FEDERAL AGRICULTURAL MORTGAGE CORP (Form: 10-Q, Received: 11/09/2015 08:23:25)

As filed with the Securities and Exchange Commission on November 9, 2015

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

Commission File Number 001-14951

____________________________________________________________

FEDERAL AGRICULTURAL MORTGAGE CORPORATION

(Exact name of registrant as specified in its charter)



Federally chartered instrumentality of the United States		52-1578738
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

1999 K Street, N.W., 4th Floor, Washington, D.C.		20006
(Address of principal executive offices)		(Zip code)

(202) 872-7700

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	o	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of November 2, 2015 , the registrant had outstanding 1,030,780 shares of Class A Voting Common Stock, 500,301 shares of Class B Voting Common Stock and 9,347,047 shares of Class C Non-Voting Common Stock.

Table of Contents



PART I - Financial Information		3
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Operations	5
	Consolidated Statements of Comprehensive Income	6
	Consolidated Statements of Equity	7
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements	9
	1. Accounting Policies	9
	2. Investment Securities	15
	3. Farmer Mac Guaranteed Securities and USDA Securities	19
	4. Financial Derivatives	21
	5. Loans and Allowance for Losses	26
	6. Off-Balance Sheet Guarantees and Long-Term Standby Purchase Commitments	38
	7. Equity	39
	8. Fair Value Disclosures	40
	9. Business Segment Reporting	50
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	55
	Forward-Looking Statements	55
	Overview	56
	Results of Operations	58
	Outlook	75
	Balance Sheet Review	78
	Off-Balance Sheet Arrangements	78
	Risk Management	78
	Liquidity and Capital Resources	95
	Regulatory Matters	97
	Other Matters	98
	Supplemental Information	99
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	104
Item 4.	Controls and Procedures	104
PART II - Other Information		106
Item 1.	Legal Proceedings	105
Item 1A.	Risk Factors	105
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	105
Item 3.	Defaults Upon Senior Securities	106
Item 4.	Mine Safety Disclosures	106
Item 5.	Other Information	106
Item 6.	Exhibits	107
Signatures		108

Table of Contents

PART I

Item 1. Financial Statements

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FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)



	As of
	September 30, 2015			December 31, 2014
	(in thousands)
Assets:
Cash and cash equivalents	$	1,516,536		$	1,363,387
Investment securities:
Available-for-sale, at fair value	2,031,629			1,938,499
Trading, at fair value	550			689
Total investment securities	2,032,179			1,939,188
Farmer Mac Guaranteed Securities:
Available-for-sale, at fair value	4,156,670			3,659,281
Held-to-maturity, at amortized cost	1,276,153			1,794,620
Total Farmer Mac Guaranteed Securities	5,432,823			5,453,901
USDA Securities:
Available-for-sale, at fair value	1,854,422			1,731,222
Trading, at fair value	31,936			40,310
Total USDA Securities	1,886,358			1,771,532
Loans:
Loans held for investment, at amortized cost	3,148,742			2,833,461
Loans held for investment in consolidated trusts, at amortized cost	612,567			692,478
Allowance for loan losses	(4,775		)	(5,864		)
Total loans, net of allowance	3,756,534			3,520,075
Real estate owned, at lower of cost or fair value	1,402			421
Financial derivatives, at fair value	7,027			4,177
Interest receivable (includes $4,626 and $9,509, respectively, related to consolidated trusts)	73,963			106,874
Guarantee and commitment fees receivable	40,160			39,462
Deferred tax asset, net	48,409			33,391
Prepaid expenses and other assets	58,454			55,413
Total Assets	$	14,853,845		$	14,287,821

Liabilities and Equity:
Liabilities:
Notes payable:
Due within one year	$	8,280,087		$	7,353,953
Due after one year	5,217,307			5,471,186
Total notes payable	13,497,394			12,825,139
Debt securities of consolidated trusts held by third parties	612,994			424,214
Financial derivatives, at fair value	94,880			84,844
Accrued interest payable (includes $3,750 and $5,145, respectively, related to consolidated trusts)	37,830			48,355
Guarantee and commitment obligation	38,253			37,925
Accounts payable and accrued expenses	26,450			81,252
Reserve for losses	5,498			4,263
Total Liabilities	14,313,299			13,505,992
Commitments and Contingencies (Note 6)
Equity:
Preferred stock:
Series A, par value $25 per share, 2,400,000 shares authorized, issued and outstanding	58,333			58,333
Series B, par value $25 per share, 3,000,000 shares authorized, issued and outstanding	73,044			73,044
Series C, par value $25 per share, 3,000,000 shares authorized, issued and outstanding	73,382			73,382
Common stock:
Class A Voting, $1 par value, no maximum authorization, 1,030,780 shares outstanding	1,031			1,031
Class B Voting, $1 par value, no maximum authorization, 500,301 shares outstanding	500			500
Class C Non-Voting, $1 par value, no maximum authorization, 9,412,379 shares and 9,406,267 shares outstanding, respectively	9,412			9,406
Additional paid-in capital	117,077			113,559
Accumulated other comprehensive (loss)/income, net of tax	(17,814		)	15,533
Retained earnings	225,386			201,013
Total Stockholders' Equity	540,351			545,801
Non-controlling interest	195			236,028
Total Equity	540,546			781,829
Total Liabilities and Equity	$	14,853,845		$	14,287,821

The accompanying notes are an integral part of these consolidated financial statements.

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FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)



	For the Three Months Ended						For the Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands, except per share amounts)
Interest income:
Investments and cash equivalents	$	3,185		$	4,507		$	9,144		$	14,845
Farmer Mac Guaranteed Securities and USDA Securities	34,002			32,532			101,608			98,335
Loans	29,731			26,371			86,509			67,157
Total interest income	66,918			63,410			197,261			180,337
Total interest expense	34,735			48,886			102,425			126,114
Net interest income	32,183			14,524			94,836			54,223
Release of/(provision for) allowance for loan losses	1,164			(511		)	978			499
Net interest income after release of/(provision for) allowance for loan losses	33,347			14,013			95,814			54,722
Non-interest income:
Guarantee and commitment fees	3,532			3,644			10,297			11,131
(Losses)/gains on financial derivatives and hedging activities	(9,568		)	808			939			(12,468		)
(Losses)/gains on trading securities	(8		)	16,369			524			24,772
Gains/(losses) on sale of available-for-sale investment securities	3			(396		)	9			(238		)
(Losses)/gains on sale of real estate owned	—			—			(1		)	165
Other income	1,060			502			1,933			794
Non-interest (loss)/income	(4,981		)	20,927			13,701			24,156
Non-interest expense:
Compensation and employee benefits	5,236			4,693			16,662			14,038
General and administrative	3,676			3,123			9,873			9,205
Regulatory fees	600			593			1,800			1,781
Real estate owned operating costs, net	48			1			47			62
Provision for/(release of) reserve for losses	861			(1,315		)	1,235			(2,188		)
Non-interest expense	10,421			7,095			29,617			22,898
Income before income taxes	17,945			27,845			79,898			55,980
Income tax expense	6,327			7,564			24,327			55
Net income	11,618			20,281			55,571			55,925
Less: Net loss/(income) attributable to non-controlling interest	36			(5,412		)	(5,199		)	(16,778		)
Net income attributable to Farmer Mac	11,654			14,869			50,372			39,147
Preferred stock dividends	(3,295		)	(3,283		)	(9,886		)	(6,543		)
Loss on retirement of preferred stock	—			—			(8,147		)	—
Net income attributable to common stockholders	$	8,359		$	11,586		$	32,339		$	32,604

Earnings per common share and dividends:
Basic earnings per common share	$	0.76		$	1.06		$	2.94		$	2.99
Diluted earnings per common share	$	0.74		$	1.02		$	2.85		$	2.87
Common stock dividends per common share	$	0.16		$	0.14		$	0.48		$	0.42

The accompanying notes are an integral part of these consolidated financial statements.

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FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)



	For the Three Months Ended						For the Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands)
Net income	$	11,618		$	20,281		$	55,571		$	55,925
Other comprehensive income, net of tax:
Unrealized holding (losses)/gains on available-for-sale securities ⁽¹⁾	(34,846		)	2,070			(21,790		)	46,612
Unrealized (losses)/gains on cash flow hedges ⁽²⁾	(2,077		)	30			(1,308		)	(99		)
Less reclassification adjustments included in:
(Losses)/gains on financial derivatives and hedging activities ⁽³⁾	(3,275		)	(3,131		)	(9,654		)	(9,338		)
Gains/(losses) on sale of available-for-sale investment securities ⁽⁴⁾	(2		)	258			(6		)	155
Other income ⁽⁵⁾	(347		)	(70		)	(589		)	(48		)
Other comprehensive loss	(40,547		)	(843		)	(33,347		)	37,282
Comprehensive (loss)/income	(28,929		)	19,438			22,224			93,207
Less: Comprehensive loss/(income) attributable to non-controlling interest	36			(5,412		)	(5,199		)	(16,778		)
Comprehensive (loss)/income attributable to Farmer Mac	$	(28,893	)	$	14,026		$	17,025		$	76,429


⁽¹⁾	Presented net of income tax benefit of $18.8 million and expense of $1.1 million , for the three months ended September 30, 2015 and 2014 , respectively, and income tax benefit of $11.7 million and expense of $25.1 million for the nine months ended September 30, 2015 and 2014 , respectively.


⁽²⁾	Presented net of income tax benefit of $1.1 million and expense of $16,000 for the three months ended September 30, 2015 and 2014 , respectively, and income tax benefit of $0.7 million and $0.1 million for the nine months ended September 30, 2015 and 2014 , respectively.


⁽³⁾	Relates to the amortization of the unrealized gains on the hedged items prior to application of hedge accounting. Presented net of income tax benefit of $1.8 million and $1.7 million for the three months ended September 30, 2015 and 2014 , respectively, and tax benefit of $5.2 million and $5.0 million for the nine months ended September 30, 2015 and 2014 , respectively.


⁽⁴⁾	Represents realized gains on sales of available-for-sale investment securities. Presented net of income tax benefit of $1,000 and expense of $0.1 million for the three months ended September 30, 2015 and 2014 , respectively, and income tax benefit of $3,000 and expense of $0.1 million for the nine months ended September 30, 2015 and 2014 , respectively.


⁽⁵⁾	Represents amortization of deferred gains related to certain available-for-sale USDA Securities and Farmer Mac Guaranteed USDA Securities. Presented net of income tax benefit of $0.2 million and $38,000 for the three months ended September 30, 2015 and 2014 , respectively, and income tax benefit of $0.3 million and $26,000 for the nine months ended September 30, 2015 and 2014 , respectively.

The accompanying notes are an integral part of these consolidated financial statements.

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FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited)



	For the Nine Months Ended
	September 30, 2015					September 30, 2014
	Shares		Amount			Shares	Amount
	(in thousands)
Preferred stock:
Balance, beginning of period	8,400		$	204,759		2,400	$	58,333
Issuance of Series B preferred stock	—		—			3,000	73,061
Issuance of Series C preferred stock	—		—			3,000	$	73,379
Balance, end of period	8,400		$	204,759		8,400	$	204,773
Common stock:
Balance, beginning of period	10,937		$	10,937		10,886	$	10,886
Issuance of Class C common stock	110		110			50	50
Repurchase of Class C common stock	(104	)	(104		)	—	—
Balance, end of period	10,943		$	10,943		10,936	$	10,936
Additional paid-in capital:
Balance, beginning of period			$	113,559			$	110,722
Stock-based compensation expense			2,457				2,182
Issuance of Class C common stock			10				16
Stock-based award activity			1,051				(59		)
Balance, end of period			$	117,077			$	112,861
Retained earnings:
Balance, beginning of period			$	201,013			$	168,877
Net income attributable to Farmer Mac			50,372				39,147
Cash dividends:
Preferred stock, Series A ($1.1016 per share in 2015 and 2014)			(2,644		)		(2,644		)
Preferred stock, Series B ($1.2891 per share in 2015 and $0.8330 per share in 2014)			(3,867		)		(2,649		)
Preferred stock, Series C ($1.1250 per share in 2015 and $0.4167 per share in 2014)			(3,375		)		(1,250		)
Common stock ($0.48 per share in 2015 and $0.42 per share in 2014)			(5,280		)		(4,584		)
Repurchase of Class C common stock			(2,686		)		—
Loss on retirement of preferred stock, Farmer Mac II LLC			(8,147		)		—
Balance, end of period			$	225,386			$	196,897
Accumulated other comprehensive income:
Balance, beginning of period			$	15,533			$	(16,202	)
Other comprehensive income, net of tax			(33,347		)		37,282
Balance, end of period			$	(17,814	)		$	21,080
Total Stockholders' Equity			$	540,351			$	546,547
Non-controlling interest:
Balance, beginning of period			$	236,028			$	241,853
Redemption of Farmer Mac II LLC preferred stock			(235,853		)		(6,000		)
Investment in Contour - non-controlling interest			175				—
Net loss attributable to non-controlling interest			(155		)		—
Balance, end of period			$	195			$	235,853
Total Equity			$	540,546			$	782,400

The accompanying notes are an integral part of these consolidated financial statements.

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FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)



	For the Nine Months Ended
	September 30, 2015			September 30, 2014
	(in thousands)
Cash flows from operating activities:
Net income	$	55,571		$	55,925
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of deferred gains, premiums, and discounts on loans, investments, Farmer Mac Guaranteed Securities, and USDA Securities	2,199			16,624
Amortization of debt premiums, discounts and issuance costs	9,601			7,384
Net change in fair value of trading securities, hedged assets, and financial derivatives	(8,705		)	3,537
(Gains)/losses on sale of available-for-sale investment securities	(9		)	238
Losses/(gains) on sale of real estate owned	1			(165		)
Total provision for/(release of) losses	257			(2,687		)
Deferred income taxes	2,182			(16,340		)
Stock-based compensation expense	2,457			2,183
Proceeds from repayment of trading investment securities	544			541
Proceeds from repayment of loans purchased as held for sale	82,864			95,194
Net change in:
Interest receivable	32,911			43,124
Guarantee and commitment fees receivable	(698		)	381
Other assets	(2,369		)	(19,179		)
Securities sold, not yet purchased	—			1,657,901
Accrued interest payable	(10,525		)	(18,919		)
Other liabilities	(864		)	4,910
Net cash provided by operating activities	165,417			1,830,652
Cash flows from investing activities:
Net change in securities purchased under agreements to resell	—			(1,630,427		)
Purchases of available-for-sale investment securities	(1,282,474		)	(1,171,063		)
Purchases of Farmer Mac Guaranteed Securities and USDA Securities	(1,093,737		)	(1,074,019		)
Purchases of loans held for investment	(565,829		)	(567,774		)
Purchases of defaulted loans	(2,244		)	(440		)
Proceeds from repayment of available-for-sale investment securities	1,111,093			894,475
Proceeds from repayment of Farmer Mac Guaranteed Securities and USDA Securities	901,327			1,098,901
Proceeds from repayment of loans purchased as held for investment	248,989			303,905
Proceeds from sale of available-for-sale investment securities	83,735			770,149
Proceeds from sale of Farmer Mac Guaranteed Securities	231,242			169,820
(Payments)/proceeds from sale of real estate owned	(1		)	1,224
Net cash used in investing activities	(367,899		)	(1,205,249		)
Cash flows from financing activities:
Proceeds from issuance of discount notes	68,066,267			32,008,889
Proceeds from issuance of medium-term notes	3,406,037			2,644,707
Payments to redeem discount notes	(66,933,948		)	(33,360,658		)
Payments to redeem medium-term notes	(3,875,715		)	(2,121,000		)
Excess tax benefits related to stock-based awards	154			57
Payments to third parties on debt securities of consolidated trusts	(42,449		)	(34,080		)
Proceeds from common stock issuance	1,685			209
Proceeds from Series B Preferred stock issuance	—			73,061
Proceeds from Series C Preferred stock issuance	—			73,379
Common stock repurchased	(1,994		)	—
Investment in Contour	175			—
Redemption of Farmer Mac II LLC Preferred Stock	(244,000		)	(6,000		)
Dividends paid - Non-controlling interest - preferred stock	(5,415		)	(16,778		)
Dividends paid on common and preferred stock	(15,166		)	(8,832		)
Net cash provided by/(used in) financing activities	355,631			(747,046		)
Net increase/(decrease) in cash and cash equivalents	153,149			(121,643		)
Cash and cash equivalents at beginning of period	1,363,387			749,313
Cash and cash equivalents at end of period	$	1,516,536		$	627,670

The accompanying notes are an integral part of these consolidated financial statements.

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FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


1.	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, 2014 consolidated balance sheet presented in this report has been derived from Farmer Mac's audited 2014 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 2014 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, 2014 filed with the SEC on March 16, 2015. That Form 10-K describes Farmer Mac's significant accounting policies, which include its policies on Principles of Consolidation; Cash and Cash Equivalents and Statements of Cash Flows; Transfers of Financial Assets and Liabilities; Investment Securities, Farmer Mac Guaranteed Securities, and USDA Securities; Loans; Securitization of Loans; Real Estate Owned; Financial Derivatives; Notes Payable; Allowance for Loan Losses and Reserve for Losses; Earnings Per Common Share; Income Taxes; Stock-Based Compensation; Comprehensive Income; Long-Term Standby Purchase Commitments ("LTSPCs"); Fair Value Measurement; and Consolidation of Variable Interest Entities ("VIEs"). 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 and nine month periods ended September 30, 2015 .

Principles of Consolidation

The consolidated financial statements include the accounts of Farmer Mac and its three subsidiaries: (1) Farmer Mac Mortgage Securities Corporation ("FMMSC"), whose principal activities are to facilitate the purchase and issuance of Farmer Mac Guaranteed Securities; (2) Farmer Mac II LLC, whose principal activity is the operation of substantially all of the business related to the USDA Guarantees line of business – primarily the acquisition of USDA Securities; and (3) Contour Valuation Services, LLC, whose principal activity is to provide appraisal services related to agricultural real estate. All inter-company balances and transactions have been eliminated in consolidation. The consolidated financial statements also include the accounts of VIEs in which Farmer Mac determined itself to be the primary beneficiary.

Table of Contents

The following tables present, by line of business, details about the consolidation of VIEs:

Table 1.1



	Consolidation of Variable Interest Entities
	As of September 30, 2015
	Farm & Ranch		USDA Guarantees		Rural Utilities		Institutional Credit		Corporate		Total
	(in thousands)
On-Balance Sheet:
Consolidated VIEs:
Loans held for investment in consolidated trusts, at amortized cost	$	612,567	$	—	$	—	$	—	$	—	$	612,567
Debt securities of consolidated trusts held by third parties ⁽¹⁾	612,994		—		—		—		—		612,994
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Carrying value ⁽²⁾	—		30,708		—		31,833		—		62,541
Maximum exposure to loss ⁽³⁾	—		31,218		—		30,000		—		61,218
Investment securities:
Carrying value ⁽⁴⁾	—		—		—		—		539,828		539,828
Maximum exposure to loss ⁽³⁾⁽⁴⁾	—		—		—		—		538,462		538,462
Off-Balance Sheet:
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Maximum exposure to loss ⁽³⁾⁽⁵⁾	553,469		10,712		—		970,000		—		1,534,181


⁽¹⁾	Includes borrower remittances of $0.4 million which have not been passed through to third party investors as of September 30, 2015 .


⁽²⁾	Includes $0.5 million of unamortized premiums and discounts and fair value adjustments related to the USDA Guarantees line of business. Includes fair value adjustments related to the Institutional Credit line of business of $1.8 million .


⁽³⁾	Farmer Mac uses unpaid principal balance and outstanding face amount of investment securities to represent maximum exposure to loss.


⁽⁴⁾	Includes auction-rate certificates, asset-backed securities, and government-sponsored enterprise ("GSE")-guaranteed mortgage-backed securities.


⁽⁵⁾	The amount under the Farm & Ranch line of business relates to unconsolidated trusts where Farmer Mac determined it was not the primary beneficiary due to shared power with an unrelated party.

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	Consolidation of Variable Interest Entities
	As of December 31, 2014
	Farm & Ranch		USDA Guarantees		Rural Utilities		Institutional Credit		Corporate		Total
	(in thousands)
On-Balance Sheet:
Consolidated VIEs:
Loans held for investment in consolidated trusts, at amortized cost ⁽¹⁾	$	421,355	$	—	$	271,123	$	—	$	—	$	692,478
Debt securities of consolidated trusts held by third parties ⁽²⁾	424,214		—		—		—		—		424,214
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Carrying value ⁽³⁾	—		27,620		—		32,415		—		60,035
Maximum exposure to loss ⁽⁴⁾	—		27,832		—		30,000		—		57,832
Investment securities:
Carrying value ⁽⁵⁾	—		—		—		—		409,657		409,657
Maximum exposure to loss ⁽⁴⁾⁽⁵⁾	—		—		—		—		412,690		412,690
Off-Balance Sheet:
Unconsolidated VIEs:
Farmer Mac Guaranteed Securities:
Maximum exposure to loss ⁽⁴⁾⁽⁶⁾	636,086		13,978		—		970,000		—		1,620,064


⁽¹⁾	Includes unamortized premiums related to the Rural Utilities line of business of $3.7 million .


⁽²⁾	Includes borrower remittances of $2.9 million which have not been passed through to third party investors as of December 31, 2014.


⁽³⁾	Includes $0.2 million of unamortized premiums and discounts and fair value adjustments related to the USDA Guarantees line of business. Includes fair value adjustments related to the Institutional Credit line of business of $2.4 million .


⁽⁴⁾	Farmer Mac uses unpaid principal balance and the outstanding face amount of investment securities to represent maximum exposure to loss.


⁽⁵⁾	Includes auction-rate certificates, asset-backed securities, and government-sponsored enterprise ("GSE")-guaranteed mortgage-backed securities.


⁽⁶⁾	The amount under the Farm & Ranch line of business relates to unconsolidated trusts where Farmer Mac determined it was not the primary beneficiary due to shared power with an unrelated party.


(a)	Statements of Cash Flows

The following table sets forth information regarding certain non-cash transactions for the nine months ended September 30, 2015 and 2014 :

Table 1.2



	For the Nine Months Ended
	September 30, 2015		September 30, 2014
	(in thousands)
Non-cash activity:
Loans acquired and securitized as Farmer Mac Guaranteed Securities	$	231,242	$	169,820
Consolidation of Farm & Ranch Guaranteed Securities from off-balance sheet to loans held for investment in consolidated trusts and to debt securities of consolidated trusts held by third parties	231,242		172,268
Purchases of securities - traded, not yet settled	15,000		—
Issuance costs on the retirement of Farmer Mac II LLC Preferred Stock	8,147		—
Unsettled common stock repurchases	796		—
Transfers of available-for-sale Farmer Mac Guaranteed Securities to held-to-maturity	—		1,612,086

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On January 1, 2014, Farmer Mac transferred $1.6 billion of Farmer Mac Guaranteed Securities from available-for-sale to held-to-maturity because Farmer Mac determined it has the ability and intent to hold these securities until maturity or payoff. Farmer Mac transferred these securities at fair value which reflected an unrealized holding gain of $22.3 million . Farmer Mac accounts for held-to-maturity securities at amortized cost. The unrealized holding gain is being amortized out of accumulated other comprehensive income over the remaining life of the transferred securities.

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(b)	Earnings Per Common Share

Basic earnings per common share ("EPS") is based on the weighted-average number of shares of common stock outstanding. Diluted earnings per common share is based on the weighted-average number of shares of common stock outstanding adjusted to include all potentially dilutive common stock options, stock appreciation rights ("SARs"), and non-vested restricted stock awards. The following schedule reconciles basic and diluted EPS for the three and nine months ended September 30, 2015 and 2014 :

Table 1.3



	For the Three Months Ended
	September 30, 2015						September 30, 2014
	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	$	8,359	11,028	$	0.76		$	11,586	10,930	$	1.06
Effect of dilutive securities ⁽¹⁾ :
Stock options, SARs and restricted stock	—		243	(0.02		)	—		442	(0.04		)
Diluted EPS	$	8,359	11,271	$	0.74		$	11,586	11,372	$	1.02

⁽¹⁾

For the three months ended September 30, 2015 and 2014 , stock options and SARs of 476,699 and 118,583 , 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 September 30, 2015 and 2014 , contingent shares of non-vested restricted stock of 45,034 and 42,514 , respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because performance conditions have not yet been met.



	For the Nine Months Ended
	September 30, 2015						September 30, 2014
	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	$	32,339	10,992	$	2.94		$	32,604	10,914	$	2.99
Effect of dilutive securities ⁽¹⁾ :
Stock options, SARs and restricted stock	—		355	(0.09		)	—		446	(0.12		)
Diluted EPS	$	32,339	11,347	$	2.85		$	32,604	11,360	$	2.87

⁽¹⁾

For the nine months ended September 30, 2015 and 2014 , stock options and SARs of 302,598 and 91,011 , respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because they were anti-dilutive. For the nine months ended September 30, 2015 and 2014 , contingent shares of non-vested restricted stock of 40,194 and 38,874 , respectively, were outstanding but not included in the computation of diluted earnings per share of common stock because performance conditions have not yet been met.

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In February 2015, the FASB issued ASU 2015-02, "Amendments to the Consolidation Analysis." This update modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities and eliminates the presumption that a general partner should consolidate a limited partnership. It also affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for interim and annual periods beginning after December 15, 2015. The adoption of the new guidance will not have a material effect on Farmer Mac's financial position, results of operations, or cash flows.


(d)	Reclassifications

Beginning January 1, 2015, Farmer Mac classified all of the income from Farmer Mac Guaranteed Securities that it holds in its portfolio as interest income. Prior to January 1, 2015, Farmer Mac classified a portion of the income from those securities, $2.5 million and $8.0 million for the three and nine months ended September 30, 2014 , respectively, as guarantee and commitment fees. This change in classification does not affect the timing or amount of income recognized from these securities. The corresponding guarantee and commitment fee receivable balance as of December 31, 2014 also was reclassified to accrued interest receivable. Certain reclassifications of prior period information, including the aforementioned change, were made to conform to the current period presentation.

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2.	INVESTMENT SECURITIES

The following tables set forth information about Farmer Mac's investment securities as of September 30, 2015 and December 31, 2014 :

Table 2.1



	As of September 30, 2015
	Amount Outstanding		Unamortized Premium/(Discount)			Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	46,500	$	—		$	46,500	$	—	$	(1,576	)	$	44,924
Floating rate asset-backed securities	81,868		(286		)	81,582		44		(508		)	81,118
Floating rate corporate debt securities	10,000		—			10,000		—		(9		)	9,991
Fixed rate corporate debt securities	10,000		(2		)	9,998		7		—			10,005
Floating rate Government/GSE guaranteed mortgage-backed securities	856,089		3,717			859,806		3,588		(1,170		)	862,224
Fixed rate GSE guaranteed mortgage-backed securities ⁽¹⁾	728		3,223			3,951		4,022		—			7,973
Floating rate GSE subordinated debt	70,000		—			70,000		—		(3,888		)	66,112
Fixed rate senior agency debt	380,806		(103		)	380,703		83		—			380,786
Fixed rate U.S. Treasuries	568,194		130			568,324		172		—			568,496
Total available-for-sale	2,024,185		6,679			2,030,864		7,916		(7,151		)	2,031,629
Trading:
Floating rate asset-backed securities	2,325		—			2,325		—		(1,775		)	550
Total investment securities	$	2,026,510	$	6,679		$	2,033,189	$	7,916	$	(8,926	)	$	2,032,179


(1)	Fair value includes $7.2 million of an interest-only security with a notional amount of $152.4 million .

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	As of December 31, 2014
	Amount Outstanding		Unamortized Premium/(Discount)			Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	46,600	$	—		$	46,600	$	—	$	(6,024	)	$	40,576
Floating rate asset-backed securities	100,730		(74		)	100,656		283		(37		)	100,902
Floating rate corporate debt securities	10,000		—			10,000		91		—			10,091
Fixed rate corporate debt securities	30,000		(10		)	29,990		35		—			30,025
Floating rate Government/GSE guaranteed mortgage-backed securities	605,053		3,431			608,484		4,712		(443		)	612,753
Fixed rate GSE guaranteed mortgage-backed securities ⁽¹⁾	853		3,542			4,395		3,807		—			8,202
Floating rate GSE subordinated debt	70,000		—			70,000		—		(3,680		)	66,320
Fixed rate senior agency debt	18,806		130			18,936		3		—			18,939
Floating rate U.S. Treasuries	75,000		(10		)	74,990		—		(11		)	74,979
Fixed rate U.S. Treasuries	975,194		462			975,656		72		(16		)	975,712
Total available-for-sale	1,932,236		7,471			1,939,707		9,003		(10,211		)	1,938,499
Trading:
Floating rate asset-backed securities	2,868		—			2,868		—		(2,179		)	689
Total investment securities	$	1,935,104	$	7,471		$	1,942,575	$	9,003	$	(12,390	)	$	1,939,188


(1)	Fair value includes $7.3 million of an interest-only security with a notional amount of $152.4 million .

During the three months ended September 30, 2015 , Farmer Mac received proceeds of $8.7 million from the sale of securities from its available-for-sale investment portfolio, resulting in realized gains of $0.1 million , compared to proceeds of $39.7 million for the same period in 2014, resulting in gross realized losses of $0.5 million and gross realized gains of $0.1 million . During the nine months ended September 30, 2015 , Farmer Mac received proceeds of $83.7 million from the sale of securities from its available-for-sale investment portfolio, resulting in gross realized gains of $0.1 million , compared to proceeds of $770.1 million for the the nine months ended September 30, 2014 , resulting in gross realized losses of $0.8 million and gross realized gains of $0.6 million . Farmer Mac also recognized $0.1 million in losses during the three and nine months ended September 30, 2015 related to other-than-temporary impairment on two auction-rate certificate securities. As of September 30, 2015, Farmer Mac intends to sell these auction-rate certificate securities in fourth quarter 2015 at a price of 99.63 percent of par pursuant to a forward sales agreement.

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As of September 30, 2015 and December 31, 2014 , unrealized losses on available-for-sale investment securities were as follows:

Table 2.2



	As of September 30, 2015
	Available-for-Sale Securities
	Unrealized loss position for less than 12 months					Unrealized loss position for more than 12 months
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(in thousands)
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	—	$	—		$	18,124	$	(1,576	)
Floating rate asset-backed securities	25,391		(297		)	7,105		(211		)
Floating rate corporate debt securities	4,991		(9		)	—		—
Floating rate Government/GSE guaranteed mortgage-backed securities	283,418		(679		)	93,530		(491		)
Floating rate GSE subordinated debt	—		—			66,112		(3,888		)
Total	$	313,800	$	(985	)	$	184,871	$	(6,166	)



	As of December 31, 2014
	Available-for-Sale Securities
	Unrealized loss position for less than 12 months					Unrealized loss position for more than 12 months
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(in thousands)
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	—	$	—		$	40,576	$	(6,024	)
Floating rate asset-backed securities	19,388		(37		)	—		—
Floating rate Government/GSE guaranteed mortgage-backed securities	76,100		(164		)	76,867		(279		)
Floating rate GSE subordinated debt	—		—			66,320		(3,680		)
Floating rate U.S. Treasuries	74,980		(11		)	—		—
Fixed rate U.S. Treasuries	325,033		(16		)	—		—
Total	$	495,501	$	(228	)	$	183,763	$	(9,983	)

The unrealized losses presented above are principally due to a general widening of credit spreads from the dates of acquisition to September 30, 2015 and December 31, 2014 , as applicable. The resulting decrease in fair values reflects an increase in the perceived risk by the financial markets related to those securities. As of September 30, 2015 , all of the investment securities in an unrealized loss position either were backed by the full faith and credit of the U.S. government or had credit ratings of at least "AA+," except two that were rated "A-." As of December 31, 2014 , all of the investment securities in an unrealized loss position either were backed by the full faith and credit of the U.S. government or had credit ratings of at least " AA+ ," except one that was rated " A- ." The unrealized losses were on 44 and 35 individual investment securities as of September 30, 2015 and December 31, 2014, respectively.

As of September 30, 2015 , 14 of the securities in loss positions had been in loss positions for more than 12 months and had a total unrealized loss of $6.2 million . As of December 31, 2014 , 15 of the securities in loss positions had been in loss positions for more than 12 months and had a total unrealized loss of $10.0 million . Securities in unrealized loss positions for 12 months or longer have a fair value as of

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September 30, 2015 that is, on average, approximately 97 percent of their amortized cost basis. Farmer Mac believes that all of these unrealized losses are recoverable within a reasonable period of time by way of maturity or changes in credit spreads. Accordingly, Farmer Mac has concluded that none of the unrealized losses on these available-for-sale investment securities represents other-than-temporary impairment as of September 30, 2015 and December 31, 2014.

Farmer Mac did not own any held-to-maturity investment securities as of September 30, 2015 and December 31, 2014. As of September 30, 2015 , Farmer Mac owned trading investment securities with an amortized cost of $2.3 million , a fair value of $0.6 million , and a weighted average yield of 4.29 percent . As of December 31, 2014 , Farmer Mac owned trading investment securities with an amortized cost of $2.9 million , a fair value of $0.7 million , and a weighted average yield of 4.24 percent .

The amortized cost, fair value, and weighted average yield of available-for-sale investment securities by remaining contractual maturity as of September 30, 2015 are set forth below. Asset-backed and mortgage-backed securities are included based on their final maturities, although the actual maturities may differ due to prepayments of the underlying assets.

Table 2.3



	As of September 30, 2015
	Available-for-Sale Securities
	Amortized Cost		Fair Value		Weighted- Average Yield
	(dollars in thousands)
Due within one year	$	959,025	$	959,287	0.27%
Due after one year through five years	94,816		95,302		1.17%
Due after five years through ten years	229,839		230,299		0.90%
Due after ten years	747,184		746,741		0.86%
Total	$	2,030,864	$	2,031,629	0.60%

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3.	FARMER MAC GUARANTEED SECURITIES AND USDA SECURITIES

The following tables set forth information about on-balance sheet Farmer Mac Guaranteed Securities and USDA Securities as of September 30, 2015 and December 31, 2014 :

Table 3.1



	As of September 30, 2015
	Unpaid Principal Balance		Unamortized Premium/(Discount)			Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
Held-to-maturity:
AgVantage	$	1,275,549	$	604		$	1,276,153	$	15,137	$	—		$	1,291,290
Available-for-sale:
AgVantage	$	4,162,940	$	—		$	4,162,940	$	37,899	$	(74,877	)	$	4,125,962
Farmer Mac Guaranteed USDA Securities	31,218		(350		)	30,868		30		(190		)	30,708
Total Farmer Mac Guaranteed Securities	4,194,158		(350		)	4,193,808		37,929		(75,067		)	4,156,670
USDA Securities	1,826,258		2,034			1,828,292		26,481		(351		)	1,854,422
Total available-for-sale	$	6,020,416	$	1,684		$	6,022,100	$	64,410	$	(75,418	)	$	6,011,092
Trading:
USDA Securities	$	30,437	$	2,229		$	32,666	$	82	$	(812	)	$	31,936



	As of December 31, 2014
	Unpaid Principal Balance		Unamortized Premium/(Discount)			Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
Held-to-maturity:
AgVantage	$	1,785,340	$	9,280		$	1,794,620	$	6,211	$	(255	)	$	1,800,576
Available-for-sale:
AgVantage	$	3,625,073	$	—		$	3,625,073	$	36,442	$	(29,853	)	$	3,631,662
Farmer Mac Guaranteed USDA Securities	27,831		(442		)	27,389		237		(7		)	27,619
Total Farmer Mac Guaranteed Securities	3,652,904		(442		)	3,652,462		36,679		(29,860		)	3,659,281
USDA Securities	1,717,813		3,162			1,720,975		11,850		(1,603		)	1,731,222
Total available-for-sale	$	5,370,717	$	2,720		$	5,373,437	$	48,529	$	(31,463	)	$	5,390,503
Trading:
USDA Securities	$	38,412	$	2,748		$	41,160	$	114	$	(964	)	$	40,310

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As of September 30, 2015 and December 31, 2014 , unrealized losses on held-to-maturity and available-for-sale on-balance sheet Farmer Mac Guaranteed Securities and USDA Securities were as follows:

Table 3.2



	As of September 30, 2015
	Available-for-Sale Securities
	Unrealized loss position for less than 12 months					Unrealized loss position for more than 12 months
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(in thousands)
Available-for-sale:
AgVantage	$	1,560,161	$	(56,977	)	$	843,727	$	(17,900	)
Farmer Mac Guaranteed USDA Securities	29,133		(190		)	—		—
USDA Securities	—		—			100,275		(351		)
Total available-for-sale	$	1,589,294	$	(57,167	)	$	944,002	$	(18,251	)



	As of December 31, 2014
	Held-to-Maturity and Available-for-Sale Securities
	Unrealized loss position for less than 12 months					Unrealized loss position for more than 12 months
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(in thousands)
Held-to-maturity:
AgVantage	$	547	$	(1	)	$	49,745	$	(254	)

Available-for-sale:
AgVantage	$	685,131	$	(13,115	)	$	1,460,089	$	(16,738	)
Farmer Mac Guaranteed USDA Securities	3,720		(7		)	—		—
USDA Securities	264,375		(1,549		)	97,817		(54		)
Total available-for-sale	$	953,226	$	(14,671	)	$	1,557,906	$	(16,792	)

The unrealized losses presented above are principally due to higher interest rates from the date of acquisition to September 30, 2015 and December 31, 2014 , as applicable. The credit exposure related to Farmer Mac's USDA Guarantees line of business is covered by the full faith and credit guarantee of the United States. The unrealized losses from AgVantage securities were on 24 available-for-sale securities as of September 30, 2015 . There were no unrealized losses from held-to-maturity AgVantage securities as of September 30, 2015 . The unrealized losses from AgVantage securities were on 2 held-to-maturity securities and 23 available-for-sale securities as of December 31, 2014 . As of September 30, 2015 , 6 available-for-sale AgVantage securities had been in a loss position for more than 12 months with a total unrealized loss of $17.9 million . As of December 31, 2014 , 15 available-for-sale AgVantage securities had been in a loss position for more than 12 months with a total unrealized loss of $16.7 million . AgVantage ^® is a registered trademark of Farmer Mac used to designate Farmer Mac Guaranteed Securities that are general obligations of lenders secured by pools of eligible loans. These Farmer Mac Guaranteed Securities are referred to as AgVantage securities. Each AgVantage security backed by agricultural mortgages requires some level of overcollateralization, or, in the case of rural utilities loans, 100 percent

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collateralization, and is secured by eligible loans of the issuing institution with a requirement that delinquent loans be removed from the collateral pool and then replaced with current eligible loans. Farmer Mac has concluded that none of the unrealized losses on its held-to-maturity Farmer Mac Guaranteed Securities and available-for-sale Farmer Mac Guaranteed Securities and USDA Securities are other-than-temporary impairment as of either September 30, 2015 or as of December 31, 2014 . Farmer Mac does not intend to sell these securities, and it is not more likely than not that Farmer Mac will be required to sell the securities before recovery of the amortized cost basis.

During the three and nine months ended September 30, 2015 and 2014, Farmer Mac realized no gains or losses from the sale of Farmer Mac Guaranteed Securities and USDA Securities.

The amortized cost, fair value, and weighted average yield of available-for-sale and held-to-maturity Farmer Mac Guaranteed Securities and USDA Securities by remaining contractual maturity as of September 30, 2015 are set forth below. The balances presented are based on their final maturities, although the actual maturities may differ due to prepayments of the underlying assets.

Table 3.3



	As of September 30, 2015
	Available-for-Sale Securities
	Amortized Cost		Fair Value		Weighted- Average Yield
	(dollars in thousands)
Due within one year	$	569,257	$	573,156	2.79	%
Due after one year through five years	1,380,918		1,390,409		1.41	%
Due after five years through ten years	1,588,290		1,596,379		1.73	%
Due after ten years	2,483,635		2,451,148		2.48	%
Total	$	6,022,100	$	6,011,092	2.06	%



	As of September 30, 2015
	Held-to-Maturity Securities
	Amortized Cost		Fair Value		Weighted- Average Yield
	(dollars in thousands)
Due within one year	$	632,791	$	634,917	2.30	%
Due after one year through five years	643,362		656,373		2.19	%
Total	$	1,276,153	$	1,291,290	2.24	%

As of September 30, 2015 , Farmer Mac owned trading USDA Securities with an amortized cost of $32.7 million , a fair value of $31.9 million , and a weighted average yield of 5.50 percent . As of December 31, 2014 , Farmer Mac owned trading USDA Securities with an amortized cost of $41.2 million , a fair value of $40.3 million , and a weighted average yield of 5.60 percent .


4.	FINANCIAL DERIVATIVES

Farmer Mac enters into financial derivative transactions principally to protect against risk from the effects of market price or interest rate movements on the value of certain assets, future cash flows, or debt issuance, and not for trading or speculative purposes. Certain financial derivatives are designated as fair

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value hedges of fixed rate assets classified as available-for-sale to protect against fair value changes in the assets related to a benchmark interest rate (i.e., LIBOR). Other financial derivatives are designated as cash flow hedges to mitigate the volatility of future interest rate payments on floating rate debt.

The following tables summarize information related to Farmer Mac's financial derivatives on a gross basis without giving consideration to master netting arrangements as of September 30, 2015 and December 31, 2014 and the effects of financial derivatives on the consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014 :

Table 4.1



	As of September 30, 2015
			Fair Value						Weighted- Average Pay Rate	Weighted- Average Receive Rate	Weighted- Average Forward Price	Weighted- Average Remaining Life (in years)
	Notional Amount		Asset			(Liability)			Weighted- Average Pay Rate	Weighted- Average Receive Rate	Weighted- Average Forward Price	Weighted- Average Remaining Life (in years)
	(dollars in thousands)
Fair value hedges:
Interest rate swaps:
Pay fixed non-callable	$	1,226,075	$	—		$	(36,048	)	2.24%	0.30%		3.31
Cash flow hedges:
Interest rate swaps:
Pay fixed non-callable	102,000		—			(2,720		)	2.23%	0.50%		6.99
No hedge designation:
Interest rate swaps:
Pay fixed non-callable	514,969		16			(55,941		)	4.02%	0.30%		8.69
Receive fixed non-callable	5,081,396		6,652			(46		)	0.19%	0.40%		0.59
Receive fixed callable	287,565		108			(3		)	0.17%	0.88%		2.76
Basis swaps	800,000		252			(60		)	0.15%	0.28%		2.53
Agency forwards	28,528		—			(312		)			100.50
Treasury futures	11,600		—			(52		)			128.28
Credit valuation adjustment			(1		)	302
Total financial derivatives	$	8,052,133	$	7,027		$	(94,880	)
Collateral pledged			—			48,111
Net amount			$	7,027		$	(46,769	)

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	As of December 31, 2014
			Fair Value						Weighted- Average Pay Rate	Weighted- Average Receive Rate	Weighted- Average Forward Price	Weighted- Average Remaining Life (in years)
	Notional Amount		Asset			(Liability)			Weighted- Average Pay Rate	Weighted- Average Receive Rate	Weighted- Average Forward Price	Weighted- Average Remaining Life (in years)
	(dollars in thousands)
Fair value hedges:
Interest rate swaps:
Pay fixed non-callable	$	1,000,000	$	—		$	(31,718	)	2.47%	0.23%		3.98
Cash flow hedges:
Interest rate swaps:
Pay fixed non-callable	15,000		—			(289		)	2.43%	0.51%		6.23
No hedge designation:
Interest rate swaps:
Pay fixed non-callable	490,183		537			(51,224		)	4.23%	0.23%		7.05
Receive fixed non-callable	3,829,355		3,414			(461		)	0.14%	0.27%		0.55
Receive fixed callable	383,565		1			(877		)	0.12%	1.34%		3.47
Basis swaps	1,105,000		247			(406		)	0.11%	0.31%		2.42
Agency forwards	12,768		—			(53		)			101.00
Treasury futures	1,700		—			(3		)			126.60
Credit valuation adjustment			(22		)	187
Total financial derivatives	$	6,837,571	$	4,177		$	(84,844	)
Collateral pledged			—			46,627
Net amount			$	4,177		$	(38,217	)

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Table 4.2



	(Losses)/gains on financial derivatives and hedging activities
	For the Three Months Ended						For the Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands)
Fair value hedges:
Interest rate swaps ⁽¹⁾	$	(12,646	)	$	5,610		$	(4,330	)	$	5,010
Hedged items	15,834			(2,549		)	13,356			4,019
Gains on hedging activities	3,188			3,061			9,026			9,029
No hedge designation:
Interest rate swaps	(11,478		)	(2,074		)	(5,637		)	(19,748		)
Agency forwards	(966		)	(210		)	(2,108		)	(1,297		)
Treasury futures	(312		)	31			(342		)	(452		)
(Losses)/gains on financial derivatives not designated in hedging relationships	(12,756		)	(2,253		)	(8,087		)	(21,497		)
(Losses)/gains on financial derivatives and hedging activities	$	(9,568	)	$	808		$	939		$	(12,468	)

⁽¹⁾

Included in the assessment of hedge effectiveness as of September 30, 2015 , but excluded from the amounts in the table, were losses of $2.9 million and $8.6 million , respectively, for the three and nine months ended September 30, 2015 , attributable to the fair value of the swaps at the inception of the hedging relationship. Accordingly, the amounts recognized as hedge ineffectiveness for the three and nine months ended September 30, 2015 were gains of $0.3 million and gains of $0.4 million , respectively. The comparable amounts as of September 30, 2014 were losses of $2.9 million and $8.7 million , respectively, for the three and nine months ended September 30, 2014 , attributable to the fair value of the swaps at the inception of the hedging relationship and, accordingly, gains of $0.2 million and $0.3 million , respectively, for the three and nine months ended September 30, 2014 , attributable to hedge ineffectiveness.

As of September 30, 2015 and December 31, 2014, Farmer Mac's credit exposure to interest rate swap counterparties, excluding netting arrangements and any adjustment for nonperformance risk, but including accrued interest, was $12.4 million and $6.1 million , respectively; however, including netting arrangements and accrued interest, Farmer Mac's credit exposure was $0.2 million as of September 30, 2015 and $0.4 million as of December 31, 2014. Farmer Mac held no cash as collateral for its derivatives in net asset positions, resulting in uncollateralized net asset positions of $0.2 million as of September 30, 2015 and $0.4 million as of December 31, 2014.

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As of September 30, 2015 and December 31, 2014, the fair value of Farmer Mac's derivatives in a net liability position including accrued interest but excluding netting arrangements and any adjustment for nonperformance risk, was $105.7 million and $99.4 million , respectively. Including netting arrangements and accrued interest, the fair value of Farmer Mac's derivatives in a net liability position at the counterparty level, was $93.0 million and $93.4 million as of September 30, 2015 and December 31, 2014, respectively. Farmer Mac posted cash of $48.1 million and no investment securities as of September 30, 2015 and posted cash of $46.6 million and no investment securities as of December 31, 2014 . Farmer Mac records posted cash as a reduction in the outstanding balance of cash and cash equivalents and an increase in the balance of prepaid expenses and other assets. Any investment securities posted as collateral are included in the investment securities balances on the consolidated balance sheets. If Farmer Mac had breached certain provisions of the derivative contracts as of September 30, 2015 and December 31, 2014, it could have been required to settle its obligations under the agreements or post additional collateral of $44.9 million and $46.8 million , respectively. As of September 30, 2015 and December 31, 2014, there were no financial derivatives in a net payable position where Farmer Mac was required to pledge collateral which the counterparty had the right to sell or repledge.

Of Farmer Mac's $8.0 billion notional amount of interest rate swaps outstanding as of September 30, 2015 , $5.7 billion were cleared through swap clearinghouses. Of Farmer Mac's $6.8 billion notional amount of interest rate swaps outstanding as of December 31, 2014 , $4.0 billion were cleared through swap clearinghouses.

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5.	LOANS AND ALLOWANCE FOR LOSSES

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 adjustments. Loans held for sale are reported at the lower of cost or fair value determined on a pooled basis. As of September 30, 2015 and December 31, 2014 , Farmer Mac had no loans held for sale. The following table displays the composition of the loan balances as of September 30, 2015 and December 31, 2014 :

Table 5.1



	As of September 30, 2015									As of December 31, 2014
	Unsecuritized			In Consolidated Trusts			Total			Unsecuritized			In Consolidated Trusts			Total
	(in thousands)
Farm & Ranch	$	2,166,125		$	612,567		$	2,778,692		$	2,118,867		$	421,355		$	2,540,222
Rural Utilities	982,078			—			982,078			718,213			267,396			985,609
Total unpaid principal balance ⁽¹⁾	3,148,203			612,567			3,760,770			2,837,080			688,751			3,525,831
Unamortized premiums, discounts and other cost basis adjustments	539			—			539			(3,619		)	3,727			108
Total loans	3,148,742			612,567			3,761,309			2,833,461			692,478			3,525,939
Allowance for loan losses	(4,158		)	(617		)	(4,775		)	(5,324		)	(540		)	(5,864		)
Total loans, net of allowance	$	3,144,584		$	611,950		$	3,756,534		$	2,828,137		$	691,938		$	3,520,075


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

Allowance for Losses

Farmer Mac maintains an allowance for losses presented in two components on its consolidated balance sheets: (1) an allowance for loan losses to account for estimated probable losses on loans held, and (2) a reserve for losses to account for estimated probable losses on loans underlying LTSPCs and off-balance sheet Farmer Mac Guaranteed Securities. As of September 30, 2015 and December 31, 2014 , Farmer Mac reported allowances for losses of $10.3 million and $10.1 million , respectively. See Note 6 for more information about off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs.

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The following is a summary of the changes in the total allowance for losses for the three and nine months ended September 30, 2015 and 2014:

Table 5.2



	As of September 30, 2015								As of September 30, 2014
	Allowance for Loan Losses			Reserve for Losses		Total Allowance for Losses			Allowance for Loan Losses			Reserve for Losses			Total Allowance for Losses
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	5,939		$	4,637	$	10,576		$	5,770		$	5,595		$	11,365
(Release of)/provision for losses	(1,164		)	861		(303		)	511			(1,315		)	(804		)
Charge-offs	—			—		—			—			—			—
Recoveries	—			—		—			45			—			45
Ending Balance	$	4,775		$	5,498	$	10,273		$	6,326		$	4,280		$	10,606

For the Nine Months Ended:
Beginning Balance	$	5,864		$	4,263	$	10,127		$	6,866		$	6,468		$	13,334
(Release of)/provision for losses	(978		)	1,235		257			(499		)	(2,188		)	(2,687		)
Charge-offs	(111		)	—		(111		)	(86		)	—			(86		)
Recoveries	—			—		—			45			—			45
Ending Balance	$	4,775		$	5,498	$	10,273		$	6,326		$	4,280		$	10,606

During third quarter 2015 , Farmer Mac recorded releases to its allowance for loan losses of $1.2 million and provisions to its reserve for losses of $0.9 million . The releases to the allowance for loan losses recorded during third quarter 2015 were primarily attributable to a reduction in the specific allowance for a permanent planting loan based on the updated appraised value of the collateral underlying such loan. The provisions to the reserve for losses recorded during third quarter 2015 were attributable to an increase in the specific allowance on two impaired canola facility loans underlying an LTSPC with one borrower. Farmer Mac recorded no charge-offs to its allowance for loan losses during third quarter 2015 .

During third quarter 2014, Farmer Mac recorded provisions to its allowance for loan losses of $0.5 million and releases to its reserve for losses of $1.3 million , primarily related to a decline in the balance of its ethanol-related agricultural storage and processing portfolio. Farmer Mac recorded no charge-offs and recoveries of $45,000 to its allowance for loan losses during third quarter 2014.

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The following tables present the changes in the total allowance for losses for the three and nine months ended September 30, 2015 and 2014 by commodity type:

Table 5.3



	September 30, 2015
	Crops		Permanent Plantings			Livestock		Part-time Farm			Ag. Storage and Processing		Other		Total
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	2,653	$	2,221		$	1,760	$	433		$	3,502	$	7	$	10,576
Provision for/(release of) losses	110		(1,151		)	39		(49		)	748		—		(303		)
Charge-offs	—		—			—		—			—		—		—
Ending Balance	$	2,763	$	1,070		$	1,799	$	384		$	4,250	$	7	$	10,273

For the Nine Months Ended:
Beginning Balance	$	2,519	$	2,159		$	1,423	$	467		$	3,552	$	7	$	10,127
Provision for/(release of) losses	244		(1,089		)	376		28			698		—		257
Charge-offs	—		—			—		(111		)	—		—		(111		)
Ending Balance	$	2,763	$	1,070		$	1,799	$	384		$	4,250	$	7	$	10,273



	September 30, 2014
	Crops		Permanent Plantings		Livestock			Part-time Farm			Ag. Storage and Processing			Other			Total
	(in thousands)
For the Three Months Ended:
Beginning Balance	$	2,390	$	2,217	$	1,311		$	444		$	4,999		$	4		$	11,365
Provision for/(release of) losses	123		74		(6		)	(3		)	(992		)	—			(804		)
Charge-offs	—		—		—			—			—			—			—
Recoveries	—		45		—			—			—			—			45
Ending Balance	$	2,513	$	2,336	$	1,305		$	441		$	4,007		$	4		$	10,606

For the Nine Months Ended:
Beginning Balance	$	2,124	$	2,186	$	1,271		$	454		$	7,292		$	7		$	13,334
Provision for/(release of) losses	389		105		91			16			(3,285		)	(3		)	(2,687		)
Charge-offs	—		—		(57		)	(29		)	—			—			(86		)
Recoveries	—		45		—			—			—			—			45
Ending Balance	$	2,513	$	2,336	$	1,305		$	441		$	4,007		$	4		$	10,606

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The following tables present the unpaid principal balances of loans held and loans underlying LTSPCs and off-balance sheet Farmer Mac Guaranteed Securities and the related total allowance for losses by impairment method and commodity type as of September 30, 2015 and December 31, 2014 :

Table 5.4



	As of September 30, 2015
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Ending Balance:
Collectively evaluated for impairment:
On-balance sheet	$	1,771,015	$	396,674	$	430,598	$	92,327	$	24,469	$	79	$	2,715,162
Off-balance sheet	1,255,337		500,917		768,207		109,474		53,130		5,759		2,692,824
Total	$	3,026,352	$	897,591	$	1,198,805	$	201,801	$	77,599	$	5,838	$	5,407,986
Individually evaluated for impairment:
On-balance sheet	$	20,840	$	29,378	$	4,331	$	8,981	$	—	$	—	$	63,530
Off-balance sheet	7,260		3,690		7,281		783		13,500		—		32,514
Total	$	28,100	$	33,068	$	11,612	$	9,764	$	13,500	$	—	$	96,044
Total Farm & Ranch loans:
On-balance sheet	$	1,791,855	$	426,052	$	434,929	$	101,308	$	24,469	$	79	$	2,778,692
Off-balance sheet	1,262,597		504,607		775,488		110,257		66,630		5,759		2,725,338
Total	$	3,054,452	$	930,659	$	1,210,417	$	211,565	$	91,099	$	5,838	$	5,504,030
Allowance for Losses:
Collectively evaluated for impairment:
On-balance sheet	$	1,848	$	445	$	717	$	59	$	357	$	—	$	3,426
Off-balance sheet	333		153		314		61		293		7		1,161
Total	$	2,181	$	598	$	1,031	$	120	$	650	$	7	$	4,587
Individually evaluated for impairment:
On-balance sheet	$	383	$	351	$	379	$	236	$	—	$	—	$	1,349
Off-balance sheet	199		121		389		28		3,600		—		4,337
Total	$	582	$	472	$	768	$	264	$	3,600	$	—	$	5,686
Total Farm & Ranch loans:
On-balance sheet	$	2,231	$	796	$	1,096	$	295	$	357	$	—	$	4,775
Off-balance sheet	532		274		703		89		3,893		7		5,498
Total	$	2,763	$	1,070	$	1,799	$	384	$	4,250	$	7	$	10,273

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	As of December 31, 2014
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Ending Balance:
Collectively evaluated for impairment:
On-balance sheet	$	1,621,360	$	359,517	$	406,049	$	57,851	$	29,003	$	—	$	2,473,780
Off-balance sheet	1,305,141		521,535		839,286		102,857		85,357		6,781		2,860,957
Total	$	2,926,501	$	881,052	$	1,245,335	$	160,708	$	114,360	$	6,781	$	5,334,737
Individually evaluated for impairment:
On-balance sheet	$	12,307	$	35,904	$	6,571	$	11,660	$	—	$	—	$	66,442
Off-balance sheet	2,458		3,239		8,712		1,586		—		—		15,995
Total	$	14,765	$	39,143	$	15,283	$	13,246	$	—	$	—	$	82,437
Total Farm & Ranch loans:
On-balance sheet	$	1,633,667	$	395,421	$	412,620	$	69,511	$	29,003	$	—	$	2,540,222
Off-balance sheet	1,307,599		524,774		847,998		104,443		85,357		6,781		2,876,952
Total	$	2,941,266	$	920,195	$	1,260,618	$	173,954	$	114,360	$	6,781	$	5,417,174
Allowance for Losses:
Collectively evaluated for impairment:
On-balance sheet	$	1,824	$	495	$	658	$	51	$	503	$	—	$	3,531
Off-balance sheet	298		149		404		52		3,049		7		3,959
Total	$	2,122	$	644	$	1,062	$	103	$	3,552	$	7	$	7,490
Individually evaluated for impairment:
On-balance sheet	$	283	$	1,410	$	328	$	312	$	—	$	—	$	2,333
Off-balance sheet	114		105		33		52		—		—		304
Total	$	397	$	1,515	$	361	$	364	$	—	$	—	$	2,637
Total Farm & Ranch loans:
On-balance sheet	$	2,107	$	1,905	$	986	$	363	$	503	$	—	$	5,864
Off-balance sheet	412		254		437		104		3,049		7		4,263
Total	$	2,519	$	2,159	$	1,423	$	467	$	3,552	$	7	$	10,127

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The following tables present by commodity type the unpaid principal balances, recorded investment, and specific allowance for losses related to impaired loans and the recorded investment in loans on nonaccrual status as of September 30, 2015 and December 31, 2014 :

Table 5.5



	As of September 30, 2015
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Impaired Loans:
With no specific allowance:
Recorded investment	$	5,616	$	13,666	$	3,635	$	1,834	$	—	$	—	$	24,751
Unpaid principal balance	5,537		13,639		3,630		1,831		—		—		24,637
With a specific allowance:
Recorded investment ⁽¹⁾	22,672		19,462		8,007		7,958		13,500		—		71,599
Unpaid principal balance	22,563		19,429		7,982		7,933		13,500		—		71,407
Associated allowance	582		472		768		264		3,600		—		5,686
Total:
Recorded investment	28,288		33,128		11,642		9,792		13,500		—		96,350
Unpaid principal balance	28,100		33,068		11,612		9,764		13,500		—		96,044
Associated allowance	582		472		768		264		3,600		—		5,686

Recorded investment of loans on nonaccrual status ⁽²⁾	$	3,541	$	15,397	$	4,361	$	6,016	$	—	$	—	$	29,315


⁽¹⁾	Impairment analysis was performed in the aggregate in consideration of similar risk characteristics of the assets and historical statistics on $64.6 million ( 67 percent ) of impaired loans as of September 30, 2015 , which resulted in a specific reserve of $1.2 million .


