Federal Agricultural Mortgage Corporation · NYSE:AGM
Federal Agricultural Mortgage — Q3 2024 Earnings Presentation
30 slides from Federal Agricultural Mortgage's earnings presentation, Nov 4, 2024
Slide 1: Equity Investor Presentation Third Quarter 2024
Equity Investor Presentation Third 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 September 30, 2024 and should be read in conjunction with Farmer Mac’s Quarterly Report on Form 10-Q filed with the SEC on November 4, 2024. In the accompanying analysis of its fina
Slide 4: Why Invest in Farmer Mac?
WHY INVEST IN FARMER MAC? A New York Stock Exchange Listed Government Sponsored Enterprise Uniquely Positioned (GSE) that provides investors the unique opportunity to invest in American agriculture and rural infrastructure. Well-positioned to benefit from the growing agricultural mortgage Focused on
Slide 5: Mission Focused
MISSION FOCUSED Strengthen Lower Increase Our Corporate Rural America Financing Costs Access to Credit Culture is Rooted in Our Values • Farmer Mac is a publicly • Farmer Mac increases the • Farmer Mac provides a • Innovation traded company driven by accessibility of financing secondary market to a
Slide 6: A Mission-Driven, For-Profit Company
A MISSION-DRIVEN, FOR-PROFIT COMPANY 1988 1996 2008 Farmer Mac initially chartered as an Second expansion of authority: Third expansion of authority: instrumentality of the United States direct loan purchases rural utilities loans 1990 1999 TODAY First expansion of authority: Listed on NYSE With out
Slide 7: Central to a Large Agricultural Mortgage Market
CENTRAL TO A LARGE AGRICULTURAL MORTGAGE MARKET (1) $4,014,338 $4,000,000 Machinery & Vehicles, $339,346 $3,500,000 $3,000,000 Ag Real Estate Debt-to-Asset Ratio: $2,500,000 10.3% $ IN THOUSANDS Real Estate $2,000,000 $3,338,849 $1,500,000 $1,000,000 $518,951 $500,000 Nonreal Estate, $174,394 Invent
Slide 8: Competitive Landscape
COMPETITIVE LANDSCAPE Mortgage Financing Mortgage Financing $345 Farm Credit System (FCS) BILLION Non-FCS (Cooperative GSE) Ag Lenders Agricultural • Four FCS Banks Mortgage Market • Insurance Companies • 56 Retail Agricultural Credit (Farmers & Ranchers) • Ag Banks Associations • Non-Bank Lenders (
Slide 9: Farmer Mac's Operating Model
FARMER MAC’S OPERATING MODEL Farmer Mac’s Regulatory/Congressional Oversight • Regulated by the Farm Credit Administration (FCA) through its Office of Secondary Market Oversight (OSMO) • Congressional oversight through Senate and House Agricultural Committees Operating model excludes issued agricult
Slide 10: Segment Profitability
SEGMENT PROFITABILITY 3Q24 Net Risk-Adjusted Each operating segment is comprised Line of Volume Gross Return on Segment ($ IN BILLIONS AS Effective of both spread-based and fee-income Business Allocated OF 9/30/2024) Spread (%) Capital (%) products • Loan purchases (spread) • Wholesale Funding (spre
Slide 11: Allowance for Losses — Quarterly
ALLOWANCE FOR LOSSES —QUARTERLY The total allowance for losses increased $3.3 June 30, 2024 to September 30, 2024 Allowance Fluctuation million to $21.9 million in third quarter 2024. $25.0 $1.8 $0.0 $21.9 • The $1.5 million net provision to the allowance for $20.0 $1.5 the Rural Infrastructure Fina
Slide 12: Agricultural Finance Loan Portfolio Diversification
AGRICULTURAL FINANCE LOAN PORTFOLIO DIVERSIFICATION By Commodity Type By Geographic Region Part-time Farm Northeast Southeast 4% Ag. Storage and 4% 10% Processing 6% Northwest 12% Livestock Mid-South 19% 17% Mid-North Permanent 27% Southwest Plantings Crops 22% 30% 49% As of September 30, 2024 Agric
Slide 13: Treasury/Investments Segment
TREASURY/INVESTMENTS SEGMENT 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 Liquidity & Investment Portfolio Cash & Equiv. 12.5% 87.2% • Maintain investment portfolio
Slide 14: Growing, Recurring, High-Quality Earnings
GROWING, RECURRING, HIGH-QUALITY EARNINGS Consistent historical financial performance highlights the diversification and resiliency of Farmer Mac’s business model Disciplined asset liability management and uninterrupted access to the capital markets have provided buffer against market volatility and
