for eligible loans.
Farmer Mac's secondary market activities include: • purchasing eligible loans directly from lenders (including participation interests, syndicated notes, revolving and non-revolving credit facilities, and unfunded commitments to make advances on loans); • guaranteeing and purchasing securities issued by lenders and other financial institutions that are secured by pools of eligible loans (Farmer Mac refers to these securities as "AgVantage," a registered trademark of Farmer Mac); • issuing and guaranteeing securities that represent interests in, or obligations secured by, pools of eligible loans (together with AgVantage, Farmer Mac refers to these securities as "Farmer Mac Guaranteed Securities"); • servicing (including as master servicer) eligible loans, including loans that have been purchased or securitized by Farmer Mac or that would be eligible for purchase by Farmer Mac but are owned by a third party; and • providing long-term standby purchase commitments ("LTSPCs") for eligible loans.
Also during 2022, 15 Farmer Mac purchased $147.3 million of Renewable Energy loans as part of its strategic initiative to support rural renewable energy projects. Underwriting and Collateral Standards Farmer Mac's charter does not specify minimum underwriting criteria for eligible Rural Utilities or Renewable Energy loans.
Also during 2023, Farmer Mac purchased 15 $273.5 million of Renewable Energy loans as part of its strategic initiative to support rural renewable energy projects. Underwriting and Collateral Standards Farmer Mac's charter does not specify minimum underwriting criteria for eligible Rural Utilities or Renewable Energy loans.
Farmer Mac's risk-based capital requirement as of December 31, 2022 was $204.2 million, and Farmer Mac's regulatory capital of $1.3 billion exceeded that amount by approximately $1.1 billion. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital Requirements" for a presentation of Farmer Mac's current regulatory capital position. Enforcement Levels .
Farmer Mac's risk-based capital requirement as of December 31, 2023 was $186.4 million, and Farmer Mac's regulatory capital of $1.5 billion exceeded that amount by approximately $1.3 billion. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital Requirements" for a presentation of Farmer Mac's current regulatory capital position. Enforcement Levels .
Farmer Mac's charter authorizes a maximum loan size (adjusted annually for inflation) for an eligible Agricultural Finance mortgage loan secured by more than 2,000 acres of agricultural real estate. That maximum loan size was $15.9 million as of December 31, 2022.
Farmer Mac's charter authorizes a maximum loan size (adjusted annually for inflation) for an eligible Agricultural Finance mortgage loan secured by more than 2,000 acres of agricultural real estate. That maximum loan size was $17.0 million as of December 31, 2023.
Farmer Mac primarily employs full-time employees to meet its business needs as it grows and evolves while supplementing human capital needs with part-time employees (including interns) and independent contractors and consultants as needed. Farmer Mac has experienced a geographic evolution in its workforce during the last three years and now employs personnel in 26 states across the United States.
Farmer Mac primarily employs full-time employees to meet its business needs as it grows and evolves while supplementing human capital needs with part-time employees (including interns) and independent contractors and consultants as needed. Farmer Mac has experienced a geographic evolution in its workforce since 2020 and now employs personnel in 27 states across the United States.
Farmer Mac's regular debt issuance supports its access to the capital markets, and Farmer Mac's liquidity investments provide an alternative source of funds should market conditions become unfavorable. As of December 31, 2022, Farmer Mac had $0.6 billion of discount notes and $24.4 billion of medium-term notes outstanding.
Farmer Mac's regular debt issuance supports its access to the capital markets, and Farmer Mac's liquidity investments provide an alternative source of funds should market conditions become unfavorable. As of December 31, 2023, Farmer Mac had $1.7 billion of discount notes and $24.9 billion of medium-term notes outstanding.
The following table presents the dividends declared and paid on Series F Preferred Stock during and after 2022: Date Dividend Declared Per Share Amount For Period Beginning For Period Ending Date Paid February 24, 2022 $0.3281250 January 18, 2022 April 17, 2022 April 17, 2022 May 18, 2022 $0.3281250 April 18, 2022 July 17, 2022 July 17, 2022 August 10, 2022 $0.3281250 July 18, 2022 October 17, 2022 October 17, 2022 November 9, 2022 $0.3281250 October 18, 2022 January 17, 2023 January 17, 2023 February 22, 2023 $0.3281250 January 18, 2023 April 17, 2023 * * The dividend declared on February 22, 2023 is scheduled to be paid on April 17, 2023.
The following table presents the dividends declared and paid on Series F Preferred Stock during and after 2023: Date Dividend Declared Per Share Amount For Period Beginning For Period Ending Date Paid February 22, 2023 $0.3281250 January 18, 2023 April 17, 2023 April 17, 2023 May 3, 2023 $0.3281250 April 18, 2023 July 17, 2023 July 17, 2023 August 9, 2023 $0.3281250 July 18, 2023 October 17, 2023 October 17, 2023 November 8, 2023 $0.3281250 October 18, 2023 January 17, 2024 January 17, 2024 February 21, 2024 $0.3281250 January 18, 2024 April 17, 2024 * * The dividend declared on February 21, 2024 is scheduled to be paid on April 17, 2024. 27 The following table presents the dividends declared and paid on Series G Preferred Stock during and after 2023: Date Dividend Declared Per Share Amount For Period Beginning For Period Ending Date Paid February 22, 2023 $0.3046875 January 18, 2023 April 17, 2023 April 17, 2023 May 3, 2023 $0.3046875 April 18, 2023 July 17, 2023 July 17, 2023 August 9, 2023 $0.3046875 July 18, 2023 October 17, 2023 October 17, 2023 November 8, 2023 $0.3046875 October 18, 2023 January 17, 2024 January 17, 2024 February 21, 2024 $0.3046875 January 18, 2024 April 17, 2024 * * The dividend declared on February 21, 2024 is scheduled to be paid on April 17, 2024.
For a more detailed discussion of Farmer Mac's regulatory and governmental relationships, see "Business—Government Regulation of Farmer Mac." HUMAN CAPITAL As of December 31, 2022, Farmer Mac employed 158 people, with 23 new employees hired during the year resulting in a net increase of 5 employees (3%) compared to year-end 2021.
For a more detailed discussion of Farmer Mac's regulatory and governmental relationships, see "Business—Government Regulation of Farmer Mac." HUMAN CAPITAL As of December 31, 2023, Farmer Mac employed 185 people, with 36 new employees hired during the year resulting in a net increase of 27 employees (17%) compared to year-end 2022.
During 2022, Farmer Mac purchased $231.0 million of loans and loan commitments to telecommunications companies that provide wireless, cable, fiber transport, and broadband services to rural America as part of its strategic initiative to provide further support for the telecommunications industry.
During 2023, Farmer Mac purchased $232.5 million of loans to telecommunications companies that provide wireless, cable, fiber transport, and broadband services to rural America as part of its strategic initiative to provide further support for the telecommunications industry.
The following table presents the dividends declared on Farmer Mac's common stock during and after 2022: Date Dividend Declared Per Share Amount For Holders Of Record As Of Date Paid February 24, 2022 $0.95 March 16, 2022 March 31, 2022 May 18, 2022 $0.95 June 15, 2022 June 30, 2022 August 10, 2022 $0.95 September 15, 2022 September 30, 2022 November 9, 2022 $0.95 December 15, 2022 December 31, 2022 February 22, 2023 $1.10 March 16, 2023 * * The dividend declared on February 22, 2023 is scheduled to be paid on March 31, 2023.
The following table presents the dividends declared on Farmer Mac's common stock during and after 2023: Date Dividend Declared Per Share Amount For Holders Of Record As Of Date Paid February 22, 2023 $1.10 March 16, 2023 March 31, 2023 May 3, 2023 $1.10 June 16, 2023 June 30, 2023 August 9, 2023 $1.10 September 15, 2023 September 29, 2023 November 8, 2023 $1.10 December 15, 2023 December 29, 2023 February 21, 2024 $1.40 March 15, 2024 * * The dividend declared on February 21, 2024 is scheduled to be paid on March 28, 2024.
As of December 31, 2022, the following shares of Farmer Mac common stock were outstanding: 24 • 1,030,780 shares of Class A voting common stock; • 500,301 shares of Class B voting common stock; and • 9,270,265 shares of Class C non-voting common stock.
As of December 31, 2023, the following shares of Farmer Mac common stock were outstanding: • 1,030,780 shares of Class A voting common stock; • 500,301 shares of Class B voting common stock; and • 9,310,872 shares of Class C non-voting common stock.
As of December 31, 2022, the total outstanding business volume in Farmer Mac's two lines of business (Agricultural Finance and Rural Infrastructure Finance) was $25.9 billion.
As of December 31, 2023, the total outstanding business volume in Farmer Mac's two lines of business (Agricultural Finance and Rural Infrastructure Finance) was $28.5 billion.
In March 2021, Farmer Mac's board of directors reinstated the share repurchase program on its previous terms (with a remaining authorization of up to $9.8 million in stock repurchases) and recently extended the expiration date of the program to March 2025.
In March 2023, Farmer Mac's board of directors extended the expiration date of the repurchase program to March 2025 on the same terms and with a remaining authorization of up to $9.8 million in stock repurchases.
Corporate AgFinance loans tend to be larger and more complex farming operations than Farm & Ranch loans (generally more than $10 million) and typically are loans made to agribusinesses focused on agriculture production, food and fiber processing, and other supply chain production. Thus, Corporate AgFinance loans often have a different credit risk profile than Farm & Ranch loans.
Corporate AgFinance loans tend to be larger and more complex operations than Farm & Ranch loans (generally more than $10 million) and typically are loans made to agribusinesses focused on agriculture production, food and fiber processing, and other supply chain production.
The dividend rights of all three classes of Farmer Mac's common stock are the same, and dividends may be paid on common stock only when, as, and if declared by Farmer Mac's board of directors in its sole discretion, subject to compliance with applicable capital requirements and the payment of dividends on outstanding preferred stock.
No ownership restrictions apply to Class C non-voting common stock, and those securities are freely transferable. 24 The dividend rights of all three classes of Farmer Mac's common stock are the same, and dividends may be paid on common stock only when, as, and if declared by Farmer Mac's board of directors in its sole discretion, subject to compliance with applicable capital requirements and the payment of dividends on outstanding preferred stock.
Each series of Outstanding Preferred Stock ranks senior to Farmer Mac's outstanding Class A voting common 25 stock, Class B voting common stock, Class C non-voting common stock, and any other common stock of Farmer Mac issues in the future.
Since each of their respective issuances, Farmer Mac has not issued any more shares of any series of Outstanding Preferred Stock. Each series of Outstanding Preferred Stock ranks senior to Farmer Mac's outstanding Class A voting common stock, Class B voting common stock, Class C non-voting common stock, and any other common stock of Farmer Mac issues in the future.
The information contained on Farmer Mac's website is not incorporated by reference into this report. 22 FUNDING OF GUARANTEE AND LTSPC OBLIGATIONS The main sources of funding for the payment of Farmer Mac's obligations under its guarantees and LTSPCs are the fees Farmer Mac receives for its guarantees and commitments, net effective spread, proceeds of debt issuances, loan repayments, and maturities of AgVantage securities.
FUNDING OF GUARANTEE AND LTSPC OBLIGATIONS The main sources of funding for the payment of Farmer Mac's obligations under its guarantees and LTSPCs are the fees Farmer Mac receives for its guarantees and commitments, net effective spread, proceeds of debt issuances, loan repayments, and maturities of AgVantage securities.
AVAILABLE INFORMATION Farmer Mac makes available free of charge, through the "Investors" section of its internet website at www.farmermac.com, copies of materials it files with, or furnishes to, the SEC, including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and any amendments to those filings, as soon as reasonably practicable after electronically filing those materials with, or furnishing those materials to, the SEC.
This included leveraging regular internal Farmer Mac communications to inform and educate personnel on diversity, equity, and inclusion matters and engage in company-wide philanthropic efforts with a focus on inclusion. 22 AVAILABLE INFORMATION Farmer Mac makes available free of charge, through the "Investors" section of its internet website at www.farmermac.com, copies of materials it files with, or furnishes to, the SEC, including its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and any amendments to those filings, as soon as reasonably practicable after electronically filing those materials with, or furnishing those materials to, the SEC.
We use traditional methods to attract and retain talent, such as competitive salaries and benefits that include: • a robust paid time off program (up to 5 weeks of vacation, 2 weeks of sick leave, 11 paid holidays, 12 weeks pregnancy leave, and 4 weeks parental leave); • a group health plan with all premiums paid by Farmer Mac; • a 401(k) plan that provides for both voluntary employee contributions and employer contributions at the levels described in Note 11 to the consolidated financial statements; • group term life insurance and long-term disability insurance with all premiums paid by Farmer Mac; • pre-tax dependent care reimbursement; • partially-funded health savings accounts; • access to group rates for legal services insurance, additional life insurance, and pet insurance; and • professional and career development opportunities and programs.
Farmer Mac uses traditional methods to attract and retain talent, such as competitive salaries and benefits that include: • a robust paid time off program (up to 5 weeks of vacation, 2 weeks of sick leave, 11 paid holidays, 6 weeks of pregnancy leave, 6 weeks of parental leave, and 8 hours of leave to volunteer for community or charitable service activities); • an "equity for all" program in which all employees are eligible to receive annual grants of equity-based compensation; • a group health plan with all premiums paid by Farmer Mac; • a 401(k) plan that provides for both voluntary employee contributions and employer contributions at the levels described in Note 11 to the consolidated financial statements; • a self-funded short-term disability benefit that provides varying percentages of base salary payments through the time of eligibility for long-term disability insurance coverage; • group term life insurance and long-term disability insurance with all premiums paid by Farmer Mac; • pre-tax dependent care reimbursement; • partially-funded health savings accounts; • access to group rates for legal services insurance, additional life and disability insurance, and pet insurance; and • professional and career development opportunities and programs.
Farmer Mac also places strategic focus on succession planning, and detailed succession plans are crafted in partnership with key leaders in the business to identify and develop high potential leaders to promote career readiness for expanded responsibilities and roles in Farmer Mac. 21 Farmer Mac experienced a 12.3% turnover rate in 2022, which was up from 7.3% in 2021, largely a result of a highly-competitive employment market.
Detailed succession plans are crafted in partnership with key leaders in the business to identify and develop high potential leaders to promote career readiness for expanded responsibilities and roles in Farmer Mac. Farmer Mac experienced a 6.4% turnover rate in 2023, which was down from 12.3% in 2022, despite a highly competitive employment market.
