SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2026

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The interim unaudited consolidated financial statements of the Federal Agricultural Mortgage Corporation ("Farmer Mac") and subsidiaries have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). These interim unaudited consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the financial position and the results of operations and cash flows of Farmer Mac and subsidiaries for the interim periods presented. Certain information and footnote disclosures normally included in the annual consolidated financial statements have been omitted as permitted by SEC rules and regulations. The December 31, 2025 consolidated balance sheet presented in this report has been derived from Farmer Mac's audited 2025 consolidated financial statements. Management believes that the disclosures are adequate to present fairly the consolidated financial statements as of the dates and for the periods presented. These interim unaudited consolidated financial statements should be read in conjunction with the 2025 consolidated financial statements of Farmer Mac and subsidiaries included in Farmer Mac's Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 19, 2026. Results for interim periods are not necessarily indicative of those that may be expected for the fiscal year. Presented below are Farmer Mac's significant accounting policies that contain updated information for the three months ended March 31, 2026.

Principles of Consolidation

The consolidated financial statements include the accounts of Farmer Mac and its two subsidiaries: (1) Farmer Mac Mortgage Securities Corporation, whose principal activities are to facilitate the purchase and issuance of Farmer Mac Guaranteed Securities; and (2) Farmer Mac II LLC, which operated substantially all of the business related to the USDA Securities included in the Agricultural Finance line of business from 2010 through 2023 and continues to hold a "run-off" portfolio of USDA Securities. The consolidated financial statements also include the accounts of Variable Interest Entities ("VIEs") in which Farmer Mac determined itself to be the primary beneficiary.

The following table provides a summary of unconsolidated VIEs with which Farmer Mac has significant continuing involvement but is not the primary beneficiary. The balances presented in the table below exclude certain transactions with unconsolidated VIEs where Farmer Mac's continuing involvement is insignificant. Farmer Mac considers continuing involvement to be insignificant when it relates to a VIE where Farmer Mac only invests in securities issued by the VIE and where Farmer Mac was not involved in the design of the VIE or where no transfers have occurred between Farmer Mac and the VIE.

Table 1.1


	Unconsolidated VIEs
	As of March 31, 2026						As of December 31, 2025
	Max Exposure to Loss(1)		Carrying Value of Assets(2)		Carrying Value of Liabilities(3)		Max Exposure to Loss(1)		Carrying Value of Assets(2)		Carrying Value of Liabilities(3)
	(in thousands)
Farmer Mac Guaranteed Securities	$	454,899	$	85,300	$	4,876	$	466,441	$	85,791	$	5,020

(1)Farmer Mac uses the guaranteed portion of unpaid principal balance and outstanding face amount of investment securities to represent maximum exposure to loss.

(2)Included in Investment securities, Guarantee and commitment fees receivable, and Prepaid expenses and other assets on our Consolidated Balance Sheets.

(3)Included in Guarantee and commitment obligation and Other liabilities on our Consolidated Balance Sheets. The weighted average remaining maturity of the loans underlying the guarantee was 20.4 years and 20.7 years as of March 31, 2026 and December 31, 2025, respectively.

Earnings Per Common Share

Basic earnings per common share ("EPS") is based on the daily weighted-average number of shares of common stock outstanding. Diluted earnings per common share is based on the daily weighted-average number of shares of common stock outstanding adjusted to include all potentially dilutive stock appreciation rights ("SARs") and unvested restricted stock unit awards. The following schedule reconciles basic and diluted EPS for the three months ended March 31, 2026 and 2025:

Table 1.2


	For the Three Months Ended
	March 31, 2026					March 31, 2025
	Net Income		Weighted-Average Shares	$ per Share		Net Income		Weighted-Average Shares	$ per Share
	(in thousands, except per share amounts)
Basic EPS
Net income attributable to common stockholders	$	51,832	10,844	$	4.78	$	43,985	10,896	$	4.04
Effect of dilutive securities(1)
SARs and restricted stock units	—		78	(0.03)		—		87	(0.03)
Diluted EPS	$	51,832	10,922	$	4.75	$	43,985	10,983	$	4.01

(1)For the three months ended March 31, 2026 and 2025, SARs and restricted stock units of 40,723 and 58,539, respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because they were anti-dilutive. For the three months ended March 31, 2026 and 2025, contingent shares of unvested restricted stock units of 10,962 and 29,507, respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because performance conditions had not yet been met.

Comprehensive Income

Comprehensive income represents all changes in stockholders' equity except those resulting from investments by or distributions to stockholders, and is comprised of net income and unrealized gains and losses on available-for-sale ("AFS") securities, certain held-to-maturity ("HTM") securities transferred from the AFS classification, and cash flow hedges, net of related taxes.

The following table presents the changes in accumulated other comprehensive income ("AOCI"), net of tax, by component for the three months ended March 31, 2026 and 2025.

