Federal Agricultural Mortgage Corporation · NYSE:AGM
Federal Agricultural Mortgage — Q1 2024 Earnings Presentation
31 slides from Federal Agricultural Mortgage's earnings presentation, May 6, 2024
Slide 1: Equity Investor Presentation First Quarter 2024
Equity Investor Presentation First Quarter 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements In addition to historical information, this presentation includes forward-looking statements that reflect management’s current expectations for Farmer Mac’s future financial results, business prospects, and business developments. Forward-looking statements include, without
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures This presentation is for general informational purposes only, is current only as of March 31, 2024 and should be read in conjunction with Farmer Mac’s Quarterly Report on Form 10-Q filed with the SEC on May 6, 2024. In the accompanying analysis of its financial inf
Slide 4: Quality Assets, Funding Advantage, Growth Prospects
Quality Assets Funding Advantage Growth Prospects • 90-day delinquencies of only 0.27% • Issue at narrow, Government • Ag productivity must double to meet across all lines of business Sponsored Enterprise (GSE) spreads expected global demand to U.S. Treasuries • Cumulative Agricultural Finance • U.S
Slide 5: Our Mission, Stakeholders and Corporate Culture
Our Mission: Our Stakeholders: Our Corporate Culture is Rooted in Our • Increase the accessibility • Financial institutions Values: of financing for American • Rural electric cooperatives • Innovation agriculture and rural infrastructure. • Farmers, ranchers, and rural communities • Passion for our
Slide 6: Management Team
Bradford T. Nordholm Aparna Ramesh Zachary N. Carpenter President & Executive Vice President – Chief Executive Vice President – Chief Chief Executive Officer Financial Officer & Treasurer Business Officer • 40+ years of agricultural and energy finance • 20+ years of experience in mission-oriented •
Slide 7: Farm Sector Assets and Debt
(1) $4,089,950,684 $4,000,000,000 Machinery & Vehicles, $362,280,165 $3,500,000,000 $3,000,000,000 Ag Real Estate Debt-to-Asset Ratio: $2,500,000,000 10.4% $ IN THOUSANDS Real Estate $2,000,000,000 $3,419,530,718 $1,500,000,000 $1,000,000,000 $520,628,364 $500,000,000 Nonreal Estate, $165,587,534 In
Slide 8: Agricultural Mortgage Market (Farmers & Ranchers)
(2) Mortgage Financing Mortgage Financing Farm Credit System (FCS) Non-FCS (Cooperative GSE) Ag Lenders Agricultural • Four FCS Banks Mortgage Market • Insurance Companies • 69 Retail Agricultural Credit (Farmers & Ranchers) • Ag Banks Associations • Non-Bank Lenders (FCS Secondary Market GSE) Agric
Slide 9: Broaden and Deepen Farmer Mac's Market
Broaden Farmer Mac’s Market • Evaluating opportunities not currently being pursued by Farmer Mac • New lines of business • New products Deepen Farmer Mac’s Market • Improving processes and operating practices • Customer interaction • Transaction processes • Existing loan features and pricing 9
Slide 10: Securitization will provide capital relief
As Farmer Mac grows its business, securitization will provide capital relief • Securitization will also stimulate growth as it will increase Farmer Mac’s brand awareness in the capital markets Securitization provides an alternative option to funding longer-term loans, while reducing interest rate ri
Slide 11: Farmer Mac's Regulatory/Congressional Oversight
Farmer Mac’s Regulatory/Congressional Oversight • Regulated by the Farm Credit Administration (FCA) through its Office of Secondary Market Oversight (OSMO) • Congressional oversight through Senate and House Agricultural Committees Operating model excludes issued agricultural mortgage-backed securiti
Slide 12: Line of Business Spread Income Products
Spread Income Volume Q1 Net Effective Line of Business Segment Fee Income Products Products ($ IN BILLIONS) Spread (%) • Loans • LTSPCs • AgVantage Securities • Guaranteed Securities Farm & Ranch • Guaranteed Securities • Loans Serviced for $18.9 0.95% Agricultural Finance • USDA Others • Loans • Un
Slide 13: Agricultural Update
By Commodity Type By Geographic Region Part-time Farm Northeast Southeast 4% Ag. Storage and 4% 9% Processing 6% Northwest 12% Livestock Mid-South 19% 17% Mid-North Permanent 27% Plantings Crops Southwest 22% 49% 31% As of March 31, 2024 Agricultural Update(3) • USDA’s Economic Research Service esti
Slide 14: Treasury: Liquidity and Investment Portfolio
Includes the financial results of the company’s Liquidity Portfolio funding, liquidity, and capital allocation strategies and operations Guaranteed By GSEs and U.S. Gov't Agencies Cash & Equiv. Liquidity & Investment Portfolio 12.8% 86.8% • Maintain investment portfolio to provide back-up source of
Slide 15: Outstanding Business Volume, Net Effective Spread and Core Earnings
Outstanding Business Volume 9% CAGR (2020-2023) $35.0 $30.0 $ IN BILLIONS $25.0 $20.0 $15.0 $10.0 $5.0 $21.9 $23.6 $25.9 $28.5 $28.8 $0.0 2020 2021 2022 2023 Q1 2024 Net Effective Spread & Core Earnings 18% CAGR 16% CAGR (2020-2023) (2020-2023) Net Effective Spread Core Earnings $200.0 NET EFFECTIVE
