XML 29 R17.htm IDEA: XBRL DOCUMENT

Loans

12 Months Ended

Dec. 31, 2022

LOANS

Farmer Mac classifies loans as either held for investment or held for sale. Loans held for investment are recorded at the unpaid principal balance, net of unamortized premium or discount and other cost basis adjustments. Loans held for sale are reported at the lower of cost or fair value determined on a pooled

basis. As of both December 31, 2022 and 2021, Farmer Mac had no loans held for sale, respectively.

Under the Agricultural Finance line of business, Farmer Mac has two segments – Farm & Ranch and Corporate AgFinance. The segments are characterized by similarities in risk attributes and the manner in which Farmer Mac monitors and assesses credit risk.

The following table includes loans held for investment and displays the composition of the loan balances as of December 31, 2022 and 2021:

Table 8.1


	As of December 31, 2022						As of December 31, 2021
	Unsecuritized		In Consolidated Trusts		Total		Unsecuritized		In Consolidated Trusts		Total
	(in thousands)
Agricultural Finance loans
Farm & Ranch	$	5,150,750	$	1,211,576	$	6,362,326	$	4,775,070	$	948,623	$	5,723,693
Corporate AgFinance	1,166,253		—		1,166,253		1,123,300		—		1,123,300
Total Agricultural Finance loans	6,317,003		1,211,576		7,528,579		5,898,370		948,623		6,846,993
Rural Infrastructure Finance loans	3,021,266		—		3,021,266		2,389,136		—		2,389,136
Total unpaid principal balance(1)	9,338,269		1,211,576		10,549,845		8,287,506		948,623		9,236,129
Unamortized premiums, discounts, fair value hedge basis adjustment, and other cost basis adjustments	(326,449)		—		(326,449)		26,590		—		26,590
Total loans	9,011,820		1,211,576		10,223,396		8,314,096		948,623		9,262,719
Allowance for losses	(14,629)		(460)		(15,089)		(13,477)		(564)		(14,041)
Total loans, net of allowance	$	8,997,191	$	1,211,116	$	10,208,307	$	8,300,619	$	948,059	$	9,248,678

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

Allowance for Losses

The following table is a summary, by asset type, of the allowance for losses as of December 31, 2022 and 2021:

Table 8.2


	December 31, 2022		December 31, 2021
	Allowance for Losses		Allowance for Losses
	(in thousands)
Loans:
Agricultural Finance loans
Farm & Ranch	$	4,044	$	2,882
Corporate AgFinance	2,731		560
Total Agricultural Finance Loans	6,775		3,442
Rural Infrastructure Finance loans	8,314		10,599
Total	$	15,089	$	14,041

The following is a summary of the changes in the allowance for losses for each year in the three-year period ended December 31, 2022:

Table 8.3



	Agricultural Finance loans						Rural Infrastructure Finance loans
	Farm & Ranch		Corporate AgFinance		Total
	(in thousands)
Balance as of December 31, 2019(1)	$	8,830	$	1,624	$	10,454	$	—
Cumulative effect adjustment from adoption of current expected credit loss standard	(2,735)		(1,174)		(3,909)		5,378
Adjusted Beginning Balance	$	6,095	$	450	$	6,545	$	5,378
Provision for losses	3,068		(109)		2,959		4,709
Charge-offs	(5,759)		—		(5,759)		—
Balance as of December 31, 2020(2)	$	3,404	$	341	$	3,745	$	10,087
(Release of)/provision for losses	(1,576)		219		(1,357)		512
Recovery	1,054		—		1,054		—

Balance as of December 31, 2021(3)(4)(5)	$	2,882	$	560	$	3,442	$	10,599
Provision for/(release of) losses	1,246		2,171		3,417		(2,285)
Charge-offs	(84)		—		(84)		—
Balance as of December 31, 2022(3)(4)(5)	$	4,044	$	2,731	$	6,775	$	8,314

(1)Prior to the adoption of ASU 2016-13, "Financial Instruments - Credit Losses," effective January 1, 2020, Farmer Mac maintained an allowance for loan losses to cover estimated probable incurred losses on loans held.

(2)Allowance for losses reflects the adoption of ASU 2016-13, "Financial Instruments - Credit Losses," effective January 1, 2020

(3)As of December 31, 2022 and 2021, allowance for losses for Agricultural Finance Farm & Ranch loans includes $1.9 million and $0.0 million allowance for collateral dependent assets secured by agricultural real estate, respectively.

(4)As of December 31, 2022 and 2021, allowance for losses for Agricultural Finance Corporate AgFinance loans includes $2.4 million and $0.0 million allowance for collateral dependent assets secured by agricultural real estate, respectively.

(5)As of both December 31, 2022 and 2021, allowance for losses for Rural Infrastructure Finance loans includes no allowance for collateral dependent assets.

