Federal Agricultural Mortgage (AGM) Q1 2025 Earnings Call May 09, 2025 08:30 AM ET Speaker0 Good morning, ladies and gentlemen, and welcome to the former MAC twenty twenty five Earnings Results Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. Please press 0 for the operator. This call is being recorded on Thursday, 05/08/2025. I would now like to turn the conference over to Jalpa Nazareth. Please go ahead. Speaker1 G ...

Equity Investor Presentation First Quarter 2025 Forward-Looking Statements In addition to historical information, this presentation includes forward-looking statements that reflect management's current expectations for 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. Management's expectations for Farmer Mac's f ...

Group 1 - Joseph Jones is a professor with over fifteen years of experience studying the market, focusing on portfolio construction from a dividend growth investor's perspective [1] - The insights expressed in his research are solely his own and do not represent the views or financial interests of his employer [1] Group 2 - The article does not provide specific investment recommendations or advice regarding the suitability of investments for particular investors [3] - It emphasizes that past performance is not a guarantee of future results [3]

Group 1 - The concept of "widow and orphan investment" emphasizes extreme safety and low risk, appealing to conservative investors [1] - The focus is on high dividend opportunities that provide a hands-off investment approach [1] Group 2 - The portfolio strategy promotes generating strong returns without the need for selling assets, making retirement investing simpler [2] - The Model Portfolio targets a yield of 9-10%, highlighting the potential for significant income generation [2] - A month-long paid trial is offered at $49 with an additional 5% discount, encouraging participation in the investment group [2]

Financial Data and Key Metrics Changes - Total revenues in 2024 improved to $362 million compared to $349 million in 2023, primarily due to higher net effective spread [10] - Core earnings year to date improved to $172 million, modestly exceeding the prior year record [11] - Net effective spread improved by $12.6 million year over year, although it compressed by three basis points to 115 basis points due to loans moving into non-accrual status [29] Business Line Data and Key Metrics Changes - The company introduced a new segment reporting construct, rebranding the rural utility segment to power and utilities and introducing a broadband infrastructure segment [13] - In 2024, the broadband infrastructure segment grew over $300 million or 60% year over year [17] - The infrastructure finance line of business grew over $1 billion in 2024, largely driven by loan purchase volume within the renewable energy segment [15] Market Data and Key Metrics Changes - The company purchased $7 billion in gross volume with farm and ranch and renewable energy loan purchases significantly outpacing the prior year [15] - As of year-end, the company had nearly $1.5 billion in total renewable energy volume, reflecting strong demand for renewable energy power generation [16] - Ninety-day delinquencies were up from 37 basis points to 51 basis points at the end of September, showing a seasonal pattern [38] Company Strategy and Development Direction - The company plans to continue its focus on renewable energy and broadband infrastructure as key growth areas [17][22] - The company aims to maintain a strong capital position and uninterrupted access to debt capital markets to support growth [22] - The company is exploring new securitization products and asset classes, including renewable energy, to enhance liquidity [22][43] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2025, citing strong liquidity, capital levels, and a diversified business mix [47][49] - The company does not anticipate material changes to its business due to the change in administration in Washington, DC [48] - Management highlighted the importance of maintaining a disciplined approach to expense management and operational efficiency [34] Other Important Information - The company announced a 7% increase in quarterly common stock dividends to $1.50 per share, effective in the first quarter of 2025 [10][41] - The company incurred an aggregate economic loss of $2.5 million related to a single borrower exposure in 2024 [36] Q&A Session Summary Question: Update on transformational securitization product - Management is exploring the feasibility of securitizing loans similar to farm and ranch loans and renewable energy loans, with no pending announcements [56][57] Question: Elevated G&A expenses - Elevated operating expenses in Q4 were due to entry into new business lines and completion of the STARS program, with some volatility expected [60][63] Question: Outlook for spreads - Management anticipates spreads to remain stable, with growth in higher-margin segments like renewable energy and farm and ranch products [72][78] Question: Impact of credit on higher product spreads - Credit issues remain idiosyncratic, with no systemic problems expected, although some specific loans require attention [92][93] Question: Renewable energy business and political changes - Current projects are investment tax credit dependent, and existing credits are locked in, with management monitoring potential changes in tax law [101][102] Question: Loan loss reserve expectations - The increase in reserves was not a catch-up but related to specific idiosyncratic issues, with expectations for stability if no new issues arise [110][112]

Federal Agricultural Mortgage Corporation (NYSE:AGM) Q4 2024 Results Conference Call February 21, 2025 8:30 AM ET Company Participants Jalpa Nazareth - Senior Director, IR & Finance Strategy Brad Nordholm - President & CEO Aparna Ramesh - EVP, CFO & Treasurer Zack Carpenter - EVP, Chief Business Officer Marc Crady - SVP, Chief Credit Officer Conference Call Participants Bill Ryan - Seaport Research Partners Bose George - KBW Operator Good morning, ladies and gentlemen. And welcome to the Federal Agricultura ...

