Federal Agricultural Mortgage (NYSE:AGM) Q3 2025 Earnings Call November 03, 2025 04:30 PM ET Company ParticipantsZach Carpenter - President and COOJalpa Nazareth - Director, Head of Investor Relations, and Finance StrategyBradford T. Nordholm - CEOBose George - Managing DirectorConference Call ParticipantsBrendan McCarthy - Equity Research AnalystBill Ryan - Managing Director and Senior Equity AnalystOperatorGood afternoon, ladies and gentlemen, and welcome to the Farmer Mac Third Quarter 2025 earnings resu ...

Federal Agricultural Mortgage (NYSE:AGM) Q3 2025 Earnings Call November 03, 2025 04:30 PM ET Company ParticipantsZach Carpenter - President and COOJalpa Nazareth - Director, Head of Investor Relations, and Finance StrategyBradford T. Nordholm - CEOBose George - Managing DirectorConference Call ParticipantsBrendan McCarthy - Equity Research AnalystBill Ryan - Managing Director and Senior Equity AnalystOperatorGood afternoon, ladies and gentlemen, and welcome to the Farmer Mac Third Quarter 2025 earnings resu ...

Federal Agricultural Mortgage (NYSE:AGM) Q3 2025 Earnings Call November 03, 2025 04:30 PM ET Speaker0Good afternoon, ladies and gentlemen, and welcome to the Farmer Mac Third Quarter 2025 earnings result conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on November 3rd, 2025. I would n ...

Equity Investor Presentation Third Quarter 2025 Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about Farmer Mac's plans, objectives, expectations, beliefs and intentions and other statements including words such as "may," "likely," "believe," "expect," "consider," "intend," "should," "estimate," "continue," and "commit," or the negative o ...

Financial Data and Key Metrics Changes - The company achieved record quarterly revenue, net effective spread, and core earnings in Q1 2025, with core earnings increasing by 6% year-over-year to $46 million [5][16] - Gross new business volume reached $1.8 billion, reflecting high single-digit growth in total revenue and net effective spread [6][15] - Outstanding business volume grew by $232 million, ending the quarter at $29.8 billion [7][16] Business Line Data and Key Metrics Changes - The infrastructure finance line of business grew by approximately $750 million, with a notable $300 million AgVantage security closed in the power and utility segment [8][9] - The broadband infrastructure segment grew by 22% since year-end, reaching nearly $1 billion [8] - The renewable energy segment grew by nearly $200 million, a 14% increase since year-end [9] - Farm and ranch loan purchases saw a net increase of $86 million despite $500 million in scheduled maturities [9][10] Market Data and Key Metrics Changes - The company noted a strong demand for refinancing and incremental borrowing in the farm and ranch segment, which is core to its mission [11][12] - The overall credit profile remained strong, with a total allowance for losses of $27 million as of March 31, 2025, reflecting a $1.7 million increase from year-end 2024 [19][20] Company Strategy and Development Direction - The company continues to focus on mission-based profitable growth, diversifying its portfolio to create opportunities in various interest rate environments [6][12] - There is an emphasis on strategic investments and talent acquisition in infrastructure finance and renewable energy to build expertise and capacity [9][12] - The company plans to enhance its securitization program to optimize the balance sheet and target new asset opportunities [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating broader market uncertainties stemming from interest rates, regulatory shifts, and policy changes [5][28] - The company anticipates continued growth in the farm and ranch segment due to agricultural economic tightening and potential government support programs [11][28] - Management highlighted a strong liquidity position with $1 billion in cash and short-term instruments, positioning the company well against potential market disruptions [24][25] Other Important Information - Operating expenses increased by 8% year-over-year due to investments in infrastructure technology and higher licensing fees [17] - The efficiency ratio for Q1 2025 was 29%, reflecting a disciplined approach to expense management [17][24] Q&A Session Summary Question: Impact of tariffs on agricultural shipments to China - Management discussed historical support programs for farmers during tariff disruptions and noted current shifts in trade to Mexico due to high tariffs [31][32] Question: Dynamics of net effective spread across business lines - Management explained that the net effective spread increase was driven by strong loan activity in the farm and ranch segment, with a strong pipeline heading into Q2 [35][37] Question: Renewable energy tax credits and outlook - Management confirmed no similar tax credit activity in Q1 2025 but remains optimistic about future opportunities [55] Question: Applications of AI within the company - Management indicated a focus on using AI to improve internal processes, particularly in loan document management [72][73]

