Earnings call transcript Q4 2022

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Operator

Good day, and welcome to the Farmer Mac Fourth Quarter and Full Year 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded.

I would now like to turn the conference over to Jalpa Nazareth, Director of Investor Relations. ahead. go Please

Jalpa Nazareth

here thank quarter and I'm joining for Finance us Nazareth, Good full you year fourth Strategy and Relations and of call. Farmer XXXX our Mac. Director afternoon Investor for at earnings Jalpa conference

to Please factors. could for to that today begin, and company's with statements during the this the Report cause information we our subject differ materially current filed and These uncertainties performance risk earlier and strategies of risks that Farmer not a Annual actual prospects contain full As from a refer based XXXX the statements expectations on XX-K SEC assumptions. results those may management's forward-looking Mac's discussion provided are guarantee Form note please projected. of are about business on call the company's which are future to the and

in of and portion Mac's and On under information measures of can will measures. today's call, the section. website we the found Disclosures XXXX be discussing financial on these financial Farmer non-GAAP release non-GAAP posted the certain Form reconciliations farmermac.com also Investors be earnings XX-K

also Joining business joining objectives, from on financial discuss Brad will Nordholm, and management be the XXXX performance. Select provide financial period. and our management is Ramesh, this will who us President our us our strategic who Aparna team and CEO detail CFO, highlights will and morning greater question-and-answer of members for

and over call President the CEO Nordholm. turn I'll to time, this Brad? Brad At

Brad Nordholm

in our while effective credit spread announce Thanks, revenue, net year we outstanding record for strong us. volume had for Jalpa. joining I'm very Good afternoon, that maintaining nearly pleased business to and everyone quality. you of thank earnings, segments all and a

our continued initiatives asset this streams XX% growth with on of revenue execution customers, diversify concluded while and under discipline building XX% we More for volume in in mission. and maintaining partnerships assets specifically, continuing a we effective spread, outstanding maintaining though XX% strategic to management. the XXXX single growth Throughout in liability core management growth with net our business earnings, our year on year-over-year our

is I'm their of XXX agriculture that passion happen believe our of expertise our securitization, and incredibly and passion, because consistently expertise, differentiates deliver and members. to I them liability funding American and with us. that management and specialization proud exceptional it of results. It coupled to strong that this rural us they the their starts infrastructure, and contributions for to with enables team specialization asset market debt, financial access deliver

it our those report rates One interest of more were Reserve that impact our because the Federal broaden pandemic. business, When results. the more to AgVantage we segment, a our are to f the had funding, opposite segments immediate you, than Farm our that were we on benefits strategic of had wholesale product apparent rising our and alternatives initiatives Bank our Ranch on with competitive rapidly comparatively been we has diversification impact in XXXX & during increasing

Diversifying our cycles. market booked and amounts loans. us portfolio been priority is diversification energy Similarly, rate loan segment Rural over showed benefiting the and interest through our record project years, less key to and last sensitivity, has changing a telecom renewable few we've that finance Infrastructure

loan portfolio to Finance is which growth of lenders we've line volume billion. lending XXXX, gross billion AgVantage and in year, provided last business predominantly reflecting outstanding Agricultural growth by the volume. driven Farm $X.X and billion net & grew Securities a of In liquidity rural business $X capacity purchase year-over-year Ranch serving $X.X in America, The

market maturity AgVantage AgVantage The Reserve profiles, their and interest the and adding increases overall Mac rates to of Bank the space asset to recent counterparties, continues financing our the term competitiveness manage comparative other Securities liability derived Farmer growth reflect given wholesale in in of Fed institutional many to options. pricing longer relative

a XXXX. Securities AgVantage million in added compared XXXX million in to in net $XXX Ranch We & Farm New $XXX

believe crucial possibly our relative incremental volatile be for environment this to that longstanding value refinancing Looking can a ahead, for especially for interest we in AgVantage borrowing rate that and as Mac counterparties. viewed Farmer continue

some head add volume additional to was higher and more our year-over-year To were years modest of growth Farm X% increases opportunistic. loan opportunities detail, and XXXX seasons. planning position We're given rate purchase compared farmers ranchers cash will environments Ranch being as & optimistic ours to loan prior as strong the purchase adjusting the planting happen in they in XXXX into and potential of their

to Mac supply focused million on of the that XXXX that waiting uncertainty XXXX complex persistent slowed year in deal to That's XXXX. to supports $X.X Corporate The business transactions billion. a segment initiative the on $XX.X agribusinesses is chain. many new larger, loans market Our This year-over-year food relatively grew in pause AgFinance signs with Farmer for market and span volatility entities stabilization. for opportunities more

