AGM-PG — Federal Agricultural Mortgage Corporation

Farmer Mac Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Outstanding Business Volume: Surpassed $33 billion.
• Record Revenue: $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: $40 million, a decline of $3.6 million from the prior year, primarily due to credit provisions.
• Net Effective Spread: Reached $101.4 million in Q4, a 16% increase year-over-year, with an annual total of $383 million, up 13%.
• Dividends: Increased quarterly dividend by $0.10 to $1.60 per share, marking the 15th consecutive annual increase.
• Share Repurchase: $12.9 million completed in Q4, with $37.1 million remaining under the current authorization.

2. Strategic Updates and Business Highlights

• Diversification Strategy: Continued focus on diversifying into higher spread, mission-aligned businesses, with significant growth in the Farm & Ranch segment.
• Securitization Transactions: Completed seventh Farm securitization, enhancing liquidity and efficiency in the agricultural mortgage market.
• Product Development: Plans to introduce a new product in 2026 to meet investor demand for agricultural assets.
• Infrastructure Finance Growth: Outstanding business volume in this segment increased to $11.8 billion, driven by strong demand in renewable energy and broadband sectors.

3. Forward Guidance and Outlook

• 2026 Expectations: Anticipate robust demand for agricultural real estate mortgages, with a projected 5% increase in transaction volume.
• Continued Growth: Strong pipelines across all segments, particularly in Farm & Ranch and infrastructure finance, with expectations for sustained net growth.
• Credit Quality: Confidence in portfolio health, with expectations of reduced delinquencies due to positive outcomes from distressed property sales.

4. Bad News, Challenges, or Points of Concern

• Credit Provisions: $32.9 million provision for credit loss in 2025, with $19.6 million attributed to specific borrowers facing operational challenges.
• Operating Expenses: Increased by 14% year-over-year, attributed to investments in business volume support and technology.
• Potential Credit Losses: Concerns about higher credit costs in newer segments as they season, although overall asset quality remains strong.

5. Notable Q&A Insights

• Credit Losses: Management emphasized that recent credit issues were borrower-specific and not indicative of systemic problems within the portfolio.
• Expense Management: CFO Matt Pullins noted a focus on balancing expense growth with revenue, maintaining an efficiency ratio target of 30%.
• Market Dynamics: Discussion on the impact of government payments and market stabilization on agricultural finance, with expectations of continued support for farmers.
• Data Center Demand: Clarified that while demand for data centers is strong, it has not materially impacted farmland prices.

Overall, Farmer Mac reported strong financial performance in 2025, with a focus on strategic growth and diversification, while navigating challenges related to credit provisions and operating expenses. The outlook for 2026 remains positive, driven by robust demand across key segments.