Federal Agricultural Mortgage Corporation Q4 FY2024 earnings call

• Delivered strong financial results in 2024 with record net effective spread and core earnings, driven by loan growth, asset liability management, and operating expense control.
• Closed two $300 million farm securitization transactions in 2024, the first time two issuances in a year.
• Announced fourteenth consecutive annual dividend increase, raising quarterly common stock dividend to $1.50 starting Q1 2025.
• Introduced new segment reporting in Q4 2024, rebranded rural utility to power and utilities, and added broadband infrastructure segment.
• Strong loan purchase volume in farm and ranch, renewable energy, and broadband, offset by maturities in farm and ranch.

In 2024, total revenues improved to $362 million compared to $349 million in 2023, primarily due to higher net effective spread. Core earnings year to date were $172 million, modestly exceeding the prior year record. The farm and ranch segment closed over $1.5 billion of new loan purchases in 2024 but had over $2 billion in scheduled maturities. The renewable energy segment recognized $2.6 million in investment tax credits and had $1.5 billion in total volume as of year-end 2024. The broadband infrastructure segment grew over $300 million or 60% year over year. The power and utilities segment included loans to rural electric generation/transmission and distribution cooperatives. Corporate Ag Finance saw net growth of about $200 million in 2024.

• Plan to continue target securitization deal sizes of approximately $300 million in 2025, exploring new securitization products including renewable energy.
• Anticipate positive momentum in farm and ranch loans in 2025 due to tightening bank liquidity and commodity price volatility.
• Announced 7% increase in quarterly common stock dividend to $1.50 starting Q1 2025.

• Credit risks: Idiosyncratic credit events such as issues with a renewable energy loan and almond price impacts on farm loans.
• Market volatility: Impact on net effective spread from volatile funding environment and credit spreads.
• Regulatory changes: Uncertainty around regulatory and statutory developments affecting business.

Q: Update on transformational securitization product A: Exploration continues on securitizing loans from others and renewable energy loans, focusing on profitability and return on allocated equity capital with no pending announcements Q: G&A expenses elevation A: Due to entry into new lines of business (telecom, renewable energy) and completion of STARS program with one-time expenses Q: Outlook for spreads A: Higher margin segments growing, AgVantage credit spreads tight, funding strategy hedges to manage spread Q: Loan loss reserve A: Allowances follow strict formulas, idiosyncratic issues cause changes, but minimal relative to capital Q: Renewable energy policy A: Projects not grant-dependent, tax credits locked in, monitor tax law changes