⁽²⁾	Includes $11.3 million of loans that are less than 90 days delinquent but which have not met Farmer Mac's performance criteria for returning to accrual status.



	As of December 31, 2014
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Impaired Loans:
With no specific allowance:
Recorded investment	$	4,877	$	5,837	$	9,576	$	2,001	$	—	$	—	$	22,291
Unpaid principal balance	4,723		5,750		9,386		1,981		—		—		21,840
With a specific allowance:
Recorded investment ⁽¹⁾	10,753		33,690		5,979		11,350		—		—		61,772
Unpaid principal balance	10,042		33,393		5,897		11,265		—		—		60,597
Associated allowance	397		1,515		361		364		—		—		2,637
Total:
Recorded investment	15,630		39,527		15,555		13,351		—		—		84,063
Unpaid principal balance	14,765		39,143		15,283		13,246		—		—		82,437
Associated allowance	397		1,515		361		364		—		—		2,637

Recorded investment of loans on nonaccrual status ⁽²⁾	$	5,168	$	14,413	$	4,438	$	6,133	$	—	$	—	$	30,152


⁽¹⁾	Impairment analysis was performed in the aggregate in consideration of similar risk characteristics of the assets and historical statistics on $54.4 million ( 65 percent ) of impaired loans as of December 31, 2014 , which resulted in a specific reserve of $1.2 million .

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⁽²⁾	Includes $11.7 million of loans that are less than 90 days delinquent but which have not met Farmer Mac's performance criteria for returning to accrual status.

The following table presents by commodity type the average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2015 and 2014 :

Table 5.6



	September 30, 2015
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
For the Three Months Ended:
Average recorded investment in impaired loans	$	27,133	$	37,911	$	12,534	$	9,989	$	13,500	$	—	$	101,067
Income recognized on impaired loans	33		234		76		76		—		—		419

For the Nine Months Ended:
Average recorded investment in impaired loans	$	23,176	$	39,337	$	13,923	$	11,248	$	6,750	$	—	$	94,434
Income recognized on impaired loans	373		459		273		226		—		—		1,331



	September 30, 2014
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
For the Three Months Ended:
Average recorded investment in impaired loans	$	19,975	$	43,280	$	12,305	$	12,276	$	—	$	—	$	87,836
Income recognized on impaired loans	90		142		149		87		—		—		468

For the Nine Months Ended:
Average recorded investment in impaired loans	$	21,873	$	44,144	$	13,040	$	12,407	$	—	$	30	$	91,494
Income recognized on impaired loans	365		412		284		288		—		—		1,349

For the three months ended September 30, 2015 , there were no troubled debt restructurings ("TDRs"). For the nine months ended September 30, 2015 , the recorded investment of loans determined to beTDRs was $1.1 million both before and after restructuring. For the three and nine months ended September 30, 2014 , the recorded investment of loans determined to be TDRs was $4.5 million and $5.3 million , respectively , before restructuring and $5.1 million and $6.0 million , respectively, after restructuring. As of September 30, 2015 , there were no TDRs identified during the previous 12 months that were in default under the modified terms. The impact of TDRs on Farmer Mac's allowance for loan losses was immaterial for the three and nine months ended September 30, 2015 and 2014.

When particular criteria are met, such as the default of the borrower, Farmer Mac becomes entitled to purchase the defaulted loans underlying Farmer Mac Guaranteed Securities (commonly referred to as "removal-of-account" provisions). Farmer Mac records all such defaulted loans at their unpaid principal balance during the period in which Farmer Mac becomes entitled to purchase the loans and therefore regains effective control over the transferred loans. In accordance with the terms of all LTSPCs, Farmer Mac acquires loans that are either 90 days or 120 days delinquent (depending on the provisions of the applicable agreement) upon the request of the counterparty. Subsequent to the purchase, these defaulted

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loans are treated as nonaccrual loans and, therefore, interest is accounted for on the cash basis. Any decreases in expected cash flows are recognized as impairment.

During the three months ended September 30, 2015 , Farmer Mac purchased one defaulted loan having an unpaid principal balance of $0.3 million from a pool underlying a Farm & Ranch Guaranteed Security. During the nine months ended September 30, 2015 , Farmer Mac purchased three defaulted loans having an unpaid principal balance of $2.2 million from pools underlying Farm & Ranch Guaranteed Securities. During the three months ended September 30, 2014 , Farmer Mac purchased no defaulted loans. During the nine months ended September 30, 2014, Farmer Mac purchased one defaulted loan having an unpaid principal balance of $0.4 million from a pool underlying an LTSPC.

The following tables present information related to Farmer Mac's acquisition of defaulted loans for the three and nine months ended September 30, 2015 and 2014 and the outstanding balances and carrying amounts of all such loans as of September 30, 2015 and December 31, 2014:

Table 5.7



	For the Three Months Ended				For the Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
	(in thousands)
Unpaid principal balance at acquisition date:
Loans underlying LTSPCs	$	—	$	—	$	—	$	440
Loans underlying off-balance sheet Farmer Mac Guaranteed Securities	263		—		2,244		—
Total unpaid principal balance at acquisition date	263		—		2,244		440
Contractually required payments receivable	264		—		2,334		440
Impairment recognized subsequent to acquisition	1		—		110		69
Recovery/release of allowance for defaulted loans	882		47		1,003		54



	As of
	September 30, 2015		December 31, 2014
	(in thousands)
Outstanding balance	$	25,412	$	24,921
Carrying amount	23,225		22,149

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Net credit losses and 90 -day delinquencies as of and for the periods indicated for loans held and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs are presented in the table below. As of September 30, 2015 , there were no delinquencies and no probable losses inherent in Farmer Mac's Rural Utilities loan portfolio and Farmer Mac had not experienced credit losses on any Rural Utilities loans.

Table 5.8



	90-Day Delinquencies ⁽¹⁾				Net Credit Losses
	As of				For the Nine Months Ended
	September 30, 2015		December 31, 2014		September 30, 2015		September 30, 2014
	(in thousands)
On-balance sheet assets:
Farm & Ranch:
Loans	$	17,967	$	18,427	$	160	$	(66	)
Total on-balance sheet	$	17,967	$	18,427	$	160	$	(66	)
Off-balance sheet assets:
Farm & Ranch:
LTSPCs	$	18,702	$	490	$	—	$	—
Total off-balance sheet	$	18,702	$	490	$	—	$	—
Total	$	36,669	$	18,917	$	160	$	(66	)


⁽¹⁾	Includes loans and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs that are 90 days or more past due, in foreclosure, or in bankruptcy, excluding loans performing under either their original loan terms or a court-approved bankruptcy plan.

Of the $18.0 million and $18.4 million of on-balance sheet loans reported as 90 -day delinquencies as of September 30, 2015 and December 31, 2014 , respectively, $2.1 million and $1.8 million were loans subject to "removal-of-account" provisions.

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Credit Quality Indicators

The following tables present credit quality indicators related to Farm & Ranch loans held and loans underlying LTSPCs and off-balance sheet Farm & Ranch Guaranteed Securities as of September 30, 2015 and December 31, 2014 :

Table 5.9



	As of September 30, 2015
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Credit risk profile by internally assigned grade ⁽¹⁾
On-balance sheet:
Acceptable	$	1,753,713	$	396,674	$	386,273	$	92,327	$	24,469	$	79	$	2,653,535
Special mention ⁽²⁾	17,302		136		44,325		—		—		—		61,763
Substandard ⁽³⁾	20,840		29,242		4,331		8,981		—		—		63,394
Total on-balance sheet	$	1,791,855	$	426,052	$	434,929	$	101,308	$	24,469	$	79	$	2,778,692
Off-Balance Sheet:
Acceptable	$	1,211,404	$	486,117	$	743,523	$	103,754	$	53,130	$	5,123	$	2,603,051
Special mention ⁽²⁾	38,263		12,434		11,614		1,263		—		7		63,581
Substandard ⁽³⁾	12,930		6,056		20,351		5,240		13,500		629		58,706
Total off-balance sheet	$	1,262,597	$	504,607	$	775,488	$	110,257	$	66,630	$	5,759	$	2,725,338
Total Ending Balance:
Acceptable	$	2,965,117	$	882,791	$	1,129,796	$	196,081	$	77,599	$	5,202	$	5,256,586
Special mention ⁽²⁾	55,565		12,570		55,939		1,263		—		7		125,344
Substandard ⁽³⁾	33,770		35,298		24,682		14,221		13,500		629		122,100
Total	$	3,054,452	$	930,659	$	1,210,417	$	211,565	$	91,099	$	5,838	$	5,504,030

Commodity analysis of past due loans ⁽¹⁾
On-balance sheet	$	6,209	$	8,729	$	753	$	2,276	$	—	$	—	$	17,967
Off-balance sheet	692		—		4,322		188		13,500		—		18,702
90 days or more past due	$	6,901	$	8,729	$	5,075	$	2,464	$	13,500	$	—	$	36,669


⁽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.

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	As of December 31, 2014
	Crops		Permanent Plantings		Livestock		Part-time Farm		Ag. Storage and Processing		Other		Total
	(in thousands)
Credit risk profile by internally assigned grade ⁽¹⁾
On-balance sheet:
Acceptable	$	1,604,546	$	353,487	$	375,010	$	57,239	$	29,003	$	—	$	2,419,285
Special mention ⁽²⁾	16,814		6,030		31,039		612		—		—		54,495
Substandard ⁽³⁾	12,307		35,904		6,571		11,660		—		—		66,442
Total on-balance sheet	$	1,633,667	$	395,421	$	412,620	$	69,511	$	29,003	$	—	$	2,540,222
Off-Balance Sheet
Acceptable	$	1,282,773	$	503,414	$	799,047	$	97,692	$	64,363	$	6,117	$	2,753,406
Special mention ⁽²⁾	13,603		12,150		30,281		1,351		—		8		57,393
Substandard ⁽³⁾	11,223		9,210		18,670		5,400		20,994		656		66,153
Total off-balance sheet	$	1,307,599	$	524,774	$	847,998	$	104,443	$	85,357	$	6,781	$	2,876,952
Total Ending Balance:
Acceptable	$	2,887,319	$	856,901	$	1,174,057	$	154,931	$	93,366	$	6,117	$	5,172,691
Special mention ⁽²⁾	30,417		18,180		61,320		1,963		—		8		111,888
Substandard ⁽³⁾	23,530		45,114		25,241		17,060		20,994		656		132,595
Total	$	2,941,266	$	920,195	$	1,260,618	$	173,954	$	114,360	$	6,781	$	5,417,174

Commodity analysis of past due loans ⁽¹⁾
On-balance sheet	$	4,175	$	6,869	$	4,555	$	2,828	$	—	$	—	$	18,427
Off-balance sheet	—		—		490		—		—		—		490
90 days or more past due	$	4,175	$	6,869	$	5,045	$	2,828	$	—	$	—	$	18,917


⁽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.

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Concentrations of Credit Risk

The following table sets forth the geographic and commodity/collateral diversification, as well as the range of original loan-to-value ratios, for all Farm & Ranch loans held and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs as of September 30, 2015 and December 31, 2014 :

Table 5.10



	As of
	September 30, 2015		December 31, 2014
	(in thousands)
By commodity/collateral type:
Crops	$	3,054,452	$	2,941,266
Permanent plantings	930,659		920,195
Livestock	1,210,417		1,260,618
Part-time farm	211,565		173,954
Ag. Storage and Processing	91,099		114,360
Other	5,838		6,781
Total	$	5,504,030	$	5,417,174
By geographic region ⁽¹⁾ :
Northwest	$	579,240	$	573,135
Southwest	1,693,048		1,753,606
Mid-North	1,933,020		1,873,041
Mid-South	688,615		627,615
Northeast	211,093		214,402
Southeast	399,014		375,375
Total	$	5,504,030	$	5,417,174
By original loan-to-value ratio:
0.00% to 40.00%	$	1,538,701	$	1,503,076
40.01% to 50.00%	1,193,443		1,191,804
50.01% to 60.00%	1,536,435		1,491,502
60.01% to 70.00%	1,072,182		1,091,759
70.01% to 80.00%	136,641		115,645
80.01% to 90.00%	26,628		23,388
Total	$	5,504,030	$	5,417,174


⁽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).

The original loan-to-value ratio is calculated by dividing the loan principal balance at the time of guarantee, purchase, or commitment by the appraised value at the date of loan origination or, when available, the updated appraised value at the time of guarantee, purchase, or commitment. Current loan-to-value ratios may be higher or lower than the original loan-to-value ratios.

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6.	OFF-BALANCE SHEET GUARANTEES AND LONG-TERM STANDBY PURCHASE 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, which are available through each of the Farm & Ranch, USDA Guarantees, Rural Utilities, or Institutional Credit lines of business, and (2) LTSPCs, which are available through the Farm & Ranch or the Rural Utilities lines of business.

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 September 30, 2015 and December 31, 2014 , not including offsets provided by any recourse provisions, recoveries from third parties, or collateral for the underlying loans:

Table 6.1



Outstanding Balance of Off-Balance Sheet Farmer Mac Guaranteed Securities
	As of September 30, 2015		As of December 31, 2014
	(in thousands)
Farm & Ranch:
Guaranteed Securities	$	553,469	$	636,086
USDA Guarantees:
Farmer Mac Guaranteed USDA Securities	10,712		13,978
Institutional Credit:
AgVantage Securities	986,529		986,528
Revolving floating rate AgVantage facility ⁽¹⁾	300,000		—
Total off-balance sheet Farmer Mac Guaranteed Securities	$	1,850,710	$	1,636,592


⁽¹⁾	Relates to a revolving floating rate AgVantage facility subject to specified contractual terms. Farmer Mac receives a fixed fee based on the full dollar amount of the facility.

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 6.2



	For the Nine Months Ended
	September 30, 2015		September 30, 2014
	(in thousands)
Proceeds from new securitizations	$	231,242	$	169,820
Guarantee fees received	2,704		2,449
Purchases of assets from the trusts	2,244		—

Farmer Mac has recorded a liability for its obligation to stand ready under the guarantee in the guarantee and commitment obligation on the consolidated balance sheets. This liability approximated $9.2 million as of September 30, 2015 and $11.1 million as of December 31, 2014 . As of September 30, 2015 and December 31, 2014, the weighted-average remaining maturity of all loans underlying off-balance sheet Farmer Mac Guaranteed Securities, excluding AgVantage securities, was 11.5 years and 12.0 years ,

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respectively. As of September 30, 2015 and December 31, 2014 , the weighted-average remaining maturity of the off-balance sheet AgVantage securities was 2.2 years and 2.4 years , respectively.

Long-Term Standby Purchase Commitments

An LTSPC is a commitment by Farmer Mac to purchase eligible loans from an identified pool of loans under specified circumstances set forth in the applicable agreement, either for cash or in exchange for Farmer Mac Guaranteed Securities, on one or more undetermined future dates. As consideration for its assumption of the credit risk on loans underlying an LTSPC, Farmer Mac receives a commitment fee payable monthly in arrears in an amount approximating what would have been the guarantee fee if the transaction were structured as a swap for Farmer Mac Guaranteed Securities.

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, was $2.7 billion as of September 30, 2015 and $2.2 billion as of December 31, 2014 .

As of September 30, 2015 and December 31, 2014 , the weighted-average remaining maturity of all loans underlying LTSPCs was 14.5 years and 14.3 years , respectively. For those LTSPCs issued or modified on or after January 1, 2003, 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. This liability approximated $29.1 million as of September 30, 2015 and $26.8 million as of December 31, 2014 .


7.	EQUITY

Non-Controlling Interest in Farmer Mac II LLC

On January 25, 2010 , Farmer Mac completed a private offering of $250.0 million of securities issued by a newly formed Delaware statutory trust. The trust securities, called Farm Asset-Linked Capital Securities or "FALConS," represented undivided beneficial ownership interests in 250,000 shares of non-cumulative perpetual preferred stock (the "Farmer Mac II LLC Preferred Stock") of Farmer Mac's subsidiary, Farmer Mac II LLC, a Delaware limited liability company. The Farmer Mac II LLC Preferred Stock had a liquidation preference of $1,000 per share. On May 14, 2014, Farmer Mac purchased $6.0 million of FALConS from certain holders. On March 30, 2015, Farmer Mac II LLC redeemed all of the outstanding shares of Farmer Mac II LLC Preferred Stock which, in turn, triggered the redemption of all of the outstanding FALConS on that same day. Farmer Mac recognized an expense of $8.1 million in deferred issuance costs upon the retirement of the Farmer Mac II LLC Preferred Stock.

Common Stock

On September 8, 2015, Farmer Mac's board of directors approved a share repurchase program (“Share Repurchase Program”) authorizing Farmer Mac to repurchase up to $25 million of its outstanding Class C Non-Voting Common Stock over the next two years. As of September 30, 2015, Farmer Mac had repurchased approximately 104,000 shares of Class C Non-Voting Common Stock at a cost of approximately $2.8 million pursuant to the Share Repurchase Program.

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Capital Requirements

Farmer Mac is subject to the following capital requirements:

•

Statutory minimum capital requirement – Farmer Mac's statutory minimum capital level is an amount of core capital (stockholders' equity less accumulated other comprehensive income) equal to the sum of 2.75 percent of Farmer Mac's aggregate on-balance sheet assets, as calculated for regulatory purposes, plus 0.75 percent of the aggregate off-balance sheet obligations of Farmer Mac, specifically including:


◦	the unpaid principal balance of outstanding Farmer Mac Guaranteed Securities;


◦	instruments issued or guaranteed by Farmer Mac that are substantially equivalent to Farmer Mac Guaranteed Securities, including LTSPCs; and


◦	other off-balance sheet obligations of Farmer Mac.


•	Statutory critical capital requirement – Farmer Mac's critical capital level is an amount of core capital equal to 50 percent of the total minimum capital requirement at that time.


•	Risk-based capital requirement – Farmer Mac's charter directs FCA to establish a risk-based capital stress test for Farmer Mac, using specified stress-test parameters.

Farmer Mac is required to comply with the higher of the minimum capital requirement and the risk-based capital requirement. As of September 30, 2015 and December 31, 2014, the minimum capital requirement was greater than the risk-based capital requirement. Farmer Mac's ability to declare and pay dividends on its preferred stock could be restricted if it fails to comply with applicable capital requirements.

As of September 30, 2015 , Farmer Mac's minimum capital requirement was $442.8 million and its actual core capital level was $558.2 million , which was $115.4 million above the minimum capital requirement as of that date. As of December 31, 2014 , Farmer Mac's minimum capital requirement was $421.3 million and its actual core capital level was $766.3 million , which was $345.0 million above the minimum capital requirement as of that date.

In accordance with FCA's rule on Farmer Mac's capital planning, and as part of Farmer Mac's capital plan, Farmer Mac has adopted a policy for maintaining a sufficient level of Tier 1 capital (consisting of retained earnings, paid-in-capital, common stock, qualifying preferred stock, and accumulated other comprehensive income allocable to investments not included in one of the four operating lines of business) and imposing restrictions on common stock dividends and any discretionary bonus payments in the event that this capital falls below specified thresholds.


8.	FAIR VALUE DISCLOSURES

As of September 30, 2015 , Farmer Mac's assets and liabilities recorded at fair value included financial instruments valued at $6.1 billion whose fair values were estimated by management in the absence of readily determinable fair values (i.e., level 3). These financial instruments measured as level 3 represented 41 percent of total assets and 74 percent of financial instruments measured at fair value as of September 30, 2015 . As of December 31, 2014 , Farmer Mac's assets and liabilities recorded at fair value included financial instruments valued at $5.5 billion whose fair values were estimated by management in the absence of readily determinable fair values. These financial instruments measured as level 3 represented 38 percent of total assets and 73 percent of financial instruments measured at fair value as of December 31, 2014 .

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Net transfers in and/or out of the different levels within the fair value hierarchy are based on the fair values of the assets and liabilities as of the beginning of the reporting period. There were no transfers within the fair value hierarchy for fair value measurements of Farmer Mac's investment securities, Farmer Mac Guaranteed Securities, USDA Securities, and financial derivatives during the first nine months of 2015 and 2014. See Note 1(a) for information about the transfer of available-for-sale Farmer Mac Guaranteed Securities to held-to-maturity as of January 1, 2014.

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The following tables present information about Farmer Mac's assets and liabilities measured at fair value on a recurring and nonrecurring basis as of September 30, 2015 and December 31, 2014 , respectively, and indicate the fair value hierarchy of the valuation techniques used by Farmer Mac to determine such fair value:

Table 8.1



Assets and Liabilities Measured at Fair Value as of September 30, 2015
	Level 1		Level 2		Level 3		Total
	(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	—	$	—	$	44,924	$	44,924
Floating rate asset-backed securities	—		81,118		—		81,118
Floating rate corporate debt securities	—		9,991		—		9,991
Fixed rate corporate debt securities	—		10,005		—		10,005
Floating rate Government/GSE guaranteed mortgage-backed securities	—		862,224		—		862,224
Fixed rate GSE guaranteed mortgage-backed securities	—		7,973		—		7,973
Floating rate GSE subordinated debt	—		66,112		—		66,112
Fixed rate senior agency debt	—		380,786		—		380,786
Fixed rate U.S. Treasuries	568,496		—		—		568,496
Total available-for-sale	568,496		1,418,209		44,924		2,031,629
Trading:
Floating rate asset-backed securities	—		—		550		550
Total trading	—		—		550		550
Total Investment Securities	568,496		1,418,209		45,474		2,032,179
Farmer Mac Guaranteed Securities:
Available-for-sale:
AgVantage	—		—		4,125,962		4,125,962
Farmer Mac Guaranteed USDA Securities	—		—		30,708		30,708
Total Farmer Mac Guaranteed Securities	—		—		4,156,670		4,156,670
USDA Securities:
Available-for-sale	—		—		1,854,422		1,854,422
Trading	—		—		31,936		31,936
Total USDA Securities	—		—		1,886,358		1,886,358
Financial derivatives	—		7,027		—		7,027
Total Assets at fair value	$	568,496	$	1,425,236	$	6,088,502	$	8,082,234
Liabilities:
Financial derivatives	$	52	$	94,828	$	—	$	94,880
Total Liabilities at fair value	$	52	$	94,828	$	—	$	94,880
Nonrecurring:
Assets:
Loans held for investment	$	—	$	—	$	1,852	$	1,852
REO	—		—		281		281
Total Nonrecurring Assets at fair value	$	—	$	—	$	2,133	$	2,133

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Assets and Liabilities Measured at Fair Value as of December 31, 2014
	Level 1		Level 2		Level 3		Total
	(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	—	$	—	$	40,576	$	40,576
Floating rate asset-backed securities	—		100,902		—		100,902
Floating rate corporate debt securities	—		10,091		—		10,091
Fixed rate corporate debt	—		30,025		—		30,025
Floating rate Government/GSE guaranteed mortgage-backed securities	—		612,753		—		612,753
Fixed rate GSE guaranteed mortgage-backed securities	—		8,202		—		8,202
Floating rate GSE subordinated debt	—		66,320		—		66,320
Fixed rate senior agency debt	—		18,939		—		18,939
Floating rate U.S. Treasuries	74,979		—		—		74,979
Fixed rate U.S. Treasuries	975,712		—		—		975,712
Total available-for-sale	1,050,691		847,232		40,576		1,938,499
Trading:
Floating rate asset-backed securities	—		—		689		689
Total trading	—		—		689		689
Total Investment Securities	1,050,691		847,232		41,265		1,939,188
Farmer Mac Guaranteed Securities:
Available-for-sale:
AgVantage	—		—		3,631,662		3,631,662
Farmer Mac Guaranteed USDA Securities	—		—		27,619		27,619
Total Farmer Mac Guaranteed Securities	—		—		3,659,281		3,659,281
USDA Guaranteed Securities:
Available-for-sale	—		—		1,731,222		1,731,222
Trading	—		—		40,310		40,310
Total USDA Guaranteed Securities	—		—		1,771,532		1,771,532
Financial derivatives	—		4,177		—		4,177
Total Assets at fair value	$	1,050,691	$	851,409	$	5,472,078	$	7,374,178
Liabilities:
Financial derivatives	$	3	$	84,841	$	—	$	84,844
Total Liabilities at fair value	$	3	$	84,841	$	—	$	84,844
Nonrecurring:
Assets:
Loans held for investment	$	—	$	—	$	5,973	$	5,973
Total Nonrecurring Assets at fair value	$	—	$	—	$	5,973	$	5,973

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The following tables present additional information about assets and liabilities measured at fair value on a recurring basis for which Farmer Mac has used significant unobservable inputs to determine fair value. Net transfers in and/or out of level 3 are based on the fair values of the assets and liabilities as of the beginning of the reporting period. There were no liabilities measured at fair value using significant unobservable inputs during the three months ended September 30, 2015 .

Table 8.2



Level 3 Assets and Liabilities Measured at Fair Value for the Three Months Ended September 30, 2015
	Beginning Balance		Purchases		Sales		Settlements			Realized and Unrealized Gains/(Losses) included in Income			Unrealized Gains/(Losses) included in Other Comprehen-sive Income			Ending Balance
	(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	40,182	$	—	$	—	$	—		$	(100	)	$	4,842		$	44,924
Total available-for-sale	40,182		—		—		—			(100		)	4,842			44,924
Trading:
Floating rate asset-backed securities ⁽¹⁾	606		—		—		(106		)	50			—			550
Total trading	606		—		—		(106		)	50			—			550
Total Investment Securities	40,788		—		—		(106		)	(50		)	4,842			45,474
Farmer Mac Guaranteed Securities:
Available-for-sale:
AgVantage	4,016,200		200,000		—		(59,311		)	15,834			(46,761		)	4,125,962
Farmer Mac Guaranteed USDA Securities	35,008		—		—		(2,614		)	—			(1,686		)	30,708
Total Farmer Mac Guaranteed Securities	4,051,208		200,000		—		(61,925		)	15,834			(48,447		)	4,156,670
USDA Securities:
Available-for-sale	1,825,406		91,374		—		(51,282		)	—			(11,076		)	1,854,422
Trading ⁽²⁾	33,770		—		—		(1,777		)	(57		)	—			31,936
Total USDA Securities	1,859,176		91,374		—		(53,059		)	(57		)	(11,076		)	1,886,358
Total Assets at fair value	$	5,951,172	$	291,374	$	—	$	(115,090	)	$	15,727		$	(54,681	)	$	6,088,502


⁽¹⁾	Unrealized gains are attributable to assets still held as of September 30, 2015 and are recorded in " (Losses)/gains on trading securities ."


⁽²⁾	Includes unrealized losses of $0.1 million attributable to assets still held as of September 30, 2015 that are recorded in " (Losses)/gains on trading securities ."

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Level 3 Assets and Liabilities Measured at Fair Value for the the Three Months Ended September 30, 2014
	Beginning Balance		Purchases		Sales			Settlements			Realized and Unrealized Gains/(Losses) included in Income			Unrealized Gains/(Losses) included in Other Comprehen-sive Income			Ending Balance
	(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	54,976	$	—	$	(14,550	)	$	—		$	(450	)	$	798		$	40,774
Floating rate Government/GSE guaranteed mortgage-backed securities	195		—		—			(7		)	—			(1		)	187
Total available-for-sale	55,171		—		(14,550		)	(7		)	(450		)	797			40,961
Trading:
Floating rate asset-backed securities ⁽¹⁾	880		—		—			(127		)	24			—			777
Total trading	880		—		—			(127		)	24			—			777
Total Investment Securities	56,051		—		(14,550		)	(134		)	(426		)	797			41,738
Farmer Mac Guaranteed Securities:
Available-for-sale:
AgVantage	3,416,512		295,700		—			(382,630		)	(2,549		)	9,293			3,336,326
Farmer Mac Guaranteed USDA Securities	21,044		—		—			(200		)	—			(395		)	20,449
Total Farmer Mac Guaranteed Securities	3,437,556		295,700		—			(382,830		)	(2,549		)	8,898			3,356,775
USDA Securities:
Available-for-sale	1,636,930		97,275		—			(42,821		)	—			(3,503		)	1,687,881
Trading ⁽²⁾	46,099		—		—			(3,079		)	(56		)	—			42,964
Total USDA Securities	1,683,029		97,275		—			(45,900		)	(56		)	(3,503		)	1,730,845
Total Assets at fair value	$	5,176,636	$	392,975	$	(14,550	)	$	(428,864	)	$	(3,031	)	$	6,192		$	5,129,358


⁽¹⁾	Unrealized gains are attributable to assets still held as of September 30, 2014 and are recorded in " (Losses)/gains on trading securities ."


⁽²⁾	Includes immaterial unrealized losses attributable to assets still held as of September 30, 2014 that are recorded in " (Losses)/gains on trading securities ."

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Level 3 Assets and Liabilities Measured at Fair Value for the the Nine Months Ended September 30, 2015
	Beginning Balance		Purchases		Sales		Settlements			Realized and Unrealized Gains/(Losses) included in Income			Unrealized Gains/(Losses) included in Other Comprehen-sive Income			Ending Balance
	(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	40,576	$	—	$	—	$	—		$	(100	)	$	4,448		$	44,924
Total available-for-sale	40,576		—		—		—			(100		)	4,448			44,924
Trading:
Floating rate asset-backed securities ⁽¹⁾	689		—		—		(543		)	404			—			550
Total trading	689		—		—		(543		)	404			—			550
Total Investment Securities	41,265		—		—		(543		)	304			4,448			45,474
Farmer Mac Guaranteed Securities:
Available-for-sale:
AgVantage	3,631,662		664,175		—		(126,308		)	13,356			(56,923		)	4,125,962
Farmer Mac Guaranteed USDA Securities	27,619		12,512		—		(9,032		)	—			(391		)	30,708
Total Farmer Mac Guaranteed Securities	3,659,281		676,687		—		(135,340		)	13,356			(57,314		)	4,156,670
USDA Securities:
Available-for-sale	1,731,222		291,981		—		(184,665		)	—			15,884			1,854,422
Trading ⁽²⁾	40,310		—		—		(8,494		)	120			—			31,936
Total USDA Securities	1,771,532		291,981		—		(193,159		)	120			15,884			1,886,358
Total Assets at fair value	$	5,472,078	$	968,668	$	—	$	(329,042	)	$	13,780		$	(36,982	)	$	6,088,502


⁽¹⁾	Unrealized gains are attributable to assets still held as of September 30, 2015 and are recorded in " (Losses)/gains on trading securities ."


⁽²⁾	Includes unrealized gains of $0.2 million attributable to assets still held as of September 30, 2015 that are recorded in " (Losses)/gains on trading securities ."

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Level 3 Assets and Liabilities Measured at Fair Value for the Nine Months Ended September 30, 2014
	Beginning Balance			Purchases		Sales			Settlements			Realized and Unrealized Gains/(Losses) included in Income			Unrealized Gains/(Losses) included in Other Comprehen-sive Income			Transfers Out			Ending Balance
	(in thousands)
Recurring:
Assets:
Investment Securities:
Available-for-sale:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	65,285		$	—	$	(26,675	)	$	—		$	(825	)	$	2,989		$	—		$	40,774
Floating rate Government/GSE guaranteed mortgage-backed securities	205			—		—			(18		)	—			—			—			187
Total available-for-sale	65,490			—		(26,675		)	(18		)	(825		)	2,989			—			40,961
Trading:
Floating rate asset-backed securities ⁽¹⁾	928			—		—			(541		)	390			—			—			777
Total trading	928			—		—			(541		)	390			—			—			777
Total Investment Securities	66,418			—		(26,675		)	(559		)	(435		)	2,989			—			41,738
Farmer Mac Guaranteed Securities:
Available-for-sale:
AgVantage	5,070,366			761,475		—			(915,218		)	4,019			27,770			(1,612,086		)	3,336,326
Farmer Mac Guaranteed USDA Securities	21,234			—		—			(562		)	—			(223		)	—			20,449
Total Farmer Mac Guaranteed Securities	5,091,600			761,475		—			(915,780		)	4,019			27,547			(1,612,086		)	3,356,775
USDA Securities:
Available-for-sale	1,553,669			256,044		—			(162,917		)	—			41,085			—			1,687,881
Trading ⁽²⁾	58,344			—		—			(15,541		)	161			—			—			42,964
Total USDA Securities	1,612,013			256,044		—			(178,458		)	161			41,085			—			1,730,845
Total Assets at fair value	$	6,770,031		$	1,017,519	$	(26,675	)	$	(1,094,797	)	$	3,745		$	71,621		$	(1,612,086	)	$	5,129,358
Liabilities:
Financial derivatives	$	(235	)	$	—	$	—		$	—		$	235		$	—		$	—		$	—
Total Liabilities at fair value	$	(235	)	$	—	$	—		$	—		$	235		$	—		$	—		$	—


⁽¹⁾	Unrealized gains are attributable to assets still held as of September 30, 2014 and are recorded in " (Losses)/gains on trading securities ."


⁽²⁾	Includes unrealized gains of $0.7 million attributable to assets still held as of September 30, 2014 that are recorded in " (Losses)/gains on trading securities ."

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The following tables present additional information about the significant unobservable inputs, such as discount rates and constant prepayment rates ("CPR"), used in the fair value measurements categorized in level 3 of the fair value hierarchy as of September 30, 2015 and December 31, 2014 .

Table 8.3



	As of September 30, 2015
Financial Instruments	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted-Average)
	(in thousands)
Assets:
Investment securities:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	44,924	Indicative bids	Range of broker quotes	92.0% - 99.6% (96.6%)
Floating rate asset-backed securities	$	550	Discounted cash flow	Discount rate	16.8% - 22.2% (19.9%)
				CPR	10.0%
Farmer Mac Guaranteed Securities:
AgVantage	$	4,125,962	Discounted cash flow	Discount rate	1.06% - 3.08% (1.7%)
Farmer Mac Guaranteed USDA Securities	$	30,708	Discounted cash flow	Discount rate	1.1% - 4.1% (1.9%)
				CPR	8% - 20% (10.0%)
USDA Securities	$	1,886,358	Discounted cash flow	Discount rate	1.2% - 5.3% (3.2%)
				CPR	0% - 19% (8.0%)



	As of December 31, 2014
Financial Instruments	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted-Average)
	(in thousands)
Assets:
Investment securities:
Floating rate auction-rate certificates backed by Government guaranteed student loans	$	40,576	Indicative bids	Range of broker quotes	82.0% - 94.0% (87.1%)
Floating rate asset-backed securities	$	689	Discounted cash flow	Discount rate	14.3% - 23.9% (19.1%)
				CPR	10.0%
Farmer Mac Guaranteed Securities:
AgVantage	$	3,631,662	Discounted cash flow	Discount rate	0.7% - 2.7% (1.3%)
Farmer Mac Guaranteed USDA Securities	$	27,619	Discounted cash flow	Discount rate	0.8% - 3.6% (1.9%)
				CPR	0% - 21% (9.0%)
USDA Securities	$	1,771,532	Discounted cash flow	Discount rate	1.1% - 5.3% (3.2%)
				CPR	0% - 20% (8.0%)

The significant unobservable inputs used in the fair value measurements of Farmer Mac Guaranteed Securities and USDA Securities are prepayment rates and discount rates commensurate with the risks involved. Typically, significant increases (decreases) in any of these inputs in isolation may result in materially lower (higher) fair value measurements. Generally, in a rising interest rate environment, Farmer Mac would expect average discount rates to increase and would likely expect a corresponding decrease in forecasted prepayment rates. Conversely, in a declining interest rate environment, Farmer Mac would expect average discount rates to decrease and would likely expect a corresponding increase in forecasted prepayment rates. Prepayment rates are not presented in the table above for AgVantage securities because they generally do not pay down principal based on amortization schedules but instead typically have fixed maturity dates when the secured general obligations are due.

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Disclosures on Fair Value of Financial Instruments

The following table sets forth the estimated fair values and carrying values for financial assets, liabilities, and guarantees and commitments as of September 30, 2015 and December 31, 2014 :

Table 8.4



	As of September 30, 2015				As of December 31, 2014
	Fair Value		Carrying Amount		Fair Value		Carrying Amount
	(in thousands)
Financial assets:
Cash and cash equivalents	$	1,516,536	$	1,516,536	$	1,363,387	$	1,363,387
Investment securities	2,032,179		2,032,179		1,939,188		1,939,188
Farmer Mac Guaranteed Securities	5,447,960		5,432,823		5,459,857		5,453,901
USDA Securities	1,886,358		1,886,358		1,771,532		1,771,532
Loans	3,793,936		3,756,534		3,547,424		3,520,075
Financial derivatives	7,027		7,027		4,177		4,177
Guarantee and commitment fees receivable:
LTSPCs	31,143		29,972		29,095		27,807
Farmer Mac Guaranteed Securities	10,110		10,188		11,876		11,655
Financial liabilities:
Notes payable:
Due within one year	8,288,217		8,280,087		7,357,770		7,353,953
Due after one year	5,305,185		5,217,307		5,556,570		5,471,186
Debt securities of consolidated trusts held by third parties	613,539		612,994		423,085		424,214
Financial derivatives	94,880		94,880		84,844		84,844
Guarantee and commitment obligations:
LTSPCs	30,242		29,071		28,130		26,843
Farmer Mac Guaranteed Securities	9,104		9,182		11,303		11,082

The carrying value of cash and cash equivalents is a reasonable estimate of their approximate fair value and is classified as level 1 within the fair value hierarchy. Investment securities primarily are valued based on unadjusted quoted prices in active markets and are classified as level 2 within the fair value hierarchy. Farmer Mac internally models the fair value of its loan portfolio, including loans held for sale, loans held for investment and loans held for investment in consolidated trusts, Farmer Mac Guaranteed Securities, and USDA Securities by discounting the projected cash flows of these instruments at projected interest rates. The fair values are based on the present value of expected cash flows using management's best estimate of certain key assumptions, which include prepayment speeds, forward yield curves and discount rates commensurate with the risks involved. These fair value measurements do not take into consideration the fair value of the underlying property and are classified as level 3 within the fair value hierarchy. Financial derivatives primarily are valued using unadjusted counterparty valuations and are classified as level 2 within the fair value hierarchy. The fair value of the guarantee fees receivable/obligation and debt securities of consolidated trusts are estimated based on the present value of expected future cash flows of the underlying mortgage assets using management's best estimate of certain key assumptions, which include prepayments speeds, forward yield curves, and discount rates commensurate with the risks involved and are classified as level 3 within the fair value hierarchy. Notes payable are valued by discounting the expected cash flows of these instruments using a yield curve derived from market prices observed for similar agency securities and are

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also classified as level 3 within the fair value hierarchy. Because the cash flows of Farmer Mac's financial instruments may be interest rate path dependent, estimated fair values and projected discount rates for level 3 financial instruments are derived using a Monte Carlo simulation model. Different market assumptions and estimation methodologies could significantly affect estimated fair value amounts.


9.	BUSINESS SEGMENT REPORTING

Farmer Mac's operations consist of four reportable operating segments – Farm & Ranch, USDA Guarantees, Rural Utilities, and Institutional Credit. The Institutional Credit segment comprises Farmer Mac's guarantees of AgVantage securities related to general obligations of lenders that are secured by pools of eligible loans.

Farmer Mac uses these four segments to manage business risk, and each segment is based on distinct products and distinct business activities. In addition to these four operating segments, a corporate segment is presented. That segment represents activity in Farmer Mac's investment portfolio and other corporate activities. The operating segment financial results include directly attributable revenues and expenses. Corporate charges for administrative expenses that are not directly attributable to an operating segment are allocated based on headcount.

Farmer Mac uses core earnings to measure corporate economic performance and develop financial plans because, in management's view, core earnings is a useful alternative measure in understanding Farmer Mac's economic performance, transaction economics, and business trends. Core earnings principally differs from net income attributable to common stockholders by excluding the effects of fair value fluctuations, which are not expected to have a cumulative net impact on financial condition or results of operations reported in accordance with generally accepted accounting principles ("GAAP") if the related financial instruments are held to maturity, as is generally expected. Core earnings also differs from net income attributable to common stockholders by excluding specified infrequent or unusual transactions that Farmer Mac believes are not indicative of future operating results and that may not reflect the trends and economic financial performance of Farmer Mac's core business. This non-GAAP financial measure may not be comparable to similarly labeled non-GAAP financial measures disclosed by other companies. Farmer Mac's disclosure of this non-GAAP measure 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.

The financial information presented below reflects the accounts of Farmer Mac and its subsidiaries on a consolidated basis. Accordingly, the core earnings for Farmer Mac's reportable operating segments will differ from the stand-alone financial statements of Farmer Mac's subsidiaries. These differences will be due to various factors, including the reversal of unrealized gains and losses related to fair value changes of trading assets and financial derivatives, as well as the allocation of certain expenses such as dividends and interest expense related to the issuance of capital and the incurrence of indebtedness managed at the corporate level. The allocation of general and administrative expenses that are not directly attributable to an operating segment may also result in differences.

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The following tables present core earnings for Farmer Mac's reportable operating segments and a reconciliation to consolidated net income for the three and nine months ended September 30, 2015 and 2014 :

Table 9.1



Core Earnings by Business Segment
For the Three Months Ended September 30, 2015
	Farm & Ranch			USDA Guarantees			Rural Utilities			Institutional Credit			Corporate			Reconciling Adjustments				Consolidated Net Income
	(in thousands)
Interest income ⁽¹⁾	$	22,805		$	15,329		$	6,909		$	19,341		$	3,185		$	(651	)		$	66,918
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(796		)	—			—			—			—			796				—
Interest expense ⁽²⁾	(12,381		)	(10,699		)	(4,002		)	(8,070		)	(1,234		)	1,651				(34,735		)
Net effective spread	9,628			4,630			2,907			11,271			1,951			1,796				32,183
Guarantee and commitment fees	3,785			7			100			436			—			(796		)		3,532
Other income/(expense) ⁽³⁾	513			13			—			—			(619		)	(8,420		)		(8,513		)
Non-interest income/(loss)	4,298			20			100			436			(619		)	(9,216		)		(4,981		)

Release of allowance for loan losses	1,164			—			—			—			—			—				1,164

Provision for losses	(861		)	—			—			—			—			—				(861		)
Other non-interest expense	(4,228		)	(986		)	(838		)	(522		)	(2,986		)	—				(9,560		)
Non-interest expense ⁽⁴⁾	(5,089		)	(986		)	(838		)	(522		)	(2,986		)	—				(10,421		)
Core earnings before income taxes	10,001			3,664			2,169			11,185			(1,654		)	(7,420		)	⁽⁵⁾	17,945
Income tax (expense)/benefit	(3,500		)	(1,282		)	(760		)	(3,915		)	533			2,597				(6,327		)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest	6,501			2,382			1,409			7,270			(1,121		)	(4,823		)	⁽⁵⁾	11,618
Preferred stock dividends	—			—			—			—			(3,295		)	—				(3,295		)
Non-controlling interest	—			—			—			—			36			—				36
Segment core earnings/(losses)	$	6,501		$	2,382		$	1,409		$	7,270		$	(4,380	)	$	(4,823	)	⁽⁵⁾	$	8,359

Total assets at carrying value	$	2,856,097		$	1,941,166		$	987,115		$	5,405,360		$	3,664,107		$	—			$	14,853,845
Total on- and off-balance sheet program assets at principal balance	5,504,030			1,898,625			1,500,307			6,725,017						—				15,627,979


⁽¹⁾	Includes reconciling adjustments for the amortization of premiums and discounts on assets consolidated at fair value to reflect core earnings amounts.


⁽²⁾	Based on effective funding cost determined for each operating segment, including expenses related to interest rate swaps not designated as hedges, which are included in " (Losses)/gains on financial derivatives and hedging activities " on the consolidated financial statements.


⁽³⁾	Includes reconciling adjustments for the reclassification of expenses related to interest rate swaps not designated as hedges and fair value adjustments on financial derivatives and trading assets. Also includes a reconciling adjustment related to the recognition of deferred gains over the estimated lives of certain Farmer Mac Guaranteed Securities and USDA Securities.


⁽⁴⁾	Includes directly attributable costs and an allocation of indirectly attributable costs based on headcount.


⁽⁵⁾	Net adjustments to reconcile core earnings before income taxes; core earnings before preferred stock dividends and attribution of income to non-controlling interest; and segment core earnings to corresponding income measures: income before income taxes, net income, and net income attributable to common stockholders, respectively.

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Core Earnings by Business Segment
For the Three Months Ended September 30, 2014
	Farm & Ranch			USDA Guarantees			Rural Utilities			Institutional Credit			Corporate			Reconciling Adjustments				Consolidated Net Income
	(in thousands)
Interest income ⁽¹⁾	$	20,052		$	14,183		$	6,703		$	18,751		$	4,683		$	(962	)		$	63,410
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(508		)	—			—			—			—			508				—
Interest expense ⁽²⁾	(11,337		)	(9,110		)	(3,813		)	(8,928		)	(910		)	(14,788		)		(48,886		)
Net effective spread	8,207			5,073			2,890			9,823			3,773			(15,242		)		14,524
Guarantee and commitment fees	3,716			49			—			387			—			(508		)		3,644
Other income/(expense) ⁽³⁾	369			13			9			—			(2,392		)	19,284				17,283
Non-interest income/(loss)	4,085			62			9			387			(2,392		)	18,776				20,927

Provision for loan losses	(511		)	—			—			—			—			—				(511		)

Release of reserve for losses	1,315			—			—			—			—			—				1,315
Other non-interest expense	(3,797		)	(747		)	(762		)	(478		)	(2,626		)	—				(8,410		)
Non-interest expense ⁽⁴⁾	(2,482		)	(747		)	(762		)	(478		)	(2,626		)	—				(7,095		)
Core earnings before income taxes	9,299			4,388			2,137			9,732			(1,245		)	3,534			⁽⁵⁾	27,845
Income tax (expense)/benefit	(3,255		)	(1,535		)	(749		)	(3,407		)	2,619			(1,237		)		(7,564		)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest	6,044			2,853			1,388			6,325			1,374			2,297			⁽⁵⁾	20,281
Preferred stock dividends	—			—			—			—			(3,283		)	—				(3,283		)
Non-controlling interest	—			—			—			—			(5,412		)	—				(5,412		)
Segment core earnings/(losses)	$	6,044		$	2,853		$	1,388		$	6,325		$	(7,321	)	$	2,297		⁽⁵⁾	$	11,586

Total assets at carrying value	$	2,428,603		$	1,772,333		$	981,300		$	5,016,670		$	4,326,791		$	—			$	14,525,697
Total on- and off-balance sheet program assets at principal balance	5,314,437			1,759,948			978,637			5,951,800						—				14,004,822


⁽¹⁾	Includes reconciling adjustments for the amortization of premiums and discounts on assets consolidated at fair value to reflect core earnings amounts and interest income related to securities purchased under agreements to resell.


⁽²⁾	Based on effective funding cost determined for each operating segment, including expenses related to interest rate swaps not designated as hedges, which are included in " (Losses)/gains on financial derivatives and hedging activities " on the consolidated financial statements. Includes reconciling adjustments for interest expense related to securities sold, not yet purchased.

⁽³⁾

Includes interest income and interest expense related to securities purchased under agreements to resell and securities sold, not yet purchased, respectively; reconciling adjustments for the reclassification of expenses related to interest rate swaps not designated as hedges and fair value adjustments on financial derivatives and trading assets; and a reconciling adjustment related to the recognition of deferred gains over the estimated lives of certain Farmer Mac Guaranteed Securities and USDA Securities.


⁽⁴⁾	Includes directly attributable costs and an allocation of indirectly attributable costs based on headcount.


⁽⁵⁾	Net adjustments to reconcile core earnings before income taxes; core earnings before preferred stock dividends and attribution of income to non-controlling interest; and segment core earnings to corresponding income measures: income before income taxes, net income, and net income attributable to common stockholders, respectively.

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Core Earnings by Business Segment
For the Nine Months Ended September 30, 2015
	Farm & Ranch			USDA Guarantees			Rural Utilities			Institutional Credit			Corporate			Reconciling Adjustments				Consolidated Net Income
	(in thousands)
Interest income ⁽¹⁾	$	66,932		$	44,456		$	20,015		$	58,676		$	9,144		$	(1,962	)		$	197,261
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(2,128		)	—			—			—			—			2,128				—
Interest expense ⁽²⁾	(35,381		)	(31,135		)	(11,466		)	(26,120		)	(3,562		)	5,239				(102,425		)
Net effective spread	29,423			13,321			8,549			32,556			5,582			5,405				94,836
Guarantee and commitment fees	11,111			9			100			1,205			—			(2,128		)		10,297
Other income/(expense) ⁽³⁾	760			100			—			—			(1,383		)	3,927				3,404
Non-interest income/(loss)	11,871			109			100			1,205			(1,383		)	1,799				13,701

Release of allowance for loan losses	978			—			—			—			—			—				978

Provision for losses	(1,235		)	—			—			—			—			—				(1,235		)
Other non-interest expense	(12,858		)	(2,396		)	(2,564		)	(1,589		)	(8,975		)	—				(28,382		)
Non-interest expense ⁽⁴⁾	(14,093		)	(2,396		)	(2,564		)	(1,589		)	(8,975		)	—				(29,617		)
Core earnings before income taxes	28,179			11,034			6,085			32,172			(4,776		)	7,204			⁽⁵⁾	79,898
Income tax (expense)/benefit	(9,862		)	(3,861		)	(2,129		)	(11,260		)	3,405			(620		)		(24,327		)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest	18,317			7,173			3,956			20,912			(1,371		)	6,584			⁽⁵⁾	55,571
Preferred stock dividends	—			—			—			—			(9,886		)	—				(9,886		)
Non-controlling interest	—			—			—			—			(5,199		)	—				(5,199		)
Loss on retirement of preferred stock	—			—			—			—			—			(8,147		)		(8,147		)
Segment core earnings/(losses)	$	18,317		$	7,173		$	3,956		$	20,912		$	(16,456	)	$	(1,563	)	⁽⁵⁾	$	32,339

Total assets at carrying value	$	2,856,097		$	1,941,166		$	987,115		$	5,405,360		$	3,664,107		$	—			$	14,853,845
Total on- and off-balance sheet program assets at principal balance	5,504,030			1,898,625			1,500,307			6,725,017						—				15,627,979


⁽¹⁾	Includes reconciling adjustments for the amortization of premiums and discounts on assets consolidated at fair value to reflect core earnings amounts.


⁽²⁾	Based on effective funding cost determined for each operating segment, including expenses related to interest rate swaps not designated as hedges, which are included in " (Losses)/gains on financial derivatives and hedging activities " on the consolidated financial statements.


⁽³⁾	Includes reconciling adjustments for the reclassification of expenses related to interest rate swaps not designated as hedges and fair value adjustments on financial derivatives and trading assets. Also includes a reconciling adjustment related to the recognition of deferred gains over the estimated lives of certain Farmer Mac Guaranteed Securities and USDA Securities.


⁽⁴⁾	Includes directly attributable costs and an allocation of indirectly attributable costs based on headcount.


⁽⁵⁾	Net adjustments to reconcile core earnings before income taxes; core earnings before preferred stock dividends and attribution of income to non-controlling interest; and segment core earnings to corresponding income measures: income before income taxes, net income, and net income attributable to common stockholders, respectively.

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Core Earnings by Business Segment
For the Nine Months Ended September 30, 2014
	Farm & Ranch			USDA Guarantees			Rural Utilities			Institutional Credit			Corporate			Reconciling Adjustments				Consolidated Net Income
	(in thousands)
Interest income ⁽¹⁾	$	57,988		$	40,449		$	21,228		$	59,206		$	15,103		$	(13,637	)		$	180,337
Interest income related to consolidated trusts owned by third parties reclassified to guarantee fee income	(1,552		)	—			—			—			—			1,552				—
Interest expense ⁽²⁾	(33,295		)	(27,433		)	(13,395		)	(30,020		)	(3,028		)	(18,943		)		(126,114		)
Net effective spread	23,141			13,016			7,833			29,186			12,075			(31,028		)		54,223
Guarantee and commitment fees	11,432			98			—			1,153			—			(1,552		)		11,131
Other income/(expense) ⁽³⁾	742			49			9			—			(3,566		)	15,791				13,025
Non-interest income/(loss)	12,174			147			9			1,153			(3,566		)	14,239				24,156

Release of allowance for loan losses	499			—			—			—			—			—				499

Release of reserve for losses	2,188			—			—			—			—			—				2,188
Other non-interest expense	(11,263		)	(2,242		)	(2,369		)	(1,415		)	(7,797		)	—				(25,086		)
Non-interest expense ⁽⁴⁾	(9,075		)	(2,242		)	(2,369		)	(1,415		)	(7,797		)	—				(22,898		)
Core earnings before income taxes	26,739			10,921			5,473			28,924			712			(16,789		)	⁽⁵⁾	55,980
Income tax (expense)/benefit	(9,358		)	(3,823		)	(1,917		)	(10,124		)	19,295			5,872				(55		)
Core earnings before preferred stock dividends and attribution of income to non-controlling interest	17,381			7,098			3,556			18,800			20,007			(10,917		)	⁽⁵⁾	55,925
Preferred stock dividends	—			—			—			—			(6,543		)	—				(6,543		)
Non-controlling interest	—			—			—			—			(16,778		)	—				(16,778		)
Segment core earnings/(losses)	$	17,381		$	7,098		$	3,556		$	18,800		$	(3,314	)	$	(10,917	)	⁽⁵⁾	$	32,604

Total assets at carrying value	$	2,428,603		$	1,772,333		$	981,300		$	5,016,670		$	4,326,791		$	—			$	14,525,697
Total on- and off-balance sheet program assets at principal balance	5,314,437			1,759,948			978,637			5,951,800						—				14,004,822


⁽¹⁾	Includes reconciling adjustments for the amortization of premiums and discounts on assets consolidated at fair value to reflect core earnings amounts and interest income related to securities purchased under agreements to resell.


