Related Party Transactions

12 Months Ended

Dec. 31, 2022

RELATED PARTY TRANSACTIONS

Farmer Mac considers an entity to be a related party if (1) the entity holds at least 5% of a class of Farmer Mac voting common stock or (2) the institution has an affiliation with a Farmer Mac director and conducts material business with Farmer Mac. As provided by Farmer Mac's statutory charter, only banks, insurance companies, and other financial institutions or similar entities may hold Farmer Mac's Class A voting common stock and only institutions of the Farm Credit System may hold Farmer Mac's Class B voting common stock. Farmer Mac's statutory charter also provides that Class A stockholders elect 5 members of Farmer Mac's 15-member board of directors and that Class B stockholders elect 5 members of the board of directors. Farmer Mac generally requires financial institutions to own a requisite amount of common stock, based on the size and type of institution, to participate in the Agricultural Finance line of business. As a result of these requirements, Farmer Mac conducts business with related parties in the normal course of Farmer Mac's business. All related party transactions were conducted with terms and conditions comparable to those available to any other participant in Farmer Mac's lines of business not related to Farmer Mac.

Zions Bancorporation, National Association:

Farmer Mac considers Zions Bancorporation, National Association and its affiliates ("Zions") a related party because Zions owns approximately 31.2% of Farmer Mac's Class A voting common stock. The following transactions occurred between Farmer Mac and Zions during 2022, 2021, and 2020:

Table 3.1


	For the Years Ended December 31,
	2022		2021		2020
	(in thousands)
Unpaid Principal Balance:
Purchases:
Loans	$	274,517	$	214,319	$	177,143
USDA Securities	4,171		9,565		10,764
Sales of Farmer Mac Guaranteed Securities	99,643		—		41,247

The purchases of loans from Zions under the Agricultural Finance line of business represented approximately 12.9%, 8.0%, and 7.1% of Agricultural Finance mortgage loan purchases for the years ended December 31, 2022, 2021, and 2020, respectively, and 9.6%, 5.6% and 6.2%, respectively, of total Agricultural Finance mortgage loan business volume (excluding AgVantage and USDA Securities). The purchases of USDA Securities from Zions represented approximately 1.5%, 2.1%, and 1.4% of total purchases of USDA Securities for the years ended December 31, 2022, 2021, and 2020, respectively. Outstanding Agricultural Finance mortgage loans purchased and USDA Securities purchased from Zions represented 3.5% and 3.4%, respectively, of Farmer Mac's outstanding business volume as of December 31, 2022 and 2021.

Zions retained servicing fees of $10.4 million, $11.0 million, and $11.8 million in 2022, 2021, and 2020, respectively, for its work as a Farmer Mac servicer.

National Rural Utilities Cooperative Financial Corporation:

Farmer Mac considers the National Rural Utilities Cooperative Financial Corporation ("CFC") a related party because CFC owns approximately 7.91% of Farmer Mac's Class A voting common stock and because a member of Farmer Mac's board of directors had an affiliation with CFC through June 2021. The following transactions occurred between Farmer Mac and CFC during 2022, 2021, and 2020:

Table 3.2


Farmer Mac Loan Purchases and Guarantees
	For the Years Ended December 31,
	2022		2021		2020
	(in thousands)
Unpaid Principal Balance:
Loans	$	386,998	$	127,117	$	272,943
LTSPCs	30,421		—		—
On-balance sheet AgVantage Securities	670,000		1,450,000		250,000


Total purchases and guarantees	$	1,087,419	$	1,577,117	$	522,943

The transactions with CFC represented 46.7% of Farmer Mac's loan purchase volume under the Rural Infrastructure Finance line of business for 2022, compared to 36.9% of Rural Infrastructure Finance loan purchase volume for 2021 and 36.7% for 2020. These transactions represented 13.4%, 37.0%, and 19.2% of AgVantage securities volume for 2022, 2021, and 2020, respectively, and represented 12.0%, 18.4%, and 9.1% of new business volume for 2022, 2021, and 2020, respectively. Of Farmer Mac's total outstanding business volume as of December 31, 2022 and 2021, Rural Utilities loans, loans under LTSPCs, and AgVantage securities issued by CFC represented 18.7% and 19.5%, respectively.

