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GUARANTEES AND COMMITMENTS | 12 Months Ended
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Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract] |
GUARANTEES AND COMMITMENTS | GUARANTEES AND COMMITMENTS Farmer Mac offers two credit enhancement alternatives to direct loan purchases that allow approved lenders the ability to retain the cash flow benefits of their loans and increase their liquidity and lending capacity: (1) Farmer Mac Guaranteed Securities and (2) LTSPCs, both of which are available through each of the Agricultural Finance and Rural Infrastructure Finance lines of business. The contractual terms of Farmer Mac's off-balance sheet guarantees and LTSPCs range from less than 1 year to 30 years. However, the actual term of each guarantee or LTSPC may be significantly less than the contractual term based on the prepayment characteristics of the related loans. Farmer Mac's maximum potential exposure under these off-balance sheet guarantees and LTSPCs is the unpaid principal balance of the underlying loans. Farmer Mac's maximum potential exposure was $4.1 billion and $3.9 billion as of December 31, 2023 and 2022, respectively. The maximum exposure from these guarantees and LTSPCs is not representative of the actual loss Farmer Mac is likely to incur, based on historical loss experience. In the event Farmer Mac was required to make payments under its guarantees or LTSPCs, Farmer Mac would have the right to enforce the terms of the loans, and in the event of default, would have access to the underlying collateral. For information on Farmer Mac's methodology for determining the reserve for losses for its financial guarantees, see Note 2(h). The following table presents changes in Farmer Mac's guarantee and commitment obligations in the consolidated balance sheets for the years ended December 31, 2023, 2022, and 2021: Table 12.1
| For the Years Ended December 31,
| 2023 |  | 2022 |  | 2021
| (in thousands)
Beginning balance, January 1 | $ | 46,582 |  |  | $ | 43,926 |  |  | $ | 35,535 |
Additions to the guarantee and commitment obligation(1) | 5,312 |  |  | 8,569 |  |  | 15,648 |
Amortization of the guarantee and commitment obligation | (4,331) |  |  | (5,913) |  |  | (7,257) |
Ending balance, December 31 | $ | 47,563 |  |  | $ | 46,582 |  |  | $ | 43,926 |
(1)Represents the fair value of the guarantee and commitment obligation at inception. Off-Balance Sheet Farmer Mac Guaranteed Securities The following table presents the maximum principal amount of potential undiscounted future payments that Farmer Mac could be required to make under all off-balance sheet Farmer Mac Guaranteed Securities as of December 31, 2023 and 2022, not including offsets provided by any recourse provisions, recoveries from third parties, or collateral for the underlying loans: Table 12.2
Outstanding Balance of Off-Balance Sheet Farmer Mac Guaranteed Securities
| As of December 31, 2023 |  | As of December 31, 2022
| (in thousands)
Agricultural Finance |  |  |
Farmer Mac Guaranteed Securities | $ | 452,602 |  |  | $ | 500,953 |
Rural Infrastructure Finance |  |  |
Farmer Mac Guaranteed Securities | — |  |  | 1,169 |
Total off-balance sheet Farmer Mac Guaranteed Securities | $ | 452,602 |  |  | $ | 502,122 |
Eligible loans and other eligible assets may be placed into trusts that are used as vehicles for the securitization of the transferred assets and the Farmer Mac-guaranteed beneficial interests in the trusts are sold to investors. The following table summarizes the significant cash flows received from and paid to trusts used for Farmer Mac securitizations: Table 12.3
| For the Year Ended December 31,
| 2023 |  | 2022 |  | 2021
| (in thousands)
Proceeds from new securitizations | $ | 222,188 |  |  | $ | 357,841 |  |  | $ | 291,393 |
Guarantee fees received | 1,620 |  |  | 1,852 |  |  | 1,029 |
Farmer Mac presents a liability for its obligation to stand ready under its guarantee in "Guarantee and commitment obligation" on the consolidated balance sheets. The following table presents the liability and the weighted-average remaining maturity of all loans underlying off-balance sheet Farmer Mac Guaranteed Securities: Table 12.4
| As of December 31, 2023 |  | As of December 31, 2022
| (dollars in thousands)
Guarantee and commitment obligation | $ | 5,969 |  |  | $ | 6,461 |
Weighted average remaining maturity: |  |  |
Farmer Mac Guaranteed Securities | 21.9 years |  | 21.4 years
AgVantage Securities | 0.0 years |  | 2.0 years
Long-Term Standby Purchase Commitments Farmer Mac has recorded a liability for its obligation to stand ready under the commitment in the guarantee and commitment obligation on the consolidated balance sheets. The following table presents the liability, the maximum principal amount of potential undiscounted future payments that Farmer Mac could be requested to make under all LTSPCs, not including offsets provided by any recourse provisions, recoveries from third parties, or collateral for the underlying loans, as well as the weighted-average remaining maturity of all loans underlying LTSPCs: Table 12.5