Business Volume and Financial Performance - As of December 31, 2024, Farmer Mac's total outstanding business volume was $29.5 billion, an increase from $28.5 billion in 2023, representing a growth of approximately 3.6%[36] - The Agricultural Finance line of business accounted for $20.5 billion of the total outstanding business volume, while Infrastructure Finance contributed $9.0 billion[36] - Farmer Mac's on-balance sheet loans in the Farm & Ranch segment increased to $5.4 billion in 2024 from $5.1 billion in 2023, reflecting a growth of 5.5%[36] - The Corporate AgFinance segment's loans rose to $1.4 billion in 2024, up from $1.3 billion in 2023, marking an increase of 9.7%[36] - In the Power & Utilities segment, loans increased to $2.9 billion in 2024 from $2.6 billion in 2023, showing a growth of 10.3%[36] - The Renewable Energy segment saw loans grow to $1.3 billion in 2024, up from $440 million in 2023, indicating a significant increase of 192.5%[36] Funding and Capital Structure - Farmer Mac had $2.2 billion of discount notes and $25.4 billion of medium-term notes outstanding as of December 31, 2024[28] - The issuance of long-term standby purchase commitments (LTSPCs) and unfunded loan commitments reached $3.1 billion and $426 million respectively, reflecting a stable source of funding for lenders[36] - As of December 31, 2024, the maximum loan size was $17.4 million, with a cumulative direct credit exposure limit of 10% of Farmer Mac's Tier 1 capital, which was $150.1 million[42] - Farmer Mac's risk-based capital requirement as of December 31, 2024 was $175.1 million, with regulatory capital of $1.5 billion exceeding this requirement by approximately $1.4 billion[132] - Farmer Mac is authorized to borrow up to $1.5 billion from the U.S. Treasury through the issuance of debt obligations, but has not utilized this authority as of December 31, 2024[120] Underwriting Standards and Loan Characteristics - Farmer Mac's underwriting standards for Agricultural Finance mortgage loans require a loan-to-value ratio not exceeding 80% and sufficient cash flow to service the loan[45] - Corporate AgFinance loans typically exceed $10 million and are secured by all business assets, with a focus on enterprise value and recurring positive cash flow[47] - The collateralization level for AgVantage securities secured by Agricultural Finance mortgage loans ranges from 103% to 125%, based on credit factors related to the issuer[58] - Farmer Mac's underwriting standards for Power & Utilities loans require lenders to take a security interest in substantially all of the borrower's assets[68] - Renewable Energy loans are typically financed on a non-recourse or limited recourse basis, with significant reliance on project analysis assumptions[70] Risk Management and Compliance - Farmer Mac's exposure to credit risk is heightened by concentrated loans, with large exposures of $25 million or more to individual borrowers, which could negatively impact its financial condition[153] - The company has $4.5 billion in contingent liabilities related to LTSPCs and securities guaranteed by Farmer Mac, which could exceed available funds for payment if defaults occur[156] - Farmer Mac's capital planning policy restricts Tier 1-eligible dividends if Tier 1 capital falls below specified thresholds[189] - Farmer Mac's board of directors oversees a policy requiring annual approval of a capital plan that addresses capital adequacy and projections under stress scenarios[138] - Farmer Mac's charter requires compliance with SEC periodic reporting requirements, including annual and quarterly financial reports[124] Employee and Organizational Structure - As of December 31, 2024, Farmer Mac employed 191 people, reflecting a net increase of 6 employees (3.24%) compared to year-end 2023[87] - Farmer Mac's workforce is geographically diverse, with 91 full-time employees in Washington, D.C., 30 in Johnston, Iowa, and 70 working remotely across the U.S.[88] - In 2024, Farmer Mac achieved a turnover rate of 6.8%, up from 6.4% in 2023[93] - The Farmer Mac LEARN program aims to enhance employee development through structured learning paths and leadership academies[91] - Farmer Mac's innovative workplace culture has been recognized with multiple awards, including the USA Today Top Workplaces national award in 2024[89] Dividends and Stock Performance - Dividends declared on common stock in 2024 were consistently $1.40 per share for each quarter, with a scheduled increase to $1.50 per share in 2025[109] - Farmer Mac declared a quarterly dividend of $1.50 per share for Q1 2025, representing a 7% increase from the previous year's dividend of $1.40 per share[214] - The board of directors considered Farmer Mac's strong capital position and consistent earnings outlook when deciding to increase the dividend payout[214] - Farmer Mac's Class A voting common stock is listed on the New York Stock Exchange under the symbol AGM.A[79] Cybersecurity and Operational Risks - Farmer Mac has implemented a comprehensive cybersecurity risk management program, including annual assessments and regular training for employees[196] - The Chief Information Security Officer (CISO) manages the cybersecurity program, which aligns with industry standards and is reviewed annually by the board[203] - The company relies heavily on technology and information systems, increasing vulnerability to cybersecurity threats and operational disruptions[167] - Farmer Mac's reliance on third-party service providers for data management exposes it to potential cybersecurity risks, which could significantly impact its operations[170] Market and Economic Conditions - In 2024, the U.S. experienced 27 separate billion-dollar weather disasters, impacting agricultural producers and infrastructure[148] - Approximately 70% of the United States was classified as experiencing some level of drought or dryness at the end of 2024[148] - Economic stress from global events may adversely affect Farmer Mac's borrowers' ability to repay loans, increasing credit risk[145] - Political and external factors could impair borrowers' profitability, affecting Farmer Mac's financial condition[149] Regulatory and Legislative Risks - The organization is subject to legislative and regulatory risks that could materially impact its business operations and financial condition[190] - Regulatory changes could impose additional compliance costs and limit business opportunities for Farmer Mac, adversely affecting its profitability[185]

