Federal Agricultural Mortgage Corporation (NYSE:AGM) Q1 2024 Earnings Conference Call May 6, 2024 8:30 AM ET Company Participants Jalpa Nazareth - Senior Director, Investor Relations and Finance Strategy Bradford Nordholm - President and Chief Executive Officer Aparna Ramesh - Executive Vice President, Chief Financial Officer and Treasurer Zachary Carpenter - Executive Vice President, Chief Business Officer Conference Call Participants Bose George - KBW William Ryan - Seaport Research Partners Brendan McCar ...

Federal Agricultural Mortgage (AGM) came out with quarterly earnings of $3.96 per share, beating the Zacks Consensus Estimate of $3.94 per share. This compares to earnings of $3.56 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 0.51%. A quarter ago, it was expected that this rural real estate lender would post earnings of $3.70 per share when it actually produced earnings of $4.10, delivering a surprise of 10.81%.Over the las ...

As filed with the Securities and Exchange Commission on May 6, 2024 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 March 31, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____. Commission File Number 001-14951 FEDERAL AGRICULTURAL MORTGAGE CORPORATION (Exact nam ...

Farmer Mac Reports First Quarter 2024 Results - Outstanding Business Volume of $28.8 Billion - WASHINGTON, D.C., May 6, 2024 — The Federal Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A), the nation's secondary market provider that increases the accessibility of financing for American agriculture and rural infrastructure, today announced its results for the fiscal quarter ended March 31, 2024. "Farmer Mac delivered another quarter of strong earnings resulting from our well-disciplined as ...

These companies should be able to continue capitalizing on elevated inflation.Higher inflation has been sticking around a lot longer than many expected. Instead of continuing to fall toward the Federal Reserve's 2% target, the latest inflation reading (as measured by the Consumer Price Index, or CPI) showed prices rising 3.5% year over year. That accelerated from the previous pace and exceeded market expectations. While sticky inflation is bad for consumers and other parts of the economy, there are some ben ...

Core Viewpoint - Federal Agricultural Mortgage Corporation (AGM) has demonstrated strong financial performance and significant dividend growth, leading to a potential upside in share price and continued investment appeal [2][18]. Dividend Growth - AGM raised its dividend by 27.3% to $1.40 per share, resulting in a starting yield of slightly over 3% [3][5]. - The company has a history of 12 consecutive years of dividend increases, with a compound annual growth rate (CAGR) of 25.12% over the last decade, totaling a 900% increase [5]. - The current payout ratio is only 30%, which is lower than the sector median of 37%, indicating a strong capacity for future dividend growth [5][18]. Financial Performance - AGM reported Q4 2023 revenue of $90 million, an 18.4% year-over-year increase, with earnings per share (EPS) of $4.10 [9]. - Net interest income grew by 21% year-over-year, totaling $327.5 million for Q4 2023, driven by increased business volume [9][10]. - Total business volume for 2023 was $2.55 billion, up from $2.3 billion in 2022 [9]. Business Segments - AGM operates in two main segments: Agricultural Financing, which includes farm and ranch operations, and Rural Infrastructure Finance, focusing on rural utilities and renewable energy [2][12]. - The agricultural finance segment grew by 6% year-over-year to $20.5 billion, while the rural infrastructure segment saw a 21% increase to $8 billion [12][13]. Valuation Metrics - AGM currently trades at a P/E ratio of 11.33, compared to a five-year average of 10.20, with an average Wall Street price target of $227 per share, indicating a potential upside of 26.87% [6][8]. - A dividend discount model estimates a fair share price of $224, representing over 25% upside from current levels [8][18]. Risk Profile - AGM maintains a low delinquency rate of 0.12%, reflecting effective borrower assessment and risk management practices [10][15]. - The company has $376 million in cash from operations and a net income margin of 57%, positioning it well to navigate current market conditions [17].