| As of December 31, 2023 |  | As of December 31, 2022
| (dollars in thousands)
Guarantee and commitment obligation(1) | $ | 41,594 |  |  | $ | 40,121 |
Maximum principal amount | 3,680,333 |  |  | 3,423,155 |
Weighted-average remaining maturity | 14.5 years |  | 15.3 years
(1) Relates to LTSPCs issued or modified on or after January 1, 2003. Commitments Farmer Mac enters into mandatory and optional delivery commitments to purchase loans. Most loan purchase commitments entered into by Farmer Mac are mandatory commitments, in which Farmer Mac charges a fee to extend or cancel the commitment. As of December 31, 2023 and 2022, commitments to purchase Agricultural Finance loans and USDA Guarantees totaled $31.0 million and $9.9 million, respectively, all of which were mandatory commitments. Farmer Mac also has unfunded commitments and letters of credit under which Farmer Mac earns a nominal fee for the obligation to provide funding at a future date. As of December 31, 2023 and 2022, Farmer Mac had $261.2 million and $130.2 million of these unfunded commitments and letters of credit under the Agricultural Finance and Rural Infrastructure lines of business. Any optional loan purchase commitments are sold forward under optional commitments to deliver Farmer Mac Guaranteed Securities that may be canceled by Farmer Mac without penalty. Reserve for Losses - LTSPCs and Farmer Mac Guaranteed Securities The following table is a summary, by asset type, of the reserve for losses as of December 31, 2023 and 2022: Table 12.6
| December 31, 2023 |  | December 31, 2022
| Reserve for Losses |  | Reserve for Losses
| (in thousands)
Agricultural Finance | $ | 1,471 |  |  | $ | 819 |
Rural Infrastructure Finance | 240 |  |  | 614 |
Total | $ | 1,711 |  |  | $ | 1,433 |
The following is a summary of the changes in the reserve for losses for the three-year period ended December 31, 2023: Table 12.7
| Agricultural Finance loans |  | Rural Infrastructure Finance loans |  |  |  |
| Reserve for Losses |  | Reserve for Losses |  |  |  |
| (in thousands)
Balance as of December 31, 2020(1) | $ | 2,097 |  |  | $ | 1,180 |  |  |  |  |
Release of losses | (1,029) |  |  | (298) |  |  |  |  |
Balance as of December 31, 2021 | $ | 1,068 |  |  | $ | 882 |  |  |  |  |
Release of losses | (249) |  |  | (268) |  |  |  |  |
Balance as of December 31, 2022 | $ | 819 |  |  | $ | 614 |  |  |  |  |
Release of losses | 652 |  |  | (374) |  |  |  |  |
Balance as of December 31, 2023 | $ | 1,471 |  |  | $ | 240 |  |  |  |  |
(1) Reserve for losses reflects the adoption of ASU 2016-13, "Financial Instruments - Credit Losses," in first quarter 2020. The provision for the reserve for losses in the Agricultural Finance LTSPC portfolio recorded during the year ended December 31, 2023 was primarily due to an updated estimate of expected losses based on additional available industry data. The release from the reserve for losses in the Rural Infrastructure Finance LTSPC portfolio recorded during the year ended December 31, 2023 was primarily due to an updated estimate of expected losses based on additional available loss-given-default industry data. The release from the reserve for losses in the Rural Infrastructure Finance LTSPC portfolio recorded during the year ended December 31, 2022 was primarily due to decreased volume and ratings upgrades. The release from the reserve for losses in the Agricultural Finance LTSPC portfolio was primarily due to ratings upgrades. The release from the reserve for losses in both the Agricultural Finance and Rural Infrastructure Finance LTSPC and Farmer Mac Guaranteed portfolios recorded during the year ended December 31, 2021 was primarily due to improving economic factor forecasts and ratings upgrades. The following table presents the unpaid principal balances by delinquency status of Agricultural Finance and Rural Infrastructure loans underlying LTSPCs and Farmer Mac Guaranteed Securities as of December 31, 2023 and 2022: Table 12.8
| As of December 31, 2023
| Current |  | 30-59 Days |  | 60-89 Days |  | 90 Days and Greater(1) |  | Total Past Due |  | Total Loans
| (in thousands)
Agricultural Finance: | $ | 3,390,918 |  |  | $ | 2,776 |  |  | $ | 2,366 |  |  | $ | 1,784 |  |  | $ | 6,926 |  |  | $ | 3,397,844 |
Rural Infrastructure Finance: | 535,013 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 535,013 |
Total | $ | 3,925,931 |  |  | $ | 2,776 |  |  | $ | 2,366 |  |  | $ | 1,784 |  |  | $ | 6,926 |  |  | $ | 3,932,857 |
(1)Includes loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs that are 90 days of 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.
