KBRA assigns an issuer rating of A- and a preferred stock rating of BBB to Wisconsin-based Compeer Financial ACA. KBRA also assigns an issuer rating of A- and a subordinated debt rating of BBB+ to operating entities Compeer Financial, PCA and Compeer Financial, FLCA (collectively, Compeer or "the company"). The Outlook for all ratings is Stable.

Key Credit Considerations

Compeer’s ratings reflect its strong market position within the agricultural lending sector and solid capital levels relative to on-balance sheet risks. Ratings are further supported by our view of the company’s well-developed risk management framework (and execution associated with it), which, in combination with its access to low cost, GSE funding, has resulted in a strong track record of financial performance.

KBRA considers Compeer’s market presence within the agricultural sector a ratings strength, particularly given that it operates within the Farm Credit System (FCS). Established by Congress in the early 1900s to meet the credit needs of American agriculture, we estimate that the FCS funds between 40% and 50% of all U.S. farm business debt and has historically shown a willingness/ability to lend in tougher agricultural markets when commercial banks may pull back. In this context, Compeer is one of the largest member-owned cooperatives (associations) within the FCS and has exhibited the scale and expertise necessary for managing its specialized agricultural lending portfolio.

While comparatively narrow in nature relative to commercial banks, KBRA views Compeer’s funding profile as a ratings strength. Compeer obtains the majority of its funding from AgriBank, FCB through a revolving, variable rate note payable that is governed by a General Financing Agreement (GFA). The cost of these funds is very low given the GSE status of AgriBank and the Federal Farm Credit Funding Corporation (Funding Corp.) which acts as an agent to obtain funding in the capital markets for the FCS. The note, which has a maturity of October 2027, has maximum capacity of $45 billion, though the actual availability is driven by the size of Compeer’s balance sheet as substantially all of its assets serve as collateral through a borrowing base. Availability on the line is estimated at roughly $1.9 billion, adequate in the context of Compeer's size and growth. Importantly, we believe that the relationship between Compeer and AgriBank is durable with interest well-aligned and we expect it to continue into the future, limiting funding risk for Compeer.

Compeer operates under a regulatory capital framework laid out by the Farm Credit Administration (FCA), the regulator of the FCS. The framework was developed by the FCA over a decade ago in conjunction with Basel III capital rules to make system institutions’ capital more comparable to depository banks. At ~12%+ CET1, Compeer’s capital position is considered strong. While robust over the last few years, balance sheet growth moderated during 2025 driven by the company opportunistically selling down ~$1.7 billion of its loan portfolio to Agribank during 3Q25, resulting in more efficient capital treatment. Combined with earnings retention, CET1 has been relatively flat over the course of 2025 after declining gradually since the end of 2019 when CET1 was ~15%. Incorporated into the ratings is the expectation that Compeer will manage CET1 in excess of 12% over time.

Meanwhile, financial performance, measured by ROA, is comparatively strong. Even with a higher-than-normal provision for credit losses throughout 2025, Compeer has generated a ~1.2% ROA, a level which compares favorably to many commercial banks. While the company’s provision expense may remain elevated in the near term due to credit quality deterioration within a digital lending program that is being discontinued and other certain sectors, we expect earnings performance to be supported by lower funding costs given the FCS’s ability to call debt as rates go down.

Offsetting some of these credit strengths is Compeer's natural loan concentration to the agricultural section. Still, on a historical basis, Compeer’s credit quality has been very strong compared to that of other finance companies and commercial banks. Even with volatility seen in commodity prices and interest rates, the levels of nonpeforming assets and realized credit losses have been nominal, aided by a strong financial position of the farm sector going into periods of stress as well as strong underwriting/portfolio management, and long-standing government policies which support the U.S. agricultural sector. That said, credit quality over most recent periods has reflected deterioration in certain sub-segments of the loan portfolio leading to nonperforming assets climbing to over 1.5% and net charge-offs (NCOs) above 20 bps of loans in 2024 and 2023. Still, we note that overall NCOs have remained well-below those of commercial bank peers, albeit higher than the 0-5 bps Compeer has historically produced.

Rating Sensitivities

Over time, higher ratings could be driven by improving credit quality, steady financial performance, and the maintenance of strong capital ratios. Although not expected, ratng pressure could develop if credit quality deterioration were to accelerate, leading to weaker financial performance and a lower CET1, or if access to low cost GSE funding were to be disrupted meaningfully either through policy actions or due to noncompliance with its GFA.

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Methodologies

• Financial Institutions: Finance Company Global Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

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