⁽²⁾	Based on effective funding cost determined for each operating segment, including expenses related to interest rate swaps not designated as hedges, which are included in " (Losses)/gains on financial derivatives and hedging activities " on the consolidated financial statements. Includes reconciling adjustments for interest expense related to securities sold, not yet purchased.

⁽³⁾


⁽⁴⁾	Includes directly attributable costs and an allocation of indirectly attributable costs based on headcount.


⁽⁵⁾	Net adjustments to reconcile core earnings before income taxes; core earnings before preferred stock dividends and attribution of income to non-controlling interest; and segment core earnings to corresponding income measures: income before income taxes, net income, and net income attributable to common stockholders, respectively.

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Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations

Financial information included in this report is consolidated to include the accounts of Farmer Mac and its three subsidiaries – Farmer Mac Mortgage Securities Corporation, Farmer Mac II LLC, and Contour Valuation Services, LLC. This discussion and analysis of financial condition and results of operations should be read together with (1) the interim unaudited consolidated financial statements and the related notes that appear elsewhere in this report and (2) Farmer Mac's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the U.S. Securities and Exchange Commission ("SEC") on March 16, 2015.

FORWARD-LOOKING STATEMENTS

Some statements made in this report, and in particular in the "Management's Discussion & Analysis of Financial Condition and Results of Operations" section, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 pertaining to management's current expectations as to Farmer Mac's future financial results, business prospects, and business developments. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements. These statements typically are accompanied by, and identified with, terms such as "anticipates," "believes," "expects," "intends," "plans," "potential," "may," "should," and similar phrases. This report includes forward-looking statements addressing Farmer Mac's:


•	prospects for earnings;


•	prospects for growth in business volume;


•	trends in net interest income and net effective spread;


•	trends in portfolio credit quality, delinquencies, and provisions for losses;


•	trends in expenses;


•	trends in investment securities;


•	prospects for asset impairments and allowance for losses;


•	changes in capital position; and


•	other business and financial matters.

Management's expectations for Farmer Mac's future necessarily involve a number of assumptions and estimates and the evaluation of risks and uncertainties. Various factors or events, both known and unknown, could cause Farmer Mac's actual results to differ materially from the expectations as expressed or implied by the forward-looking statements, including the factors discussed under "Risk Factors" in Part I, Item 1A of Farmer Mac's Annual Report on Form 10-K for the fiscal period ended December 31, 2014 filed with the SEC on March 16, 2015, and uncertainties regarding:


•	the availability to Farmer Mac of debt and equity financing and, if available, the reasonableness of rates and terms;


•	legislative or regulatory developments that could affect Farmer Mac or its sources of business;


•	fluctuations in the fair value of assets held by Farmer Mac and its subsidiaries;


•	the rate and direction of development of the secondary market for agricultural mortgage and rural utilities loans, including lender interest in Farmer Mac credit products and the secondary market provided by Farmer Mac;


•	the general rate of growth in agricultural mortgage and rural utilities indebtedness;

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•	the impact of economic conditions, including the effects of drought and other weather-related conditions and fluctuations in agricultural real estate values, on agricultural mortgage lending and borrower repayment capacity;


•	developments in the financial markets, including possible investor, analyst, and rating agency reactions to events involving government-sponsored enterprises, including Farmer Mac;


•	changes in the level and direction of interest rates, which could, among other things, affect the value of collateral securing Farmer Mac's agricultural mortgage loan assets; and


•	volatility in commodity prices relative to costs of production and/or export demand for U.S. agricultural products.

In light of these potential risks and uncertainties, no undue reliance should be placed on any forward-looking statements expressed in this report. Furthermore, Farmer Mac undertakes no obligation to release publicly the results of revisions to any forward-looking statements that may be made to reflect new information or any future events or circumstances, except as otherwise mandated by the SEC. The information contained in this report is not necessarily indicative of future results.

Overview

During third quarter 2015, Farmer Mac increased its outstanding business volume by $497.9 million to $15.6 billion driven primarily by the addition of $522.3 million of Rural Utilities loans under LTSPCs, which was the first time Farmer Mac has provided LTSPCs on loans in the Rural Utilities line of business. Farmer Mac also added a $300.0 million revolving floating rate AgVantage facility during third quarter 2015. Farmer Mac's net effective spread improved $0.6 million in third quarter 2015 compared to second quarter 2015. Credit quality remained stable during the quarter.

The effects of Farmer Mac's cash management and liquidity initiative and capital restructuring initiative are explained in the comparisons of financial results between third quarter 2015 and third quarter 2014. These two initiatives were completed in first quarter 2015 and are described in more detail in Farmer Mac's Annual Report on Form 10-K filed with the SEC on March 16, 2015.

Net Income and Core Earnings

Farmer Mac's net income attributable to common stockholders for third quarter 2015 was $8.4 million , compared to $11.6 million for third quarter 2014 . The decrease was primarily attributable to the effects of unrealized fair value changes on financial derivatives and hedged assets, which was a $4.5 million after-tax loss in third quarter 2015 , compared to a $2.7 million after-tax gain in third quarter 2014. The year-over-year decrease in net income attributable to common stockholders was partially offset by a decrease in preferred stock dividend expense of $3.5 million after-tax in third quarter 2015 compared to third quarter 2014 , due to the redemption of all outstanding shares of Farmer Mac II LLC Preferred Stock on March 30, 2015. For more information about quarter-to-quarter changes in net income attributable to common stockholders, see "—Results of Operations."

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Farmer Mac's non-GAAP core earnings for third quarter 2015 were $13.2 million , compared to $9.3 million in third quarter 2014 and $11.6 million in second quarter 2015. The year-over-year increase was primarily attributable to: (1) a $3.5 million after-tax decrease in preferred dividend expense resulting from the redemption of all outstanding shares of Farmer Mac II LLC Preferred Stock in first quarter 2015; (2) a $1.8 million after-tax increase in net effective spread resulting from net growth in outstanding business volume, excluding the effect of the October 1, 2014 redemption of Farmer Mac's investment in $78.5 million of high yielding preferred stock; and (3) the absence in third quarter 2015 of $1.0 million after-tax in financing costs related to the cash management and liquidity initiative. The year-over-year increase in core earnings was offset in part by the loss of $1.9 million after-tax in preferred dividend income resulting from the fourth quarter 2014 redemption of $78.5 million of high-yielding preferred stock previously held in Farmer Mac's investment portfolio. In addition, operating expenses increased in third quarter 2015 by $0.7 million after-tax compared to the prior year quarter, primarily due to higher compensation costs resulting from the consolidation of Farmer Mac's appraisal subsidiary, Contour Valuation Services, LLC, higher legal fees, and information services expenses related to corporate strategic initiatives. Credit expenses also increased $0.4 million after-tax. The increase in core earnings in third quarter 2015 compared to second quarter 2015 was primarily due to a $1.0 million decrease in credit expenses resulting from net releases to the allowance for losses of $0.2 million after-tax in third quarter 2015, compared to net provisions of $0.8 million after-tax in second quarter 2015, and an increase in net effective spread of $0.4 million after-tax resulting from overall portfolio growth in Farm & Ranch loans, USDA Securities, and Rural Utilities loans. Fair value changes on derivatives do not affect core earnings. For more information about the composition of core earnings, see "—Results of Operations."

Farmer Mac's net effective spread was $30.4 million ( 88 basis points) in third quarter 2015 , compared to $29.8 million ( 97 basis points) in third quarter 2014 and $29.8 million ( 88 basis points) in second quarter 2015. The year-over-year decrease in basis points was primarily attributable to the loss of $2.1 million in preferred dividend income (7 basis points) from the October 2014 redemption of preferred stock held in Farmer Mac's investment portfolio. The year-over-year increase in dollars was primarily attributable to growth in outstanding business volume. The increase in dollars of net effective spread compared to second quarter 2015 was primarily due to growth in outstanding business volume.

Business Volume

Farmer Mac added $1.4 billion of new business volume during third quarter 2015. The new business volume included Rural Utilities loans added under LTSPCs of $522.3 million , the addition of a $300.0 million revolving floating rate AgVantage facility, purchases of AgVantage securities of $206.6 million , Farm & Ranch loan purchases of $176.0 million , USDA Securities purchases of $91.4 million , Farm & Ranch loans added under LTSPCs of $79.6 million , and Rural Utilities loan purchases of $53.6 million . Taking into account maturities and paydowns on existing assets, Farmer Mac's outstanding business volume was $15.6 billion as of September 30, 2015 , an increase of $497.9 million from June 30, 2015, $1.0 billion from December 31, 2014 , and $1.6 billion from September 30, 2014 .

Capital

As of September 30, 2015 , Farmer Mac's core capital level was $558.2 million , $115.4 million above the minimum capital level required by Farmer Mac's statutory charter. As of December 31, 2014 , Farmer Mac's core capital level was $766.3 million , which was $345.0 million above the minimum capital requirement. The decrease in capital in excess of the minimum capital level was due primarily to the redemption of the Farmer Mac II LLC Preferred Stock in first quarter 2015.

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Credit Quality

Farmer Mac continued to maintain favorable credit metrics, as substandard assets and the total allowance for losses as a percentage of the Farm & Ranch portfolio remained at similar levels compared to second quarter 2015. During third quarter 2015, Farmer Mac reduced its total allowance for losses by $0.3 million , primarily due to a reduction in the specific allowance for a permanent planting loan and a decrease in the general allowance for processing loans underlying LTSPCs due to repayment of these loans at par. As of September 30, 2015 , Farmer Mac's 90-day delinquencies were $36.7 million ( 0.67 percent of the Farm & Ranch portfolio), up from $18.9 million ( 0.35 percent of the Farm & Ranch portfolio) as of December 31, 2014 , and from $24.7 million ( 0.46 of the Farm & Ranch portfolio) as of September 30, 2014 . The primary cause of the increase in 90-day delinquencies during third quarter 2015 was the delinquency of one borrower on two canola facility loans underlying an LTSPC that had been categorized as substandard assets in second quarter 2015 and became delinquent for 90 days or more during third quarter 2015. As of September 30, 2015, Farmer Mac's exposure to this canola facility was $13.5 million. During third quarter 2015, Farmer Mac increased the allowance for losses by $1.3 million related to this canola facility. For more information about Farmer Mac's credit metrics, including 90-day delinquencies, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk – Loans and Guarantees."

Results of Operations

Farmer Mac's net income attributable to common stockholders for the three months ended September 30, 2015 was $8.4 million , or $0.74 per diluted common share, compared to $11.6 million , or $1.02 per diluted common share, for the same period in 2014 . For the nine months ended September 30, 2015 , Farmer Mac's net income attributable to common stockholders was $32.3 million , or $2.85 per diluted common share, compared to $32.6 million , or $2.87 per diluted common share, for the nine months ended September 30, 2014 . Farmer Mac's non-GAAP core earnings were $13.2 million , or $1.17 per diluted common share for the three months ended September 30, 2015 , compared to $9.3 million , or $0.82 per diluted common share for the same period in 2014. Farmer Mac's non-GAAP core earnings were $33.9 million , or $2.99 per diluted common share, for the nine months ended September 30, 2015 , compared to $43.5 million , or $3.83 per diluted common share, for the same period in 2014.

Farmer Mac uses core earnings to measure corporate economic performance and develop financial plans because, in management's view, core earnings is a useful alternative measure in understanding Farmer Mac's economic performance, transaction economics, and business trends. Core earnings principally differs from net income attributable to common stockholders by excluding the effects of fair value fluctuations, which are not expected to have a cumulative net impact on financial condition or results of operations reported in accordance with GAAP if the related financial instruments are held to maturity, as is generally expected. Core earnings also differs from net income attributable to common stockholders by excluding specified infrequent or unusual transactions that Farmer Mac believes are not indicative of future operating results and that may not reflect the trends and economic financial performance of Farmer Mac's core business. Accordingly, the loss from retirement of the Farmer Mac II LLC Preferred Stock in first quarter 2015 has been excluded from core earnings because it is not a frequently occurring transaction and not indicative of future operating results. This is also consistent with Farmer Mac's previous treatment of these types of origination costs associated with securities underwriting that are capitalized and deferred during the life of the security. The non-GAAP financial measure of core earnings used by Farmer Mac may not be comparable to similarly labeled non-GAAP

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financial measures disclosed by other companies. Farmer Mac's disclosure of this non-GAAP measure 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.

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A reconciliation of Farmer Mac's net income attributable to common stockholders to core earnings is presented in the following table along with a breakdown of the composition of core earnings:

Table 1



Reconciliation of Net Income Attributable to Common Stockholders to Core Earnings
	For the Three Months Ended
	September 30, 2015			September 30, 2014
	(in thousands, except per share amounts)
Net income attributable to common stockholders	$	8,359		$	11,586
Less the after-tax effects of:
Unrealized (losses)/gains on financial derivatives and hedging activities	(4,489		)	2,685
Unrealized losses on trading assets ⁽¹⁾	(5		)	(21		)
Amortization of premiums/discounts and deferred gains on assets consolidated at fair value	(76		)	(440		)
Net effects of settlements on agency forward contracts	(253		)	73
Sub-total	(4,823		)	2,297
Core earnings	$	13,182		$	9,289

Composition of Core Earnings:
Revenues:
Net effective spread	$	30,387		$	29,766
Guarantee and commitment fees	4,328			4,152
Other ⁽²⁾	(93		)	(2,001		)
Total revenues	34,622			31,917

Credit related (income)/expense:
Release of losses	(303		)	(804		)
REO operating expenses	48			1
Gains on sale of REO	—			—
Total credit related income	(255		)	(803		)

Operating expenses:
Compensation and employee benefits	5,236			4,693
General and administrative	3,676			3,123
Regulatory fees	600			593
Total operating expenses	9,512			8,409

Net earnings	25,365			24,311
Income tax expense	8,924			6,327
Net (loss)/income attributable to non-controlling interest	(36		)	5,412
Preferred stock dividends	3,295			3,283
Core earnings	$	13,182		$	9,289

Core earnings per share:
Basic	$	1.20		$	0.85
Diluted	1.17			0.82
Weighted-average shares:
Basic	11,028			10,930
Diluted	11,271			11,372


⁽¹⁾	Excludes unrealized gains related to securities sold, not yet purchased of $16.4 million during the three months ended September 30, 2014.


⁽²⁾	Includes $17.9 million of interest expense related to securities purchased under agreements to resell and securities sold, not yet purchased and $16.4 million of unrealized gains on securities sold, not yet purchased during the three months ended September 30, 2014.

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Reconciliation of Net Income Attributable to Common Stockholders to Core Earnings
	For the Nine Months Ended
	September 30, 2015			September 30, 2014
	(in thousands, except per share amounts)
Net income attributable to common stockholders	$	32,339		$	32,604
Less the after-tax effects of:
Unrealized gains/(losses) on financial derivatives and hedging activities	5,317			(2,763		)
Unrealized gains on trading assets ⁽¹⁾	341			359
Amortization of premiums/discounts and deferred gains on assets consolidated at fair value ⁽²⁾	(686		)	(8,646		)
Net effects of settlements on agency forward contracts	(289		)	133
Loss on retirement of Farmer Mac II LLC Preferred Stock ⁽³⁾	(6,246		)	—
Sub-total	(1,563		)	(10,917		)
Core earnings	$	33,902		$	43,521

Composition of Core Earnings:
Revenues:
Net effective spread	$	89,431		$	85,251
Guarantee and commitment fees	12,425			12,683
Other ⁽⁴⁾	(522		)	(2,931		)
Total revenues	101,334			95,003

Credit related expense/(income):
Provision for/(release of) losses	257			(2,687		)
REO operating expenses	47			62
Losses/(gains) on sale of REO	1			(165		)
Total credit related expense/(income)	305			(2,790		)

Operating expenses:
Compensation and employee benefits	16,662			14,038
General and administrative	9,873			9,205
Regulatory fees	1,800			1,781
Total operating expenses	28,335			25,024

Net earnings	72,694			72,769
Income tax expense ⁽⁵⁾	23,707			5,927
Net income attributable to non-controlling interest	5,199			16,778
Preferred stock dividends	9,886			6,543
Core earnings	$	33,902		$	43,521

Core earnings per share:
Basic	$	3.08		$	3.99
Diluted	2.99			3.83
Weighted-average shares:
Basic	10,992			10,914
Diluted	11,347			11,360


⁽¹⁾	Excludes unrealized gains related to securities sold, not yet purchased of $24.2 million during the nine months ended September 30, 2014.


⁽²⁾	Includes $7.5 million related to the acceleration of premium amortization in first quarter 2014 due to significant refinancing activity in the Rural Utilities line of business.


⁽³⁾	Relates to the write-off of deferred issuance costs as a result of the retirement of Farmer Mac II LLC Preferred Stock.


⁽⁴⁾	Includes $25.7 million of interest expense related to securities purchased under agreements to resell and securities sold, not yet purchased and $24.2 million of unrealized gains on securities sold, not yet purchased during the nine months ended September 30, 2014.


⁽⁵⁾	Includes the reduction of $11.6 million tax valuation allowance against capital loss carryforwards related to expected capital gains on securities sold, not yet purchased and a reduction in tax valuation allowance of $0.9 million associated with certain gains on investment portfolio assets during the nine months ended September 30, 2014.

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The following sections provide more detail regarding specific components of Farmer Mac's results of operations.

Net Interest Income . Net interest income for the three and nine months ended September 30, 2015 was $32.2 million and $94.8 million , respectively, compared to $14.5 million and $54.2 million for the same periods in 2014. The increase in net interest income primarily resulted from the absence of the following two items that did not recur in the first nine months of 2015 but were included in net interest income for the first nine months of 2014: (1) the acceleration of amortization of $11.6 million in premiums associated with certain Rural Utilities loans that were refinanced into other loan products in first quarter 2014; and (2) interest expense of $25.7 million associated with securities purchased under agreements to resell and securities sold, not yet purchased (related to Farmer Mac's cash management and liquidity initiative that began in second quarter 2014). The increase in net interest income was also attributable in part to an increase in the average outstanding balance of Farm & Ranch loans, USDA Securities, and AgVantage securities. The increase in net interest income was partially offset by the loss of $6.5 million in preferred dividend income due to the October 2014 redemption of high-yielding preferred stock previously held in Farmer Mac's investment portfolio. The overall net interest yield was 89 basis points for the nine months ended September 30, 2015 , compared to 53 basis points for the nine months ended September 30, 2014 .

The following table provides information regarding interest-earning assets and funding for the nine months ended September 30, 2015 and 2014 . The average balance of non-accruing loans is included in the average balance of loans, Farmer Mac Guaranteed Securities, and USDA Securities presented, though the related income is accounted for on a cash basis. Therefore, as the average balance of non-accruing loans and the income received increases or decreases, the net interest yield will fluctuate accordingly. The average balance of loans in consolidated trusts with beneficial interests owned by third parties is disclosed in the net effect of consolidated trusts and is not included in the average balances of interest-earning assets and interest-bearing liabilities. The interest income and expense associated with these trusts are shown in the net effect of consolidated trusts.

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Table 2



	For the Nine Months Ended
	September 30, 2015						September 30, 2014
	Average Balance		Income/ Expense		Average Rate		Average Balance		Income/ Expense		Average Rate
	(dollars in thousands)
Interest-earning assets:
Cash and investments ⁽¹⁾	$	3,227,893	$	9,144	0.38	%	$	3,585,567	$	14,845	0.55	%
Loans, Farmer Mac Guaranteed Securities and USDA Securities ⁽²⁾⁽³⁾	10,439,224		173,911		2.22	%	9,687,272		155,635		2.14	%
Total interest-earning assets	13,667,117		183,055		1.79	%	13,272,839		170,480		1.71	%
Funding:
Notes payable due within one year	5,711,356		8,343		0.19	%	4,570,664		5,321		0.16	%
Notes payable due after one year ⁽⁴⁾	7,422,810		82,004		1.47	%	7,265,672		87,005		1.60	%
Other interest-bearing liabilities ⁽⁵⁾	—		—		—	%	797,324		25,483		4.26	%
Total interest-bearing liabilities ⁽⁶⁾	13,134,166		90,347		0.92	%	12,633,660		117,809		1.24	%
Net non-interest-bearing funding	532,951		—				639,179		—
Total funding	13,667,117		90,347		0.88	%	13,272,839		117,809		1.18	%
Net interest income/yield prior to consolidation of certain trusts	13,667,117		92,708		0.90	%	13,272,839		52,671		0.53	%
Net effect of consolidated trusts ⁽⁷⁾	503,609		2,128		0.56	%	334,163		1,552		0.62	%
Adjusted net interest income/yield	$	14,170,726	$	94,836	0.89	%	$	13,607,002	$	54,223	0.53	%


⁽¹⁾	Average balance includes $793.1 million of securities purchased under agreements to resell in 2014. Includes $0.3 million of interest expense related to securities purchased under agreements to resell in 2014.


⁽²⁾	Includes $11.6 million related to the acceleration of premium amortization in first quarter 2014 due to refinancing activity in the Rural Utilities line of business. Excludes interest income of $14.2 million and $9.9 million in 2015 and 2014, respectively, related to consolidated trusts with beneficial interests owned by third parties.


⁽³⁾	See Note 1(d) to the consolidated financial statements for more information about the reclassification of certain amounts in prior periods from guarantee and commitment fees to interest income related to on-balance sheet Farmer Mac Guaranteed Securities.


⁽⁴⁾	Includes current portion of long-term notes.


⁽⁵⁾	Represents securities sold, not yet purchased.


⁽⁶⁾	Excludes interest expense of $12.1 million and $8.3 million in 2015 and 2014, respectively, related to consolidated trusts with beneficial interests owned by third parties.


⁽⁷⁾	Includes the effect of consolidated trusts with beneficial interests owned by third parties.

The lower average rate earned on cash and investments during the first nine months of 2015 compared to the first nine months of 2014 reflects the effect of the October 1, 2014 redemption of $78.5 million of high-yielding preferred stock previously held in Farmer Mac's investment portfolio and an increase in the average balance of cash and cash equivalents earning minimal yields. The average rate earned on cash and investments during the first nine months of 2014 included the effects of interest costs resulting from the slightly negative rate of return received on the securities purchased under agreements to resell (repos) that were part of Farmer Mac's cash management and liquidity initiative. Farmer Mac's positions in these securities were closed in fourth quarter 2014 and therefore did not have an effect during the first nine months of 2015 as compared to the first nine months of 2014. The higher average rate on loans, Farmer Mac Guaranteed Securities, and USDA Securities was due to the absence during the first nine months of 2015 of the acceleration of amortization in premiums associated with certain Rural Utilities loans that occurred in the first nine months of 2014, partially offset by the decline in market rates as reflected in the rates on loans and AgVantage securities acquired, reset, or refinanced during 2014 and 2015. The average rates on notes payable due within one year are consistent with general trends in average short-term rates during the period presented. The downward trend in the average rate on notes payable due after one year for the first nine months of 2015 as compared to the same period in 2014 reflects the retirement of older debt and the issuance of new debt at lower market rates. Other interest-bearing liabilities consist of high coupon fixed-rate U.S. Treasury securities and represent Farmer Mac's positions in securities sold, not yet purchased entered into beginning in second quarter 2014 as part of Farmer Mac's cash management and liquidity initiative. These positions were closed in fourth quarter

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2014 and therefore did not have an effect during the first nine months of 2015 as compared to the first nine months of 2014.

The following table sets forth information regarding changes in the components of Farmer Mac's net interest income for the periods indicated. For each category, information is provided on changes attributable to changes in volume (change in volume multiplied by old rate) and changes in rate (change in rate multiplied by old volume). Combined rate/volume variances, the third element of the calculation, are allocated based on their relative size.

Table 3



	For the Nine Months Ended September 30, 2015 Compared to Same Period 2014
	Increase/(Decrease) Due to
	Rate			Volume			Total
	(in thousands)
Income from interest-earning assets:
Cash and investments ⁽¹⁾	$	(4,332	)	$	(1,369	)	$	(5,701	)
Loans, Farmer Mac Guaranteed Securities and USDA Securities ⁽²⁾	5,893			12,383			18,276
Total	1,561			11,014			12,575
Expense from other interest-bearing liabilities ⁽³⁾	(31,968		)	4,506			(27,462		)
Change in net interest income prior to consolidation of certain trusts ⁽⁴⁾	$	33,529		$	6,508		$	40,037


⁽¹⁾	Includes $0.3 million of interest expense and an average balance of $793.1 million related to securities purchased under agreements to resell in 2014.


⁽²⁾	Includes $11.6 million related to the acceleration of premium amortization in first quarter 2014 due to refinancing activity in the Rural Utilities line of business.


⁽³⁾	Includes $25.5 million of interest expense and average balance of $797.3 million related to securities sold, not yet purchased in 2014.


⁽⁴⁾	Excludes the effect of debt in consolidated trusts with beneficial interests owned by third parties.

The reasons for the decrease in income due to changes in rate on cash and investments, the increase in income due to changes in rate on loans, Farmer Mac Guaranteed Securities, and USDA Securities, and the decrease in expense due to changes in rate are the same as described above. Aside from the decrease in income earned from cash and investments, the increases in income from interest-earning assets and in expense from other interest-bearing liabilities due to changes in volume reflect the increase in the average balance of on-balance sheet assets and the related funding for those assets, respectively, during the first nine months of 2015 compared to the first nine months of 2014.

Net interest yield includes the amortization of premiums and discounts on assets consolidated at fair value and excludes the accrual of income and expense related to the contractual amounts due on financial derivatives that are not designated in hedge accounting relationships. The following paragraphs describe the effects of these items on the net interest yield and the table below presents them as adjustments to reconcile to the net effective spread Farmer Mac earns on the difference between its interest-earning assets and its net funding costs, including payments for income and expense related to derivative financial instruments that are not designated as hedging instruments in a hedge accounting relationship ("undesignated financial derivatives").

Farmer Mac uses interest rate swaps to manage its interest rate risk exposure by synthetically modifying the interest rate reset or maturity characteristics of certain assets and liabilities. The accrual of the contractual amounts due on interest rate swaps designated in fair value hedge accounting relationships is included as an adjustment to the yield of the hedged item and is included in interest income. For interest rate swaps not designated in hedge accounting relationships, Farmer Mac records the income or expense

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related to the accrual of the contractual amounts due in " (Losses)/gains on financial derivatives and hedging activities " on the consolidated statements of operations. However, Farmer Mac does include the accrual of the contractual amounts due for undesignated financial derivatives in its calculation of net effective spread, which is intended to reflect the net spread between the asset and all of its related funding, including any associated derivatives, whether or not they are in a hedge accounting relationship.

Farmer Mac's net interest income and net interest yield include net yield adjustments related to the amortization of premiums and discounts on assets consolidated at fair value. These premiums and discounts are amortized as adjustments to yield in interest income over the contractual or estimated remaining lives of the underlying assets. Farmer Mac excludes these amounts from net effective spread because they either do not reflect actual cash premiums paid for the assets at acquisition or are not expected to have an economic effect on Farmer Mac's financial performance if the assets are held to maturity, as is generally expected. Farmer Mac also excluded from net effective spread the amount of interest expense included in net interest income that was incurred during the first nine months of 2014 related to securities purchased under agreements to resell and securities sold, not yet purchased because the associated benefits from these securities were not similarly recorded in net interest income, but rather were recorded as income tax benefits. Because Farmer Mac's positions in these securities were closed during fourth quarter 2014, adjustments to net interest income for interest expense related to these securities were not necessary for the first nine months of 2015.

The following table presents the net effective spread between Farmer Mac's interest-earning assets and its net funding costs. This spread is measured by including income or expense related to undesignated financial derivatives (the income or expense related to financial derivatives designated in hedge accounting relationships is already included in net interest income) and excluding the amortization of premiums and discounts on assets consolidated at fair value and the interest expense related to securities purchased under agreements to resell and securities sold, not yet purchased. Farmer Mac's net effective spread was $30.4 million and $89.4 million for the three and nine months ended September 30, 2015, respectively, compared to $29.8 million and $85.3 million for the same periods in 2014, respectively. In percentage terms, net effective spread for the three and nine months ended September 30, 2015 was 0.88 percent and 0.87 percent , respectively, compared to 0.97 percent and 0.91 percent for the same periods in 2014, respectively. The contraction in net effective spread in percentage terms compared to the nine months ended September 30, 2014 was primarily attributable to the loss of $6.5 million in preferred dividend income (7 basis points) from the October 2014 redemption of the high-yielding preferred stock previously held in Farmer Mac's investment portfolio and a higher average balance in cash and cash equivalents to increase Farmer Mac's liquidity position. See Note 9 to the consolidated financial statements for more information regarding net effective spread from Farmer Mac's individual business segments. Additionally, see "—Supplemental Information" for quarterly net effective spread by line of business.

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Table 4



	For the Three Months Ended										For the Nine Months Ended
	September 30, 2015					September 30, 2014					September 30, 2015					September 30, 2014
	Dollars			Yield		Dollars			Yield		Dollar			Yield		Dollar			Yield
	(dollars in thousands)
Net interest income/yield prior to consolidation of certain trusts ⁽¹⁾⁽²⁾	$	31,387		0.91	%	$	14,016		0.45	%	$	92,708		0.90	%	$	52,671		0.56	%
Expense related to undesignated financial derivatives	(1,651		)	(0.05	)%	(2,949		)	(0.10	)%	(5,239		)	(0.05	)%	(6,537		)	(0.07	)%
Amortization of premiums on assets consolidated at fair value ⁽²⁾	651			0.02	%	783			0.03	%	1,962			0.02	%	13,374			0.14	%
Interest expense related to securities purchased under agreements to resell and securities sold, not yet purchased	—			—	%	17,916			0.59	%	—			—	%	25,743			0.28	%
Net effective spread	$	30,387		0.88	%	$	29,766		0.97	%	$	89,431		0.87	%	$	85,251		0.91	%


⁽¹⁾	For the three and nine months ended September 30, 2014, net interest yield is adjusted to remove the average balance of $1.6 billion and $0.8 billion, respectively, related to securities purchased under agreements to resell.


⁽²⁾	Includes $11.6 million related to the acceleration of premium amortization in first quarter 2014 due to refinancing activity in the Rural Utilities line of business.

Provision for and Release of Allowance for Loan Losses and Reserve for Losses .

The following table summarizes the components of Farmer Mac's total allowance for losses for the three and nine months ended September 30, 2015 and 2014 :

Table 5



	September 30, 2015								September 30, 2014
	Allowance for Loan Losses			Reserve for Losses		Total Allowance for Losses			Allowance for Loan Losses			Reserve for Losses			Total Allowance for Losses
	( in thousands )
For the Three Months Ended:
Beginning Balance	$	5,939		$	4,637	$	10,576		$	5,770		$	5,595		$	11,365
(Release of)/provision for losses	(1,164		)	861		(303		)	511			(1,315		)	(804		)
Charge-offs	—			—		—			—			—			—
Recoveries	—			—		—			45			—			45
Ending Balance	$	4,775		$	5,498	$	10,273		$	6,326		$	4,280		$	10,606

For the Nine Months Ended:
Beginning Balance	$	5,864		$	4,263	$	10,127		$	6,866		$	6,468		$	13,334
(Release of)/provision for losses	(978		)	1,235		257			(499		)	(2,188		)	(2,687		)
Charge-offs	(111		)	—		(111		)	(86		)	—			(86		)
Recoveries	—			—		—			45			—			45
Ending Balance	$	4,775		$	5,498	$	10,273		$	6,326		$	4,280		$	10,606

The releases to the allowance for loan losses recorded during the three and nine months ended September 30, 2015 were primarily attributable to a reduction in the specific allowance for a permanent planting loan based on the updated appraised value of the collateral underlying such loan. The provisions to the reserve

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for losses during the three and nine months ended September 30, 2015 were primarily attributable to a $1.3 million increase in the specific allowance for two impaired canola facility loans underlying an LTSPC with one borrower. The establishment in second quarter 2015 of a specific allowance for these loans was due to a downgrade in risk rating resulting from collateral shortfalls relative to the unpaid principal balance for such loans, and the increase in the specific allowance for these loans was due to the borrower's delinquency for 90 days or more during third quarter 2015. The provisions to the reserve for losses during third quarter 2015 were partially offset by a decrease in the general allowance of processing loans underlying LTSPCs due to repayment of these loans at par. The net provisions to the allowance for loan losses recorded during the three months ended September 30, 2014 were primarily related to an increase in the general allowance due to overall net volume growth in the on-balance sheet Farm & Ranch portfolio and an increase in the specific allowance for loans individually evaluated for impairment. The net releases to the total allowance for losses during the nine months ended September 30, 2014 were primarily related to a decrease in the general allowance due to substantial paydowns of on-balance sheet ethanol loans and loans underlying LTSPCs. As of September 30, 2015 and December 31, 2014 , Farmer Mac's allowance for loan losses was $4.8 million and $5.9 million , respectively. As of September 30, 2015 , Farmer Mac's reserve for losses was $5.5 million , compared to $4.3 million as of December 31, 2014 . See Note 5 and "—Risk Management—Credit Risk – Loans and Guarantees."

Guarantee and Commitment Fees . 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, were $3.5 million and $10.3 million , respectively, for the three and nine months ended September 30, 2015 , compared to $3.6 million and $11.1 million for the same periods in 2014 , respectively. The decrease in guarantee and commitment fees was primarily attributable to a lower average balance outstanding for off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs. See Note 1(d) to the consolidated financial statements for more information about the reclassification of certain amounts in prior periods from guarantee and commitment fees to interest income related to on-balance sheet Farmer Mac Guaranteed Securities.

Losses and Gains on Financial Derivatives and Hedging Activities . The effect of unrealized and realized gains and losses on Farmer Mac's financial derivatives and hedging activities was net losses of $9.6 million and net gains of $0.9 million for the three and nine months ended September 30, 2015 , respectively, compared to net gains of $0.8 million and net losses of $12.5 million for the same periods in 2014, respectively.

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The components of gains and losses on financial derivatives and hedging activities for the three and nine months ended September 30, 2015 and 2014 are summarized in the following table:

Table 6



	For the Three Months Ended						For the Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
	(in thousands)
Fair value hedges:
Unrealized (losses)/gains due to fair value changes:
Financial derivatives ⁽¹⁾	$	(12,646	)	$	5,610		$	(4,330	)	$	5,010
Hedged items	15,834			(2,549		)	13,356			4,019
Gains on hedging activities	3,188			3,061			9,026			9,029
No hedge designation:
Unrealized (losses)/gains due to fair value changes	(10,094		)	1,070			(845		)	(13,279		)
Realized:
Expense related to financial derivatives	(1,651		)	(2,949		)	(5,239		)	(6,537		)
Losses due to terminations or net settlements	(1,011		)	(374		)	(2,003		)	(1,681		)
Losses on financial derivatives not designated in hedging relationships	(12,756		)	(2,253		)	(8,087		)	(21,497		)
(Losses)/gains on financial derivatives and hedging activities	$	(9,568	)	$	808		$	939		$	(12,468	)

⁽¹⁾

Included in the assessment of hedge effectiveness as of September 30, 2015 , but excluded from the amounts in the table, were losses of $2.9 million and $8.6 million for the three and nine months ended September 30, 2015 , respectively, attributable to the fair value of the swaps at the inception of the hedging relationship. Accordingly, the amounts recognized as hedge ineffectiveness for the three and nine months ended September 30, 2015 were gains of $0.3 million and gains of $0.4 million . The comparable amounts as of September 30, 2014 were losses of $2.9 million and $8.7 million for the three and nine months ended September 30, 2014 , respectively, attributable to the fair value of the swaps at the inception of the hedging relationship and, accordingly, gains of $0.2 million and $0.3 million , respectively, for the three and nine months ended September 30, 2014 , attributable to hedge ineffectiveness.

Changes in the fair values of Farmer Mac's open derivative positions for both designated and undesignated hedges are captured in the table above in unrealized losses due to fair value changes and are primarily the result of fluctuations in long-term interest rates. For financial derivatives designated in fair value hedges, changes in the fair values of the hedged items attributable to the hedged risk are also included in the table above in unrealized gains/(losses) due to fair value changes. The accrual of periodic cash settlements for interest paid or received from Farmer Mac's interest rate swaps that are not designated in hedge accounting relationships is shown as expense related to financial derivatives. Payments or receipts to terminate derivative positions or net cash settled forward sales contracts on the debt of other GSEs and U.S. Treasury futures that are not designated in hedge accounting relationships are included in losses due to terminations or net settlements.

Losses and Gains on Trading Securities . During the three and nine months ended September 30, 2015 , Farmer Mac recorded unrealized losses on trading securities of $8,000 and unrealized gains of $0.5 million , respectively, compared to unrealized gains of $16.4 million and $24.8 million during the same periods in 2014, respectively. Of the total unrealized losses and unrealized gains recognized during the three and nine months ended September 30, 2015 , $57,000 of losses and $0.1 million of gains, respectively, related to financial assets selected to be carried at fair value with changes in fair value included in earnings (the fair value option). Of the total unrealized gains during the three and nine months ended September 30, 2014 , $16.4 million and $24.2 million, respectively, related to securities sold, not yet purchased as part of Farmer Mac's cash management and liquidity initiative and $0.1 million of losses and

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$0.2 million of gains, respectively, related to financial assets accounted for under the fair value option. Farmer Mac has not elected to account for any financial assets under the fair value option since 2008.

Gains and Losses on Sale of Available-for-Sale Investment Securities . During the three and nine months ended September 30, 2015 , Farmer Mac realized net gains of $3,000 and $9,000 , respectively, compared to realized net losses of $0.4 million and $0.2 million , respectively, for the same periods in 2014. The realized net gains recognized during the first nine months of 2015 were from sales of securities from the available-for-sale investment portfolio which were partially offset by $0.1 million of other-than-temporary impairment losses on two available-for-sale auction rate certificates. As of September 30, 2015, Farmer Mac intends to sell the securities in fourth quarter 2015 at a price of 99.63 percent of par pursuant to a forward sales agreement. The realized net losses in the first nine months of 2014 related to sales of two auction-rate certificates at a price of 97 percent of par that resulted in realized losses of $0.8 million, which were partially offset by realized gains from sales of other securities from the available-for-sale investment portfolio.

Other Income . Other income totaled $1.1 million and $1.9 million , respectively, for the three and nine months ended September 30, 2015 , compared to $0.5 million and $0.8 million , respectively, for the same periods in 2014 . Other income during the three and nine months ended September 30, 2015 included: (1) the recognition of $0.5 million and $0.9 million, respectively, of gains previously deferred in accumulated other comprehensive income related to fair value changes of certain available-for-sale securities contributed to Farmer Mac II LLC in 2010; (2) the recognition of $0.3 million and $0.4 million, respectively, of appraisal fees received by Farmer Mac's consolidated appraisal company subsidiary, Contour Valuation Services, LLC, which was formed in fourth quarter 2014; and (iii) other miscellaneous items.

Compensation and Employee Benefits . Compensation and employee benefits were $5.2 million and $16.7 million , respectively, for the three and nine months ended September 30, 2015 , compared to $4.7 million and $14.0 million , respectively, for the same periods in 2014 . The increase in compensation and employee benefits in the first nine months of 2015 compared to the first nine months of 2014 was due primarily to higher incentive compensation driven by meeting certain performance targets, an increase in headcount, annual salary adjustments, and adjustments to stock compensation expense to reflect changes in forfeiture rates. The increase in annual salary adjustments reflects a change in 2014 to the allocation of total compensation elements for Farmer Mac's executive officers that resulted in a shift in compensation toward base salary and annual cash compensation and a commensurate reduction in the targeted value of equity-based long-term incentive compensation. Additionally, compensation costs for the three and nine months ended September 30, 2015 included $0.3 million and $0.6 million, respectively, in compensation costs for Farmer Mac's consolidated appraisal company subsidiary, Contour Valuation Services, LLC.

General and Administrative Expenses . General and administrative expenses, including legal, audit, and consulting fees, were $3.7 million and $9.9 million , respectively, for the three and nine months ended September 30, 2015 , compared to $3.1 million and $9.2 million , respectively, for the same periods in 2014. The increase in general and administrative expenses in the first nine months of 2015 compared to the first nine months of 2014 was due primarily to legal fees incurred for the preparation of comment letters in response to FCA's proposed rule on Farmer Mac's board governance and standards of conduct and higher consulting fees and information services expenses related to corporate strategic initiatives. Additionally, general and administrative costs for the three and nine months ended September 30, 2015 included $0.1 million and $0.3 million, respectively, in operating expenses for Farmer Mac's consolidated appraisal company subsidiary.

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Regulatory Fees . Regulatory fees (which consist of the fees paid to FCA) were $0.6 million and $1.8 million , respectively, for both the three and nine months ended September 30, 2015 and 2014. FCA has advised Farmer Mac that its estimated fees for the federal fiscal year ending September 30, 2016 will remain at the same level ($0.6 million per federal fiscal quarter) as the prior federal fiscal year. After the end of a federal government fiscal year, FCA may revise its prior year estimated assessments to reflect actual costs incurred, and has issued both additional assessments and refunds in the past.

Income Tax Expense . Income tax expense totaled $6.3 million and $24.3 million , respectively, for the three and nine months ending September 30, 2015 , compared to an income tax expense of $7.6 million and $0.1 million , respectively, for the same periods in 2014. The increase in income tax expense in the first nine months ending September 30, 2015 was a result of higher pre-tax income and the absence of the income tax benefit of $11.6 million related to the cash management and liquidity initiative that was recorded in second quarter 2014. The consolidated tax benefits of the dividends declared on Farmer Mac II LLC Preferred Stock, which is presented as "Net loss/(income) attributable to non-controlling interest" on the consolidated statements of operations on a pre-tax basis, and, for the nine months ended September 30, 2015, the loss on retirement of the Farmer Mac II LLC Preferred Stock were the primary reasons Farmer Mac's effective tax rate was lower than the statutory federal rate of 35 percent for the nine months ended September 30, 2015 and 2014.

Loss on Retirement of Preferred Stock . On March 30, 2015, Farmer Mac II LLC redeemed all of the outstanding shares of Farmer Mac II LLC Preferred Stock, which, in turn, triggered the redemption of all of the outstanding FALConS on that same day. As a result, Farmer Mac recognized an expense of $8.1 million of deferred issuance costs related to those shares of Farmer Mac II LLC Preferred Stock as "Loss on retirement of preferred stock" on the consolidated statements of operations.

Business Volume . During third quarter 2015 , Farmer Mac added $1.4 billion of new business volume. Specifically, Farmer Mac:


•	added $522.3 million of Rural Utilities loans under LTSPCs;


•	added a $300.0 million revolving floating rate AgVantage facility;


•	purchased $206.6 million of AgVantage securities;


•	purchased $176.0 million of newly originated Farm & Ranch loans;


•	purchased $91.4 million of USDA Securities;


•	added $79.6 million of Farm & Ranch loans under LTSPCs; and


•	purchased $53.6 million of Rural Utilities loans.

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Farmer Mac's outstanding business volume was $15.6 billion as of September 30, 2015 , an increase of $497.9 million from June 30, 2015 and an increase of $1.0 billion from December 31, 2014 . The increase in Farmer Mac's outstanding business volume was driven by the addition of $522.3 million of rural utilities loans under LTSPCs, as well as broad-based portfolio growth across most of Farmer Mac's other products, including AgVantage securities, Farm & Ranch loans, and USDA Securities. The large LTSPC transaction completed in third quarter 2015 is the first time Farmer Mac has provided LTSPCs under its Rural Utilities line of business. Of the new business volume in AgVantage securities for third quarter 2015 , a $300.0 million revolving floating rate AgVantage facility with the National Rural Utilities Cooperative Finance Corporation ("CFC") was added as an off-balance commitment because CFC had not drawn on the facility as of September 30, 2015. Farmer Mac receives a fixed fee based on the full dollar amount of the facility. If CFC draws on this facility, the amounts drawn will be presented as on-balance sheet AgVantage securities, and Farmer Mac will earn a spread on the drawn balance.

The following table sets forth purchases of non-delinquent eligible loans, new loans added under LTSPCs, and new guarantees during the periods indicated in the Farm & Ranch, USDA Guarantees, and Rural Utilities lines of business, as well as purchases of AgVantage securities in the Institutional Credit line of business:

Table 7



Farmer Mac New Purchases, Guarantees, and LTSPCs
	For the Three Months Ended				For the Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
	(in thousands)
Farm & Ranch:
Loans	$	175,965	$	150,243	$	503,116	$	501,766
LTSPCs	79,621		77,368		241,876		297,812
USDA Guarantees:
USDA Securities	91,374		97,275		291,981		256,044
Farmer Mac Guaranteed USDA Securities	—		—		12,512		—
Rural Utilities:
Loans	53,552		9,936		62,255		68,528
LTSPCs	522,262		—		522,262		—
Institutional Credit:
AgVantage	206,602		295,700		728,767		825,165
Revolving floating rate AgVantage facility	300,000		—		300,000		—
Total purchases, guarantees, and LTSPCs	$	1,429,376	$	630,522	$	2,662,769	$	1,949,315

New business volume for loans within the Farm & Ranch line of business for the nine months ended September 30, 2015 was in line with the same period in 2014 and demand seems stable. Prepayment rates remained subdued and contributed to favorable trends in net loan growth. New business volume for LTSPCs within the Farm & Ranch line of business for the nine months ended September 30, 2015 compared to the same period in 2014 reflected decreased demand for pools of loans under LTSPCs by Farm Credit System institutions. The increase in new business volume in the USDA Guarantees line of business for the first nine months of 2015 compared to the same period in 2014 reflected an increase in lender usage of USDA guaranteed loan programs and the resulting increase in loans available for purchase on the secondary market, as well as the increasing willingness of banks to sell the lower-return guaranteed portions of these loans to fund other new loan originations. Rural Utilities loan purchase volume

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remained low due to reduced demand associated with slow historical economic growth and greater energy efficiency in recent years. Changes in AgVantage securities volume are primarily driven by the generally larger transaction sizes for that product and the fluctuating funding and liquidity needs of Farmer Mac's customer network and scheduled maturity amounts.

The purchase price of non-delinquent eligible loans and portfolios is their respective fair value based on current market interest rates and Farmer Mac's target net yield. The purchase price includes an amount to compensate Farmer Mac for credit risk that is similar to the guarantee or commitment fees it receives for assuming credit risk on loans underlying off-balance sheet Farmer Mac Guaranteed Securities and LTSPCs. Based on market conditions, Farmer Mac either retains the loans it purchases or securitizes them and retains or sells Farmer Mac Guaranteed Securities backed by those loans. Historically, Farmer Mac has retained the vast majority of loans it has purchased. The weighted-average age of the Farm & Ranch non-delinquent eligible loans purchased and retained (excluding the purchases of defaulted loans) during third quarter 2015 and 2014 was less than one year . Of those loans, 71 percent and 57 percent , respectively, had principal amortization periods longer than the maturity date, resulting in balloon payments at maturity, with a weighted-average remaining term to maturity of 18.8 years and 16.3 years, respectively.

During third quarter 2015 and 2014 , Farmer Mac securitized some of the Farm & Ranch loans it had purchased and sold the resulting Farmer Mac Guaranteed Securities in the amount of $118.8 million and $43.0 million , respectively. Farmer Mac consolidates these loans and presents them as "Loans held for investment in consolidated trusts, at amortized cost" on the consolidated balance sheets. For the three and nine months ended September 30, 2015 , $83.1 million and $166.7 million , respectively, of Farmer Mac Guaranteed Securities were sold to Zions First National Bank ("Zions"), which is a related party to Farmer Mac, compared to $39.6 million and $147.2 million of sales for the three and nine months ended September 30, 2014, respectively.

The following table sets forth information regarding the Farmer Mac Guaranteed Securities issued during the periods indicated:

Table 8



	For the Three Months Ended				For the Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
	(in thousands)
Loans securitized and sold as Farm & Ranch Guaranteed Securities	$	118,802	$	42,963	$	231,242	$	172,268
AgVantage Securities	206,602		295,700		728,767		825,165
Total Farmer Mac Guaranteed Securities Issuances	$	325,404	$	338,663	$	960,009	$	997,433

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The following table sets forth information regarding outstanding volume in each of Farmer Mac's four lines of business as of the dates indicated:

Table 9



Lines of Business - Outstanding Business Volume
	As of September 30, 2015		As of December 31, 2014
	(in thousands)
On-balance sheet:
Farm & Ranch:
Loans	$	2,166,125	$	2,118,867
Loans held in trusts:
Beneficial interests owned by third party investors	612,567		421,355
USDA Guarantees:
USDA Securities	1,856,695		1,756,224
Farmer Mac Guaranteed USDA Securities	31,218		27,832
Rural Utilities:
Loans ⁽¹⁾	982,078		718,213
Loans held in trusts:
Beneficial interests owned by Farmer Mac ⁽¹⁾	—		267,396
Institutional Credit:
AgVantage Securities	5,438,488		5,410,413
Total on-balance sheet	$	11,087,171	$	10,720,300
Off-balance sheet:
Farm & Ranch:
LTSPCs	$	2,171,869	$	2,240,866
Guaranteed Securities	553,469		636,086
USDA Guarantees:
Farmer Mac Guaranteed USDA Securities	10,712		13,978
Rural Utilities:
LTSPC	518,229		—
Institutional Credit:
AgVantage Securities	986,529		986,528
Revolving floating rate AgVantage facility ⁽²⁾	300,000		—
Total off-balance sheet	$	4,540,808	$	3,877,458
Total	$	15,627,979	$	14,597,758


⁽¹⁾	Reflects the unwinding of certain consolidated trusts with the effect that loans previously consolidated on the balance sheet as "Loans held in trusts" currently are included within "Loans."


⁽²⁾	As of September 30, 2015, this facility had not been utilized. Farmer Mac receives a fixed fee based on the full dollar amount of the facility. If CFC draws on the facility, the amounts drawn will be presented as on-balance sheet AgVantage securities, and Farmer Mac will earn a spread on the drawn balance.

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The following table summarizes by maturity date the scheduled principal amortization of loans held, loans underlying off-balance sheet Farmer Mac Guaranteed Securities (excluding AgVantage securities) and LTSPCs, USDA Securities, and Farmer Mac Guaranteed USDA Securities as of September 30, 2015 :

Table 10



Schedule of Principal Amortization as of September 30, 2015
	Loans Held		Loans Underlying Off-Balance Sheet Farmer Mac Guaranteed Securities and LTSPCs		USDA Securities and Farmer Mac Guaranteed USDA Securities		Total
	(in thousands)
2015	$	54,266	$	65,222	$	113,064	$	232,552
2016	179,510		265,555		137,204		582,269
2017	186,965		246,637		113,670		547,272
2018	204,031		650,978		132,563		987,572
2019	177,818		185,869		126,004		489,691
Thereafter	2,958,180		1,829,306		1,276,120		6,063,606
Total	$	3,760,770	$	3,243,567	$	1,898,625	$	8,902,962

Of the $15.6 billion outstanding principal balance of volume included in Farmer Mac's four lines of business as of September 30, 2015 , $6.7 billion were AgVantage securities included in the Institutional Credit line of business. Unlike business volume in the form of purchased loans, USDA Securities, and loans underlying LTSPCs and non-AgVantage Farmer Mac Guaranteed Securities, most AgVantage securities do not require periodic payments of principal based on amortization schedules and instead have fixed maturity dates when the secured general obligation is due. The following table summarizes by maturity date the outstanding principal amount of both on- and off-balance sheet AgVantage securities as of September 30, 2015 :

Table 11



AgVantage Balances by Year of Maturity
	As of
	September 30, 2015
	(in thousands)
2015	$	35,812
2016	1,348,298
2017	1,572,419
2018 ⁽¹⁾	1,212,340
2019	320,350
Thereafter ⁽²⁾	2,235,798
Total	$	6,725,017


⁽¹⁾	Includes the expiration of the $300.0 million revolving floating rate AgVantage facility. As of September 30, 2015, this facility had not been utilized.


⁽²⁾	Includes various maturities ranging from 2020 to 2044.

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The weighted-average remaining maturity of the outstanding AgVantage securities shown in the table above was 4.4 years as of September 30, 2015 . As a general matter, if maturing AgVantage securities are not replaced with new AgVantage securities, either from the same issuer or from new business, or if the spread earned by Farmer Mac on new AgVantage securities that replace maturing AgVantage securities is lower than the spread earned on the maturing securities, Farmer Mac's income could be adversely affected.

As part of fulfilling its guarantee obligations for Farm & Ranch Guaranteed Securities and commitments to purchase eligible loans underlying LTSPCs, Farmer Mac purchases defaulted loans, all of which are at least 90-days delinquent or in material non-monetary default at the time of purchase, out of the loan pools underlying those securities and LTSPCs, and records the purchased loans as such on its balance sheet. The purchase price for a defaulted loan purchased out of a pool of loans backing Farm & Ranch Guaranteed Securities is the then-current outstanding principal balance of the loan plus accrued and unpaid interest. The purchase price for a defaulted loan purchased under an LTSPC is the then-current outstanding principal balance of the loan, with accrued and unpaid interest on the defaulted loan payable out of any future loan payments or liquidation proceeds as received. The purchase price of a defaulted loan is not an indicator of the expected loss on that loan; many other factors affect expected loss, if any, on any loan so purchased. The weighted-average age of delinquent loans purchased out of securitized pools and LTSPCs was 7 years during third quarter 2015. Farmer Mac did not purchase any delinquent loans during third quarter 2014. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Risk Management—Credit Risk – Loans and Guarantees."

The following table presents Farmer Mac's purchases of defaulted loans underlying Farm & Ranch Guaranteed Securities and LTSPCs for the periods indicated:

Table 12



	For the Three Months Ended				For the Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
	(in thousands)
Defaulted loans purchased underlying Farm & Ranch Guaranteed Securities owned by third party investors	$	263	$	—	$	2,244	$	—
Defaulted loans purchased underlying LTSPCs	—		—		—		440
Total loan purchases	$	263	$	—	$	2,244	$	440

Outlook

Farmer Mac continues to provide a stable source of liquidity, capital, and risk management tools as the secondary market that helps meet the financing needs of rural America. While the pace of Farmer Mac's growth will depend on the capital and liquidity needs of the participants in the rural financing business, Farmer Mac foresees opportunities for continued growth. More specifically, Farmer Mac believes that its Farm & Ranch, USDA Guarantees, Rural Utilities, and Institutional Credit lines of business all have opportunities for growth, driven by several key factors:


•	As agricultural and rural utilities lenders face increased equity capital requirements under new regulatory frameworks or rating agency requirements, or seek to reduce exposure due to lending limits or concentration limits, Farmer Mac can provide relief for those institutions through loan purchases, guarantees, or LTSPCs.

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•	Lending in the rural utilities industry may increase as rural utilities seek alternatives for financing, including refinancing existing debt.


•	As a result of targeted marketing and product development efforts, Farmer Mac's lender network and customer base continues to expand, which may generate additional demand for Farmer Mac's products from new sources.

Farmer Mac believes that these growth opportunities will be important in replacing income earned on the loans and other assets as they mature, pay down, or are reinvested at potentially lower spreads.

Agricultural Sector . The agricultural sector includes many diverse industries that respond in different ways to changes in economic conditions. Those individual industries often are affected differently, sometimes positively and sometimes negatively, by prevailing domestic and global economic factors and regional weather conditions. This results in cycles where one or more industries may be under stress at the same time that others are not. In addition, borrowers that rely on non-farm sources of income as a significant percentage of overall income may experience stress associated with weakness in the general economy. The profitability of agricultural industries is also affected by commodity inventories and their associated market prices, which can vary largely as a result of weather patterns, access to water supply, and harvest conditions that may affect supply. The strength of the U.S. dollar relative to other worldwide currencies could also potentially adversely affect the demand for certain U.S. agricultural exports, which may result in producers receiving lower commodity prices.

