Core Viewpoint - Federal Agricultural Mortgage Corporation (AGM), also known as Farmer Mac, is a Government-Sponsored Enterprise (GSE) focused on supporting financing for agriculture and infrastructure in rural America [1]. Company Overview - AGM's mission is to facilitate financing in the agricultural sector and rural infrastructure [1]. - The company operates as a GSE, which indicates its role in enhancing the availability of credit in the agricultural market [1]. Investment Position - The analyst has a beneficial long position in AGM shares, indicating confidence in the company's future performance [2].

Financial Data and Key Metrics Changes - In 2025, the company achieved record revenue of $410 million, a 13% increase from the previous year, and produced $183 million in core earnings, marking the 10th consecutive year of record annual core earnings [3][4] - The net effective spread reached an all-time quarterly record of $101.4 million in Q4 2025, reflecting a 16% increase year-over-year [17] - Core earnings for the full year were $182.9 million, up 6.6% compared to the prior year, despite a 14% increase in operating expenses [20][21] Business Line Data and Key Metrics Changes - The Agricultural Finance segment's outstanding business volume grew by $1 billion in 2025, primarily driven by the Farm and Ranch segment [9] - The Infrastructure Finance line of business saw outstanding business volume increase to $11.8 billion, up over $2.8 billion from the prior year, with significant contributions from Power Utilities and Renewable Energy segments [11][12] - The Corporate AgFinance segment experienced a net growth of $63 million during 2025, reflecting ongoing support for larger agribusinesses [11] Market Data and Key Metrics Changes - The USDA projects a 5% increase in demand for real estate mortgages in 2026 compared to 2025 levels, indicating a robust agricultural real estate market [6] - The Broadband Infrastructure segment grew by $700 million in 2025, driven by data center-related demand [13] Company Strategy and Development Direction - The company is focused on diversifying its portfolio into higher spread, mission-aligned businesses while maintaining strong underwriting standards [8] - A new product is anticipated to be introduced in 2026 to support investor demand for agricultural assets [5] - The company aims to balance capital allocation between prudent growth, balance sheet strength, and consistent shareholder returns [4][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience despite market volatility, including interest rate movements and commodity price fluctuations [6][15] - The company expects continued customer demand for liquidity and capital efficiency as market conditions evolve [15] - Management highlighted the importance of maintaining a strong capital position to support future growth, particularly in more capital-intensive segments [25] Other Important Information - The company returned $78 million to shareholders through dividends and share repurchases in 2025 [4] - The total allowance for losses as of December 31, 2025, was $39.7 million, or 17% of nonaccrual assets [23] Q&A Session Summary Question: Credit issues and run rate provision - Management noted that $32 million of the provision was attributable to automatic provisions from portfolio growth, with no systemic issues identified [32][40] Question: Spread expectations for the year - Management indicated that spread levels depend on product mix and growth opportunities, with strong growth anticipated across all segments [34][35] Question: Details on credit provisioning related to specific segments - Management clarified that credit issues were borrower-specific and not indicative of systemic problems, with high loan quality across segments [40][42] Question: Expense outlook for 2026 - Management expects a level of expense growth due to increased business volume and strategic investments, while maintaining an efficiency ratio target of 30% [46][47] Question: Outlook for volume mix heading into 2026 - Management expressed a positive outlook for broad gains across all segments, particularly in Farm and Ranch and Infrastructure Finance [52][53]