Core Insights - Farmer Mac has completed a $308.1 million securitization of agricultural mortgage loans, marking its fourth transaction in the FARM series since 2021 [1] - The transaction, FARM 2024-1, consists of 443 agricultural mortgage loans with an aggregate outstanding principal balance of approximately $308.1 million [1] - The deal includes a $285.0 million senior tranche guaranteed by Farmer Mac and a $23.1 million unguaranteed subordinate tranche, with the senior tranche offering notes in three classes to provide diverse investment options [1] Market Demand and Investor Engagement - There was more than three times the demand for this offering, indicating strong institutional investor interest and market appetite for agricultural assets [2] - The successful expansion of the investor base and introduction of new classes of senior notes were aimed at addressing the cashflow demands of capital markets [2] Company Overview - Farmer Mac operates as a Government Sponsored Enterprise, enhancing access to credit for American agriculture and rural infrastructure [3] - The company provides innovative financial products that enable lenders to offer flexible financing to farmers, ranchers, agribusinesses, and rural infrastructure providers [3] - Farmer Mac's advantages include long-term financing, low cost of funds, low overhead costs, and high operational efficiency [3]

The Zacks Mortgage & Related Services industry is poised to benefit from expectations of interest rate cuts, which is anticipated to propel mortgage production activity. Continued pullback of banks from mortgage lending due to new capital requirements for mortgage-related assets and bright prospects of the reverse mortgage industry is likely to aid gains-on-sale (GOS) margins.As the industry recovers from a high interest-rate scenario, it might be wise to focus on mortgage service providers like PennyMac Fi ...

Financial Data and Key Metrics Changes - In 2023, the company achieved a 28% growth in net effective spread to $327 million and a 38% growth in core earnings to $171 million, alongside a 10% growth in outstanding business volume to $28.5 billion [7][19][25] - The quarterly common stock dividend was increased by 27% to $1.40 per share, marking the 13th consecutive year of dividend increases [8][25] Business Line Data and Key Metrics Changes - The rural infrastructure line of business grew by $1.4 billion or 21% year-over-year to $8 billion, driven by new AgVantage facilities and growth in renewable energy and telecommunications portfolios [9] - The agricultural finance line of business increased by $1.2 billion or 6% year-over-year to $20.5 billion, primarily due to the acquisition of mortgage servicing rights and loan purchase growth [10] Market Data and Key Metrics Changes - The company provided $8.3 billion in liquidity and lending capacity to lenders serving rural America, reflecting a net year-over-year outstanding business volume growth of over $2.5 billion [9] - The telecommunications portfolio grew nearly 60% year-over-year, while the renewable energy segment more than doubled in size during the year [11] Company Strategy and Development Direction - The company aims to diversify its loan portfolio and serve more clearly defined market segments, which has proven beneficial through changing market cycles [9] - There is a focus on strategic talent acquisition in renewable energy and telecommunications to build expertise and capacity as market opportunities arise [11][16] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the increase in Farm & Ranch loan purchases in 2024, despite expectations of declining farm incomes due to elevated input costs and receding commodity prices [12][66] - The company is well-positioned to navigate ongoing market uncertainties and aims to be a reliable source of capital for stakeholders [15][29] Other Important Information - Operating expenses increased by 19% year-over-year due to headcount growth and technology investments, yet the efficiency ratio remained below the target of 30% at 27% [22][23] - The company maintained a strong credit profile with 90-day delinquencies at $35 million, reflecting a decrease both sequentially and year-over-year [24] Q&A Session Summary Question: What were the drivers of the margin in renewable energy and utilities? - Management indicated that improved pricing strategies and a growing reputation in the market contributed to the margin improvements in these segments [31][32] Question: What is the outlook for generating volumes from other farm credit system banks? - The company is actively engaging with various banks and associations within the farm credit system, expecting to find new business opportunities in the coming years [43][45] Question: What is the outlook for loan growth in the Farm & Ranch segment? - Management expressed optimism for enhanced growth in 2024 compared to 2023, driven by market dynamics and increased borrowing activity [70] Question: How does the company manage prepayment risk across different segments? - The company noted that prepayment risk is low across most segments, with a focus on maintaining a well-hedged balance sheet to mitigate any potential impacts [62] Question: What is the outlook for the farm economy and its impact on Farmer Mac? - Management anticipates a slight positive impact on Farmer Mac from the farm economy, despite expected declines in farm incomes, as it may stimulate additional borrowing activity [66]

Fourth Quarter 2023 Equity Investor FARMER MAC Forward-Looking Statements In addition to historical information, this presentation includes forward- NO OFFEROR SOLICITATION OF SECURITIES looking statements that reflect management’s current expectations for This presentation does not constitute an offer to sell or a solicitation of Farmer Mac’s future financial results, business prospects, and business an offer to buy any Farmer Mac security. Farmer Mac securities are developments. Forward-looking statements ...