Farmer Mac continues to monitor land values and commodity prices in response to cyclical swings. Although farmland values and commodity prices have declined recently in some sectors, primarily in the Midwest, Farmer Mac believes that its portfolio remains sufficiently diversified, both geographically and by commodity, and that its portfolio has generally demonstrated historically high credit quality and low delinquency rates to endure reasonably foreseeable volatility in farmland values and commodity prices. Farmer Mac also continues to closely monitor sector profitability, economic conditions, and agricultural land value and geographic trends to tailor underwriting practices to changing conditions. For more information about the loan balances and loan-to-value ratios for Farm & Ranch loans in Farmer Mac's portfolio as of September 30, 2015 , see "—Risk Management—Credit Risk – Loans and Guarantees."

The western part of the United States, including California, continues to experience drought conditions, with the water level in many California reservoirs at historically low levels. Although to date Farmer Mac has not observed any material effect on its portfolio from drought conditions, the persistence of extreme drought conditions in the western states could have an adverse effect on Farmer Mac’s delinquency rates or loss experience. This is particularly true in the permanent plantings sector, where the value of the related collateral is closely tied to the production value and capability of the permanent plantings. Farmer Mac continues to remain informed about the drought and its effects on the agricultural industries located in the western states and on Farmer Mac's Farm & Ranch portfolio through regular discussions with its loan servicers that service loans in drought-stricken areas, as well as customers and other lenders in the industry.

Farmer Mac continues to monitor the establishment and evolution of legislation and regulations that affect farmers, ranchers, and rural lenders. Many federal agricultural policies previously in effect have been altered with the enactment of the Agricultural Act of 2014, including those affecting crop subsidies, crop insurance , and other aspects of agricultural production. Farmer Mac will continue to monitor the effects of these altered federal agricultural policies as the USDA adopts final regulations implementing the Agricultural Act of 2014.

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Farmer Mac's marketing efforts directed towards the Farm & Ranch line of business focus on lenders that have demonstrated a commitment to agricultural lending based on their lending history. Farmer Mac directs its outreach efforts to these lenders through direct personal contact, which is facilitated through Farmer Mac's frequent participation in state and national banking conferences, its alliances with the American Bankers Association and the Independent Community Bankers of America, and its business relationships with members of the Farm Credit System. In the Farm & Ranch line of business, Farmer Mac has experienced continuing stable demand for its loan products. Demand for Farmer Mac's secondary market tools could also increase as rural lenders adapt to new and changing regulations, which may require lenders to obtain more liquidity and capital to continue their lending practices.

Farmer Mac also directs marketing efforts towards the agricultural industry by trying to identify and develop relationships with potential issuers of AgVantage securities who can pledge loans as collateral to obtain financing as part of Farmer Mac's Institutional Credit line of business. As part of these efforts, Farmer Mac has recently increased its focus on wholesale financing for institutional investors in agricultural assets that qualify as eligible collateral under Farmer Mac's charter. In July 2014, Farmer Mac expanded its AgVantage product to this new type of issuer and refers to this product variation as the Farm Equity AgVantage product. Farmer Mac directs its outreach efforts to these potential issuers through its business relationships within the agricultural community and through executive outreach to institutions whose profile presents opportunity to benefit from wholesale financing. As institutional investment in agricultural assets continues to grow, Farmer Mac believes that it is in a unique position to help increase access to capital for these types of counterparties and thereby provide a new source of capital to benefit rural America. Farmer Mac designed the Farm Equity AgVantage product to provide an efficient, low-cost source of financing tailored to meet the needs of institutional investors that can be adapted to many different types of organizational structures and for both public and private institutional investors. Although this product is in the early stages of development, Farmer Mac believes there is opportunity to expand this type of business as both the trend toward institutional investment in agricultural assets and awareness of the Farm Equity AgVantage product continue to grow. For more information about the Farm Equity AgVantage product, see "Business—Farmer Mac Lines of Business—Institutional Credit" in Farmer Mac's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC on March 16, 2015 and "—Risk Management—Credit Risk – Institutional."

Rural Utilities Industry . Reduced demand for capital within the rural utilities industry has increased competition for rural cooperative borrowers among lenders that either are not eligible or choose not to participate in Farmer Mac's Rural Utilities line of business. The rural utilities industry may experience needs for financing over the next several years to make improvements in response to environmental and clean energy policies and to refinance government loans made by the USDA's Rural Utilities Service. In addition, CFC, the rural utilities lender that is the only current participant in Farmer Mac's Rural Utilities line of business, may experience increased needs for term funding and LTSPC business from Farmer Mac as a result of new requirements implemented by debt rating agencies. In third quarter 2015, CFC utilized Farmer Mac's LTSPC product for the first time. Domestic economic indicators also continue to show modest growth, and as the economy strengthens, Farmer Mac believes that demand for rural utilities loans may increase. Farmer Mac also foresees opportunities for growth pertaining to the rural utilities industry within Farmer Mac's Institutional Credit line of business related to the increasing trend in the past year of rural utilities cooperatives beginning to shift their debt refinancing activities away from the Rural Utilities Service and towards market-based lenders, including rural utilities cooperative lenders. Farmer Mac has the opportunity to help these lenders as they seek lower-cost wholesale financing alternatives, which could allow them to become more competitive in pursuing these refinancing opportunities.

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Balance Sheet Review

Assets . Farmer Mac's total assets as of September 30, 2015 were $14.9 billion , compared to $14.3 billion as of December 31, 2014 . The increase in total assets was primarily attributable to an increase in cash and cash equivalents and total loans, net of allowance.

As of September 30, 2015 , Farmer Mac had $1.5 billion of cash and cash equivalents and $2.0 billion of investment securities, compared to $1.4 billion of cash and cash equivalents and $1.9 billion of investment securities as of December 31, 2014 . As of September 30, 2015 , Farmer Mac had $5.4 billion of Farmer Mac Guaranteed Securities, $1.9 billion of USDA Securities, and $3.8 billion of loans, net of allowance. This compares to $5.5 billion of Farmer Mac Guaranteed Securities, $1.8 billion of USDA Securities, and $3.5 billion of loans, net of allowance, as of December 31, 2014 .

Liabilities . Farmer Mac's total liabilities increased to $14.3 billion as of September 30, 2015 from $13.5 billion as of December 31, 2014 . The increase in liabilities was primarily attributable to an increase in notes payable due within one year.

Equity . As of September 30, 2015 , Farmer Mac had total equity of $540.5 million , comprised of stockholders' equity of $540.4 million and non-controlling interest of $0.2 million related to Farmer Mac's appraisal subsidiary, Contour Appraisal Services, LLC. As of December 31, 2014 , Farmer Mac had total equity of $781.8 million , comprised of stockholders' equity of $545.8 million and non-controlling interest of $236.0 million . The decrease in total equity was a result of the redemption of all of the outstanding shares of Farmer Mac II LLC Preferred Stock (presented as "Non-controlling interest" within equity on Farmer Mac's consolidated balance sheets) during first quarter 2015 and a decrease in accumulated other comprehensive income due to decreases in the fair value of available-for-sale securities, offset in part by an increase in retained earnings. The decrease in the fair value of available-for-sale securities was driven primarily by less favorable funding spreads to LIBOR.

Off-Balance Sheet Arrangements

Farmer Mac offers approved lenders two credit enhancement alternatives to increase their liquidity or lending capacity while retaining the cash flow benefits of their loans: (1) Farmer Mac Guaranteed Securities, which are available through each of the Farm & Ranch, USDA Guarantees, Rural Utilities, and Institutional Credit lines of business; and (2) LTSPCs, which are available through the Farm & Ranch and Rural Utilities lines of business. 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 the remainder of these transactions, and in the event of deconsolidation, both of these alternatives result in the creation of off-balance sheet obligations for Farmer Mac. See Note 6 to the consolidated financial statements for more information about consolidation and Farmer Mac's off-balance sheet business activities. See "—Business Volume" for more information about the two types of off-balance sheet transactions that Farmer Mac completed with CFC for the first time during third quarter 2015 – an LTSPC transaction and a revolving floating rate AgVantage facility for the issuance of Farmer Mac Guaranteed Securities that is currently not drawn upon but on which Farmer Mac earns an annual fee on the full facility size.

Risk Management

Credit Risk – Loans and Guarantees . Farmer Mac is exposed to credit risk resulting from the inability of borrowers to repay their loans in conjunction with a deficiency in the value of the collateral relative to the outstanding balance of the loan and the costs of liquidation. Farmer Mac is exposed to credit risk on:

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•	loans held;


•	loans underlying Farmer Mac Guaranteed Securities; and


•	loans underlying LTSPCs.

Farmer Mac generally assumes 100 percent of the credit risk on loans held, loans underlying LTSPCs in the Farm & Ranch and Rural Utilities lines of business and Farmer Mac Guaranteed Securities in the Farm & Ranch line of business. Farmer Mac has direct credit exposure to loans in non-AgVantage transactions and indirect credit exposure to loans that secure AgVantage transactions because AgVantage securities represent a general obligation of an issuer that is in turn secured by qualified loans. The credit exposure of Farmer Mac and Farmer Mac II LLC on USDA Securities, including those underlying Farmer Mac Guaranteed USDA Securities, is covered by the full faith and credit of the United States. Therefore, Farmer Mac believes that Farmer Mac and Farmer Mac II LLC have little or no credit risk exposure in the USDA Guarantees line of business because of the USDA guarantee. As of September 30, 2015 , neither Farmer Mac nor Farmer Mac II LLC had experienced any credit losses on any business under the USDA Guarantees line of business, and neither expects to incur any such losses in the future.

Farmer Mac has established underwriting, collateral valuation, and documentation standards for agricultural real estate mortgage loans and rural utilities loans. Farmer Mac believes that these standards mitigate the risk of loss from borrower defaults and provide guidance about the management, administration, and conduct of underwriting and appraisals to all participating and potential lenders. These standards were developed on the basis of industry norms for agricultural real estate mortgage loans and rural utilities loans and are designed to assess the creditworthiness of the borrower, as well as the value of the collateral securing the loan. Farmer Mac evaluates and adjusts these standards on an ongoing basis based on current and anticipated market conditions. For more information about Farmer Mac's underwriting and collateral valuation standards, see "Business—Farmer Mac Lines of Business—Farm & Ranch—Underwriting and Collateral Valuation (Appraisal) Standards" and "Business—Farmer Mac Lines of Business—Rural Utilities—Underwriting" in Farmer Mac's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC on March 16, 2015.

Farmer Mac requires approved lenders to make representations and warranties regarding the conformity of eligible agricultural mortgage and rural utilities loans to Farmer Mac's standards, the accuracy of loan data provided to Farmer Mac, and other requirements related to the loans. Sellers are responsible to Farmer Mac for breaches of those representations and warranties, and Farmer Mac has the ability to require a seller to cure, replace, or repurchase a loan sold or transferred to Farmer Mac if any breach of a representation or warranty is discovered that was material to Farmer Mac's decision to purchase the loan or that directly or indirectly causes a default or potential loss on a loan sold or transferred by the seller to Farmer Mac. Farmer Mac has not required a seller to cure or repurchase a loan purchased by Farmer Mac for breach of a representation or warranty in the last three years. In addition to relying on the representations and warranties of lenders, Farmer Mac also underwrites all of the agricultural mortgage loans (other than rural housing and part-time farm mortgage loans) and rural utilities loans that it holds in its portfolio. For rural housing and part-time farm mortgage loans, Farmer Mac relies on representations and warranties from the seller that those loans conform to Farmer Mac's specified underwriting criteria without exception. For more information about Farmer Mac's loan eligibility requirements, see "Business—Farmer Mac Lines of Business—Farm & Ranch—Loan Eligibility" and "Business—Farmer Mac Lines of Business—Rural Utilities—Loan Eligibility" in Farmer Mac's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC on March 16, 2015.

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Under contracts with Farmer Mac and in consideration for servicing fees, Farmer Mac-approved central servicers service loans in accordance with Farmer Mac's requirements. Central servicers are responsible to Farmer Mac for serious errors in the servicing of those loans. If a central servicer materially breaches the terms of its servicing agreement with Farmer Mac, such as failing to forward payments received or releasing collateral without Farmer Mac's consent, or experiences insolvency or bankruptcy, Farmer Mac has the right to terminate the servicing relationship for a particular loan or the entire portfolio serviced by the central servicer. In addition, Farmer Mac can proceed against the central servicer in arbitration or exercise any remedies available to it under law. In the last three years, Farmer Mac has not exercised any remedies or taken any formal action against any central servicers. For more information about Farmer Mac's servicing requirements, see "Business—Farmer Mac Lines of Business—Farm & Ranch—Servicing" and "Business—Farmer Mac Lines of Business—Rural Utilities—Servicing" in Farmer Mac's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC on March 16, 2015.

Farmer Mac's AgVantage securities are general obligations of institutions approved by Farmer Mac and are secured by eligible loans in an amount at least equal to the outstanding principal amount of the security. Farmer Mac excludes the loans that secure AgVantage securities from the credit risk metrics it discloses because Farmer Mac has only indirect credit risk on those loans and because of the other characteristics of AgVantage securities that mitigate credit risk. Those characteristics include a general obligation of an issuing institution approved by Farmer Mac, the required collateralization level for the securities, and the requirement for delinquent loans to be removed from the pool of pledged loans and replaced with current eligible loans. As such, all AgVantage securities are secured by current loans representing at least 100 percent of the outstanding amount of these securities. As of September 30, 2015 , Farmer Mac had not experienced any credit losses on any AgVantage securities and does not expect to incur any such losses in the future. See "—Credit Risk – Institutional" for more information about Farmer Mac's credit risk on AgVantage securities.

Farmer Mac has developed different underwriting standards for rural utilities loans that depend on whether direct or indirect credit exposure is assumed on a loan and whether the borrower is an electric distribution cooperative or a G&T cooperative. As of September 30, 2015 , there were no delinquencies in Farmer Mac's portfolio of rural utilities loans, and Farmer Mac has not experienced any credit losses on rural utilities loans since Congress authorized Farmer Mac's Rural Utilities line of business in 2008. Based on this performance, Farmer Mac excludes the loans in the Rural Utilities line of business from the credit risk metrics it discloses. Farmer Mac's direct credit exposure to rural utilities loans and loans underlying LTSPCs as of September 30, 2015 was $1.5 billion across 38 states, of which $0.5 billion were loans to electric distribution cooperatives and $1.0 billion were loans to G&T cooperatives. Farmer Mac also had indirect credit exposure to the rural utilities loans securing AgVantage securities and included in the Institutional Credit line of business, some of which are loans to G&T cooperatives. For more information, see "—Credit Risk – Institutional."

Farmer Mac maintains an allowance for loan losses to cover estimated probable losses on loans held and a reserve for losses to cover estimated probable losses on loans underlying LTSPCs and off-balance sheet Farm & Ranch Guaranteed Securities. The methodology that Farmer Mac uses to determine the level of its allowance for losses is described in Note 2(j) to the consolidated financial statements included in Farmer Mac's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC on March 16, 2015. Management believes that this methodology produces a reasonable estimate of probable losses, as of the balance sheet date, for all loans held and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs.

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The following table summarizes the components of Farmer Mac's total allowance for losses for three and nine months ended September 30, 2015 and 2014 :

Table 13



	September 30, 2015								September 30, 2014
	Allowance for Loan Losses			Reserve for Losses		Total Allowance for Losses			Allowance for Loan Losses			Reserve for Losses			Total Allowance for Losses
	( in thousands )
For the Three Months Ended:
Beginning Balance	$	5,939		$	4,637	$	10,576		$	5,770		$	5,595		$	11,365
(Release of)/provision for losses	(1,164		)	861		(303		)	511			(1,315		)	(804		)
Charge-offs	—			—		—			—			—			—
Recoveries	—			—		—			45			—			45
Ending Balance	$	4,775		$	5,498	$	10,273		$	6,326		$	4,280		$	10,606

For the Nine Months Ended:
Beginning Balance	$	5,864		$	4,263	$	10,127		$	6,866		$	6,468		$	13,334
(Release of)/provision for losses	(978		)	1,235		257			(499		)	(2,188		)	(2,687		)
Charge-offs	(111		)	—		(111		)	(86		)	—			(86		)
Recoveries	—			—		—			45			—			45
Ending Balance	$	4,775		$	5,498	$	10,273		$	6,326		$	4,280		$	10,606

Activity affecting the allowance for loan losses and reserve for losses is discussed in "—Results of Operations—Provision for and Release of Allowance for Loan Losses and Reserve for Losses." As of September 30, 2015 , Farmer Mac's allowances for losses totaled $10.3 million , or 19 basis points of the outstanding principal balance of loans held for investment and loans underlying LTSPCs and off-balance sheet Farm & Ranch Guaranteed Securities, compared to $10.1 million , or 19 basis points, as of December 31, 2014 .

Farmer Mac's 90-day delinquency measure includes loans 90 days or more past due, as well as loans in foreclosure and non-performing loans where the borrower is in bankruptcy. As of September 30, 2015 , Farmer Mac's 90-day delinquencies were $36.7 million ( 0.67 percent of the Farm & Ranch portfolio), compared to $18.9 million ( 0.35 percent of the Farm & Ranch portfolio) as of December 31, 2014 and $24.7 million ( 0.46 percent of the Farm & Ranch portfolio) as of September 30, 2014 . Those 90-day delinquencies were comprised of 37 delinquent loans as of September 30, 2015 , compared with 29 delinquent loans as of December 31, 2014 and 41 delinquent loans as of September 30, 2014 . The increase in 90-day delinquencies during third quarter 2015 was primarily related to the delinquency of one borrower on two canola facility loans underlying an LTSPC that had been categorized as substandard assets during second quarter 2015 and became delinquent for 90 days or more during third quarter 2015. Farmer Mac had $13.5 million of exposure to this borrower as of September 30, 2015. Farmer Mac expects that over time its 90-day delinquency rate will eventually revert closer to Farmer Mac's historical averages due to macroeconomic and other potential factors, but Farmer Mac has not yet seen an impact on its portfolio or a rise in delinquencies related to these factors. Farmer Mac's average 90-day delinquency rate for the Farm & Ranch line of business over the last fifteen years is approximately 1.00 percent.

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The following table presents historical information regarding Farmer Mac's 90-day delinquencies in the Farm & Ranch line of business compared to the principal balance of all Farm & Ranch loans held and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs:

Table 14



	Farm & Ranch Line of Business		90-Day Delinquencies		Percentage
	(dollars in thousands)
As of:
September 30, 2015	$	5,504,030	$	36,669	0.67	%
June 30, 2015	5,485,570		31,852		0.58	%
March 31, 2015	5,347,248		32,101		0.60	%
December 31, 2014	5,417,174		18,917		0.35	%
September 30, 2014	5,314,437		24,661		0.46	%
June 30, 2014	5,310,664		25,911		0.49	%
March 31, 2014	5,293,975		29,437		0.56	%
December 31, 2013	5,163,080		28,296		0.55	%
September 30, 2013	5,035,748		33,042		0.66	%

When analyzing the overall risk profile of its lines of business, Farmer Mac takes into account more than the Farm & Ranch loan delinquency percentages provided above. The lines of business also include AgVantage securities and rural utilities loans, neither of which have any delinquencies, and USDA Securities, which are backed by the full faith and credit of the United States. Across all of Farmer Mac's lines of business, 90-day delinquencies represented 0.23 percent of total outstanding business volume as of September 30, 2015 , compared to 0.13 percent as of December 31, 2014 and 0.18 percent as of September 30, 2014 .

As of September 30, 2015 , Farmer Mac individually evaluated $31.8 million of the $96.4 million of recorded investment in impaired loans for collateral shortfalls against updated appraised values, other updated collateral valuations, or discounted values. For the remaining $64.6 million of impaired assets for which updated valuations were not available, Farmer Mac evaluated them in the aggregate in consideration of their similar risk characteristics and historical statistics. Farmer Mac recorded specific allowances of $5.7 million for undercollateralized assets as of September 30, 2015 . Farmer Mac's non-specific or general allowances were $4.6 million as of September 30, 2015 .

Loans in the Farm & Ranch line of business are all secured by first liens on agricultural real estate. Accordingly, Farmer Mac's exposure on a loan is limited to the difference between (1) the total of the accrued interest, advances, and the principal balance of a loan and (2) the value of the property less the cost to sell. Measurement of that excess or shortfall is the best predictor and determinant of loss, compared to other measures that evaluate the efficiency of a particular farm operator. Debt service ratios depend upon farm operator efficiency and leverage, which can vary widely within a geographic region, commodity type, or an operator's business and farming skills. A loan's original loan-to-value ratio is one of many factors Farmer Mac considers in evaluating loss severity and is calculated by dividing the loan principal balance at the time of guarantee, purchase, or commitment by the appraised value at the date of loan origination or, when available, updated appraised value at the time of guarantee, purchase, or commitment. Other factors include, but are not limited to, other underwriting standards, commodity and farming forecasts, and regional economic and agricultural conditions.

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Loan-to-value ratios depend upon the market value of a property, as determined in accordance with Farmer Mac's collateral valuation standards. As of September 30, 2015 and December 31, 2014 , the average unpaid loan balance for loans outstanding in the Farm & Ranch line of business was $584,000 and $589,000 , respectively. The original loan-to-value ratio is based on the original appraised value that has not been indexed to provide a current market value or reflect amortization of loans. The weighted average original loan-to-value ratio for Farm & Ranch loans purchased during third quarter 2015 was 48 percent , compared to 43 percent for loans purchased in the same period for 2014. The weighted average original loan-to-value ratio for all Farm & Ranch loans held and all loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs was approximately 46 percent as of September 30, 2015 and 47 percent as of December 31, 2014 . The weighted-average original loan-to-value ratio for all 90-day delinquencies was 41 percent and 46 percent , respectively, as of September 30, 2015 and December 31, 2014 .

The weighted average current loan-to-value ratio, which is the loan-to-value ratio based on original appraised value but which reflects loan amortization since purchase, for Farm & Ranch loans held and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs was approximately 43 percent and 44 percent , respectively, as of September 30, 2015 and December 31, 2014 .

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The following table presents outstanding Farm & Ranch loans held and loans underlying LTSPCs and off-balance sheet Farm & Ranch Guaranteed Securities and 90-day delinquencies as of September 30, 2015 by year of origination, geographic region, commodity/collateral type, and original loan-to-value ratio:

Table 15



Farm & Ranch 90-Day Delinquencies as of September 30, 2015
	Distribution of Farm & Ranch Line of Business		Farm & Ranch Line of Business		90-Day Delinquencies ⁽¹⁾		Percentage
	(dollars in thousands)
By year of origination:
Before 2002 and prior	8	%	$	411,994	$	4,581	1.11	%
2003	2	%	130,712		106		0.08	%
2004	3	%	148,699		861		0.58	%
2005	4	%	207,592		1,780		0.86	%
2006	4	%	199,869		4,376		2.19	%
2007	3	%	186,452		6,115		3.28	%
2008	4	%	224,375		1,886		0.84	%
2009	3	%	170,219		584		0.34	%
2010	5	%	266,385		—		—	%
2011	6	%	356,061		14,042		3.94	%
2012	13	%	741,003		—		—	%
2013	20	%	1,099,231		1,152		0.10	%
2014	14	%	777,379		1,186		0.15	%
2015	11	%	584,059		—		—	%
Total	100	%	$	5,504,030	$	36,669	0.67	%
By geographic region ⁽²⁾ :
Northwest	11	%	$	579,240	$	17,027	2.94	%
Southwest	31	%	1,693,048		7,161		0.42	%
Mid-North	35	%	1,933,020		2,472		0.13	%
Mid-South	12	%	688,615		1,237		0.18	%
Northeast	4	%	211,093		483		0.23	%
Southeast	7	%	399,014		8,289		2.08	%
Total	100	%	$	5,504,030	$	36,669	0.67	%
By commodity/collateral type:
Crops	55	%	$	3,054,452	$	6,901	0.23	%
Permanent plantings	17	%	930,659		8,729		0.94	%
Livestock	22	%	1,210,417		5,075		0.42	%
Part-time farm	4	%	211,565		2,464		1.16	%
Ag. Storage and Processing	2	%	91,099		13,500		14.82	%
Other	—		5,838		—		—	%
Total	100	%	$	5,504,030	$	36,669	0.67	%
By original loan-to-value ratio:
0.00% to 40.00%	28	%	$	1,538,701	$	10,443	0.68	%
40.01% to 50.00%	22	%	1,193,443		2,512		0.21	%
50.01% to 60.00%	28	%	1,536,435		7,797		0.51	%
60.01% to 70.00%	20	%	1,072,182		15,081		1.41	%
70.01% to 80.00% ⁽³⁾	2	%	136,641		688		0.50	%
80.01% to 90.00% ⁽³⁾	—	%	26,628		148		0.56	%
Total	100	%	$	5,504,030	$	36,669	0.67	%


⁽¹⁾	Includes loans held and loans underlying off-balance sheet Farm & Ranch Guaranteed Securities and LTSPCs that are 90 days or more past due, in foreclosure, and in bankruptcy, excluding loans performing under either their original loan terms or a court-approved bankruptcy plan.


⁽²⁾	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).


⁽³⁾	Primarily part-time farm loans. Loans with an original loan-to-value ratio of greater than 80% are required to have private mortgage insurance.

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The following table presents Farmer Mac's cumulative net credit losses relative to the cumulative original balance for all Farm & Ranch loans purchased and loans underlying LTSPCs and off-balance sheet Farm & Ranch Guaranteed Securities as of September 30, 2015 by year of origination, geographic region, and commodity/collateral type. The purpose of this information is to present information regarding losses relative to original Farm & Ranch purchases, guarantees, and commitments.

Table 16



Farm & Ranch Credit Losses Relative to Cumulative
Original Loans, Guarantees, and LTSPCs as of September 30, 2015
	Cumulative Original Loans, Guarantees and LTSPCs		Cumulative Net Credit Losses			Cumulative Loss Rate
	(dollars in thousands)
By year of origination:
Before 2001	$	7,028,744	$	10,987		0.16	%
2001	1,040,308		178			0.02	%
2002	1,086,368		89			0.01	%
2003	932,255		350			0.04	%
2004	739,031		311			0.04	%
2005	894,364		(184		)	(0.02	)%
2006	903,002		9,545			1.06	%
2007	712,703		4,686			0.66	%
2008	781,998		3,247			0.42	%
2009	530,759		1,508			0.28	%
2010	639,396		—			—	%
2011	716,068		—			—	%
2012	1,063,348		—			—	%
2013	1,336,611		—			—	%
2014	887,529		—			—	%
2015	615,173		—			—	%
Total	$	19,907,657	$	30,717		0.15	%
By geographic region ⁽¹⁾ :
Northwest	$	2,730,953	$	7,402		0.27	%
Southwest	6,956,764		9,036			0.13	%
Mid-North	5,049,965		12,830			0.25	%
Mid-South	2,297,957		(211		)	(0.01	)%
Northeast	1,249,254		169			0.01	%
Southeast	1,622,764		1,491			0.09	%
Total	$	19,907,657	$	30,717		0.15	%
By commodity/collateral type:
Crops	$	9,131,703	$	4,310		0.05	%
Permanent plantings	4,044,810		9,332			0.23	%
Livestock	4,905,798		3,859			0.08	%
Part-time farm	1,047,866		1,204			0.11	%
Ag. Storage and Processing	632,181		12,012			1.90	%
Other	145,299		—			—	%
Total	$	19,907,657	$	30,717		0.15	%


⁽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).

Analysis of portfolio performance indicates that commodity type is the primary determinant of Farmer Mac's exposure to loss on a given loan. Within most commodity groups, certain geographic areas allow greater economies of scale or proximity to markets than others and, consequently, may result in more

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successful operations within the commodity group. Certain geographic areas also offer better growing conditions and market access than others and, consequently, may result in more versatile and more successful operators within a given commodity group. Farmer Mac's board of directors has established policies regarding geographic and commodity concentration to maintain adequate diversification and measure concentration risk.

However, in Farmer Mac's experience, the degree to which the collateral for a commodity group is single-use or highly improved is a more significant determinant of the probability of ultimate losses on a given loan than diversity of geographic location within a commodity group. Commodity groups that tend to be single-use or highly improved include permanent plantings (for example, nut crops), agricultural storage and processing facilities (for example, canola plants and grain processing facilities), and certain livestock facilities (for example, dairy facilities). The versatility of a borrower's operation (and in the case of persisting adverse economic conditions, the borrower's ability to switch commodity groups) will more likely result in profitability for the borrower and, consequently, a lower risk of decreased value for the underlying collateral. Producers of agricultural commodities that require highly improved property are less able to adapt their operations when faced with adverse economic conditions. In addition, in the event of a borrower's default, the prospective sale value of the collateral is more likely to decrease and the related loan may become undercollateralized. This analysis is consistent with corresponding commodity analyses, which indicate that Farmer Mac has experienced higher loss and collateral deficiency rates in permanent planting loans and agricultural storage and processing loans, for which the collateral is typically highly improved and specialized.

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The following tables present concentrations of Farm & Ranch loans held and loans underlying LTSPCs and off-balance sheet Farm & Ranch Guaranteed Securities by commodity type within geographic region and cumulative credit losses by origination year and commodity type:

Table 17



	As of September 30, 2015
	Farm & Ranch Concentrations by Commodity Type within Geographic Region
	Crops			Permanent Plantings			Livestock			Part-time Farm			Ag. Storage and Processing			Other			Total
	(dollars in thousands)
By geographic region ⁽¹⁾ :
Northwest	$	294,709		$	80,710		$	160,901		$	29,420		$	13,500		$	—		$	579,240
	5.4		%	1.5		%	2.9		%	0.5		%	0.2		%	—		%	10.5		%
Southwest	519,223			656,656			457,380			43,580			15,802			407			1,693,048
	9.4		%	11.9		%	8.3		%	0.8		%	0.4		%	—		%	30.8		%
Mid-North	1,656,670			25,777			183,553			32,458			30,017			4,545			1,933,020
	30.1		%	0.5		%	3.3		%	0.6		%	0.5		%	0.1		%	35.1		%
Mid-South	397,331			25,293			223,191			29,293			13,213			294			688,615
	7.2		%	0.5		%	4.1		%	0.5		%	0.2		%	—		%	12.5		%
Northeast	76,513			20,245			54,172			51,611			8,424			128			211,093
	1.4		%	0.4		%	1.0		%	0.9		%	0.2		%	—		%	3.9		%
Southeast	110,006			121,978			131,220			25,203			10,143			464			399,014
	2.0		%	2.1		%	2.4		%	0.5		%	0.2		%	—		%	7.2		%
Total	$	3,054,452		$	930,659		$	1,210,417		$	211,565		$	91,099		$	5,838		$	5,504,030
	55.5		%	16.9		%	22.0		%	3.8		%	1.7		%	0.1		%	100.0		%


⁽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).

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Table 18



	As of September 30, 2015
	Farm & Ranch Cumulative Credit Losses/(Recoveries) by Origination Year and Commodity Type
	Crops			Permanent Plantings			Livestock			Part-time Farm			Ag. Storage and Processing		Total
	(in thousands)
By year of origination:
1995 and Prior	$	277		$	(79	)	$	(107	)	$	—		$	—	$	91
1996	(721		)	2,296			(73		)	—			—		1,502
1997	(397		)	2,785			(131		)	—			—		2,257
1998	(438		)	1,803			1,781			—			—		3,146
1999	(108		)	723			158			296			—		1,069
2000	7			1,907			1,049			(41		)	—		2,922
2001	45			1			132			—			—		178
2002	—			—			—			89			—		89
2003	309			—			—			41			—		350
2004	—			—			162			149			—		311
2005	(87		)	(263		)	—			166			—		(184		)
2006	1,616			—			40			201			7,688		9,545
2007	1,083			11			779			303			2,510		4,686
2008	2,626			—			—			—			621		3,247
2009	98			148			69			—			1,193		1,508
2010	—			—			—			—			—		—
2011	—			—			—			—			—		—
2012	—			—			—			—			—		—
2013	—			—			—			—			—		—
2014	—			—			—			—			—		—
2015	—			—			—			—			—		—
Total	$	4,310		$	9,332		$	3,859		$	1,204		$	12,012	$	30,717

Farmer Mac regularly conducts detailed, statistical stress tests of its portfolio for credit risk and compares those results to current and historical credit quality metrics and to the various statutory, regulatory, and Farmer Mac's board of directors' capital policy metrics. Farmer Mac's methodologies for pricing its guarantee and commitment fees, managing credit risk, and providing adequate allowances for losses consider all of the foregoing factors and information.

Credit Risk – Institutional . Farmer Mac is exposed to credit risk arising from its business relationships with other institutions including:


•	issuers of AgVantage securities;


•	approved lenders and servicers; and


•	interest rate swap counterparties.

Farmer Mac approves AgVantage counterparties and manages institutional credit risk related to those AgVantage counterparties by requiring them to meet Farmer Mac's standards for creditworthiness for the particular counterparty and transaction. The required collateralization level is established at the time of issuance and does not change during the life of the security. In AgVantage transactions, the corporate obligor is required to remove from the pool of pledged collateral any loan that becomes more than 30 days

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delinquent in the payment of principal or interest and to substitute an eligible loan that is current in payment to maintain the minimum required collateralization level. In the event of a default on the general obligation, Farmer Mac would have recourse to the pledged collateral and have rights to the ongoing borrower payments of principal and interest. For Farm Equity AgVantage counterparties, Farmer Mac also requires that the counterparty (1) maintain a higher collateralization level, through lower loan-to-value ratio thresholds and higher overcollateralization than required for traditional AgVantage securities and (2) comply with specified financial covenants for the life of the related Farm Equity AgVantage security to avoid default. For a more detailed description of AgVantage securities, see "Business—Farmer Mac Lines of Business—Institutional Credit—AgVantage Securities" in Farmer Mac's Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 16, 2015.

The unpaid principal balance of outstanding on-balance sheet AgVantage securities secured by loans eligible for the Farm & Ranch line of business totaled $3.4 billion as of September 30, 2015 and $3.7 billion as of December 31, 2014 . The unpaid principal balance of on-balance sheet AgVantage securities secured by loans eligible for the Rural Utilities line of business totaled $2.1 billion as of September 30, 2015 and $1.7 billion as of December 31, 2014 . In addition, the unpaid principal balance of outstanding off-balance sheet AgVantage transactions totaled $1.3 billion and $1.0 billion as of September 30, 2015 and December 31, 2014 , respectively.

The following table provides information about the issuers of AgVantage securities, as well as the required collateralization levels for those transactions as of September 30, 2015 and December 31, 2014 :

Table 19



	As of September 30, 2015				As of December 31, 2014
Counterparty	Balance		Credit Rating	Required Collateralization	Balance		Credit Rating	Required Collateralization
	(dollars in thousands)
AgVantage:
MetLife ⁽¹⁾	$	2,550,000	AA-	103%	$	2,750,000	AA-	103%
CFC ⁽²⁾	2,395,293		A	100%	1,741,601		A	100%
Rabo Agrifinance, Inc.	1,500,000		None	106%	1,700,000		None	106%
Other ⁽³⁾	86,334		⁽⁴⁾	102% to 120%	110,387		⁽³⁾	102% to 120%
Farm Equity AgVantage ⁽⁵⁾	193,390		None	110%	94,953		None	110%
Total outstanding	$	6,725,017			$	6,396,941


⁽¹⁾	Includes securities issued by Metropolitan Life Insurance Company and MetLife Insurance Company USA.


⁽²⁾	Includes $300.0 million related to a revolving floating rate AgVantage facility. Farmer Mac receives a fixed fee based on the full dollar amount of the facility. This facility had not been drawn upon as of September 30, 2015.


⁽³⁾	Consists of AgVantage securities issued by 5 different issuers as of both September 30, 2015 and December 31, 2014 .


⁽⁴⁾	Includes $26.2 million related to an issuer with a credit rating of BBB- and $60.1 million related to 4 issuers without a credit rating as of September 30, 2015 and $50.2 million related to an issuer with a credit rating of BBB- and $60.2 million related to 4 issuers without a credit rating as of December 31, 2014 .


⁽⁵⁾	Consists of securities from 2 separate issuers as of both September 30, 2015 and December 31, 2014 .

Farmer Mac manages institutional credit risk related to lenders and servicers by requiring those institutions to meet Farmer Mac's standards for creditworthiness. Farmer Mac monitors the financial condition of those institutions by evaluating financial statements and bank credit rating agency reports. For more information about Farmer Mac's lender eligibility requirements, see "Business—Farmer Mac Lines of Business—Farm & Ranch—Approved Lenders" and "Business—Farmer Mac Lines of Business—Rural Utilities—Approved Lenders" in Farmer Mac's Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 16, 2015.

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Farmer Mac manages institutional credit risk related to its interest rate swap counterparties through collateralization provisions contained in each of its swap agreements that varies based on the market value of its swaps portfolio with each counterparty. In addition, Farmer Mac transacts interest rate swaps with multiple counterparties to ensure a more even distribution of institutional credit risk related to its swap transactions. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), mandatory clearing of certain interest rate derivative transactions became effective for Farmer Mac during second quarter 2013, and Farmer Mac has been able to use the clearing process for cleared swap transactions as another mechanism for managing its derivative counterparty risk. Credit risk related to interest rate swap contracts is discussed in "—Risk Management—Interest Rate Risk" and Note 4 to the consolidated financial statements.

Credit Risk – Other Investments . As of September 30, 2015 , Farmer Mac had $1.5 billion of cash and cash equivalents and $2.0 billion of investment securities. The management of the credit risk inherent in these investments is governed by Farmer Mac's internal policies as well as FCA regulations, which establish limitations on dollar amount, issuer concentration, and credit quality. Those regulations can be found at 12 C.F.R. §§ 652.1-652.45 (the "Liquidity and Investment Regulations"). In addition to establishing a portfolio of highly liquid investments as an available source of cash, the goals of Farmer Mac's investment policies are designed to minimize Farmer Mac's exposure to financial market volatility, preserve capital, and support Farmer Mac's access to the debt markets.

The Liquidity and Investment Regulations and Farmer Mac's policies generally require each investment or issuer of an investment to be highly rated by a nationally recognized statistical rating organization ("NRSRO"). Investments in mortgage securities and asset-backed securities are required to have a rating in the highest NRSRO category. Corporate debt securities with maturities of no more than five years but more than three years are required to be rated in one of the two highest categories; corporate debt securities with maturities of three years or less are required to be rated in one of the three highest categories. Some investments do not require a rating, such as U.S. Treasury securities and other obligations fully insured by the United States government or a government agency or diversified investment funds regulated under the Investment Company Act of 1940. Investments in diversified investment funds are further limited to those funds that are holding only instruments approved for direct investment by Farmer Mac.

The Liquidity and Investment Regulations and Farmer Mac's policies also establish concentration limits, which are intended to limit exposure to any one counterparty. The Liquidity and Investment Regulations limit Farmer Mac's total credit exposure to any single issuer of securities and uncollateralized financial derivatives to 25 percent of Farmer Mac's regulatory capital (as of September 30, 2015 , 25 percent of Farmer Mac's regulatory capital was $142.1 million ), though Farmer Mac's current policy, for any investments made after the effective date of this policy, limits this total credit exposure to 5 percent of its regulatory capital (as of September 30, 2015, 5 percent of Farmer Mac's regulatory capital was $28.4 million ). These exposure limits do not apply to obligations of the United States or GSEs, though Farmer Mac is restricted by the Liquidity and Investment Regulations and its own policy from investing more than 100 percent of its regulatory capital in any one GSE.

Interest Rate Risk . Farmer Mac is subject to interest rate risk on all assets retained on its balance sheet because of possible timing differences in the cash flows of the assets and related liabilities. This risk is primarily related to loans held, Farmer Mac Guaranteed Securities, and USDA Securities due to the ability of borrowers to prepay their loans before the scheduled maturities, thereby increasing the risk of asset and

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liability cash flow mismatches. Cash flow mismatches in a changing interest rate environment can reduce the earnings of Farmer Mac if assets repay sooner than expected and the resulting cash flows must be reinvested in lower-yielding investments when Farmer Mac's funding costs cannot be correspondingly reduced, or if assets repay more slowly than expected and the associated debt must be replaced by higher-cost debt. As discussed below, Farmer Mac manages this interest rate risk by funding assets purchased with liabilities matching the duration and cash flow characteristics of the assets purchased.

The goal of interest rate risk management at Farmer Mac is to create and maintain a portfolio that generates stable earnings and value across a variety of interest rate environments. Farmer Mac's primary strategy for managing interest rate risk is to fund asset purchases with liabilities that have similar duration and cash flow characteristics so that they will perform similarly as interest rates change. To match these characteristics, Farmer Mac issues discount notes and both callable and non-callable medium-term notes across a spectrum of maturities. Farmer Mac issues callable debt to offset the prepayment risk associated with some loans. By using a blend of liabilities that includes callable debt, the interest rate sensitivities of the liabilities tend to increase or decrease as interest rates change in a manner similar to changes in the interest rate sensitivities of the assets. Farmer Mac also uses financial derivatives to better match the durations of Farmer Mac's assets and liabilities, thereby reducing overall interest rate sensitivity.

Taking into consideration the prepayment provisions and the default probabilities associated with its loan assets, Farmer Mac uses prepayment models to project and value cash flows associated with these assets. Because borrowers' behaviors in various interest rate environments may change over time, Farmer Mac periodically evaluates the effectiveness of these models compared to actual prepayment experience and adjusts and refines the models as necessary to improve the precision of subsequent prepayment forecasts.

In certain cases, yield maintenance provisions and other prepayment penalties contained in agricultural mortgage loans and rural utilities loans reduce, but do not eliminate, prepayment risk. Those provisions require borrowers to make an additional payment when they prepay their loans, thus compensating Farmer Mac for the shortened duration of the prepaid loan. As of September 30, 2015 , 1 percent of the total outstanding balance of loans in the Farm & Ranch line of business where Farmer Mac either owned the loan or the beneficial interest in the underlying loan had yield maintenance provisions and less than 1 percent had other forms of prepayment protection (together covering 2 percent of all loans with fixed interest rates). Of the Farm & Ranch loans purchased in third quarter 2015 , none had yield maintenance or another form of prepayment protection. As of September 30, 2015 , none of Farmer Mac's USDA Securities had yield maintenance provisions; however, 6 percent contained prepayment penalties. Of the USDA Securities purchased in third quarter 2015 , 5 percent contained various forms of prepayment penalties. As of September 30, 2015 , 62 percent of the rural utilities loans owned by Farmer Mac had yield maintenance provisions. Of the rural utilities loans purchased in third quarter 2015 , 88 percent contained prepayment penalties.

Farmer Mac's purchases of eligible loan assets expose Farmer Mac to interest rate risk arising primarily from uncertainty as to when the borrowers will repay the outstanding principal balance on the related loans. Generally, the values of Farmer Mac's eligible loan assets, and the debt issued to fund these assets, increase when interest rates decline, and their values decrease as interest rates rise. Furthermore, changes in interest rates may affect loan prepayment rates which may, in turn, affect durations and values of the loans. Declining interest rates generally increase prepayment rates, which shortens the duration of these assets, while rising interest rates tend to slow loan prepayments, thereby extending the duration of the loans.

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Farmer Mac is also subject to interest rate risk on loans that Farmer Mac has committed to acquire (other than delinquent loans through LTSPCs) but has not yet purchased. When Farmer Mac commits to purchase those loans, it is exposed to interest rate risk between the time it commits to purchase the loans and the time it either:


•	sells Farmer Mac Guaranteed Securities backed by the loans; or


•	issues debt to retain the loans in its portfolio.

Farmer Mac manages the interest rate risk related to these loans, and any related Farmer Mac Guaranteed Securities or debt issuance, through the use of forward sale contracts on the debt securities of other GSEs and futures contracts involving U.S. Treasury securities. Farmer Mac uses forward sale contracts on GSE securities to reduce its interest rate exposure to changes in both U.S. Treasury rates and spreads on Farmer Mac debt and certain Farmer Mac Guaranteed Securities. Issuing debt to fund the loans as investments does not fully eliminate interest rate risk due to the possible timing differences in the cash flows of the assets and related liabilities, as discussed above.

Farmer Mac's $1.5 billion of cash and cash equivalents mature within three months and are funded with discount notes having similar maturities. As of September 30, 2015 , $2.026 billion of the $ 2.032 billion of investment securities (nearly 100 percent ) were floating rate securities with rates that adjust within one year or fixed rate securities with original maturities between three months and one year. Those securities are funded with effectively floating rate debt that closely matches the rate adjustment dates of the associated investments. As of September 30, 2015 , Farmer Mac had outstanding discount notes of $6.1 billion , medium-term notes that mature within one year of $2.2 billion , and medium-term notes that mature after one year of $5.2 billion .

Recognizing that interest rate sensitivity may change with the passage of time and as interest rates change, Farmer Mac assesses this exposure on a regular basis and, if necessary, readjusts its portfolio of assets and liabilities by:


•	purchasing assets in the ordinary course of business;


•	refinancing existing liabilities; or


•	using financial derivatives to alter the characteristics of existing assets or liabilities.

Farmer Mac regularly stress tests its portfolio for interest rate risk and uses a variety of metrics to quantify and manage its interest rate risk. These metrics include sensitivity to interest rate movements of market value of equity ("MVE") and net interest income ("NII") as well as duration gap analysis. MVE represents management's estimate of the present value of all future cash flows from on- and off-balance sheet assets, liabilities, and financial derivatives, discounted at current interest rates and appropriate spreads. However, MVE is not indicative of the market value of Farmer Mac as a going concern because these market values are theoretical and do not reflect future business activities. MVE sensitivity analysis is used to measure the degree to which the market values of Farmer Mac's assets and liabilities change for a given change in interest rates. Because this analysis evaluates the impact of interest rate movements on the value of all future cash flows, this measure provides an evaluation of Farmer Mac's long-term interest rate risk.

Farmer Mac's NII is the difference between the yield on its interest-earning assets and its funding costs. Farmer Mac's NII may be affected by changes in market interest rates resulting from timing differences

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between maturities and re-pricing characteristics of assets and liabilities. The direction and magnitude of any such effect depends on the direction and magnitude of the change in interest rates as well as the composition of Farmer Mac's portfolio. The NII forecast represents an estimate of the net interest income that Farmer Mac's current portfolio is expected to produce over a twelve-month horizon. As a result, NII sensitivity statistics provide a short-term view of Farmer Mac's interest rate sensitivity.

Duration is a measure of a financial instrument's sensitivity to small changes in interest rates. Duration gap is the difference between the estimated durations of Farmer Mac's assets and liabilities. Because duration is a measure of market value sensitivity, duration gap summarizes the extent to which estimated market value sensitivities for assets and liabilities are matched. Duration gap provides a relatively concise measure of the interest rate risk inherent in Farmer Mac's outstanding book of business.

A positive duration gap denotes that the duration of Farmer Mac's assets is greater than the duration of its liabilities. A positive duration gap indicates that the market value of Farmer Mac's assets is more sensitive to small interest rate movements than is the market value of its liabilities. Conversely, a negative duration gap indicates that Farmer Mac's assets are less sensitive to small interest rate movements than are its liabilities.

Each of the metrics is produced using asset/liability models and is derived based on management's best estimates of such factors as projected interest rates, interest rate volatility, and prepayment speeds. Accordingly, these metrics should be understood as estimates rather than precise measurements. In addition, actual results may differ to the extent there are material changes to Farmer Mac's portfolio or changes in strategies undertaken to mitigate unfavorable sensitivities to interest rate changes.

The following schedule summarizes the results of Farmer Mac's MVE and NII sensitivity analysis as of September 30, 2015 and December 31, 2014 to an immediate and instantaneous uniform or "parallel" shift in the yield curve:

Table 20



	Percentage Change in MVE from Base Case
Interest Rate Scenario	As of September 30, 2015		As of December 31, 2014
+100 basis points	2.7	%	3.2	%
-25 basis points	(1.7	)%	(1.8	)%



	Percentage Change in NII from Base Case
Interest Rate Scenario	As of September 30, 2015		As of December 31, 2014
+100 basis points	2.1	%	4.3	%
-25 basis points	(5.0	)%	(8.7	)%

Farmer Mac's board of directors has established policies and procedures regarding MVE and NII sensitivity. These policies include the measurement of MVE and NII sensitivity to more severe decreasing interest rate scenarios that are consistent in magnitude with the increasing interest rate scenarios. However, given the low interest rate environment, such rate scenarios produce negative interest rates, and, as a result, do not produce results that are meaningful. Consequently, Farmer Mac measures and reports MVE and NII sensitivity to a down 25 basis point interest rate shock.

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As of September 30, 2015 , Farmer Mac's effective duration gap was minus 2.3 months , compared to minus 2.6 months as of December 31, 2014 . During 2015, longer term interest rates declined while shorter term LIBOR rates increased. Despite this rate movement, Farmer Mac's overall interest rate sensitivity remained relatively stable and at relatively low levels.

The economic effects of financial derivatives are included in Farmer Mac's MVE, NII, and duration gap analyses. Farmer Mac enters into the following financial derivative transactions principally to protect against risk from the effects of market price or interest rate movements on the value of assets, future cash flows, credit exposure, and debt issuance, not for trading or speculative purposes:


•	"pay-fixed" interest rate swaps, in which Farmer Mac pays fixed rates of interest to, and receives floating rates of interest from, counterparties;


•	"receive-fixed" interest rate swaps, in which Farmer Mac receives fixed rates of interest from, and pays floating rates of interest to, counterparties; and


•	"basis swaps," in which Farmer Mac pays variable rates of interest based on one index to, and receives variable rates of interest based on another index from, counterparties.

As of September 30, 2015 , Farmer Mac had $8.0 billion combined notional amount of interest rate swaps, with terms ranging from less than one year to twenty-five years, of which $1.8 billion were pay-fixed interest rate swaps, $5.4 billion were receive-fixed interest rate swaps, and $0.8 billion were basis swaps.

Farmer Mac enters into interest rate swap contracts to adjust the characteristics of its debt to match more closely the cash flow and duration characteristics of its loans and other assets, thereby reducing interest rate risk and often times deriving an overall lower effective cost of borrowing than would otherwise be available to Farmer Mac in the conventional debt market. Specifically, interest rate swaps synthetically convert the variable cash flows related to the forecasted issuance of short-term debt into effectively fixed rate medium-term notes that match the anticipated duration and interest rate characteristics of the corresponding assets. Farmer Mac evaluates the overall cost of using the swap market as a funding alternative and uses interest rate swaps to manage specific interest rate risks for specific transactions. Certain financial derivatives are designated as fair value hedges of fixed rate assets classified as available-for-sale to protect against fair value changes in the assets related to a benchmark interest rate (e.g., LIBOR).

Farmer Mac has used callable interest rate swaps (in conjunction with the issuance of short-term debt) as an alternative to callable medium-term notes with equivalently structured maturities and call options. The call options on the swaps are designed to match the prepayment options on those assets without prepayment protection. The blended durations of the swaps are also designed to match the duration of the related assets over their estimated lives. If the assets prepay, the swaps can be called and the short-term debt repaid; if the assets do not prepay, the swaps remain outstanding and the short-term debt is rolled over, effectively providing fixed rate callable funding over the lives of the related assets. Thus, the economics of the assets are closely matched to the economics of the interest rate swap and funding combination.

As discussed in Note 4 to the consolidated financial statements, all financial derivatives are recorded on the balance sheet at fair value as a freestanding asset or liability. Changes in the fair values of financial derivatives are reported in " (Losses)/gains on financial derivatives and hedging activities " in the consolidated statements of operations . For financial derivatives designated in fair value hedging relationships, changes in the fair values of the hedged items related to the risk being hedged are also

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reported in " (Losses)/gains on financial derivatives and hedging activities " in the consolidated statements of operations . For financial derivatives designated in cash flow hedging relationships, the effective portion of the derivative gain/loss is recorded in other comprehensive income; amounts are disclosed as a reclassification out of other comprehensive income when the hedge transaction affects earnings. Any ineffective portion of designated hedge transactions is recognized immediately in " (Losses)/gains on financial derivatives and hedging activities ". All of Farmer Mac's financial derivative transactions are conducted under standard collateralized agreements that limit Farmer Mac's potential credit exposure to any counterparty. As of September 30, 2015 , Farmer Mac had uncollateralized net exposures of $0.2 million to one counterparty. As of December 31, 2014 , Farmer Mac had uncollateralized net exposures of $0.4 million to two counterparties.

Liquidity and Capital Resources

Farmer Mac regularly accesses the capital markets for funding, and Farmer Mac has maintained access to the capital markets at favorable rates throughout 2014 and the first nine months of 2015. Assuming continued access to the capital markets, Farmer Mac believes it has sufficient liquidity and capital resources to support its operations for the next 12 months and for the foreseeable future. Farmer Mac also has a liquidity contingency plan to manage unanticipated disruptions in its access to the capital markets. That plan involves borrowing through repurchase agreement arrangements and the sale of liquid assets. Farmer Mac is required to maintain a minimum of 90 days of liquidity under the Liquidity and Investment Regulations. In accordance with the methodology for calculating available days of liquidity prescribed by those regulations, Farmer Mac maintained an average of 159 days of liquidity during third quarter 2015 and had 124 days of liquidity as of September 30, 2015 .

Debt Issuance . Farmer Mac funds its purchases of eligible loan assets and investment assets and finances its operations primarily by issuing debt obligations of various maturities through a network of dealers in the public capital markets. Farmer Mac works to enhance its funding operations by undertaking extensive debt investor relations initiatives, including conducting non-deal roadshows with institutional investors, making periodic dealer sales force presentations, and speaking at fixed income investor conferences throughout the United States. Debt obligations issued by Farmer Mac include discount notes and fixed and floating rate medium-term notes, including callable notes.

Farmer Mac's board of directors has authorized the issuance of up to $18.0 billion of discount notes and medium-term notes (of which $13.5 billion was outstanding as of September 30, 2015 ), subject to periodic review of the adequacy of that level relative to Farmer Mac's borrowing requirements. Farmer Mac's board of directors increased that authorization from $15.0 billion to $18.0 billion in June 2015. Farmer Mac invests the proceeds of its debt issuances in purchases of loans, USDA Securities, Farmer Mac Guaranteed Securities, and investment assets in accordance with policies established by its board of directors and subject to regulations established by FCA.

Liquidity . The funding and liquidity needs of Farmer Mac's lines of business are driven by the purchase and retention of eligible loans, USDA Securities, and Farmer Mac Guaranteed Securities (including AgVantage securities); the maturities of Farmer Mac's discount notes and medium-term notes; and payment of principal and interest on Farmer Mac Guaranteed Securities. Farmer Mac's primary sources of funds to meet these needs are the proceeds of its debt issuances, fees for its guarantees and commitments, net effective spread, loan repayments, and maturities of AgVantage securities.

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Farmer Mac uses a combination of pay-fixed interest rate swaps and receive-fixed interest rate swaps to mitigate its exposure to interest rate risk and monitors the effects of actual and potential fair value changes on its capital position. From time to time, Farmer Mac uses pay-fixed interest rate swaps, combined with a planned series of discount note or short-term floating rate medium-term note issuances, as an alternative source of effectively fixed rate funding. While the swap market may provide favorable effectively fixed rates, interest rate swap transactions expose Farmer Mac to the risk of future variability of its own issuance spreads versus corresponding LIBOR rates. If the spreads on the Farmer Mac discount notes or short-term floating rate medium-term notes were to deteriorate relative to LIBOR, Farmer Mac would be exposed to a commensurate reduction on its net interest yield on the notional amount of its pay-fixed interest rate swaps and its LIBOR-based floating rate assets. Conversely, if the rates on the Farmer Mac discount notes or short-term floating rate medium-term notes were to improve relative to LIBOR, Farmer Mac would benefit from a commensurate increase on its net interest yield on the notional amount of its pay-fixed interest rate swaps and its LIBOR-based floating rate assets.