Financial Data and Key Metrics Changes - The company achieved record quarterly revenue, net effective spread, and core earnings in Q1 2025, with core earnings increasing by 6% year-over-year to $46 million [5][16] - Gross new business volume reached $1.8 billion, contributing to a net increase of $232 million in outstanding business volume, totaling $29.8 billion at the end of the quarter [6][16] - Net effective spread reached a record of $90 million or 117 basis points, with sequential and year-over-year improvements of $2.5 million and $6.9 million respectively [16][23] Business Line Data and Key Metrics Changes - The infrastructure finance line of business grew by approximately $750 million, with significant contributions from the broadband infrastructure segment, which grew 22% since year-end [8][9] - The renewable energy segment saw growth of nearly $200 million, a 14% increase since year-end [9] - Farm and ranch loan purchases increased by $86 million despite $500 million in scheduled maturities, indicating strong demand in this segment [9][10] Market Data and Key Metrics Changes - The company noted a strong demand for financing opportunities in rural telecommunication providers driven by fiber line expansion and wireless broadband deployment [8] - The overall credit profile remained strong, with a total allowance for losses of $27 million, reflecting a $1.7 million increase from year-end 2024 [19][20] - Ninety-day delinquencies increased to 54 basis points, up from 37 basis points at year-end, reflecting seasonal patterns [20] Company Strategy and Development Direction - The company continues to focus on mission-based profitable growth, emphasizing diversification of its portfolio to create opportunities in various interest rate environments [6][12] - Strategic investments and talent acquisition in infrastructure finance and renewable energy are prioritized to build expertise and capacity [9][12] - The company plans to enhance its securitization program to optimize the balance sheet and target new asset opportunities [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating broader market uncertainties stemming from interest rates, regulatory shifts, and policy changes [5][13] - The company anticipates continued growth in the farm and ranch segment due to agricultural economic tightening and potential government support programs [9][11] - Management remains optimistic about the future, focusing on fulfilling its mission efficiently and innovatively [27] Other Important Information - Operating expenses increased by 8% year-over-year due to investments in infrastructure technology and higher licensing fees [17] - The company maintains a strong capital position, with core capital of $1.5 billion exceeding statutory requirements by $601 million [20][21] - The company has approximately $1 billion in cash and short-term instruments, providing a strong liquidity position [23] Q&A Session Summary Question: Impact of tariffs on agricultural shipments to China - Management discussed historical support programs for farmers during tariff disruptions and noted current shifts in trade patterns towards Mexico [30][32] Question: Dynamics of net effective spread across business lines - Management explained that the net effective spread increase was driven by strong loan activity in the farm and ranch segment, with a robust pipeline heading into Q2 [34][36] Question: Changes in funding costs and securitization expectations - Management highlighted improved funding dynamics from Q4 to Q1 and expressed optimism about upcoming securitization transactions [48][49] Question: Renewable energy tax credits and outlook - Management confirmed no new tax credit activity in Q1 but remains optimistic about future opportunities [55] Question: Applications of AI within the company - Management indicated a focus on using AI to improve internal processes, particularly in loan document management [71][72]