| As of December 31, 2022
| Current |  | 30-59 Days |  | 60-89 Days |  | 90 Days and Greater(1) |  | Total Past Due |  | Total Loans
| (in thousands)
Agricultural Finance: | $ | 3,174,939 |  |  | $ | 11,614 |  |  | $ | 622 |  |  | $ | 3,817 |  |  | $ | 16,053 |  |  | $ | 3,190,992 |
Rural Infrastructure Finance: | 523,192 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 523,192 |
Total | $ | 3,698,131 |  |  | $ | 11,614 |  |  | $ | 622 |  |  | $ | 3,817 |  |  | $ | 16,053 |  |  | $ | 3,714,184 |
(1)Includes loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs that are 90 days of 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. Credit Quality Indicators The following tables present credit quality indicators related to Agricultural Finance and Rural Infrastructure loans underlying LTSPCs and Farmer Mac Guaranteed Securities as of December 31, 2023 and 2022, by year of origination: Table 12.9
| As of December 31, 2023
| Year of Origination: |  |  |  |
| 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Revolving Loans - Amortized Cost Basis |  | Total
| (in thousands)
Agricultural Finance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Internally Assigned Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acceptable | $ | 169,429 |  |  | $ | 246,441 |  |  | $ | 515,396 |  |  | $ | 534,395 |  |  | $ | 264,815 |  |  | $ | 1,185,811 |  |  | $ | 391,335 |  |  | $ | 3,307,622 |
Special mention(1) | — |  |  | 71 |  |  | 2,466 |  |  | 872 |  |  | 531 |  |  | 44,631 |  |  | 8,565 |  |  | 57,136 |
Substandard(2) | — |  |  | — |  |  | — |  |  | 131 |  |  | 1,536 |  |  | 26,328 |  |  | 5,091 |  |  | 33,086 |
Total | $ | 169,429 |  |  | $ | 246,512 |  |  | $ | 517,862 |  |  | $ | 535,398 |  |  | $ | 266,882 |  |  | $ | 1,256,770 |  |  | $ | 404,991 |  |  | $ | 3,397,844 |
For the Year Ended December 31, 2023: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
(1)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured. (2)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, 2023
| Year of Origination: |  |  |  |
| 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Revolving Loans - Amortized Cost Basis |  | Total
| (in thousands)
Rural Infrastructure Finance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Internally Assigned Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acceptable | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 419,190 |  |  | $ | 115,823 |  |  | $ | 535,013 |
Special mention(1) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Substandard(2) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 419,190 |  |  | $ | 115,823 |  |  | $ | 535,013 |
For the Year Ended December 31, 2023: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
(1)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured. (2)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: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Internally Assigned Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acceptable | $ | 202,998 |  |  | $ | 496,269 |  |  | $ | 535,798 |  |  | $ | 254,293 |  |  | $ | 207,379 |  |  | $ | 1,107,834 |  |  | $ | 296,508 |  |  | $ | 3,101,079 |
Special mention(1) | — |  |  | 1,319 |  |  | 1,778 |  |  | — |  |  | 1,198 |  |  | 42,680 |  |  | 3,205 |  |  | 50,180 |
Substandard(2) | — |  |  | — |  |  | 176 |  |  | — |  |  | 3,588 |  |  | 32,597 |  |  | 3,372 |  |  | 39,733 |
Total | $ | 202,998 |  |  | $ | 497,588 |  |  | $ | 537,752 |  |  | $ | 254,293 |  |  | $ | 212,165 |  |  | $ | 1,183,111 |  |  | $ | 303,085 |  |  | $ | 3,190,992 |
For the Year Ended December 31, 2022: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
(1)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured. (2)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: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Internally Assigned Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acceptable | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 470,659 |  |  | $ | 52,533 |  |  | $ | 523,192 |
Special mention(1) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Substandard(2) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 470,659 |  |  | $ | 52,533 |  |  | $ | 523,192 |
For the Year Ended December 31, 2022: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
(1)Assets in the "Special mention" category generally have potential weaknesses due to performance issues but are currently considered to be adequately secured. (2)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.

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