Financial Performance - Farmer Mac reported an outstanding business volume of $29.5 billion for the fiscal year ended December 31, 2024[1][2]. - Net interest income increased by 8% year-over-year to $353.9 million[6]. - Diluted EPS (GAAP) rose by 24% to $4.63 compared to $3.73 in the previous year[5]. - Core earnings per share (Non-GAAP) remained stable at $15.64, with a slight decrease of 3% from the previous year[6]. - Farmer Mac's net income attributable to common stockholders was $180.4 million, up from $172.8 million in the same period last year[6]. - Net income attributable to common stockholders for the year ended December 31, 2024, was $180,428 thousand, a 4.5% increase from $172,838 thousand in 2023[26]. - Total revenues for the year ended December 31, 2024, reached $361,990,000, up from $349,207,000 in 2023, indicating a year-over-year increase of 3.9%[30]. - Core earnings for the year ended December 31, 2024, were $171,630,000, slightly up from $171,156,000 in 2023, reflecting a marginal increase of 0.3%[30]. - Basic earnings per common share for the year ended December 31, 2024, were $16.59, compared to $15.97 in 2023, reflecting a growth of 3.9%[26]. - The diluted earnings per share for the year ended December 31, 2024, was $16.44, compared to $15.81 in 2023, reflecting an increase of 4.0%[33]. Capital and Liquidity - Total core capital stood at $1.5 billion, with a Tier 1 Capital Ratio of 14.2% as of December 31, 2024[6]. - Farmer Mac maintained 264 days of liquidity as of December 31, 2024[6]. - Total assets increased to $31,324,742 thousand as of December 31, 2024, up from $29,524,382 thousand in 2023, representing a growth of 6.1%[25]. - Total liabilities increased to $29,835,716 thousand as of December 31, 2024, from $28,112,519 thousand in 2023, a rise of 6.1%[25]. - Total equity as of December 31, 2024, was $1,489,026 thousand, up from $1,411,863 thousand in 2023, representing an increase of 5.5%[25]. Expenses and Provisions - Total operating expenses for the year ended December 31, 2024, amounted to $105,386,000, up from $97,099,000 in 2023, representing an increase of 8.4%[30]. - Provision for losses for the year ended December 31, 2024, was $11,490,000, significantly higher than $1,136,000 in 2023, indicating a substantial increase in credit-related expenses[30]. - The company reported a total credit-related expense of $11,686,000 for the year ended December 31, 2024, compared to $1,136,000 in 2023, highlighting a significant rise in credit-related costs[30]. Dividends - The Board of Directors declared a quarterly dividend of $1.50 per share, representing a 7% increase year-over-year[7]. Future Outlook - The company expressed optimism about future growth and its ability to fulfill its mission efficiently and profitably[3]. - The company plans to continue focusing on expanding its market presence and enhancing its product offerings in the upcoming fiscal year[30]. Segment Performance - Outstanding business volume in Agricultural Finance as of December 31, 2024, was $20,494,673,000, slightly down from $20,502,780,000 in 2023[35]. - Loans held for investment increased to $11,183,408 thousand in 2024, compared to $9,623,119 thousand in 2023, marking a growth of 16.2%[25]. - Loans in the Power & Utilities segment increased to $2,886,576,000 from $2,616,359,000 year-over-year, reflecting a growth of approximately 10.3%[35]. - The Renewable Energy segment saw loans rise to $1,265,700,000, up from $440,286,000, indicating a significant increase[35]. - Total Infrastructure Finance volume reached $9,028,357,000, compared to $7,968,244,000 in the previous year, marking an increase of approximately 13.3%[35]. - Unfunded loan commitments in the Corporate AgFinance segment rose to $225,734,000 from $145,377,000, showing a growth of about 55.3%[35]. Quarterly Performance - For the three months ended December 31, 2024, total core earnings amounted to $56,210,000, with segment core earnings from Agricultural Finance at $23,977,000 and Infrastructure Finance at $32,233,000[34]. - Interest income for the period was $395,765,000, while interest expense totaled $302,397,000, resulting in a net effective spread of $87,528,000[34]. - Core earnings for December 2024 were reported at $43,554, compared to $44,907 in September 2024, indicating a slight decline[39]. - Total revenues for December 2024 amounted to $92,123, up from $91,526 in September 2024[39]. - The provision for losses in December 2024 was $3,872, an increase from $3,258 in September 2024[39]. - Operating expenses for December 2024 totaled $29,093, compared to $24,587 in September 2024, reflecting a rise in costs[39]. - Net earnings for December 2024 were $59,158, down from $63,485 in September 2024[39]. - Guarantee and commitment fees for December 2024 were $5,086, slightly higher than $4,997 in September 2024[39]. - The total credit-related expense for December 2024 was $3,872, compared to $3,454 in September 2024[39]. - Preferred stock dividends remained consistent at $5,666 for December 2024, unchanged from September 2024[39].