The following table presents the dividends declared and paid on Series G Preferred Stock during and after 2022: Date Dividend Declared Per Share Amount For Period Beginning For Period Ending Date Paid February 24, 2022 $0.3046875 January 18, 2022 April 17, 2022 April 17, 2022 May 18, 2022 $0.3046875 April 18, 2022 July 17, 2022 July 17, 2022 August 10, 2022 $0.3046875 July 18, 2022 October 17, 2022 October 17, 2022 November 9, 2022 $0.3046875 October 18, 2022 January 17, 2023 January 17, 2023 February 22, 2023 $0.3046875 January 18, 2023 April 17, 2023 * * The dividend declared on February 22, 2023 is scheduled to be paid on April 17, 2023. 27 FARMER MAC'S AUTHORITY TO BORROW FROM THE U.S.
The following table presents the dividends declared and paid on Series D Preferred Stock during and after 2023: Date Dividend Declared Per Share Amount For Period Beginning For Period Ending Date Paid February 22, 2023 $0.35625 January 18, 2023 April 17, 2023 April 17, 2023 May 3, 2023 $0.35625 April 18, 2023 July 17, 2023 July 17, 2023 August 9, 2023 $0.35625 July 18, 2023 October 17, 2023 October 17, 2023 November 8, 2023 $0.35625 October 18, 2023 January 17, 2024 January 17, 2024 February 21, 2024 $0.35625 January 18, 2024 April 17, 2024 * * The dividend declared on February 21, 2024 is scheduled to be paid on April 17, 2024.
As of December 31, 2022, Farmer Mac's Tier 1 capital ratio was 14.9%.
As of December 31, 2023, Farmer Mac's Tier 1 capital ratio was 15.4%.
Farmer Mac's two primary sources of revenue are: • interest income earned on assets held on balance sheet, net of related funding costs and interest payments and receipts on financial derivatives; and • guarantee and commitment fees received for outstanding guaranteed securities and LTSPCs. 6 Farmer Mac funds its purchases of eligible loans and securities primarily by issuing debt obligations of various maturities in the public capital markets.
The debts and obligations of Farmer Mac and its subsidiaries are not guaranteed by the full faith and credit of the United States of America. 6 Farmer Mac's two primary sources of revenue are: • interest income earned on assets held on balance sheet, net of related funding costs and interest payments and receipts on financial derivatives; and • guarantee and commitment fees received for outstanding guaranteed securities and LTSPCs.
The charter prescribes that the following minimum standards must be applied to all Agricultural Finance mortgage loans: • provide that no loan with a loan-to-value ratio ("LTV") more than 80% may be eligible; • require each borrower to demonstrate sufficient cash flow to adequately service the loan; • require sufficient documentation standards; • protect the integrity of the appraisal process for any loan; and • confirm that the borrower is or will be actively engaged in agricultural production. 10 Underwriting and Collateral Standards - Farm & Ranch Farmer Mac experiences direct credit exposure to borrowers on Agricultural Finance mortgage loans in its Farm & Ranch reportable operating segment (referred to as "Farm & Ranch loans") through its loan purchases, unfunded commitments, LTSPCs, and Farmer Mac Guaranteed Securities that represent interests in, or obligations secured by, pools of eligible Farm & Ranch loans but that are not AgVantage securities ("Farm & Ranch Guaranteed Securities").
The charter prescribes that the following minimum standards must be applied to all Agricultural Finance mortgage loans: • provide that no loan with a loan-to-value ratio ("LTV") more than 80% may be eligible; • require each borrower to demonstrate sufficient cash flow to adequately service the loan; • require sufficient documentation standards; • protect the integrity of the appraisal process for any loan; and • confirm that the borrower is or will be actively engaged in agricultural production.
For information about Farmer Mac's allowance for losses, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk – Loans and Guarantees" and Note 2(h), Note 8, and Note 12 to the consolidated financial statements.
For information about Farmer Mac's allowance for losses, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk – Loans and Guarantees" and Note 2(h), Note 8, and Note 12 to the consolidated financial statements. 23 FINANCING Debt Issuance Farmer Mac's charter authorizes Farmer Mac to issue debt obligations to purchase eligible loans and securities, USDA Securities, and to maintain reasonable amounts of liquid investments to maintain an adequate supply of liquidity.
This represents a 73% increase in geographic diversity (by state) since the start of the COVID-19 pandemic. As of December 31, 2022, 89 full-time employees were located in the Washington, D.C. area, 27 full-time employees were located in the Johnston, Iowa area, and 42 full-time employees worked on a fully remote basis in other parts of the United States.
As of December 31, 2023, 95 full-time employees were located in the Washington, D.C. area, 28 full-time employees were located in the Johnston, Iowa area, and 62 full-time employees worked on a fully remote basis in other parts of the United States.
For Rural Utilities loans, Farmer Mac reviews lenders' credit submissions and analyzes borrowers' audited financial statements and financial and operating reports to confirm that loans meet Farmer Mac's underwriting standards for Rural Utilities loans.
For Rural Utilities loans, Farmer Mac reviews lenders' credit submissions and analyzes borrowers' audited financial statements and financial and operating reports to confirm that loans meet Farmer Mac's underwriting standards for Rural Utilities loans. It is customary with these loans for the lender or lender group to take a security interest in substantially all of the borrower's assets.
Farmer Mac was recognized in 2022 by Top Workplaces USA for Cultural Excellence in the categories of Innovation, Employee Appreciation, Leadership, and Compensation & Benefits. Compensation & Benefits As a financial services organization, Farmer Mac must attract and retain a highly skilled workforce in an often competitive employment environment.
Compensation & Benefits As a financial services organization, Farmer Mac must attract and retain a highly skilled workforce in an often competitive employment environment.
The Series C Preferred Stock pays an annual dividend rate of 6.000% from the date of issuance to and including the quarterly payment date on July 17, 2024 and thereafter at a floating rate equal to three-month LIBOR plus 3.260%.
The Series C Preferred Stock pays an annual dividend rate of 6.000% from the date of issuance to and including the quarterly payment date on July 17, 2024 and thereafter at a floating rate equal to three-month LIBOR plus 3.260%, which Farmer Mac expects will be converted to the Term Secured Overnight Financing Rate published by CME Group Benchmark Administration, Ltd., plus a spread adjustment based on the tenor of the securities, if not redeemed prior to that payment date.
The following table presents the outstanding balances under Farmer Mac's two lines of business as of December 31, 2022 and 2021: 8 Lines of Business - Outstanding Business Volume On or Off Balance Sheet As of December 31, 2022 As of December 31, 2021 (in thousands) Agricultural Finance: Farm & Ranch: Loans On-balance sheet $ 5,150,750 $ 4,775,070 Loans held in consolidated trusts: Beneficial interests owned by third-party investors (Pass-Through) 1 On-balance sheet 914,918 948,623 Beneficial interests owned by third-party investors (Structured) 1 On-balance sheet 296,658 — IO-FMGS 2 On-balance sheet 10,622 12,297 USDA Securities On-balance sheet 2,407,302 2,445,806 AgVantage Securities 1 On-balance sheet 5,605,000 4,725,000 LTSPCs and unfunded commitments Off-balance sheet 2,822,309 2,587,154 Other Farmer Mac Guaranteed Securities 3 Off-balance sheet 500,953 578,358 Loans serviced for others Off-balance sheet 20,280 22,331 Total Farm & Ranch $ 17,728,792 $ 16,094,639 Corporate AgFinance: Loans On-balance sheet $ 1,166,253 $ 1,123,300 AgVantage Securities 1 On-balance sheet 359,600 367,464 Unfunded commitments Off-balance sheet 77,654 47,070 Total Corporate AgFinance $ 1,603,507 $ 1,537,834 Total Agricultural Finance $ 19,332,299 $ 17,632,473 Rural Infrastructure Finance: Rural Utilities: Loans On-balance sheet $ 2,801,696 $ 2,302,373 AgVantage Securities 1 On-balance sheet 3,044,156 3,033,262 LTSPCs and unfunded commitments Off-balance sheet 512,592 556,837 Other Farmer Mac Guaranteed Securities 3 Off-balance sheet 1,169 2,755 Total Rural Utilities $ 6,359,613 $ 5,895,227 Renewable Energy: Loans On-balance sheet $ 219,570 $ 86,763 Unfunded commitments Off-balance sheet 10,600 — Total Renewable Energy $ 230,170 $ 86,763 Total Rural Infrastructure Finance $ 6,589,783 $ 5,981,990 Total $ 25,922,082 $ 23,614,463 1.
The following table presents the outstanding balances under Farmer Mac's two lines of business as of December 31, 2023 and 2022: 8 Lines of Business - Outstanding Business Volume On or Off Balance Sheet As of December 31, 2023 As of December 31, 2022 (in thousands) Agricultural Finance: Farm & Ranch: Loans On-balance sheet $ 5,133,450 $ 5,150,750 Loans held in consolidated trusts: Beneficial interests owned by third-party investors (single-class) (1) On-balance sheet 870,912 914,918 Beneficial interests owned by third-party investors (structured) (1) On-balance sheet 561,349 296,658 IO-FMGS (2) On-balance sheet 9,409 10,622 USDA Securities On-balance sheet 2,368,872 2,407,302 AgVantage Securities (1) On-balance sheet 5,835,000 5,605,000 LTSPCs and unfunded loan commitments Off-balance sheet 2,999,943 2,822,309 Other Farmer Mac Guaranteed Securities (3) Off-balance sheet 452,602 500,953 Loans serviced for others Off-balance sheet 577,264 20,280 Total Farm & Ranch $ 18,808,801 $ 17,728,792 Corporate AgFinance: Loans On-balance sheet $ 1,259,723 $ 1,166,253 AgVantage Securities (1) On-balance sheet 288,879 359,600 Unfunded loan commitments Off-balance sheet 145,377 77,654 Total Corporate AgFinance $ 1,693,979 $ 1,603,507 Total Agricultural Finance $ 20,502,780 $ 19,332,299 Rural Infrastructure Finance: Rural Utilities: Loans On-balance sheet $ 3,094,477 $ 2,801,696 AgVantage Securities (1) On-balance sheet 3,898,468 3,044,156 LTSPCs and unfunded loan commitments Off-balance sheet 487,778 512,592 Other Farmer Mac Guaranteed Securities (3) Off-balance sheet — 1,169 Total Rural Utilities $ 7,480,723 $ 6,359,613 Renewable Energy: Loans On-balance sheet $ 440,286 $ 219,570 Unfunded loan commitments Off-balance sheet 47,235 10,600 Total Renewable Energy $ 487,521 $ 230,170 Total Rural Infrastructure Finance $ 7,968,244 $ 6,589,783 Total $ 28,471,024 $ 25,922,082 (1) A type of Farmer Mac Guaranteed Security.
Workplace Culture The COVID-19 pandemic continues to motivate many organizations, including Farmer Mac, to focus on how and where people work and to reassess physical workspace needs. In 2022, Farmer Mac advanced its philosophy about how and where its employees should work, moving toward a "Presence with Purpose" 20 model.
Workplace Culture Farmer Mac continues to focus on how and where people work and to reassess physical workspace needs and operates under a "Presence with Purpose" model.
All references to www.farmermac.com in this report are inactive textual references only.
All references to www.farmermac.com in this report are inactive textual references only. The information contained on Farmer Mac's website is not incorporated by reference into this report.
Diversity, Equity, and Inclusion Farmer Mac's diversity, equity, and inclusion ("DEI") council was formed in late 2020 at the direction of Farmer Mac's board of directors and senior executives. The DEI council consists of 12 rotating Farmer Mac employees with the assistance of outside DEI consultants.
Diversity, Equity, and Inclusion Farmer Mac's diversity, equity, and inclusion ("DEI") council was formed in late 2020 at the direction of Farmer Mac's board of directors and senior executives. In 2023, Farmer Mac's DEI council, with support from external consultants, continued to assess the council’s objectives and focused its DEI efforts on refining its three-year plan.
In addition to Farmer Mac LEARN, Farmer Mac made investments in multiple digital learning platforms in 2022 and continues to offer an education assistance plan for employees with at least one year of full-time employment. As part of its workforce strategy, Farmer Mac is building intern and talent pipelines through partnership with academic institutions, community organizations, and business partners.
Farmer Mac continues to invest in digital learning platforms to support the learning needs of the employees and business, while also leveraging internal subject matter expertise to elevate learning offerings. Farmer Mac also continues to offer an education assistance plan for employees with at least one year of full-time employment.
Loan Servicing During 2021, Farmer Mac began servicing a sizeable portion of the Agricultural Finance mortgage loan and USDA Securities portfolios through a strategic acquisition of loan servicing rights along with experienced servicing personnel and an operational servicing platform.
Loan Servicing Farmer Mac services a sizeable portion of its Agricultural Finance mortgage loan and USDA Securities portfolios, as well as a smaller portfolio of eligible agricultural mortgage loans that are held by an unrelated third party.
Removed
The debts and obligations of Farmer Mac and its subsidiaries are not guaranteed by the full faith and credit of the United States of America.
Added
Farmer Mac funds its purchases of eligible loans and securities primarily by issuing debt obligations of various maturities in the public capital markets.
Removed
It is customary in loans to electric distribution cooperatives and electric generation and transmission cooperatives for the lender or lender group to take a security interest in substantially all of the borrower's assets.
Added
Underwriting and Collateral Standards - Farm & Ranch Farmer Mac accepts direct credit exposure to borrowers on Agricultural Finance mortgage loans in its Farm & Ranch reportable operating segment (referred to as "Farm & Ranch loans") through its loan 10 purchases, unfunded loan commitments, LTSPCs, and Farmer Mac Guaranteed Securities that represent interests in, or obligations secured by, pools of eligible Farm & Ranch loans but that are not AgVantage securities ("Farm & Ranch Guaranteed Securities").
Removed
Farmer Mac LEARN includes online modules focused on new employee onboarding, business training, competency development, leadership development, and career development. During 2022, strategic focus was placed on new employee onboarding and leadership development, including specialized programs and online courses in each category.
Added
The underwriting for loans to agribusinesses typically relies upon enterprise value, meaning the debt is generally secured by all business assets and common stock (in addition to first lien mortgages) of the borrower and the value of the borrowing entity depends on its ability to generate recurring positive cash flow.
Removed
In 2022, Farmer Mac continued to strengthen its focus on DEI efforts within Farmer Mac's workforce by executing its multiyear strategic plan with a focus during 2022 on enterprise-wide education.
Added
Enterprise value is the estimated value of the borrower as a going concern, which is estimated using one or more valuation techniques such as: discounted cash flow, cash flow multiples, asset liquidation, or other valuation techniques. Thus, Corporate AgFinance loans often have a different credit risk profile than Farm & Ranch loans.
Removed
FINANCING Debt Issuance Farmer Mac's charter authorizes Farmer Mac to issue debt obligations to purchase eligible loans and securities, USDA Securities, and to maintain reasonable amounts of liquid investments to maintain an adequate supply of liquidity.
Added
This represents a 73% increase in geographic diversity (by state) since the start of the COVID-19 pandemic in early 2020.
Removed
No ownership restrictions apply to Class C non-voting common stock, and those securities are freely transferable.
