Federal Agricultural Mortgage Corporation Q4 FY2025 earnings call

• Brad Nordholm stated that 2025 was a strong year with over $33 billion in outstanding business volume, record revenue of $410 million, and $183 million in core earnings. The company announced a $0.10 per share increase in the quarterly dividend to $1.60 per share, its 15th consecutive annual increase. It was active in the share repurchase program, with $12.9 million completed in the fourth quarter under the amended program and $37.1 million remaining. The seventh Farm securitization transaction was completed. - Zack Carpenter mentioned that the results showcase the benefits of the diversification strategy. The team saw outstanding business volume activity with broad - based net volume growth across all segments. The Farm & Ranch segment experienced significant net growth, with activity accelerating in the fourth quarter and continuing into 2026. The Corporate AgFinance segment had net growth, and it was anticipated to have activity in the first quarter of 2026. The Infrastructure Finance segment had strong growth in outstanding business volume, with contributions from Power & Utilities, Renewable Energy, and Broadband Infrastructure segments. - Matt Pullins discussed fourth - quarter and full - year results. Fourth - quarter core earnings were $40 million, negatively affected by credit provisions related to a few loans. Full - year core earnings were $182.9 million, a 6.6% increase compared to the prior year. Core capital increased by $204 million in 2025 to $1.7 billion, and the Tier 1 capital ratio was 13.3% as of December 31, 2025.

In 2025, Farmer Mac achieved strong financial results. Outstanding business volume exceeded $33 billion. Revenue reached a record $410 million, a 13% rise from the previous year. Core earnings amounted to $183 million, marking the 10th consecutive year of record annual core earnings. The agricultural finance outstanding business volume grew by $1 billion, with the Farm & Ranch segment accounting for nearly all of this net growth. The Farm & Ranch AgVantage securities portfolio reversed the runoff trend and expanded by $500 million in the fourth quarter. The Corporate AgFinance segment saw a net growth of $63 million in 2025. The Infrastructure Finance segment's outstanding business volume stood at $11.8 billion at year - end 2025, an increase of over $2.8 billion from the prior year, with contributions from Power & Utilities, Renewable Energy, and Broadband Infrastructure segments. The net effective spread in the fourth quarter was $101.4 million, a 16% increase from the prior year quarter and an all - time quarterly high. For the full year, net effective spread was a record $383 million, up $43.5 million or 13% from the previous year. Full - year core earnings were $182.9 million, a 6.6% increase compared to the prior year, partially offset by higher credit expenses and operating costs.

• Farmer Mac anticipates introducing a new product in the market in 2026 to support investor demand for agricultural assets and align with its mission. - It is expected that there will be continued customer demand for liquidity, capital efficiency, and long - term funding solutions as market conditions change. - The company will maintain a thoughtful and balanced approach to managing its overall capital position, with organic capital generation, selective capital issuance, and the use of risk transfer tools to support future growth, especially in more accretive segments. - In 2026, there will be expense growth related to the expansion of outstanding business volume, including transaction - related, operational, and personnel expenses, while aiming to operate within the target efficiency ratio of 30%.

• Credit provisions were associated with a small number of loans originated from 2021 to 2023 in the Corporate AgFinance and Broadband Infrastructure segments, although these did not signal a significant change in the high credit quality of the portfolios. - The business is exposed to volatility and uncertainty in the environment, such as interest rate fluctuations, commodity price changes, supply chain disruptions, consumer behavior shifts, and broader geopolitical and policy dynamics. - In the Corporate AgFinance segment, ongoing refinancings and maturities could pose a headwind. - Increased policy uncertainty in the renewable power investment market may affect the Renewable Energy segment, although Farmer Mac intends to continue participating in transactions with strong credit standards. - Data center demand in the Broadband Infrastructure segment may bring some risks, but no material impact on farmland prices has been observed in the portfolio.

Q: Regarding credit issues, while noting losses are customer - specific, is there a way to consider the run rate provision based on the changing mix?

A: Keep in mind that $32 million of the provision included $13 million attributable to automatic provisions from CECL modeling due to portfolio growth. In 2026, it starts strongly, with a core level of automatic provisioning reflecting portfolio growth, and special provisions for individual credits are difficult to forecast, with no indication that the number will increase currently.

Q: About the spread expectation for the year, are current spread levels reasonable based on expectations?

A: This depends on volume mix. 2025 was a year of substantial growth in newer segments with more accretive yields. AgVantage had an inflection point in 2024 and has strong momentum into 2026. It's hard to pinpoint spread direction as it depends on product mix and growth opportunities, with strong growth expected in all segments and products in the first half of 2026.

Q: Following up on the provision, can you elaborate on the portfolio situation with broadband, small credits, and Corporate AgFinance, and whether there was something with smaller credits causing more disruption in the fourth quarter?

A: There are only a few such loans compared to the large number on the balance sheet. There is no systemic issue. Some loans were purchased post - COVID, and businesses struggled to adjust, with things deteriorating further in the fourth quarter, but it's very borrower - specific and the overall portfolio quality is high.

Q: On the Farm & Ranch business, what's the indication on January 1 loan payments and government market stabilization payments in February?

A: The January 1 prepayment cycle was in line with previous years, with more growth in January than prepayments indicating momentum. Government program payments in 2026, including $13 billion from H.R. 1 and $24 billion in ad hoc and disaster aids, will support the Ag economy.

Q: On the expense outlook in 2026, how should we think about expense growth?

A: There is modest seasonality with slower fourth - quarter expense growth. The first quarter of 2026 has higher personnel expenses. In 2026, there will be expense growth related to the expansion of business volume, including transaction, operational, and personnel expenses, as well as strategic investments in technology and business development, while aiming to operate within the 30% efficiency ratio.

Q: What's the outlook for volume mix heading into 2026, and which segments are more bullish?

A: Pipelines in the infrastructure finance line of business remain strong, with strong growth expected in all 3 segments in the next couple of quarters. The Farm & Ranch segment of agricultural finance continues to perform strongly with record loan submissions and approvals in January. Farm & Ranch AgVantage had a strong fourth quarter, and its growth is expected to increase in 2026.

Q: What's driving the relative value increase in the AgVantage business?

A: Some counterparties' facilities have been closed with regulatory approvals, and existing counterparties have modified facilities for more utilization. The fourth quarter was an inflection point with various components coming to fruition, making the product set have relative value compared to other liquidity sources.

Q: On the credit side, what's the recovery outlook?

A: There has been improvement in pricing for permanent planting, specifically almonds in California. A stressed borrower's transaction is showing signs of resolution, expected to lead to a reduction in 90 - plus day delinquencies and the recoupment of fees and interest income in the first half of 2026, with the positive financial impact recognized through an increase in net effective spread as the asset was on nonaccrual.

Q: On the dividend increase of 7%, how is it related to business growth and repurchase opportunity?

A: There are tools for managing capital growth. Strong growth in segments consuming more capital is positive for the long - term financial strength and performance.

Q: On problem loans from 2021 to 2023, what lessons have been learned affecting current underwriting?

A: We can constantly evolve and monitor markets. We don't change standards but update our thinking based on market changes. We have increased headcount for the right expertise in newer segments and use up - to - date information for appropriate credit decisions as markets evolve.

Q: What's the impact of data center demand on farmland prices and lending risk?

A: Data center opportunities are in rural areas not related to productive farmland areas. Farmland values have been relatively stable with some declines due to the commodity cycle, and no correlation between data center investments and farmland value changes has been seen in the portfolio.