AGM-A — Federal Agricultural Mortgage Corporation

Farmer Mac Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Outstanding Business Volume: Surpassed $33 billion, reaching $33.4 billion by year-end.
• Record Revenue: $410 million, a 13% increase from the previous year.
• Core Earnings: $183 million for the year, marking the 10th consecutive year of record core earnings; Q4 core earnings were $40 million, down $3.6 million year-over-year.
• Net Effective Spread: Reached $383 million for the year, a 13% increase; Q4 net effective spread was $101.4 million, a 16% increase year-over-year.
• Dividends: Quarterly dividend increased 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 authorization, totaling $78 million returned to shareholders in 2025.

2. Strategic Updates and Business Highlights

• Diversification Strategy: Continued focus on expanding into higher spread, mission-aligned businesses, particularly in Renewable Energy, Broadband Infrastructure, and Corporate AgFinance.
• Farm Securitization: Completed the seventh Farm securitization transaction, enhancing liquidity and capital optimization.
• Market Demand: USDA projects a 5% increase in demand for real estate mortgages in 2026, supporting Farmer Mac's growth strategy.
• Portfolio Growth: Significant growth in the Farm & Ranch segment and Infrastructure Finance, with notable increases in Power & Utilities and Renewable Energy segments.

3. Forward Guidance and Outlook

• 2026 Expectations: Anticipate continued strong demand for liquidity and capital efficiency across all segments, with a focus on maintaining a balanced capital allocation approach.
• Credit Quality: Management expects to see a reduction in 90-plus day delinquencies in the first half of 2026 due to positive outcomes from distressed property sales.
• Expense Management: Targeting an efficiency ratio of 30%, with planned investments in technology and personnel to support growth.

4. Bad News, Challenges, or Points of Concern

• Credit Provisions: $32.9 million provision for credit loss in 2025, primarily due to specific borrower issues in the Corporate AgFinance and Broadband Infrastructure segments.
• Operating Expenses: Increased by 14% year-over-year, attributed to transaction-related costs and personnel investments.
• Market Volatility: Ongoing uncertainties from interest rates, commodity prices, and geopolitical factors could impact future performance.

5. Notable Q&A Insights

• Credit Losses: Management emphasized that credit issues were concentrated among a few borrowers and not indicative of systemic problems in the portfolio.
• Spread Expectations: Future spreads will depend on product mix and growth opportunities, with strong growth anticipated across all segments.
• Government Support: Anticipated government payments in 2026 are expected to bolster farm income, aiding the agricultural sector.
• Data Center Demand: No significant impact on farmland prices from data center investments; farmland values remain stable despite some regional declines.

Overall, Farmer Mac's performance in 2025 reflects strong operational execution and strategic diversification, though challenges remain in credit quality and expense management. The outlook for 2026 appears positive, driven by robust demand and strategic initiatives.