Added
In 2023, Farmer Mac was awarded a Top Workplaces USA national award and an industry award in financial services. Farmer Mac also received six Top Workplaces USA cultural excellence awards in 2023 in the categories of innovation, employee appreciation, leadership, compensation & benefits, employee well being, and professional development.
Removed
During first quarter 2020, Farmer Mac repurchased approximately 4,000 shares of Class C non-voting common stock at a cost of approximately $0.2 million under a share repurchase program that Farmer Mac's board of directors approved in 2015 and modified in 2019.
Added
Farmer Mac LEARN is deployed in a blended learning fashion and is structured around six strategic LEARN Academies to enable effective learning and career development.
Removed
Shortly after these repurchases were completed, Farmer Mac indefinitely suspended its share repurchase program in an effort to preserve capital and liquidity in view of market volatility and uncertainty caused by the COVID-19 pandemic.
Added
The LEARN Academies were introduced in 2023 and include: • New Hire Academy • Skills Academy • Leadership Academy • Business Academy • Ethics & Compliance Academy • IT and Cybersecurity Academy 21 Each Academy is structured around learning paths aligned to each employee’s professional level, role, and career trajectory.
Removed
Since each of their respective issuances, Farmer Mac has not issued any more shares of any series of Outstanding Preferred Stock.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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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 36 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.
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.
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 42 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.
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.
A significant increase in the difference between Farmer Mac's funding cost relative to the benchmark index, including LIBOR and SOFR, may compress spread income on the assets Farmer Mac holds and seeks to re-fund with the higher cost funding. Widespread compression within a short timeframe could adversely affect Farmer Mac's operating results or financial condition.
A significant increase in the difference between Farmer Mac's funding cost relative to the benchmark index, including SOFR, may compress spread income on the assets Farmer Mac holds and seeks to re-fund with the higher cost funding. Widespread compression within a short timeframe could adversely affect Farmer Mac's operating results or financial condition.
Any of the risks described in this section could materially and adversely affect Farmer Mac's business, operating results, financial condition, reputation, capital levels, and future earnings. For more information about Farmer Mac's risk management, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management" in Item 7 of this Annual Report on Form 10-K. Item 1B.
Any of the risks described in this section could materially and adversely affect Farmer Mac's business, operating results, financial condition, reputation, capital levels, and future earnings. For more information about Farmer Mac's risk management, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management" in Item 7 of this Annual Report on Form 10-K.
Failure by Farmer Mac's third-party loan servicers, information systems providers, and other service providers to protect confidential information from unauthorized access and dissemination could result in liability for Farmer Mac or damage Farmer Mac's reputation, which could have a negative effect on Farmer Mac's business, operating results, or financial condition.
Failure by Farmer Mac's third-party loan servicers, third-party applications, information systems providers, and other service providers to protect confidential information from unauthorized access and dissemination could result in liability for Farmer Mac or damage Farmer Mac's reputation, which could have a negative effect on Farmer Mac's business, operating results, or financial condition.
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.
The issuance of debt securities is Farmer Mac's 38 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.
Like many other financial institutions, Farmer Mac and its service providers face regular attacks by threat actors attempting to gain unauthorized access to, or disrupt, its information systems and access or acquire its data, including from organized criminal groups, hackers, nation states, activists, insiders, and other unauthorized third parties.
Like many other financial institutions, Farmer Mac and its third party service providers face regular attacks by threat actors attempting to gain unauthorized access to, or disrupt, its information systems and access or acquire its data, including from organized criminal groups, hackers, nation states, activists, insiders, and other unauthorized third parties.
See "Management's Discussion and Analysis—Risk Management—Credit Risk – Loans and Guarantees" for more information on Farmer Mac's management of credit risk. 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.
See "Management's Discussion and Analysis—Risk Management—Credit Risk – Loans and Guarantees" for more information on Farmer Mac's management of credit risk. 37 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.
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.
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.
Inadequacies or failures in Farmer Mac's internal processes, personnel, systems, cybersecurity program, or infrastructure could lead to a significant disruption in its business operations; unauthorized access to or acquisition, destruction, alteration, release, theft, or loss of confidential, proprietary, or personal data; fraud, 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.
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 40 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.
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.
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 43 new risks that these new processes present.
These technology and information systems encompass an integrated set of hardware, software, infrastructure, and personnel organized to facilitate the planning, control, coordination, operations, and decision-making processes within Farmer Mac.
These technology and information systems encompass an integrated set of hardware, software, infrastructure, and personnel organized to facilitate the planning, control, coordination, operations, and 41 decision-making processes within Farmer Mac.
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.
Farmer Mac also has concentrated 36 exposures to individual business counterparties on AgVantage securities, which are general obligations of institutional counterparties secured by eligible loans held by the issuing institution.
If Farmer Mac were to undertake activities involving greater risk or lower returns to satisfy its mission, Farmer Mac's business, operating results, or financial condition could be adversely affected.
If Farmer 39 Mac were to undertake activities involving greater risk or lower returns to satisfy its mission, Farmer Mac's business, operating results, or financial condition could be adversely affected.
Farmer Mac's exposure to credit risk may also increase due to concentrated exposure to a particular borrower or counterparty. Farmer Mac’s Farm & Ranch 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'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.
As the importance and complexity of Farmer Mac’s technology and information systems has increased, and as new technologies are developed that are used by its customers, Farmer Mac, or its service providers to support its business and operations, so too have the risks posed to Farmer Mac’s information systems and data from cybersecurity attacks that threaten the confidentiality, integrity, or availability of Farmer Mac’s information technology assets and resources and its data.
As the importance and complexity of Farmer Mac’s technology and information systems has increased, and as new technologies are developed that are used by its customers, Farmer Mac, or its service providers to support its business and operations, the risks posed to Farmer Mac’s information systems and data from cybersecurity attacks that threaten the confidentiality, integrity, or availability of Farmer Mac’s information technology assets and resources and its data have increased.
Although 43 Farmer Mac's financial derivatives provide economic hedges of interest rate risk, changes in the fair values of financial derivatives can cause volatility in net income and in capital, particularly if those financial derivatives are not designated in hedge accounting relationships or if there is any ineffectiveness in a hedge accounting relationship.
Although 44 Farmer Mac's financial derivatives provide economic hedges of interest rate risk, changes in the fair values of financial derivatives can cause volatility in net income and in capital, particularly if those financial derivatives are not designated in hedge accounting relationships or if there is any ineffectiveness in a hedge accounting relationship.
The trading price may fluctuate in response to various factors, including short sales, hedging, the presence or absence of a share repurchase program, stock market influences in general that are unrelated to Farmer Mac's operating performance (including COVID-19), or sales of significant amounts of the stock by large holders.
The trading price may fluctuate in response to various factors, including short sales, hedging, the presence or absence of a share repurchase program, stock market influences in general that are unrelated to Farmer Mac's operating performance, or sales of significant amounts of the stock by large holders.
Farmer Mac's credit risk may also increase due to decline in the collateral values securing the loans in Farmer Mac's portfolio.
Farmer Mac's credit risk may increase due to decline in the collateral values securing the loans in Farmer Mac's portfolio.
Also, the risk of unauthorized access to confidential, proprietary, or personal information through information system breaches or inadvertent dissemination may be heightened in a remote-working environment, which is currently more prevalent at Farmer Mac.
Finally, the risk of unauthorized access to confidential, proprietary, or personal information through information system breaches or inadvertent dissemination may be heightened in a remote-working environment, which is currently more prevalent at Farmer Mac.
Farmer Mac is aware of cyber-attacks and incidents involving its third party service providers in the past, and although Farmer Mac has not experienced a material loss of data or disruption of its operations 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 Farmer Mac's operations in the same manner as incidents on its own systems.
Farmer Mac is aware of cybersecurity incidents involving its third party service providers in the past, and although Farmer Mac has not experienced a material loss of data or disruption of its operations 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 Farmer Mac's operations in the same manner as incidents on its own systems.
These threats come from a variety of different sources, including cyber-attacks, computer viruses, malware, exploits of system and network vulnerabilities, human error, phishing, ransomware, and distributed denial of service attacks. The methods used to gain unauthorized access to or disrupt its information systems and data, or those of its service providers, are evolving.
These threats come from a variety of different sources, including cyber-attacks, computer viruses, malware, exploits of system and network vulnerabilities, human error, phishing, ransomware, and distributed denial of service attacks. The threats Farmer Mac faces and the methods used to gain unauthorized access to or disrupt its information systems and data, or those of its service providers, are evolving.
The ownership of Farmer Mac's two classes of voting common stock is concentrated in a few institutions. Four financial institutions hold approximately 53% of Farmer Mac's Class A voting common stock, with 31% held by one institution.
The ownership of Farmer Mac's two classes of voting common stock is concentrated in a few institutions. Four financial institutions hold approximately 51% of Farmer Mac's Class A voting common stock, with 31% held by one institution.
As of December 31, 2022, transactions with two 38 institutions represented nearly all of the business volume under Farmer Mac's Rural 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 of December 31, 2023, transactions with two institutions represented nearly all of the business volume under Farmer Mac's Rural 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.
In the event that a borrower defaults, and Farmer Mac must foreclose, 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.
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.
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, 2022, $8.0 billion of the $9.0 billion of AgVantage securities outstanding had been issued by only three counterparties.
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, 2023, $9.0 billion of the $10.0 billion of AgVantage securities outstanding had been issued by only three counterparties.
As of December 31, 2022, Farmer Mac held cash, cash equivalents, and other investment securities with a fair value of $5.5 billion that could be used as a source of funds for payment on its obligations, including its guarantee and LTSPC obligations.
As of December 31, 2023, Farmer Mac held cash, cash equivalents, and other investment securities with a fair value of $5.9 billion that could be used as a source of funds for payment on its obligations, including its guarantee and LTSPC obligations.
Yet Farmer Mac's ability to implement safeguards preventing disruption to third-party systems or infrastructure is more limited than for its own systems or infrastructure.
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.
All of these factors may be exacerbated during periods of low trading volume for Farmer Mac's Class C stock, which averaged 31,995 shares daily during 2022, and may have a prolonged negative effect on its trading price or increase price volatility. 46 Regulatory and Compliance Risk Farmer Mac and many of its business counterparties are subject to comprehensive government regulation, and unanticipated changes to those laws and regulations could adversely affect Farmer Mac's business, operating results, reputation, or financial condition.
All of these factors may be exacerbated during periods of low trading volume for Farmer Mac's Class C stock, which averaged 57,662 shares daily during 2023 and may have a prolonged negative effect on its trading price or increase price volatility. 46 Regulatory and Compliance Risk Farmer Mac and many of its business counterparties are subject to comprehensive government regulation, and unanticipated changes to those laws and regulations could adversely affect Farmer Mac's business, operating results, reputation, or financial condition.
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 2022, ten institutions generated approximately 71% of loan purchase volume in the Agricultural Finance line of business.
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 2023, ten institutions generated approximately 81% of loan purchase volume in the Agricultural Finance line of business.
For example, as of December 31, 2022, Farmer Mac's assets and liabilities recorded at fair value included financial instruments valued at $7.6 billion whose fair values management estimated in the absence of readily observable fair values (in other words, level 3).
For example, as of December 31, 2023, Farmer Mac's assets and liabilities recorded at fair value included financial instruments valued at $5.6 billion whose fair values management estimated in the absence of readily observable fair values (in other words, level 3).
Specialized or highly improved collateral, such as storage and processing facilities or permanent plantings, 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 35 switch functional production when faced with adverse conditions.
Specialized or highly improved collateral, such as storage and processing facilities, permanent plantings, or rural utilities 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.
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 or are disrupted, then Farmer Mac's operations may be impacted in the same manner as inadequacies or failures in Farmer Mac's own internal processes, personnel, systems, cybersecurity program, 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 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.
Credit and Counterparty Risk Economic stress caused by disruptive global events, such as the continuing COVID-19 pandemic, 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.
Credit and Counterparty Risk 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.
Farmer Mac is also subject to repricing risk, which is the risk that Farmer Mac's funding cost relative to a benchmark index (for example, the London Interbank Offered Rate known as "LIBOR" or the Secured Overnight Financing Rate known as "SOFR") will increase from the time the initial funding was issued and the time the liabilities are re-funded.
Farmer Mac is also subject to repricing risk, which is the risk that Farmer Mac's funding cost relative to a benchmark index (for example, the Secured Overnight Financing Rate known as "SOFR") will increase from the time the initial funding was issued and the time the liabilities are re-funded.
In 2022 and 2021, Farmer Mac recorded a gain of $13.5 million and a loss of $1.4 million, respectively, from changes in the fair values of its financial derivatives as a result of movements in interest rates during those years.
In 2023 and 2022, Farmer Mac recorded a gain of $5.1 million and a gain of $13.5 million, respectively, from changes in the fair values of its financial derivatives as a result of movements in interest rates during those years.
A deficiency, failure, interruption, or breach in Farmer Mac's or our service providers' technology and information systems, infrastructure, or cybersecurity program, including the occurrence of successful cyber-attacks, could result in a loss of business, damage to Farmer Mac's reputation, the disclosure or misuse of confidential or proprietary information, or increased costs or liability to Farmer Mac, which could adversely affect Farmer Mac's business, operating results, or financial condition.
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 result in a loss of business, damage to Farmer Mac's reputation, the disclosure or misuse of confidential or proprietary information, or increased costs or liability to Farmer Mac, which could adversely affect Farmer Mac's business, operating results, or financial condition.
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.
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.
As of December 31, 2022, Farmer Mac had $3.9 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.
As of December 31, 2023, Farmer Mac had $4.1 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 Farmer Mac uses unreliable market data or incorrect estimates or assumptions in its internal models to estimate the fair value of its investment securities, those estimates could adversely affect results of operations during the reporting period.
Internal models require Farmer Mac to exercise judgment about estimates and assumptions used in the models. If Farmer Mac uses unreliable market data or incorrect estimates or assumptions in its internal models to estimate the fair value of its investment securities, those estimates could adversely affect results of operations during the reporting period.
Widespread weakening in the financial condition of borrowers within a particular geographic region, that produce particular commodities or rely on particular collateral, or that engage in processes or production that is dependent on a fluid supply chain could negatively affect Farmer Mac’s financial condition if sufficient diversity in these areas does not successfully mitigate concentration risk.
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.
For example, as of December 31, 2022, Farmer Mac held at fair value $3.2 billion of investment securities guaranteed by GSEs.
For example, as of December 31, 2023, Farmer Mac held at fair value $3.7 billion of investment securities guaranteed by GSEs.
Although Farmer Mac has implemented what we believe is an appropriate information security program with cybersecurity procedures, policies, practices, and controls, Farmer Mac may be unable to prevent unauthorized access to its information technology assets or data, which could lead to a significant disruption to its business operations; unauthorized access to or acquisition, destruction, alteration, release, theft, or loss of confidential, proprietary, or personal data; fraud, 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 41 reputational damage.