Slide 15: Growth Opportunities to Increase Assets Under Management
GROWTH OPPORTUNITIES TO INCREASE ASSETS UNDER MANAGEMENT Agricultural Pool Rural Infrastructure Finance Purchases Finance Securitization Renewable Energy & Project Finance Growing Wholesale Electricity Funding Demand Syndications Loan Rural Servicing Broadband Collateral Value Efficiencies Core Farm
Slide 16: Agricultural Mortgage-Backed Securities Opportunity
AGRICULTURAL MORTGAGE-BACKED SECURITIES OPPORTUNITY FARM securitization program exemplifies Farmer Mac’s core mission to lower costs for the end borrower and improve credit availability in rural America, while transforming the agricultural mortgage market industry with new efficiencies Building upon
Slide 17: Farmer Mac Uses Proven, Rigorous Underwriting
FARMER MAC USES PROVEN, RIGOROUS UNDERWRITING 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 45% as of September 30, • L
Slide 18: Credit Consistently Outperforms
CREDIT CONSISTENTLY OUTPERFORMS 90-Day Delinquencies 3.00% 2.00% 1.26% 1.00% 0.58% 0.51% 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 3Q24 Industry 90-Day Delinquencies (4) Farmer Mac 90-Day Delinquencies (Agricultural Finan
Slide 19: Strong, Growing Capital Base
STRONG, GROWING $1,600 33.0% CAPITAL BASE $1,452 $1,465 $1,400 $1,323 28.0% Consistent, strong earnings growth has $1,210 supported capital base and allowed for $1,200 $589 $580 23.0% consistent returns to shareholders $517 $1,012 TIER 1 CAPITAL RATIO (%) CORE CAPITAL$ IN MILLIONS $1,000 $497 Opport
Slide 20: Key Metrics
KEY METRICS Operating Efficiency Return on Common Equity 31% 25% Maintain Efficiency Ratio Below 30% Return on Common Equity greater than 14% 30% 20% 29% 28% 15% 27% 26% 10% 19% 29% 29% 17% 16% 16% 16% 25% 27% 27% 5% 24% 26% 23% 0% 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 • 185 employees ma
Slide 21: Quality Earnings Drive Strong Dividends
QUALITY EARNINGS DRIVE STRONG DIVIDENDS 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 $1.20 payments for 13 cons
Slide 22: Why Invest in Farmer Mac?
WHY INVEST IN FARMER MAC? A New York Stock Exchange Listed Government Sponsored Enterprise Uniquely Positioned (GSE) that provides investors the unique opportunity to invest in American agriculture and rural infrastructure. Well-positioned to benefit from the growing agricultural mortgage Focused on
Slide 23: Appendix
APPENDIX
Slide 24: Key Company Metrics
KEY COMPANY METRICS ($ in thousands, except per share amounts) 2024 YTD 2023 2022 2021 2020 Core Earnings $128,076 $171,156 $124,314 $113,570 $100,612 Core Earnings per Diluted Share $11.69 $15.65 $11.42 $10.47 $9.33 Net Effective Spread ($) $252,036 $326,980 $255,529 $220,668 $196,956 Net Effective
Slide 25: Equity Capital Structure
EQUITY CAPITAL STRUCTURE Summary Stratifications NYSE Ticker Dividend Yield Shares Outstanding CLASS A VOTING COMMON STOCK AGM.A 3.91% 1.0 million • Ownership restricted to non-Farm Credit System financial institutions COMMON CLASS B VOTING COMMON STOCK – – 0.5 million STOCK • Ownership restricted t
Slide 26: Funding
FUNDING 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 advan
Slide 27: Reconciliation of Net Income to Core Earnings
RECONCILIATION OF NET INCOME TO CORE EARNINGS Core Earnings by Period Ended (in thousands) 2024 YTD 2023 2022 2021 2020 Net income attributable to common stockholders $ 129,580 $ 172,838 $ 150,979 $ 111,413 $ 94,904 Less reconciling items: Gains/(Losses) on undesignated financial derivatives due to
Slide 28: Reconciliation of Net Interest Income to Net Effective Spread
RECONCILIATION OF NET INTEREST INCOME TO NET EFFECTIVE SPREAD Net Effective Spread By Period Ended 2024 YTD 2023 2022 2021 2020 $ in thousands Dollars Yield Dollars Yield Dollars Yield Dollars Yield Dollars Yield Net interest income/yield $ 260,499 1.15% $ 327,547 1.15% $ 270,940 1.04% $ 221,951 0.9
Slide 29: Resources
RESOURCES 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: USDA, Economic Research Service U.S. and State-Level
Slide 30: Farmer Mac
FARMER MAC
Federal Agricultural Mortgage — Q3 2024 Earnings Presentation on 6ix