Federal Agricultural Mortgage (US:AGM)2025-11-03 21:11Financial Performance - Net income attributable to common stockholders for Q3 2025 was $48.7 million, a decrease of $0.5 million from Q2 2025, while core earnings increased to $49.6 million[148][150]. - Year-over-year net income increased by $6.4 million, primarily due to an $11.7 million increase in net interest income[149]. - Core earnings for the three months ended September 30, 2025, were $49.6 million, compared to $44.9 million for the same period in 2024, reflecting an increase of 4.8%[173]. - Total revenues for the three months ended September 30, 2025, were $105.1 million, compared to $91.5 million in 2024, marking an increase of 14.8%[173]. - GAAP Basic EPS for Q3 2025 was $4.45, up from $3.89 in Q3 2024, representing a 14.4% increase[176]. - Core EPS for the three months ended September 30, 2025, was $4.54, compared to $4.13 in 2024, representing a growth of 9.9%[173]. - Net interest income for Q3 2025 was $98.5 million, a sequential increase of $1.7 million[153]. - The net effective spread for Q3 2025 was 1.20%, up from 1.19% in Q2 2025[154]. - The provision for losses for the nine months ended September 30, 2025, was $16.8 million, compared to $7.6 million in the same period of 2024, reflecting a significant increase in credit-related expenses[175]. - The company reported a decrease in funding costs by $3.9 million in Q3 2025 compared to Q3 2024[186]. Business Volume and Assets - Outstanding business volume reached $31.1 billion as of September 30, 2025, reflecting a net increase of $0.5 billion from the previous quarter[156]. - Total assets increased by $2.05 billion (7%) to $33.38 billion as of September 30, 2025, primarily due to new loan volume and a larger investment portfolio[250]. - Loans, net of allowance, rose by $1.99 billion (18%) to $13.16 billion, indicating strong growth in loan origination[250]. - The total outstanding business volume reached $31,119,162 thousand, an increase from $30,587,259 thousand as of June 30, 2025, representing a growth of approximately 1.74%[328]. - The on-balance sheet outstanding business volume as of September 30, 2025, was $25,854,546 thousand, compared to $25,329,911 thousand on June 30, 2025, indicating a growth of about 2.07%[329]. Delinquencies and Credit Quality - As of September 30, 2025, 90-day delinquencies for on-balance sheet Agricultural Finance portfolios were $164.8 million, representing 1.7% of the portfolio, while off-balance sheet delinquencies were $13.0 million, or 0.4%[161]. - The increase in on-balance sheet delinquencies from the prior quarter was $41.4 million (0.4%) and from the prior year was $63.4 million (0.6%)[161]. - The total amount of 90-day delinquencies increased to $177.76 million, with 106 delinquent loans reported as of September 30, 2025[254]. - The 90-day delinquency rate for Agricultural Finance mortgage loans was 1.35% as of September 30, 2025, up from 0.88% at the end of 2024[254][255]. - The increase in delinquencies was primarily attributed to challenges in profitability within certain agricultural commodity segments, particularly in the Southwest region[254]. Capital and Funding - Core capital increased to $1.69 billion as of September 30, 2025, up from $1.50 billion at the end of 2024[157]. - The capital in excess of the minimum capital level required increased to $723.4 million as of September 30, 2025, from $583.5 million at the end of 2024[157]. - Total liabilities increased by $1.86 billion (6%) to $31.69 billion, mainly driven by an increase in notes payable to fund loan volume[251]. - Farmer Mac's Tier 1 capital ratio was 13.9% as of September 30, 2025, slightly down from 14.2% as of December 31, 2024[322]. - Farmer Mac was classified as within "level 1" compliance with statutory capital requirements as of September 30, 2025[321]. Operating Expenses - Operating expenses for the nine months ended September 30, 2025, totaled $88.8 million, a 16% increase from $76.3 million in the same period of 2024, driven by higher compensation and employee benefits expenses[197]. - The company’s total operating expenses for the three months ended September 30, 2025, were $29.8 million, reflecting a 21% increase from $24.6 million in the same period of 2024[197]. - Operating expenses totaled $29,510,000, slightly down from $29,795,000 in the previous quarter, showing a reduction of 1.0%[331]. Market and Economic Conditions - The USDA forecasts a 29% increase in net cash farm income for 2025, reaching one of the highest inflation-adjusted levels in history, driven by over $40 billion in government support[224]. - The agricultural sector is expected to face volatility due to evolving U.S. trade policies, which could impact demand for U.S. agricultural products[227]. - Average farm real estate values increased by 4.3% from June 2024 to June 2025, with the highest gains in the Southern Plains (5.9%) and Lake states (5.7%)[230]. - The USDA projects U.S. agricultural exports to drop to $173 billion in 2025, a 1% decrease from 2024 and a 12% decline from peak levels in 2022[233]. - Drought conditions increased, with approximately 23% of the continental U.S. classified as experiencing severe to exceptional drought as of October 2025[234]. Renewable Energy and Infrastructure - The Renewable Energy segment saw a $0.3 billion increase in outstanding business volume during Q3 2025, reflecting strong demand for renewable power generation[201]. - Farmer Mac expects to continue participating in renewable energy project finance transactions despite potential challenges from tax credit phase-outs[239]. - Farmer Mac's Infrastructure Finance portfolio included $2.911 billion in Distribution Cooperative loans, $780.822 million in Generation and Transmission Cooperative loans, and $2.283 billion in Renewable Energy loans[273]. Risk Management - Farmer Mac is actively managing interest rate risk through financial derivatives and monitoring exposure to changes in interest rates[332]. - The company is subject to interest rate risk on loans and securities it has committed to acquire but not yet purchased, managing this risk through financial derivatives[297]. - Farmer Mac's strategy includes issuing debt securities across various maturities to align cash flows from assets and liabilities[293].