Financial Data and Key Metrics Changes - In 2025, the company achieved record revenue of $410 million, a 13% increase from the previous year, and produced $183 million in core earnings, marking the 10th consecutive year of record annual core earnings [3][4] - The net effective spread reached $383 million for the full year, an increase of $43.5 million or 13% from the prior year [19][20] - Core earnings for the full year were $182.9 million, up 6.6% compared to the prior year, despite a 14% increase in operating expenses [20][21] Business Line Data and Key Metrics Changes - The Agricultural Finance segment's outstanding business volume grew by $1 billion, primarily driven by the Farm and Ranch segment [9][10] - The Infrastructure Finance segment's outstanding business volume increased to $11.8 billion, up over $2.8 billion from the prior year, with significant contributions from all three segments [11][12] - The Farm and Ranch AgVantage securities portfolio grew by $500 million in the fourth quarter, reversing a previous trend of decline [10] Market Data and Key Metrics Changes - The USDA projects a 5% increase in demand for real estate mortgages in 2026 compared to 2025 levels [6] - The broadband infrastructure segment grew by $700 million in 2025, more than double the prior year's growth, driven by data center-related demand [13][14] Company Strategy and Development Direction - The company is focused on diversifying its portfolio into higher spread, mission-aligned businesses while maintaining strong underwriting standards [8] - A new product is anticipated to be introduced in the market this year to support strong investor demand for agricultural assets [5] - The company aims to balance capital allocation between prudent growth, balance sheet strength, and consistent shareholder returns [4][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience despite volatility and uncertainty in the economic environment, including interest rate movements and commodity price fluctuations [6][15] - The company expects continued customer demand for liquidity and capital efficiency as market conditions evolve [15][25] Other Important Information - The company returned $78 million to shareholders through dividends and share repurchases in 2025 [4] - The total allowance for losses as of December 31, 2025, was $39.7 million, or 17% of nonaccrual assets [23] Q&A Session Summary Question: Credit issues and run rate provision - Management noted that $32 million of the provision was attributable to automatic provisions from portfolio growth, and they do not foresee any significant changes in credit quality [29][32] Question: Spread expectations for the year - Management indicated that spread levels depend on product mix and growth opportunities, with strong growth anticipated across all segments [34][35] Question: Details on credit provisioning - Management clarified that the credit provisioning issues were borrower-specific and not systemic, with high overall loan quality across segments [39][40] Question: Expense outlook for 2026 - Management expects a level of expense growth due to increased business volume and strategic investments, while maintaining an efficiency ratio target of 30% [46][47] Question: Volume mix outlook for 2026 - Management anticipates strong pipelines across infrastructure finance and agricultural finance, with notable growth expected in the Farm and Ranch AgVantage segment [50][53]

Financial Data and Key Metrics Changes - Farmer Mac achieved record revenue of $410 million in 2025, a 13% increase from the previous year, and produced $183 million in core earnings, marking the 10th consecutive year of record annual core earnings [3][4] - The company reported a net effective spread of $383 million for the full year, an increase of 13% from the prior year, and a quarterly net effective spread of $101.4 million, reflecting a 16% increase year-over-year [18][20] Business Line Data and Key Metrics Changes - The Agricultural Finance segment's outstanding business volume grew by $1 billion in 2025, primarily driven by the Farm and Ranch segment [10] - The Infrastructure Finance line of business saw outstanding business volume increase to $11.8 billion, up over $2.8 billion from the prior year, with significant contributions from power utilities and renewable energy segments [12][14] - The corporate Ag Finance segment experienced a net growth of $63 million during 2025, indicating ongoing support for larger agribusinesses [12] Market Data and Key Metrics Changes - The USDA projects a 5% increase in demand for real estate mortgages in 2026 compared to 2025 levels, indicating a robust agricultural real estate market [6] - The broadband infrastructure segment grew by $700 million in 2025, more than double the previous year's growth, driven by data center-related demand [15] Company Strategy and Development Direction - Farmer Mac is focused on diversifying its portfolio into higher spread, mission-aligned businesses while maintaining strong underwriting standards [9] - The company plans to introduce a new product in 2026 to support investor demand for agricultural assets, aligning with its mission [5] - A balanced capital allocation approach prioritizing prudent growth, balance sheet strength, and consistent shareholder returns is emphasized [4] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience despite market volatility, including interest rate movements and commodity price fluctuations [7] - The company anticipates continued customer demand for liquidity and capital efficiency as market conditions evolve [17] - Management highlighted the importance of maintaining a strong capital position to support future growth, particularly in more capital-intensive segments [27] Other Important Information - Farmer Mac returned $78 million to shareholders through dividends and share repurchases in 2025, with a quarterly dividend increase to $1.60 per share [4] - The company completed its seventh farm securitization transaction, enhancing liquidity in the agricultural mortgage market [5] Q&A Session Summary Question: Credit issues and run rate provision - Management noted that $32 million of the provision expense was attributable to automatic provisions from portfolio growth, with no systemic issues identified [33][36] Question: Spread expectations for the year - Management indicated that spread levels depend on product mix and growth opportunities, with strong growth anticipated across all segments [37][39] Question: Details on problem loans - Management clarified that the credit issues were borrower-specific and not indicative of systemic problems, with ongoing monitoring of affected loans [42][45] Question: Impact of government payments on farmers - Management confirmed that government payments are expected to support farmers, particularly in the row crop space, benefiting the agricultural economy [48][49] Question: Expense growth outlook - Management indicated that expense growth will continue in 2026 due to increased business volume and strategic investments, while maintaining an efficiency ratio target of 30% [50][51] Question: Volume mix outlook for 2026 - Management expressed optimism for strong growth in the infrastructure finance and agricultural finance segments, particularly in farm and ranch AgVantage [54][58]