Core Insights - Farmer Mac announced a 7% increase in its quarterly dividend, raising it to $1.50 per share, marking the fourteenth consecutive year of dividend increases [5][10] - The company reported an outstanding business volume of $29.5 billion as of December 31, 2024, reflecting strong operational performance [1][22] - Farmer Mac's net income attributable to common stockholders for the year ended December 31, 2024, was $180.4 million, an increase from $172.8 million in the previous year [10][24] Financial Performance - For the fiscal year 2024, net interest income grew by 8% year-over-year to $353.9 million, while net effective spread increased by 4% to $339.6 million [10][24] - Diluted earnings per share (EPS) rose by 24% year-over-year to $4.63, with core EPS showing a slight decline of 3% to $3.97 [4][10] - Total core capital reached $1.5 billion, with a Tier 1 Capital Ratio of 14.2% as of December 31, 2024 [10] Business Strategy and Outlook - The company expressed optimism about its future, citing strong liquidity, capital levels, and a diversified business mix as key strengths [2][21] - Farmer Mac aims to enhance the economic framework supporting Rural America, focusing on efficient, innovative, and profitable operations [2][21] Dividend Information - The quarterly dividend of $1.50 per share will be payable on March 31, 2025, to shareholders of record as of March 14, 2025 [5][6] - Preferred stock dividends were also declared for various classes, with specific amounts detailed for each series [6] Operational Highlights - Farmer Mac's total assets increased to $31.3 billion as of December 31, 2024, compared to $29.5 billion a year earlier [22][23] - The company maintained 264 days of liquidity as of the end of 2024, indicating a solid liquidity position [10]

Core Viewpoint - Farmer Mac will release its financial results for the fiscal quarter and year ended December 31, 2024, on February 21, 2025, before the equity markets open [1] Group 1: Financial Results Announcement - The financial results will be discussed in a conference call scheduled for February 21, 2025, at 8:30 a.m. eastern time [1] - The conference call can be accessed via telephone or webcast, with specific dial-in numbers provided for domestic and international participants [2] Group 2: Company Overview - Farmer Mac's mission is to enhance the accessibility of financing to provide essential liquidity for American agriculture and rural infrastructure [3] - The company operates a secondary market that supports agricultural and infrastructure businesses, contributing to a robust rural economy [3] - Farmer Mac offers a variety of financial solutions to meet the needs of financial institutions across diverse markets, including agriculture, agribusiness, broadband infrastructure, power and utilities, and renewable energy [3]