Federal Agricultural Mortgage Corporation · NYSE:AGM
Federal Agricultural Mortgage — Q4 2023 Earnings Presentation
29 slides from Federal Agricultural Mortgage's earnings presentation, Feb 23, 2024
Slide 1: Fourth Quarter 2023 Equity Investor Presentation
Fourth Quarter 2023 E q u i t y In v e s to r P r e s e n ta tio n
Slide 2: Forward-Looking Statements
FARMER MAC Forward-Looking Statements In addition to historical information, this presentation includes forward- NO OFFER OR SOLICITATION OF SECURITIES look ing statements that reflect management’s current expectations for This presentation does not constitute an offer to sell or a solicitation of F
Slide 3: Use of Non-GAAP Financial Measures
FARMER MAC Use of Non-GAAP Financial Measures This presentation is for general informational purposes only, is current Core earnings and core earnings per share also differ from net income only as of December 31, 2023 and should be read in conjunction with attributable to common stockholders and ear
Slide 4: Investment Highlights
FARMER MAC Investment Highlights •90-Day delinquencies of only 0.12% across all lines of business Quality Assets •Cumulative Agricultural Finance Mortgage Loans lifetime losses of only 0.10% •Issue at narrow, Government Sponsored Enterprise (GSE) spreads to U.S. Treasuries Funding Advantage •E.g., 1
Slide 5: A Mission-Driven, For-Profit Company
FARMER MAC A Mission-Driven, For-Profit Company Our Mission Farmer Mac is committed to help build a strong and vital rural Farmer Mac initially chartered America by increasing the availability and affordability of by Congress as an instrumentality credit for the benefit of American agricultural and
Slide 6: Executive Leadership
FARMER MAC Executive Leadership Bradford T. Nordholm Aparna Ramesh Zachary N. Carpenter President & Chief Executive Officer Executive Vice President – Chief Financial Executive Vice President – Chief Business Officer & Treasurer Officer • 40+ years of agricultural and energy finance • 20+ years of e
Slide 7: U.S. Agricultural Balance Sheet
FARMER MAC U.S. Agricultural Balance Sheet (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: 10.4% $2,500,000,000 $ in thousands Real Estate $2,000,000,000 $3,419,530,718 $1,500,000,000 $1,000,000,000 $520,628,364 $
Slide 8: Central to a Large Agricultural Mortgage Market
FARMER MAC Central to a Large Agricultural Mortgage Market (2) (FCS Secondary Mark et GSE) Agricultural Finance Line of Business (Farm & Ranch and Corporate AgFinance) Farm Credit System Non-FCS Ag (FCS) Lenders (Cooperative GSE) AG BANKS Agricultural • $61B Insurance Companies • Four FCS Banks Mort
Slide 9: Growth Opportunities: Broaden Farmer Mac's Market
FARMER MAC Growth Opportunities = Relative Size of Volume Renewable Opportunity Broaden Farmer M ac’s Market Energy, Project Broaden Farmer Mac’s Market Evaluating opportunities not currently Finance = Broaden being pursued by Farmer Mac Securitization • New lines of business = Deepen Syndications •
Slide 10: Farmer Mac's Operating Model
FARMER MAC Farmer Mac’s Operating Model Farmer M ac’s Regulatory/Congressional Oversight • Regulated by the Farm Credit Administration (FCA) through its Office of Secondary Market Oversight (OSMO) • Congressional oversight through Senate and House Agricultural Committees Operating model excludes iss
Slide 11: Lines of Business
FARMER MAC Lines of Business AS OF DECEMBER 31, 2023 Spread Income Fee Income Volume Q4 Net Effective Line of Business Segment Products Products ($ IN BILLIONS) Spread (%) • Loans • LTSPCs • AgVantage • Guaranteed Securities Securities Farm & Ranch $18.8 0.98% • Guaranteed • Loans Agricultural Finan
Slide 12: Agricultural Finance Loan Portfolio Diversification
FARMER MAC Agricultural Finance Loan Portfolio Diversification AS OF DECEMBER 31, 2023 By Commodity Type By Geographic Region Ag. Storage and Processing Part-time Farm 6% Northeast 4% 4% Southeast Northwest 9% 13% Livestock Crops Mid-South 19% 49% 17% Southwest 31% Permanent Plantings 22% Mid-North
Slide 13: Treasury/Investments Segment
FARMER MAC Treasury/Investments Segment AS OF DECEMBER 31, 2023 Treasury segment includes the financial Liquidity Portfolio results of the company’s funding, liquidity, and capital allocation strategies and Asset-Backed Securities operations. 0.3% Liquidity & Investment Portfolio Maintain investment
Slide 14: Growing, Recurring, High-Quality Earnings