Equity Investor Presentation Fourth Quarter 2025 Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about Farmer Mac's plans, objectives, expectations, beliefs and intentions and other statements including words such as "may," "potential," "believe," "expect," "consider," "intend," "should," "could," "continue," and "commit," or the negative ...

Financial Performance - Farmer Mac reported a record outstanding business volume of $33.4 billion, reflecting a net change of $3.8 billion, or 13% growth year-over-year[6]. - Net interest income increased by 10% year-over-year to $390.7 million, while the net effective spread rose by 13% to a record $383.0 million[6]. - Core earnings reached $182.9 million, or $16.66 per diluted share, representing a 7% increase compared to the previous year[6]. - The diluted EPS (GAAP) decreased by 20% year-over-year to $3.71, while diluted core EPS (Non-GAAP) fell by 8% to $3.66[5]. - Total revenues rose to $410,299,000 in 2025, up from $361,990,000 in 2024, marking an increase of 13.3%[27]. - Core earnings reached $182,949,000 in 2025, compared to $171,630,000 in 2024, representing a growth of 6.6%[27]. - Basic earnings per common share for the year ended December 31, 2025, were $16.73, up from $16.59 in 2024, an increase of 0.8%[23]. - The company reported a net earnings figure of $256,288,000 for 2025, up from $244,918,000 in 2024, which is an increase of 4.6%[27]. Capital and Assets - Farmer Mac's total core capital stood at $1.7 billion, with a Tier 1 Capital Ratio of 13.3% as of December 31, 2025[6]. - Total assets increased to $35,370,157 thousand as of December 31, 2025, up from $31,324,742 thousand in 2024, representing a growth of 12.8%[22]. - Total liabilities increased to $33,651,208 thousand in 2025, compared to $29,835,716 thousand in 2024, reflecting a growth of 12.5%[22]. - Total investment securities rose to $17,550,379 thousand in 2025, compared to $16,576,887 thousand in 2024, marking an increase of 5.9%[22]. - Loans held for investment increased to $13,877,051 thousand in 2025, up from $11,183,408 thousand in 2024, a growth of 24.1%[22]. - Outstanding business volume in Agricultural Finance increased to $21,515,452,000 as of December 31, 2025, compared to $20,494,673,000 as of December 31, 2024[34]. Dividends and Shareholder Returns - The Board of Directors declared a quarterly dividend of $1.60 per share, marking a 7% increase year-over-year and the fifteenth consecutive annual increase[7]. Risk Management and Expenses - The provision for losses for the year ended December 31, 2025, was $32,860 thousand, significantly higher than $11,579 thousand in 2024, indicating increased risk management measures[23]. - Total credit-related expenses increased significantly to $34,210,000 in 2025 from $11,686,000 in 2024, reflecting a rise of 192.5%[27]. - Operating expenses rose to $119,801,000 in 2025, up from $105,386,000 in 2024, which is an increase of 13.7%[27]. - The provision for losses surged to $32,860,000 in 2025, compared to $11,579,000 in 2024, indicating a significant increase of 183.5%[27]. Quarterly Performance - For the three months ended December 31, 2025, total core earnings amounted to $57,091,000, with segment core earnings from Agricultural Finance at $25,571,000[33]. - The company reported a net income of $47,924,000 for the quarter, reflecting the impact of unallocated expenses and income tax effects[33]. - Core earnings for December 2025 were reported at $39,996 thousand, compared to $49,622 thousand in September 2025, indicating a decrease of 19.5%[38]. - Total revenues for December 2025 amounted to $107,911 thousand, up from $105,086 thousand in September 2025, representing an increase of 2.7%[38]. - Net earnings for December 2025 were $59,652 thousand, down from $67,858 thousand in September 2025, a decline of 12.9%[38]. Management and Future Outlook - Management expressed confidence in the company's resilient business model and ability to deliver value to rural America and shareholders[3]. - The earnings conference call to discuss the financial results was scheduled for February 19, 2026[9]. - Farmer Mac's Annual Report on Form 10-K for the year ended December 31, 2025, was filed with the SEC, providing more detailed performance information[10].