The $2.3 million net release from the allowance for the Rural Infrastructure Finance portfolio during the year ended December 31, 2022 was primarily attributable to a risk rating upgrade on a single loan and improvements in forecasts of future economic conditions. The risk rating upgrade on that loan reflected

that borrower's successful securitization of its large payable that arose during the arctic freeze that struck Texas in February 2021. The $3.4 million net provision to the allowance for the Agricultural Finance mortgage loan portfolio during the year ended December 31, 2022 was primarily attributable to a risk rating downgrade on a single agricultural storage and processing loan, due to its ongoing bankruptcy proceedings.

The provision to the allowance for Rural Infrastructure Finance loan losses of $0.5 million recorded

during the year ended 2021 was primarily attributable to the impact of the Texas Arctic Freeze, partially

offset by the impact of improving economic factor forecasts. The $1.4 million release from the allowance

for the Agricultural Finance mortgage loan portfolio during the year ended 2021 was primarily attributable

to a recovery on the payoff of the agricultural storage and processing loan secured by a specialized poultry

facility that had been partially charged off in 2020 and improving economic factor forecasts.

The provision to the allowance for Rural Infrastructure Finance loan losses of $4.7 million recorded

during the year ended December 31, 2020 was primarily attributable to the impact of net new loan volume

in the portfolio and the impact of economic factor forecasts, especially continued expected higher

unemployment, as a result of the COVID-19 pandemic and the resulting economic volatility. The

provision to the allowance for Agricultural Finance mortgage loans of $3.0 million recorded during the

year ended December 31, 2020 was primarily related to an agricultural storage and processing loan

secured by a specialized poultry facility that Farmer Mac has deemed to be a CDA. The provision was

more than offset by charge-offs from the allowance of $5.8 million, primarily related to the specialized

poultry loan because a portion of the loan was deemed to be uncollectible.

The following table presents the unpaid principal balances by delinquency status of Farmer Mac's loans and non-performing assets as of December 31, 2022 and 2021:

Table 8.4


	As of December 31, 2022
	Accruing
	Current		30-59 Days		60-89 Days		90 Days and Greater(2)		Total Past Due		Nonaccrual loans(3)(4)		Total Loans
	(in thousands)
Loans(1):
Agricultural Finance loans
Farm & Ranch	$	6,287,326	$	10,066	$	392	$	1,140	$	11,598	$	63,402	$	6,362,326
Corporate AgFinance	1,150,690		—		—		—		—		15,563		1,166,253
Total Agricultural Finance loans	7,438,016		10,066		392		1,140		11,598		78,965		7,528,579
Rural Infrastructure Finance loans	3,021,266		—		—		—		—		—		3,021,266
Total	$	10,459,282	$	10,066	$	392	$	1,140	$	11,598	$	78,965	$	10,549,845

(1)Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.

(2)Includes loans in consolidated trusts with beneficial interests owned by third parties that are 90 days or more past due.

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

(4)Includes $22.0 million of nonaccrual loans for which there was no associated allowance. During the year ended December 31, 2022, Farmer Mac received $5.6 million in interest on nonaccrual loans, respectively.


	As of December 31, 2021
	Accruing
	Current		30-59 Days		60-89 Days		90 Days and Greater(2)		Total Past Due		Nonaccrual loans(3)(4)		Total Loans
	(in thousands)
Loans(1):
Agricultural Finance loans
Farm & Ranch	$	5,591,770	$	4,548	$	568	$	—	$	5,116	$	126,807	$	5,723,693
Corporate AgFinance	1,123,300		—		—		—		—		—		1,123,300
Total Agricultural Finance loans	6,715,070		4,548		568		—		5,116		126,807		6,846,993
Rural Infrastructure Finance loans	2,389,136		—		—		—		—		—		2,389,136
Total	$	9,104,206	$	4,548	$	568	$	—	$	5,116	$	126,807	$	9,236,129

(1)Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.

(2)Includes loans in consolidated trusts with beneficial interests owned by third parties that are 90 days or more past due.

(4)Includes $31.0 million of nonaccrual loans for which there was no associated allowance. During the year ended December 31, 2021, Farmer Mac received $5.0 million in interest on nonaccrual loans.

Credit Quality Indicators

The following tables present credit quality indicators related to Agricultural Finance mortgage loans and Rural Infrastructure Finance loans held as of December 31, 2022 and 2021, by year of origination:

Table 8.5


	As of December 31, 2022
	Year of Origination:
	2022		2021		2020		2019		2018		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Agricultural Finance - Farm & Ranch loans(1):
Internally Assigned Risk Rating:
Acceptable	$	1,157,829	$	1,704,547	$	1,187,474	$	360,704	$	242,491	$	947,535	$	385,503	$	5,986,083
Special mention(2)	91,099		68,260		25,629		11,254		5,325		17,797		2,452		221,816
Substandard(3)	3,094		8,814		22,976		23,937		17,845		67,654		10,107		154,427
Total	$	1,252,022	$	1,781,621	$	1,236,079	$	395,895	$	265,661	$	1,032,986	$	398,062	$	6,362,326


For the Year Ended:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	(84)	$	—	$	(84)
Current period recoveries	—		—		—		—		—		—		—		—
Current period Agricultural Finance net charge-offs	$	—	$	—	$	—	$	—	$	—	$	(84)	$	—	$	(84)

(1)Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.

