Federal Agricultural Mortgage (AGM) - 2024 Q2 - Quarterly Report

Financial Performance - Net income attributable to common stockholders for Q2 2024 was $40.313 million, a sequential decrease of$6.6 million due to a $6.4 million increase in provision for credit losses[153]. - Core earnings for Q2 2024 were$39.777 million, down $3.6 million sequentially, primarily due to a$6.4 million increase in provision for credit losses[155]. - Core earnings for the three months ended June 30, 2024, were $39,777 thousand, a decrease from$42,162 thousand in the same period of 2023[179]. - The company reported a net income attributable to common stockholders of $40,313 thousand for the three months ended June 30, 2024, compared to$40,421 thousand in the same period of 2023[179]. - For the three months ended June 30, 2024, GAAP Basic EPS was $3.71, a slight decrease from$3.73 in the same period of 2023, while Core Earnings - Basic EPS was $3.66, down from$3.89[182]. - For the six months ended June 30, 2024, GAAP Diluted EPS increased to $7.96 from$7.39 in 2023, while Core Earnings - Diluted EPS rose to $7.59 from$7.42[183]. - Core earnings per share for the three months ended June 30, 2024, were $3.66 (basic) and$3.63 (diluted), down from $3.89 and$3.86, respectively, in the same period of 2023[179]. Revenue and Income Sources - Net interest income for Q2 2024 was $87.340 million, reflecting a$1.0 million sequential increase driven by a shift towards higher-yielding loans[158]. - The net effective spread for Q2 2024 was 1.14%, consistent with the previous quarter[158]. - Total revenues for the six months ended June 30, 2024, increased to $178,341 thousand from$169,716 thousand in the same period of 2023[181]. - The provision for losses for the six months ended June 30, 2024, was $4,360 thousand, compared to$1,892 thousand in the same period of 2023[181]. - Guarantee and commitment fee income for the six months ended June 30, 2024, was $7.7 million, a 4$7.4 million in the same period of 2023[200]. Asset and Liability Management - Core capital increased to $1.510 billion as of June 30, 2024, up from$1.452 billion at the end of 2023[164]. - As of June 30, 2024, Farmer Mac's total assets increased to $30.19 billion, up by$669.93 million (2%) from December 31, 2023[265]. - The total liabilities rose to $28.69 billion, reflecting an increase of$580.82 million (2%) primarily due to higher notes payable[266]. - Farmer Mac's total equity reached $1.50 billion, an increase of$89.12 million (6%) driven by higher retained earnings and accumulated other comprehensive income[266]. Credit Quality and Delinquencies - The 90-day delinquency rate for Agricultural Finance mortgage loans was 0.54% as of June 30, 2024, down from 0.69% as of March 31, 2024[269]. - The total 90-day delinquencies amounted to $62.06 million, with 34 delinquent loans reported as of June 30, 2024[272]. - Substandard assets in the Agricultural Finance mortgage loan portfolio were$248.0 million (2.2% of the portfolio) as of June 30, 2024, compared to $255.2 million (2.3$7.2 million in Q2 2024, driven by credit upgrades in permanent plantings and crops[278]. - The top ten borrower exposures over 90 days delinquent represented over half of the total 90-day delinquencies as of June 30, 2024[269]. Business Volume and Growth - Outstanding business volume as of June 30, 2024, was $28.8 billion, a net decrease of$88.9 million from the previous quarter[162]. - Farmer Mac's outstanding business volume increased by 7.6% in Q2 2024 compared to Q2 2023, reflecting the diversification of its business model and the resilience of the agriculture and rural infrastructure sectors[238]. - The company has consistently increased its total outstanding business volume from $26,484,118 thousand as of March 31, 2023, to$28,758,339 thousand as of June 30, 2024, representing a growth of approximately 8.59% over the period[342]. - The total outstanding business volume for the company has shown a steady upward trend over the past year, with a notable increase from $24,479,391 thousand as of June 30, 2022, to the current figure, indicating a year-over-year growth of approximately 17.67$24.5 million compared to $24.2 million in 2023, while for the six months, expenses rose by 8$51.7 million[208]. - Compensation and employee benefits expenses increased by 6% to $14.8 million for Q2 2024, and by 13$33.1 million for the six months, primarily due to higher headcount and stock compensation[210]. Market and Economic Conditions - The USDA projects net cash farm income to drop by 21% in 2023 and another 24% in 2024, primarily due to lower commodity prices and higher farm expenses[248]. - U.S. agricultural exports are projected to decline to $170.5 billion in 2024, a 5% decrease from 2023 and a 13% drop from peak levels in 2022[254]. - The U.S. experienced 28 separate billion-dollar weather disasters in 2023, impacting agricultural production significantly[255]. Regulatory and Compliance - Farmer Mac's compliance with statutory capital requirements is classified as "level 1," the highest compliance level[336]. - The FCA's proposed regulatory agenda includes a review of Farmer Mac's regulatory capital framework, with potential rulemaking expected in May 2025[263].