AGM-PE — Federal Agricultural Mortgage Corporation

Summary of Farmer Mac Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Outstanding Business Volume: Surpassed $33 billion, with a total of $33.4 billion at year-end.
• Record Revenue: Achieved $410 million, a 13% increase year-over-year.
• Core Earnings: $183 million for the full year, marking the 10th consecutive year of record annual core earnings. Q4 core earnings were $40 million, down $3.6 million from the previous year.
• Net Effective Spread: Reached $383 million for the full year, a 13% increase, and $101.4 million for Q4, a 16% increase year-over-year.
• Dividend Increase: Quarterly dividend raised by $0.10 to $1.60 per share, marking the 15th consecutive annual increase.
• Share Repurchases: $12.9 million completed in Q4 under a $50 million program, totaling $78 million returned to shareholders in 2025.

2. Strategic Updates and Business Highlights

• Diversification Strategy: Continued focus on diversifying into higher spread, mission-aligned businesses, particularly in Renewable Energy, Broadband Infrastructure, and Corporate AgFinance.
• Securitization Transactions: Completed the seventh Farm securitization transaction, enhancing liquidity in the agricultural mortgage market.
• Market Demand: USDA projects a 5% increase in demand for real estate mortgages in 2026, with strong activity anticipated in the Farm & Ranch segment.
• Infrastructure Growth: Significant growth in Infrastructure Finance, with outstanding business volume increasing to $11.8 billion, driven by demand for renewable energy and broadband expansion.

3. Forward Guidance and Outlook

• Positive Momentum: Anticipation of continued strong customer demand for liquidity and capital efficiency in 2026.
• Growth Expectations: Strong pipelines across all segments, particularly in Infrastructure Finance and Farm & Ranch AgVantage, with expectations for robust loan purchase growth.
• Credit Quality: Confidence in maintaining high credit quality despite recent challenges, with expectations for reduced delinquencies in the first half of 2026.

4. Bad News, Challenges, or Points of Concern

• Credit Provisions: $32.9 million provision for credit losses in 2025, primarily related to specific borrowers in Corporate AgFinance and Broadband Infrastructure, raising concerns about potential systemic issues.
• Operating Expenses: Operating expenses increased by 14% year-over-year, driven by investments in business volume support and technology, which could pressure margins.
• Market Volatility: Ongoing uncertainties from interest rate fluctuations, commodity price changes, and geopolitical dynamics pose risks to future performance.

5. Notable Q&A Insights

• Credit Losses: Management emphasized that recent credit losses were borrower-specific and not indicative of systemic issues within the portfolio. They are monitoring these loans closely.
• Expense Management: CFO Matt Pullins highlighted the need for continued investment in technology and personnel to support growth while managing expenses within a targeted efficiency ratio.
• Market Dynamics: The team discussed the impact of government payments on farm income and the stability of farmland prices amidst rising data center demand, clarifying that data center investments have not significantly affected farmland values.

Overall, Farmer Mac reported strong financial performance and strategic growth initiatives while addressing challenges related to credit quality and operating expenses. The outlook for 2026 remains positive, with expectations for continued demand and growth across various segments.