modest a strong in able due primarily to million were very accretive in sizeable purchase increase $XXX increase we payoffs, While at approximately new of for this loans segment. which to net saw a supported XXXX, only revenues very gross spreads,

so accretive strong standpoint Over the diversification market year. of strategy. the a These an NES are build to from in XXXX, far be for component seen flow in and an starting continue our in increase fourth quarter pipeline and of we've very the deals key a to quarter in first deal XXXX, and this

on Mac We on in expect strengthen have the deliver mission. and to segment this and to to to continue our Farmer future enable meaningful results impacts

key strong across very diversification of sub-segment Infrastructure growth a was the markets. XXXX this as is business for Rural of opportunities line significant year numerous providing

$XXX added and we Telecommunications Utilities Rural year, about Energy, the core Renewable of the sub-sectors. million XX% growth in year-over-year reflecting of business During

investment rural Rural million areas. is due increasing infrastructure. utility America to Farmer sector in the as widespread in in to Mac in broadband investments XX% XXXX, recognition infrastructure in in borrowers $XXX expenditures course investment the increased well an there that the primarily these telecommunication broadband and Loan and in normal acquired capital purchase as maintaining over Utilities in volume of growing upgrading and loans related and XXXX, for need a fiber were

of the for new and providing of investment cost Mac. We look to committed avenue this providers, and Farmer to capital remain on growth forward updates for to reduce telecommunication increasing we

Energy transactions growth Renewable solar an had with a $XXX number of net from wind exceptional and year in in over portfolio million Our counterparties.

Our a in counterparties transactions participation in few from renewable years. transactions syndicated has potential us increased energy broadly source to future

on as The to pipeline energy in existing near-term on focus opportunities. continue strong the bringing renewable and deals remains upsizing new we

energy economic development for on important said I've prior and us. business calls, a both As opportunity is renewable America for rural an opportunity

One have to $XXX million, third may $XXX on a we announce seen securitization As our opportunity afternoon, million products successfully achieve many long-term yesterday have closed introduction FARM continues objectives. that very you for I'm mortgage for Securitization the backed series example, them that approximately us be interest agriculture of Mac in since we've help met program, potential tremendous shown Farmer to successful have pleased and offers their that who securitization transaction. with benefits. customers return

opportunity products and core our mission interests. early end capital rural while American in flow still leading creating borrower, institutional the building issue improve securitization with the America to stages a Farmer to we're of market lower credit for investors. exemplifies regular borrower to this for also cost the to in new availability producers Developing shows of While return Mac's our agricultural investment for and the well-received program, align set the commitment investor both being that our a

the The record over to from prices. of in U.S. export income agricultural reached years. last farm levels strong economy demand XXXX, states commodity due continues and in Farmland of to record benefit elevated many values highs primarily couple

crops annual While limited input continue commodity expected support to costs remain are global prices. in should elevated to XXXX,

economic believe period and could should to be industries portfolio as directly correlated the downturn agriculture, food, into balanced positively We positioned infrastructure tend sectors as correlated volatility the ample to not generally general demand market recessionary believe sufficiently arise consumer withstand economy with well the to due U.S. as economy. support. move a to are our well or is withstand government that We these an

our will turning per very to take to quarterly of Board before pleased XX% our considered all starting and common stock business and share for earnings, and target, common of our Mac's per $X.XX position outlook XXXX. That Directors to the to to Farmer our consistency it maintain increase support I'm our requirements. dividend payout first to in share and capital quarter strong the deciding increase capital announce Aparna, stock our exceed In a in Now, of dividend. regulatory $X.XX our

consecutive XXth year Farmer the is quarterly This its has increased dividend. that Mac

our environment interactions. while we'll source stability customers remaining by this potential in to be to implications of of their changing vigilant to and to needs about remaining adaptive meet any flexible market ahead, Looking strive continue a

changing in value balance continue for on shareholder our of our credit proactive funding us strategy and sources, opportunities enables which our and and us mission of foundation for us position to strong create positions enhance well to The financial sheet and more environments deliver our you. to is management

I'll that, it Aparna? with our results discuss Financial Chief Aparna Officer And turn our Ramesh detail. more financial in to to