Farmer Mac maintains cash, cash equivalents (including U.S. Treasury securities and other short-term money market instruments), and other investment securities that can be drawn upon for liquidity needs. The following table presents these assets as of September 30, 2015 and December 31, 2014 :

Table 21



	As of September 30, 2015		As of December 31, 2014
	(in thousands)
Cash and cash equivalents	$	1,516,536	$	1,363,387
Investment securities:
Guaranteed by U.S. Government and its agencies	1,025,457		1,404,156
Guaranteed by GSEs	898,211		398,600
Corporate debt securities	19,996		40,116
Asset-backed securities	88,515		96,316
Total	$	3,548,715	$	3,302,575

Farmer Mac's asset-backed investment securities include callable, highly rated auction-rate certificates ("ARCs"), the interest rates on which are reset through an auction process, most commonly at intervals of 28 days, or at formula-based floating rates as set forth in the related transaction documents in the event of a failed auction. These formula-based floating rates, which may at times reset to zero, are intended to preserve the underlying principal balance of the securities and avoid overall cash shortfalls. Accordingly, payments of accrued interest may be delayed and are ultimately subject to cash availability. Beginning in mid-February 2008, there were widespread failures of the auction mechanism designed to provide regular liquidity to these types of securities. Consequently, Farmer Mac has not sold any of its ARCs into the auctions since that time. All ARCs held by Farmer Mac are collateralized entirely by pools of Federal Family Education Loan Program guaranteed student loans that are backed by the full faith and credit of the United States. Farmer Mac continues to believe that the credit quality of these securities is high, based on the underlying collateralization and the securities' ratings. To date, Farmer Mac has received all interest due on ARCs it holds and expects to continue to do so. Farmer Mac does not believe that the auction failures will affect Farmer Mac's liquidity or its ability to fund its operations or make dividend payments. All ARCs held by Farmer Mac are callable by the issuers at par at any time.

The carrying value of Farmer Mac's ARCs investments was $44.9 million as of September 30, 2015 , compared to $40.6 million as of December 31, 2014 . During third quarter 2015, Farmer Mac recognized in earnings $0.1 million of other-than-temporary impairment losses on two ARCs. As of September 30,

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2015, Farmer Mac intended to sell the securities in fourth quarter 2015 at a price of 99.63 percent of par pursuant to a forward sales agreement. As of September 30, 2015 , Farmer Mac's carrying value of all of its ARCs investments was 97 percent of par. The discounted carrying value reflects uncertainty regarding the ability to obtain par in the absence of any active market trading. See Note 8 to the consolidated financial statements for more information on the carrying value of ARCs.

Capital . Farmer Mac is subject to the following capital requirements – minimum, critical, and risk-based. Farmer Mac is required to comply with the higher of the minimum capital requirement and the risk-based capital requirement. The minimum capital requirement is expressed as a percentage of on-balance sheet assets and off-balance sheet obligations. The critical capital requirement is equal to one-half of the minimum capital amount. Farmer Mac's statutory charter does not specify the required level of risk-based capital but directs FCA to establish a risk-based capital stress test for Farmer Mac, using specified stress test parameters. Certain enforcement powers are given to FCA depending on Farmer Mac's compliance with these capital standards. As of September 30, 2015 , Farmer Mac was in compliance with its statutory capital requirements and was classified as within "level I" (the highest compliance level). See Note 7 to the consolidated financial statements for more information about Farmer Mac's capital position and see "Business—Government Regulation of Farmer Mac—Regulation—Capital Standards" in Farmer Mac's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC on March 16, 2015 for more information on the statutory and regulatory capital requirements applicable to Farmer Mac.

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, qualifying preferred stock, and accumulated other comprehensive income allocable to investments not included in one of the four operating lines of business). That policy imposes restrictions on Tier 1-eligible dividends and any discretionary bonus payments in the event that Tier 1 capital falls below specified thresholds. As of September 30, 2015 and December 31, 2014 , Farmer Mac's Tier 1 capital ratio was 11.5% and 11.3% , respectively. For more information about Farmer Mac's capital adequacy policy and FCA's rule on capital planning, see "Business—Government Regulation of Farmer Mac—Regulation—Capital Standards" in Farmer Mac's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC on March 16, 2015. As of September 30, 2015 , Farmer Mac was in compliance with its capital adequacy policy.

Regulatory Matters

The Dodd-Frank Act contains a variety of provisions designed to regulate financial markets. Certain provisions of the Dodd-Frank Act, including those regarding derivatives, corporate governance, and executive compensation, apply to Farmer Mac. On October 22, 2015, the Federal Reserve Board, FCA, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, and the Office of the Comptroller of the Currency adopted a joint final rule to establish minimum requirements for the exchange of initial and variation margin between swap dealers or major swap participants and their counterparties to non-cleared swaps. Farmer Mac does not expect that any of the final rules that have been passed, including the final rule establishing margin requirements for non-cleared swaps , or that are anticipated to be passed under the Dodd-Frank Act will have a material effect on Farmer Mac's business activities and operations or financial condition. Farmer Mac will continue to monitor all applicable developments in the implementation of the Dodd-Frank Act and expects to be able to adapt successfully to any new applicable legislative and regulatory requirements.

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Other Matters

Common Stock Dividends . On November 4, 2015, Farmer Mac's Board of Directors declared a quarterly dividend of $0.16 per share on all classes of its common stock. The quarterly dividend will be payable on December 31, 2015 to holders of record of common stock as of December 16, 2015. For the first, second, and third quarter s of 2015, Farmer Mac paid a quarterly dividend of $0.16 per share on all classes of its common stock. For each quarter in 2014, Farmer Mac paid a quarterly dividend of $0.14 per share on all classes of its common stock. Farmer Mac's ability to declare and pay dividends on common stock could be restricted if it fails to comply with applicable capital requirements. See "Business—Government Regulation of Farmer Mac—Regulation—Capital Standards—Enforcement Levels" in Farmer Mac's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC on March 16, 2015.

Preferred Stock Dividends . On November 4, 2015, Farmer Mac's Board of Directors also declared a quarterly dividend of $0.3672 per share on its Series A Preferred Stock, $0.4297 per share on its Series B Preferred Stock, and $0.375 per share on its Series C Preferred Stock. Farmer Mac will pay the quarterly dividends on each series of preferred stock for the period from, but not including, October 17, 2015 to and including January 17, 2016, which will be payable on January 17, 2016 to holders of record as of January 2, 2016. For each of the first, second, and third quarters of 2015 and for each quarter of 2014, Farmer Mac paid a quarterly dividend of $0.3672 per share on its Series A Preferred Stock. For each of the first, second, and third quarters of 2015 and for the last two quarters of 2014, Farmer Mac paid a quarterly dividend of $0.4297 per share on its Series B Preferred Stock, and for the period from, but not including, its issuance date on March 25, 2014 through and including the regularly scheduled quarterly payment date of April 17, 2014, Farmer Mac paid an initial dividend of $0.105 per share on its Series B Preferred Stock. For each of the first, second, and third quarters of 2015 and for the last quarter of 2014, Farmer Mac paid a quarterly dividend of $0.375 per share on its Series C Preferred Stock, and for the period from, but not including, its issuance date on June 20, 2014 through and including the regularly scheduled quarterly payment date of October 17, 2014, Farmer Mac paid an initial dividend of $0.4875 per share on its Series C Preferred Stock.

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Supplemental Information

The following tables present quarterly and annual information regarding new business volume, repayments, and outstanding business volume:

Table 22



New Business Volume
	Farm & Ranch				USDA Guarantees		Rural Utilities				Institutional Credit
	Loans		LTSPCs		USDA Securities		Loans		LTSPCs		AgVantage		Total
	(in thousands)
For the quarter ended:
September 30, 2015	$	175,965	$	79,621	$	91,374	$	53,552	$	522,262	$	506,602	$	1,429,376
June 30, 2015	196,927		102,944		123,933		—		—		307,250		731,054
March 31, 2015	130,224		59,311		89,186		8,703		—		214,915		502,339
December 31, 2014	196,058		72,045		86,942		6,972		—		454,490		816,507
September 30, 2014	150,243		77,368		97,275		9,936		—		295,700		630,522
June 30, 2014	159,116		34,850		90,785		4,689		—		300,775		590,215
March 31, 2014	192,407		185,594		67,984		53,903		—		228,690		728,578
December 31, 2013	245,770		75,731		58,438		41,374		—		295,000		716,313
September 30, 2013	193,089		198,783		70,372		5,107		—		353,500		820,851

For the year ended:
December 31, 2014	697,824		369,857		342,986		75,500		—		1,279,655		2,765,822
December 31, 2013	824,881		540,798		361,894		86,965		—		1,273,500		3,088,038

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Table 23



Repayments of Assets by Line of Business
	Farm & Ranch						USDA Guarantees		Rural Utilities				Institutional Credit
	Loans		Guaranteed Securities		LTSPCs		USDA Securities		Loans		LTSPCs		AgVantage		Total
	(in thousands)
For the quarter ended:
Scheduled	$	37,524	$	11,178	$	45,943	$	19,785	$	25,662	$	4,033	$	609,524	$	753,649
Unscheduled	70,242		11,164		61,075		35,394		—		—		—		177,875
September 30, 2015	$	107,766	$	22,342	$	107,018	$	55,179	$	25,662	$	4,033	$	609,524	$	931,524

Scheduled	$	8,687	$	11,126	$	34,064	$	31,064	$	19	$	—	$	9,245	$	94,205
Unscheduled	48,659		11,299		47,714		45,357		13,910		—		—		166,939
June 30, 2015	$	57,346	$	22,425	$	81,778	$	76,421	$	13,929	$	—	$	9,245	$	261,144

Scheduled	$	39,803	$	21,163	$	53,747	$	33,388	$	25,805	$	—	$	81,922	$	255,828
Unscheduled	59,731		16,687		68,330		38,914		390		—		—		184,052
March 31, 2015	$	99,534	$	37,850	$	122,077	$	72,302	$	26,195	$	—	$	81,922	$	439,880

Scheduled	$	7,000	$	19,821	$	28,472	$	16,966	$	—	$	—	$	9,349	$	81,608
Unscheduled	29,284		21,907		58,882		31,890		—		—		—		141,963
December 31, 2014	$	36,284	$	41,728	$	87,354	$	48,856	$	—	$	—	$	9,349	$	223,571

Scheduled	$	37,361	$	11,560	$	45,631	$	18,123	$	43,612	$	—	$	383,130	$	539,417
Unscheduled	59,601		15,002		54,683		29,539		—		—		—		158,825
September 30, 2014	$	96,962	$	26,562	$	100,314	$	47,662	$	43,612	$	—	$	383,130	$	698,242

Scheduled	$	9,813	$	13,623	$	52,622	$	28,681	$	—	$	—	$	361,831	$	466,570
Unscheduled	45,094		13,575		42,550		38,465		19,622		—		—		159,306
June 30, 2014	$	54,907	$	27,198	$	95,172	$	67,146	$	19,622	$	—	$	361,831	$	625,876

Scheduled	$	41,587	$	24,430	$	48,157	$	29,319	$	23,744	$	—	$	176,268	$	343,505
Unscheduled	63,329		9,747		59,856		39,086		55,164		—		—		227,182
March 31, 2014	$	104,916	$	34,177	$	108,013	$	68,405	$	78,908	$	—	$	176,268	$	570,687

Scheduled	$	6,729	$	24,367	$	36,063	$	17,463	$	6,897	$	—	$	303,087	$	394,606
Unscheduled	54,277		11,586		61,147		30,651		—		—		—		157,661
December 31, 2013	$	61,006	$	35,953	$	97,210	$	48,114	$	6,897	$	—	$	303,087	$	552,267

Scheduled	$	34,455	$	13,133	$	47,143	$	21,235	$	31,994	$	—	$	258,488	$	406,448
Unscheduled	84,889		12,232		81,761		39,514		5,259		—		—		223,655
September 30, 2013	$	119,344	$	25,365	$	128,904	$	60,749	$	37,253	$	—	$	258,488	$	630,103

For the year ended:
Scheduled	$	95,761	$	69,434	$	174,882	$	93,089	$	67,356	$	—	$	930,578	$	1,431,100
Unscheduled	197,308		60,231		215,971		138,980		74,786		—		—		687,276
December 31, 2014	$	293,069	$	129,665	$	390,853	$	232,069	$	142,142	$	—	$	930,578	$	2,118,376

Scheduled	$	82,440	$	77,702	$	170,690	$	94,672	$	61,400	$	—	$	846,011	$	1,332,915
Unscheduled	286,825		67,917		264,314		195,684		5,259		—		—		819,999
December 31, 2013	$	369,265	$	145,619	$	435,004	$	290,356	$	66,659	$	—	$	846,011	$	2,152,914

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Table 24



Lines of Business - Outstanding Business Volume
	Farm & Ranch						USDA Guarantees		Rural Utilities				Institutional Credit
	Loans		Guaranteed Securities		LTSPCs		USDA Securities		Loans		LTSPCs		AgVantage		Total
	(in thousands)
As of:
September 30, 2015	$	2,778,692	$	553,469	$	2,171,869	$	1,898,625	$	982,078	$	518,229	$	6,725,017	$	15,627,979
June 30, 2015	2,710,493		575,811		2,199,266		1,862,430		954,188		—		6,827,939		15,130,127
March 31, 2015	2,570,912		598,236		2,178,100		1,814,918		968,117		—		6,529,934		14,660,217
December 31, 2014	2,540,222		636,086		2,240,866		1,798,034		985,609		—		6,396,941		14,597,758
September 30, 2014	2,380,448		677,814		2,256,175		1,759,948		978,637		—		5,951,800		14,004,822
June 30, 2014	2,327,167		704,376		2,279,121		1,710,335		1,012,313		—		6,039,230		14,072,542
March 31, 2014	2,222,958		731,574		2,339,443		1,686,696		1,027,246		—		6,100,286		14,108,203
December 31, 2013	2,135,467		765,751		2,261,862		1,687,117		1,052,251		—		6,047,864		13,950,312
September 30, 2013	1,950,704		801,703		2,283,341		1,676,793		1,017,774		—		6,055,951		13,786,266

Table 25



On-Balance Sheet Outstanding Business Volume
	Fixed Rate		5- to 10-Year ARMs & Resets		1-Month to 3-Year ARMs		Total Held in Portfolio
	(in thousands)
As of:
September 30, 2015	$	4,889,894	$	2,147,916	$	4,049,361	$	11,087,171
June 30, 2015	5,136,559		2,118,999		4,102,075		11,357,633
March 31, 2015	5,006,542		2,020,600		3,857,363		10,884,505
December 31, 2014	5,020,085		2,002,943		3,697,272		10,720,300
September 30, 2014	4,823,897		1,919,353		3,324,703		10,067,953
June 30, 2014	4,955,560		1,881,625		3,247,011		10,084,196
March 31, 2014	4,890,979		1,834,352		3,304,094		10,029,425
December 31, 2013	4,980,500		1,827,744		3,113,224		9,921,468
September 30, 2013	4,970,420		1,802,255		2,924,785		9,697,460

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The following table presents the quarterly net effective spread by segment:

Table 26



	Net Effective Spread by Line of Business
	Farm & Ranch				USDA Guarantees				Rural Utilities				Institutional Credit ⁽¹⁾				Corporate				Net Effective Spread
	Dollars		Yield		Dollars		Yield		Dollars		Yield		Dollars		Yield		Dollars		Yield		Dollars		Yield
	(dollars in thousands)
For the quarter ended:
September 30, 2015	$	9,628	1.80	%	$	4,630	0.99	%	$	2,907	1.18	%	$	11,271	0.81	%	$	1,951	0.25	%	$	30,387	0.88	%
June 30, 2015	9,681		1.82	%	4,466		0.98	%	2,838		1.18	%	10,860		0.78	%	1,942		0.25	%	29,787		0.88	%
March 31, 2015 ⁽²⁾	10,114		1.97	%	4,225		0.95	%	2,804		1.15	%	10,425		0.77	%	1,689		0.20	%	29,257		0.86	%
December 31, 2014 ⁽³⁾	8,682		1.71	%	5,250		1.19	%	2,908		1.18	%	9,871		0.78	%	1,732		0.26	%	28,443		0.91	%
September 30, 2014	8,207		1.68	%	5,073		1.18	%	2,890		1.16	%	9,823		0.78	%	3,773		0.59	%	29,766		0.97	%
June 30, 2014	7,820		1.64	%	4,159		0.99	%	2,953		1.16	%	9,957		0.78	%	4,160		0.57	%	29,049		0.92	%
March 31, 2014 ⁽⁴⁾	7,114		1.53	%	3,784		0.91	%	1,990		0.73	%	9,406		0.74	%	4,142		0.56	%	26,436		0.84	%
December 31, 2013 ⁽⁴⁾	10,113		2.20	%	4,022		0.97	%	2,379		0.89	%	9,088		0.72	%	4,420		0.58	%	30,022		0.94	%
September 30, 2013	7,980		1.86	%	4,505		1.09	%	2,974		1.12	%	9,117		0.72	%	4,117		0.57	%	28,693		0.93	%


⁽¹⁾	See Note 1(d) to the consolidated financial statements for more information about the reclassification of certain amounts in prior periods from guarantee and commitment fees to interest income related to on-balance sheet Farmer Mac Guaranteed Securities.

⁽²⁾

Beginning in first quarter 2015, Farmer Mac revised its methodology for interest expense allocation among the Farm & Ranch, USDA Guarantees, and Rural Utilities lines of business. As a result of this revision, a greater percentage of interest expense has been allocated to the longer-term assets included within the USDA Guarantees and Rural Utilities lines of business. Net effective spread for periods prior to the quarter ended March 31, 2015 does not reflect this revision.


⁽³⁾	On October 1, 2014, $78.5 million of preferred stock issued by CoBank was called, resulting in a loss of net effective spread of $2.1 million or 30 basis points

in the corporate segment. The impact on consolidated net effective spread was 7 basis points.

⁽⁴⁾

First quarter 2014 includes the impact of spread compression in the Rural Utilities line of business from the early refinancing of loans (41 basis points). Fourth quarter 2013 includes the impact in net effective spread in the Farm & Ranch line of business of one-time adjustments for recovered buyout interest and yield maintenance (40 basis points in aggregate) and the impact of spread compression in the Rural Utilities line of business from the early refinancing of loans (26 basis points).

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The following table presents quarterly core earnings reconciled to net income attributable to common stockholders:

Table 27




	September 2015			June 2015			March 2015			December 2014			September 2014			June 2014			March 2014			December 2013			September 2013
	(in thousands)
Revenues:
Net effective spread ⁽¹⁾	$	30,387		$	29,787		$	29,257		$	28,443		$	29,766		$	29,049		$	26,436		$	30,022		$	28,693
Guarantee and commitment fees	4,328			4,085			4,012			4,096			4,152			4,216			4,315			4,252			4,134
Other ⁽²⁾	(93		)	(24		)	(405		)	(1,285		)	(2,001		)	(520		)	(410		)	427			(466		)
Total revenues	34,622			33,848			32,864			31,254			31,917			32,745			30,341			34,701			32,361

Credit related (income)/expense:
(Release of)/provision for losses	(303		)	1,256			(696		)	(479		)	(804		)	(2,557		)	674			12			(36		)
REO operating expenses	48			—			(1		)	48			1			59			2			3			35
Losses/(gains) on sale of REO	—			—			1			28			—			(168		)	3			(26		)	(39		)
Total credit related (income)/expense	(255		)	1,256			(696		)	(403		)	(803		)	(2,666		)	679			(11		)	(40		)

Operating expenses:
Compensation and employee benefits	5,236			5,733			5,693			4,971			4,693			4,889			4,456			4,025			4,523
General and administrative	3,676			3,374			2,823			2,992			3,123			3,288			2,794			3,104			2,827
Regulatory fees	600			600			600			600			593			594			594			594			593
Total operating expenses	9,512			9,707			9,116			8,563			8,409			8,771			7,844			7,723			7,943

Net earnings	25,365			22,885			24,444			23,094			24,311			26,640			21,818			26,989			24,458
Income tax expense/(benefit) ⁽³⁾	8,924			8,091			6,692			4,858			6,327			(4,734		)	4,334			5,279			6,263
Net (loss)/income attributable to non-controlling interest	(36		)	(119		)	5,354			5,414			5,412			5,819			5,547			5,546			5,547
Preferred stock dividends	3,295			3,296			3,295			3,296			3,283			2,308			952			882			881
Core earnings	$	13,182		$	11,617		$	9,103		$	9,526		$	9,289		$	23,247		$	10,985		$	15,282		$	11,767

Reconciling items (after-tax effects):
Unrealized (losses)/gains on financial derivatives and hedging activities	(4,489		)	10,388			(582		)	(3,717		)	2,685			(3,053		)	(2,395		)	8,003			4,632
Unrealized (losses)/gains on trading assets	(5		)	110			236			679			(21		)	(46		)	426			(50		)	(407		)
Amortization of premiums/discounts and deferred gains on assets consolidated at fair value	(76		)	(81		)	(529		)	(811		)	(440		)	(179		)	(8,027		)	(10,864		)	(421		)
Net effects of settlements on agency forwards	(253		)	128			(164		)	(30		)	73			236			(176		)	114			(158		)
Loss on retirement of Farmer Mac II LLC Preferred Stock	—			—			(6,246		)	—			—			—			—			—			—
Net income attributable to common stockholders	$	8,359		$	22,162		$	1,818		$	5,647		$	11,586		$	20,205		$	813		$	12,485		$	15,413


⁽¹⁾	The difference between first quarter 2014 and fourth quarter 2013 net effective spread was due to the impact of one-time adjustments for recovered buyout interest and yield maintenance of $1.8 million in fourth quarter 2013, $0.6 million associated with the early refinancing of AgVantage securities and the recasting of certain Rural Utilities loans, and a lower day count in first quarter 2014.

⁽²⁾

Fourth quarter 2014 and third quarter 2014 include $13.6 million and $17.9 million , respectively, of interest expense related to securities purchased under agreements to resell and securities sold, not yet purchased and $12.8 million and $16.4 million , respectively of gains on securities sold, not yet purchased. First quarter 2014 includes additional hedging costs of $0.6 million. Fourth quarter 2013 includes gains on the repurchase of debt of $1.5 million, partially offset by realized losses on the sale of available-for-sale securities of $0.9 million and additional hedging costs of $0.2 million. Second quarter 2013 includes $3.1 million of realized gains from the sale of an available-for-sale investment security.

⁽³⁾

Fourth quarter 2014 and second quarter 2014 reflect a reduction of $1.4 million and $11.6 million, respectively, in the tax valuation allowance against capital loss carryforwards related to capital gains on securities sold, not yet purchased. First quarter 2014 and fourth quarter 2013 reflect a reduction in tax valuation allowance of $0.8 million and $2.1 million, respectively, associated with certain gains on investment portfolio assets. Second quarter 2013 includes the reduction of $1.1 million of tax valuation allowance against capital loss carryforwards related to realized gains from the sale of an available-for-sale investment security.

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Item 3.	Quantitative and Qualitative Disclosures About Market Risk

Farmer Mac is exposed to market risk from changes in interest rates. Farmer Mac manages this market risk by entering into various financial transactions, including financial derivatives, and by monitoring and measuring its exposure to changes in interest rates. 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 such risk. For information regarding Farmer Mac's use of financial derivatives and related accounting policies, see Note 4 to the consolidated financial statements.


Item 4.	Controls and Procedures

Management's Evaluation of Disclosure Controls and Procedures . Farmer Mac maintains disclosure controls and procedures designed to ensure that information required to be disclosed in its periodic filings under the Securities Exchange Act of 1934 (the “Exchange Act”), including this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported on a timely basis. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed under the Exchange Act is accumulated and communicated to Farmer Mac's management on a timely basis to allow decisions regarding required disclosure. Management, including Farmer Mac's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of Farmer Mac's disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of September 30, 2015 .

Farmer Mac carried out the evaluation of the effectiveness of its disclosure controls and procedures, required by paragraph (b) of Exchange Act Rules 13a-15 and 15d-15, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that Farmer Mac's disclosure controls and procedures were effective as of September 30, 2015 .

Changes in Internal Control Over Financial Reporting . There were no changes in Farmer Mac's internal control over financial reporting during the three months ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, Farmer Mac's internal control over financial reporting.

104

PART II


Item 1.	Legal Proceedings

None.

Item 1A. Risk Factors

There were no material changes from the risk factors previously disclosed in Farmer Mac's Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 16, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Farmer Mac is a federally chartered instrumentality of the United States and its debt and equity securities are exempt from registration pursuant to Section 3(a)(2) of the Securities Act of 1933.

During third quarter 2015, the following transactions occurred related to Farmer Mac's equity securities that were not registered under the Securities Act of 1933 and were not otherwise reported on a Current Report on Form 8-K:

Class C Non-Voting Common Stock . Under 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 91 shares of its Class C Non-Voting Common Stock on July 8, 2015 to the three directors who elected to receive stock in lieu of their cash retainers. Farmer Mac calculated the number of shares issued to the directors based on a price of $29.06 per share, which was the closing price of the Class C Non-Voting Common Stock on June 30, 2015 as reported by the New York Stock Exchange.


(b)	Not applicable.


(c)	The table below sets forth information regarding Farmer Mac's purchases of shares of its outstanding Class C Non-Voting Common Stock during the quarter ended September 30, 2015:



	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan ⁽¹⁾	Approximate Maximum Dollar Value That May Yet Be Purchased Under the Plan
	(Dollars in thousands, except per share information)
Period:
July 1, 2015 – July 31, 2015 ⁽²⁾	—	$	—	—	$	—
August 1, 2015 – August 31, 2015 ⁽²⁾	—	—		—	—
September 1, 2015 – September 30, 2015	103,712	26.87		103,712	22,213
Total	103,712	26.87

⁽¹⁾

On September 8, 2015, Farmer Mac's board of directors approved a share repurchase program authorizing Farmer Mac to repurchase up to $25 million of its outstanding Class C Non-Voting Common Stock until September 7, 2017. Repurchases of Class C Non-Voting Common Stock will be made at management's discretion from time to time in the open market at prevailing market prices, through private transactions, or block trades, in each case subject to compliance with all SEC rules and other legal requirements, and may be made in part under one or more Rule 10b5-1 plans. The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements, and other factors.


⁽²⁾	No shares of Class C Non-Voting Common Stock were purchased during this period.

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Item 3. Defaults Upon Senior Securities

(a) None.

(b) None.


Item 4.	Mine Safety Disclosures

Not applicable.

Item 5. Other Information

(a) None.

(b) None.

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Item 6. Exhibits

(3) Exhibits.



*	3.1	—	Title VIII of the Farm Credit Act of 1971, as most recently amended by the Food, Conservation and Energy Act of 2008 (Previously filed as Exhibit to Form 10-Q filed August 12, 2008).
*	3.2	—	Amended and Restated By-Laws of the Registrant (Previously filed as Exhibit 3.1 to Form 8-K filed June 9, 2014).
*	4.1	—	Specimen Certificate for Farmer Mac Class A Voting Common Stock (Previously filed as Exhibit 4.1 to Form 10-Q filed May 15, 2003).
*	4.2	—	Specimen Certificate for Farmer Mac Class B Voting Common Stock (Previously filed as Exhibit 4.2 to Form 10-Q filed May 15, 2003).
*	4.3	—	Specimen Certificate for Farmer Mac Class C Non-Voting Common Stock (Previously filed as Exhibit 4.3 to Form 10-Q filed May 15, 2003).
*	4.4	—	Specimen Certificate for 5.875% Non-Cumulative Preferred Stock, Series A (Previously filed as Exhibit 4.4.1 to Form 10-Q filed May 9, 2013).
*	4.4.1	—	Certificate of Designation of Terms and Conditions of 5.875% Non-Cumulative Preferred Stock, Series A (Previously filed as Exhibit 4.1 to Form 8-A filed January 17, 2013).
*	4.5	—	Specimen Certificate for 6.875% Non-Cumulative Preferred Stock, Series B (Previously filed as Exhibit 4.5 to Form 10-Q filed May 12, 2014).
*	4.5.1	—	Certificate of Designation of Terms and Conditions of 6.875% Non-Cumulative Preferred Stock, Series B (Previously filed as Exhibit 4.1 to Form 8-A filed March 25, 2014).
*	4.6	—	Specimen Certificate for 6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C (Previously filed as Exhibit 4.6 to Form 10-Q filed August 11, 2014).
*	4.6.1	—	Certificate of Designation of Terms and Conditions of 6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C (Previously filed as Exhibit 4.1 to Form 8-A filed June 20, 2014).
**	10.1	—	Master Note Purchase Agreement dated as of July 31, 2015 between Farmer Mac, Farmer Mac Mortgage Securities Corporation, and National Rural Utilities Cooperative Finance Corporation
**#	10.2	—	First Supplemental Note Purchase Agreement dated as of July 31, 2015 between Farmer Mac, Farmer Mac Mortgage Securities Corporation, and National Rural Utilities Cooperative Finance Corporation
**	10.3	—	Second Amended, Restated and Consolidated Pledge Agreement dated as of July 31, 2015 between Farmer Mac, Farmer Mac Mortgage Securities Corporation, National Rural Utilities Cooperative Finance Corporation, and U.S. Bank National Association
**	10.4	—	Long Term Standby Commitment to Purchase dated as of August 31, 2015 between Farmer Mac and National Rural Utilities Cooperative Finance Corporation
**†	10.5	—	Description of compensation arrangement between Farmer Mac and its directors, effective July 1, 2015.
**	31.1	—	Certification of Registrant's principal executive officer relating to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
**	31.2	—	Certification of Registrant's principal financial officer relating to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
**	32	—	Certification of Registrant's principal executive officer and principal financial officer relating to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



*	Incorporated by reference to the indicated prior filing.
**	Filed with this report.
#	Portions of this exhibit have been omitted pursuant to a request for confidential treatment.
†	Management contract or compensatory plan.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FEDERAL AGRICULTURAL MORTGAGE CORPORATION



/s/ Timothy L. Buzby		November 9, 2015
By:	Timothy L. Buzby	Date
	President and Chief Executive Officer
	(Principal Executive Officer)



/s/ R. Dale Lynch		November 9, 2015
By:	R. Dale Lynch	Date
	Executive Vice President – Chief Financial Officer
	(Principal Financial Officer)

108

EXHIBIT 10.1

EXECUTION VERSION

FARMER MAC MORTGAGE SECURITIES CORPORATION
as Note Purchaser

NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
as Borrower

FEDERAL AGRICULTURAL MORTGAGE CORPORATION
as Guarantor

MASTER NOTE PURCHASE AGREEMENT

_______________________________

Dated as of July 31, 2015

CFC LOCAGMT

AA001-X-Farmer(SIGMUNK)

197589-4

TABLE OF CONTENTS

Page

RECITALS 1

ARTICLE I DEFINITIONS 1


Section 1.01	Definitions . 1


Section 1.02	Principles of Construction . 4

ARTICLE II PURCHASE OF NOTES 4


Section 2.01	Supplemental Note Purchase Agreements . 4


Section 2.02	Draw Notice . 4


Section 2.03	Interest Rates and Payment . 4


Section 2.04	Maturity . 5


Section 2.05	Facility Fee . 5

ARTICLE III CONDITIONS PRECEDENT 5


Section 3.01	Conditions Precedent to the Purchase of Each Note . 5


Section 3.02	Certificate of Pledged Collateral . 6

ARTICLE IV REPORTING REQUIREMENTS 6


Section 4.01	Annual Reporting Requirements . 6


Section 4.02	Additional Reporting Requirements 6


Section 4.03	Default Notices; Material Change to Risk Rating Methodology . 7

ARTICLE V REPRESENTATIONS OF THE PARTIES 7


Section 5.01	Representations of Farmer Mac and the Purchaser . 7


Section 5.02	Representations of National Rural . 8

ARTICLE VI SECURITY AND COLLATERAL 10


Section 6.01	Security and Collateral 10

ARTICLE VII EVENTS OF DEFAULT 10


Section 7.01	Events Of Default . 10


Section 7.02	Acceleration . 11


Section 7.03	Remedies Not Exclusive . 11

ARTICLE VIII MISCELLANEOUS 11


Section 8.01	GOVERNING LAW 11


Section 8.02	WAIVER OF JURY TRIAL 11


Section 8.03	Notices 11


Section 8.04	Benefit Of Agreement 12


Section 8.05	Entire Agreement 12


Section 8.06	Amendments And Waivers . 12


Section 8.07	Counterparts . 12


Section 8.08	Termination Of Agreement . 12


Section 8.09	Survival 13


Section 8.10	Severability 13

ARTICLE IX GUARANTEE 13


Section 9.01	Guarantee . 13


Section 9.02	Control By The Guarantor . 14

Schedule I – Addresses for Notices

Schedule II – Form of Supplemental Note Purchase Agreement

Schedule III – Supplemental Note Purchase Agreement

Annex A – Form of Note

Annex B – Form of Opinion of Counsel to National Rural

Annex C – Form of Officers’ Certificate

MASTER NOTE PURCHASE AGREEMENT

MASTER NOTE PURCHASE AGREEMENT, dated as of July 31, 2015 (the “ Agreement ”), among FARMER MAC MORTGAGE SECURITIES CORPORATION (the “ Purchaser ”), a wholly owned subsidiary of FEDERAL AGRICULTURAL MORTGAGE CORPORATION, a federally-chartered instrumentality of the United States and an institution of the Farm Credit System (“ Farmer Mac ” or the “ Guarantor ”); NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, a cooperative association existing under the laws of the District of Columbia (“ National Rural ”); and Farmer Mac, as Guarantor.

RECITALS

WHEREAS National Rural wishes from time to time to issue and sell Notes to the Purchaser, and the Purchaser wishes from time to time to purchase such Notes from National Rural, all on the terms and subject to the conditions provided herein and in a related supplemental note purchase agreement; and

WHEREAS Farmer Mac is an instrumentality of the United States formed to provide for a secondary market for agricultural real estate mortgages and rural utilities loans; National Rural is a non-profit cooperative and Farmer Mac, the Purchaser and National Rural have agreed that the Notes will be secured by the pledge of notes for borrowings from National Rural by members of National Rural, as provided herein.

NOW, THEREFORE, in consideration of the mutual agreements herein contained, Farmer Mac, the Purchaser and National Rural agree as follows:

Article I
DEFINITIONS

Section 1.01 Definitions . As used in this Agreement, the following terms shall have the following meanings:

“ Applicable Margin ” means, for any Note, the margin to be added to the Index to determine the rate of interest payable on such Note from time to time. The Applicable Margin shall be set forth in the applicable Supplement Note Purchases Agreement.

“ Anniversary Date ” means, for any Supplemental Note Purchase Agreement, the date twelve (12) months from the Effective Date and the corresponding date in each subsequent twelve (12) month period.

“ Business Day ” means any day other than a Saturday, a Sunday, or a day on which any of the Federal Reserve Bank of New York, Farmer Mac’s office in Washington, DC or National Rural’s office in Virginia is not open for business.

“ Certificate of Pledged Collateral ” has the meaning given to that term in the Pledge Agreement.

“ Closing Date ” means the date of the funding of each issuance of one or more Notes hereunder, which date shall be set forth in the applicable Draw Notice.

“ Collateral Agent ” means U.S. Bank National Association, or its successor, as collateral agent under the Pledge Agreement.

“ Control Party ” means (i) the Guarantor, so long as no Guarantor Default has occurred and is continuing, or (ii) the holders of the Notes for so long as a Guarantor Default has occurred and is continuing.

“ Dollar ” or “ $ ” means the lawful money of the United States of America.

“ Draw Notice ” means each request by National Rural to Farmer Mac by written notice or notice given by electronic mail to Farmer Mac at AccountingOperations@farmermac.com for the issuance of a Note setting forth the amount and Maturity Date thereof.

“ Draw Period ” means the draw period set forth in a Supplemental Note Purchase Agreement or such other period agreed to in writing by the parties for any series of Notes issued hereunder.

“ Eligible Member ” has the meaning given to that term in the Pledge Agreement.

“ Eligible Security ” has the meaning given to that term in the Pledge Agreement.

“ Event of Default ” has the meaning given to that term in Section 7.01.

“ Facility Fee ” means the fee on each Maximum Purchase Amount as set forth in the applicable Supplemental Note Purchase Agreement.

“ Financial Statements ”, in respect of a Fiscal Year, means the consolidated financial statements (including footnotes) of National Rural for that Fiscal Year as audited by independent certified public accountants selected by National Rural.

“ Fiscal Quarters ” means the fiscal quarters of National Rural, as such dates may be changed from time to time, which at the date hereof commence on June 1, September 1, December 1 and March 1 and end on August 31, November 30, February 28 and May 31, respectively.

“ Fiscal Year ” means the fiscal year of National Rural, as such may be changed from time to time, which at the date hereof commences on June 1 of each calendar year and ends on May 31 of the following calendar year.

“ Index ” means an established and published variable index rate. The Index for any series of Notes issued hereunder shall be agreed upon between the parties and set forth in the applicable Supplemental Note Purchase Agreement.

“ Guarantor Default ” means a default by the Guarantor under its obligations pursuant to Article IX, which is existing and continuing.

“ Interest Payment Date ” means the date any payment of interest is due, as set forth in a Supplemental Note Purchase Agreement; provided, however, that if any such date is not a Business Day, such Interest Payment Date that would otherwise be such date will be the next Business Day following such date.

“ Interest Period ” means, with respect to any Note, until all outstanding principal of such Note and interest accrued thereon have been paid in full, each period of time during which interest accrues and is payable on each Interest Payment Date, as determined and set forth in the applicable Supplemental Note Purchase Agreement; provided , that if any Interest Period would end on a day other than a Business Day, then such Interest Period shall be extended to and include the next succeeding Business Day and the next Interest Period shall commence on the next succeeding day.

“ Maturity Date ” means the maturity date of a Note, which shall be the last day of the Draw Period of the applicable Supplemental Note Purchase Agreement, unless otherwise agreed to by the parties and set forth in the applicable Note.

“ Maximum Purchase Amount ” means the maximum aggregate principal amount of Notes that may be issued and outstanding at any given time under a Supplemental Note Purchase Agreement, as provided for therein.

“ Member ” shall mean any Person who is member of National Rural.

“ National Rural Notice ” has the meaning given to that term in the Pledge Agreement.

“ Note ” means a promissory note of National Rural payable to the Purchaser, having the terms provided for in Article II of this Agreement and otherwise in the form of Annex A attached hereto except to the extent the parties may have agreed to changes therein, as may be issued under a Supplemental Note Purchase Agreement.

“ Note Documents ” for any series of Notes means the Notes, this Agreement, the applicable Supplemental Note Purchase Agreement, and the Pledge Agreement.

“ Notice of Prepayment ” means any request by National Rural to the Purchaser by written notice or notice given by electronic mail to the Purchaser at AccountingOperations@farmermac.com for the prepayment in whole or in part of any Note.

“ Person ” means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

“ Pledge Agreement ” means the Amended, Restated and Consolidated Pledge Agreement dated as of the date hereof, among National Rural, the Purchaser, Farmer Mac and the Collateral Agent.

“ Pledged Collateral ” has the meaning given to that term in the Pledge Agreement.

“ Pledged Securities ” has the meaning given to that term in the Pledge Agreement.

“ Risk Rating Methodology ” has the meaning set forth in Section 4.03.

“ Supplemental Note Purchase Agreement ” means the agreement establishing one or more series of Notes to be issued hereunder among Farmer Mac, the Purchaser and National Rural, in the form of Schedule II attached hereto or as otherwise agreed among the parties.

Section 1.02 PRINCIPLES OF CONSTRUCTION . Unless the context shall otherwise indicate, the terms defined in Section 1.01 hereof include the plural as well as the singular and the singular as well as the plural. The words “hereafter”, “herein”, “hereof”, “hereto” and “hereunder”, and words of similar import, refer to this Agreement as a whole. The descriptive headings of the various articles and sections of this Agreement were formulated and inserted for convenience only and shall not be deemed to affect the meaning or construction of the provisions hereof.

ARTICLE II
PURCHASE OF NOTES

Section 2.01 Supplemental Note Purchase Agreements . The parties may agree from time to time to enter into one or more Supplemental Note Purchase Agreements, which shall specify the Maximum Purchase Amount and such other terms governing the series of Notes issued thereunder, as the parties may agree.

Section 2.02 Draw Notice . National Rural shall provide the Purchaser with a Draw Notice at least two (2) Business Days prior to the Closing Date of the Note specified in the Draw Notice. Each Draw Notice shall indicate the amount and the Maturity Date of the Note that National Rural requests to be advanced.

Section 2.03 Interest Rates and Payment .

(a) Notes . Each Note shall bear interest, payable as to each Interest Period in arrears unless otherwise agreed by the parties hereto and set forth in the applicable Supplemental Note Purchase Agreement, on the outstanding principal amount thereof (computed on the basis of a 360-day year and the actual number of days elapsed) from its date of issuance until final payment on or before the Maturity Date thereof or as otherwise provided in the Note, at a rate per annum equal to the Interest Rate for each Interest Period. Accrued interest shall be payable (i) on each Interest Payment Date, and (ii) on the date of any payment of principal, if other than an Interest Payment Date. The principal amount of each Note, together with any accrued but unpaid interest, shall be due and payable on the Maturity Date for such Note.

(b) Interest Payment Notice . The Purchaser shall send to National Rural, not later than the fifth Business Day prior to an Interest Payment Date for any Note, a notice setting forth the amount of interest due and owing on such Interest Payment Date for such Note.

(c) Prepayment; Notice of Prepayment . Each Note shall be prepayable, without fee or penalty of any kind, during the term of such Note unless otherwise agreed by the Purchaser and National Rural and set forth in the applicable Note. National Rural shall provide the Purchaser with a Notice of Prepayment at least five (5) Business Days prior to the date scheduled for prepayment as set forth in such Notice of Prepayment. In such event, at least three (3) Business Days prior to the date scheduled for prepayment, the Purchaser shall provide National Rural with a notice setting forth the amount of interest due and owing on the date of prepayment.

(d) Default Interest . To the extent any payment of interest or principal is not paid when due, interest shall continue to accrue thereon at the applicable rate per annum, determined as provided above, plus one percent.

Section 2.04 Maturity . Each Note shall mature on the applicable Maturity Date.

Section 2.05 Facility Fee . National Rural shall pay to Farmer Mac a Facility Fee, in arrears within five (5) Business Days of receipt of invoice thereof at the end of each of the Fiscal Quarters for so long as each Supplemental Note Purchase Agreement is in effect, or as otherwise agreed between the parties and set forth in a Supplemental Note Purchase Agreement.

ARTICLE III
CONDITIONS PRECEDENT

Section 3.01 Conditions Precedent to the Purchase of Each Note . On each Closing Date, the Purchaser shall be under no obligation to purchase any Note unless and until the following conditions have been satisfied:

(a) The Note . Farmer Mac shall have received a copy of such Note, duly executed on behalf of National Rural, in the form attached as Annex A hereto, or otherwise in a form agreed by the parties, with the original of such Note to be delivered on the Business Day following the Closing Date.

(b) The Pledge Agreement . The Pledge Agreement shall be in full force and effect.

(c) Opinion of Counsel . Farmer Mac shall have received an opinion of counsel to National Rural substantially in the form of Annex B, attached hereto.

(d) Financial and Other Information . National Rural shall have provided Farmer Mac with its most recent Financial Statements and such other information concerning National Rural as Farmer Mac shall have reasonably requested.

(e) No Material Adverse Change . National Rural shall have certified to Farmer Mac (in the manner specified in paragraph (i) of this Section 3.01), and Farmer Mac shall be satisfied that no material adverse change shall have occurred in the financial condition or business of National Rural between the end of National Rural’s most recently completed Fiscal Year for which Financial

Statements have been made publicly available and the applicable Closing Date, which has not been set forth in documents, certificates or financial information furnished to Farmer Mac or publicly filed.

(f) UCC Filing . National Rural shall have provided Farmer Mac with evidence that National Rural has filed the financing statement required pursuant to Section 2.02(i) of the Pledge Agreement.

(g) No Event of Default . National Rural shall have certified to Farmer Mac and Farmer Mac shall be satisfied that no Event of Default shall have occurred and be continuing.

(h) Certification of Senior Management . National Rural shall have provided Farmer Mac a certification by any vice president of National Rural, substantially in the form of Annex C attached hereto, as to the following: (i) that National Rural is a lending institution organized as a private, not-for-profit, cooperative association with the appropriate expertise, experience and qualifications to make loans to its Members for rural electrification and related purposes; (ii) the matters to be certified under paragraphs (e) and (g) of this Section 3.01; and (iii) the representations and warranties of National Rural.

Section 3.02 Certificate of Pledged Collateral . No later than three (3) Business Days after each advance hereunder, National Rural shall provide Farmer Mac and the Collateral Agent with a copy of a Certificate of Pledged Collateral, dated as of the last day of the calendar month most recently ended at least ten (10) Business Days prior to such authentication and delivery, or a more recent date, at National Rural’s option, in accordance with the terms of the Pledge Agreement.

ARTICLE IV
REPORTING REQUIREMENTS

Section 4.01 Annual Reporting Requirements . So long as any Note remains outstanding, National Rural shall provide Farmer Mac with the following items in form and substance satisfactory to Farmer Mac:

(e) within 120 days of the end of each Fiscal Year, the Financial Statements for such Fiscal Year;

(f) within 30 days of the end of each Fiscal Quarter, a Certificate of Pledged Collateral;

(g) within 120 days of the end of each Fiscal Year, a receipt from the Collateral Agent, or such other evidence as is satisfactory to Farmer Mac, as to the Pledged Collateral held by the Collateral Agent at the end of such Fiscal Year; and

(h) such other information concerning National Rural or the Pledged Collateral as is reasonably requested by Farmer Mac.

Section 4.02 Additional Reporting Requirements . So long as any Note remains outstanding, National Rural shall provide Farmer Mac with the following items, which items may be included on a consolidated report of other loans serviced by National Rural on behalf of Farmer Mac:

(a) within fifteen (15) days of the end of each calendar quarter ending March 31st, June 30th, September 30th, and December 31st, a report in a format reasonably acceptable to Farmer Mac that identifies each Eligible Security that constitutes Pledged Collateral, which report shall include the outstanding principal balance of such Eligible Security, the related facility rating assigned by National Rural and the related borrower rating assigned by National Rural, in each case as of the end of such quarter;

(b) as soon as practicable, but in any event no later than thirty (30) days following each September 30th, a report in a format reasonably acceptable to Farmer Mac that identifies each Eligible Security that constitutes Pledged Collateral, which report shall include the appropriate financial data from unaudited financial statements, which may be on a Form 7 (the financial and statistical report used by National Rural for a distribution system Member) for the prior calendar year ending December 31st, as reasonably requested by Farmer Mac, consistent with past practice and industry standards at the time of such request; and

(c) as soon as practicable, but in any event no later than thirty (30) days following each November 30th, a report in a format reasonably acceptable to Farmer Mac that identifies each Eligible Security that constitutes Pledged Collateral, which report shall include the appropriate financial data from unaudited financial statements, which may be on a Form 12 (the financial and statistical report used by National Rural for a power supply Member) for the prior calendar year ending December 31st, as reasonably requested by Farmer Mac, consistent with past practice and industry standards at the time of such request.

Section 4.03 Default Notices; Material Change to Risk Rating Methodology .

(a) If an action, occurrence or event shall happen that is, or with notice and the passage of time would become, an Event of Default, National Rural shall deliver a National Rural Notice of such action, occurrence or event to Farmer Mac before 4:00 p.m. (District of Columbia time) on the Business Day following the date National Rural becomes aware of such action, occurrence or event, and, if such Event of Default should occur, shall submit to Farmer Mac, within five days thereafter, a report setting forth its views as to the reasons for the Event of Default, the anticipated duration of the Event of Default and what corrective actions National Rural is taking to cure such Event of Default.

(b) National Rural shall provide written notice to Farmer Mac within 30 days after the occurrence of any of the following material changes to National Rural’s current internal risk rating methodology for determining Facility Ratings or Borrower Ratings (“ Risk Rating Methodology ”): (1) any material change to the weighting of the risk rating criteria; and (2) any material change in the criteria in the risk rating.

ARTICLE V
REPRESENTATIONS OF THE PARTIES

Section 5.01 Representations of Farmer Mac and the Purchaser . Each of Farmer Mac and the Purchaser jointly and severally represent to National Rural that on the date hereof, on the date of each Supplemental Note Purchase Agreement and on each date on which the Purchaser purchases a Note from National Rural:

(d) it has all necessary authority and has taken all necessary corporate action, and obtained all necessary approvals, in order for it to execute and deliver all Note Documents to which it is a party and for its obligations and agreements under the Note Documents to constitute valid and binding obligations of Farmer Mac and the Purchaser; and in particular the terms of the transaction, and the actions taken by Farmer Mac and the Purchaser, are in compliance with and in satisfaction of the requirements of the Farm Credit Administration, as amended or waived by the Farm Credit Administration; and

(e) The Purchaser is purchasing the Notes for its own account and not with a view to the distribution thereof, provided that the disposition by Farmer Mac or the Purchaser of their property shall at all times be within their control. Farmer Mac and the Purchaser each understands that the Notes have not been registered under the Securities Act of 1933, as amended, and may be resold only if an exemption from registration is available.

Section 5.02 Representations of National Rural . National Rural hereby represents to Farmer Mac and the Purchaser that on the date hereof, on the date of each Supplemental Note Purchase Agreement and on each date on which the Purchaser purchases a Note from National Rural, except as may be otherwise set forth in a Supplemental Note Purchase Agreement:

(c) National Rural has been duly organized and is validly existing and in good standing as a cooperative association under the laws of the District of Columbia;

(d) National Rural has the corporate power and authority to execute and deliver this Agreement and each of the other Note Documents, to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder;

(e) National Rural has taken all necessary corporate and other action to authorize the execution and delivery of this Agreement, each of the other Note Documents, the consummation by National Rural of the transactions contemplated hereby and thereby and the performance by National Rural of its obligations hereunder and thereunder;

(f) this Agreement and each of the other Note Documents, have been duly authorized, executed and delivered by National Rural and constitute the legal, valid and binding obligations of National Rural, enforceable against National Rural in accordance with their respective terms, subject to: (i) applicable bankruptcy, reorganization, insolvency, moratorium and other laws of general applicability relating to or affecting creditors’ rights generally; and (ii) the application of general principles of equity regardless of whether such enforceability is considered in a proceeding in equity or at law;

(g) no approval, consent, authorization, order, waiver, exemption, variance, registration, filing, notification, qualification, license, permit or other action is now, or under existing law in the future will be, required to be obtained, given, made or taken, as the case may be, with, from or by any regulatory body, administrative agency or governmental authority having jurisdiction over National Rural or any third party under any agreement to which National Rural is a party to authorize the execution and delivery by National Rural of this Agreement or any of the other Note Documents, or the consummation by National Rural of the transactions contemplated hereby or thereby or the performance by National Rural of its obligations hereunder or thereunder;

(h) neither the execution or delivery by National Rural of this Agreement or any of the other Note Documents, nor the consummation by National Rural of any of the transactions contemplated hereby or thereby nor the performance by National Rural of its obligations hereunder or thereunder, including, without limitation, the pledge of the Pledged Securities (as such term is defined in the Pledge Agreement) to Farmer Mac, conflicts with or will conflict with, violates or will violate, results in or will result in a breach of, constitutes or will constitute a default under, or results in or will result in the imposition of any lien or encumbrance pursuant to any term or provision of the articles of incorporation or the bylaws of National Rural or any provision of any existing law or any rule or regulation currently applicable to National Rural or any judgment, order or decree of any court or any regulatory body, administrative agency or governmental authority having jurisdiction over National Rural or the terms of any mortgage, indenture, contract or other agreement to which National Rural is a party or by which National Rural or any of its properties is bound;

(i) there is no action, suit, proceeding or investigation before or by any court or any regulatory body, administrative agency or governmental authority presently pending or, to the knowledge of National Rural, threatened with respect to National Rural, this Agreement, or any of the other Note Documents, challenging the validity or enforceability of this Agreement or any of the other Note Documents, or seeking to restrain, enjoin or otherwise prevent National Rural from engaging in its business as currently conducted or the consummation by National Rural of the transactions contemplated by this Agreement or any of the other Note Documents, or which, if adversely determined, would have a material adverse effect on National Rural’s financial condition or its ability to perform its obligations under this Agreement or any of the other Note Documents;

(j) National Rural is a lending institution organized as a private, not-for-profit, cooperative association with the appropriate expertise, experience and qualifications to make loans to its Members for rural electrification purposes; and

(k) no material adverse change has occurred in the financial condition or business of National Rural between the end of National Rural’s most recently completed Fiscal Year for which Financial Statements have been made publicly available and the date this representation is given which has not been set forth in documents, certificates or financial information furnished to Farmer Mac or publicly filed.

ARTICLE VI
SECURITY AND COLLATERAL

Section 6.01 Security and Collateral .

(l) National Rural shall cause the Allowable Amount of the Pledged Collateral (as such terms are defined in the Pledge Agreement) to be at all times not less than 100% of the aggregate principal amount of the Notes outstanding under this Agreement.

(m) National Rural shall not create, or permit to exist, any pledge, lien, charge, mortgage, encumbrance, debenture, hypothecation or other similar security instrument that secures, or in any way attaches to, such Pledged Collateral, other than the lien of the Pledge Agreement, without the prior written consent of Farmer Mac.

(n) The Pledged Securities will at all times be notes issued to National Rural by Eligible Members (as defined in the Pledge Agreement).

ARTICLE VII
EVENTS OF DEFAULT

Section 7.01 Events Of Default . Each of the following actions, occurrences or events shall, but only (except in the case of subsections (a), (d) and (e) below) if National Rural does not cure such action, occurrence or event within 30 days of notice from Farmer Mac requesting that it be cured, constitute an “ Event of Default ” under the terms of this Agreement:

(a) a failure by National Rural to make a payment of principal or interest on any Note for more than ten (10) days after the same becomes due and payable;

(b) a material representation by National Rural to Farmer Mac in connection with this Agreement, any Note or the Pledge Agreement, or any material information reported pursuant to Article V, shall prove to be incorrect or untrue in any material respect when made or deemed made;

(c) a failure by National Rural to comply with any other material covenant or provision contained in this Agreement or any of the other Note Documents;

(d) the entry of a decree or order by a court having jurisdiction in the premises adjudging National Rural a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of National Rural under the Federal Bankruptcy Act or any other applicable Federal or State law or law of the District of Columbia, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of National Rural or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or

(e) the commencement by National Rural of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Act or any other applicable Federal or State law or law of the District of Columbia, or the consent by it to the filing of any such petition or to the appointment of receiver, liquidator, assignee, trustee, sequestrator (or similar official) of National Rural or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by National Rural in furtherance of any such action.

Section 7.02 Acceleration . Upon the occurrence, and during the continuance, of an Event of Default, Farmer Mac may, upon notice to that effect to National Rural, declare the entire principal amount of, and accrued interest on, the Notes at the time outstanding to be immediately due and payable.

Section 7.03 Remedies Not Exclusive . Upon the occurrence, and during the continuance, of an Event of Default, Farmer Mac shall be entitled to take such other action as is provided for by law, in this Agreement, or in any of the other Note Documents, including injunctive or other equitable relief.

ARTICLE VIII
MISCELLANEOUS

Section 8.01 GOVERNING LAW . EXCEPT AS SET FORTH IN SECTION 9.01 HEREOF, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, FEDERAL LAW. TO THE EXTENT FEDERAL LAW INCORPORATES STATE LAW, THAT STATE LAW SHALL BE THE LAWS OF THE DISTRICT OF COLUMBIA APPLICABLE TO CONTRACTS MADE AND PERFORMED THEREIN.

Section 8.02 WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.02.

Section 8.03 Notices . All notices and other communications hereunder to be made to any party shall be in writing and shall be addressed as specified in Schedule I attached hereto as appropriate except as otherwise provided herein. The address, telephone number, or facsimile

number for any party may be changed at any time and from time to time upon written notice given by such changing party to the other parties hereto. A properly addressed notice or other communication shall be deemed to have been delivered at the time it is sent by facsimile (fax) transmission to the party or parties to which it is given. Certain notices or other communications may be sent via electronic mail to one or more email addresses provided specifically for receiving such notice or other communication, provided that the receiving party (i) has provided such email address or addresses in writing to the sending party in advance of such notice or communication and (ii) has indicated to the sending party the type or nature of notice or communication which may be appropriately sent in such manner.

Section 8.04 Benefit Of Agreement . This Agreement shall become effective when it shall have been executed by Farmer Mac, the Purchaser and National Rural, and thereafter shall be binding upon and inure to the respective benefit of the parties and their permitted successors and assigns.

Section 8.05 Entire Agreement . This Agreement, including the Schedules and Annexes hereto, and the other Note Documents, constitute the entire agreement between the parties hereto concerning the matters contained herein and supersede all prior oral and written agreements and understandings between the parties.