Farmer Mac had interest receivable of $18.2 million and $7.8 million as of December 31, 2022 and 2021, respectively, and earned interest income of $79.4 million, $50.0 million, and $63.1 million during 2022, 2021, and 2020, respectively, related to its AgVantage transactions with CFC.

As of both December 31, 2022 and 2021, Farmer Mac had $0.1 million of commitment fees receivable from CFC and earned commitment fees of $1.1 million, $1.2 million, and $1.3 million, respectively for 2022, 2021, and 2020.

CFC retained servicing fees of $3.4 million, $3.3 million, and $3.3 million in 2022, 2021, and 2020, respectively, for its work as a Farmer Mac central servicer.

CoBank:

Farmer Mac considers CoBank a related party because CoBank owns approximately 32.6% of Farmer Mac's Class B voting common stock.

Farmer Mac purchased $376.0 million, $207.5 million, and $416.8 million of loans and participations from CoBank, under the Rural Infrastructure Finance line of business in 2022, 2021, and 2020, respectively. The transactions with CoBank represented 45.4%, 60.2%, and 56.0% of Farmer Mac's loan

purchase transactions under the Rural Infrastructure Finance line of business for 2022, 2021, and 2020, respectively. Of Farmer Mac's total outstanding business volume as of December 31, 2022 and 2021, CoBank's Rural Infrastructure Finance loans and unfunded commitments represented 6.3% and 5.6%, respectively, of total outstanding volume.

CoBank retained servicing fees of $3.5 million, $3.2 million, and $2.3 million in 2022, 2021, and 2020, respectively, for its work as a Farmer Mac central servicer.

AgFirst Farm Credit Bank:

Farmer Mac considers AgFirst Farm Credit Bank ("AgFirst") a related party because AgFirst owns approximately 16.8% of Farmer Mac's Class B voting common stock.

AgFirst entered into $0.0 million, $11.0 million, and $32.5 million of Agricultural Finance LTSPC transactions in 2022, 2021, and 2020, respectively, and the aggregate balance of Agricultural Finance LTSPCs outstanding as of December 31, 2022 and 2021 was $387.1 million and $363.9 million, respectively. In each of 2022, 2021, and 2020, Farmer Mac received $1.2 million in commitment fees from AgFirst, and had $0.1 million of commitment fees receivable as of both December 31, 2022 and 2021.

AgFirst owns certain securities backed by rural housing loans. Farmer Mac guarantees the last ten percent of losses (based on the original principal balance at the time of pooling) from each loan in the pool backing those securities. As of December 31, 2022 and 2021, the outstanding balance of those securities owned by AgFirst was $2.2 million and $4.0 million, respectively. Farmer Mac received guarantee fees of $15,000, $19,000, and $25,000 in 2022, 2021, and 2020, respectively, on those securities.

Farm Credit Bank of Texas:

Farmer Mac considers Farm Credit Bank of Texas a related party because the bank owns approximately 7.7% of Farmer Mac's Class B voting common stock. Farmer Mac received from Farm Credit Bank of Texas commitment fees of $2.9 million, $1.9 million, and $1.2 million in 2022, 2021, and 2020, respectively. The aggregate amount of Agricultural Finance LTSPCs outstanding with Farm Credit Bank of Texas as of December 31, 2022 and 2021 was $881.6 million and $625.6 million, respectively. In each of 2022, 2021, and 2020, Farm Credit Bank of Texas retained $0.1 million in servicing fees for its work as a Farmer Mac central servicer.

Other Related Party Transactions:

Farmer Mac considers Bath State Bank and Farm Credit of Florida related parties because a member of Farmer Mac's board of directors is affiliated with those entities. Farmer Mac purchased $0.0 million, $2.3 million, and $9.2 million in USDA Securities from Bath State Bank in 2022, 2021, and 2020, respectively. Farmer Mac purchased $2.1 million and $5.0 million in Agricultural Finance mortgage loans from Bath State Bank in 2022 and 2021, respectively. Farmer Mac did not purchase any Agricultural Finance mortgage loans from Bath State Bank in 2020.

Farmer Mac purchased $0.0 million, $1.1 million, and $0.2 million of Agricultural Finance mortgage loans from Farm Credit of Florida in 2022, 2021, and 2020.