Federal Agricultural Mortgage Corporation · NYSE:AGM
Federal Agricultural Mortgage — Q4 2024 Earnings Presentation
30 slides from Federal Agricultural Mortgage's earnings presentation, Feb 21, 2025
Slide 1: Equity Investor Presentation Fourth Quarter 2024
Equity Investor Presentation Fourth 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 December 31, 2024 and should be read in conjunction with Farmer Mac’s Annual Report on Form 10-K filed with the SEC on February 21, 2025. In the accompanying analysis of its financi
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 (1) AGRICULTURAL MORTGAGE MARKET $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 $345 Farm Credit System (FCS) BILLION Non-FCS (Cooperative GSE) Ag Lenders Agricultural • Four FCS Banks Mortgage Market • Insurance Companies • 56 Retail Agricultural Credit (Farmers & Ranchers) • Ag Banks Associations • Non-Bank Lenders (
Slide 9: Farmer Mac's Operating Model
FARMER MAC’S OPERATING MODEL Farmer Mac’s Regulatory/Congressional Oversight • Regulated by the Farm Credit Administration (FCA) through its Office of Secondary Market Oversight (OSMO) • Congressional oversight through Senate and House Agricultural Committees Operating model excludes issued agricult
Slide 10: Segment Profitability
SEGMENT PROFITABILITY Risk-Adjusted Volume 4Q2024 Net Each business segment is comprised Line of Gross Return on Segment ($ IN BILLIONS Effective Business AS OF 12/31/2024) Spread (%) Allocated Capital of both spread-based and fee-income (%) products • Loan purchases (spread) Farm & Ranch $18.6 0.96
Slide 11: Allowance for Losses - Quarterly
ALLOWANCE FOR LOSSES —QUARTERLY The total allowance for losses increased $3.4 September 30, 2024 to December 31, 2024 Allowance million to $25.3 million in fourth quarter 2024. Fluctuation $30.0 • The $3.5 million net provision to the allowance for $3.5 $0.0 $0.0 $25.0 $25.3 the Infrastructure Finan
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 5% 10% Processing 7% Northwest 12% Livestock Mid-South 19% 18% Permanent Mid-North 26% Southwest Plantings Crops 29% 21% 49% As of December 31, 2024 Agricu
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. Cash & Equiv. Liquidity & Investment Portfolio 14.7% Gov't Agencies 85.1% • 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 Infrastructure Finance Purchases Finance Securitization Renewable Energy & Project Finance Growing Wholesale Electricity Funding Demand Syndications Loan Rural Servicing Broadband Collateral Value Efficiencies Core Farm & Ran
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 requirements default even in default • Total debt coverage ratio • Focus on repayment • Average portfolio LTV of of at least 1.25x capacity through stressed 46% as of December 31, • LT
Slide 18: Credit Consistently Outperforms
CREDIT CONSISTENTLY OUTPERFORMS 90-Day Delinquencies 3.00% 2.00% 1.00% 0.58% 0.88% 0.37% 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 FY24 Industry 90-Day Delinquencies (4) Farmer Mac 90-Day Delinquencies (Agricultural Finan
Slide 19: Strong, Growing Capital Base
STRONG, GROWING $1,600 33.0% $1,501 $1,452 CAPITAL BASE $1,400 $1,323 28.0% Consistent, strong earnings growth has $1,200 $1,210 $584 supported capital base and allowed for $589 23.0% consistent returns to shareholders $517 TIER 1 CAPITAL RATIO (%) CORE CAPITAL$ IN MILLIONS $1,000 $497 18.0% Opportu
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% 15% 28% 10% 19% 27% 16% 16% 16% 17% 29% 29% 28% 5% 26% 27% 27% 25% 0% 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 • 191 employees managing n
Slide 21: Quality Earnings Drive Strong Dividends
QUALITY EARNINGS DRIVE STRONG DIVIDENDS Strong earnings and consistent capital position $1.60 7% year-over-year increase in 2025 support continued dividend growth for $1.50 $1.40 Farmer Mac. $1.40 • Farmer Mac’s dividend growth rate over the past 13 Increased quarterly dividend $1.20 payments for 14
Slide 22: Why Invest in Farmer Mac?
WHY INVEST IN FARMER MAC? A New York Stock Exchange Listed Government Sponsored Enterprise Uniquely Positioned (GSE) that provides investors the unique opportunity to invest in American agriculture and rural infrastructure. Well-positioned to benefit from the growing agricultural mortgage Focused on
Slide 23: Appendix
APPENDIX
Slide 24: Key Company Metrics
KEY COMPANY METRICS ($ in thousands, except per share amounts) 2024 2023 2022 2021 2020 Core Earnings $171,630 $171,156 $124,314 $113,570 $100,612 Core Earnings per Diluted Share $15.64 $15.65 $11.42 $10.47 $9.33 Net Effective Spread ($) $339,564 $326,980 $255,529 $220,668 $196,956 Net Effective Spr
Slide 25: Equity Capital Structure
EQUITY CAPITAL STRUCTURE Summary Stratifications NYSE Ticker Dividend Yield Shares Outstanding CLASS A VOTING COMMON STOCK AGM.A 3.76% 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 2023 2022 2021 2020 Net income attributable to common stockholders $ 180,428 $ 172,838 $ 150,979 $ 111,413 $ 94,904 Less reconciling items: Gains/(Losses) on undesignated financial derivatives due to fair
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 2023 2022 2021 2020 $ in thousands Dollars Yield Dollars Yield Dollars Yield Dollars Yield Dollars Yield Net interest income/yield $ 353,867 1.16% $ 327,547 1.15% $ 270,940 1.04% $ 221,951 0.94% $
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 — Q4 2024 Earnings Presentation on 6ix