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 core earnings.
• Q4 Core Earnings: $40 million, down $3.6 million from the prior year, impacted by credit provisions.
• Net Effective Spread: Reached $101.4 million for Q4, a 16% increase year-over-year; full-year net effective spread was $383 million, up 13%.
• Dividend Increase: Quarterly dividend raised 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, including Renewable Energy and Broadband Infrastructure.
• Farm Securitization: Completed seventh Farm securitization transaction, enhancing liquidity in the agricultural mortgage market.
• AgVantage Securities Growth: Portfolio grew by $500 million in Q4, reversing a previous decline.
• Infrastructure Finance Growth: Outstanding business volume increased to $11.8 billion, driven by demand in data centers and renewable energy projects.

3. Forward Guidance and Outlook

• 2026 Expectations: Anticipate robust demand for agricultural real estate mortgages, projected to grow by 5% year-over-year.
• Continued Growth: Strong pipelines across all segments, particularly in Farm & Ranch and Infrastructure Finance.
• Credit Quality: Confidence in asset quality with expectations of reduced delinquencies from recent property sales.

4. Bad News, Challenges, or Points of Concern

• Credit Provisions: $32.9 million provision for credit losses in 2025, with $19.6 million tied to specific borrowers in Corporate AgFinance and Broadband Infrastructure.
• Operational Challenges: Some borrowers faced business-specific obstacles, leading to concentrated credit issues.
• Rising Operating Expenses: 14% increase in operating expenses due to investments in business volume support, although efforts are in place to manage these costs.

5. Notable Q&A Insights

• Credit Provisioning: Management indicated that while there are automatic provisions due to portfolio growth, they do not foresee significant increases in credit costs moving forward.
• Expense Management: CFO noted that while expenses are expected to grow with business volume, they will remain focused on maintaining an efficiency ratio around 30%.
• Market Dynamics: Discussions highlighted the impact of government payments on agricultural income and the stability of farmland prices despite external pressures from data center demand.
• Underwriting Adjustments: Management emphasized that while underwriting standards remain unchanged, they continuously adapt their approach based on market conditions and borrower-specific issues.

Overall, Farmer Mac demonstrated strong financial performance in 2025, with strategic initiatives aimed at growth and diversification, despite facing some credit challenges and rising expenses. The outlook for 2026 remains positive, supported by strong demand across various segments.