FARMER MAC Growing, Recurring, High-Quality Earnings Outstanding Business Volume $30.0 9% CAGR (2020-2023) $25.0 $20.0 $ IN BILLIONS $15.0 $10.0 $5.0 $21.9 $23.6 $25.9 $28.5 $0.0 2020 2021 2022 2023 Outstanding Business Volume Net Effective Spread & Core Earnings $350.0 18% CAGR 16% CAGR $200.0 NET
Slide 15: Quality Earnings Drives Strong Dividends
FARMER MAC Quality Earnings Drives Strong Dividends Strong earnings and consistent capital $1.60 position supports continued dividend growth for Farmer Mac. $1.40 27% year-over-year $1.40 increase in 2024 • Farmer Mac’s dividend growth rate over the $1.20 past 13 years is substantially greater than
Slide 16: Farmer Mac Uses Proven, Rigorous Underwriting
FARMER MAC Farmer Mac Uses Proven, Rigorous Underwriting Industry-leading Credits are less Losses less likely credit requirements likely to default even in default – Average portfolio LTV – Total debt coverage ratio – Focus on repayment of 47% as of at least 1.25x capacity through of December 31, 20
Slide 17: Credit Consistently Outperforms
FARMER MAC Credit Consistently Outperforms 90-Day Delinquencies 3.00% 2.50% 2.00% 1.50% 1.00% 0.51% 0.50% 0.31% 0.00% 0.12% FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Industry 90-Day Delinquencies (5) Farmer Mac 90-Day Delinquen
Slide 18: Historical Credit Losses
FARMER MAC Historical Credit Losses Ag Storage & Processing Crops Permanent Plantings Livestock Part-Time Farm / Rural Housing $12 $10 NET LOSS / (GAIN) $ IN MILLIONS $8 $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 201
Slide 19: Allowance for Losses – Quarterly
FARMER MAC Allowance for Losses – Quarterly The total allowance for losses decreased $0.6 million to $18.3 million in fourth quarter 2023 • $0.1 million provision to the allowance for the Rural Infrastructure Finance portfolio was primarily attributable to updated model assumptions in the rural infr
Slide 20: Strong and Growing Equity Capital Base
FARMER MAC Strong and Growing Equity Capital Base $1,452 33.0% $1,400 $1,323 $1,210 28.0% $1,200 $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% 13.0% $600 14.2% $400 8.0% $200 3.0% $681 $713 $806 $863 $0 -2.0% 2020 2021 2022 2
Slide 21: Investment Highlights
FARMER MAC Investment Highlights •90-Day delinquencies of only 0.12% across all lines of business Quality Assets •Cumulative Agricultural Finance Mortgage Loans lifetime losses of only 0.10% •Issue at narrow, Government Sponsored Enterprise (GSE) spreads to U.S. Treasuries Funding Advantage •E.g., 1
Slide 22: Appendix
Appendix Financing Rural America®
Slide 23: Key Company Metrics
FARMER MAC Key Company Metrics ($ in thousands, except per share amounts) 2023 2022 2021 2020 2019 Core Earnings $171,156 $124,314 $113,570 $100,612 $93,742 Core Earnings per Diluted Share $15.65 $11.42 $10.47 $9.33 $8.70 Net Effective Spread ($) $326,980 $255,529 $220,668 $196,956 $168,608 Net Effe
Slide 24: Equity Capital Structure
FARMER MAC Equity Capital Structure NYSE Dividend Shares Ticker Yield Outstanding COMMON STOCK CLASS A VOTING COMMON STOCK AGM.A 3.56% 1.0 million • Ownership restricted to non-Farm Credit System financial institutions CLASS B VOTING COMMON STOCK -- -- 0.5 million • Ownership restricted to Farm Cred
Slide 25: Funding
FARMER MAC 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 M ac’s debt securities carry privileges for certain holders • 20% capital risk weighting • Eligible collateral for
Slide 26: "Demand Pull" Provides Sustained Growth Opportunity
FARMER MAC “Demand Pull” Provides Sustained Growth Opportunity (11) (12) 12.0 0.50 0.43 0.45 10.0 ARABLE LAND PER CAPITA (hectare in use per person) 0.40 WORLD POPULATION 8.0 0.35 (in billions) 0.30 6.0 0.25 0.18 0.20 4.0 0.15 2.0 0.10 3.0 9.8 0.05 0.0 0.00 1960 1970 1980 1990 2000 2010 2020 2030 20
Slide 27: Reconciliation of Net Income to Core Earnings
FARMER MAC Reconciliation of Net Income to Core Earnings Core Earnings by Period Ended (in thousands) 2023 2022 2021 2020 Net income attributable to common stockholders $ 172,838 $ 150,979 $ 111,413 $ 94,904 Less reconciling items: Gains/(losses) on undesignated financial derivatives due to fair val
Slide 28: Reconciliation of Net Interest Income to Net Effective Spread
FARMER MAC Reconciliation of Net Interest Income to Net Effective Spread For the Year Ended December 31, 2023 2022 2021 2020 $ in thousands Dollars Yield Dollars Yield Dollars Yield Dollars Yield Net interest income/yield $ 327,547 1.15% $ 270,940 1.04% $ 221,951 0.94% $ 195,848 0.87% Net effects of
Slide 29: Resources
FARMER MAC 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: Eligible ag real estate mortgage market
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