Slide 16: Quarterly Dividend per Common Share
Strong earnings and consistent capital position $1.60 27% year-over-year increase in 2024 support continued dividend growth for $1.40 Farmer Mac. $1.40 • Farmer Mac’s dividend growth rate over the past 13 Increased quarterly dividend $1.20 payments for 13 consecutive years years is substantially gre
Slide 17: Industry-leading credit requirements
Industry-leading credit Credits are less likely to Losses less likely even in requirements default default • Total debt coverage ratio • Focus on repayment • Average portfolio LTV of of at least 1.25x capacity through stressed 46% as of March 31, • LTVs average 40% to inputs 2024 45% on mortgages •
Slide 18: 90-Day Delinquencies and Charge-offs
90-Day Delinquencies 3.00% 2.00% 1.00% 0.51% 0.69% 0.31% 0.27% 0.00% FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 1Q24 Industry 90-Day Delinquencies (5) Farmer Mac 90-Day Delinquencies (Agricultural Finance Mortgage Loans Portfoli
Slide 19: Agricultural Finance Mortgage Loan Losses by Origination Year
$12 Ag Storage & Processing Crops Permanent Plantings Livestock Part-Time Farm / Rural Housing $10 $8 NET LOSS / (GAIN) $ IN MILLIONS $6 $4 $2 $0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 -$2 & Pri
Slide 20: Allowance for Losses
The total allowance for losses decreased $1.9 million to $16.4 million in first quarter 2024. • $2.0 million release to the allowance for the Rural Infrastructure Finance portfolio was primarily attributable to a single telecommunications loan that completed a restructuring, which resulted in an imp
Slide 21: Core Capital and Tier 1 Capital Ratio
$1,452 $1,484 33.0% $1,400 $1,323 $1,210 28.0% $1,200 $612 $589 $1,012 $517 23.0% TIER 1 CAPITAL RATIO (%) $1,000 $497 CORE CAPITAL $ IN MILLIONS $331 18.0% $800 14.8% 14.9% 15.4% 15.5% 13.0% $600 14.2% $863 $872 8.0% $400 $806 $681 $713 $200 3.0% $0 -2.0% 2020 2021 2022 2023 Q1 2024 Statutory Minim
Slide 22: Quality Assets, Funding Advantage, Growth Prospects
Quality Assets Funding Advantage Growth Prospects • 90-day delinquencies of only 0.27% • Issue at narrow, Government • Ag productivity must double to meet across all lines of business Sponsored Enterprise (GSE) spreads expected global demand to U.S. Treasuries • Cumulative Agricultural Finance • U.S
Slide 23: Appendix
APPENDIX
Slide 24: Financial Summary and Key Metrics
($ in thousands, except per share amounts) 2024 YTD 2023 2022 2021 2020 Core Earnings $43,392 $171,156 $124,314 $113,570 $100,612 Core Earnings per Diluted Share $3.96 $15.65 $11.42 $10.47 $9.33 Net Effective Spread ($) $83,044 $326,980 $255,529 $220,668 $196,956 Net Effective Spread (%) 1.14% 1.18%
Slide 25: Summary Stratifications: Common and Preferred Stock
Summary Stratifications NYSE Ticker Dividend Yield Shares Outstanding CLASS A VOTING COMMON STOCK AGM.A 3.59% 1.0 million • Ownership restricted to non-Farm Credit System financial institutions COMMON CLASS B VOTING COMMON STOCK – – 0.5 million STOCK • Ownership restricted to Farm Credit System inst
Slide 26: Debt Securities Privileges and Treasury Spreads
Finance asset purchases with proceeds of debt issuances: • 30 dealers • Match-funding provides for stable net effective spread and immaterial interest rate risk Farmer Mac’s debt securities carry privileges for certain holders: • 20% capital risk weighting • Eligible collateral for Fed advances • Le
Slide 27: World Population and Arable Land per Capita
(11)(12) (HECTARE IN USE PER PERSON) 12.0 0.50 0.43 ARABLE LAND PER CAPITA 9.8 10.0 WORLD POPULATION 0.40 8.0 (IN BILLIONS) 0.30 6.0 0.18 0.20 4.0 3.0 2.0 0.10 0.0 0.00 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 World Population Arable Land per capita World population is expected to grow to 9
Slide 28: Core Earnings Reconciliation
Core Earnings by Period Ended (in thousands) 2024 YTD 2023 2022 2021 2020 Net income attributable to common stockholders $ 46,955 $ 172,838 $ 150,979 $ 111,413 $ 94,904 Less reconciling items: Gains/(losses) on undesignated financial derivatives due to fair value changes 1,683 5,142 13,495 (1,430) (
Slide 29: Net Effective Spread Reconciliation
For the Year Ended March 31, 2024 2024 YTD 2023 2022 2021 2020 $ in thousands Dollars Yield Dollars Yield Dollars Yield Dollars Yield Dollars Yield Net interest income/yield $ 86,368 1.15% $ 327,547 1.15% $ 270,940 1.04% $ 221,951 0.94% $ 195,848 0.87% Net effects of consolidated trusts (1,052) 0.02
Slide 30: Footnotes
Footnote 1: USDA Economic Research Service year end 2023 balance sheet (https://data.ers.usda.gov/reports.aspx?ID=17835). Farm Sector Assets and Farm Sector Debt values are values for 2023 from USDA Economic Research Service. Footnote 2: Eligible ag real estate mortgage market structure shown includ
Slide 31: Farmer Mac
FARMER MAC
Federal Agricultural Mortgage — Q1 2024 Earnings Presentation on 6ix