Farmer Mac’s current information security program with cybersecurity procedures, policies, practices, and controls, may not be sufficient to prevent unauthorized access to its information technology assets or data, which 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 and/or its customers); extortion; financial and economic loss or costs; errors in its financial statements; impairment of its liquidity; harm to 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.
As of December 31, 2022, approximately 88.2% of the $9.0 billion outstanding principal amount of AgVantage securities (of which $2.0 billion and $1.1 billion will be maturing in 2023 and 2024, respectively) were issued by three institutions.
As of December 31, 2023, approximately 90.1% of the $10.0 billion outstanding principal amount of AgVantage securities (of which $2.4 billion and $1.2 billion will be maturing in 2024 and 2025, respectively) were issued by three institutions.
Farmer Mac recorded gains of $5.8 million and losses of $0.3 million in 2022 and 2021, respectively, related to ineffectiveness in hedge accounting relationships.
Farmer Mac recorded losses of $5.4 million and gains of $5.8 million in 2023 and 2022, respectively, related to ineffectiveness in hedge accounting relationships.
If Farmer Mac is required to fully collateralize a significant portion of its derivatives in an adverse interest rate environment, it could have a material adverse effect on Farmer Mac's liquidity position or operating results. Discontinuation of the LIBOR benchmark interest rate could adversely affect Farmer Mac's business, operating results, or financial condition.
If Farmer Mac is required to fully collateralize a significant portion of its derivatives in an adverse interest rate environment, it could have a material adverse effect on Farmer Mac's liquidity position or operating results.
For example, the COVID-19 pandemic, the conflict between Russia and Ukraine, and natural disasters have all contributed to recent or current economic stress on producers and service providers in rural America.
For example, the conflict between Russia and Ukraine, conflict in the Middle East, and severe weather conditions and natural disasters have all contributed to recent or current economic stress on producers and service providers in rural America.
These financial instruments measured with significant unobservable inputs represented 27.9% of total assets and 61.5% of financial instruments measured at fair value as of December 31, 2022. See "Management's Discussion and Analysis—Critical Accounting Estimates—Fair Value Measurement" for more information about fair value measurement.
These financial instruments measured with significant unobservable inputs represented 18.8% of total assets and 52.4% of financial instruments measured at fair value as of December 31, 2023. See "Management's Discussion and Analysis—Critical Accounting Estimates" for more information about fair value measurement.
If this occurs 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.
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.
The trading price of Farmer Mac's Class C non-voting common stock ("Class C stock") has at times experienced substantial price volatility and may remain volatile. For example, the trading price of the Class C stock ranged from $90.38 per share to $130.61 per share during 2022.
The trading price of Farmer Mac's Class C non-voting common stock ("Class C stock") has at times experienced substantial price volatility and may remain volatile. For example, the trading price of the Class C stock ranged from $113.53 per share to $194.92 per share during 2023.
If management makes incorrect assumptions or estimates that result in understating or overstating reported financial results, it could materially and adversely affect Farmer Mac's business, operating results, reported assets and liabilities, financial condition, reputation, or capital levels. Changes in accounting standards or in applying accounting policies could adversely affect Farmer Mac's business, operating results, financial condition, or capital levels.
If management makes incorrect assumptions or estimates that result in understating or overstating reported financial results, it could materially and adversely affect Farmer Mac's business, operating results, reported assets and liabilities, financial condition, reputation, or capital levels. 45 Changes in the value or composition of Farmer Mac's investment securities could adversely affect Farmer Mac's business, operating results, financial condition, liquidity or capital levels.
As of December 31, 2022, the aggregate notional balance of Farmer Mac's cleared swaps was $19.5 billion, and the aggregate notional balance of Farmer Mac's non-cleared swaps was $4.4 billion. 37 Strategic/Business Risk 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.
Strategic/Business Risk 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.
The U.S. experienced 18 separate billion-dollar weather disasters in 2022, tied for the third-highest level in the 40 years tracked by the National Oceanic and Atmospheric Administration behind only 2020 (22) and 2021 (20). Many climatologists predict increases in average temperatures, more extreme temperatures, and increases in volatile weather over time.
The U.S. experienced 28 separate billion-dollar weather disasters in 2023, surpassing 2020 (which had 22 billion-dollar weather disasters) as the highest level in the 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.
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.
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. 35 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.
As of December 31, 2022, Farmer Mac posted $144.7 million of cash and $204.0 million of investment securities as collateral for its derivatives in net liability positions.
As of December 31, 2023, Farmer Mac posted $84.6 million of cash and $207.2 million of investment securities as collateral for its derivatives in net liability positions.
Operational risk includes the risk of loss to Farmer Mac resulting from: • inadequate or failed internal processes, systems, cybersecurity program, or infrastructure; • Farmer Mac's inability to successfully implement enhancements to any of these or migrate to new systems or infrastructure; • failed execution, including based on human error; • inadequate or failed internal controls or processes to detect or prevent fraud or other violations of law or regulations; or • external events, including a disruption involving physical site access, cyber incidents, catastrophic events, natural disasters, terrorist activities, or disease pandemics.
Operational risk includes the risk of loss to Farmer Mac resulting from: • inadequate or failed internal processes, systems, cybersecurity program, or infrastructure; • Farmer Mac's inability to successfully implement enhancements to any of these or migrate to new systems or infrastructure; • 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; • failed execution of system implementations and upgrades; • human error, malfeasance, or other misconduct; • undetected or unknown errors, defects, or vulnerabilities in third party software or cybersecurity incidents related to third party software; • inadequate or failed internal controls or processes to detect or prevent fraud or other violations of law or regulations; or • external events, including a disruption involving physical site access, catastrophic events, natural disasters, terrorist activities, or disease pandemics.
Farmer Mac relies on third parties, including loan servicers, information systems providers, software-as-a-service (SaaS) providers, cloud computing service providers, and other service providers, to perform various functions that support Farmer Mac’s business and operations. Farmer Mac depends on these third parties to collect, process, transmit, and store a variety of confidential, proprietary, or personal information, including sensitive financial information.
Farmer Mac relies on third parties, including loan servicers, information systems providers, software-as-a-service (SaaS) providers, cloud computing service providers, law firms, and other service providers, to perform various functions that support Farmer Mac’s business and operations.
Just as Farmer Mac is subject to numerous cyber-attacks from a variety of actors, so too are these third parties. Farmer Mac requires third parties who collect, process, or store confidential, proprietary, or personal data to adhere to security policies, processes, and controls.
Farmer Mac depends on these third parties to collect, process, transmit, and store a variety of confidential, proprietary, or personal information, including sensitive financial information and customer information. Just as Farmer Mac is 42 subject to numerous cyber-attacks from a variety of actors, so too are these third parties.
We are not always able to prevent or recognize attacks, and we may be unable to implement effective preventive measures or proactively address these threats until after a cybersecurity event has been discovered.
Farmer Mac is not always able to prevent or recognize attacks, and Farmer Mac's existing cybersecurity defenses may not be sufficient to detect attacks in a timely manner. Also, Farmer Mac may be unable to implement effective preventive measures or proactively address these threats until after a cybersecurity incident has been discovered.
This pace has created and, if the Federal Reserve continues to raise interest rates, may continue to create or may exacerbate periods of market volatility that could adversely affect Farmer Mac's ability to manage interest rate risk, which could have a material adverse effect on Farmer Mac's operating results or financial condition.
Furthermore, a future period of rapid increase or decline in interest rates may create or exacerbate periods of market volatility that could adversely affect Farmer Mac's ability to manage interest rate risk, which could have a material adverse effect on Farmer Mac's operating results or financial condition.
During third quarter 2021, Farmer Mac expanded its internal loan servicing function through a strategic acquisition 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 experienced servicing personnel and an 40 operational servicing platform.
Starting in 2021, Farmer Mac has 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.
As long as Farmer Mac's Class A and Class B voting common stock is highly concentrated in a few institutions, these institutions influence Farmer Mac's business, strategy, or board composition in a way that may not be in the best interests of either Farmer Mac or other stockholders. 39 Operational Risk 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.
As long as Farmer Mac's Class A and Class B voting common stock is highly concentrated in a few institutions, these institutions may seek to influence Farmer Mac's business, strategy, or board composition in a way that may not be in the best interests of either Farmer Mac or other stockholders.
However, available market data may not reflect the actual sale conditions Farmer Mac may face when selling its investment securities, particularly in adverse financial market conditions. Internal models require Farmer Mac to exercise judgment about estimates and assumptions used in the models.
This requires Farmer Mac to rely on market observations and internal models to estimate the fair values of its investment securities and to determine whether credit losses exist. However, available market data may not reflect the actual sale conditions Farmer Mac may face when selling its investment securities, particularly in adverse financial market conditions.
Some securities owned by Farmer Mac, including auction-rate certificates, do not have well-established secondary trading markets, making it more difficult to estimate current fair values for those securities. This requires Farmer Mac to rely on market observations and internal models to estimate the fair values of its investment securities and to determine whether credit losses exist.
Deterioration in financial or credit market conditions could reduce the fair value of Farmer Mac's investment securities, particularly those securities that are less liquid and more subject to market variability. Some securities owned by Farmer Mac, including auction-rate certificates, do not have well-established secondary trading markets, making it more difficult to estimate current fair values for those securities.
This strategic acquisition 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.
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.
For example, during 2022, Farmer Mac benefited from higher nominal interest rates in its investment portfolio; however, if those nominal interest rates decline, Farmer Mac may earn less interest income on its investments in future periods.
For example, since 2022, the Federal Reserve has rapidly increased the target range for the federal funds rate by 5.25% in an effort to combat rising inflation. Although Farmer Mac benefited from higher nominal interest rates in its investment portfolio, if those nominal interest rates decline, Farmer Mac may earn less interest income on its investments in future periods.
However, the control systems, cybersecurity program, infrastructure, and personnel associated with third parties with which we do business or obtain services are beyond our control.
Farmer Mac requires third parties who collect, process, or store confidential, proprietary, or personal data to adhere to security policies, processes, and controls. However, the control systems, cybersecurity program, infrastructure, and personnel associated with third parties with which Farmer Mac does business or obtains services are beyond its control.
Removed
For example, in 2022, “exceptional drought” or “extreme drought” conditions, the two most severe drought classifications, covered significant areas of the western and midwestern states, and more than half of the continental United States experienced abnormally dry conditions or worse. The effects of climate change could make some agricultural properties less suitable for farming or for other alternative uses.
Added
For example, long and persistent heat and drought conditions affected agricultural production regions in the western and midwestern parts of the United States in 2021 and 2022. There was a sizable improvement in conditions in 2023 for large portions of the West Coast, especially California, but drought conditions have intensified in other areas of the country.
Removed
Specialized or highly improved collateral securing loans in Farmer Mac's portfolio could increase the probability of loss on those loans 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.
Added
Approximately 14% of the continental U.S. was classified as being in severe to exceptional drought as of January 2, 2024, according to data from the National Center for Environmental Information. The effects of climate change could make some agricultural properties less suitable for farming or for other alternative uses.
Removed
The farming of permanent plantings generally involves more risk than farming of annual row crops because permanent plantings generally require more time and capital to plant and permanent plantings are more expensive to replace in the event of disease, drought, mismanagement, catastrophic condition (such as wildfire), or adverse weather conditions.
Added
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.
Removed
During 2022, the Federal Reserve rapidly increased the target range for the federal funds rate by 4.25% over the course of the year in an effort to combat rising inflation.
Added
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.
Removed
In July 2017, the United Kingdom's Financial Conduct Authority ("UKFCA"), which regulates U.S. Dollar LIBOR ("LIBOR"), announced that it would no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021 and would support the LIBOR indexes through 2021 to allow for a transition to any alternative reference rates.
Added
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.
Removed
In November 2020, the UKFCA and the ICE Benchmark Administration, which administers LIBOR, announced that most tenors of LIBOR would continue to be published through June 2023. These announcements indicate that the continuation of LIBOR in its current form will be discontinued after June 2023.
Added
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.
Removed
Farmer Mac continues to evaluate the potential effect on its business of the replacement of the LIBOR benchmark interest rate, including evaluation of the recently enacted Adjustable Interest Rate (LIBOR) Act and implementing rules, and using replacement benchmark interest rates such as SOFR.

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Item 2. Properties

Properties — owned and leased real estate

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Farmer Mac also maintains another office location at 9169 Northpark Drive, Johnston, Iowa 50131, under an amended lease that began on October 1, 2017 and ends on August 31, 2027. Farmer Mac believes that its offices are suitable and adequate for its current and anticipated needs for the near future.
Farmer Mac also maintains another office location at 9169 Northpark Drive, Johnston, Iowa 50131, under an amended lease that began on 51 October 1, 2017 and ends on August 31, 2027.
Item 2. Properties 48 Farmer Mac maintains its principal office at 1999 K Street, N.W., 4th Floor, Washington, D.C. 20006, under a sublease that began on October 1, 2011 and ends on August 30, 2024.
Item 2. Properties Farmer Mac maintains its principal office at 1999 K Street, N.W., 4th Floor, Washington, D.C. 20006, under a lease that ends on August 30, 2024. During 2023, Farmer Mac signed a new lease for office space at 2100 Pennsylvania Avenue, N.W., Washington, D.C., which begins on September 1, 2024 and ends on April 30, 2036.
Added
Under the terms of that lease, Farmer Mac has had access to the property since May 2023 and may take possession of its new office space upon completion of the agreed-upon buildout of tenant improvements, which is expected before September 1, 2024.
Added
Farmer Mac believes that its offices (including the anticipated office space under Farmer Mac's new lease) are suitable and adequate for its current and anticipated needs for the near future. Item 3. Legal Proceedings None. Item 4. Mine Safety Disclosures Not applicable. 52 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases for Equity Securities (a) Farmer Mac has three classes of common stock outstanding – Class A voting common stock, Class B voting common stock, and Class C non-voting common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities (a) Farmer Mac has three classes of common stock outstanding – Class A voting common stock, Class B voting common stock, and Class C non-voting common stock.
Farmer Mac obtained the information in the performance graph from S&P Global Market Intelligence. 51 This performance graph shall not be deemed to be "soliciting material" or to be "filed" with the SEC, and this performance graph shall not be incorporated by reference into any of Farmer Mac's filings under the Securities Act or the Securities Exchange Act of 1934 and related regulations, or any other document, whether made before or after the date of this report and despite any general incorporation language contained in a filing or document (except to the extent Farmer Mac specifically incorporates this section by reference into a filing or document).
Farmer Mac obtained the information in the performance graph from S&P Global Market Intelligence. 54 This performance graph shall not be deemed to be "soliciting material" or to be "filed" with the SEC, and this performance graph shall not be incorporated by reference into any of Farmer Mac's filings under the Securities Act or the Securities Exchange Act of 1934 and related regulations, or any other document, whether made before or after the date of this report and despite any general incorporation language contained in a filing or document (except to the extent Farmer Mac specifically incorporates this section by reference into a filing or document).
