Federal Agricultural Mortgage (US:AGM)2025-02-21 12:04Business 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]