Until recently, I had never owned any of the Federal Agricultural Mortgage Corporation ( AGM ), aka Farmer Mac, preferred securities before. It was not because I had a problem with either the issuer or the securities themselves. They just never traded atMy experience stems from the hedge fund industry beginning in the mid-90's, working as a Portfolio Manager, Domestic Equity Analyst and Trader. I was the Portfolio Manager of a domestic Long/Short Equity product with gross assets that peaked over 1 Billion d ...

Until recently, I had never owned any of the Federal Agricultural Mortgage Corporation ( AGM ), aka Farmer Mac, preferred securities before. It was not because I had a problem with either the issuer or the securities themselves. They just never traded atMy experience stems from the hedge fund industry beginning in the mid-90's, working as a Portfolio Manager, Domestic Equity Analyst and Trader. I was the Portfolio Manager of a domestic Long/Short Equity product with gross assets that peaked over 1 Billion d ...

Mr. Pullins brings more than two decades of experience in corporate finance, accounting, strategic planning, capital markets, and regulatory reporting, most recently serving as Senior Vice President, Chief Financial Officer – Capital Markets at PNC Financial Services Group, Inc. His career reflects a deep understanding of financial strategy, risk management, and enterprise reporting functions, developed through progressively senior leadership roles. At PNC, he oversaw the financial operations of a $1 billio ...

Summary of Federal Agricultural Mortgage Corporation (Farmer Mac) FY Conference Call Company Overview - **Company Name**: Federal Agricultural Mortgage Corporation (Farmer Mac) - **Ticker Symbol**: AGM - **Market Capitalization**: Approximately $2 billion - **Total Assets**: About $40 billion, with $31 billion in business volume - **Employee Efficiency**: Core earnings per employee at approximately $900,000 [6][7][12] Core Business Segments - **Agricultural Finance**: Accounts for about two-thirds of business volume, with core farmland mortgages at $18.2 billion [14] - **Infrastructure Finance**: Comprises one-third of business volume, including power and utilities, renewable energy, and broadband infrastructure [16][19] Financial Performance - **Revenue and EPS Growth**: Low double digits compound annual growth rate over the last 10 years [7] - **Net Effective Spread**: Increased from 90 basis points to 120 basis points over five years [21] - **Cumulative Losses**: Only 12 basis points of cumulative losses in agricultural finance loans [28] Market Dynamics - **Agricultural Sector**: Challenges in soybean, cotton, and rice markets due to reliance on exports, particularly to China [42][45] - **Renewable Energy**: Significant growth in renewable energy financing, particularly solar and battery projects, with expectations for continued expansion [17][18] - **Broadband Infrastructure**: Focus on providing liquidity for telecommunication services and data centers, with strong growth anticipated [20] Strategic Initiatives - **Diversification**: Expanded into corporate agricultural finance and infrastructure to mitigate risks and enhance growth [9][15] - **Securitization**: Completed six securitization transactions totaling $1.8 billion, with plans for more [34][35] - **GSE Funding Advantage**: Access to capital markets similar to other government-sponsored enterprises, providing competitive rates [39][40] Risk Management - **Asset Liability Management**: Focus on matching interest rate risk and maintaining liquidity with $8 billion in liquidity reserves [12][31] - **Credit Quality**: Strong credit metrics with no significant sector concerns, supported by diversification across commodities [28][29] Shareholder Returns - **Dividend Growth**: 14 consecutive years of dividend increases, with a current yield of 3.5% [36][49] - **Future Outlook**: Optimistic about market opportunities and potential for continued dividend growth as business matures [37][49] Conclusion - **Unique Positioning**: Farmer Mac is a mission-driven public company with a unique focus on providing liquidity across agriculture and infrastructure sectors, supported by a strong GSE funding advantage and disciplined risk management practices [38][49]

Group 1 - The article emphasizes a strong buy recommendation for Farmer Mac (AGM), indicating a positive outlook on the stock's performance [1] - The author has a long position in AGM shares, suggesting confidence in the company's future growth [2] - The focus is on high-quality small-cap investment opportunities in Europe, with an emphasis on capital gains and dividend income [1] Group 2 - The investment strategy includes a mixture of dividend and growth stocks, aiming for continuous cash flow [1] - The investment group European Small Cap Ideas provides exclusive research and model portfolios for investors [1] - Weekly updates and educational content are offered to enhance understanding of European investment opportunities [1]

Group 1 - The article emphasizes a strong buy recommendation for Farmer Mac (AGM), indicating a positive outlook on the stock's performance [1] - The author highlights a focus on European small-cap investments, advocating for a balanced portfolio of dividend and growth stocks [1] - The investment group European Small Cap Ideas is mentioned as a source for exclusive research on European investment opportunities, particularly in the small-cap sector [1] Group 2 - The article notes that the author holds a beneficial long position in AGM shares, indicating personal investment confidence in the company [2] - The author also has long positions in Series F and Series G preferred shares, further demonstrating commitment to the investment [2]