Table 1.3


	As of March 31, 2026								As of March 31, 2025
	AFS Securities		HTM Securities		Cash Flow Hedges		Total		AFS Securities		HTM Securities		Cash Flow Hedges		Total
	(in thousands)














For the Three Months Ended:
Beginning Balance	$	2,811	$	(9,246)	$	19,817	$	13,382	$	(37,575)	$	(9,226)	$	34,654	$	(12,147)
Other comprehensive (loss)/income before reclassifications	(28,126)		—		1,936		(26,190)		17,194		—		(3,591)		13,603
Amounts reclassified from AOCI	(2)		(309)		(1,952)		(2,263)		(3)		(239)		(3,022)		(3,264)
Net comprehensive (loss)/income	(28,128)		(309)		(16)		(28,453)		17,191		(239)		(6,613)		10,339
Ending Balance	$	(25,317)	$	(9,555)	$	19,801	$	(15,071)	$	(20,384)	$	(9,465)	$	28,041	$	(1,808)

The following table presents other comprehensive income activity, the impact on net income of amounts reclassified from each component of AOCI, and the related tax impact for the three months ended March 31, 2026 and 2025:

Table 1.4


	For the Three Months Ended
	March 31, 2026						March 31, 2025
	Before Tax		Provision (Benefit)		After Tax		Before Tax		Provision (Benefit)		After Tax
	(in thousands)
Other comprehensive (loss)/ income:
AFS securities:
Unrealized holding (losses)/gains on AFS securities	$	(35,602)	$	(7,476)	$	(28,126)	$	21,766	$	4,572	$	17,194
Less reclassification adjustments included in:
Other income(1)	(2)		—		(2)		(4)		(1)		(3)
Total	$	(35,604)	$	(7,476)	$	(28,128)	$	21,762	$	4,571	$	17,191
HTM securities:
Less reclassification adjustments included in:
Net interest income(2)	$	(392)	$	(83)	$	(309)	$	(303)	$	(64)	$	(239)
Total	$	(392)	$	(83)	$	(309)	$	(303)	$	(64)	$	(239)
Cash flow hedges
Unrealized gains/(losses) on cash flow hedges	$	2,451	$	515	$	1,936	$	(4,546)	$	(955)	$	(3,591)
Less reclassification adjustments included in:
Net interest income(3)	(2,471)		(519)		(1,952)		(3,825)		(803)		(3,022)
Total	$	(20)	$	(4)	$	(16)	$	(8,371)	$	(1,758)	$	(6,613)
Other comprehensive (loss)/income	$	(36,016)	$	(7,563)	$	(28,453)	$	13,088	$	2,749	$	10,339

(1)Represents amortization of deferred gains related to certain AFS USDA Securities and Farmer Mac Guaranteed USDA Securities.

(2)Represents amortization of unrealized gain/loss reported in AOCI prior to the reclassification of certain securities from AFS to HTM, which occurred at fair value. The unrealized gain/loss will be amortized over the securities' remaining life with no impact on future net income.

(3)Relates to the recognition of unrealized gains and losses on cash flow hedges recorded in AOCI.

New Accounting Standards

Recently Adopted Accounting Guidance


Standard	Description	Date of Adoption	Effect on Consolidated Financial Statements
ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements	ASU 2025-09 amends ASC 815 to align hedge accounting more closely with the economics of an entity's risk management practices. Among other things, key amendments include: similar risk assessment for cash flow hedges, hedging interest payments on choose-your-rate debt, cash flow hedges of nonfinancial forecasted transactions, and net written options as hedging instruments.	January 1, 2026	Farmer Mac adopted the new standard on a prospective basis. The adoption of this amendment did not have a material impact on Farmer Mac's financial position, results of operations, or cash flows. See Note 3 to the financial statements.

Recently Issued Accounting Guidance, Not Yet Adopted Within Our Consolidated Financial Statements

Farmer Mac is still assessing the impact of the new accounting standards in the table below but does not expect that adoption of the new guidance will have a material impact on Farmer Mac's financial position, results of operations, or cash flows.


Standard			Description
ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses			This Update requires public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted.
ASU 2025-06, Intangibles - Goodwill and Other - Internal-use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software			This Update amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. It removes all references to "development stages" and establishes new criteria to be met for the entity to begin capitalizing software costs. New guidance is then given for how to evaluate whether the probable-to-complete recognition threshold has been met. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted.
ASU 2025-08, Financial Instruments - Credit Losses (Topic 326): Purchased Loans			This Update expands the scope of the "gross-up" approach from applicable only to purchased credit-deteriorated ("PCD") assets to include financial assets acquired without credit deterioration and deemed "seasoned." Non-PCD loans are seasoned if they were purchased at least 90 days after origination and the acquirer was not involved in the origination of the loans. Under this model, an allowance for expected credit losses is recognized at acquisition, offsetting the loan's amortized cost basis, thereby eliminating the day-one credit-loss expense previously required for non-PCD assets. ASU 2025-08 is effective for annual periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted.
ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements			This Update clarifies interim disclosure requirements, including providing a comprehensive list of interim disclosure requirements under U.S. GAAP and a disclosure principle that requires entities to disclose events since the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for annual periods beginning after December 15, 2027, and interim periods within those annual periods, with early adoption permitted.