Financial Data and Key Metrics Changes - The company achieved record quarterly revenue, net effective spread, and core earnings in Q1 2025, with core earnings increasing by 6% year-over-year to $46 million [4][15] - Gross new business volume reached $1.8 billion, with outstanding business volume growing by $232 million to $29.8 billion [5][15] - Net effective spread reached a record of $90 million or 117 basis points, with sequential and year-over-year improvements of $2.5 million and $6.9 million respectively [15][22] Business Line Data and Key Metrics Changes - The infrastructure finance line of business grew by approximately $750 million, with significant contributions from the power and utility segment and broadband infrastructure segment growing by 22% [6][8] - Renewable energy segment grew by nearly $200 million, a 14% increase since year-end 2024 [8] - Farm and ranch loan purchases saw a net increase of $86 million despite $500 million in scheduled maturities [9][10] Market Data and Key Metrics Changes - The company noted a strong demand for farm and ranch assets, with a focus on liquidity and working capital needs due to tightening agricultural economic conditions [60] - The overall credit profile remained strong, with 90-day delinquencies at 54 basis points, up from 37 basis points at year-end 2024 [18][19] Company Strategy and Development Direction - The company continues to focus on mission-based profitable growth, diversifying its portfolio to create opportunities in various interest rate environments [5][12] - Strategic investments and talent acquisition in infrastructure finance and renewable energy are prioritized to build expertise and capacity [8][12] - The company plans to enhance its securitization program to optimize the balance sheet and target new asset opportunities [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating broader market uncertainties related to interest rates, regulatory shifts, and government actions [5][12] - The company anticipates continued growth in the farm and ranch segment due to ongoing agricultural economic tightening and potential government support programs [10][61] - Management highlighted a strong liquidity position with 289 days of liquidity and approximately $1 billion in cash and short-term instruments [22][23] Other Important Information - Operating expenses increased by 8% year-over-year due to investments in infrastructure technology and higher licensing fees [16] - The company’s core capital of $1.5 billion exceeded statutory requirements by $601 million or 65% as of March 31, 2025 [19][20] Q&A Session Summary Question: Impact of tariffs on agricultural shipments to China - Management discussed historical support programs for farmers during tariff disruptions and noted current shifts in trade patterns towards Mexico [28][30] Question: Dynamics of net effective spread across business lines - Management explained that the net effective spread increase was driven by strong loan activity in the farm and ranch segment, while broadband and renewable energy segments experienced slight declines [34][36] Question: Changes in funding costs and upcoming securitization - Management indicated improved funding dynamics from Q4 to Q1 and expressed optimism about the upcoming securitization transaction [48][50] Question: Outlook for renewable energy and tax credits - Management confirmed no new tax credit activity in Q1 but remains optimistic about future opportunities [54][55] Question: Applications of AI within the company - Management highlighted the focus on using AI to improve internal processes, particularly in loan document management [70][72]

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 ...

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 company purchased $7 billion in gross volume, with significant growth in farm and ranch and renewable energy loan purchases [15] - The broadband infrastructure segment grew over $300 million or 60% year over year, reflecting strong demand for financing opportunities in rural areas [17] Market Data and Key Metrics Changes - The company ended the year with nearly $1.5 billion in total renewable energy volume, reflecting strong demand for renewable energy power generation and storage [16] - The farm and ranch segment saw net growth of about $200 million during 2024, supporting larger agribusinesses [18] - Ninety-day delinquencies increased from 37 basis points to 51 basis points, reflecting seasonal patterns in the agricultural cycle [38] Company Strategy and Development Direction - The company plans to continue its focus on renewable energy and broadband infrastructure as key growth areas, with a strong pipeline for 2025 [17][22] - The company aims to maintain a disciplined approach to expense management while investing in technology to enhance operational efficiency [34] - The company is committed to being a regular issuer in the market, with plans to explore new securitization products and asset classes [22][43] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, 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 navigating market uncertainty and potential regulatory changes while fulfilling its mission [49] Other Important Information - The company announced a 7% increase in its quarterly common stock dividend to $1.50 per share, effective in the first quarter of 2025 [10][41] - The total allowance for losses was $25.3 million as of December 31, 2024, reflecting a $3.4 million increase from the previous quarter [36] Q&A Session Summary Question: Update on transformational securitization product - Management is exploring opportunities to securitize loans similar to farm and ranch loans and renewable energy loans, with no pending announcements at this time [56][57] Question: Details on elevated G&A expenses - Elevated operating expenses were attributed to new business lines and one-time expenses related to the completion of the STARS program, with some volatility expected [62][63] Question: Outlook for spreads in 2025 - Management anticipates spreads to remain stable, with growth in higher spread businesses like renewable energy and farm and ranch products [72][78] Question: Impact of credit loss content on higher product spreads - Credit issues remain idiosyncratic, with no systemic problems anticipated, and management is cautious about projecting future credit trends [89][92] Question: Potential changes in renewable energy support from the government - Current projects are not grant-dependent and have locked-in credits, with management taking a wait-and-see approach regarding potential changes in tax law [101][105] Question: Loan loss reserve expectations - The increase in the reserve was not a catch-up but rather reflective of specific idiosyncratic issues, with expectations for stability if no new issues arise [110][114]