Section 8.06 Amendments And Waivers .

(a) Except as otherwise provided herein, no provision of this Agreement may be amended or modified except pursuant to an agreement in writing entered into by Farmer Mac, the Purchaser and National Rural. No provision of this Agreement may be waived except in writing by the party or parties receiving the benefit of and under such provision.

(b) No failure or delay of Farmer Mac, the Purchaser or National Rural in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. No waiver of any provision of this Agreement or consent to any departure by National Rural therefrom shall in any event be effective unless the same shall be authorized as provided in paragraph (a) of this Section 8.06, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on National Rural in any case shall entitle National Rural to any other or further notice or demand in similar or other circumstances.

Section 8.07 Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.

Section 8.08 Termination Of Agreement . This Agreement shall terminate upon the later to occur of (a) the date all Draw Periods have expired, or (b) the date of indefeasible payment in full of all amounts payable hereunder and under the Notes.

Section 8.09 Survival . The representations and warranties of each of the parties hereto contained in this Agreement and contained in each of the other Note Documents, and the parties’ obligations under any and all thereof, shall survive and shall continue in effect following the execution and delivery of this Agreement, any disposition of the Notes and the expiration or other termination of any of the other Note Documents, but, in the case of each Note Document, shall not survive the expiration or the earlier termination of such Note Document, except to the extent expressly set forth in such Note Document.

Section 8.10 Severability . If any term or provision of this Agreement or any Note Document or the application thereof to any circumstance shall, in any jurisdiction and to any extent, be invalid or unenforceable, such term or such provision shall be ineffective as to such jurisdiction to the extent of such invalidity or unenforceability without invalidating or rendering unenforceable any remaining terms or provisions of such Note Document or the application of such term or provision to circumstances other than those as to which it is held invalid or unenforceable.

ARTICLE IX
GUARANTEE

Section 9.01 Guarantee .

(a) The Guarantor agrees to pay in full to the holder of each Note, the principal of, and interest on, the Notes when due, whether at maturity, upon redemption or otherwise (the “ Guaranteed Obligations ”), on the applicable due date for such payment.

(b) The Guarantor’s obligations hereunder shall inure to the benefit of and shall be enforceable by any holder of a Note if, for reason beyond the control of such holder, such holder shall have failed to receive the interest or principal, as applicable, payable to such holder any payment date, redemption date or stated maturity date. The Guarantor hereby irrevocably agrees that its obligations hereunder shall be unconditional, irrespective of the validity, legality or enforceability of, or any change in or amendment to, this Agreement, the Pledge Agreement or any Note, the absence of any action to enforce the same, the waiver or consent by the holder of any Note or by the Collateral Agent with respect to any provisions of this Agreement or the Pledge Agreement, or any action to enforce the same or any other circumstance that might otherwise constitute a legal or equitable discharge or defense of a guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, protest or notice with respect to each Note or the interest represented thereby, and all demands whatsoever, and covenants that the guarantee will not be discharged except upon complete irrevocable payment of the principal and interest obligations represented by the Notes.

(c) The Guarantor shall be subrogated to and is hereby assigned all rights of the holder of the Notes against National Rural and the proceeds of the Pledged Collateral, all in respect of any amounts paid by the Guarantor pursuant to the provisions of the guarantee contained in this Article IX. Each holder shall execute and deliver to the Guarantor in each holder’s name such instruments and documents as the Guarantor may reasonably request in writing confirming or evidencing such subrogation and assignment.

(d) No reference herein shall alter or impair the guarantee, which is absolute and unconditional, of the due and punctual payment of principal of, and interest on, the Notes, on the dates such payments are due.

(e) The guarantee is not an obligation of, and is not a guarantee as to principal or interest by the Farm Credit Administration, the United States or any other agency or instrumentality of the United States (other than the Guarantor).

(f) The guarantee shall be governed by, and construed in accordance with, Federal law. To the extent Federal law incorporates state law, that state law shall be the laws of the District of Columbia applicable to contracts made and performed therein.

Section 9.02 Control By The Guarantor . If the Guarantor is the Control Party, the Guarantor shall be considered the holder of all Notes outstanding for all purposes under the Pledge Agreement and shall be permitted to take any and all actions permitted to be taken by the holder thereunder. The Control Party will have the sole right to direct the time, method and place of conducting any proceeding for any remedy available to the Collateral Agent or any holder with respect to the Notes or exercising any power conferred on the Collateral Agent with respect to the Notes provided that:

(i) such direction shall not be in conflict with any rule of law or with the Pledge Agreement;

(ii) the Collateral Agent shall have been provided with indemnity from the Control Party reasonably satisfactory to it; and

the Collateral Agent may take any other action deemed proper by such Collateral Agent that is not inconsistent with such direction, provided, however, that the Collateral Agent need not take any action which it determines might expose it to liability.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed by an authorized officer as of the day and year first above written.



FARMER MAC MORTGAGE SECURITIES CORPORATION

By:	/s/ Timothy L. Buzby
Name: Title:	Timothy L. Buzby President



FEDERAL AGRICULTURAL MORTGAGE CORPORATION

By:	/s/ Timothy L. Buzby
Name: Title:	Timothy L. Buzby President and CEO



NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

By:	/s/ J. Andrew Don
Name: Title:	J. Andrew Don Senior Vice President and Chief Financial Officer

SCHEDULE I
TO
MASTER NOTE PURCHASE AGREEMENT

Addresses for Notices


1.	The addresses referred to in Section 8.03 hereof, for purposes of delivering notices and communications, are as follows:

If to the Purchaser or Farmer Mac:

Federal Agricultural Mortgage Corporation
1999 K Street, N.W., 4 ^th Floor
Washington, DC 20006
Fax: 202-872-7713
Attn: Chief Financial Officer

With a copy to:

Federal Agricultural Mortgage Corporation
1999 K Street, N.W., 4 ^th Floor
Washington, DC 20006
Fax: 202-872-7713
Attn: Capital Markets Group

With a copy also to:

Federal Agricultural Mortgage Corporation
1999 K Street, N.W., 4 ^th Floor
Washington, DC 20006
Fax: 202-872-7713
Attn: General Counsel

With a copy also to:

Federal Agricultural Mortgage Corporation
1999 K Street, N.W., 4 ^th Floor
Washington, DC 20006
Fax: 202-872-7713
Attn: Manager – Rural Utilities Lending

If to National Rural:

National Rural Utilities Cooperative Finance Corporation
20701 Cooperative Way
Dulles, VA 20166
Telephone: 703-467-7402
Fax: 703-467-5178
Attn: Andrew Don, Senior Vice President & Chief Financial Officer

Schedule I

Page 2

With a copy to:

National Rural Utilities Cooperative Finance Corporation
20701 Cooperative Way
Dulles, VA 20166
Telephone: 703-467-1628
Fax: 703-467-5178
Attn: Ling Wang, Vice President, Capital Market Relations

With a copy also to:

National Rural Utilities Cooperative Finance Corporation
20701 Cooperative Way
Dulles, VA 20166
Telephone: 703-467-1872
Fax: 703-467-5651
Attn: Roberta B. Aronson, Esq., Senior Vice President & General Counsel

SCHEDULE II

MASTER NOTE PURCHASE AGREEMENT

FORM OF SUPPLEMENTAL NOTE PURCHASE AGREEMENT

Schedule III

Page 2

________ SUPPLEMENTAL NOTE PURCHASE AGREEMENT

________ SUPPLEMENTAL NOTE PURCHASE AGREEMENT, dated as of ____________, 20__ (the “ Supplemental Note Purchase Agreement ”), among FARMER MAC MORTGAGE SECURITIES CORPORATION (the “ Purchaser ”), a wholly owned subsidiary of FEDERAL AGRICULTURAL MORTGAGE CORPORATION, a federally-chartered instrumentality of the United States and an institution of the Farm Credit System (“ Farmer Mac ” or the “ Guarantor ”); NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, a cooperative association existing under the laws of the District of Columbia (“ National Rural ”).

RECITALS

WHEREAS National Rural, the Purchaser and the Guarantor have heretofore executed and delivered the Master Note Purchase Agreement dated as of __________________, 2015, among National Rural, the Purchaser and the Guarantor (the “ Master Agreement ”); and

WHEREAS, pursuant to the Master Agreement, the parties desire to establish hereby the terms of one or more series of Notes to be issued by National Rural and purchased by the Purchaser; and

NOW, THEREFORE, in consideration of the mutual agreements herein contained, Farmer Mac, the Purchaser and National Rural agree as follows:

1. Capitalized Terms . Capitalized terms used herein without definition shall have the meanings assigned to them in the Master Agreement.

2. Title of Series . Each Note issued hereunder on or after the date hereof may identify the name (if any name is designated) of such series of Notes. Failure to make a notation of the name on the applicable Note shall not affect the validity and effect of such Note.

3. Purchase of Notes . The Purchaser agrees to purchase Notes, at 100% of their principal amount, from time to time during the Draw Period, pursuant to a Draw Notice, in an aggregate principal amount, for all Notes outstanding under this Supplemental Note Purchase Agreement at any one time, not in excess of $_________ (the “ Maximum Purchase Amount ”), subject to the conditions set forth in the Master Agreement. For purposes hereof, “ Draw Period ” means the date that is _______ (___) years from the date hereof. National Rural may borrow, repay (subject to the terms of the applicable Notes being repaid) and reborrow funds at any time or from time to time during the Draw Period. Each borrowing under this Supplemental Note Purchase Agreement shall be made in accordance with the Note applicable thereto.

Each advance under this Agreement shall be disbursed in a minimum amount of $__ million and additional increments of $_ million in excess thereof or such other amounts as agreed to in the applicable Note.

Schedule III

Page 3

4. The following additional terms shall apply to each Note issued pursuant to this Agreement:

Applicable Margin: _______________

Index: _______________

Facility Fee: _______________

Interest Payment Date: _______________

Interest Period: _______________

5. GOVERNING LAW . EXCEPT AS SET FORTH IN SECTION 9.01 OF THE MASTER AGREEMENT, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, FEDERAL LAW. TO THE EXTENT FEDERAL LAW INCORPORATES STATE LAW, THAT STATE LAW SHALL BE THE LAWS OF THE DISTRICT OF COLUMBIA APPLICABLE TO CONTRACTS MADE AND PERFORMED THEREIN.

6. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.

7. Inconsistency . In the event of any inconsistency between the terms of this Supplemental Note Purchase Agreement and the Master Agreement, the terms of this Supplemental Note Purchase Agreement shall apply.

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed by an authorized officer as of the day and year first above written.



FARMER MAC MORTGAGE SECURITIES CORPORATION

By:
Name: Title:



FEDERAL AGRICULTURAL MORTGAGE CORPORATION

By:
Name: Title:

Schedule III

Page 4



NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

By:
Name: Title:

ANNEX A

[Form of NOTE]

NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

Floating Rate Senior Note due _______

Washington, D.C.
____________, 20__

FOR VALUE RECEIVED, the undersigned, NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION (“ National Rural ”), a District of Columbia cooperative association, hereby promises to pay to FARMER MAC MORTGAGE SECURITIES CORPORATION, a wholly owned subsidiary of Farmer Mac (as defined below) (“ the Purchaser ”), or registered assigns, the principal sum of _______________ MILLION DOLLARS ($___,000,000.00) on __________________, together with interest computed from the date hereof according to the terms of the Note Purchase Agreement (as defined below).

Payments of principal and interest on this Note are to be made in lawful money of the United States of America at such place as shall have been designated by written notice to National Rural from the registered holder of this Note as provided in the Note Purchase Agreement referred to below.

This Note is issued pursuant to the Master Note Purchase Agreement, dated as of _______________, 2015, as well as the Supplemental Note Purchase Agreement dated as of ____________ __, 200__ (together, as from time to time amended, the “ Note Purchase Agreement ”), among National Rural, the Purchaser and Federal Agricultural Mortgage Corporation (“ Farmer Mac ”), and is entitled to the benefits thereof. This Note is also entitled to the benefits of the Amended, Restated and Consolidated Pledge Agreement, dated as of _____________, 2015, among National Rural, the Purchaser, Farmer Mac and the Collateral Agent named therein.

Capitalized terms used herein and not defined herein shall have the meanings given to those terms in the Note Purchase Agreement.

This Note is a registered Note and, upon surrender of this Note for registration of transfer or exchange, accompanied by a written instrument of transfer duly executed by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, National Rural may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and National Rural will not be affected by any notice to the contrary.

This Note is prepayable at any time by National Rural, in whole or in part at the option of National Rural on the terms set forth in the Note Purchase Agreement. In the event that any such repayment or prepayment of the principal amount of any Note is made on a day other than

ANNEX A

Page 2

an Interest Payment Date, accrued interest on the principal amount thereof shall be payable through and excluding the call date on which such repayment or prepayment is made.

If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared due and payable in the manner, at the price and with the effect provided in the Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of National Rural and the holder hereof shall be governed by, the laws of the District of Columbia, excluding choice-of-law principles of the law of the District of Columbia that would require the application of the laws of another jurisdiction.



NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
By

	Name:
	Title:



NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
By

	Name:
	Title:

ANNEX B

[FORM OF OPINION OF COUNSEL TO NATIONAL RURAL]

[•]

Federal Agricultural Mortgage Corporation

1999 K Street, N.W.

4th Floor

Washington, DC 20006

Ladies and Gentlemen:

I am delivering this opinion as general counsel (“Counsel”) of National Rural Utilities Cooperative Finance Corporation, a District of Columbia cooperative association (the “Borrower”), and am familiar with matters pertaining to the loan to Borrower in the principal amount of $_______________ , provided for in Master Note Purchase Agreement, dated as of __________________, 2015, as well as the Supplemental Note Purchase Agreement dated as of _____________, 20___ (together, as from time to time amended, the “ Note Purchase Agreement ”), among the Borrower, Farmer Mac Mortgage Securities Corporation (the “Purchaser”) and Federal Agricultural Mortgage Corporation (“Farmer Mac”).

I have examined such corporate records and proceedings of the Borrower, and such other documents as I have deemed necessary as a basis for the opinions hereinafter expressed.

I have also examined the following documents as executed and delivered: (a) the Note Purchase Agreement; (b) the Note dated as of ____________, in the principal amount of $____________ (“Note”), said Note payable to the Purchaser; and (c) the Amended, Restated and Consolidated Pledge Agreement, dated as of __________________, 2015, among the Borrower, the Purchaser, Farmer Mac and U.S. Bank National Association (as amended, the “Pledge Agreement”). The documents described in items (a) through (c) above are collectively referred to herein as the “Note Documents.”

Based on the foregoing, but subject to the assumptions, exceptions, qualifications and limitations hereinafter expressed, I am of the opinion that:

(1) The Borrower has been duly incorporated and is validly existing as a cooperative association in good standing under the laws of the District of Columbia with corporate power and authority to execute and perform its obligations under the Note Documents.

(2) The Note Documents have been duly authorized, executed and delivered by the Borrower, and such documents constitute the legal, valid and binding agreements of the Borrower, enforceable against the Borrower in accordance with their respective terms.

ANNEX B

Page 2

(3) Neither the execution nor the delivery by the Borrower of any of the Note Documents nor the consummation by the Borrower of any of the transactions contemplated therein, including, without limitation, the pledge of the Pledged Securities (as such term is defined in the Pledge Agreement) to Farmer Mac, nor the fulfillment by the Borrower of the terms of any of the Note Documents will conflict with or violate, result in a breach of or constitute a default under any term or provision of the Articles of Incorporation or By-laws of the Borrower or any law or any regulation or any order known to Counsel currently applicable to the Borrower of any court, regulatory body, administrative agency or governmental body having jurisdiction over the Borrower or the terms of any indenture, deed of trust, note, note agreement or instrument to which the Borrower is a party or by which the Borrower or any of its properties is bound.

(4) No approval, authorization, consent, order, registration, filing, qualification, license or permit of or with any state or Federal court or governmental agency or body having jurisdiction over the Borrower is required for any consummation by the Borrower of the transactions contemplated by the Note Documents; provided , however , no opinion is expressed as to the applicability of any Federal or state securities law to any sale, transfer or other disposition of the Note after the date hereof.

(5) Except as set forth in writing and previously delivered to Farmer Mac or attached hereto as Exhibit A, there is no pending or, to Counsel’s knowledge, threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator with respect to the Borrower, or any of the Note Documents, which, if adversely determined, would have a material adverse effect on the Borrower’s financial condition or its ability to perform its obligations under any of the Note Documents.

(6) With respect to the Pledged Securities in the Certificate of Pledged Collateral (as such term is defined in the Pledge Agreement), (x) all action with respect to the recording, registering or filing of financing statements in the jurisdiction of organization of National Rural has been taken as is necessary to perfect the security interest intended to be created in such items under the Uniform Commercial Code and (y) in the case of each Eligible Security (as such term is defined in the Pledge Agreement) constituting a certificated security or instrument under the Uniform Commercial Code, such Eligible Security has been delivered to the Collateral Agent such that the taking and retention of the possession by the Collateral Agent of such Eligible Security is sufficient to perfect the security interest to be created under the Uniform Commercial Code. For purposes of the opinion set forth in this section (6), I have assumed that the Uniform Commercial Code of the District of Columbia is the same as that of the State of New York.

The foregoing opinions are subject to the following assumptions, exceptions, qualifications and limitations:

A. I am a member of the Bar of the District of Columbia and render no opinion on the laws of any jurisdiction other than the laws of the District of Columbia, the federal laws of the United States of America and the General Corporation Law of the District of Columbia.

ANNEX B

Page 3

B. My opinions are limited to the present laws and to the facts, as they presently exist. I assume no obligation to revise or supplement this opinion should the present laws of the jurisdictions referred to in paragraph A above be changed by legislative action, judicial decision or otherwise.

C. The opinions expressed in paragraph 2 above shall be understood to mean only that if there is a default in performance of an obligation, (i) if a failure to pay or other damage can be shown and (ii) if the defaulting party can be brought into a court which will hear the case and apply the governing law, then, subject to the availability of defenses, and to the exceptions set forth in the next paragraph, the court will provide a money damage (or perhaps injunctive or specific performance) remedy.

D. My opinions are also subject to the effect of: (1) bankruptcy, insolvency, reorganization, receivership, moratorium and other laws affecting creditors’ rights (including, without limitation, the effect of statutory and other law regarding fraudulent conveyances, fraudulent transfers and preferential transfers); and (2) the exercise of judicial discretion and the application of principles of equity, good faith, fair dealing, reasonableness, conscionability and materiality (regardless of whether the applicable agreements are considered in proceeding in equity or at law).

E. This letter is rendered to you in connection with the Note Documents and the transactions related thereto, and may not be relied upon by any other person or by you in any other context or for any other purpose.

F. I have assumed with your permission (i) the genuineness of all signatures by each party other than the Borrower, (ii) the authenticity of documents submitted to me as originals and the conformity to authentic original documents of all documents submitted to me as copies, and (iii) the due execution and delivery, pursuant to due authorization, of the Note Documents by each party other than the Borrower.

Yours sincerely,

Roberta B. Aronson

General Counsel

ANNEX C

[FORM OF OFFICERS’ CERTIFICATE]

Officers’ Certificate

TO: Federal Agricultural Mortgage Corporation.

We, _________________, _________________, and ________________, _____________________, of National Rural Utilities Cooperative Finance Corporation (“ National Rural ”), pursuant to the Master Note Purchase Agreement dated as of __________________, 2015, among National Rural, Farmer Mac Mortgage Securities Corporation, and Federal Agricultural Mortgage Corporation (the “ Note Purchase Agreement ”), hereby certify on behalf of National Rural that as at the date hereof:

(1) National Rural is a lending institution organized as a private, not-for-profit, cooperative association with the appropriate expertise, experience and qualifications to make loans to its Members for rural electrification and related purposes;

(2) no material adverse change has occurred in the financial condition of National Rural between the date of the end of National Rural’s most recently completed Fiscal Year for which Financial Statements have been made publicly available and the date hereof, which has not been set forth in documents, certificates, or financial information furnished to Farmer Mac or publicly filed;

(3) National Rural has complied at all times with the requirements of Section 4.03(b) of the Note Purchase Agreement to provide timely notice of any material change to National Rural’s Risk Rating Methodology;

(4) all of the representations contained in Section 5.02 of the Note Purchase Agreement remain true and correct in all material respects on and as of the date hereof; and

(5) no Event of Default exists.

Capitalized terms used in this certificate shall have the meanings given to those terms in the Note Purchase Agreement.

DATED as of this _____ day of ______________, _________.

NATIONAL RURAL UTILITIES

COOPERATIVE FINANCE CORPORATION

By:

Name:

Title:

By:

Name:

ANNEX C

Title:

Exhibit 10.2

CONFIDENTIAL TREATMENT FOR THIS EXHIBIT HAS BEEN REQUESTED FROM THE SECURITIES AND EXCHANGE COMMISSION

PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED, AND THE REDACTED PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION

FIRST SUPPLEMENTAL NOTE PURCHASE AGREEMENT

FIRST SUPPLEMENTAL NOTE PURCHASE AGREEMENT, dated as of July 31, 2015 (the “ Supplemental Note Purchase Agreement ”), among FARMER MAC MORTGAGE SECURITIES CORPORATION (the “Purchaser”), a wholly owned subsidiary of FEDERAL AGRICULTURAL MORTGAGE CORPORATION, a federally-chartered instrumentality of the United States and an institution of the Farm Credit System (“ Farmer Mac ” or the “Guarantor”), and NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, a cooperative association existing under the laws of the District of Columbia (“ National Rural ”).

RECITALS

WHEREAS National Rural, the Purchaser and the Guarantor have heretofore executed and delivered the Master Note Purchase Agreement dated as of July 31, 2015, among National Rural, the Purchaser and the Guarantor (the “ Master Agreement ”); and

WHEREAS, pursuant to the Master Agreement, the parties desire to establish hereby the terms of one or more series of Notes to be issued by National Rural and purchased by the Purchaser; and

NOW, THEREFORE, in consideration of the mutual agreements herein contained, Farmer Mac, the Purchaser and National Rural agree as follows:

1. Capitalized Terms . Capitalized terms used herein without definition shall have the meanings assigned to them in the Master Agreement.

3. Purchase of Notes . The Purchaser agrees to purchase Notes, at 100% of their principal amount, from time to time during the Draw Period, pursuant to a Draw Notice, in an aggregate principal amount, for all Notes outstanding under this Supplemental Note Purchase Agreement at any one time, not in excess of $300,000,000.00 (the “ Maximum Purchase Amount ”), subject to the conditions set forth in the Master Agreement. For purposes hereof, “ Draw Period ” means the period beginning the date hereof to the date that is three (3) years from the date hereof. National Rural may borrow, repay (subject to the terms of the applicable Notes being repaid) and

Exhibit 10.2

CONFIDENTIAL TREATMENT FOR THIS EXHIBIT HAS BEEN REQUESTED FROM THE SECURITIES AND EXCHANGE COMMISSION

PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED, AND THE REDACTED PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION

reborrow funds at any time or from time to time during the Draw Period. Each borrowing under this Supplemental Note Purchase Agreement shall be made in accordance with the Note applicable thereto.

Each Note under this Agreement shall be disbursed in a minimum amount of $10 million and additional increments of $5 million in excess thereof or such other amounts as agreed to in the applicable Note.

4. The following additional terms shall apply to each Note issued pursuant to this Agreement:

Applicable Margin : [REDACTED PORTION FILED SEPARATELY WITH SEC PURSUANT TO CONFIDENTIAL TREATMENT REQUEST]

Index : LIBOR

For purposes of this Pricing Agreement, “ LIBOR ” shall mean the London Interbank Offered Rate for one-month U.S. Dollar deposits, as calculated by Farmer Mac in the following order of priority:

• the rate that appears at 11:00 a.m. (London time) on the LIBOR Determination Date equal to the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for U.S. Dollars for a period equal in length to such Interest Period) as displayed on page LIBOR01 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time) for one-month U.S. Dollar deposits;

• if a rate does not so appear, Farmer Mac will select four leading banks in the London interbank market and request those banks to provide their offered quotations to prime banks in the London interbank market for three-month U.S. Dollar deposits at 11:00 a.m. (London time) on the LIBOR Determination Date. If at least two of the selected banks provide the requested quotations, LIBOR will be the arithmetic mean of the quotations obtained, as determined by Farmer Mac;

• if fewer than two of the selected banks provide the requested quotations, Farmer Mac will select three major banks in New York City and request those banks to provide their offered quotations to leading European banks for three-month U.S. Dollar loans, beginning

Exhibit 10.2

CONFIDENTIAL TREATMENT FOR THIS EXHIBIT HAS BEEN REQUESTED FROM THE SECURITIES AND EXCHANGE COMMISSION

PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED, AND THE REDACTED PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION

on the applicable Interest Rate Reset Date, at approximately 11:00 a.m. (London time) on the LIBOR Determination Date. LIBOR will be the arithmetic mean of the quotations obtained, as determined by Farmer Mac; and

• if fewer than three of the selected banks provide the requested quotations, LIBOR will remain LIBOR in effect for the immediately preceding Interest Period.

LIBOR Determination Date : The second London Banking Day before the first day of the applicable Interest Period.

London Banking Day : Any day on which commercial banks are open for business, including dealings in foreign exchange and deposits in U.S. Dollar deposits, in London, England.

Facility Fee : [REDACTED PORTION FILED SEPARATELY WITH SEC PURSUANT TO CONFIDENTIAL TREATMENT REQUEST] for the first year. Each year thereafter, Farmer Mac and National Rural shall agree upon the Facility Fee for the following year at least forty-five (45) days prior to the next Anniversary Date; provided, however, if the parties are not able to agree upon such Facility Fee at least forty-five (45) days prior to such Anniversary Date, the then-effective Facility Fee shall continue to be effective on the next Anniversary Date and either party shall have the option to terminate this Agreement by providing notice to the other party at least thirty (30) days prior to such Anniversary Date. Any such termination shall become effective (i) on such Anniversary Date, as to any unused portion of the Maximum Purchase Amount; and (ii) upon payment in full, as to any portion of the Maximum Purchase Amount outstanding on such Anniversary Date.

Interest Payment Date : Monthly, on the first Business Day of each month.

Interest Period : Initially, the period commencing on the effective date of a Note, and ending on the numerically corresponding day in the calendar month that is one (1) month thereafter, and thereafter, each period commencing on the last day of the immediately preceding Interest Period applicable to such Note and ending on the numerically corresponding day in the calendar month that is one (1) month thereafter; provided, that (i) if any Interest Period would end on a day other than a Business Day, then such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically

Exhibit 10.2

CONFIDENTIAL TREATMENT FOR THIS EXHIBIT HAS BEEN REQUESTED FROM THE SECURITIES AND EXCHANGE COMMISSION

PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED, AND THE REDACTED PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION

corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.

6. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.

[Remainder of page intentionally left blank.]

Exhibit 10.2

CONFIDENTIAL TREATMENT FOR THIS EXHIBIT HAS BEEN REQUESTED FROM THE SECURITIES AND EXCHANGE COMMISSION

PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED, AND THE REDACTED PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed by an authorized officer as of the day and year first above written.



FARMER MAC MORTGAGE SECURITIES CORPORATION

By:	/s/ Timothy L. Buzby
Name: Title:	Timothy L. Buzby President



FEDERAL AGRICULTURAL MORTGAGE CORPORATION

By:	/s/ Timothy L. Buzby
Name: Title:	Timothy L. Buzby President and CEO



NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

By:	/s/ J. Andrew Don
Name: Title:	J. Andrew Don Senior Vice President and Chief Financial Officer

EXHIBIT 10.3

EXECUTION VERSION

FARMER MAC MORTGAGE

SECURITIES CORPORATION,

As Note Purchaser

NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION,

As Borrower

U.S. BANK NATIONAL ASSOCIATION,

As Collateral Agent

FEDERAL AGRICULTURAL
MORTGAGE CORPORATION,

As Guarantor

_______________________________

SECOND AMENDED, RESTATED

AND CONSOLIDATED PLEDGE AGREEMENT

_______________________________

Dated as of July 31, 2015

CFC DOC

AA001-G-Farmer(SIGMUNK)

199541-5

ARTICLE I

Definitions


Section 1.01.	Definitions 3


Section 1.02.	Other Defined Terms; Principles of Construction 9

ARTICLE II

Provisions as to Pledged Collateral


Section 2.01.	Holding of Pledged Securities 10


Section 2.02.	UCC Filings 10


Section 2.03.	Withdrawal and Substitution of Pledged Collateral 11


Section 2.04.	[Reserved] 11


Section 2.05.	Addition of Pledged Collateral 11


Section 2.06.	Accompanying Documentation 11


Section 2.07.	Renewal; Extension; Substitution 12


Section 2.08.	Voting Rights; Interest and Principal 12


Section 2.09.	Protection of Title; Payment of Taxes; Liens, etc 13


Section 2.10.	Maintenance of Pledged Collateral 14


Section 2.11.	Representations, Warranties and Covenants 14


Section 2.12.	Further Assurances 15

ARTICLE III

[Reserved]

ARTICLE IV

Remedies

CFC DOC

AA001-G-Farmer(SIGMUNK)

199541-5


Section 4.01.	Events of Default 16


Section 4.02.	Remedies upon Default 16


Section 4.03.	Application of Proceeds 18


Section 4.04.	Securities Act 19

ARTICLE V

The Collateral Agent


Section 5.01.	Certain Duties and Responsibilities 20


Section 5.02.	Certain Rights of Collateral Agent 21


Section 5.03.	Money Held by Collateral Agent 22


Section 5.04.	Compensation and Reimbursement 22


Section 5.05.	Corporate Collateral Agent Required; Eligibility 23


Section 5.06.	Resignation and Removal; Appointment of Successor 23


Section 5.07.	Acceptance of Appointment by Successor 24


Section 5.08.	Merger, Conversion, Consolidation or Succession to Business 25

ARTICLE VI

Miscellaneous


Section 6.01.	Notices 25


Section 6.02.	Waivers; Amendment 25


Section 6.03.	Successors and Assigns 26


Section 6.04.	Counterparts; Effectiveness 26


Section 6.05.	Severability 26


Section 6.06.	GOVERNING LAW 26

iii


Section 6.07.	WAIVER OF JURY TRIAL 27


Section 6.08.	Headings 27


Section 6.09.	Security Interest Absolute 27


Section 6.10.	Termination or Release 27


Section 6.11.	Collateral Agent Appointed Attorney-in-Fact 28

Schedule I – Additional Criteria for Eligible Securities

Schedule II – Addresses for Notices

Annex A – Form of Certificate of Pledged Collateral

SECOND AMENDED, RESTATED AND CONSOLIDATED PLEDGE AGREEMENT, dated as of July 31, 2015, among NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION, a District of Columbia cooperative association and its successors and assigns (hereinafter called “ National Rural ”), FARMER MAC MORTGAGE SECURITIES CORPORATION, (the “ Purchaser ”), a wholly owned subsidiary of FEDERAL AGRICULTURAL MORTGAGE CORPORATION, a federally-chartered instrumentality of the United States and an institution of the Farm Credit System and its successors and assigns (“ Farmer Mac ”), U.S. BANK NATIONAL ASSOCIATION, a national banking association and its successors and assigns (hereinafter called the “ Collateral Agent ”), and Farmer Mac, as Guarantor.

RECITALS

WHEREAS, National Rural, the Purchaser and Farmer Mac, previously amended, restated and consolidated the following note purchase agreements among National Rural, the Purchaser and Farmer Mac (collectively, the “ Original Note Purchase Agreements ”) into the Amended and Restated Note Purchase Agreement, dated as of March 24, 2011 (the “ 2011 Note Purchase Agreement ”): (a) that certain Note Purchase Agreement dated as of December 15, 2008, as amended by that certain First Amendment to Note Purchase Agreement dated as of July 13, 2009 (the “ December 2008 NPA ”); (b) that certain Note Purchase Agreement dated as of February 5, 2009, as amended by that certain First Amendment to Note Purchase Agreement dated as of July 13, 2009 (the “ February 2009 NPA ”); (c) that certain Note Purchase Agreement dated as of March 23, 2009 (the “ March 2009 NPA ”); (d) that certain Note Purchase Agreement dated as of May 22, 2009 (the “ May 2009 NPA ”); and (e) that certain Note Purchase Agreement dated as of January 11, 2011 (the “ January 2011 NPA ”);

WHEREAS, National Rural, the Purchaser and Farmer Mac have entered into the Note Purchase Agreement dated as of even date herewith (the “ 2015 Note Purchase Agreement ,” together with the 2011 Note Purchase Agreement, the “ Note Purchase Agreements ”);

WHEREAS, National Rural issued notes to Purchaser pursuant to the Original Note Purchase Agreements, and may from time to time issue additional notes to Purchaser pursuant to the Note Purchase Agreements, all upon the terms and subject to the conditions set forth in the Note Purchase Agreements;

WHEREAS, National Rural, the Purchaser and Farmer Mac previously amended, restated and consolidated the following pledge agreements (collectively, the “ Original Pledge Agreements ”) into the Amended, Restated and Consolidated Pledge Agreement dated as of March 24, 2011 (the “ 2011 Pledge Agreement ”) to secure notes issued pursuant to the Original Note Purchase Agreements and 2011 Note Purchase Agreement: (a) that certain Pledge Agreement dated as of December 15, 2008, as amended by that certain First Amendment to Pledge Agreement dated as of September 23, 2009, securing the notes

issued pursuant to the December 2008 NPA; (b) that certain Pledge Agreement dated as of February 5, 2009, as amended by that certain First Amendment to Pledge Agreement dated as of September 23, 2009, securing the notes issued pursuant to the February 2009 NPA; (c) that certain Pledge Agreement dated as of March 23, 2009, as amended by that certain First Amendment to Pledge Agreement dated as of September 23, 2009, securing the notes issued pursuant to the March 2009 NPA; (d) that certain Pledge Agreement dated as of May 22, 2009, securing the notes issued pursuant to the May 2009 NPA; and (e) that certain Pledge Agreement dated as of January 11, 2011, securing the notes issued pursuant to the January 2011 NPA;

WHEREAS, National Rural is required pursuant to the terms of the 2015 Note Purchase Agreement to pledge certain property to secure National Rural’s obligations under the notes from time to time issued to Purchaser pursuant to the 2015 Note Purchase Agreement (collectively, with the notes original issued to Purchaser under the Original Note Purchase Agreements and notes issued to Purchase from time to time pursuant to the 2011 Note Purchase Agreement, the “ Notes ”); and

WHEREAS, in furtherance of the foregoing, National Rural, the Purchaser, Farmer Mac and the Collateral Agent have agreed to amend, restate and consolidate the Original Pledge Agreements and the 2011 Pledge Agreement and continue the liens created by the Original Pledge Agreements as set forth herein.

NOW, THEREFORE, THIS PLEDGE AGREEMENT WITNESSETH that, to secure the performance of the certain Obligations contained in the Notes, the Note Purchase Agreements and herein, National Rural hereby assigns and pledges to the Collateral Agent, its successors and assigns, for the benefit of the Control Party, and grants to the Collateral Agent, its successors and assigns, for the benefit of the Control Party, a security interest in the following (collectively referred to as the “ Pledged Collateral ”) as provided in Article II: (i) the Pledged Securities and the certificates representing the Pledged Securities; (ii) subject to Section 2.08, all payments of principal or interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for, and all other Proceeds received in respect of, the Pledged Securities pledged hereunder; (iii) subject to Section 2.08, all rights and privileges of National Rural with respect to the Pledged Securities; (iv) all Proceeds of any of the foregoing above; that may, on the date hereof or from time to time hereafter, be subjected to the Lien hereof by National Rural by delivery, assignment or pledge thereof to the Collateral Agent hereunder and the Collateral Agent is authorized to receive the same as additional security hereunder (subject to any reservations, limitations or conditions agreed to in writing by National Rural and the Control Party respecting the scope or priority of such security or the use and disposition of such property or the Proceeds thereof).

TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the

Collateral Agent, its successors and assigns, for the benefit of the Control Party, forever; subject , however , to the terms, covenants and conditions hereinafter set forth.

ARTICLE I

Definitions

SECTION 1.01. Definitions. As used in this Pledge Agreement, the following terms shall have the following meanings:

“ 2011 Note Purchase Agreement ” has the meaning set forth in the recitals hereto.

“ 2011 Pledge Agreement ” has the meaning set forth in the recitals hereto.

“ 2015 Note Purchase Agreement ” has the meaning set forth in the recitals hereto.

“ Accounting Requirements ” shall mean any system of accounts prescribed by a federal regulatory authority having jurisdiction over the Member or, in the absence thereof, the requirements of GAAP applicable to businesses similar to that of the Member.

“ Allowable Amount ” on any date, means (i) with respect to each Eligible Security that is not a line of credit, the aggregate outstanding principal amount of such Eligible Security, subject to the Maximum Debtor Principal Amount; (ii) with respect to each Eligible Security that is a line of credit, the aggregate outstanding principal amount of such Eligible Security multiplied by the Maximum Advance Rate, subject to the Maximum Debtor Principal Amount; and (iii) with respect to each Excess Pledged Security, the aggregate outstanding principal amount of such Excess Pledged Security.

“ Certificate of Pledged Collateral ” means each (i) Certificate of Pledged Collateral (as defined in the Original Pledge Agreements) previously delivered to the Collateral Agent and the Control Party pursuant to the Original Pledge Agreements, (ii) Certificate of Pledged Collateral (as defined in the 2011 Pledge Agreement) previously delivered to the Collateral Agent and the Control Party pursuant to the 2011 Pledge Agreement, and (iii) certificate delivered from and after the date hereof to the Collateral Agent and the Control Party substantially in the form of Annex A attached hereto.

“ Class A Member ” means any Class A Member of National Rural as described in National Rural’s Bylaws as of the date hereof.

“ Class B Member ” means any Class B Member of National Rural as described in National Rural’s Bylaws as of the date hereof.

“ Collateral Agent ” means the Person named as the “ Collateral Agent ” in the introductory paragraph hereof.

“ Completed Calendar Year ” of a Member means a calendar year ended more than one hundred twenty (120) days prior to any date of determination, unless financial statements of such Member for a later calendar year shall have been furnished to National Rural.

“ Control Party Notice ” and “ Control Party Order ” mean, respectively, a written notice or order signed by any Vice President of the Control Party and delivered to the Collateral Agent and National Rural.

“ Control Party Notice of Default ” has the meaning given to that term in Section 4.02.

“ December 2008 NPA ” has the meaning set forth in the recitals hereto.

“ Depreciation and Amortization Expense ” shall mean an amount constituting the depreciation and amortization of the Member computed pursuant to Accounting Requirements.

“ Eligible Member ” means any Class A Member or Class B Member of National Rural as described in National Rural’s Bylaws currently in effect.

“ Eligible Security ” means a Secured or Unsecured note, bond or line of credit of any Eligible Member payable or registered to, or to the order of, National Rural, (A) in respect of which (i) the Total Exposure Amount does not exceed the Maximum Debtor Principal Amount; provided , however, if the Total Exposure Amount does exceed the Maximum Debtor Principal Amount, such note or bond may be pledged hereunder but only to the extent it does not exceed the Maximum Debtor Principal Amount and the Allowable Amount of such Eligible Security shall only include the principal amount which does not exceed the Maximum Debtor Principal Amount, (ii) no default has occurred in the payment of principal or interest in accordance with the terms of such note or bond that is continuing beyond the contractual grace period (if any) provided in such note or bond for such payment and (iii) no “event of default” as defined in such note or bond (or in any instrument creating a security interest in favor of National Rural in respect of such note or bond), shall exist that has resulted in the exercise of any right or remedy described in such note or bond (or in any such instrument); (B) which is not classified by National Rural as a non-performing loan under generally accepted accounting principles in the United States; and (C) which otherwise satisfies the criteria set forth on Schedule I hereto, as such Schedule I may be amended from time to time as mutually agreed upon in writing by Farmer Mac and National Rural, with notice of any such amendment to the Collateral Agent prior to the pledge of such Eligible Security.

“ Equity ” means the aggregate of the Member’s total margins and equity computed pursuant to Accounting Requirements.

“ Equity to Total Assets Ratio ” means the ratio expressed as a percentage of a Member’s Equity to Total Assets, determined in accordance with Accounting Requirements.

“ Equity to Total Capitalization Ratio ” means (A) the sum of all Equity of all members of a Class B Member, divided by (B) the sum of (i) Equity of such members and (ii) Long-Term Debt for such members, all calculated in accordance with the requirements of the U.S. Department of Agriculture RUS Form 7, or, if such form is unavailable with respect to such member, the National Rural Form 7.

“ Event of Default ” has the meaning set forth in Section 4.01.

“ Excess Pledged Security ” means any Pledged Security the outstanding balance of which, together with all other Pledged Securities not constituting Excess Pledged Securities, exceeds the outstanding principal amount of the Notes at any time.

“ Facility Rating ” means the facility rating assigned by National Rural to an Eligible Security from time to time in accordance with National Rural's internal risk rating system.

“ Farmer Mac ” has the meaning set forth in the introductory paragraph hereof.

“ February 2009 NPA ” has the meaning set forth in the recitals hereto.

“ GAAP ” means generally accepted accounting principles in the United States as in effect from time to time.

“ Guarantor Default ” means a default by the Guarantor under its obligations pursuant to Article IX of the Note Purchase Agreement which is existing and continuing.

“ Interest Expense ” means an amount constituting the interest expense with respect to Long-Term Debt of the Member computed pursuant to Accounting Requirements.

“ Lien ” means any lien, pledge, charge, mortgage, encumbrance, debenture, hypothecation or other similar security interest attaching to any part of the Pledged Collateral.

“ Lien of this Pledge Agreement ” or “ Lien hereof ” means the Lien created by these presents.

“ Long-Term Debt ” is determined in accordance with the Uniform System of Accounts prescribed at the time by RUS or, if such Member is not required to maintain its accounts in accordance with said Uniform System of Accounts, otherwise determined in accordance with GAAP.

“ Long-Term Debt to Net Utility Plant Ratio ” means for any Member, the ratio obtained by dividing the amount of such Member’s Long-Term Debt by its Net Utility Plant, and expressing the quotient as a percentage.

“ March 2009 NPA ” has the meaning set forth in the recitals hereto.

“ Maximum Advance Rate ” means seventy-five percent (75%), or such higher percentage permitted by Farmer Mac and communicated to National Rural in writing.

“ Maximum Debtor Principal Amount ” means $75 million, or such higher amount permitted by Farmer Mac and communicated to National Rural in writing. In calculating the Maximum Debtor Principal Amount, any amount in excess of the Maximum Advance Rate shall be excluded.

“ May 2009 NPA ” has the meaning set forth in the recitals hereto.

“ Member ” shall mean any Person who is a member of National Rural.

“ Modified Debt Service Coverage Ratio—Distribution ” of any Member, for any Completed Calendar Year of such Member, means the ratio determined by adding such Member’s Operating Margins, Non-Operating Margins—Interest, Interest Expense, and Depreciation and Amortization Expense for such year, and dividing the sum so obtained by the sum of all payments of principal and interest required to be made during such year on account of such Member’s Long-Term Debt (but in the event any portion of such Member’s Long-Term Debt is refinanced during such year the payments of principal and interest required to be made during such year in respect thereof shall be based (in lieu of actual payments thereon) upon the larger of (x) an annualization of such payments required to be made with respect to the refinancing debt during the portion of such year such refinancing debt is outstanding, and (y) the payments of principal and interest required to be made during the following year on account of such refinancing debt). For purposes of this definition of “Modified Debt Service Coverage Ratio—Distribution” and only for such purposes, (i) in computing Interest Expense, and payments of interest required to be made on account of Long-Term Debt, there shall be added, to the extent not otherwise included, an amount equal to thirty-three and one-third percent (33-1/3%) of the excess of the Restricted Rentals paid by such Member for such year over two percent (2%) of such Member’s Equity for such year, and (ii) in computing such Member’s Operating Margins, all cash received in respect of generation and transmission and other capital credits shall be included.

“ Modified Debt Service Coverage Ratio—G&T ” of any Member, for any Completed Calendar Year of such Member, means the ratio determined as follows: add (i) Operating Margins, (ii) Non-Operating Margins—Interest, (iii) Interest Expense, (iv) Depreciation and Amortization Expense, and (v) cash received in respect of generation and transmission and other capital credits, and divide the sum so obtained by the sum of all payments of Principal and Interest Expense required to be made during such calendar year; provided , however , that in the event that any amount of Long-Term Debt has been refinanced during such year, the payments of Principal and Interest Expense required to be made during

such year on account of such refinanced amount of Long-Term Debt shall be based (in lieu of actual payments required to be made on such refinanced amount of Long-Term Debt) upon the larger of (i) an annualization of the payments required to be made with respect to the refinancing debt during the portion of such year such refinancing debt is outstanding or (ii) the payment of Principal and Interest Expense required to be made during the following year on account of such refinancing debt.

“ National Rural ” has the meaning set forth in the introductory paragraph hereof.

“ National Rural Notice ” and “ National Rural Order ” mean, respectively, a written notice or order signed in the name of National Rural by either its Chief Executive Officer or its Chief Financial Officer, and by any Vice President of National Rural, and delivered to the Collateral Agent and the Control Party.

“ Net Utility Plant ” means the amount constituting the total utility plant of the Member, less depreciation computed in accordance with Accounting Requirements.

“ Non-Operating Margins—Interest ” means the amount representing the interest component of non-operating margins of the Member computed pursuant to Accounting Requirements.

“ Note Purchase Agreements ” has the meaning set forth in the recitals hereto.

“ Notes ” has the meaning set forth in the recitals hereto.

“ Obligations ” means the due and punctual performance of the obligations of National Rural to make payments of principal, and interest on the Notes.

“ Officers’ Certificate ” means a certificate signed by any Vice President of National Rural, and delivered to the Control Party and/or the Collateral Agent, as applicable.

“ Operating Margins ” means the amount of patronage capital and operating margins of the Member computed pursuant to Accounting Requirements.

“ Original Note Purchase Agreements ” has the meaning set forth in the recitals hereto.

“ Original Notes ” has the meaning set forth in the recitals hereto.

“ Original Pledge Agreement ” has the meaning set forth in the recitals hereto.

“ Person ” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

“ Pledge Agreement ” means this Second Amended, Restated and Consolidated Pledge Agreement, as originally executed and as it may from time to time be amended, supplemented or otherwise modified from time to time pursuant to the applicable provisions hereof.

“ Pledged Amount ” on any date, means with respect to Eligible Securities, the aggregate principal amount of such Eligible Securities theretofore advanced thereon which remains unpaid on such date and pledged hereunder.

“ Pledged Collateral ” has the meaning set forth in the Granting Clause set forth prior to Article I of this Pledge Agreement.

“ Pledged Securities ” means at any time the Eligible Securities listed on Schedule A and/or Schedule B to the Certificate of Pledged Collateral most recently delivered. As of the date hereof, the Pledged Securities shall include all of the Eligible Securities listed on the Certificate of Pledged Collateral most recently delivered pursuant to the 2011 Pledge Agreement.

“ Principal ” means the amount of principal billed on account of Long-Term Debt of the Member computed pursuant to Accounting Requirements.

“ Proceeds ” has the meaning specified in Section 9-102 of the Uniform Commercial Code.

“ Purchaser ” has the meaning set forth in the introductory paragraph hereof.

“ Restricted Rentals ” means all rentals required to be paid under finance leases and charged to income, exclusive of any amounts paid under any such lease (whether or not designated therein as rental or additional rental) for maintenance or repairs, insurance, taxes, assessments, water rates or similar charges. For the purpose of this definition the term “finance lease” shall mean any lease having a rental term (including the term for which such lease may be renewed or extended at the option of the lessee) in excess of three (3) years and covering property having an initial cost in excess of $250,000 other than automobiles, trucks, trailers, tractors, other vehicles (including without limitation aircraft and ships), office, garage and warehouse space and office equipment (including without limitation computers).

“ RUS ” means the Rural Utilities Service of the United States Department of Agriculture, acting by and through the Administrator of the Rural Utilities Service, and including any successor agencies or departments.

“ Secured ” means the debt evidenced by the note or bond is secured by a valid lien in favor of National Rural on substantially all of the Eligible Member’s real and personal property, subject to standard permitted exceptions consistent with National Rural’s standard lending practices from time to time, which lien may be shared pari passu with the other lender or lenders identified in the applicable security documents.

“ Total Assets ” means an amount constituting the total assets of the Member computed pursuant to Accounting Requirements.

“ Total Exposure Amount ” on any date, means with respect to Eligible Securities, the aggregate principal amount of all notes or bonds of such Eligible Member (A) pledged hereunder, (B) pledged to secure any other notes or bonds issued by National Rural to Farmer Mac or any affiliate, or (C) sold by National Rural or any affiliate to Farmer Mac, any affiliate of Farmer Mac, or any trust whose beneficial ownership is owned or controlled by Farmer Mac or an affiliate or that issues pass-through securities guaranteed by Farmer Mac. In calculating the Total Exposure Amount, with respect to any Eligible Security that is a line of credit, any amount in excess of the Maximum Advance Rate shall be excluded.

“ Uniform Commercial Code ” means the Uniform Commercial Code as from time to time in effect in the District of Columbia.

“ Unsecured ” means the debt evidenced by the note or bond is not secured by a lien in favor of National Rural on substantially all of the Eligible Member’s real and personal property.

“ Vice President ” means any vice president of National Rural or Farmer Mac or the Purchaser, as applicable, whether or not designated by a number or a word or words added before or after the title “vice president”.

“ Whole Loan Sale ” means a loan by National Rural to an Eligible Member evidenced by a note payable to the order of National Rural, the outstanding principal amount of which has been sold by National Rural or any affiliate to Farmer Mac, any affiliate of Farmer Mac, or any trust whose beneficial ownership is owned or controlled by Farmer Mac or an affiliate or that issues pass-through securities guaranteed by Farmer Mac.

SECTION 1.02. Other Defined Terms; Principles of Construction . Capitalized terms used but not defined in this Pledge Agreement shall have the meanings given to them in the Note Purchase Agreement. Unless the context shall otherwise indicate, the terms defined in Section 1.01 hereof include the plural as well as the singular and the singular as well as the plural. The words “hereafter”, “herein”, “hereof”, “hereto” and “hereunder”, and words of similar import, refer to this Pledge Agreement as a whole. The descriptive headings of the various articles and sections of this Pledge Agreement were formulated and inserted for convenience only and shall not be deemed to affect the meaning or construction of the provisions hereof.

ARTICLE II

Provisions as to Pledged Collateral

SECTION 2.01. Holding of Pledged Securities.

(a) National Rural shall make available to the Control Party, within forty-five (45) days of a pledge of the Pledged Securities in connection with an advance (or for a longer period as National Rural and the Control Party agree), such back-up information as is reasonably necessary in order to allow the Control Party to confirm compliance of such Pledged Securities to the requisite criteria as outlined herein. Upon receipt of the back-up information, the Control Party shall have ninety (90) days to object in writing to the inclusion of any item of the Pledged Securities as part of the Pledged Collateral. If the Control Party reasonably determines that any of the Pledged Securities do not meet the criteria for Eligible Securities, then National Rural shall have forty-five (45) days in which to provide substitute collateral, and the timeline specified above for National Rural to make available back-up material and confirmation shall also apply as to the substituted collateral. Nothing in this Section 2.01(a) shall limit or otherwise affect the representations, warranties or covenants by National Rural in this Agreement or the Note Purchase Agreement.

(b) The Collateral Agent, on behalf of the Control Party, shall hold the Pledged Securities in the name of National Rural (or its nominee), endorsed or assigned in blank or in favor of the Collateral Agent. Upon occurrence of an Event of Default, the Collateral Agent, on behalf of the Control Party, shall have the right (in its sole and absolute discretion), to the extent a register is maintained therefor, to register the Pledged Securities in the Collateral Agent’s own name as pledgee, or in the name of the Collateral Agent’s nominee (as pledgee or as sub-agent) or to continue to hold the Pledged Securities in the name of National Rural, endorsed or assigned in blank or in favor of the Collateral Agent. Upon cessation of such Event of Default, the Collateral Agent shall take such action as is necessary to again cause the Pledged Securities to be registered in the name of National Rural (or its nominee).

SECTION 2.02. UCC Filings. National Rural shall prepare and file in the proper Uniform Commercial Code filing office in the District of Columbia (i) a financing statement recording the Collateral Agent’s interest in the Pledged Collateral and (ii) from time to time after the date hereof continuation statements or such other filings as are necessary to maintain the perfection of the Lien hereof on the Pledged Collateral.

SECTION 2.03. Withdrawal and Substitution of Pledged Collateral.

(a) Any part of the Pledged Collateral may be withdrawn by National Rural or substituted for other Eligible Securities by National Rural and shall be delivered to National Rural by the Collateral Agent upon National Rural Order at any time and from time to time, together with any other documents or instruments of transfer or assignment necessary to reassign to National Rural said Pledged Collateral and the interest of National Rural, provided the aggregate Allowable Amount of Pledged Collateral remaining after such withdrawal or substitution shall at least equal the aggregate principal amount of the Notes outstanding after such withdrawal or substitution, as shown by the Certificate of Pledged Collateral furnished to the Collateral Agent pursuant to Subsection (b)(i) of this Section.

(b) Prior to any such withdrawal or substitution, the Collateral Agent shall be furnished with the following instruments (with a copy to the Control Party):

(i) a Certificate of Pledged Collateral, dated as of the last day of the calendar month most recently ended at least ten (10) Business Days prior to such withdrawal or substitution (or a more recent date, at National Rural’s option), showing that immediately after such withdrawal or substitution the requirements of Subsection (a) of this Section will be satisfied; and

(ii) an Officers’ Certificate certifying that no Event of Default has occurred which has not been remedied.

Upon any such withdrawal or substitution, National Rural shall deliver any Eligible Securities to be substituted and the Collateral Agent shall execute any instruments of transfer or assignment specified in a National Rural Order as necessary to vest in National Rural any part of the Pledged Collateral withdrawn.

In case an Event of Default shall have occurred and be continuing, National Rural shall not withdraw or substitute any part of the Pledged Collateral.

SECTION 2.04. [Reserved.]

SECTION 2.05. Addition of Pledged Collateral. At any time, National Rural may pledge additional Eligible Securities under this Pledge Agreement by delivering such Pledged Collateral to the Collateral Agent, accompanied by a Certificate of Pledged Collateral specifying such additional collateral and dated as of the last day of the calendar month most recently ended at least ten (10) Business Days prior thereto (or a more recent date at National Rural’s option).

SECTION 2.06. Accompanying Documentation. Where Eligible Securities are delivered to the Collateral Agent under Section 2.01, 2.03 or Section 2.05, such securities shall be accompanied by the appropriate instruments of transfer executed in blank and in a form satisfactory to the Collateral Agent and by such other instruments and documents as the Collateral Agent may reasonably request. All other property delivered to the Collateral Agent under Section 2.01, 2.03 or Section 2.05 and comprising part of the Pledged Collateral shall be accompanied by proper instruments of assignment duly executed by National Rural and such other instruments or documents as the Collateral Agent may reasonably request.

SECTION 2.07. Renewal; Extension; Substitution. Unless and until an Event of Default shall have occurred and be continuing, National Rural may at any time renew or extend, subject to the Lien of this Pledge Agreement, any Pledged Security upon any terms or may accept in place of and in substitution for any such Pledged Security, another Eligible Security or Securities of the same issuer or of any successor thereto for at least the same unpaid principal amount, all as evidenced by a National Rural Order delivered to the Collateral Agent; provided , however , that in case of any substitution, Eligible Securities substituted as aforesaid shall be subject to the Lien of this Pledge Agreement as part of the Pledged Collateral and be held in the same manner as those for which they shall be substituted, and in the case of each substituted Eligible Security,

National Rural shall provide an Officers’ Certificate certifying to the Collateral Agent that such substituted security satisfies the requirements of this Section. So long as no Event of Default shall have occurred and be continuing, the Collateral Agent, upon National Rural Order stating that no Event of Default shall have occurred and be continuing, shall execute any consent to any such renewal, extension or substitution as shall be specified in such National Rural Order.

SECTION 2.08. Voting Rights; Interest and Principal .