Core Insights - Farmer Mac's third quarter performance was positively received by the market despite missing revenue expectations, driven by strong non-GAAP earnings and significant portfolio growth [1] - The management attributed the performance to expansion in infrastructure finance and renewable energy, along with disciplined asset liability management [1] - CEO Bradford Nordholm highlighted the importance of diversifying into newer business lines, such as broadband and renewable projects, to mitigate seasonal pressures in traditional agricultural lending [1] Financial Highlights - Revenue for Q3 was reported at $94.96 million, missing analyst estimates of $101 million, representing an 11.1% year-on-year growth but a 6% miss [5] - Adjusted EPS was $4.52, slightly beating analyst estimates of $4.47, marking a 1.2% increase [5] - Operating margin decreased to 70.2% from 72.9% in the same quarter last year [5] - Market capitalization stands at $1.75 billion [5] Analyst Insights - Questions from analysts during the earnings call focused on various topics, including net effective spreads and the impact of tariffs and commodity price volatility on agricultural borrowers [5] - CEO Nordholm explained that Farmer Mac's asset liability structure is designed to be neutral to interest rate shifts, with spreads influenced more by business mix than market rates [5] - The company acknowledged headline risks from tariffs but pointed to portfolio diversity and resilient commodity sectors as mitigating factors [5] - There was broad-based demand for Farm & Ranch loans across over 100 commodities, driven by strong liquidity-seeking borrowers [5] - Prepayment trends are expected to remain modest as most borrowers locked in low fixed rates in recent years [5] - Key drivers for net effective spread increases include rapid growth in rural infrastructure and a shift away from lower-spread AgVantage securities [5]

Financial Data and Key Metrics Changes - The company achieved a record net effective spread of $97.8 million and core earnings of $49.6 million for Q3 2025 [6][25] - Year-to-date net effective spread and core earnings reached $281 million and $143 million, respectively, reflecting double-digit year-over-year growth [7][25] - The total allowance for losses was $37.2 million, or 12 basis points of total outstanding business volume [11] Business Line Data and Key Metrics Changes - The infrastructure finance line of business grew by $600 million this quarter to $11 billion, driven by strong interest in data centers and renewable energy projects [17] - The renewable energy segment more than doubled year-over-year to $2.3 billion, with expectations for continued growth [18] - The broadband infrastructure segment also doubled year-over-year to $1.3 billion, reflecting increased demand for data centers [20] - The agricultural finance portfolio grew by $285 million in Q3, outpacing scheduled maturities [21] Market Data and Key Metrics Changes - The company reported a modest uptick in 90-day delinquencies, attributed to seasonal impacts rather than identifiable trends [11] - Despite market uncertainties, the company has not seen significant effects on its portfolio related to political developments or government actions [12] Company Strategy and Development Direction - The company is focused on diversifying its loan portfolio into newer lines of business, including renewable energy and broadband infrastructure, to leverage competitive advantages [7][14] - The securitization program is a strategic initiative aimed at optimizing the balance sheet and enhancing growth opportunities [15] - The company plans to continue evaluating capital management tools to optimize its overall capital position [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the overall health of the portfolio, supported by strong asset quality metrics [4][24] - The company anticipates continued growth in its diversified business segments despite broader market uncertainties [24] - Management noted that the agricultural sector is experiencing financial pressures, but they believe farmers are adapting to market conditions [42][45] Other Important Information - The company successfully issued $100 million of Series H preferred stock, strengthening its capital position [13] - Management is in the process of searching for a new CFO, with expectations for an announcement in Q4 2025 [26] Q&A Session Summary Question: Outlook for spreads given Fed rate cuts - Management indicated that a cut in interest rates should have no impact on the net effective spread due to their asset-liability management strategy [30] Question: Impact of tariffs on crops - Management noted that while there are financial pressures in major crops, some prices have increased, and they do not see systemic risks affecting their portfolio [42][45] Question: Changes in loan structure and prepayment expectations - Management confirmed that they are seeing significant increases in loan applications and approvals, with a focus on new money loans [52][58] Question: Credit provision levels - Management characterized the provision as episodic and not indicative of systemic issues, with no significant increases expected in the near term [38][66] Question: Share repurchase activity - Management disclosed a repurchase of approximately 30,000 shares for about $5 million [68]