(2)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.

(3)Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not corrected.


	As of December 31, 2022
	Year of Origination:
	2022		2021		2020		2019		2018		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Agricultural Finance - Corporate AgFinance(1):
Internally Assigned Risk Rating:
Acceptable	$	145,263	$	299,729	$	221,560	$	108,230	$	76,454	$	44,827	$	232,107	$	1,128,170
Special mention(2)	—		—		—		20,698		—		—		2,145		22,843
Substandard(3)	—		—		4,598		—		—		—		10,642		15,240
Total	$	145,263	$	299,729	$	226,158	$	128,928	$	76,454	$	44,827	$	244,894	$	1,166,253


For the Year Ended:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	—		—		—		—		—		—		—		—
Current period Agricultural Finance net charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

(1)Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.

(2)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.

(3)Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not corrected.


	As of December 31, 2022
	Year of Origination:
	2022		2021		2020		2019		2018		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Rural Infrastructure Finance loans(1):
Internally Assigned Risk Rating:
Acceptable	$	741,021	$	220,420	$	629,223	$	739,270	$	7,932	$	649,830	$	33,570	$	3,021,266
Special mention(2)	—		—		—		—		—		—		—		—
Substandard(3)	—		—		—		—		—		—		—		—
Total	$	741,021	$	220,420	$	629,223	$	739,270	$	7,932	$	649,830	$	33,570	$	3,021,266






For the Year Ended:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	—		—		—		—		—		—		—		—
Current period Rural Infrastructure net charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

(1)Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.

(2)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.

(3)Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not corrected.


	As of December 31, 2021
	Year of Origination:
	2021		2020		2019		2018		2017		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Agricultural Finance - Farm & Ranch loans(1):
Internally Assigned Risk Rating:
Acceptable	$	1,786,446	$	1,300,798	$	399,394	$	277,061	$	271,234	$	957,357	$	349,949	$	5,342,239
Special mention(2)	84,795		50,057		30,168		3,670		9,133		14,646		3,227		195,696
Substandard(3)	1,654		4,997		26,237		27,109		38,703		75,780		11,278		185,758
Total	$	1,872,895	$	1,355,852	$	455,799	$	307,840	$	319,070	$	1,047,783	$	364,454	$	5,723,693






For the Year Ended:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	—		—		—		—		(1,054)		—		—		(1,054)
Current period Agricultural Finance net recoveries	$	—	$	—	$	—	$	—	$	(1,054)	$	—	$	—	$	(1,054)

(1)Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.

(2)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.

(3)Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not corrected.


	As of December 31, 2021
	Year of Origination:
	2021		2020		2019		2018		2017		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Agricultural Finance - Corporate AgFinance loans(1):
Internally Assigned Risk Rating:
Acceptable	$	351,614	$	240,712	$	140,742	$	47,856	$	32,618	$	47,360	$	195,415	$	1,056,317
Special mention(2)	—		—		21,031		44,407		—		—		1,545		66,983
Substandard(3)	—		—		—		—		—		—		—		—
Total	$	351,614	$	240,712	$	161,773	$	92,263	$	32,618	$	47,360	$	196,960	$	1,123,300






For the Year Ended:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	—		—		—		—		—		—		—		—
Current period Agricultural Finance net recoveries	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

(1)Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.

(2)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.

(3)Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not corrected.


	As of December 31, 2021
	Year of Origination:
	2021		2020		2019		2018		2017		Prior		Revolving Loans - Amortized Cost Basis		Total
	(in thousands)
Rural Infrastructure Finance loans(1):
Internally Assigned Risk Rating:
Acceptable	$	242,570	$	612,366	$	774,941	$	8,100	$	86,878	$	628,903	$	12,578	$	2,366,336
Special mention(2)	—		—		—		—		—		—		—		—
Substandard(3)	—		22,800		—		—		—		—		—		22,800
Total	$	242,570	$	635,166	$	774,941	$	8,100	$	86,878	$	628,903	$	12,578	$	2,389,136






For the Year Ended:
Current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Current period recoveries	—		—		—		—		—		—		—		—
Current period Rural Infrastructure net charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

(1)Amounts represent unpaid principal balance of risk-rated loans, which is the basis Farmer Mac uses to analyze its portfolio, and recorded investment of past due loans.

(2)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured.

(3)Substandard assets have a well-defined weakness or weaknesses and there is a distinct possibility that some loss will be sustained if deficiencies are not corrected.