(a) Unless and until an Event of Default has occurred and is continuing, and the Control Party delivers to the Collateral Agent a Control Party Notice of Default suspending National Rural’s rights under this clause:

(i) National Rural shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof provided that such rights and powers shall not be exercised in any manner inconsistent with the terms of the Note Purchase Agreement or this Pledge Agreement.

(ii) The Collateral Agent shall execute and deliver to National Rural, or cause to be executed and delivered to National Rural, all such proxies, powers of attorney and other instruments as National Rural may reasonably request for the purpose of enabling National Rural to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to subparagraph (i) above.

(iii) National Rural shall be entitled to receive and retain any and all interest, principal and other distributions paid on or distributed in respect of the Pledged Securities; provided that any non-cash interest, principal or other distributions that would constitute Pledged Securities if pledged hereunder, and received in exchange for Pledged Securities or any part thereof pledged hereunder, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer of Pledged Securities may be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by National Rural, shall not be commingled by National Rural with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the benefit of the Collateral Agent and shall be forthwith delivered to the Collateral Agent in the same form as so received (with any necessary endorsement).

(b) If an Event of Default shall have occurred and be continuing, then, to the extent such rights are suspended by the applicable Control Party Notice of Default, all rights of National Rural to interest, principal or other distributions that National Rural is authorized to receive pursuant to paragraph (a)(iii) of this Section 2.08 shall cease, and all such suspended rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such interest, principal or other distributions. All interest, principal or other distributions received by National Rural contrary to the provisions of this Section 2.08 shall be held in trust for the benefit of the

Collateral Agent, shall be segregated from other property or funds of National Rural and shall be forthwith delivered to the Collateral Agent in the same form as so received (with any necessary endorsement). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 4.03 to the fullest extent permitted by applicable law. After all Events of Default have ceased, the Collateral Agent shall promptly repay to National Rural (without interest) all interest, principal or other distributions that National Rural would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section 2.08 and that remain in such account.

(c) If an Event of Default shall have occurred and be continuing, then, to the extent such rights are suspended by the applicable Control Party Notice of Default, all rights of National Rural to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 2.08, and the obligations of the Collateral Agent under paragraph (a)(ii) of this Section 2.08, shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers; provided that the Collateral Agent shall have the right from time to time during the existence of such Event of Default to permit National Rural to exercise such rights and powers.

SECTION 2.09. Protection of Title; Payment of Taxes; Liens, etc. National Rural will:

(a) duly and promptly pay and discharge, or cause to be paid and discharged, before they become delinquent, all taxes, assessments, governmental and other charges lawfully levied, assessed or imposed upon or against any of the Pledged Collateral, including the income or profits therefrom and the interests of the Collateral Agent in such Pledged Collateral;

(b) duly observe and conform to all valid requirements of any governmental authority imposed upon National Rural relative to any of the Pledged Collateral, and all covenants, terms and conditions under or upon which any part thereof is held;

(c) cause to be paid and discharged all lawful claims (including, without limitation, income taxes) which, if unpaid, might become a lien or charge upon Pledged Collateral; and

(d) do all things and take all actions necessary to keep the Lien of this Pledge Agreement a first and prior lien upon the Pledged Collateral and protect its title to the Pledged Collateral against loss by reason of any foreclosure or other proceeding to enforce any lien prior to or pari passu with the Lien of this Pledge Agreement.

Nothing contained in this Section shall require the payment of any such tax, assessment, claim, lien or charge or the compliance with any such requirement so long as the validity, application or amount thereof shall be contested in good faith; provided , however , that National Rural shall have set aside on its books such reserves (segregated to the extent required by generally accepted accounting principles) as shall be deemed adequate with respect thereto as determined by the Board of Directors of National Rural (or a committee thereof).

SECTION 2.10. Maintenance of Pledged Collateral. National Rural shall cause the Allowable Amount of Pledged Collateral held by the Collateral Agent at all times to be not less than 100% of the aggregate principal amount of the Notes outstanding.

SECTION 2.11. Representations, Warranties and Covenants. National Rural represents, warrants and covenants to the Collateral Agent, for the benefit of the Control Party, that from the time that Pledged Collateral is pledged hereunder, and for so long as such Pledged Collateral is required to remain pledged:

(a) except for the Lien hereof and any Lien consented to in writing by Farmer Mac or the Control Party, National Rural (i) is and will continue to be the direct owner, beneficially and of record, of the Pledged Securities from time to time pledged hereunder, (ii) holds and will continue to hold the same free and clear of all Liens, other than Liens created by this Pledge Agreement, (iii) will make no assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than Liens created by this Pledge Agreement and (iv) will defend its title or interest thereto or therein against any and all Liens (other than the Lien created by this Pledge Agreement), however arising, of all Persons whomsoever;

(b) except for restrictions and limitations imposed by the Note Purchase Agreement or securities laws generally, the Pledged Securities are and will continue to be freely transferable and assignable, and none of the Pledged Securities are or will be subject to any restriction of any nature that might prohibit, impair, delay or otherwise affect the pledge of such Pledged Securities hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Collateral Agent of rights and remedies hereunder;

(c) National Rural has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated;

(d) no consent or approval of any governmental authority, any securities exchange or any other Person was or is necessary to the validity of the pledge effected hereby (other than such as have been obtained and are in full force and effect);

(e) by virtue of the execution and delivery by National Rural of this Pledge Agreement, when any Pledged Securities are delivered to the Collateral Agent in accordance with this Pledge Agreement, the Collateral Agent will obtain a legal and valid Lien upon and security interest in such Pledged Securities as security for the payment and performance of the Obligations;

(f) the Allowable Amount of Pledged Collateral from Class B Members does not exceed $2 billion;

(g) the Allowable Amount of all Pledged Collateral that is Unsecured does not exceed twenty percent (20%) of the Allowable Amount of all Pledged Collateral; and

(h) the percentage of the Allowable Amount of Pledged Collateral that comprises lines of credit (other than any Excess Pledged Security) does not exceed the percentage of the aggregate outstanding principal balance of Notes under the Note Purchase Agreements that comprises the outstanding principal balance of Notes under the 2015 Note Purchase Agreement.

SECTION 2.12. Further Assurances. National Rural will execute and deliver, or cause to be executed and delivered, all such additional instruments and do, or cause to be done, all such additional acts as (a) may be necessary or proper, consistent with the Granting Clause hereof to carry out the purposes of this Pledge Agreement and to make subject to the Lien hereof any property intended so to be subject or (b) may be necessary or proper to transfer to any successor the estate, powers, instruments and funds held hereunder and to confirm the Lien of this Pledge Agreement. National Rural will also cause to be filed, registered or recorded any instruments of conveyance, transfer, assignment or further assurance in all offices in which such filing, registering or recording is necessary to the validity thereof or to give notice thereof.

ARTICLE III

[Reserved]

ARTICLE IV

Remedies

SECTION 4.01. Events of Default. “ Event of Default ”, wherever used herein, means any “Event of Default” as defined in Section 7.01(a) of the Note Purchase Agreement, provided that, for the purposes of this Pledge Agreement:

(c) the Collateral Agent shall not be required to recognize that an Event of Default exists before such time as the Collateral Agent receives a Control Party Notice or National Rural Notice stating that an Event of Default exists and specifying the particulars of such default in reasonable detail;

(d) the Collateral Agent shall not be required to recognize that an Event of Default has ceased until (i) such time as the Collateral Agent receives a Control Party Notice stipulating that such event has ceased to exist; or (ii) 30 days after receipt by the Collateral Agent of a National Rural Notice stipulating that such event has ceased to exist, provided that the Collateral Agent does not receive a Control Party Notice within such

timeframe disputing the cessation of such Event of Default, and further provided that no additional Control Party Notice of Default shall have been received in respect of any other subsisting Event(s) of Default. Upon receipt of any National Rural Notice under subparagraph (ii) of this Subsection, the Collateral Agent shall provide a copy of such National Rural Notice to the Control Party; and

(e) if at any time the Allowable Amount of Pledged Collateral held by the Collateral Agent becomes less than 100% of the aggregate principal amount of the Notes outstanding and National Rural cures such defect within five (5) business days of such occurrence, it shall not constitute an Event of Default hereunder.

SECTION 4.02. Remedies upon Default. If an Event of Default shall have occurred and be continuing, the Control Party may issue a notice (a “ Control Party Notice of Default ”), which may be combined with the notice provided under Section 4.01(b), suspending the rights of National Rural under Section 2.08 in part without suspending all such rights (as specified by the Control Party in its sole and absolute discretion) without waiving or otherwise affecting the Control Party’s rights to give additional Control Party Notices of Default from time to time suspending other rights under Section 2.08 so long as an Event of Default has occurred and is continuing. Subject to paragraph (b) of this Section 4.02, upon cessation of an Event of Default, all rights of National Rural suspended under the applicable Control Party Notice of Default shall revest in National Rural.

(a) Upon the occurrence of an Event of Default, the Collateral Agent shall, for the benefit and at the direction of the Control Party, have the right to exercise any and all rights afforded to a secured party under the Uniform Commercial Code or other applicable law. Without limiting the generality of the foregoing, National Rural agrees that the Collateral Agent shall have the right, but only if so instructed by a Control Party Order and subject to the requirements of applicable law and the Collateral Agent’s right (in its sole and absolute discretion) to receive indemnification or other reasonable assurances that its costs and expenses in connection therewith will be paid, to sell or otherwise dispose of all or any part of the Pledged Collateral at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale of securities (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Pledged Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Pledged Collateral so sold. Each such purchaser at any sale of Pledged Collateral shall hold the property sold absolutely, free from any claim or right on the part of National Rural, and National Rural hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which National Rural now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

(b) The Collateral Agent shall give National Rural ten (10) days’ written notice (which National Rural agrees is reasonable notice within the meaning of Section 9‑611 of the Uniform Commercial Code or its equivalent in other jurisdictions) of the Collateral Agent’s intention to make any sale of Pledged Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice (if any) of such sale. At any such sale, the Pledged Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Pledged Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Pledged Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Pledged Collateral is made on credit or for future delivery, the Pledged Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Pledged Collateral so sold and, in case of any such failure, such Pledged Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Pledge Agreement, the Control Party may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of National Rural (all said rights being also hereby waived and released to the extent permitted by law), the Pledged Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to the Control Party from National Rural as a credit against the purchase price, and the Control Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to Pledged Collateral therefor. For purposes hereof, a written agreement to purchase the Pledged Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and National Rural shall not be entitled to the return of the Pledged Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose this Pledge Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court‑appointed receiver. Any sale pursuant to the provisions of this Section 4.02 shall be deemed to conform to the commercially reasonable standards as provided in Section 9‑610(b) of the Uniform Commercial Code or its equivalent in other jurisdictions.

SECTION 4.03. Application of Proceeds. The Collateral Agent shall apply the proceeds of any collection or sale of Pledged Collateral, including any Pledged Collateral consisting of cash, as follows to the fullest extent permitted by applicable law:

FIRST, to the payment of all reasonable costs and expenses incurred by the Collateral Agent in connection with or reasonably related or reasonably incidental to such collection or sale or otherwise in connection with or related or incidental to this Pledge Agreement or any of the Obligations, including all court costs and the reasonable fees and expenses of its agents and legal counsel, the repayment of all advances made by the Collateral Agent (in its sole discretion) hereunder on behalf of National Rural and any other reasonable costs or expenses incurred in connection with the exercise of any right or remedy hereunder;

SECOND, to the payment to the Control Party in full of the Obligations; such payment to be for an amount certified in a Control Party Notice delivered to the Collateral Agent as being the amount due and owing to the Control Party under the Obligations; and

THIRD, to National Rural, its successors or assigns, or as a court of competent jurisdiction may otherwise direct.

Upon any sale of the Pledged Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Pledged Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof.

SECTION 4.04. Securities Act . In view of the position of National Rural in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being called the “ Federal Securities Laws ”) with respect to any disposition of the Pledged Collateral permitted hereunder. National Rural understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Collateral Agent if the Collateral Agent were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Collateral Agent in any attempt to dispose of all or part of the Pledged Collateral under applicable Blue Sky or other state securities laws or similar laws analogous in purpose or effect. National Rural recognizes that in light of such restrictions and limitations the Collateral Agent may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment, and not with a view to the distribution or resale thereof. National Rural acknowledges and agrees that in light of such restrictions and limitations,

the Collateral Agent, in its sole and absolute discretion (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed under the Federal Securities Laws and (b) may approach and negotiate with a single potential purchaser to effect such sale. National Rural acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, the Collateral Agent shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that the Collateral Agent, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a single purchaser were approached. The provisions of this Section 4.04 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Collateral Agent sells.

ARTICLE V

The Collateral Agent

SECTION 5.01. Certain Duties and Responsibilities.

(i) the Collateral Agent undertakes to perform such duties and only such duties as are specifically set forth in this Pledge Agreement, and no implied covenants or obligations shall be read into this Pledge Agreement against the Collateral Agent; and

(ii) in the absence of bad faith on its part, the Collateral Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Collateral Agent and substantially conforming to the requirements of this Pledge Agreement; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Collateral Agent the Collateral Agent shall be under a duty to examine the same to determine whether or not they substantially conform to the requirements of this Pledge Agreement.

(d) No provision of this Pledge Agreement shall be construed to relieve the Collateral Agent from liability for its own grossly negligent action, its own grossly negligent failure to act, or its own willful misconduct, except that:

(i) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section;

(ii) the Collateral Agent shall not be liable for any error of judgment made in good faith, unless it shall be proved that the Collateral Agent was grossly negligent in ascertaining the pertinent facts; and

(iii) no provision of this Pledge Agreement shall require the Collateral Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(e) Whether or not therein expressly so provided, every provision of this Pledge Agreement relating to the conduct or affecting the liability of or affording protection to the Collateral Agent shall be subject to the provisions of this Section.

SECTION 5.02. Certain Rights of Collateral Agent. Except as otherwise provided in Section 5.01:

(a) the Collateral Agent may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) any request or direction of National Rural mentioned herein shall be sufficiently evidenced by a National Rural Notice or National Rural Order;

(c) any request or direction of the Control Party mentioned herein shall be sufficiently evidenced by a Control Party Notice or Control Party Order;

(d) whenever in the administration of this Pledge Agreement the Collateral Agent shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Collateral Agent (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers’ Certificate in the case of National Rural, and a certificate signed by any Vice President of the Control Party in the case of the Control Party;

(e) the Collateral Agent may consult with counsel and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

(f) the Collateral Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Pledge Agreement at the request or direction of either National Rural or the Control Party pursuant to this Pledge Agreement, unless such party shall have offered to the Collateral Agent reasonable security or indemnity against the costs,

expenses and liabilities which might be incurred by it in compliance with such request or direction;

(g) the Collateral Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, or to recompute, verify, reclassify or recalculate any information contained therein, but the Collateral Agent, in its sole and absolute discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Collateral Agent shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of National Rural, personally or by agent or attorney;

(h) the Collateral Agent may execute any of the powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Collateral Agent shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder;

(i) unless explicitly stated herein to the contrary, the Collateral Agent shall have no duty to inquire as to the performance of National Rural’s covenants herein. In addition, the Collateral Agent shall not be deemed to have knowledge of any Event of Default unless the Collateral Agent has received a Control Party Notice in accordance with Section 4.01(a), and shall not be deemed to have knowledge of the cessation of the same until such time as it receives a National Rural Notice in accordance with Section 4.01(b); and

(j) unless explicitly stated herein to the contrary, the Collateral Agent shall have no obligation to take any action with respect to any Event of Default until it has received a Control Party Notice applicable to such event in accordance with Section 4.01(a), and the Collateral Agent shall have no liability for any action or inaction taken, suffered or omitted in respect of any such event by it prior to such time as the applicable Control Party Notice is delivered. Similarly, the Collateral Agent shall have no obligation to take any action with respect to the cessation of an Event of Default until it has received a National Rural Notice applicable to such event in accordance in accordance with Section 4.01(b), and the Collateral Agent shall have no liability for any action or inaction taken, suffered or omitted in respect of any such event by it prior to such time as the applicable National Rural Notice is delivered.

SECTION 5.03. Money Held by Collateral Agent. Money held by the Collateral Agent hereunder need not be segregated from other funds except to the extent required by law. The Collateral Agent shall have no liability to pay interest on or (except as expressly provided herein) invest any such moneys.

SECTION 5.04. Compensation and Reimbursement.

(a) National Rural agrees:

(iv) to pay to the Collateral Agent from time to time such reasonable compensation for all services rendered by it hereunder as shall have been set forth in an agreement signed by National Rural;

(v) except as otherwise expressly provided herein, to reimburse the Collateral Agent upon its request for all reasonable expenses, out-of-pocket costs, disbursements and advances incurred or made by the Collateral Agent in accordance with any provision of this Pledge Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except to the extent any such expense, disbursement or advance may be attributable to its gross negligence or bad faith; and

(vi) to indemnify the Collateral Agent for, and to defend and hold it harmless against, any loss, liability or expense incurred without gross negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Pledge Agreement or the performance of its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent such loss, liability or expense may be attributable to its gross negligence or bad faith; provided , however , that National Rural shall have no liability under this clause for any settlement of any litigation or other dispute effected without the prior written consent of National Rural (such consent not to be unreasonably withheld).

(b) Any such amounts payable as provided hereunder shall be additional Obligations secured by the Lien hereof. The provisions of this Section 5.04 shall remain operative and in full force and effect regardless of the termination of this Pledge Agreement or the Note Purchase Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Obligations, the invalidity or unenforceability of any term or provision of this Pledge Agreement or the Note Purchase Agreement, or any investigation made by or on behalf of the Collateral Agent or the Control Party. All amounts due under this Section 5.04 shall be payable on written demand therefor.

SECTION 5.05. Corporate Collateral Agent Required; Eligibility. There shall at all times be a Collateral Agent hereunder which shall be a corporation or association organized and doing business under the laws of the United States of America or of any State, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or State authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Neither National Rural nor any Person directly or indirectly controlling, controlled by or under common control with National Rural shall serve as Collateral Agent hereunder. If at any time the Collateral Agent shall cease to be

eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

SECTION 5.06. Resignation and Removal; Appointment of Successor.

(e) No resignation or removal of the Collateral Agent and no appointment of a successor Collateral Agent pursuant to this Article shall become effective until the acceptance of appointment by the successor Collateral Agent under Section 5.07.

(f) The Collateral Agent may resign at any time by giving written notice thereof to National Rural. If an instrument of acceptance by a successor Collateral Agent shall not have been delivered to the Collateral Agent within 30 days after the giving of such notice of resignation, the resigning Collateral Agent may petition any court of competent jurisdiction for the appointment of a successor Collateral Agent.

(g) If at any time:

(i) except if an Event of Default has occurred and is continuing, National Rural, in its sole and absolute discretion, elects to remove the Collateral Agent; or

(ii) the Collateral Agent shall cease to be eligible under Section 5.05 or shall become incapable of acting or shall be adjudged bankrupt or insolvent or a receiver of the Collateral Agent or of its property shall be appointed or any public officer shall take charge or control of the Collateral Agent or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in any such case, National Rural may remove the Collateral Agent by delivery of a National Rural Order to that effect.

(h) If the Collateral Agent shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Collateral Agent for any cause, National Rural shall promptly appoint a successor Collateral Agent by delivering a National Rural Notice to the retiring Collateral Agent, the successor Collateral Agent and the Control Party to such effect.

SECTION 5.07. Acceptance of Appointment by Successor. Every successor Collateral Agent appointed hereunder shall execute, acknowledge and deliver to National Rural, the Control Party and to the retiring Collateral Agent an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Collateral Agent shall become effective and such successor Collateral Agent, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Collateral Agent; but, on request of National Rural, the Control Party or the successor Collateral Agent, such retiring Collateral Agent shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Collateral Agent all the rights,

powers and trusts of the retiring Collateral Agent, and shall duly assign, transfer and deliver to such successor Collateral Agent all property and money held by such retiring Collateral Agent hereunder, subject nevertheless to its Lien, if any, provided for in Section 5.04. Upon request of any such successor Collateral Agent, National Rural shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Collateral Agent all such rights, powers and trusts.

No successor Collateral Agent shall accept its appointment unless at the time of such acceptance such successor Collateral Agent shall be eligible under Section 5.05 hereof.

SECTION 5.08. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Collateral Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Collateral Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Collateral Agent, shall be the successor of the Collateral Agent hereunder, provided such corporation shall be eligible under Section 5.05 hereof without the execution or filing of any paper or any further act on the part of any of the parties hereto.

ARTICLE VI

Miscellaneous

SECTION 6.01. Notices. All notices and other communications hereunder to be made to any party shall be in writing and shall be addressed as specified in Schedule II attached hereto as appropriate. The address, telephone number, or facsimile number for any party may be changed at any time and from time to time upon written notice given by such changing party to the other parties hereto. A properly addressed notice or other communication shall be deemed to have been delivered at the time it is sent by facsimile (fax) transmission to the party or parties to which it is given. Certain notices or other communications may be sent via electronic mail to one or more email addresses provided specifically for receiving such notice or other communication, provided that the receiving party (i) has provided such email address or addresses in writing to the sending party in advance of such notice or communication and (ii) has indicated to the sending party the type or nature of notice or communication which may be appropriately sent in such manner.

All National Rural Notices and National Rural Orders delivered to the Collateral Agent shall be contemporaneously copied to the Control Party by National Rural; all Control Party Notices and Control Party Orders delivered to the Collateral Agent shall be contemporaneously copied by Farmer Mac to National Rural; and all Collateral Agent notices delivered to either National Rural or Farmer Mac shall be contemporaneously copied to the other such party by the Collateral Agent.

SECTION 6.02. Waivers; Amendment.

(a) No failure or delay by a party in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of each party hereunder are cumulative and are not exclusive of any rights or remedies that such party would otherwise have. No waiver of any provision of this Pledge Agreement or consent to any departure by any party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 6.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on any party in any case shall entitle any party to any other or further notice or demand in similar or other circumstances.

(b) Neither this Pledge Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by National Rural, the Collateral Agent, the Purchaser and Farmer Mac.

SECTION 6.03. Successors and Assigns. Whenever in this Pledge Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of National Rural, the Collateral Agent, the Purchaser, the Control Party or Farmer Mac that are contained in this Pledge Agreement shall bind and inure to the benefit of their respective successors and assigns.

SECTION 6.04. Counterparts; Effectiveness. This Pledge Agreement may be executed in counterparts, each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Pledge Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Pledge Agreement.

SECTION 6.05. Severability. Any provision of this Pledge Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. The parties shall endeavor in good‑faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 6.06. GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE UNITED STATES OF AMERICA, TO THE EXTENT APPLICABLE, AND OTHERWISE THE LAWS OF THE STATE OF NEW YORK.

SECTION 6.07. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY

APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS PLEDGE AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.07.

SECTION 6.08. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Pledge Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Pledge Agreement.

SECTION 6.09. Security Interest Absolute. All rights of the Collateral Agent and/or the Control Party hereunder, the grant of a security interest in the Pledged Collateral and all obligations of National Rural hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Note Purchase Agreement, any Note, any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Note Purchase Agreement, any Note or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, National Rural in respect of the Obligations or this Pledge Agreement.

SECTION 6.10. Termination or Release.

(a) This Pledge Agreement shall terminate on the date when the Obligations have been indefeasibly paid in full, and at such time the Lien hereof shall be released.

(b) Upon any withdrawal, substitution or other disposal by National Rural of any Pledged Collateral that is permitted by the terms of this Pledge Agreement, or upon the effectiveness of any written consent to the release of the security interest granted hereby in any Pledged Collateral, the Lien hereof securing such Pledged Collateral shall be automatically released.

(c) In connection with any termination or release pursuant to paragraph (a) or (b) the Collateral Agent shall deliver to National Rural the Pledged

Collateral and shall execute and deliver to National Rural, at National Rural’s expense, all documents that National Rural shall reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this Section 6.10 shall be without recourse to or warranty by the Collateral Agent.

SECTION 6.11. Collateral Agent Appointed Attorney-in-Fact. National Rural hereby appoints the Collateral Agent the attorney-in-fact of National Rural for the purpose of, upon the occurrence and during the continuance of an Event of Default, carrying out the provisions of this Pledge Agreement with respect to the Pledged Collateral and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest but is subject nevertheless to the terms and conditions of this Pledge Agreement. Without limiting the generality of the foregoing, the Collateral Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Collateral Agent’s name or in the name of National Rural (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Pledged Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Pledged Collateral; (c) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Pledged Collateral or to enforce any rights in respect of any Pledged Collateral; (d) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Pledged Collateral; (e) to notify, or to require National Rural to notify, obligors under Pledged Securities to make payment directly to the Collateral Agent; and (f) subject to the second sentence of Section 4.02(a), to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Pledged Collateral, and to do all other acts and things necessary to carry out the purposes of this Pledge Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Pledged Collateral for all purposes; provided that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Pledged Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the Control Party shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to National Rural for any act or failure to act hereunder, except for their own gross negligence or willful misconduct.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be duly executed, all as of the day and year first above written.



FARMER MAC MORTGAGE SECURITIES CORPORATION
By /s/ Timothy L. Buzby

	Name: Timothy L. Buzby
	Title: President



FEDERAL AGRICULTURAL MORTGAGE CORPORATION
By /s/ Timothy L. Buzby

	Name: Timothy L. Buzby
	Title: President and CEO



NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
By /s/ J. Andrew Don

	Name: J. Andrew Don
	Title: Title: Senior Vice President and Chief Financial Officer



U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent
By /s/ Brian D. True

	Name: Brian D. True
	Title: Title: Vice President

SCHEDULE I
TO
PLEDGE AGREEMENT

ADDITIONAL CRITERIA FOR ELIGIBLE SECURITIES

Criteria for Eligible Security of Class A Eligible Member : Each Class A Eligible Member must satisfy the following criteria only on the date of the pledge of such Eligible Security:


•	Long-Term Debt to Net Utility Plant Ratio, as the average ratio of the most recent three full calendar years for which financial information is available, does not exceed 90%.


•	Modified Debt Service Coverage Ratio—Distribution, as the average ratio of the most recent three full calendar years for which financial information is available, is greater than or equal to 1.35.


•	Equity to Total Assets Ratio, as the average ratio of the most recent three full calendar years for which financial information is available, is greater than or equal to 20%.


•	The Eligible Security that is Secured has a Facility Rating by National Rural of “4.9” or lower (or, for an Eligible Security that is Unsecured, a Facility Rating by National Rural of “4.4” or lower).

Criteria for Eligible Security of Class B Eligible Member : Each Class B Eligible Member must satisfy the following criteria only on the date of the pledge of such Eligible Security:


•	Equity to Total Capitalization Ratio, as the average ratio of the most recent three full calendar years for which financial information is available, is greater than or equal to 25%.


•	Modified Debt Service Coverage Ratio—G&T, as the average ratio of the most recent three full calendar years for which financial information is available, is greater than or equal to 1.10.


•	Equity to Total Assets Ratio, as the average ratio of the most recent three full calendar years for which financial information is available, is greater than or equal to 10%.


•	The Eligible Security that is Secured has a Facility Rating by National Rural of “4.9” or lower (or, for an Eligible Security that is Unsecured, a Facility Rating by National Rural of “4.4” or lower).

SCHEDULE II
TO
PLEDGE AGREEMENT

Addresses for Notices

The addresses referred to in Section 6.01 hereof, for purposes of delivering communications and notices, are as follows:

If to the Purchaser:

Farmer Mac Mortgage Securities Corporation

1999 K Street, N.W., 4 ^th Floor

Washington, DC 20006

Fax: 202-872-7713

Attn: Vice President

If to Farmer Mac:

Federal Agricultural Mortgage Corporation
1999 K Street, N.W., 4 ^th Floor
Washington, DC 20006
Fax: 202-872-7713
Attn: Manager – Rural Utilities Lending

With a copy to:

Federal Agricultural Mortgage Corporation
1999 K Street, N.W., 4 ^th Floor
Washington, DC 20006
Fax: 202-872-7713
Attn: General Counsel

If to National Rural:

National Rural Utilities Cooperative Finance Corporation
20701 Cooperative Way
Dulles, VA 20166
Telephone: 703-467-7402
Fax: 703-467-5178
Attn: Andrew Don, Senior Vice President

& Chief Financial Officer

SCHEDULE II
TO
PLEDGE AGREEMENT

With a copy to:

National Rural Utilities Cooperative Finance Corporation
20701 Cooperative Way
Dulles, VA 20166
Telephone: 703-467-1872
Fax: 703-467-5651
Attn: Roberta B. Aronson, Esq., Senior Vice President

& General Counsel

If to the Collateral Agent:

U.S. Bank National Association
100 Wall Street
Suite 1600
New York, NY 10005-3701

Telephone: (212) 361-2893
Fax: (212) 509-3384
Attn: Beverly A. Freeney

NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION

SECOND AMENDED, RESTATED AND CONSOLIDATED PLEDGE AGREEMENT

DATED AS OF JULY 31, 2015

CERTIFICATE OF PLEDGED COLLATERAL FILED WITH
U.S. BANK NATIONAL ASSOCIATION, Collateral Agent

________________, Chief Executive Officer (or Chief Financial Officer, or Treasurer, or Controller) and ____________________, Vice-President, respectively, of National Rural Utilities Cooperative Finance Corporation, hereby certify to the Control Party and the Collateral Agent under the above-mentioned Second Amended, Restated and Consolidated Pledge Agreement as amended to the date hereof (herein called the “Pledge Agreement”) as follows:



1.	The Pledged Amount of Pledged Collateral certified hereby, remaining on deposit with the Collateral Agent, as shown on Schedule A hereto, is	$
2.	The Pledged Amount of Pledged Collateral certified hereby, being deposited as shown on Schedule B hereto, is	$
3.	The cumulative amount excluded from the Pledged Amount on Schedule A and Schedule B based on the Maximum Debtor Principal Amount is	$
4.	The cumulative amount excluded from the Pledged Amount on Schedule A and Schedule B based on the Maximum Advance Rate is	$
5.	The Allowable Amount of Pledged Collateral (the sum of items 1 and 2 minus the sum of items 3 and 4) is	$
6.	The aggregate principal amount of the Note(s) outstanding at the date hereof is	$
7.	The aggregate amount, if any, of the Note(s) to be issued on the basis of this Certificate is	$
8.	The sum of amounts in items 6 and 7 is	$
9.	The aggregate amount by which the Allowable Amount of Pledged Collateral exceeds the aggregate principal amount of the Note(s) outstanding (item 5 minus item 8) is	$

ANNEX A
TO
PLEDGE AGREEMENT



10.	(a) The Allowable Amount of Pledged Collateral which is included in item 5 above from Class B Members does not exceed $2 billion. (b) The Allowable Amount of Pledged Collateral that is Unsecured does not exceed 20% of the Allowable Amount of Pledged Collateral which is included in item 5 above. (c) The percentage of the Allowable Amount of Pledged Collateral that comprises lines of credit (other than any Excess Pledged Security) does not exceed the percentage of the aggregate outstanding principal balance of Notes under the Note Purchase Agreements that comprises the outstanding principal balance of Notes under the 2015 Note Purchase Agreement.
11.	To the knowledge of the undersigned, each Eligible Security from a Class A Member, the Pledged Amount of which is included in item 2, satisfies the following criteria on the date of this Certificate: (1) Long-Term Debt to Net Utility Plant Ratio, as the average ratio of the most recent three full calendar years for which financial information is available, does not exceed 90%; (2) Modified Debt Service Coverage Ratio—Distribution, as the average ratio of the most recent three full calendar years for which financial information is available, is greater than or equal to 1.35; (3) Equity to Total Assets Ratio, as the average ratio of the most recent three full calendar years for which financial information is available, is greater than or equal to 20%; and (4) the Eligible Security that is Secured has a Facility Rating by National Rural of “4.9” or lower (or, for an Eligible Security that is Unsecured, a Facility Rating by National Rural of “4.4” or lower).
12.	To the knowledge of the undersigned, each Eligible Security from a Class B Member, the Pledged Amount of which is included in item 2, satisfies the following criteria on the date of this Certificate: (1) Equity to Total Capitalization Ratio, as the average ratio of the most recent three full calendar years for which financial information is available, is greater than or equal to 25%; (2) Modified Debt Service Coverage Ratio—G&T, as the average ratio of the most recent three full calendar years for which financial information is available, is greater than or equal to 1.10; (3) Equity to Total Assets Ratio, as the average ratio of the most recent three full calendar years for which financial information is available, is greater than or equal to 10%; and (4) the Eligible Security that is Secured has a Facility Rating by National Rural of “4.9” or lower (or, for an Eligible Security that is Unsecured, a Facility Rating by National Rural of “4.4” or lower).

ANNEX A
TO
PLEDGE AGREEMENT



13.	So far as is known to the undersigned, no Event of Default exists.
14.	(a) To the extent an Eligible Security listed on Schedule A or Schedule B has an outstanding principal amount of more than the Maximum Debtor Principal Amount, the Allowable Amount of Pledged Collateral set forth in item 5 above reflects only the Maximum Debtor Principal Amount with respect to such Eligible Security, with any excess above the Maximum Debtor Principal Amount reflected in item 3 above. (b) To the extent any line of credit constituting Eligible Security is listed on Schedule A or Schedule B , the Allowable Amount of Pledged Collateral set forth in item 5 above reflects only the Maximum Advance Rate of such Eligible Security, with any excess above the Maximum Advance Rate reflected in item 4 above.
15.	Each Eligible Member whose notes are Pledged Securities has received or is eligible to receive a loan or commitment for a loan from RUS or any successor agency.

All initially capitalized terms used but not defined herein shall have the meanings given such terms in the Pledge Agreement.

Dated: _____________________

OF NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION

ANNEX A
TO
PLEDGE AGREEMENT

PLEDGED SECURITIES ON DEPOSIT

SCHEDULE A TO CERTIFICATE OF PLEDGED COLLATERAL
DATED



Eligible Securities	Name of Issuer	Pledged Amount (Item 1)
Pledged Securities (Here List Securities)

ANNEX A
TO
PLEDGE AGREEMENT

PLEDGED SECURITIES BEING DEPOSITED

SCHEDULE B TO CERTIFICATE OF PLEDGED COLLATERAL
DATED



Eligible Securities	Name of Issuer	Pledged Amount (Item 2)
Pledged Securities (Here List Securities)

EXHIBIT 10.4

LONG TERM STANDBY COMMITMENT TO PURCHASE

This Long Term Standby Commitment to Purchase (“Commitment”) is made as of August 31, 2015 between the Federal Agricultural Mortgage Corporation (“Farmer Mac”), a corporation organized and existing under the laws of the United States of America and National Rural Utilities Cooperative Finance Corporation , organized and existing under the laws of the District of Columbia (“CFC” or “Seller”).

WHEREAS, the Seller and Farmer Mac each desire to enter into this Commitment, which permits the Seller, at its option, to sell Qualified Loans within a defined portfolio of Qualified Loans to Farmer Mac from time to time during the life of the defined portfolio and obligates Farmer Mac to purchase such Qualified Loans, all under the terms and conditions set forth in this Commitment; and

WHEREAS, the Seller and Farmer Mac have identified a portfolio of Qualified Loans that the parties desire to make subject to the terms and conditions of this Commitment; and

WHEREAS, the Seller and Farmer Mac seek to create a procedure by which the Seller may add additional Qualified Loans to such portfolio from time to time.

NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth in this Commitment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Farmer Mac and the Seller agree as follows:

ARTICLE I

DEFINED TERMS

Whenever used in this Commitment, the following words and phrases have the following meanings:

Average Equity to Total Assets : As defined in the Servicing Agreement.

Average Equity to Total Capitalization Ratio : As defined in the Servicing Agreement.

Average Long-Term Debt to Net Utility Plant Ratio : As defined in the Servicing Agreement.

Average Modified Debt Service Coverage Ratio—Distribution : As defined in the Servicing Agreement.

Average Modified Debt Service Coverage Ratio—G&T : As defined in the Servicing Agreement.

Borrower Rating : The borrower rating assigned by the Seller to a Qualified Loan from time to time in accordance with the Seller’s internal risk rating system.

Business Day : Any day other than a Saturday, Sunday or other day Farmer Mac or the Seller is closed for business.

Charter Act : The Farmer Mac Charter Act in Title VIII of the Farm Credit Act of 1971 (12 U.S.C. §§2279aa et seq . ), as amended and in effect from time to time.

Commitment Term : From the Effective Date of this Commitment through and including the date on which all Qualified Loans have been purchased or securitized or deemed paid in full (through scheduled payments, prepayments, liquidation or otherwise).

Debt to EBITDA Ratio : As defined in the Servicing Agreement.

Defaulted Qualified Loan : Any Qualified Loan that is delinquent in payment for ninety (90) or more consecutive days or otherwise in material non-monetary default, except as otherwise provided in Article V herein. A Defaulted Qualified Loan that was a Qualified Loan on the date it was added to the Portfolio will be a Qualified Loan for purposes of this Commitment unless the terms of such loan are modified by the Seller, without the consent of Farmer Mac, in a manner that is not authorized under Section 5.01(d) of the Servicing Agreement, except as to (a) subpart (ii) thereof with respect to interest rate conversions or repricings in the ordinary course of business, and (b) subpart (vii) thereof.

Delinquency Report : The report providing information with respect to any delinquent Qualified Loan included in the Portfolio, as provided monthly to Farmer Mac by the Seller pursuant to Section 4.04. The Delinquency Report shall be provided in a Microsoft Excel (XLS) format in accordance with the file specifications reasonably required by Farmer Mac and shall include a description of proposed remedial actions to be taken by the Seller. The current required file specifications for the Delinquency Report are set forth in Exhibit G to this Commitment.

Delivery Date : The date on which the Seller sells a Qualified Loan in the Portfolio to Farmer Mac, which, in the case of Defaulted Qualified Loans, shall be the date that Farmer Mac disburses the purchase proceeds in accordance with Section 5.01, and, in the case of Flex Qualified Loans, shall be the date of delivery of a Qualified Loan to Farmer Mac pursuant to Section 5.02.

Effective Date : The date this Commitment is executed, except with respect to Qualified Loans listed on a Qualified Loan Schedule delivered to Farmer Mac by the Seller pursuant to Section 4.02(b), in which case the Effective Date shall be the first day of the month following receipt of such Qualified Loan Schedule by Farmer Mac.

Eligible Class A Member : Each Class A Member of CFC, as described in CFC’s Bylaws currently in effect, that satisfies the following criteria on the Effective Date of such Member’s Qualified Loan:

(a) Such Member’s Average Long-Term Debt to Net Utility Plant Ratio does not exceed 90%;

(b) Such Member’s Average Modified Debt Service Coverage Ratio—Distribution is at least 1.35;

(d) Such Member’s Qualified Loan has a Facility Rating of “4.9” or lower.

Eligible Class B Member : Each Class B Member of CFC, as described in CFC’s Bylaws currently in effect, that satisfies the following criteria on the Effective Date of such Member’s Qualified Loan:

(a) Such Member’s Average Equity to Total Capitalization Ratio at least 25%;

(b) Such Member’s Average Modified Debt Service Coverage Ratio—G&T is at least 1.15;

(d) Such Member’s Debt to EBITDA Ratio is no greater than 12; and

(e) Such Member’s Qualified Loan has a Facility Rating of “4.9” or lower.

Event of Default : An event described in Article VIII.

Facility Rating : The facility rating assigned by the Seller to a Qualified Loan from time to time in accordance with the Seller’s internal risk rating system.

Flex Qualified Loan : Any Qualified Loan that complies, on the date of its sale to Farmer Mac, with the standards set forth herein for a Qualified Loan.

Governmental Body : Any Federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality having jurisdiction over the parties.

Liquidated Qualified Loan : Any defaulted Qualified Loan, including any Qualified Loan as to which the related Mortgaged Property is held by Farmer Mac, as to which the Seller has determined that all amounts it expects to recover from or on account of such Qualified Loan have been recovered and have been appropriately distributed.

Liquidation Expenses : Expenses incurred by or on behalf of Farmer Mac or the Seller in connection with the liquidation of any defaulted Qualified Loan, including, without limitation, legal fees and expenses, brokerage commissions paid to third parties, any unreimbursed amounts expended for hazard insurance and environmental reports respecting the related Qualified Loan and any related and unreimbursed expenditures for real estate and conveyance taxes or for property restoration or preservation.

Liquidation Proceeds : For any Defaulted Qualified Loan purchased by Farmer Mac hereunder, cash (including insurance proceeds) received in connection with Farmer Mac’s liquidation of such Defaulted Qualified Loan and, if applicable, ultimate disposition of related property securing such Qualified Loan.

Loan Activity Report : The report regarding activity with respect to each Qualified Loan included in the Portfolio, as provided monthly to Farmer Mac by the Seller pursuant to Section 4.04. The Loan Activity Report shall be based on actual payment activity and provided in a Microsoft Excel (XLS) format in accordance with the file specifications reasonably required by Farmer Mac. The current required file specifications for the Loan Activity Report are set forth in Exhibit F to this Commitment.

Loan Agreement : An original loan agreement to which the applicable borrower is a party and providing for the Qualified Loan which is evidenced by the related Mortgage Note and, if applicable, secured by the related Mortgage.

Loan Setup File : The information about each Qualified Loan added to the Portfolio, as provided to Farmer Mac by the Seller pursuant to Section 4.04. The Loan Setup File shall be provided in a Microsoft Excel (XLS) format in accordance with the file specifications reasonably required by Farmer Mac. The current required file specifications for the Loan Setup File are set forth in Exhibit E to this Commitment.

Loss Reserve Amount : With respect to any Defaulted Qualified Loan, the amount, if any, by which (a) the sum of the amounts due as described in paragraphs 5.01(b)(I)(iv) and (v) (or paragraphs 5.01(b)(II)(iv) and (v), as applicable) hereof exceeds (b) (x) Liquidation Proceeds less (y) Liquidation Expenses not theretofore reimbursed to either Farmer Mac or the Seller, as appropriate, less (z) the sum of the amounts described in paragraphs 5.01(b)(I)(i) and (ii) (or paragraphs 5.01(b)(II)(i) and (ii), as applicable) hereof. Liquidation Proceeds and Liquidation Expenses shall be allocated among all then outstanding loans from Seller to the borrower, including such Defaulted Qualified Loan.

MBS : Securities issued and/or guaranteed by Farmer Mac that are secured as to 100% of the outstanding principal amount by Qualified Loans.

Mortgage : An original mortgage, deed of trust or other instrument that constitutes a first lien on an interest in real property securing the Mortgage Note. Such Mortgage may be an RUS form of mortgage, a CFC form of mortgage, the form specified by another lender and agreed to by CFC, or an indenture of trust substantially in the form as is usual and customary for rural electric utility borrowers. It is understood that some of the Mortgages provide that one or more promissory notes may be secured by such Mortgage without being specifically identified in such Mortgage and without such Mortgage being amended to reflect such fact.

Mortgage File : The following documents pertaining to the applicable Qualified Loan:

(a) an original or copy of the Mortgage Note endorsed without recourse to Farmer Mac (or to such other Person as directed by Farmer Mac), with all necessary intervening endorsements showing a complete chain of endorsement from the originator to the Seller, if applicable;

(b) if the Qualified Loan is secured by real property, a copy of the applicable Mortgage;

(c) an original or copy of each amendment to the Mortgage Note and, if the Qualified Loan is secured by real property, a copy of each amendment to the Mortgage in Seller’s possession;

(d) an original or copy of the Loan Agreement;

(e) a copy of the Opinion of Counsel of borrower’s counsel; and

(f) if the Qualified Loan is secured by real property, copies of any other security documents (including any UCC-1, UCC-2 or UCC-3 financing statement), that evidence the creation or perfection of a security interest in the related real property and are in the possession of or within the control of the Seller.

Mortgage Note : A promissory note or other evidence of indebtedness of a borrower under a Qualified Loan, together with all riders thereto and amendments thereof.

Opinion of Counsel : A written opinion of counsel of a law firm reasonably acceptable to the recipient thereof. Any Opinion of Counsel may be provided by in-house counsel of a Person if reasonably acceptable to the addressee thereof.

Optional Removal Trigger : With respect to any pool of Qualified Loans identified on a Qualified Loan Schedule, the amount specified, if any, in the Qualified Loan Schedule as to which the Seller would be permitted to remove the pool of Qualified Loans from the Portfolio under Section 10.01(b) if the aggregate unpaid principal balance of the Qualified Loans remaining in the pool is equal to or less than such specified trigger amount, which shall be stated in the Qualified Loan Schedule as a percentage of the aggregate outstanding principal balance of the Portfolio as of the Effective Date.

Permitted Lien : A pledge of any Qualified Loan identified on a Qualified Loan Schedule pursuant to any of the following, as any such document may be amended, restated, supplemented, substituted or otherwise modified from time to time, and as any identified trustee or collateral agent may be substituted from time to time: (i) the Indenture dated as of February 15, 1994, as amended on September 15, 1994 by and between CFC and U.S. Bank National Association, as successor Trustee; (ii) the Indenture dated as of October 25, 2007, by and between CFC and U.S. Bank National Association, as Trustee; (iii) the Amended, Restated and Consolidated Bond Guarantee Agreement, dated as of December 13, 2012, by and between CFC and the United States of America, acting through the Rural Utilities Service; (iv) the Amended, Restated and Consolidated Pledge Agreement, dated as of December 13, 2012, by and among CFC, the United States of America, acting through the Rural Utilities Service, and U.S. Bank National Association, as Collateral Agent; (v) the Second Amended, Restated and Consolidated Pledge Agreement, dated as of July 31, 2015, by and among, CFC, Farmer Mac, U.S. Bank National Association, as Collateral Agent, and Farmer Mac Mortgage Securities Corporation, as Note Purchaser; or (vi) any indenture, bond guarantee agreement or pledge agreement with U.S. Bank National Association, the United States of America acting through the Rural Utilities Service, Farmer Mac, Farmer Mac Mortgage Securities Corporation, or party of similar character, establishing a similar funding program secured by the pledge of certain CFC loans.

Person : An individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

Portfolio : All of the groups of Qualified Loans, identified on each of the Qualified Loan Schedules signed by the parties hereto and delivered to Farmer Mac in connection with this Commitment and incorporated herein by reference, which are subject to this Commitment and are eligible to be sold to Farmer Mac under the terms and conditions set forth in this Commitment. Additional pools of Qualified Loans may be added to the Portfolio under this Commitment with the written concurrence of both parties.

Qualified Loan : Any loan, or an interest in a loan (including a Qualified Participation Interest), for an electric facility that satisfies the following criteria, meets the requirements of this Commitment on its Effective Date and which is identified in the Portfolio or which is added to the Portfolio as provided for herein:

(a) The Borrower is either an Eligible Class A Member, an Eligible Class B Member or other Class A or B Member of CFC as approved by Farmer Mac, that has received, or is eligible to receive, a loan from RUS under the Rural Electrification Act of 1936.

(b) Such loan is payable in full upon maturity or amortizes on a level principal or level debt service basis.

(c) Interest is payable on such loan monthly, quarterly, semi-annually or annually, as specified in the applicable Loan Agreement.

(d) On its Effective Date, the Seller will have at least one other loan to the same borrower in the Seller’s portfolio. In addition, on its Effective Date, it will be the intention of the Seller to maintain a credit relationship with such borrower until such time as the loan to such borrower added to the Portfolio pursuant to this Commitment is repaid in full.

(e) No event of default with respect to such loan shall have been declared by the Seller and be continuing on the Effective Date.

(f) Such loan is a performing loan and is not more than thirty (30) days delinquent in payment.

(g) Such loan shall have been documented in accordance with the Seller’s existing practices and procedures at the time, and in form and substance that are substantially similar to the documentation used by Seller for loans of similar character in the Seller’s own loan portfolio as of its Effective Date.

(h) The principal balance of such loan, when aggregated with (x) the aggregate principal balance of all loans to the same borrower previously added to the Portfolio hereunder and (y) the aggregate principal balance of all loans to the same borrower previously sold by Seller to Farmer Mac, will not exceed $50,000,000 (or any higher amount permitted by Farmer Mac and communicated to Seller in writing).

(i) With respect to any loan, the Borrower of which is a Class B Member, the principal balance of such loan, when aggregated with (x) the aggregate principal balance of all other loans to Class B Members previously added to the Portfolio hereunder, (y) the aggregate principal balance of all loans previously sold by Seller to Farmer Mac with respect to Class B Members, and (z) the aggregate principal balance of all loans previously pledged by Seller to Farmer Mac with respect to Class B Members, will not exceed $2.0 billion (or any higher amount permitted by Farmer Mac and communicated to Seller in writing).

Qualified Loan Schedule : A listing of Qualified Loans in a form reasonably required by Farmer Mac. The current form of Qualified Loan Schedule required by Farmer Mac is attached as Exhibit D to this Commitment.

Qualified Participation Interest : An undivided interest in a mortgage loan, including the related mortgage or deed of trust. The related mortgage loan must be a Qualified Loan, and the ratio of the principal balance of the Qualified Participation Interest to the principal balance of the underlying loan will be determined at the time the Qualified Participation Interest is placed into the Portfolio. A Qualified Participation Interest, if transferred to Farmer Mac pursuant to the terms of this Commitment, will have first priority or shared pari passu right in payment and liquidation to the interest not transferred to Farmer Mac. The documentation evidencing the transfer of a Qualified Participation Interest will be agreed upon between the Seller and Farmer Mac at the time the initial Qualified Participation Interest is transferred to Farmer Mac either as a Defaulted Qualified Loan or a Flex Qualified Loan.

Repurchase Price : With respect to any Qualified Loan, the unpaid principal balance thereof together with accrued and unpaid interest thereon to the date of repurchase.

Reserve Amount Total Limit : If applicable, as indicated in the related Qualified Loan Schedule for a pool of Qualified Loans, the maximum aggregate amount of Reserve Payments to be paid by Seller to Farmer Mac during the term of this Commitment. The Reserve Amount Total Limit shall equal with respect to each pool of Qualified Loans listed on a Qualified Loan Schedule, the percentage (as specified in the related Qualified Loan Schedule) of the aggregate outstanding principal balance of the Portfolio as of the Effective Date.

Reserve Payment : If applicable, as indicated in the related Qualified Loan Schedule for a pool of Qualified Loans, an amount to be paid by Seller to Farmer Mac to mitigate a Loss Reserve Amount that Farmer Mac would otherwise incur with respect to a Defaulted Qualified Loan. Such amount shall equal the lesser of (a) the Loss Reserve Amount; and (b) the Reserve Amount Total Limit. The amount of a Reserve Payment shall be reduced by the amount that the aggregate of all Reserve Payments made over the term of this Commitment exceeds the Reserve Amount Total Limit.

Regulatory Authority : Any federal or state governmental authority charged with regulation, supervision, examination and enforcement authority over the Seller and the Seller’s underwriting and servicing practices.

Risk Rating Methodology : The Seller’s current internal risk rating methodology for determining Facility Ratings or Borrower Ratings.

RUS : The Rural Utilities Service of the United States Department of Agriculture, acting by and through the Administrator of the Rural Utilities Service, and including any successor agencies or departments.

Servicing Agreement : The Amended and Restated Master Sale and Servicing Agreement between Farmer Mac and CFC dated as of August 12, 2011.

Standby Purchase Commitment Fee : The periodic amount due Farmer Mac from the Seller for this Commitment. Such amount with respect to any Qualified Loan included in the Portfolio shall be paid in monthly payments in arrears in an amount equal to 1/12th of the applicable fee, multiplied by the unpaid principal balance of such Qualified Loan, as reported monthly by the Seller in accordance with Section 4.04. The applicable fee for any particular Qualified Loan shall be as agreed upon between the parties and set forth in a Qualified Loan Schedule signed by both parties.

Solely for purposes of this definition of Standby Purchase Commitment Fee, the term “unpaid principal balance of such Qualified Loan” shall mean the unpaid principal balance of such Qualified Loan, calculated as of the first day of the month prior to the month in which the Standby Purchase Commitment Fee is to be paid.

Termination Event : With respect to either the Seller or Farmer Mac, (i) any change in law or regulation (or any ruling or interpretation related to any existing law or regulation) that, in the reasonable judgment of such party and as supported by a written opinion of such party’s retained counsel, renders the transaction contemplated hereby void, unenforceable or illegal (in whole or in part) as to such party, (ii) any change in the law, regulations or Financial Accounting Standards adopted by the Financial Accounting Standards Board (or other similar accounting rules) that, in the reasonable judgment of such party and as supported by a written opinion of an independent counsel and/or accounting firm acceptable to both parties, renders the transaction as contemplated hereby unsound as to such party, it being understood by the parties that the treatment of the transaction contemplated hereby as risk management and the weighting of the Qualified Loans, other than Qualified Participation Interests and, if applicable, loans in an amount up to the Reserve Amount Total Limit, in the 20% category for risk-based capital purposes by the Seller and as off-balance sheet assets by Farmer Mac for capital requirements represents the accounting treatment contemplated by the parties, or (iii) any change in the Bank Capital Methodology and Assumptions and Nonbank Financial Institutions Rating Methodology rating criteria as defined in and published by Standard & Poor's Financial Services LLC or its successor that, in the reasonable judgement of Seller renders the transaction as contemplated hereby no longer beneficial for Seller for risk-based capital purpose, it being understood by the parties that the treatment of the transaction contemplated hereby as the weighting of the Qualified Loans, other than Qualified Participation Interest, and, if applicable, loans in an amount up to the Reserve Amount Total Limit, in the 23% category for risk-based capital purpose by the Seller.

ARTICLE II

GENERAL COVENANTS OF THE SELLER

Section 2.01. Performance of Obligations . The Seller hereby covenants to keep and perform faithfully all of the covenants and undertakings contained herein.

Section 2.02. Good Standing . The Seller hereby covenants to maintain its current condition of good standing under all applicable laws and regulations and to commit no act that would alter the status of the Seller as represented in Section 6.03 hereof.

Section 2.03. Further Assurances . The Seller shall, subject to applicable confidentiality requirements, execute and deliver or cause to be executed and delivered to Farmer Mac now, and at any reasonable time or times hereafter at the request of Farmer Mac, all documents, instruments, letters of direction, notices, reports, acceptances, receipts, consents, waivers, affidavits and certificates as Farmer Mac may reasonably request, in form satisfactory to Farmer Mac in order to consummate fully all of the transactions contemplated hereunder.

Section 2.04. Sale, Transfer or Pledge of Portfolio or Servicing Rights . During the Commitment Term, the Seller may not pledge or hypothecate all or any portion of any Qualified Loan or the Portfolio or any of the rights associated with the Portfolio and the Qualified Loans except for Permitted Liens. Notwithstanding the foregoing, Farmer Mac shall not be obligated to purchase any Qualified Loan hereunder unless and until such Qualified Loan is free and clear of any pledge or security interest, including any Permitted Liens. The Seller may sell or transfer the Portfolio or the servicing rights associated with the Qualified Loans only under the terms set forth below.

(a) Farmer Mac will approve the sale or transfer of the Portfolio only if all of the Qualified Loans in the Portfolio are sold or transferred to a purchaser or transferee that is reasonably acceptable to Farmer Mac and that agrees to assume all of the Seller’s obligations hereunder pursuant to a written agreement among the Seller, Farmer Mac and such successor party. If the Seller transfers or sells the Portfolio but retains the right to service the Qualified Loans, the written agreement among the Seller, Farmer Mac and the successor party shall also provide that the payment of the Standby Purchase Commitment Fee shall remain a corporate obligation of the Seller.

(b) Farmer Mac will approve the sale of the servicing rights associated with the Qualified Loans only if such servicing is sold (a) with respect to all Qualified Loans and (b) to one successor servicer reasonably acceptable to Farmer Mac that agrees, pursuant to a written agreement among the Seller, Farmer Mac and such successor servicer, to the obligations of the Seller set forth herein.

(c) Any sale or transfer of the Portfolio or the rights associated with the Portfolio will be subject to a transfer fee of 5 basis points (0.05%) per annum of the aggregate outstanding unpaid principal balance of the Qualified Loans in the Portfolio, to be payable out of the future cash flows on the Qualified Loans.

(d) Upon such transfer, the Seller shall have no further right to include additional Qualified Loans in the Portfolio.