Financial Data and Key Metrics Changes - The company achieved a record net effective spread of $97.8 million and core earnings of $49.6 million for Q3 2025 [6][25] - Year-to-date net effective spread and core earnings reached $281 million and $143 million, respectively, reflecting double-digit year-over-year growth [7][25] - The total allowance for losses was $37.2 million, or 12 basis points of total outstanding business volume, indicating a well-diversified portfolio [11][13] Business Line Data and Key Metrics Changes - The infrastructure finance line of business grew by $600 million to $11 billion, driven by strong interest in data centers and renewable energy projects [17] - The renewable energy segment more than doubled year-over-year to $2.3 billion, with expectations for continued growth [18] - The broadband infrastructure segment also doubled year-over-year to $1.3 billion, reflecting increased demand for data centers [20] Market Data and Key Metrics Changes - The agricultural finance portfolio showed strong loan purchase growth, with a $285 million increase in the farm and ranch loan purchase portfolio [21] - Despite market uncertainties, the company reported stable credit quality metrics, with a modest uptick in 90-day delinquencies attributed to seasonal impacts [11][12] Company Strategy and Development Direction - The company is focused on diversifying its loan portfolio into newer lines of business, including renewable energy and broadband infrastructure, to enhance growth and resilience [7][14] - A successful preferred stock issuance strengthened the capital base, supporting long-term growth objectives [4][13] - The securitization program is a strategic initiative aimed at optimizing the balance sheet and enhancing growth opportunities [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the overall health of the portfolio, citing strong asset quality metrics despite market volatility [4][12] - The company anticipates continued growth in its diversified business segments, particularly in infrastructure finance and renewable energy [18][24] - Management noted that they have not seen significant effects on the portfolio from political developments or government actions [12] Other Important Information - The company repurchased approximately 30,000 shares of Class C common stock for about $5 million, demonstrating a commitment to returning capital to shareholders [15][68] - The company is in the process of searching for a new CFO, with expectations for an announcement in the fourth quarter of 2025 [26] Q&A Session Summary Question: Outlook for spreads given Fed rate cuts - Management indicated that a cut in interest rates by the Fed should have no impact on the net effective spread due to their asset-liability management strategy [29][30] Question: Impact of tariffs on agriculture - Management noted that while there are financial pressures in major crops, they have not seen significant impacts on their portfolio, and market stabilization payments are expected soon [41][45] Question: Changes in loan structure and prepayment expectations - Management confirmed an increase in loan applications and approvals, with a focus on new money loans, and indicated that prepayments are expected to remain low [52][58] Question: Credit provision levels and charge-offs - Management characterized the credit provision as episodic and not indicative of systemic risks, with a mix of growth and specific allowances impacting the current levels [36][66]

Financial Data and Key Metrics Changes - The company achieved record net effective spread of $97.8 million and core earnings of $49.6 million for Q3 2025, with year-to-date net effective spread and core earnings at $281 million and $143 million respectively, reflecting double-digit year-over-year growth [5][6][22] - The total allowance for losses was $37.2 million, or 12 basis points of total outstanding business volume, indicating a well-diversified portfolio [11][12] Business Line Data and Key Metrics Changes - The infrastructure finance line of business grew by $600 million to $11 billion, driven by strong interest in data centers and renewable energy projects [16][19] - The renewable energy segment more than doubled year-over-year to $2.3 billion, with expectations for continued growth supported by a strong near-term pipeline [17] - The broadband infrastructure segment also doubled year-over-year to $1.3 billion, reflecting increased demand for data centers [18] Market Data and Key Metrics Changes - The agricultural finance portfolio reflected strong loan purchase growth, with the farm and ranch loan purchase portfolio growing by $285 million in Q3 2025 [19][20] - Despite market uncertainties, the company reported stable credit quality metrics, with a modest uptick in 90-day delinquencies attributed to seasonal impacts [11][22] Company Strategy and Development Direction - The company is focused on diversifying its loan portfolio into newer lines of business such as renewable energy and broadband infrastructure, which are seen as key growth areas [6][14] - The securitization program is a strategic initiative aimed at optimizing the balance sheet and enhancing growth opportunities [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the overall health of the portfolio, citing strong asset quality metrics and a diversified business model [4][12] - The company anticipates continued growth in its various segments despite market volatility and uncertainties [22] Other Important Information - The company successfully issued $100 million of Series H preferred stock, strengthening its capital position and improving its Tier 1 capital ratio to 13.9% [12][13] - The company repurchased approximately 30,000 shares of Class C common stock for about $5 million, demonstrating a commitment to returning capital to shareholders [14] Q&A Session Summary Question: Outlook for spreads given Fed rate cuts - Management indicated that a cut in interest rates by the Fed should have no impact on the net effective spread due to their asset-liability management strategy [25][26] Question: Credit provision levels - Management noted that the current provision levels are low compared to other financial institutions and reflect episodic events rather than systemic risks [31][32] Question: Impact of tariffs on agriculture - Management clarified that while there are financial pressures in major crops, they have not seen significant negative impacts on their portfolio, and market stabilization payments are expected soon [36][37] Question: Loan structure and prepayment expectations - Management stated that they are seeing significant increases in loan applications and approvals, with a mix of fixed and variable rate loans, and prepayment speeds are expected to remain low [41][45]