Revenue Sources and Financial Performance - Farmer Mac's primary revenue sources include net interest income and guarantee fees from outstanding guaranteed securities and long-term standby purchase commitments (LTSPCs) [31]. - Net income attributable to common stockholders for 2025 was $182.5 million, a year-over-year increase of $2.1 million, driven by a $36.9 million increase in net interest income [203]. - Core earnings for 2025 were $182.9 million, reflecting an increase of $11.3 million year-over-year, primarily due to a $43.5 million increase in net effective spread [204]. - Net interest income for 2025 was $390.7 million, up $36.9 million from 2024, with a net interest yield of 1.19% [207]. - The company provided $10.5 billion in liquidity and lending capacity to lenders serving rural America during 2025 [201]. Loan and Credit Risk Management - The maximum loan size for eligible Agricultural Finance mortgage loans secured by more than 2,000 acres is $17.4 million as of December 31, 2025, with a cumulative direct credit exposure limit of 10% of Farmer Mac's Tier 1 capital, which is $170.6 million [36]. - The allowance for losses increased by $14.3 million, primarily due to $32.9 million in net provision expense, with significant credit deteriorations in Corporate AgFinance and Broadband Infrastructure segments [211]. - Substandard assets increased to $569.8 million as of December 31, 2025, representing 3.52% of the Agricultural Finance portfolio and 0.96% of the Infrastructure Finance portfolio [213]. - 90-day delinquency rates for Agricultural Finance loans were 0.40% as of December 31, 2025, compared to 0.37% in 2024 [214]. - The company has a concentration of $7.6 billion in AgVantage securities issued by three counterparties, which poses a significant credit risk if any of these counterparties default [128]. Business Operations and Market Position - The Agricultural Finance line of business includes the Farm & Ranch and Corporate AgFinance segments, which provide a secondary market for eligible loans through purchasing, guaranteeing, and servicing [34]. - Farmer Mac's activities aim to enhance lenders' liquidity and lending capacity, providing a stable funding source for agricultural and rural credit markets [29]. - The company markets a mix of products to lenders, including long-term fixed-rate loans, to meet their capital and liquidity needs [30]. - Farmer Mac's competitive position is influenced by the willingness of originators to offer eligible loans for sale in the secondary market, as well as the types of products offered by competitors [56]. - The company is classified within level I for compliance with capital standards as of December 31, 2025, indicating the highest compliance level [106]. Employee Engagement and Corporate Culture - As of December 31, 2025, Farmer Mac employed 212 people, reflecting a net increase of 21 employees (11%) compared to year-end 2024 [67]. - The company has a flexible office space and hybrid work model, which has enhanced employee engagement and contributed to receiving the USA Today Top Workplaces national award in 2025 [70]. - Farmer Mac's compensation and benefits package includes a robust paid time off program, a group health plan with all premiums paid by the company, and a 401(k) plan with employer contributions [72]. - The company has adopted a strategic learning and development program called "Farmer Mac LEARN," structured around six strategic LEARN Academies to support employee career development [71]. - The turnover rate decreased to 3.9% in 2025 from 6.8% in 2024 [76]. Capital Management and Financial Stability - As of December 31, 2025, the regulatory capital was $1.7 billion, exceeding the risk-based capital requirement of $201.3 million by approximately $1.5 billion [104]. - The company declared dividends of $1.50 per share for four quarters in 2025, with an increase to $1.60 scheduled for March 2026 [88]. - The company is authorized to borrow up to $1.5 billion from the U.S. Treasury to fulfill guarantee obligations, but has not utilized this authority as of December 31, 2025 [94][95]. - The company has a common stock repurchase program with an authorized amount of $50.0 million, extended to August 5, 2027 [90]. - The company must maintain a capital conservation buffer of more than 2.5% of risk-weighted assets, with restrictions on dividend payouts if the buffer falls below this level [113]. Risk Factors and Compliance - The company is subject to risks from geopolitical instability and natural disasters, which may adversely affect borrowers' ability to repay loans [119]. - The company faces risks from changes in U.S. trade policies and regulations that could impact agricultural producers and infrastructure borrowers [123]. - The company is regulated by government agencies, and changes in legislation could adversely affect its business operations and financial condition [161]. - The company may face increased compliance costs and legal liabilities due to evolving privacy and cybersecurity regulations [165]. - The company is exposed to operational risks due to reliance on third-party servicers for loan servicing, which could adversely affect business operations [142]. Cybersecurity and Operational Risks - Cybersecurity threats have increased, with the company facing regular attacks from various sources, which could disrupt operations and lead to significant financial losses [145]. - The company has implemented a comprehensive cybersecurity risk management program, including annual assessments and regular training for all employees [171]. - The cybersecurity subcommittee of the board meets monthly to discuss the performance and effectiveness of the cybersecurity program [177]. - The Chief Information Security Officer (CISO) has over 20 years of experience in cybersecurity and reports directly to the Chief Risk Officer [178]. - The company maintains a privacy and security incident response program to manage and recover from cybersecurity incidents [173].