Farmer Mac's ability to pay dividends on its common stock is also subject to the payment of dividends on its outstanding 50 preferred stock. Applicable FCA regulations also require Farmer Mac to provide FCA with 15 days' advance notice of certain capital distributions.
Farmer Mac's ability to pay dividends on its common stock is also subject to the payment of dividends on its outstanding preferred stock. Applicable FCA regulations also require Farmer Mac to provide FCA with 15 days' 53 advance notice of certain capital distributions.
In deciding to maintain Farmer Mac's common stock dividend payout target, the board of directors considered Farmer Mac's strong capital position and the consistency of and outlook for earnings, balanced against the need for capital to fund the significant growth objectives identified in the company's strategic plan and to meet regulatory requirements and metrics established by the board of directors.
In deciding to increase Farmer Mac's common stock dividend payout, the board of directors considered Farmer Mac's strong capital position and the consistency of and outlook for earnings, balanced against the need for capital to fund the significant growth objectives identified in the company's strategic plan and to meet regulatory requirements and metrics established by the board of directors.
One type of transaction related to Farmer Mac's common stock occurred during fourth quarter 2022 that was not registered under the Securities Act and not otherwise reported on a Current Report on Form 8-K: • In October 2022, consistent with Farmer Mac's policy that permits directors of Farmer Mac to elect to receive shares of Class C non-voting common stock in lieu of their cash retainers, Farmer Mac issued an aggregate of 515 shares of Class C non-voting common stock to the six directors who elected to receive such stock in lieu of a portion of their cash retainers.
One type of transaction related to Farmer Mac's common stock occurred during fourth quarter 2023 that was not registered under the Securities Act and not otherwise reported on a Current Report on Form 8-K: • In October 2023, consistent with Farmer Mac's policy that permits directors of Farmer Mac to elect to receive shares of Class C non-voting common stock in lieu of their cash retainers, Farmer Mac issued an aggregate of 420 shares of Class C non-voting common stock to the seven directors who elected to receive such stock in lieu of a portion of their cash retainers.
Information about securities authorized for issuance under Farmer Mac's equity compensation plans appears under "Equity Compensation Plans" in Farmer Mac's definitive proxy statement to be filed on or about April 14, 2023. That portion of the definitive proxy statement is incorporated by reference into this Annual Report on Form 10-K.
Information about securities authorized for issuance under Farmer Mac's equity compensation plans appears under "Equity Compensation Plans" in Farmer Mac's definitive proxy statement to be filed on or about April 17, 2024. That portion of the definitive proxy statement is incorporated by reference into this Annual Report on Form 10-K.
On February 23, 2021, Farmer Mac's board of directors declared a dividend of $0.88 per share on Farmer Mac's common stock payable for first quarter 2021. That dividend was paid quarterly through fourth quarter 2021.On February 24, 2022, Farmer Mac's board of directors declared a dividend of $0.95 per share on Farmer Mac's common stock payable for first quarter 2022.
On February 24, 2022, Farmer Mac's board of directors declared a dividend of $0.95 per share on Farmer Mac's common stock payable for first quarter 2022. That dividend was paid quarterly through fourth quarter 2022.
The number of shares issued to the directors was calculated based on a price of $99.14 per share, which was the closing price of the Class C non-voting common stock on September 30, 2022, the last business day of the third quarter, as reported by the New York Stock Exchange. Performance Graph .
The number of shares issued to the directors was calculated based on a price of $154.30 per share, which was the closing price of the Class C non-voting common stock on September 30, 2023, the last business day of the third quarter, as reported by the New York Stock Exchange. Performance Graph .
The graph assumes that $100 was invested on December 31, 2017 in each of: Farmer Mac's Class A voting common stock; Farmer Mac's Class C non-voting common stock; the NYSE Composite Index; and the S&P 500 Diversified Financials Index. The graph also assumes that all dividends were reinvested into the same securities throughout the past five years.
The graph assumes that $100 was invested on December 31, 2018 in each of: Farmer Mac's Class A voting common stock; Farmer Mac's Class C non-voting common stock; the NYSE Composite Index; and the S&P 500 Financial Services Index. The graph also assumes that all dividends were reinvested into the same securities throughout the past five years.
(b) Not applicable. (c) None. Item 6. [Reserved]. 52
(b) Not applicable. (c) None. Item 6. [Reserved]. 55
That dividend was paid quarterly through fourth quarter 2022. On February 22, 2023, Farmer Mac's board of directors declared a dividend of $1.10 per share on Farmer Mac's common stock payable for first quarter 2023. See "Business—Financing—Equity Issuance" for more information on Farmer Mac's common stock.
On February 22, 2023, Farmer Mac's board of directors declared a dividend of $1.10 per share on Farmer Mac's common stock payable for first quarter 2023. That dividend was paid quarterly through fourth quarter 2023.
The following graph compares the performance of Farmer Mac's Class A voting common stock and Class C non-voting common stock with the performance of the New York Stock Exchange Composite Index ("NYSE Comp") and the Standard & Poor's 500 Diversified Financials Index ("S&P 500 Div Fin") over the period from December 31, 2017 to December 31, 2022.
The following graph compares the performance of Farmer Mac's Class A voting common stock and Class C non-voting common stock with the performance of the New York Stock Exchange Composite Index ("NYSE Comp") and the Standard & Poor's 500 Financial Services Index ("S&P 500 Financial Services Index") over the period from December 31, 2018 to December 31, 2023.
As of February 6, 2023, Farmer Mac had 851 registered owners of the Class A voting common stock, 75 registered owners of the Class B voting common stock, and 807 registered owners of the Class C non-voting common stock.
As of February 5, 2024, Farmer Mac had 833 registered owners of the Class A voting common stock, 75 registered owners of the Class B voting common stock, and 789 registered owners of the Class C non-voting common stock.
The quarterly dividend of $1.10 per share on all three classes of common stock for first quarter 2023 represents an increase of $0.15 per common share, or 16%, over the quarterly dividend payout in 2022 and reflects the board's goal to maintain Farmer Mac's common stock dividend payout target as a percentage of annual core earnings at 35%.
The quarterly dividend of $1.40 per share on all three classes of common stock for first quarter 2024 represents an increase of $0.30 per common share, or 27%, over the quarterly dividend payout in 2023.
Added
On February 21, 2024, Farmer Mac's board of directors declared a dividend of $1.40 per share on Farmer Mac's common stock payable for first quarter 2024. See "Business—Financing—Equity Issuance" for more information on Farmer Mac's common stock.
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The S&P 500 Financial Services Index was renamed in 2023 and was formerly known as the Standard & Poor's 500 Diversified Financials Index.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Quantitative and Qualitative Disclosures About Market Risk 110 Financial Statements 111 Consolidated Balance Sheets 115 Consolidated Statements of Operations 116 2 Consolidated Statements of Comprehensive Income 117 Consolidated Statements of Equity 118 Consolidated Statements of Cash Flows 119 Notes to Consolidated Financial Statements 121
Quantitative and Qualitative Disclosures About Market Risk 113 Item 8. Financial Statements 114 Consolidated Balance Sheets 118 2 Consolidated Statements of Operations 119 Consolidated Statements of Comprehensive Income 120 Consolidated Statements of Equity 121 Consolidated Statements of Cash Flows 122 Notes to Consolidated Financial Statements 123
Item 6. [Reserved] 52 Item 7 . Management's Discussion and Analysis of Financial Condition and Results of Operations 53 Overview 53 Critical Accounting Estimates 57 Use of Non-GAAP Measures 58 Results of Operations 60 Outlook 79 Balance Sheet Review 84 Risk Management 85 Liquidity and Capital Resources 102 Other Matters 105 Supplemental Information 106 Item 7A .
Item 6. [Reserved] 5 3 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 56 Overview 56 Critical Accounting Estimates 61 Use of Non-GAAP Measures 62 Results of Operations 64 Outlook 83 Balance Sheet Review 89 Risk Management 89 Liquidity and Capital Resources 105 Other Matters 109 Supplemental Information 109 Item 7 A .

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

206 edited+83 added−77 removed126 unchanged
The unrealized (losses)/gains on trading securities are reported on Farmer Mac's consolidated statements of operations, which represent changes during the period in fair values for trading assets remaining on Farmer Mac's balance sheet as of the end of the reporting period. 3. The net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value.
The unrealized gains/(losses) on trading securities are reported on Farmer Mac's consolidated statements of operations, which represent changes during the period in fair values for trading assets remaining on Farmer Mac's balance sheet as of the end of the reporting period. 3. The net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value.
In percentage terms, the year-over-year 0.10% increase was primarily attributable to a decrease of 0.08% in funding costs and an increase of 0.02% in net fair value changes from financial derivatives designated in hedge accounting relationships (designated financial derivatives).
In percentage terms, the year-over-year 0.10% increase was primarily attributable to a decrease of 0.08% in funding costs and an increase of 0.02% in net fair value changes from financial derivatives designated in hedge accounting relationships (designated financial derivatives).
The management of the credit risk inherent in these investments is governed by Farmer Mac's internal policies as well as Farmer Mac's Liquidity and Investment Regulations.
The management of the credit risk inherent in these investments is governed by Farmer Mac's internal policies as well as Liquidity and Investment Regulations.
For Corporate AgFinance loans, which are often larger loan exposures to agriculture production and agribusinesses that support agriculture production, food and fiber processing, and other supply chain production, and which may have risk profiles that differ from smaller agricultural mortgage loans, Farmer Mac has implemented methodologies and parameters that help assess credit risk based on the appropriate sector, borrower construct, and transaction complexity.
For Corporate AgFinance loans, which are often larger loan exposures to agriculture production and agribusinesses that support agriculture production, food and fiber processing, and other supply chain production, and which may have risk profiles that differ from smaller agricultural mortgage loans, Farmer Mac has implemented methodologies and parameters that help assess credit risk based on the appropriate sector, borrower construct, and 89 transaction complexity.
In accordance with FCA's rule on capital planning, Farmer Mac's board of directors 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). That policy restricts Tier 1-eligible dividends and any discretionary bonus payments if Tier 1 capital falls below specified thresholds.
In accordance with the FCA's rule on capital planning, Farmer Mac's board of directors 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). That policy restricts Tier 1-eligible dividends and any discretionary bonus payments if Tier 1 capital falls below specified thresholds.
The accrual of periodic cash settlements for interest paid or received from Farmer Mac's interest rate swaps that are undesignated financial derivatives is shown as expense related to financial derivatives. 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.
The accrual of periodic cash settlements for interest paid or received from Farmer Mac's interest rate swaps that are undesignated financial derivatives is shown as income or expense related to financial derivatives. 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.
For GAAP purposes, realized gains or losses on settlements of these contracts are reported in the consolidated statements of operations in the period in which they occur. For core earnings purposes, these realized gains or losses are deferred and amortized as net yield adjustments over the term of the related debt, which generally ranges from 3 to 15 years. 5.
For GAAP purposes, realized gains or losses on settlements of these contracts are reported in the consolidated statements of operations in the period in which they occur. For core earnings purposes, these realized gains or losses are deferred and amortized as net yield adjustments over the term of the related debt, which generally ranges from 3 to 15 years.
The Liquidity and Investment Regulations and Farmer Mac's internal policies require that investments held in Farmer Mac's investment portfolio meet the following creditworthiness standards: (1) at a minimum, at least one obligor of the investment must have a very strong capacity to meet financial commitments for the life of the investment, even under severely adverse or stressful conditions, and generally present a very low risk of default; (2) if the obligor whose capacity to meet financial 95 commitments is being relied upon to meet the standard set forth in subparagraph (1) is located outside of the United States, the investment must also be fully guaranteed by a U.S. government agency; and (3) the investment must exhibit low credit risk and other risk characteristics consistent with the purpose or purposes for which it is held.
The Liquidity and Investment Regulations and Farmer Mac's internal policies require that investments held in Farmer Mac's investment portfolio meet the following creditworthiness standards: (1) at a minimum, at least one obligor of the investment must have a very strong capacity to meet financial commitments for the life of the investment, even under severely adverse or stressful conditions, and generally present a very low risk of default; (2) if the obligor whose capacity to meet financial commitments is being relied upon to meet the standard set forth in subparagraph (1) is located outside of 99 the United States, the investment must also be fully guaranteed by a U.S. government agency; and (3) the investment must exhibit low credit risk and other risk characteristics consistent with the purpose or purposes for which it is held.
As part of this strategy, Farmer Mac seeks to issue debt securities across a variety of maturities that together with financial derivatives closely align the forecasted debt and financial derivative cash flows with forecasted asset cash flows. 96 Farmer Mac issues discount notes and both callable and non-callable medium-term notes across a spectrum of maturities to execute its debt issuance strategy.
As part of this strategy, Farmer Mac seeks to issue debt securities across a variety of maturities that together with financial derivatives closely align the forecasted debt and financial derivative cash flows with forecasted asset cash flows. Farmer Mac issues discount notes and both callable and non-callable medium-term notes across a spectrum of maturities to execute its debt issuance strategy.
Portions of Farmer Mac's callable debt is issued to mitigate prepayment risk associated with certain interest-earning assets held on balance sheet. In general, as interest rates decline, prepayments typically increase, and Farmer Mac is able to economically extinguish certain callable debt issuances.
Portions of Farmer Mac's callable debt is 100 issued to mitigate prepayment risk associated with certain interest-earning assets held on balance sheet. In general, as interest rates decline, prepayments typically increase, and Farmer Mac is able to economically extinguish certain callable debt issuances.
Storage and Processing Total (in thousands) By year of origination: 2012 and prior $ 3,427 $ 9,783 $ 3,836 $ 1,066 $ 15,673 $ 33,785 2013 — — — — — — 2014 — — — — — — 2015 (540) — — 24 — (516) 2016 903 — — — — 903 2017 — — — — 4,311 4,311 2018 — — — — — — 2019 — — — — — — 2020 — — — — — — 2021 — — — — — — 2022 — — — — — — Total $ 3,790 $ 9,783 $ 3,836 $ 1,090 $ 19,984 $ 38,483 For more information about the credit quality of Farmer Mac's Agricultural Finance mortgage loans and the associated allowance for losses please refer to Note 8 and Note 12 to the consolidated financial statements.
Storage and Processing Total (in thousands) By year of origination: 2013 and prior $ 3,427 $ 9,783 $ 3,836 $ 1,066 $ 15,673 $ 33,785 2014 — — — — — — 2015 (540) — — 24 — (516) 2016 903 — — — — 903 2017 — — — — 4,311 4,311 2018 — — — — — — 2019 — — — — — — 2020 — — — — — — 2021 — — — — — — 2022 — — — — — — 2023 — — — — — — Total $ 3,790 $ 9,783 $ 3,836 $ 1,090 $ 19,984 $ 38,483 For more information about the credit quality of Farmer Mac's Agricultural Finance mortgage loans and the associated allowance for losses please refer to Note 8 and Note 12 to the consolidated financial statements.