Section 2.05 . Indemnification . The Seller shall indemnify and hold Farmer Mac harmless from and against any and all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation) (excluding any and all losses, claims, damages, liabilities and expenses related to any delinquency in payment for ninety (90) or more consecutive days or other material non-monetary default of a Qualified Loan , except to the extent such losses, claims, damages, liabilities or expenses are caused directly by Seller’s negligent servicing practices ) (collectively, “Losses”) to which Farmer Mac may become subject insofar as such Losses arise out of or are based upon (i) the Seller’s performance of its servicing obligations set forth in this Commitment with respect to the Qualified Loans in the Portfolio prior to sale of the Qualified Loans to Farmer Mac or (ii) a final adjudication of, including any settlement of, any outstanding litigation described in Exhibit C attached to this Commitment. This covenant to indemnify and hold harmless shall survive the sale of the Qualified Loans to Farmer Mac.

Section 2.06. Original Principal Balance . Notwithstanding any other provision of this Commitment, the Seller shall not deliver a Flex Qualified Loan to Farmer Mac for sale if the original principal balance of such Qualified Loan does not meet Farmer Mac’s maximum dollar purchase limitations, in effect as of the Delivery Date, for the purchase of similar Qualified Loans, determined in accordance with the Charter Act.

Section 2.07. Seller Status . The Seller shall deliver all applications, instruments and other documents reasonably requested by Farmer Mac to maintain its status as a Farmer Mac approved seller and servicer.

Section 2.08. Lien Status of Qualified Loans . The Seller represents and warrants that each loan listed as “secured” in a Qualified Loan Schedule signed by both parties is secured by a validly recorded, filed and perfected lien mortgage shared pari passu and pro rata by the lenders that are parties to the mortgage on the real property securing the Qualified Loan.

Section 2.09. Change in Risk Rating Methodology . The Seller shall deliver written notice to Farmer Mac within 30 days after the occurrence of any of the following material changes to the Seller’s Risk Rating Methodology: (1) any material change to the weighting of the risk rating criteria; and (2) any material change in the criteria in the risk rating.

ARTICLE III

COVENANTS OF FARMER MAC

Section 3.01. Commitment to Purchase Qualified Loans . Farmer Mac hereby covenants to purchase the Qualified Loans in the Portfolio in accordance with the provisions of this Commitment.

Section 3.02. Performance of Obligations . Farmer Mac hereby covenants to keep and perform faithfully all of the covenants and undertakings contained herein.

Section 3.03. Good Standing . Farmer Mac hereby covenants to maintain its current condition of good standing under all applicable laws and regulations and to commit no act that would alter the status of Farmer Mac as represented in Section 7.02 hereof.

ARTICLE IV

PRE-DELIVERY OBLIGATIONS OF THE SELLER

Section 4.01. Payment of Standby Purchase Commitment Fees . With respect to each Qualified Loan listed on a Qualified Loan Schedule signed by both parties, the Seller shall pay to Farmer Mac in immediately available funds, by 12:00 noon (eastern time), on the seventh Business Day of each month, an amount sufficient to pay the Standby Purchase Commitment Fee. If such funds are not received by Farmer Mac by 12:00 noon (eastern time) on such seventh Business Day, the Seller shall pay interest to Farmer Mac on such overdue amount at a rate equal to the federal funds rate. The Seller’s obligation to pay the Standby Purchase Commitment Fee shall begin in the month immediately following the Effective Date with respect to each Qualified Loan and end in the month immediately following the month in which the Commitment Term expires.

Section 4.02. Delivery of Qualified Loan Information . (a) Not later than the tenth day of the month following the date of execution of this Commitment, the Seller shall deliver to Farmer Mac the information required to complete a Qualified Loan Schedule for the Qualified Loans initially to be included in the Portfolio. Such Qualified Loans shall become part of the Portfolio as of the Effective Date upon receipt by Farmer Mac of such Qualified Loan Schedule signed by both Farmer Mac and the Seller. The information required for such Qualified Loan Schedule shall be delivered in an electronic format acceptable to Farmer Mac.

(b) The Seller may deliver to Farmer Mac information required to complete additional Qualified Loan Schedules for any additional Qualified Loans approved by Farmer Mac that the Seller wishes to add to the Portfolio. The Seller shall follow the same requirements for completion of the initial Qualified Loan Schedule. Such additional approved Qualified Loans shall become part of the Portfolio effective on the Effective Date indicated in the related Qualified Loan Schedule upon receipt by Farmer Mac of such Qualified Loan Schedule signed by both Farmer Mac and the Seller. The Standby Purchase Commitment Fee with respect to any such additional Qualified Loans shall be due and payable beginning in the month following the month in which the related Effective Date occurs.

(c) The Seller may deliver to Farmer Mac information required to complete additional Qualified Loan Schedules for any additional Qualified Loans Seller wishes to substitute for any existing Qualified Loan in the Portfolio. Such substitution shall be subject to (i) the substituting Qualified Loan shall have a Facility Rating at the time of substitution equal to or better than the Qualified Loan being substituted or (ii) Farmer Mac’s approval of the new Qualified Loan, which shall not be unreasonably withheld or delayed. The Seller shall follow the same requirements for completion of the initial Qualified Loan Schedule. Such substitute Qualified Loans shall become part of the Portfolio effective on the Effective Date indicated in the related Qualified Loan Schedule upon receipt by Farmer Mac of such Qualified Loan Schedule signed by both Farmer Mac and the Seller. The Standby Purchase Commitment Fee with respect to any such substitute Qualified Loans shall be due and payable beginning in the month following the month in which the related Effective Date occurs. The Seller may not otherwise remove a Qualified Loan from the Portfolio without the prior written consent of Farmer Mac; except , that , (I) if, in connection with the refinance of any Qualified Loan in the ordinary course of business, the Borrower elects to have the loan sold to Farmer Mac pursuant to the Servicing Agreement, such Qualified Loan shall be removed from the Portfolio following notice thereof from CFC to Farmer Mac and neither party shall have any obligation with respect thereto hereunder, or (II) if the Seller refinances, restructures or modifies any Qualified Loan without the written consent of Farmer Mac or in a manner that is not authorized under Section 5.01(d) of the Servicing Agreement (except as to subpart (ii) thereof with respect to interest rate conversions or repricings in the ordinary course of business, and subpart (vii) thereof) , such Qualified Loan shall be removed from the Portfolio and Farmer Mac shall not be obligated to purchase such restructured or modified Qualified Loan. Loan modifications include, but are not limited to, situations where the obligations related to a Qualified Loan are assumed by a new borrower or new guarantor through the acquisition of the original borrower’s or guarantor’s assets and liabilities, whether such acquisition is accomplished via purchase or some other form of corporate merger or consolidation.

(d) If the Seller renews a loan that was included in the Portfolio and has matured, such loan may become part of the Portfolio, without Farmer Mac’s prior review and approval, effective on the related Effective Date indicated on a Qualified Loan Schedule delivered by the Seller to Farmer Mac that contains the required information about the renewed loan; provided that the principal balance of the new loan does not exceed 100% of the unpaid principal balance of the Qualified Loan prior to maturity and renewal. A Qualified Loan may be renewed and added to the Portfolio under this subsection 4.02(d) up to a maximum of two times, after which any such renewed loan may only be added to the Portfolio upon Farmer Mac’s prior review and approval and signing of a Qualified Loan Schedule. With respect to each renewed loan added to the Portfolio pursuant to this subsection 4.02(d), the Seller and Farmer Mac agree that Farmer Mac shall have the right, at any time for a period of 12 months after a loan’s Effective Date, to review the loan files for and conduct due diligence on such loan to determine whether it is a Qualified Loan. If Farmer Mac determines, in its sole discretion, that any such loan was not a Qualified Loan at the time the loan was added to the Portfolio, the applicable Qualified Loan Schedule shall be revised to reflect that such loan is not in the Portfolio, and Farmer Mac shall have no obligation to purchase such loan from the Seller under this Commitment.

Section 4.03. Administration and Servicing of Qualified Loans . (a) The Seller will service the Qualified Loans in the Portfolio using commercially reasonable practices and in substantial compliance with the applicable servicing standards set forth in the sections of Sections 5.01(a) through (f) of the Servicing Agreement pertaining to the servicing of loans and administration of proceeds, except as modified by this Commitment. The Seller may conduct such servicing through the facilities of agents or independent contractors but shall not thereby be released from any of its duties or responsibilities hereunder.

(b) The Seller must maintain or provide for the maintenance of a Mortgage File for each Qualified Loan in the Portfolio. The Seller will provide for the physical segregation of any original Mortgage Notes relating to the Qualified Loans in the Portfolio and hold such Mortgage Notes in a secure environment in accordance with generally accepted industry standards for the custody of mortgage loan documentation. The Seller will maintain or provide for the maintenance of each Mortgage Note in a fire resistant vault, drawer or other suitable depository. The Seller is responsible for maintaining accurate accounting and borrower payment records.

(c) Upon reasonable notice and at any reasonable time during the Commitment Term and subject to applicable confidentiality requirements, Farmer Mac has the right to examine any and all books and records that pertain to the Qualified Loans, any and all accounting reports associated with the Qualified Loans and borrower remittances, and any other reports and documentation that Farmer Mac considers necessary to assure that (i) the Qualified Loans meet the terms and conditions set forth herein and (ii) the Seller is servicing the Qualified Loans in compliance with Sections 5.01(a) through (f) of the Servicing Agreement and this Commitment.

(d) The Seller shall service delinquent Qualified Loans using commercially reasonable practices in substantial compliance with Sections 5.01(a) through (f) of the Servicing Agreement, including timely initiation of loss mitigation efforts. However, the Seller must sell the delinquent Qualified Loan to Farmer Mac prior to completion of the foreclosure process (or other comparable conversion) in accordance with Section 5.01 hereof. If title to the underlying mortgaged property has transferred to the Seller and no right of rescission by the borrower exists, the related Qualified Loan is no longer eligible for sale to Farmer Mac and should be reported as a “payoff” in accordance with the requirements of Section 4.04.

(e) The Seller shall service all Qualified Loans, and all other loans to borrowers of Qualified Loans (“Related Loans”), in a manner that protects Farmer Mac’s financial interests. In that regard, without Farmer Mac’s prior concurrence, which concurrence shall not be unreasonably withheld, the Seller shall not, without limitation, apply funds received, take or defer taking any servicing action (including restructuring or reamortizing), or waive a substantive default with respect to any Related Loan if so doing materially increases the amount of Farmer Mac’s risk of or actual loss with respect to the relationship (i.e., the Qualified Loan plus all Related Loans).

(f) With respect to either Qualified Participation Interests or Qualified Loans that are part of a syndication, the Seller shall provide promptly upon receipt any notices, requests for consent, or other information received from the lead lending institution for such Qualified Participation Interest or Qualified Loan, or from any other participant or lending institutions in the syndicate, as applicable. To the extent that the Seller is the lead agent or lead lending institution in the participation arrangement or syndication, as applicable, the Seller shall provide any such notices, requests for consent, or other information to Farmer Mac concurrently with the remaining members of the participation or syndication.

Section 4.04. Reporting Requirements . Not later than the last Business Day of the month in which a Qualified Loan is added to the Portfolio, the Seller shall provide a Loan Setup File to Farmer Mac. Thereafter and until the Qualified Loan is sold to Farmer Mac or otherwise removed from the Portfolio, the Seller shall provide a Loan Activity Report to Farmer Mac not later than the seventh Business Day of each month. In addition, the Seller shall provide a Delinquency Report to Farmer Mac on or before the tenth day of each calendar month (or if such tenth day is not a Business Day, the next succeeding Business Day) to the extent that any of the Qualified Loans included in the Portfolio are delinquent.

ARTICLE V

DELIVERY OF AND PAYMENT FOR QUALIFIED LOANS

Section 5.01. Defaulted Qualified Loans . (a) Subject to the requirements set forth in this Commitment, the Seller may elect to sell to Farmer Mac, in exchange for cash, any Defaulted Qualified Loan. The election by Seller to sell to Farmer Mac any Defaulted Qualified Loan shall not trigger any obligation on the part of Seller to sell other Defaulted Qualified Loans that are under this Commitment. Notwithstanding the foregoing, prior to transfer of ownership of a mortgaged property from the borrower to the Seller as a result of loss mitigation efforts, a foreclosure proceeding or other comparable conversion, the Seller shall sell to Farmer Mac the related Defaulted Qualified Loan regardless of the amount of time such Qualified Loan has been delinquent.

(b) (I) The purchase price for any Defaulted Qualified Loan shall equal the unpaid principal balance of the Qualified Loan, as reported to Farmer Mac in accordance with Section 4.04, in the month in which the Seller elects to sell such Qualified Loan. The purchase price for a Defaulted Qualified Loan shall not include accrued or delinquent interest or foreclosure or related costs or expenses. Liquidation proceeds or other payments with respect to such Defaulted Qualified Loan shall be applied as follows:


(i)	To the Seller, unpaid interest accruing at the note rate on the Qualified Loan while held by the Seller, but not to exceed interest accruing through 6 months following the first delinquency.


(ii)	To the party making protective advances and paying liquidation expenses and REO expenses, reimbursement for such advances and expenses.


(iii)	To the servicer, unpaid servicing fees accrued during the period Farmer Mac owned the Defaulted Qualified Loan.


(iv)	To Farmer Mac, unpaid interest accruing at the note rate less the applicable servicing fee rate on the Qualified Loan from the date purchased by Farmer Mac until the date of liquidation.


(v)	To Farmer Mac, the outstanding principal amount of the Qualified Loan.


(vi)	To the Seller, unpaid interest accruing at the note rate on the Defaulted Qualified Loan from the date through which the Seller was paid for the interest by Farmer Mac until the date Farmer Mac purchased the Defaulted Qualified Loan.


(vii)	To the Seller, default interest accruing while the Seller held the Defaulted Qualified Loan.


(viii)	To Farmer Mac, the remainder, if any.

(II) The purchase price for any Defaulted Qualified Loan that is a Qualified Participation Interest shall equal the unpaid principal balance of the Qualified Participation Interest, as reported to Farmer Mac in accordance with Section 4.04, in the month in which the Seller elects to sell such Qualified Participation Interest. The purchase price for a Defaulted Qualified Loan that is a Qualified Participation Interest shall not include accrued or delinquent interest or foreclosure or related costs or expenses. Liquidation proceeds or other payments with respect to the pro rata portion of the loan underlying such Defaulted Qualified Loan that is a Qualified Participation Interest shall be applied as follows:


(i)	To the Seller, unpaid interest accruing at the note rate on the Qualified Participation Interest while it was held by the Seller, but not to exceed interest accruing through 6 months following the first delinquency on the loan.


(ii)	To the party making protective advances and paying liquidation expenses and REO expenses, reimbursement, on a pro rata basis, for such advances and expenses.


(iii)	To the applicable servicer, their pro rata portions of any unpaid servicing fees accrued on the underlying loan during the period Farmer Mac owned the Defaulted Qualified Loan that is a Qualified Participation Interest.


(iv)	To Farmer Mac, the unpaid interest accruing at the note rate less the applicable servicing fee rate on the Qualified Participation Interest from the date purchased by Farmer Mac until the date of liquidation.


(v)	To Farmer Mac, the outstanding principal amount of the Qualified Participation Interest.


(vi)	To the Seller, unpaid interest accruing at the note rate on the Qualified Participation Interest from the date through which the Seller was paid for the interest by Farmer Mac until the date Farmer Mac purchased the Qualified Participation Interest.


(vii)	To the Seller, default interest on a pro rata basis accruing on the underlying loan prior to Farmer Mac’s purchase of the Defaulted Qualified Loan that is a Qualified Participation Interest.


(viii)	To Farmer Mac, the remainder, if any.

The purchase proceeds, as well as any reimbursement of a portion of the Standby Purchase Commitment Fee, as described in Section 5.04, will be disbursed by wire transfer to the Seller on the first Business Day of the month following Farmer Mac’s confirmation of receipt of a completed Purchase Request and Certification as described in subsection (c) below. The parties acknowledge and agree that so long as the Seller is servicer of the Qualified Loan and to the extent any funds in the Collection Account (as defined in the Servicing Agreement) are allocable to Seller’s pro rata portion of the Qualified Loan, Seller shall be entitled at any time to withdraw such funds, as such funds are not required to be deposited in such Collection Account.

(c) No later than the seventh Business Day of any month in which the Seller elects to sell Defaulted Qualified Loans to Farmer Mac, the Seller will do the following:

(i) deliver a Purchase Request and Certification electronically and in hard copy, in the form of Exhibit B attached hereto, listing the Farmer Mac loan number and unpaid principal balance of the Qualified Loans that have become Defaulted Qualified Loans that the Seller wishes to sell to Farmer Mac either as whole loans or participation interests. The Purchase Request and Certification shall be delivered to Farmer Mac via facsimile transmission (number 202-872-7713).

(ii) prepare and deliver the Mortgage File, as well as original executed versions of each Mortgage Note in the Mortgage File, to Farmer Mac. Only Farmer Mac’s loan records as reflective of the reports submitted by the Seller under Section 4.04 hereof shall determine the proceeds that the Seller is entitled to receive for Farmer Mac’s purchase of Defaulted Qualified Loans.

(d) As of its Delivery Date, a Defaulted Qualified Loan sold to Farmer Mac (or as to which a participation interest is sold to Farmer Mac) shall no longer be subject to the terms of this Commitment and shall be serviced by the Seller in accordance with the standard servicing terms of Article V of the Servicing Agreement. It is the express and specific intent of the parties hereto that the sale of a Defaulted Qualified Loan sold to Farmer Mac (or as to which a participation interest is sold to Farmer Mac) as provided herein is and shall be construed for all purposes as a true and absolute sale of such loan, and shall provide Farmer Mac with the full benefits of ownership of such loan.

(e) The Seller and Farmer Mac agree that, if a Defaulted Qualified Loan sold to Farmer Mac subsequently becomes current in payments under its original terms without being restructured, Farmer Mac may, in its sole discretion, sell such Qualified Loan, provided, however, the Seller shall have a right to first refusal to purchase such Qualified Loan for a price equal to the unpaid principal balance plus any accrued interest on such Qualified Loan. In the event of such re-purchase by Seller, such Qualified Loan will thereafter be listed on the applicable Qualified Loan Schedule and be a part of the Portfolio subject to this Commitment.

(f) If the Qualified Loan Schedule indicates that the related pool of Qualified Loans is subject to Reserve Payments by specifying a Reserve Amount Total Limit, then no later than the fifth Business Day following the date that a Defaulted Qualified Loan sold to Farmer Mac becomes a Liquidated Qualified Loan, Seller will pay to Farmer Mac any related Reserve Payment.

Section 5.02. Flex Qualified Loans . (a) Subject to the requirements set forth in this Commitment, the Seller may elect to sell to Farmer Mac, from time to time, at any time during the Commitment Term, in exchange for cash, some or all Flex Qualified Loans, subject to Farmer Mac’s then-current requirements for its Cash Window Program for cash purchases, and any other terms mutually agreed between the parties at the time of sale. Flex Qualified Loans sold to Farmer Mac for cash pursuant to the terms of this section shall be sold at the price agreed by Farmer Mac and the Seller at the time of sale based on Farmer Mac’s then-required net yield for cash window purchases of the same product type as such Qualified Loans.

(b) Prior to the removal of a Flex Qualified Loan from the Portfolio, the Seller will contact Farmer Mac to enter into a mandatory commitment to sell such Flex Qualified Loan to Farmer Mac in accordance with the procedures set forth for selling loans in the Servicing Agreement. In the month in which the Seller elects to sell Flex Qualified Loans to Farmer Mac, the Seller will report, in accordance with the loan level reporting requirements set forth in Section 4.04, the removal of the Qualified Loan from this Commitment by reporting a zero unpaid principal balance.

(c) The Seller shall sell Flex Qualified Loans pursuant to subparagraph (a) in the month in which the Qualified Loan is removed from this Commitment.

(d) No later than the last Business Day of the month of the sale to Farmer Mac of Flex Qualified Loans, the Seller shall supply to Farmer Mac a Loan Setup File including each such Flex Qualified Loan.

(e) As of its Delivery Date, a Flex Qualified Loan sold to Farmer Mac (or as to which a participation is sold to Farmer Mac) shall no longer be subject to the terms of this Commitment and shall be serviced by the Seller in accordance with the standard servicing provisions of Article V of the Servicing Agreement.

Section 5.03. [RESERVED].

Section 5.04. Mandatory Flex Participation Interests . (a) Upon election by the Seller to deliver a Flex Qualified Loan to Farmer Mac pursuant of this Commitment, Farmer Mac shall be entitled to perform such due diligence as to allow it to determine the value of the related mortgaged property at the time of purchase by Farmer Mac. In the event that (i) Farmer Mac determines that the outstanding principal balance of such Qualified Loan exceeds the maximum loan-to-value ratio for eligibility for the appropriate Farmer Mac program at the time of purchase by Farmer Mac and (ii) if applicable, such Qualified Loan is not insured or guaranteed by a qualified mortgage insurer approved by Farmer Mac, Farmer Mac shall so notify the Seller and shall purchase only a pro rata participation interest in such Qualified Loan. Such pro rata participation interest shall be calculated to result in the loan-to-value ratio (based on an appraisal) of Farmer Mac’s participation interest being equal to the maximum loan-to-value ratio for eligibility for the appropriate Farmer Mac loan product.

(b) In the event that Farmer Mac accepts delivery of only a participation interest in a Qualified Loan as described in paragraph (a) above, Farmer Mac shall reimburse the Seller for a portion of the Standby Purchase Commitment Fee collected with respect to such Qualified Loan. The amount of reimbursement due to the Seller as described in the preceding sentence shall be the difference between (A) the amount of Commitment Fee collected over the preceding twelve (12) months and (B)(I) the amount in the preceding clause (A) times (II) the pro-rata percentage of the participation interest purchased by Farmer Mac relative to the outstanding balance of the Qualified Loan at the time of Farmer Mac’s purchase of such participation interest.

Section 5.05. Custodian . (a) For any Qualified Loan purchased by Farmer Mac under Article V hereof and unless Farmer Mac has directed otherwise, Seller shall act as custodian for the Mortgage File for such Qualified Loan. The Participation Custodian shall manage all aspects of the custodial process for the Mortgage File, including:

(i) Maintaining the Mortgage File separate from all other loan files owned or serviced by the Seller, and maintaining books and records for each Qualified Loan serviced by it which shall be clearly marked in its loan servicing system to reflect the sale of the Qualified Loan and the ownership of each Qualified Loan by Farmer Mac;

(ii) Maintaining the Mortgage File in a secure location, in accordance with the Seller’s customary business practices; and

(iii) Generating custodian reports or performing other custodial duties as may reasonably be requested by Farmer Mac.

(b) Seller shall hold Farmer Mac and its officers and employees harmless from any liability, loss, or damage in connection with the loss, theft, or destruction of any Mortgage Files while such Mortgage Files are in the possession, custody or control of the Seller pursuant to this Section 5.05.

(c) If Farmer Mac has notified the Seller that an entity other than the Seller shall serve as custodian of the Mortgage File for such Qualified Loan in accordance with this Section 5.05, the Seller agrees to cooperate with Farmer Mac and the designated custodian to transfer the Mortgage File and all of its contents and take such other commercially reasonable action that Farmer Mac determines in its sole discretion is necessary or appropriate to transfer custody of the Mortgage File to the designated custodian.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller represents and warrants that:

Section 6.01. Seller’s Status . As of the date of this Commitment and each Effective Date:

(a) Each loan listed in a Qualified Loan Schedule is a Qualified Loan.

(b) The Seller is a cooperative association duly organized, validly existing and in good standing under the laws governing its creation and existence and with the requisite power and authority to conduct its business as it is currently being conducted; the Seller holds all licenses, certificates and permits necessary for the conduct of its business as it is currently being conducted and is or will be in compliance with the laws of each state in which any real property securing any Mortgage is located to the extent necessary to ensure the enforceability of each Qualified Loan.

(c) The Seller has the requisite power and authority to execute and deliver this Commitment, to service and administer all the Qualified Loans identified on each Qualified Loan Schedule in accordance with the terms of this Commitment, and to take all other actions and execute and deliver all other documents which are requisite or pertinent to the transactions described in this Commitment. The persons signing such documents and taking such actions on its behalf have been duly authorized to do so and such documents and actions are valid, legally binding and enforceable against the Seller in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights and to general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

(d) The Seller is not required to obtain the consent of any other Person or any consents, licenses, approvals or authorizations from, or registrations or declarations with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Commitment, except for such consents, licenses, approvals or authorizations, or registrations or declarations, as shall have been obtained or filed, as the case may be.

(e) No action, suit or proceeding is pending or, to the best of the Seller’s knowledge, threatened against it that would prohibit it from entering into this Commitment or performing its obligations hereunder or, in the reasonable opinion of the Seller has a reasonable likelihood of resulting in a material adverse effect on the transactions contemplated hereby.

(f) The Seller is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or governmental agency, which default would reasonably be expected to have consequences that would materially and adversely affect the condition (financial or otherwise) or operations of the Seller or its respective properties or would reasonably be expected to have consequences that would materially adversely affect the performance of the Seller hereunder.

(g) The execution and delivery of this Commitment by the Seller and the performance and compliance with the terms of this Commitment by the Seller will not violate the Articles of Incorporation or Bylaws of the Seller, or constitute a material default (or an event which, with notice or lapse of time, or both, would constitute a material default) under, or result in the material breach of, any material contract, agreement or other instrument to which the Seller is a party or which may be applicable to the Seller, or any of its assets.

(h) No Event Default under Section 8.01 below has occurred and is continuing and no event or circumstance has occurred or exists which, with notice or lapse of time or both, would constitute an Event Default under Section 8.01 below.

Section 6.02. Showings . The Seller has delivered to Farmer Mac on or prior to the date of execution of this Commitment an officer’s certificate substantially in the form set forth in Exhibit A .

Section 6.03. Fraudulent Conveyance . The performance of the Seller’s obligations under this Commitment does not constitute a fraudulent conveyance within the meaning of any bankruptcy, insolvency, reorganization, moratorium or other similar law affecting the rights of creditors.

Section 6.04. Portfolio Requirements . As of the Effective Date with respect to a Qualified Loan, such Qualified Loan has not been purchased or securitized by Farmer Mac, paid in full (through scheduled payments, prepayments or otherwise) or otherwise removed from the Portfolio under the terms and conditions set forth in this Commitment.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES OF FARMER MAC

Farmer Mac represents and warrants that:

Section 7.01. Consents and Approvals . No consents or approvals of any Person are or will be required which have not or will not have been obtained for the execution and delivery of this Commitment or the performance of any obligations hereunder.

Section 7.02. Corporate Existence and Power . Farmer Mac is an instrumentality of the United States, created and existing under the laws of the United States, duly organized, validly existing and in good standing under the laws governing its creation and existence, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and to enter into this Commitment.

Section 7.03. Authorization and Non-contravention . The execution, delivery and performance by Farmer Mac of this Commitment are within Farmer Mac’s corporate power and have been duly authorized by all necessary corporate action on the part of Farmer Mac (no action by its shareholders being required) and will not: (i) violate or contravene any law, regulation, judgment, injunction, order, decree or other instrument currently binding on Farmer Mac; or (ii) violate, contravene or constitute a default under any provision of the Charter Act or of any agreement, contract, mortgage or other instrument currently binding on Farmer Mac.

Section 7.04. Binding Effect . This Commitment constitutes a valid and legally binding agreement of Farmer Mac enforceable against Farmer Mac in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting creditors’ rights generally.

Section 7.05. Governmental Consents . No consent, approval, authorization or order of any Governmental Body is required, and no filing need be made with any Governmental Body, in connection with the execution, delivery and performance by Farmer Mac of this Commitment or the consummation by Farmer Mac of the transactions contemplated hereby.

Section 7.06. Compliance with Laws . Farmer Mac is not in violation of any statute, rule or regulation of any Governmental Body or any order of any court or arbitrator, the violation of which, considered in the aggregate, could materially adversely affect the business, operations or properties of Farmer Mac.

Section 7.07. Litigation . There are no actions, suits, or proceedings pending or, to the best knowledge of Farmer Mac, threatened, or any judgment or order entered against Farmer Mac or its assets in any court or before any Federal, state, municipal or other governmental department or commission, board, bureau, agency or instrumentality which is likely to be adversely determined and which if adversely determined will materially, adversely affect its business or financial condition or the validity and enforceability of this Commitment or its ability to perform in accordance with this Commitment.

ARTICLE VIII

EVENTS OF DEFAULT

Section 8.01. Seller Events of Default . Any one or more of the following acts or occurrences by the Seller shall constitute an Event of Default under this Commitment:

(a) failure by the Seller to pay the Standby Purchase Commitment Fee or any Reserve Payment, if applicable, in accordance with the terms of this Commitment; or

(b) failure by the Seller to observe or perform any covenant or agreement contained in Section 2.06 herein; or

(c) failure by the Seller to observe or perform any other covenants or agreements set forth in this Commitment or in the Servicing Agreement which continues unremedied for a period of thirty (30) days after the Seller first acquires knowledge or receives notice thereof; or

(d) any covenant, representation, warranty or statement made by the Seller herein or in any certificate delivered in connection herewith shall prove to have been incorrect in any material respect when made; provided that if the incorrect matter as to which such representation or warranty relates is capable of being cured, it shall not constitute an Event of Default hereunder unless the Seller fails to correct such matter within thirty (30) days after the Seller shall first acquire knowledge or receive notice thereof; or

(e) a decree or order of a court or agency or supervisory authority having jurisdiction on the premises for the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against the Seller; or

(f) the Seller consents to the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings relating to the Seller or all or substantially all of its property; or

(g) the Seller admits in writing its inability to pay its debts generally as they become due, files a petition to invoke any applicable insolvency or reorganization statute, makes an assignment for the benefit of its creditors, or voluntarily suspends payment of its obligations.

Section 8.02. Farmer Mac Events of Default . Any one or more of the following acts or occurrences by Farmer Mac shall constitute an Event of Default under this Commitment:

(a) failure to purchase an eligible Qualified Loan or a Qualified Participation Interest pursuant to the terms of this Commitment or reimburse a portion of the Standby Purchase Commitment Fee pursuant to Section 5.04(b); or

(b) failure by Farmer Mac to observe or perform any other covenants or agreements set forth in this Commitment which continues unremedied for a period of thirty (30) days after Farmer Mac first acquires knowledge or receives notice thereof; or

(c) any covenant, representation, warranty or statement made by Farmer Mac herein shall prove to have been incorrect in any material respect when made; or

(d) a decree or order of a court or agency or supervisory authority having jurisdiction on the premises for the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against Farmer Mac; or

(e) Farmer Mac consents to the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings relating to Farmer Mac or all or substantially all of its property; or

(f) Farmer Mac admits in writing its inability to pay its debts generally as they become due, files a petition to invoke any applicable insolvency or reorganization statute, makes an assignment for the benefit of its creditors, or voluntarily suspends payment of its obligations.

ARTICLE IX

REMEDIES

Section 9.01. Remedies of Farmer Mac . Upon the occurrence of any Event of Default by the Seller hereunder, unless such Event of Default has been cured, Farmer Mac may, at its option:

(a) terminate this Commitment and refuse to accept delivery of additional Defaulted Qualified Loans for purchase hereunder; and/or

(b) solely for any Event of Default related to Section 6.01(a) hereunder, direct the Seller to repurchase the affected Qualified Loan sold to Farmer Mac by remitting the Repurchase Price to an account designated by Farmer Mac.

Notwithstanding the foregoing, the parties agree and acknowledge that Farmer Mac is entitled to seek any and all legal and/or equitable remedies that may be available to Farmer Mac under applicable law for any Seller Event of Default.

Section 9.02. Remedies of Seller . Upon the occurrence of any Event of Default by Farmer Mac hereunder, the Seller may, at its option, terminate this Commitment; provided however, that:

(a) Upon an Event of Default under Section 8.02(b), (c) or, in the case of the appointment of a conservator only, (d), the Seller may terminate this Commitment only if such Event of Default remains uncured for a period of 30 days following written notice to Farmer Mac by the Seller.

(b) Upon an Event of Default under 8.02(a), the Seller may: (i) elect to require that the purchase price be paid by the issuance of an MBS backed by such Qualified Loan or (ii) terminate this Commitment only if such Event of Default remains uncured for a period of 30 days following written notice to Farmer Mac by the Seller.

Section 9.03. Remedies Not Exclusive . Unless otherwise expressly provided, no remedy conferred herein or reserved to any party is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity; provided, however, that in no event shall either party have any liability to the other party with respect to consequential damages.

Section 9.04. Delay or Omission Not Waiver . No delay or omission of either party to exercise any right or remedy provided hereunder upon an Event of Default (except a delay or omission pursuant to a written waiver) shall impair any such right or remedy or constitute a waiver of any such Event of Default or acquiescence therein. Every right and remedy given by this Article IX or by law to either party may be exercised from time to time, and as often as may be deemed expedient by either party. In order to entitle either party to exercise any remedy reserved to such party in this Article IX, it shall not be necessary to give any notice unless otherwise provided in Sections 9.01 or 9.02.

ARTICLE X

MISCELLANEOUS

Section 10.01. Termination Event; Removal of Qualified Loans from Portfolio .

(a) Farmer Mac and the Seller each must give the other party written notice of the occurrence of a Termination Event. In the case of a Termination Event, such notice shall be accompanied by an opinion of counsel or an opinion of an independent accounting firm, if applicable, supporting the conclusion that a Termination Event has occurred. Upon the declaration of the occurrence of a Termination Event, this Commitment shall terminate only in respect to the Qualified Loans affected by the Termination Event and be of no further force or effect.

(b) If the Qualified Loan Schedule specifies an Optional Removal Trigger for the related pool of Qualified Loans, then notwithstanding the provisions of Section 4.02(c), the Seller may remove all (but not part) of a pool of Qualified Loans identified on a Qualified Loan Schedule from the Portfolio without the prior written consent of Farmer Mac to the extent that the aggregate unpaid principal balance of the Qualified Loans remaining in the applicable pool is less than or equal to the Optional Removal Trigger. Seller shall provide Farmer Mac with not fewer than thirty (30) days written notice of its intent to remove a pool of Qualified Loans from the Portfolio pursuant to this Section 10.01(b). Upon removal of any pool of Qualified Loans from the Portfolio, Farmer Mac shall not be obligated to purchase any Qualified Loan contained in such pool in the future under the terms of this Commitment.

Section 10.02. Accounting/Capital Treatment . Neither Farmer Mac nor any of the directors, officers, employees or agents of Farmer Mac shall be under any liability for the accuracy, legality or soundness of the Seller’s intended accounting or capital treatment of the transaction contemplated by this Commitment or for the Seller’s interpretation of any accounting rules relating to its intended accounting or capital treatment of this transaction.

Section 10.03. Servicing . In connection with the servicing of the Qualified Loans in the Portfolio, although the Seller agrees to comply (or cause its subservicer to comply) in all material respects with the applicable servicing standards set forth in the Servicing Agreement, the parties agree that the Seller is not servicing the Portfolio for Farmer Mac until the Qualified Loans are removed from the Portfolio and sold to Farmer Mac.

Section 10.04. Reserved .

Section 10.05. Benefit of Commitment . Any reference to any of the parties to this Commitment shall be deemed to include the successors and assigns of such party. All covenants and agreements herein contained are for the benefit of the parties hereto only, and nothing expressed or implied herein is intended to be for the benefit of any other Person.

Section 10.06. Amendments and Waivers . No term, covenants, agreement or condition of this Commitment may be amended, nor any compliance therewith waived (either generally or in a particular instance and either retrospectively or prospectively) except by an instrument in writing duly executed and delivered by the parties hereto.

Section 10.07. Notices . All notices and communications provided for hereunder shall be in writing and shall be delivered by legible telecopy (receipt confirmed by telephone) or by a means that guarantees over-night delivery. All notices and communications shall be addressed as follows.

If to the Seller:

National Rural Utilities Cooperative Finance Corporation

20701 Cooperative Way

Dulles, VA 20166

Telephone: 703-467-7402

Facsimile: 703-467-5178

Attn: Andrew Don, Senior Vice President

& Chief Financial Officer

With a copy to:

National Rural Utilities Cooperative Finance Corporation

20701 Cooperative Way

Dulles, VA 20166

Telephone: 703-467-1872

Facsimile: 703-467-5651

Attn: Roberta B. Aronson, Esq., Senior Vice President

& General Counsel

If to Farmer Mac:

Farmer Mac

Attention: General Counsel

1999 K Street, N.W.

4 ^th Floor

Washington, DC 20006

Facsimile: (202) 872-7713

Section 10.08. Attorneys’ Fees . If a legal action is commenced in connection with any dispute under this Commitment, the prevailing party shall be entitled to reasonable attorney fees, costs, and necessary disbursements incurred in connection with the related action as determined by the court.

Section 10.09. Severability . If any provision of this Commitment shall be invalid, illegal or unenforceable, such provision shall be severable from the remaining provisions of this Commitment, and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 10.10. Multiple Counterparts . This Commitment may be simultaneously executed in multiple counterparts, all of which shall constitute one and the same instrument and each of which shall be, and shall be deemed to be, an original.

Section 10.11. Governing Law . The terms of this Commitment shall be construed and interpreted in accordance with federal law. To the extent federal law incorporates state law, that state law shall be the laws of the District of Columbia, without regard to the conflicts of laws provisions thereof.

Section 10.12. Termination . This Commitment shall terminate on the earlier of (a) the last day of the Commitment Term, (b) the date upon which the actions required upon the occurrence of a Termination Event, as set forth in Section 10.01, have been fulfilled by the Seller or Farmer Mac, as applicable, (c) at Farmer Mac’s or the Seller’s option, as applicable, the date upon which an Event of Default has occurred with respect to the other party, and (d) the date specified in a notice of termination delivered by Seller, at Seller’s discretion, provided such notice is delivered at least two (2) years after the Effective Date of this Commitment and provides at least six (6) months prior notice of such termination.

Section 10.13. Time is of the Essence . Time is of the essence for all of the terms and provisions of this Commitment.

[Remainder of Page Intentionally Blank – Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have caused this Commitment to be duly executed by their duly authorized officers or representatives as of the date above first written.

FEDERAL AGRICULTURAL MORTGAGE CORPORATION

By: /s/ R. Dale Lynch

Name: R. Dale Lynch

Title: CFO, EVP

NATIONAL RURAL UTILITIES COOPERATIVE

FINANCE CORPORATION

By: /s/ J. Andrew Don

Name: J. Andrew Don

Title: Senior Vice President and Chief Financial Officer

EXHIBIT A

OFFICER’S CERTIFICATE

_______________________________ (the “Seller”)

[Institution’s Name]

I, ________________, a duly appointed or elected officer of the Seller hereby certify as follows:


1.	The Seller has the requisite authority under its articles of incorporation and by-laws (or similar organizational documents) to enter into and perform under the Long Term Standby Commitment to Purchase (the “Commitment”) between the Seller and the Federal Agricultural Mortgage Corporation.


2.	The Seller has taken such action, including the adoption of resolutions if necessary, to authorize the Seller’s entry into and performance under the Commitment.


3.	The person or persons who signed the Commitment on behalf of the Seller are authorized to execute and deliver the Commitment on behalf of the Seller.

IN WITNESS WHEREOF, I have signed this Officer’s Certificate this ______ day of _________, in the year ___________.

By:__________________________________
Name:
Title:

EXHIBIT B

PURCHASE REQUEST AND CERTIFICATION


TO:	[ ]

Farmer Mac

1133 21 ^st Street, N.W.

Suite 600

Washington, D.C. 20036


DATE:	_________ [No later than the 7 ^th business day of the month]

SELLER PURCHASE REQUEST AND CERTIFICATION

Farmer Mac Seller ID:

The following Qualified Loans have become Defaulted Qualified Loans pursuant to the Long-Term Standby Commitment to Purchase entered into between Farmer Mac and [NAME OF SELLER] (the “Seller”) as of [DATE] (the “Commitment”). Accordingly, the Seller certifies that (i) all the information contained in the Qualified Loan Schedule submitted to the Custodian is correct and (ii) upon payment of the purchase price, the Seller will transfer an undivided interest in such Qualified Loans or Qualified Participation Interests to Farmer Mac. Capitalized terms used but not defined herein shall have the meanings set forth in the Commitment.

Farmer Mac Loan # Current whole loan UPB Participation Interest and %

________________________

[NAME]

By:

[Authorized Officer]

Contact Person:

Name:

Phone #:

Address:

EXHIBIT C

PENDING LITIGATION SCHEDULE

Except as disclosed in the Seller’s Form 10-K filed with the U.S. Securities and Exchange Commission on August 26, 2015, none.

EXHIBIT D

Qualified Loan Schedule: [Name of Seller and Related Pool Identifier] Effective Date: [Fill in date]

Loan Advance Interest Effective Date FAMC Commitment Maturity Payment

Loan Number Borrower Name Date Rate Type Balance Participation Fee Rate Date Frequency

Total Number of Loans: [_____] Weighted Average Commitment Fee: [_______]% Total Scheduled Balance of Loans: $[________]

The loans listed in this Qualified Loan Schedule (“QLS”) have been included in the Seller’s Portfolio under the Long Term Standby Commitment to Purchase Agreement between Farmer Mac and the Seller (the “Commitment”) based on information provided to Farmer Mac by the Seller. Seller acknowledges that the due diligence procedures Farmer Mac performs prior to signing a QLS vary depending on the characteristics of the loans nominated by the Seller for inclusion in the Portfolio and do not necessarily include a review of loan files by Farmer Mac for conformity with Farmer Mac’s requirements. The Seller further acknowledges that it remains fully obligated under its representations and warranties with respect to each of the loans listed on this QLS, as set forth in Section 6.01 of the Commitment, and subject to the remedies for any breach of those representations and warranties.

The Seller acknowledges that payment of the Standby Purchase Commitment Fee and submission of the monthly loan activity report are due on or before the 7th Business Day of each month, beginning the month after the month of the Effective Date. Failure to pay the Standby Purchase Commitment Fee in accordance with the terms of the Commitment requires interest to be paid on any overdue amount and constitutes an Event of default for which Farmer Mac may terminate the Commitment. The Seller certifies that the information contained in this Qualified Loan Schedule is accurate.

Optional Removal Trigger Percentage:______ (if none specified, then 0%)

Reserve Amount Total Limit:_______ (if none specified, then 0%)

[ Name of Seller]

Signature:

Name:

Title:

Federal Agricultural Mortgage Corporation

Signature:

Name:

Title:

QUALIFIED LOAN SCHEDULE

EXHIBIT E

FILE SPECIFICATIONS FOR LOAN SETUP FILE



LONG TERM STANDBY COMMITMENT, BASIC SETUP FILE

Field Number	Field Name	Format Example	Description
1	Coop ID	DC001	Alphanumeric RUS Cooperative ID
2	Coop Name	FMAC Example Coop	Name of Cooperative
3	Loan Numbers	DC00190000001	Alphanumeric loan identification number (specified by counterparty)
4	Facility Type	PC	Type of Loan Program (PC = Standby; LUM = Loan Purchase)
5	Unpaid Principal Balance	2093377.20	Outstanding balance of loan at the time of submissions (just the portion participated to Farmer Mac)
6	Pool Effective Date	8/1/2015	Effective date of the purchase commitment
7	Maturity Date	8/1/2025	Date the loan matures
8	Amortization End Date	8/1/2030	Final amortization end date (must be equal to or greater than maturity)
9	Amortization Basis	Level Debt	Type of amortization (Level Debt, Interest Only, Level Principal, Custom)
10	Payment Frequency	6	Number of months between interest and principal payments (Annual=12, Semi-annual=6, Quarterly=3, Monthly=1)
11	Interest Rate Term	1.00	Years interest rate is fixed
12	Remaining Loan Term	10.00	Years remaining until last payment
13	Interest Rate Set Date	9/1/2014	Date the interest rate was last set
14	Annual Commitment Fee Rate	.0020	Annualized fee paid to Farmer Mac to commit to purchase loan
15	Current Note Rate	.0400000	The note rate at the time of submission
16	Loan Advance Date	8/1/2013	Date the loan was originally settled or originated
17	Interest Payment Type	LTF	Type of interest rate product (LTV or variable and LTF or fixed)
18	Day Count Convention	30/360	Loan accounting day count convention (30/360, ACT/360, 30/365, ACT/365, ACT/ACT)
19	Next Repricing Date	9/1/2016	Next date on which the loan will change its rate (Adjustable only)
20	Reset Margin	.0250000	Amount of margin added to index value at the time of reset (Adjustable only)
21	Rate Reset Index	1ML	Index to which the loan's rate will change (Adjustable only; "Internal" if internal, non-published index)
22	Loan Participation	0	Farmer Mac is participating only on a portion of the note (boolean; 0 = no and 1 = yes)
23	Percent Participation	.50	Percentage of total loan that Farmer Mac is a participant

EXHIBIT F

FILE SPECIFICATIONS FOR LOAN ACTIVITY REPORT



LTSPC & Security, Periodic File
Field Number	Field Name	Type	Max Length	Format Example	Description/ Comments
1	Coop ID	AN	50	DC001	Alphanumeric RUS Cooperative ID
2	Loan Number	AN	50	DC00190000001	Alphanumeric loan identification number (specified by counterparty)
3	Prior Month Balance	Numeric	32	1000000	Balance of the loan or participation amount at the beginning of the period before any payments applied (i.e., first of month)
4	Ending Period Balance	Numeric	32	1000000	Balance of the loan or participation amount at the end of the period after any payments applied (i.e., end of month)
5	Current Note Rate	Numeric	32	.0360000	Current effective interest rate of note at the beginning of the period
6	Accrued Interest	Numeric	32	3000	Amount of accrued interest during the monthly period
7	Delinquency Code	Numeric	2	1	Loan past due indicator at end of period
8	Periodic Report Date	Date	10	8/1/2015	Date of the reporting period (always first of month)
9	Commitment Fee	Numeric	32	8/1/2030	Amount of commitment fee paid to Farmer Mac for month (on a 30/360 basis: beginning balance * fee rate / 12)
10	Action Code	Numeric	3	50	Code corresponding to servicing actions or payoffs
11	Last Payment Effective Date	Date	10	7/31/2015	Date the loan last paid principal and/or interest (used to evaluate days past due)



LEGEND ONE: ACTION CODE		LEGEND TWO: DELINQUENCY CODE
0	No Action Code	1	Current
10	Delinquent Loan Purchase by Farmer Mac	2	30-59 Days Delinquent
20	Loan Paid Off	3	60-89 Days Delinquent
30	Removed Loan from LTSC (with consent from FAMC)	4	90+ Days Delinquent
40	Modified LTSC Loan (Seller will add Loan to Setup File)	5	Foreclosure
50	New Loan Added to LTSC (Seller will add to Setup File)	6	Bankruptcy
60	Repriced LTSC Loan (Loan Number Updated)	7	REO
		8	Ready to purchase

EXHIBIT G

FILE SPECIFICATIONS FOR DELINQUENCY REPORT



DISTRESSED LOAN REPORTING - ALL PRODUCTS
Field Number	Field Name	Type	Max Length	Format Example	Description/ Comments
GENERAL DELINQUENCY SECTION
1	Loan Number	AN	50	123456	Unique Loan number assigned by Farmer Mac
2	Report Date	Date	19	MM/DD/YYYY	Delinquency Reporting Date
3	Borrower Last Name	AN	50	Text	Last Name\ Entity Name of First Borrower Listed on Related Borrower Setup File
4	Payment Due Date	Date	19	MM/DD/YYYY	Date the Original Delinquent Payment was Due
5	Delinquency Status Code	Numeric	11	300	Legend One ^*
6	Delinquency Reason Code	Numeric	11	300	Legend Two ^*
9	Servicer Comments	Memo	512	Text	Completed by Central Servicer

APPENDIX A



LEGEND ONE:
Code	Delinquency Status	Delinquency Reason Description
1	Pending Action	Delinquency is being resolved by servicer, but no formal action has been taken.
2	Foreclosure	The servicer has referred the case to an attorney to take legal action to acquire the property through a foreclosure sale.
3	Chapter 7 Bankruptcy	The mortgagor(s) has filed for bankruptcy under Chapter 7 of the Federal Bankruptcy Act.
4	Chapter 11 Bankruptcy	The mortgagor(s) has filed for bankruptcy under Chapter 11 of the Federal Bankruptcy Act.
5	Chapter 12 Bankruptcy	The mortgagor(s) has filed for bankruptcy under Chapter 12 of the Federal Bankruptcy Act.
6	Chapter 13 Bankruptcy	The mortgagor(s) has filed for bankruptcy under Chapter 13 of the Federal Bankruptcy Act.
7	Forbearance	The servicer has authorized a temporary suspension of payments or a repayment plan that calls for periodic payments of less than the scheduled payment, periodic payments at different intervals, etc. to give the mortgagor(s) additional time and a means for bringing the mortgage current by repaying all delinquent installments.
8	Preforeclosure Sale	The mortgagor(s) plans to pursue a preforeclosure sale (a payoff of less than the full amount of our indebtedness) to avoid the expenses of foreclosure proceedings.
9	Drug Seizure	The Department of Justice has decided to seize (or has seized) a property under the forfeiture provision of the Controlled Substances Act.
10	Refinance	The servicer is pursuing a modification arrangement whereby the existing first mortgage is refinanced (paid off) with the proceeds of the new mortgage arranged by us.
11	Assumption	The servicer is working with the mortgagor(s) to sell the property by permitting the purchaser to pay the delinquent installments and assume the outstanding debt in order to avoid a foreclosure.
12	Modification	The servicer is working with the mortgagor(s) to renegotiate the terms of the mortgage in order to avoid foreclosure.
13	Charge-Off	The Servicer is determining whether it is in our best interests to pursue collection efforts or legal actions against the mortgagor(s) (because of a reduced value for the property, a low outstanding mortgage balance, or the presence of certain environmental hazards on the property).
14	Third-Party Sale	We authorized a foreclosure bid equal to the “fair market value” of a property (instead of the “total indebtedness”) in order to encourage third party bidding at the foreclosure sale.
15	Probate	The servicer is waiting to pursue (or complete) foreclosure action because proceedings required to verify a deceased mortgagor’s will are in process.
16	Deed-in-Lieu	We authorized the servicer to accept a voluntary conveyance of the property instead of initiating foreclosure proceedings.
17	Assignment	Use this code to indicate that a mortgage is in the process of being assigned to the insurer or guarantor.
18	REO	Use this action code for REO

LEGEND TWO:
Code	Delinquency Reason	Delinquency Reason Description
1	Curtailment of Income	The delinquency is attributable to a reduction in the mortgagor’s income, such as a garnishment of wages, a change to a lower paying job, reduced commissions or overtime pay, loss of a part- time job, low commodity prices, etc. The mortgagor(s) is expected to recover from such a set-back.
2	Excessive Obligations	The delinquency is attributable to the mortgagor’s having incurred excessive debts (either in a single instance or as a matter of habit) that prevent him or her from making payments on both those debts and the mortgage debt. The mortgagor(s) is expected to recover if debt obligations are reduced.
3	Farm Management/ Business Failure	The delinquency is attributable to having a reduction in income that are the direct result of the farming operation not remaining a viable entity or, at least, unable to generate sufficient cash to meet mortgage obligations.
4	Death of Principal mortgagor(s)	The delinquency is attributable to the death of the principal mortgagor(s).
5	Illness of Principal mortgagor(s)	The delinquency is attributable to a prolonged illness that keeps the principal mortgagor(s) from working and generating income.
6	Illness of mortgagor(s) Family Member	The delinquency is attributable to the principal mortgagor’s having incurred extraordinary expenses as the result of the illness of a family member.
7	Death of mortgagor(s) Family Member	The delinquency is attributable to the principal mortgagor’s having incurred extraordinary expenses as the result of the death of a family member.
8	Marital Difficulties	The delinquency is attributable to problems associated with a separation or divorce, such as a dispute over ownership of the property, a decision not to make payments until the divorce settlement is finalized, a reduction in the income available to repay the mortgage debt, etc.
9	Abandonment of Property	The delinquency is attributable to the mortgagor’s having abandoned the property for reason(s) that are not known by the servicer (because the servicer has not been able to locate the mortgagor(s)).
10	Property Problem	The delinquency is attributable to the condition of the improvements or the property (substandard construction, expensive and extensive repairs needed, subsidence of sinkholes on property, impaired rights of ingress and egress, etc. ) or the mortgagor(s) dissatisfaction with the property or the neighborhood.
11	Inability to Sell Property	The delinquency is attributable to the mortgagor’s having difficulty in selling the property.
12	Inability to Rent Property	The delinquency is attributable to the mortgagor’s needing rental income to make the mortgage payments and having difficulty in finding a tenant.
13	Military Service	The delinquency is attributable to the principal mortgagor’s having been called to active duty status and his or her military pay not being sufficient to enable the continued payment of the existing mortgage debt.
14	Unemployment	The delinquency is attributable to a reduction in income resulting from the principal mortgagor(s) having lost his or her job.
15	Casualty Loss	The delinquency is attributable to the mortgagor’s having incurred a sudden, unexpected property loss as the result of an accident, fire, storm, theft, earthquake, etc.
16	Servicing Problems	The delinquency is attributable to the mortgagor’s being dissatisfied with the way the mortgage servicer is servicing the loan or with the fact that servicing of the loan has been transferred to a new servicer.
17	Payment Adjustment	The delinquency is attributable to the mortgagor’s being unable to make a new payment that resulted from an increase related to a scheduled payment change for a graduated-payment or adjustable- rate mortgage.
18	Payment Dispute	The delinquency is attributable to a disagreement between the mortgagor(s) and the mortgage servicer about the amount of the mortgage payment, the acceptance of a partial payment, or the application of previous payments that results in the mortgagor(s) refusal to make the payment(s) until the dispute is resolved.
19	Transfer of Ownership Pending	The delinquency is attributable to the mortgagor’s having agreed to sell the property and deciding not to make any additional payments.
20	Fraud	The delinquency is attributable to a legal dispute arising out of a fraudulent or illegal action that occurred in connection with the origination of the mortgage (or later).
21	Unable to Contact Borrower	The reason for the delinquency cannot be ascertained because the mortgagor(s) cannot be located or has not responded to the servicer’s inquiries.
22	Incarceration	The delinquency is attributable to the principal mortgagor(s) having been jailed or imprisoned (regardless of whether he or she is still incarcerated).
23	Other	The delinquency is attributable to reasons that are not otherwise included in this list of applicable codes.

Exhibit 10.5

In connection with a review of director compensation in June 2015, the Board of Directors of the Federal Agricultural Mortgage Corporation approved the following level of director compensation in the form of cash retainer and targeted value of equity, effective July 1, 2015:


•	The base annual cash retainer payable to all directors was increased from $50,000 to $58,400 to offset the elimination of meeting fees described below.


•	The value of the equity award grant to all directors remained unchanged at $50,000.


•	The incremental annual cash retainer payable to:


◦	the Chairman of the Board was increased from $32,000 to $40,000, bringing his total annual cash retainer to $98,400.


◦	the Vice Chairman of the Board was established at $20,000, bringing his total annual cash retainer to $78,400.


◦	the Chairman of the Audit Committee remained unchanged at $12,000, bringing his total annual cash retainer at $70,400.


◦	the Chairman of the Compensation Committee remained unchanged at $6,500, bringing his total annual cash retainer at $64,900.

Also in connection with the review of director compensation in June 2015, the Board of Directors eliminated the payment of separate meeting fees of $1,200 per day previously paid for committee meetings attended on a day other than the day of a Board meeting and for attendance at each day of in-person Board meetings in excess of twelve days per year, all effective July 1, 2015.

Exhibit 31.1

CERTIFICATION

I, Timothy L. Buzby, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of the Federal Agricultural Mortgage Corporation for the fiscal quarter ended September 30, 2015;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 9, 2015



/s/ Timothy L. Buzby
Timothy L. Buzby
Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, R. Dale Lynch, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of the Federal Agricultural Mortgage Corporation for the fiscal quarter ended September 30, 2015;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 9, 2015



/s/ R. Dale Lynch
R. Dale Lynch
Chief Financial Officer

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of the Federal Agricultural Mortgage Corporation (the “Corporation”) for the quarterly period ended September 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Timothy L. Buzby, Chief Executive Officer of the Corporation, and R. Dale Lynch, Chief Financial Officer of the Corporation, each hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.



/s/ Timothy L. Buzby
Timothy L. Buzby
Chief Executive Officer

/s/ R. Dale Lynch
R. Dale Lynch
Chief Financial Officer

Date:	November 9, 2015