FEDERAL AGRICULTURAL MORTGAGE CORP (AGM)·Q1 2025 Earnings Summary

Executive Summary

• Record quarter on core metrics: core earnings $46.0m ($4.19 diluted core EPS), net effective spread (NES) $90.0m (1.17%), and “total revenues” (core composition) $96.8m; core ROE 17% and efficiency ratio 29% .
• Versus S&P Global consensus: EPS beat and revenue miss — EPS $4.19 vs $4.06 (beat +$0.13), “Revenue” $91.10m vs $94.33m (miss -$3.23m); management emphasized NES expansion from higher average balances, lower nonaccruals, and opportunistic funding .
• Business mix pivot continues: Infrastructure Finance outstanding volume +$743m Q/Q (to $9.77b) led by Power & Utilities, Broadband (+22% since YE) and Renewable Energy (+$200m; +14%) .
• Balance sheet/capital remain a support: Tier 1 capital ratio 13.9%, core capital 65% above statutory minimum; 289 days of liquidity; near‑term FARM securitization (subsequently closed $300.1m deal on 6/11) as additional catalyst .

What Went Well and What Went Wrong

• What Went Well

  • “Record quarterly revenue, net effective spread and core earnings” with NES up to $90.0m (1.17%) and core earnings to $46.0m; efficiency ratio 29% and core ROE 17% .
  • Infrastructure Finance momentum: Broadband Infrastructure outstanding volume +22% since year‑end to nearly $1.0b; Renewable Energy +~$200m (+14%); Power & Utilities added $134m net loan purchases and closed a $300m AgVantage security .
  • Funding execution: “Funding improved quite dramatically from Q4 to Q1” by “buying into narrowing SOFR spreads,” helping NES and allowing Farmer Mac to sit out volatility in Q2 as needed .

• What Went Wrong

  • GAAP results softer YoY and sequentially: net income to common $44.0m vs $47.0m YoY and $50.8m in Q4; GAAP diluted EPS $4.01 vs $4.28 YoY and $4.63 in Q4 .
  • Non‑interest income fell YoY ($3.38m vs $7.31m) largely on derivatives marks; OpEx +8% YoY given tech investments, licensing and servicing costs .
  • 90‑day delinquencies rose to 54 bps from 37 bps in Q4 (seasonal), and management is monitoring tariff risk to ag exporters with pockets of stress in California permanent crops (almonds/pistachios) .

Financial Results

Quarterly trend (oldest → newest)

Results vs S&P Global consensus (Q1 2025)

Values marked with * retrieved from S&P Global.

Segment breakdown – Net Effective Spread, Q1 2025

KPIs

Guidance Changes

Post‑quarter update: FARM 2025‑1 agricultural mortgage securitization $300.1m closed June 11, 2025 .

Earnings Call Themes & Trends

Management Commentary

• “We’ve achieved another outstanding quarter with record quarterly revenue, net effective spread and core earnings…These strengths support our long‑term strategic growth objectives and provide a buffer against market volatility” — Brad Nordholm, CEO .
• “Net effective spread reached a record $90m or 117 bps…sequential improvement driven by higher average loan balances, a decline in nonaccrual loans and modest improvements in floating rate funding” — Aparna Ramesh, CFO .
• “Funding improved quite dramatically from Q4 to Q1…we ‘bought’ into narrowing SOFR spreads…allowing us to stay comfortably out of the market during volatility” — CFO .
• “Broadband Infrastructure grew 22% since year‑end to nearly $1b…Renewable Energy grew by nearly $200m (+14%)” — CEO .

Q&A Highlights

• Tariffs/macro: Management expects policy offsets (USDA programs, potential subsidies) to mitigate some tariff impacts; watching row crops and California permanent crops closely .
• Spread dynamics by segment: Farm & Ranch and Corporate AgFinance benefited from volume and prior‑quarter higher purchase spreads; Broadband/Renewables reflect construction‑phase mix (unfunded commitments diluting NES %) with later accretion as projects fund .
• Funding/securitization: First‑quarter funding costs improved materially; plan to be a regular issuer and bring another FARM deal “before the second quarter is up” (timing dependent on markets) .
• Renewable energy tax credits: No Q1 activity; Q4 legal fees rolled off aiding OpEx; monitoring for later‑year opportunities .
• Farm & Ranch momentum: ~$550m new business volume; strong loan purchase pipeline into Q2 as banks seek capital/liquidity relief; approvals approaching prior record levels .

Estimates Context

• Q1 2025 vs S&P Global consensus: EPS $4.19 vs $4.06 (beat); “Revenue” $91.10m vs $94.33m (miss) — consensus counts: EPS (3), Revenue (2) [GetEstimates].
• Forward quarters (context): Q2 2025 consensus EPS 4.29 (3 ests), Revenue $96.54m (2 ests) [GetEstimates].
  Values retrieved from S&P Global.

Key Takeaways for Investors

• Quality beat where it matters: NES and core EPS records underscore durable earnings power; funding execution offers cushion into volatile rates .
• Mix shift is a tailwind: Infrastructure (Broadband/Renewables/P&U) growth diversifies earnings and supports NES trajectory as construction commitments fund up .
• Capital/liquidity buffers reduce downside: 289 days liquidity; Tier 1 13.9%; core capital 65% above minimum — enabling opportunistic issuance and growth .
• Watch the GAAP optics: GAAP EPS/net income softer YoY and Q/Q on derivative marks; non‑GAAP core measures better capture underlying spread economics .
• Macro watch‑list: Tariffs and CA permanent crops are monitored; USDA support likely offsets near‑term pressure; credit metrics remain seasonally stable .
• Near‑term catalyst: Ongoing FARM securitizations (FARM 2025‑1 already closed post‑quarter) and continued NES expansion could support estimates and sentiment .
• Dividend growth continues: Q2 common dividend raised to $1.50, marking 14th consecutive annual increase path per investor materials .