For securitization trusts where Farmer Mac is the primary beneficiary, the trust assets and liabilities are included on Farmer Mac's consolidated balance 104 sheet. For securitization trusts where Farmer Mac is not the primary beneficiary and in the event of deconsolidation, both of these alternatives create off-balance sheet obligations for Farmer Mac.
For securitization trusts where Farmer Mac is the primary beneficiary, the trust assets and liabilities are included on Farmer Mac's consolidated balance sheet. For securitization trusts where Farmer Mac is not the primary beneficiary and in the event of deconsolidation, both of these alternatives create off-balance sheet obligations for Farmer Mac.
Gains/(losses) on financial derivatives due to fair value changes are presented by two reconciling items in Table 6 above: (a) Gains/(losses) on undesignated financial derivatives due to fair value changes; and (b) Gains/(losses) on hedging activities due to fair value changes. 2. Unrealized (losses)/gains on trading securities.
Gains/(losses) on financial derivatives due to fair value changes are presented by two reconciling items in Table 6 above: (a) Gains/(losses) on undesignated financial derivatives due to fair value changes; and (b) (Losses)/gains on hedging activities due to fair value changes. 66 2. Unrealized gains/(losses) on trading securities.
Farmer Mac's generally requires most financial institutions that participate in Farmer Mac's Agricultural Finance line of business to own a requisite amount of common stock, based on the size and type of institution.
Farmer Mac generally requires most financial institutions that participate in Farmer Mac's Agricultural Finance line of business to own a requisite amount of common stock, based on the size and type of institution.
Farmer Mac's disclosure of these non-GAAP measures is intended to be supplemental in nature and is not meant to be considered in isolation from, as a substitute for, or as more important than, the related financial information prepared in accordance with GAAP. 58 Core Earnings and Core Earnings Per Share The main difference between core earnings and core earnings per share (non-GAAP measures) and net income attributable to common stockholders and earnings per common share (GAAP measures) is that those non-GAAP measures exclude the effects of fair value fluctuations.
Farmer Mac's disclosure of these non-GAAP measures is intended to be supplemental in nature and is not meant to be considered in isolation from, as a substitute for, or as more important than, the related financial information prepared in accordance with GAAP. 62 Core Earnings and Core Earnings Per Share The main difference between core earnings and core earnings per share (non-GAAP measures) and net income attributable to common stockholders and earnings per common share (GAAP measures) is that those non-GAAP measures exclude the effects of fair value fluctuations.
The discussion below of Farmer Mac's financial information includes "non-GAAP measures," which are measures of financial performance not presented in accordance with generally accepted accounting principles in the United 53 States ("GAAP").
The discussion below of Farmer Mac's financial information includes "non-GAAP measures," which are measures of financial performance not presented in accordance with generally accepted accounting principles in the United States ("GAAP").
If a servicer materially breaches the terms of its servicing 93 agreement with Farmer Mac, such as failing to forward payments received or releasing collateral without Farmer Mac's consent, or experiences insolvency or bankruptcy, the servicer is responsible for any corresponding damages to Farmer Mac and, in most cases, Farmer Mac has the right to terminate the servicing relationship for a particular loan or the entire portfolio serviced by the servicer.
If a servicer materially breaches the terms of its servicing 97 agreement with Farmer Mac, such as failing to forward payments received or releasing collateral without Farmer Mac's consent, or experiences insolvency or bankruptcy, the servicer is responsible for any corresponding damages to Farmer Mac and, in most cases, Farmer Mac has the right to terminate the servicing relationship for a particular loan or the entire portfolio serviced by the servicer.
However, the accrual of the contractual amounts due for undesignated financial derivatives are included in Farmer Mac's calculation of net effective spread. 59 Net effective spread also differs from net interest income and net interest yield because it includes the net effects of terminations or net settlements on financial derivatives, which consist of: (1) the net effects of cash settlements on agency forward contracts on the debt of other GSEs and U.S.
However, the accrual of the contractual amounts due for undesignated financial derivatives are included in Farmer Mac's calculation of net effective spread. 63 Net effective spread also differs from net interest income and net interest yield because it includes the net effects of terminations or net settlements on financial derivatives, which consist of: (1) the net effects of cash settlements on agency forward contracts on the debt of other GSEs and U.S.
The fixed rate investment securities are generally funded in a manner consistent with Farmer Mac's overall funding strategy that approximates a duration and convexity match. 97 Interest Rate Risk Metrics Farmer Mac regularly evaluates and conducts interest rate shock simulations on its portfolio of financial assets, debt, and financial derivatives and examines a variety of metrics to quantify and manage its exposure to interest rate risk.
The fixed rate investment securities are generally funded in a manner consistent with Farmer Mac's overall funding strategy that approximates a duration and convexity match. 101 Interest Rate Risk Metrics Farmer Mac regularly evaluates and conducts interest rate shock simulations on its portfolio of financial assets, debt, and financial derivatives and examines a variety of metrics to quantify and manage its exposure to interest rate risk.
Treasury securities and other financial derivatives. Similarly, when Farmer Mac commits to sell certain assets, the associated interest rate exposure is primarily managed with exchange-traded futures contracts involving U.S. Treasury securities and other financial derivatives. Farmer Mac's $0.9 billion of cash and cash equivalents held as of December 31, 2022 mature within three months.
Treasury securities and other financial derivatives. Similarly, when Farmer Mac commits to sell certain assets, the associated interest rate exposure is primarily managed with exchange-traded futures contracts involving U.S. Treasury securities and other financial derivatives. Farmer Mac's $0.9 billion of cash and cash equivalents held as of December 31, 2023 mature within three months.
The related parties listed in the table below consist of (1) all holders of at least five percent of a class of Farmer Mac voting common stock as of December 31, 2022 and (2) other institutions that are considered "related parties" through an affiliation with a Farmer Mac director and that have conducted business with Farmer Mac during the two years ended December 31, 2022.
The related parties listed in the table below consist of (1) all holders of at least five percent of a class of Farmer Mac voting common stock as of December 31, 2023 and (2) other institutions that are considered "related parties" through an affiliation with a Farmer Mac director and that have conducted business with Farmer Mac during the two years ended December 31, 2023.
The rising cost of fossil fuel-based inputs combined with the falling costs of renewable power generation may hasten this increase in capacity along with recently enacted legislature, such as the Inflation Reduction Act of 2022 that incentivizes domestic production in clean energy technologies such as solar and wind.
The rising cost of fossil fuel-based inputs combined with the falling costs of renewable power generation may hasten this increase in capacity along with recently enacted legislation, such as the Inflation Reduction Act of 2022 that incentivizes domestic production in clean energy technologies such as solar and wind.
The $65.7 million net increase in Corporate AgFinance during 2022 resulted from $546.6 million of new purchases and commitments, which was partially offset by $480.9 million of scheduled maturities, repayments, and sales. Farmer Mac purchased a total of $328.9 million in loans, which was partially offset by $276.9 million in scheduled maturities and repayments.
The $65.7 million net increase in Corporate AgFinance during 2022 resulted from $546.6 million of new purchases and unfunded loan commitments, which was partially offset by $480.9 million of scheduled maturities, repayments, and sales. Farmer Mac purchased a total of $328.9 million in loans, which was partially offset by $276.9 million in scheduled maturities and repayments.
The fair values of the contracts change daily as market interest rates change. Because the financial derivative liabilities recorded on the consolidated balance sheet as of December 31, 2022 do not represent the amounts that may ultimately be paid under the financial derivative contracts, those liabilities are not included in the table presented above.
The fair values of the contracts change daily as market interest rates change. Because the financial derivative liabilities recorded on the consolidated balance sheet as of December 31, 2023 do not represent the amounts that may ultimately be paid under the financial derivative contracts, those liabilities are not included in the table presented above.
Farmer Mac regularly accesses the debt capital markets for funding, and Farmer Mac has maintained steady access to the debt capital markets throughout 2022. Farmer Mac funds its purchases of eligible loan assets, USDA Securities, Farmer Mac Guaranteed Securities, and investment assets and finances its operations primarily by issuing debt obligations of various maturities in the debt capital markets.
Farmer Mac regularly accesses the debt capital markets for funding, and Farmer Mac has maintained steady access to the debt capital markets throughout 2023. Farmer Mac funds its purchases of eligible loan assets, USDA Securities, Farmer Mac Guaranteed Securities, and investment assets and finances its operations primarily by issuing debt obligations of various maturities in the debt capital markets.
Farmer Mac does not consider the assets held by the related securitization trust to be available to satisfy the claims of the creditors of Farmer Mac and/or the depositor. During 2022 and 2021, Farmer Mac realized no gains or losses from the securitization of loans that it holds in consolidated trusts.
Farmer Mac does not consider the assets held by the related securitization trust to be available to satisfy the claims of the creditors of Farmer Mac and/or the depositor. During 2023 and 2022, Farmer Mac realized no gains or losses from the securitization of loans that it holds in consolidated trusts.
As of December 31, 2022, Farmer Mac had not experienced any credit losses on any USDA Securities or Farmer Mac Guaranteed USDA Securities and does not expect to incur any such losses in the future. Because we do not expect credit losses on this portfolio, Farmer Mac does not provide an allowance for losses on its portfolio of USDA Securities.
As of December 31, 2023, Farmer Mac had not experienced any credit losses on any USDA Securities or Farmer Mac Guaranteed USDA Securities and does not expect to incur any such losses in the future. Because we do not expect credit losses on this portfolio, Farmer Mac does not provide an allowance for losses on its portfolio of USDA Securities.
Farmer Mac also considers the fair value of AgVantage AFS to be a critical accounting estimate because Farmer Mac applies a discount rate in calculating the net present value of future expected cash flows that is both significant to the estimate of their fair value and unobservable in the market.
Farmer Mac also considers the fair value of AgVantage to be a critical accounting estimate because Farmer Mac applies a discount rate in calculating the net present value of future expected cash flows that is both significant to the estimate of their fair value and 61 unobservable in the market.
The top ten borrower exposures over 90 days delinquent represented over half of the 90-day delinquencies as of December 31, 2022. Farmer Mac believes that it remains adequately collateralized on its delinquent loans. Farmer Mac's 90-day delinquency rate as of December 31, 2022 was below Farmer Mac's historical average.
The top ten borrower exposures over 90 days delinquent represented over half of the 90-day delinquencies as of December 31, 2023. Farmer Mac believes that it remains adequately collateralized on its delinquent loans. Farmer Mac's 90-day delinquency rate as of December 31, 2023 was below Farmer Mac's historical average.
The following tables present concentrations of Agricultural Finance mortgage loans by commodity type within geographic region and cumulative credit losses by origination year and commodity type: Table 28 As of December 31, 2022 Agricultural Finance Mortgage Loans Concentrations by Commodity Type within Geographic Region Crops Permanent Plantings Livestock Part-time Farm Ag.
The following tables present concentrations of Agricultural Finance mortgage loans by commodity type within geographic region and cumulative credit losses by origination year and commodity type: Table 28 As of December 31, 2023 Agricultural Finance Mortgage Loans Concentrations by Commodity Type within Geographic Region Crops Permanent Plantings Livestock Part-time Farm Ag.
Farmer Mac’s performance during 2022, described in more detail below, reflects the success of our continued focus on pursuing new channels and innovative ways to further our mission to increase the accessibility of financing for American agriculture and rural infrastructure.
Farmer Mac’s performance during 2023, described in more detail below, reflects the success of our continued focus on pursuing new channels and innovative ways to further our mission to increase the accessibility of financing for American agriculture and rural infrastructure.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The objective of this section of the report is to provide a discussion and analysis, from management’s perspective, of the material information necessary to assess Farmer Mac's financial condition and results of operations for the year ended December 31, 2022.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The objective of this section of the report is to provide a discussion and analysis, from management’s perspective, of the material information necessary to assess Farmer Mac's financial condition and results of operations for the year ended December 31, 2023.
Approximately 53% of the Class A voting common stock is held by four 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).
Approximately 51% of the Class A voting common stock is held by four 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).
During the previous three years ended December 31, 2022, there have been no breaches of representations and warranties by sellers that resulted in Farmer Mac requiring a seller to cure, replace, or repurchase a loan.
During the previous three years ended December 31, 2023, there have been no breaches of representations and warranties by sellers that resulted in Farmer Mac requiring a seller to cure, replace, or repurchase a loan.
Farmer Mac also can proceed against the servicer in arbitration or exercise any remedies available to it under law. During the previous three years ended December 31, 2022, Farmer Mac had not exercised any remedies or taken any formal action against any servicers.
Farmer Mac also can proceed against the servicer in arbitration or exercise any remedies available to it under law. During the previous three years ended December 31, 2023, Farmer Mac had not exercised any remedies or taken any formal action against any servicers.
This discussion and analysis of financial condition and results of operations should be read together with Farmer Mac's consolidated financial statements and the related notes to the consolidated financial statements for the fiscal years ended December 31, 2022, 2021, and 2020.
This discussion and analysis of financial condition and results of operations should be read together with Farmer Mac's consolidated financial statements and the related notes to the consolidated financial statements for the fiscal years ended December 31, 2023, 2022, and 2021.
Net effective spread is measured by: including (1) expenses related to undesignated financial derivatives, which consists of income or expense related to contractual amounts due on financial derivatives not designated in hedge relationships (the income or expense related to financial derivatives designated in hedge accounting relationships is already included in net interest income), and (2) the amortization of losses due to terminations or net settlements of financial derivatives; and excluding (3) the amortization of premiums and discounts on assets consolidated at fair value, (4) the net effects of consolidated trusts with beneficial interests owned by third parties, and (5) the fair value changes of financial derivatives and corresponding financial assets or liabilities in fair value hedge relationships.
Net effective spread is measured by: including (1) expenses related to undesignated financial derivatives, which consists of income or expense related to contractual amounts due on financial derivatives not designated in hedge relationships (the income or expense related to financial derivatives designated in hedge accounting relationships is already included in net interest income), and (2) the amortization of losses due to terminations or net settlements of financial derivatives; and excluding (1) the amortization of premiums and discounts on assets consolidated at fair value, (2) the net effects of consolidated trusts with beneficial interests owned by third parties (single-class), and (3) the fair value changes of financial derivatives and corresponding financial assets or liabilities in fair value hedge relationships.
A Farmer Mac Guaranteed Security. 2. An interest-only Farmer Mac Guaranteed Security retained as part of a structured securitization. 3.
(2) An interest-only Farmer Mac Guaranteed Security retained as part of a structured securitization.