Core Insights - Farmer Mac reported strong financial results for the fiscal year 2025, achieving record net effective spread and outstanding business volumes, marking the tenth consecutive year of record annual core earnings [1][2] - The company announced a 7% increase in its quarterly common stock dividend to $1.60 per share, reflecting its commitment to returning value to shareholders [1][3] - Total core capital reached $1.7 billion with a Tier 1 Capital Ratio of 13.3% as of December 31, 2025, indicating a solid capital position [1][3] Financial Performance - Record core earnings of $182.9 million, or $16.66 per diluted share, representing a 7% year-over-year growth [1][3] - Net income attributable to common stockholders was $182.5 million, or $16.62 per diluted share [1][3] - Net effective spread increased by 13% year-over-year to a record $383.0 million [1][3] - Net interest income grew by 10% year-over-year to $390.7 million [1][3] Business Volume and Liquidity - Farmer Mac provided $10.5 billion in liquidity and lending capacity to lenders serving rural America [1][3] - Outstanding business volume grew by $3.8 billion, reflecting a 13% increase year-over-year [1][3] Dividend Information - The quarterly dividend of $1.60 per share will be payable on March 31, 2026, to shareholders of record as of March 16, 2026 [1][3] - This marks the fifteenth consecutive annual increase in the quarterly common stock dividend [1][3] Balance Sheet Highlights - Total assets as of December 31, 2025, were $35.37 billion, up from $31.32 billion in 2024 [3][4] - Total liabilities increased to $33.65 billion from $29.84 billion in the previous year [3][4] - The company reported total equity of $1.72 billion, an increase from $1.49 billion in 2024 [3][4] Earnings Call Information - A conference call to discuss the fourth quarter and full year 2025 financial results is scheduled for February 19, 2026, at 4:30 p.m. Eastern Time [1][3]

Core Viewpoint - First Sabrepoint Capital Management LP has established a new position in Federal Agricultural Mortgage Corporation (Farmer Mac) by acquiring 44,500 shares valued at approximately $7.81 million, indicating a strategic investment in the agricultural finance sector [1][2]. Company Overview - Federal Agricultural Mortgage Corporation (Farmer Mac) provides a secondary market for agricultural and rural infrastructure loans in the United States [6]. - The company reported a total revenue of $402.4 million and a net income of $216 million for the trailing twelve months (TTM) [4]. - The dividend yield stands at 3.44%, with shares priced at $179.14 as of February 12, 2026 [4]. Financial Performance - Farmer Mac's outstanding business volume reached $31.1 billion, with net interest income increasing by 13% year over year to $98.5 million [10]. - Core earnings hit a record of $49.6 million, translating to $4.52 per diluted share, while the net effective spread reached a record $97.8 million [10]. - Despite a 7.85% decline in share price over the past year, the company has outperformed the S&P 500 by 20.75 percentage points [8][10]. Investment Implications - The new position represents 3.01% of First Sabrepoint's 13F reportable assets under management, suggesting confidence in Farmer Mac's growth potential [8]. - The company's secondary market model, which includes farm and ranch, rural utilities, broadband, and renewable energy, provides credit exposure tied to essential infrastructure rather than consumer spending [11]. - Farmer Mac maintains a strong balance sheet with $1.7 billion in core capital and a Tier 1 ratio of 13.9%, indicating financial stability [11].

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