Bill Ryan

Bill Ryan asked for more details on the credit provisions in Q4 2025, specifically in broadband and corporate ag finance, to understand if there were underlying issues beyond idiosyncratic events.

Answer

CEO Brad Nordholm reiterated that there were no systemic issues. President & COO Zach Carpenter explained that the credit issues were borrower-specific, affecting a 'few loans' out of thousands, often related to post-COVID market changes, operational challenges, and consumer behavior shifts. He noted that these loans were purchased right outside of COVID.

Bill Ryan followed up on credit provisions, asking if issues in broadband and Corporate AgFinance were systemic or isolated. He also inquired about the January 1 loan payment cycle for Farm and Ranch, government market stabilization payments, and the expense outlook for 2026.

Answer

CEO Brad Nordholm reiterated no systemic issues. President and COO Zach Carpenter clarified that credit issues were borrower-specific, stemming from post-COVID market dynamics and operational struggles. Zach also reported the January 1 payment cycle was in line with the prior year, with more growth than prepayments, and confirmed government payments would support the ag economy. CFO Matt Pullins projected expense growth in 2026 due to volume, personnel, and tech investments, while aiming for a 30% efficiency ratio.

Bill Ryan from Seaport Global asked Farmer Mac about the impact of recent tariff headlines on the agricultural sector and the company's stock price, specifically identifying affected crops and the status of market stabilization payments to farmers. He also questioned if the farm and ranch business volume is accelerating and if loan structures have changed.

Answer

Bradford T. Nordholm, CEO, acknowledged that negative headlines impact stock price but noted a nuanced reality, citing recent increases in soybean and almond prices despite pressures in other major crops like corn and cotton. He highlighted farmers' adaptability and confirmed expectations for $10-$12 billion in market facilitation payments. Zach Carpenter, President and COO, emphasized Farmer Mac's national diversity across over 100 commodities, noting strong performance in dairy, protein, and livestock sectors. Mr. Carpenter confirmed a significant increase in farm and ranch loan applications and approvals, with a majority of 2025 growth from new money loans, indicating continued growth. He stated that loan structure criteria remain consistent, and banks' capital management needs drive secondary market utilization.

Bill Ryan from Seaport Global asked about the impact of tariffs on farmers and specific crops, the status of market stabilization payments, and later inquired if the farm and ranch business volume is accelerating, including any changes in loan structure.

Answer

Bradford T. Nordholm, CEO of Farmer Mac, explained that media headlines often overstate the negative impact of tariffs, noting recent increases in soybean and almond prices, and that farmers are adaptive. He mentioned an expectation of $10 billion-$12 billion in market facilitation payments soon. Zach Carpenter, President and COO, highlighted Farmer Mac's national diversity across over 100 commodities, which provides resilience, with strong performance in dairy, protein, and livestock sectors offsetting challenges elsewhere. Mr. Carpenter confirmed a significant increase in farm and ranch loan applications and approvals, driven by both strong agricultural sectors and those needing liquidity. He noted that the majority of 2025 growth came from new money loans for land and equipment purchases, anticipating continued growth as rates moderate, and stated that loan structure criteria remain consistent.

Bill Ryan asked for elaboration on the expected mix between Consumer and Small Business for the 15% origination growth projected for 2026. He also inquired about any underwriting adjustments made on the Consumer side in Q4 2025 and changes in Small Business industry focus.

Answer

CEO Steve Cunningham indicated that 2026 would likely see Consumer growth settle at more typical levels, while Small Business (SMB) would continue its strong growth pattern (20%+), leading to a slow tilt in the portfolio towards SMB. He confirmed continuous credit adjustments, noting that Consumer credit in Q4 2025 moved back to typical levels after strong Q3 performance. For SMB, credit remained remarkably stable, with ongoing monitoring of industries like construction and transportation.

Bill Ryan asked about the expected mix of origination growth between consumer and small business for 2026, given the projected 15% overall growth. He also inquired about any recent underwriting adjustments made on the consumer side in Q4 2025 and changes in industry focus for small businesses.

Answer

Steve Cunningham, CEO of Enova International, indicated that consumer growth would likely return to more typical levels, while SMB would continue its strong growth, potentially leading to a slow tilt in the portfolio towards SMB. He confirmed continuous credit adjustments, noting that consumer net charge-off ratios settled within expectations in Q4 2025 after strong Q3 credit. For SMB, credit remained stable, with ongoing monitoring of industries like construction and transportation.

Bill Ryan followed up on the competitive landscape, asking about the impact of increased origination volumes across the board, other companies potentially loosening credit boxes, and fixed-income investors allocating more capital to the sector, specifically if LendingClub has experienced any pressure on its underwriting standards.

Answer

CEO Scott Sanborn affirmed that LendingClub has not faced pressure on underwriting standards, emphasizing that their growth stems from a low base and increased marketing efforts, still operating below historical spend levels in a larger total addressable market. He noted the competitive space remains consistent, with a recent shift in competition from banks to fintechs, and reiterated a commitment to long-term, disciplined underwriting to ensure returns for both LendingClub and its loan buyers.