The percentage of substandard assets within the portfolio as of December 31, 2022 was below the historical average. Farmer Mac's average substandard assets as a percentage of its Agricultural Finance mortgage loans over the last 15 years is approximately 4%.
The percentage of Agricultural Finance substandard assets within the portfolio as of December 31, 2023 was below the historical average. Farmer Mac's average Agricultural Finance substandard assets as a percentage of its Agricultural Finance mortgage loans over the last 15 years is approximately 4%.
For more information about Farmer Mac's underwriting and collateral valuation standards for Rural Infrastructure Finance loans, see "Business—Farmer Mac's Lines of Business—Rural Infrastructure Finance—Underwriting and Collateral Standards." As of December 31, 2022, there were no delinquencies in Farmer Mac's portfolio of Rural Infrastructure Finance loans.
For more information about Farmer Mac's underwriting and collateral valuation standards for Rural Infrastructure Finance loans, see "Business—Farmer Mac's Lines of Business—Rural Infrastructure Finance—Underwriting and Collateral Standards." As of December 31, 2023, there were no delinquencies in Farmer Mac's portfolio of Rural Infrastructure Finance loans.
The $34.9 million year-over-year increase in net effective spread in dollars was primarily due to a $23.6 million increase from net new business volume, a $7.7 million decrease in non-GAAP funding costs, due to increasing yields on interest-earning assets on our short-term investments that are funded by non-interest bearing excess equity, a $2.4 million increase in net servicing revenue, and a $0.9 million increase in cash-basis interest income.
For 2022 compared to 2021, the $34.9 million year-over-year increase in net effective spread in dollars was primarily due to a $23.6 million increase from net new business volume, a $7.7 million decrease in non-GAAP funding costs due to increasing yields on interest-earning assets on our short-term investments that are funded by non-interest bearing excess equity, a $2.4 million increase in net servicing revenue, and a $0.9 million increase in cash-basis interest income.
For a more detailed description of AgVantage securities, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Other Products – Agricultural Finance—AgVantage Securities" and "Business—Farmer Mac's Lines of Business—Rural Infrastructure Finance—Other Products – Rural Infrastructure Finance—AgVantage Securities." The unpaid principal balance of outstanding on-balance sheet AgVantage securities secured by loans eligible for the Agricultural Finance line of business totaled $6.0 billion as of December 31, 2022 and $5.1 billion as of December 31, 2021.
For a more detailed description of AgVantage securities, see "Business—Farmer Mac's Lines of Business—Agricultural Finance—Other Products – Agricultural Finance—AgVantage Securities" and "Business—Farmer Mac's Lines of Business—Rural Infrastructure Finance—Other Products – Rural Infrastructure Finance—AgVantage Securities." The unpaid principal balance of outstanding on-balance sheet AgVantage securities secured by loans eligible for the Agricultural Finance line of business totaled $6.1 billion as of December 31, 2023 and $6.0 billion as of December 31, 2022.
The $49.0 million year-over-year increase in net interest income was primarily attributable to a $21.9 million increase from net new business volume, a $21.4 million decrease in funding costs due to increasing yields on interest-earning assets on our short-term investments that are funded by non-interest bearing excess equity, and a $6.1 million increase in the fair value of designated financial derivatives.
The $49.0 million year-over-year increase in net interest income for 2022 compared to 2021 was primarily attributable to a $21.9 million increase from net new business volume and a $21.4 million decrease in funding costs, due to increasing yields on interest-earning assets on our short-term investments that are funded by non-interest bearing excess equity, and a $6.1 million increase in the fair value of designated financial derivatives.
The $4.2 billion in gross purchases was partially offset by $3.3 billion in scheduled maturities. Of the AgVantage Securities that were acquired during 2022 and were still outstanding as of December 31, 2022, $470.0 million will mature by June 30, 2023 and an additional $600.0 million will mature by December 31, 2023.
The $4.2 billion in gross purchases was partially offset by $3.3 billion in scheduled maturities. Of the AgVantage Securities that were acquired during 2022 and were still outstanding as of December 31, 2022, $470.0 million are scheduled to mature by June 30, 2023 and an additional $600.0 million are scheduled to mature by December 31, 2023.
Also, certain financial derivatives are designated as cash flow hedges to mitigate the volatility of future interest rate payments on floating rate debt. As discussed in Note 4 to the consolidated financial statements, all financial derivatives are recorded on the balance sheet at fair value as derivative assets or as derivative liabilities.
SOFR). Also, certain financial derivatives are designated as cash flow hedges to mitigate the volatility of future interest rate payments on floating rate debt. As discussed in Note 6 to the consolidated financial statements, all financial derivatives are recorded on the balance sheet at fair value as derivative assets or as derivative liabilities.
As of both December 31, 2022 and 2021, there were no 90-day delinquencies in Farmer Mac's portfolio of Rural Infrastructure Finance loan purchases and loans underlying LTSPCs.
As of both December 31, 2023 and 2022, there were no 90-day delinquencies in Farmer Mac's portfolio of Rural Infrastructure Finance loan purchases and loans underlying LTSPCs.
For more information regarding discount notes and medium-term notes, see Note 7 to the consolidated financial statements. (2) Interest payments on callable medium-term notes are calculated based on maturity. Future calls of these notes could cause actual interest payments to differ significantly from the amounts presented. (3) Calculated using the effective interest rates as of December 31, 2022.
For more information about discount notes and medium-term notes, see Note 7 to the consolidated financial statements. (2) Interest payments on callable medium-term notes are calculated based on maturity. Future calls of these notes could cause actual interest payments to differ significantly from the amounts presented. (3) Calculated using the effective interest rates as of December 31, 2023.
As the nation’s secondary market for agricultural and rural infrastructure loans, we help strengthen and connect rural America by providing a broad array of financial solutions to lenders that support flexible low-cost financing to farmers, ranchers, agribusinesses, renewable energy projects, rural utilities, and other related rural businesses and enterprises.
As the nation’s secondary market for agricultural and rural infrastructure loans, we help strengthen and connect rural America by providing a broad array of financial solutions to lenders that support flexible low-cost financing to farmers, ranchers, agribusinesses, renewable energy projects, rural utilities (including telecommunications, fiber, and broadband projects), and other related rural businesses and enterprises.
As of December 31, 2022, Farmer Mac was in compliance with its statutory capital requirements and was classified as within "level 1" (the highest compliance level).
As of December 31, 2023, Farmer Mac was in compliance with its statutory capital requirements and was classified as within "level 1" (the highest compliance level).
Credit risk related to interest rate swap contracts is discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Interest Rate Risk" and Note 4 to the consolidated financial statements. Credit Risk – Other Investments . As of December 31, 2022, Farmer Mac had $0.9 billion of cash and cash equivalents and $4.6 billion of investment securities.
Credit risk related to interest rate swap contracts is discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Interest Rate Risk" and Note 6 to the consolidated financial statements. Credit Risk – Other Investments . As of December 31, 2023, Farmer Mac had $0.9 billion of cash and cash equivalents and $5.0 billion of investment securities.
In both 2022 and 2021, FCBT retained approximately $0.1 million in servicing fees for its work as a Farmer Mac servicer.
In both 2023 and 2022, FCBT retained approximately $0.1 million in servicing fees for its work as a Farmer Mac servicer.
The Federal Reserve Bank of Chicago AgLetter reported a 20% gain in farmland values in the Seventh District (primarily Iowa, Indiana, Illinois, and Wisconsin) between October 2021 and October 2022. Data from the Federal Reserve Bank of Kansas City show a similar rise in land values in the Tenth District (primarily Kansas, Missouri, Nebraska, and Oklahoma) during that same period.
The Federal Reserve Bank of Chicago AgLetter reported a 5% gain in farmland values in the Seventh District (primarily Iowa, Indiana, Illinois, and Wisconsin) between October 2022 and October 2023. Data from the Federal Reserve Bank of Kansas City show a similar rise in land values in the Tenth District (primarily Kansas, Missouri, Nebraska, and Oklahoma) during that same period.
Zions Bancorporation, National Association (Zions) 322,100 shares of Class A voting common stock (31.25% of outstanding Class A stock and 21.04% of total voting common stock outstanding) None In 2022 and 2021, Farmer Mac's purchases of on-balance sheet Agricultural Finance mortgage loans from Zions represented approximately 12.9% and 8.0%, respectively, of Agricultural Finance mortgage loan purchase volume for those years.
Zions Bancorporation, National Association (Zions) 322,100 shares of Class A voting common stock (31.25% of outstanding Class A stock and 21.04% of total voting common stock outstanding) None In 2023 and 2022, Farmer Mac's purchases of on-balance sheet Agricultural Finance mortgage loans from Zions represented approximately 9.5% and 12.9%, respectively, of Agricultural Finance mortgage loan purchase volume for those years.
The growth in renewable energy generation and deployment of energy storage technologies may help deepen Farmer Mac's relationships with existing customers through new business opportunities. According to data from the U.S. Energy Information Administration, renewable electricity capacity is expected to grow by 48% in the next five years, compared to total electric capacity growth of 10%.
Growth in renewable energy generation and deployment of energy storage technologies has the potential to continue to deepen Farmer Mac's relationships with existing customers through new business opportunities. According to data from the U.S. Energy Information Administration, renewable electricity capacity is expected to grow by 48% in the next five years, compared to total electric capacity growth of 10%.
Farm Credit Bank of Texas (FCBT) 38,503 shares of Class B voting common stock (7.70% of outstanding Class B stock and 2.51% of total voting common stock outstanding) None In 2022 and 2021, Farmer Mac earned approximately $2.9 million and $1.9 million, respectively, in fees attributable to transactions with FCBT, primarily commitment fees for LTSPCs.
Farm Credit Bank of Texas (FCBT) 38,503 shares of Class B voting common stock (7.70% of outstanding Class B stock and 2.51% of total voting common stock outstanding) None In 2023 and 2022, Farmer Mac earned approximately $3.4 million and $2.9 million, respectively, in fees attributable to transactions with FCBT, primarily commitment fees for LTSPCs.
Those purchases represented 9.6% and 5.6%, respectively, of total Agricultural Finance mortgage loan business volume (excluding AgVantage and USDA Securities) for those years. The purchases of USDA Securities from Zions represented approximately 1.5% and 2.1%, respectively, of the USDA Guarantees purchases for the years ended December 31, 2022 and 2021.
Those purchases represented 6.9% and 9.6%, respectively, of total Agricultural Finance mortgage loan business volume (excluding AgVantage and USDA Securities) for those years. The purchases of USDA Securities from Zions represented approximately 0.1% and 1.5%, respectively, of the USDA Guarantees purchases for the years ended December 31, 2023 and 2022.
Farmer Mac's future growth opportunities for financing the electric cooperative industry may be affected by the demand for electric power in rural areas, capital expenditures by electric cooperatives driven by regulatory or technological changes, the changing interest rate environment, increased policy initiatives to support rural connectivity, and competitive dynamics within the rural utilities cooperative finance industry.
These growth opportunities may be affected by the demand for electric power in rural areas, capital expenditures by electric cooperatives driven by regulatory or technological changes, the changing interest rate environment, increased policy initiatives to support rural connectivity, and competitive dynamics within the rural utilities cooperative finance industry.
The following table presents the amount and timing of Farmer Mac's known, fixed, and determinable discount and medium-term note obligations by payment date as of December 31, 2022.
Discount and Medium-term Notes . The following table presents the amount and timing of Farmer Mac's known, fixed, and determinable discount and medium-term note obligations by payment date as of December 31, 2023.
See Note 12 to the consolidated financial statements for more information about consolidation and Farmer Mac's off-balance sheet business activities. As of December 31, 2022 and 2021, outstanding off-balance sheet LTSPCs and Farmer Mac Guaranteed Securities totaled $3.9 billion and $3.8 billion, respectively.
See Note 12 to the consolidated financial statements for more information about consolidation and Farmer Mac's off-balance sheet business activities. As of December 31, 2023 and 2022, outstanding off-balance sheet LTSPCs and Farmer Mac Guaranteed Securities totaled $4.1 billion and $3.9 billion, respectively.
Activity affecting the allowance for loan losses and reserve for losses is discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Provision for and Release of Allowance for Loan Losses and Reserve for Losses." Rural Infrastructure Finance - Direct Credit Exposure Farmer Mac's direct credit exposure to Rural Infrastructure Finance loans held and loans underlying LTSPCs as of December 31, 2022 was $3.5 billion across 45 states.
Activity affecting the allowance for loan losses and reserve for losses is discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Provision for and Release of Allowance for Loan Losses and Reserve for Losses." Rural Infrastructure Finance - Direct Credit Exposure Farmer Mac's direct credit exposure to Rural Infrastructure Finance loans held and loans underlying LTSPCs as of December 31, 2023 was $4.1 billion across 45 states.
Off-balance sheet Agricultural Finance assets 90 days or more delinquent increased in part-time farms and livestock, and was partially offset by decreases in crops and permanent plantings. The top ten borrower exposures over 90 days delinquent in either the on- or off-balance sheet Agricultural Finance portfolio represented over half of the aggregate 90-day delinquencies as of December 31, 2022.
Off-balance sheet Agricultural Finance assets 90 days or more delinquent decreased in permanent plantings and livestock and was partially offset by increases in crops and part-time farms. The top ten borrower exposures over 90 days delinquent in either the on- or off-balance sheet Agricultural Finance portfolio represented over half of the aggregate 90-day delinquencies as of December 31, 2023.
Treasury yields. The periodic measurement of fair value and underlying discount rate methodology is subject to Farmer Mac’s internal controls and review by management. As of December 31, 2022, a 0.50% increase in the discount rates used to determine the fair value of AgVantage AFS would decrease the overall GAAP carrying value by approximately 1.98%.
Treasury yields. The periodic measurement of fair value and underlying discount rate methodology is subject to Farmer Mac’s internal controls and review by management. As of December 31, 2023, a 0.50% increase in the discount rates used to determine the fair value of AgVantage AFS would decrease the overall GAAP carrying value by approximately 2.01%.
The unpaid principal balance of on-balance sheet AgVantage securities secured by loans eligible for the Rural Infrastructure Finance line of business totaled $3.0 billion as of both December 31, 2022 and December 31, 2021.
The unpaid principal balance of on-balance sheet AgVantage securities secured by loans eligible for the Rural Infrastructure Finance line of business totaled $3.9 billion as of December 31, 2023 and $3.0 billion as of December 31, 2022.
Additionally, Farmer Mac has excluded guarantee asset fair value changes, because these fluctuations are not expected to have a cumulative net impact on Farmer Mac's financial condition or results of operations if Farmer Mac fulfills its guarantee obligation throughout the term of the guaranteed securities, as is expected.
Farmer Mac has also excluded guarantee asset fair value changes from the presentation of core earnings because these fluctuations are not expected to have a cumulative net impact on Farmer Mac's financial condition or results of operations if Farmer Mac fulfills its guarantee obligation throughout the term of the guaranteed securities, as is expected.
In addition to capital projects spurred by these programs, Farmer Mac could see an increase in financing opportunities for other telecommunications providers in rural areas, with wireless broadband increasingly important to economic opportunity and precision agriculture.
In addition to capital projects spurred by these programs, Farmer Mac could see an increase in financing opportunities for other telecommunications providers in rural areas, with fiber line expansion and wireless broadband increasingly important to rural economic opportunity and precision agriculture. Renewable Energy.
Additionally, Farmer Mac purchased $2.1 million and $5.0 million in Agricultural Finance mortgage loans from Bath State Bank in 2022 and 2021, respectively. CoBank, ACB 163,253 shares of Class B voting common stock (32.63% of outstanding Class B stock and 10.66% of total voting common stock outstanding) Farmer Mac director Everett M.
Farmer Mac also purchased $0.3 million and $2.1 million in Agricultural Finance mortgage loans from Bath State Bank in 2023 and 2022, respectively. CoBank, ACB 163,253 shares of Class B voting common stock (32.63% of outstanding Class B stock and 10.66% of total voting common stock outstanding) Farmer Mac director Everett M.
As of December 31, 2022, Farmer Mac applied discount rates that ranged from 4.7% to 6.1% (with a weighted average of 5.1%), As of December 31, 2021, Farmer Mac applied discount rates that ranged from 0.9% to 2.1% (with a weighted average of 1.7%).
As of December 31, 2023, Farmer Mac applied discount rates that ranged from 4.7% to 5.4% (with a weighted average of 5.0%). As of December 31, 2022, Farmer Mac applied discount rates that ranged from 4.7% to 6.1% (with a weighted average of 5.1%).
The Liquidity and Investment Regulations limit Farmer Mac's total credit exposure to any single entity, issuer, or obligor of securities to 10% of Farmer Mac's regulatory capital ($134.0 million as of December 31, 2022). However, Farmer Mac's current policy limits this total credit exposure to 5% of its regulatory capital ($67.0 million as of December 31, 2022).
The Liquidity and Investment Regulations limit Farmer Mac's total credit exposure to any single entity, issuer, or obligor of securities to 10% of Farmer Mac's regulatory capital ($147.0 million as of December 31, 2023). However, Farmer Mac's current policy limits this total credit exposure to 5% of its regulatory capital ($73.5 million as of December 31, 2023).
The increase in compensation and employee benefits expenses for 2022 compared to 2021 was due to increased headcount (full year impact of 32 net new hires in 2021 and 5 net new hires in 2022) and increased executive stock compensation. The increase in compensation and employee benefits expenses for 2021 compared to 2020 was due to increased headcount.
The increase in compensation and employee benefits expenses for 2022 compared to 2021 was due to increased headcount (full year impact of 32 net new hires in 2021 and 5 net new hires in 2022) and increased executive stock compensation. General and Administrative Expenses (G&A) .
Storage and Processing 1,426,801 19,984 1.40 % Other 168,540 — — % Total $ 35,406,205 $ 38,483 0.11 % (1) Geographic regions: Northwest (AK, ID, MT, OR, WA, WY); Southwest (AZ, CA, CO, HI, NM, NV, UT); Mid-North (IA, IL, IN, MI, MN, NE, ND, SD, WI); Mid-South (AR, KS, LA, MO, OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NH, NJ, NY, OH, PA, RI, VA, VT, WV); Southeast (AL, FL, GA, MS, NC, SC, TN). 90 Analysis of portfolio performance indicates that commodity type is the primary determinant of Farmer Mac's exposure to loss on a given loan.
Storage and Processing 1,810,339 19,984 1.10 % Other 168,831 — — % Total $ 37,126,085 $ 38,483 0.10 % (1) Geographic regions: Northwest (AK, ID, MT, OR, WA, WY); Southwest (AZ, CA, CO, HI, NM, NV, UT); Mid-North (IA, IL, IN, MI, MN, NE, ND, SD, WI); Mid-South (AR, KS, LA, MO, OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NH, NJ, NY, OH, PA, RI, VA, VT, WV); Southeast (AL, FL, GA, MS, NC, SC, TN). 94 Analysis of portfolio performance indicates that commodity type is the primary determinant of Farmer Mac's exposure to loss on a given loan.
As adjusted for the core earnings presentation, guarantee and commitment fees were $18.1 million for the year ended December 31, 2022, compared to $17.5 million and $19.2 million for the years ended December 31, 2021 and 2020, respectively.
As adjusted for the core earnings presentation, guarantee and commitment fees were $18.9 million for the year ended December 31, 2023, compared to $18.1 million and $17.5 million for the years ended December 31, 2022, and 2021, respectively.
The following table presents guarantee and commitment fees, which compensate Farmer Mac for assuming the credit risk on loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs, for the years ended December 31, 2022, 2021, and 2020: 66 Table 12 For the Years Ended December 31, 2022 2021 2020 (dollars in thousands) Contractual guarantee fees $ 14,235 $ 12,669 $ 12,549 Guarantee obligation amortization 5,913 7,257 — Guarantee asset fair value changes (7,108) (7,257) — Guarantee fee income $ 13,040 $ 12,669 $ 12,549 Guarantee and commitment fees increased for the year ended December 31, 2022 compared to 2021, which was due to increases in the average outstanding balance of LTSPCs during the period.
The following table presents guarantee and commitment fees, which compensate Farmer Mac for assuming the credit risk on loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs, for the years ended December 31, 2023, 2022, and 2021: 70 Table 12 For the Years Ended December 31, 2023 2022 2021 (dollars in thousands) Contractual guarantee and commitment fees $ 15,084 $ 14,235 $ 12,669 Guarantee obligation amortization 4,331 5,913 7,257 Guarantee asset fair value changes (2,703) (7,108) (7,257) Guarantee and commitment fee income $ 16,712 $ 13,040 $ 12,669 Guarantee and commitment fees increased for the year ended December 31, 2023 compared to 2022, which was due to increases in the average outstanding balance of LTSPCs during the period.
The $21.2 million decrease in substandard assets in our off-balance sheet portfolios during 2022 was primarily due to credit upgrades in crops, livestock, and 56 permanent plantings, and was partially offset by credit downgrades in part-time farms.
The $6.6 million decrease in substandard assets in our off-balance sheet portfolios during 2023 was primarily due to credit upgrades in livestock and crops, and was partially offset by credit downgrades in permanent plantings and part-time farms.
In 2022 and 2021, CoBank retained $3.5 million and $3.2 million of servicing fees related to the loan participations sold to Farmer Mac, respectively.
In 2023 and 2022, CoBank retained $3.6 million and $3.5 million of servicing fees related to the loan participations sold to Farmer Mac, respectively.
Treasury securities. As of December 31, 2022, Farmer Mac had $23.9 billion combined notional amount of interest rate swaps, with terms ranging from less than one year to just over thirty years, of which $8.9 billion were pay-fixed interest rate swaps, $13.1 billion were receive-fixed interest rate swaps, and $1.9 billion were basis swaps.
Treasury securities. As of December 31, 2023, Farmer Mac had $25.8 billion combined notional amount of interest rate swaps, with terms ranging from less than one year to just over thirty years, of which $9.9 billion were pay-fixed interest rate swaps, $15.0 billion were receive-fixed interest rate swaps, and $0.9 billion were basis swaps.
As of December 31, 2022 and 2021, Farmer Mac's Tier 1 capital ratio was 14.9% and 14.8%, respectively. As of December 31, 2022, Farmer Mac was in compliance with its capital adequacy policy.
As of December 31, 2023 and 2022, Farmer Mac's Tier 1 capital ratio was 15.4% and 14.9%, respectively. As of December 31, 2023, Farmer Mac was in compliance with its capital adequacy policy.
For Agricultural Finance mortgage loans to which Farmer Mac has direct credit exposure, Farmer Mac's 90-day delinquencies as of December 31, 2022, were $43.5 million (0.41% of the Agricultural Finance mortgage loan portfolio to which Farmer Mac has direct credit exposure), compared to $47.3 million (0.48% of the Agricultural Finance mortgage loan portfolio) as of December 31, 2021.
For Agricultural Finance mortgage loans to which Farmer Mac has direct credit exposure, Farmer Mac's 90-day delinquencies as of December 31, 2023, were $34.7 million (0.31% of the Agricultural Finance mortgage loan portfolio to which Farmer Mac has direct credit exposure), compared to $43.5 million (0.41% of the Agricultural Finance mortgage loan portfolio) as of December 31, 2022.
In percentage terms, the increase of 0.05% was primarily attributable to an increase of 0.04% in net new business volume and a decrease of 0.01% in non-GAAP funding costs. See Note 14 to the consolidated financial statements for more information about net interest income and net effective spread from Farmer Mac's individual business segments.
In percentage terms, the year-over-year increase of 0.04% was primarily attributable to an decrease of 0.03% in non-GAAP funding costs and an increase of 0.01% in cash-basis interest income. See Note 14 to the consolidated financial statements for more information about net interest income and net effective spread from Farmer Mac's individual business segments.
Table 7 Reconciliation of GAAP Basic Earnings Per Share to Core Earnings - Basic Earnings Per Share For the Years Ended December 31, 2022 2021 2020 (in thousands, except per share amounts) GAAP - Basic EPS $ 14.00 $ 10.36 $ 8.85 Less reconciling items: Gains/(losses) on undesignated financial derivatives due to fair value changes (see Table 13) 1.25 (0.13) (0.16) Gains/(losses) on hedging activities due to fair value changes 0.50 (0.17) (0.44) Unrealized losses on trading securities (0.08) (0.01) — Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value — 0.01 0.01 Net effects of terminations or net settlements on financial derivatives 1.47 0.04 0.12 Issuance costs on the retirement of preferred stock — — (0.16) Income tax effect related to reconciling items (0.66) 0.06 0.10 Sub-total 2.48 (0.20) (0.53) Core Earnings - Basic EPS $ 11.52 $ 10.56 $ 9.38 Shares used in per share calculation (GAAP and Core Earnings) 10,791 10,758 10,728 Reconciliation of GAAP Diluted Earnings Per Share to Core Earnings - Diluted Earnings Per Share For the Years Ended December 31, 2022 2021 2020 (in thousands, except per share amounts) GAAP - Diluted EPS $ 13.87 $ 10.27 $ 8.80 Less reconciling items: Gains/(losses) on undesignated financial derivatives due to fair value changes (see Table 13) 1.24 (0.13) (0.16) Gains/(losses) on hedging activities due to fair value changes 0.49 (0.17) (0.44) Unrealized losses on trading securities (0.08) (0.01) — Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value — 0.01 0.01 Net effects of terminations or net settlements on financial derivatives 1.45 0.05 0.11 Issuance costs on the retirement of preferred stock — — (0.15) Income tax effect related to reconciling items (0.65) 0.05 0.10 Sub-total 2.45 (0.20) (0.53) Core Earnings - Diluted EPS $ 11.42 $ 10.47 $ 9.33 Shares used in per share calculation (GAAP and Core Earnings) 10,883 10,846 10,786 62 The non-GAAP reconciling items between net income attributable to common stockholders and core earnings are: 1.
Table 7 Reconciliation of GAAP Basic Earnings Per Share to Core Earnings - Basic Earnings Per Share For the Years Ended December 31, 2023 2022 2021 (in thousands, except per share amounts) GAAP - Basic EPS $ 15.97 $ 14.00 $ 10.36 Less reconciling items: Gains/(losses) on undesignated financial derivatives due to fair value changes (see Table 13) 0.49 1.25 (0.13) (Losses)/gains on hedging activities due to fair value changes (0.50) 0.50 (0.17) Unrealized gains/(losses) on trading securities 0.18 (0.08) (0.01) Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value 0.02 — 0.01 Net effects of terminations or net settlements on financial derivatives 0.02 1.47 0.04 Income tax effect related to reconciling items (0.04) (0.66) 0.06 Sub-total 0.17 2.48 (0.20) Core Earnings - Basic EPS $ 15.80 $ 11.52 $ 10.56 Shares used in per share calculation (GAAP and Core Earnings) 10,829 10,791 10,758 Reconciliation of GAAP Diluted Earnings Per Share to Core Earnings - Diluted Earnings Per Share For the Years Ended December 31, 2023 2022 2021 (in thousands, except per share amounts) GAAP - Diluted EPS $ 15.81 $ 13.87 $ 10.27 Less reconciling items: Gains/(losses) on undesignated financial derivatives due to fair value changes (see Table 13) 0.47 1.24 (0.13) (Losses)/gains on hedging activities due to fair value changes (0.49) 0.49 (0.17) Unrealized gains/(losses) on trading securities 0.18 (0.08) (0.01) Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value 0.02 — 0.01 Net effects of terminations or net settlements on financial derivatives 0.02 1.45 0.05 Income tax effect related to reconciling items (0.04) (0.65) 0.05 Sub-total 0.16 2.45 (0.20) Core Earnings - Diluted EPS $ 15.65 $ 11.42 $ 10.47 Shares used in per share calculation (GAAP and Core Earnings) 10,937 10,883 10,846 The non-GAAP reconciling items between net income attributable to common stockholders and core earnings are: 1.
The components of gains and losses on financial derivatives for the years ended December 31, 2022, 2021, and 2020 are summarized in the following table: Table 13 For the Years Ended December 31, 2022 2021 2020 (dollars in thousands) Gains/(losses) due to fair value changes $ 13,495 $ (1,431) $ (1,701) Accrual of contractual payments (7,756) 2,841 3,468 Gains/(losses) due to terminations or net settlements 16,892 (1,086) (23) Gains on financial derivatives $ 22,631 $ 324 $ 1,744 These changes in fair value are primarily the result of fluctuations in long-term interest rates.
The components of gains and losses on financial derivatives for the years ended December 31, 2023, 2022, and 2021 are summarized in the following table: Table 13 For the Years Ended December 31, 2023 2022 2021 (dollars in thousands) Gains/(losses) due to fair value changes $ 5,142 $ 13,495 $ (1,431) Accrual of contractual payments (4,845) (7,756) 2,841 Gains/(losses) due to terminations or net settlements 2,585 16,892 (1,086) Gains on financial derivatives $ 2,882 $ 22,631 $ 324 These changes in fair value are primarily the result of fluctuations in long-term interest rates.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Interest Rate Risk" for more 110 information about Farmer Mac's exposure to interest rate risk and its strategies to manage that risk. For information about Farmer Mac's use of financial derivatives and related accounting policies, see Note 6 to the consolidated financial statements.
See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Interest Rate Risk" for more information about Farmer Mac's exposure to interest rate risk and its strategies to manage that risk. For 113 information about Farmer Mac's use of financial derivatives and related accounting policies, see Note 6 to the consolidated financial statements.

Other AGM 10-K year-over-year comparisons