Aparna Ramesh

you, and approach, resiliency board, measured strong and Farmer balanced, excellent cycle. across were the our Thank Results everyone. quality Mac. good remarkable year was Brad, XXXX morning a throughout well for highlighting credit market

year fourth momentum. with in finish to performance quarter enabled strong Our us very the XXXX

million driven million in effective million, $XXX.X of $XX.X $XX.XX $XX.X $X.XX by in reflecting growth or course net of or earnings the Core double-digit year, million record generally board. the share fourth sequential share were and year-over-year compositional quarter spread for of per XXXX the improvement per XXXX, the $XXX.X across the of the spread first the wider and year, program quarter in over the shift spread for assets and our in product

Corporate As by part we higher rate AgVantage Corporate volumes the on higher have and in some environment. AgFinance seen loans particular, pricing in driven

that years, net raised the expensive a us mentioned that capital. environment. of a generates expected the opportunistically to Another in to funding in to raise as short debt downward non-GAAP that excess continues to on reduces have capital to evolving need debt with we reinvesting for actions additional effective and callable more past pressure curve and our cost continue of This term and costs has the rising contributed increase excess spread over the create capital few is calls This low prior the rate we fed end return. is factor

debt that liability has when to extension rates our were liquidity low cost low this of the sheet us strong as balance well continue remains side overall rates The of Our we rise. profile. as strengthened from also benefit debt raised we makes insulated and the

liability We rates duration interest We or rise as continue to disciplined rate carefully [ph]. to minimize matches asset ebb and our the analyze management. risk maintain convexity

despite forward-looking prudent Our in strategies, profitability funding to us to the approach with an inversion enhanced an yield allowed curve. maintain coupled a hedging, have

stock technology information strategic along increased and software Turning with increased year-over-year compensation, operating licenses to and initiatives. expenses increased growth headcount, increased to XX% by consultants expenses, and to due spending on support operating

end, year this than our XX%. at efficiency ratio was XX.X% and or efficiency Our target operating of ratio was strategic planned better

operating to and historical expect critical pace increase to to are needed a expenses additional We investments core develop overall capabilities. to headcount at that above averages infrastructure support due

our efficiency all We're whole. a especially impacting the ratio and the pleased companies that containment our that as with and are experiencing headwinds strategies, cost market are inflationary given

will we said XX% efficiency to or As holding are run at ratio we we and ratio closely efficiency lower. committed previously, monitor continue to rate our the

platforms However, funding scale some increases and as the XX% we make may temporary see we further decisions above to for growth, invest level. infrastructure in and

diversify. invest we infrastructure note, and the on as scale to manage in platforms making risk of our to to a decision businesses sheet this are other us our and the treasury allow balance lines significant On of cusp

and anticipate other also origination near-term. investments platforms our lending We modernize in to our the

delinquencies continues in $XX the same or our profile be credit of XX to portfolio, points headwinds. period XX-day compared despite were strong last Our the $XX economic basis million to million year. entire

total and this loan. of for the provision which million, agricultural $XX.X were XXXX storage As single of was to XXXX, primarily to allowance December a the $XXX,XXX compared and reflects due losses end an XX, year deterioration processing

Farmer now, $X.X primarily XX%. as in earnings. XXXX, by Mac's capital increase Core year $XXX XXXX, to capital requirement of statutory due million billion of exceeded core capital December to Turning from retained an or end XX, our increased

as offset this XX.X% ratio that yearend partially was XX.X% second of and tier as capital largely program of securitization And XXXX transaction. earnings through capital due our growth strong Our were results one XXXX. XX, obtained improved to assets. December from in by And we these to relief factors

closed, and long-term for of as Maintaining steady support consistent business strategy model. fundamental and our a successfully strong credit our capital of costs, to is lower execution deliver growth, our standards part the of noted, continued ensure level the Brad transaction We series structured volatile FARM products. was unguaranteed market, third very That a yesterday. tranche and a environment both despite securitization of received senior by structured two around transaction well a guaranteed which tranches, were tranche, subordinated

diversify these deals the securitized structure and our opportunities this for product mission as we're backed to as further can success source to the The but thoughts and agricultural sector. with by demonstrates funding of that agricultural success. to revenues, to sources This additional conduit long-term our transaction very and continued Mac's well mirrors prior generate align Farmer a capability develop encouraged also might of that demand a serve capital

as our nature products asset as not environment is prepayment new in capability that's a mission, we we class mortgages. market securities, for expect These the of to in with mortgage Most and a investors is with to return have products central similar the given importantly, the to as build volatile committed offer investors. making liquidity correlated future behavior this regularly programmatic that agricultural rate to this more a effort associated other backed our highly continue to securitized to

we very $X.XX quarter announce dividends, to a that pleased earlier, to We of us this our capital positions $X.XX XXXX. and quarterly mentioned first share stock for strong support Brad total dividend of earnings a consistent are increase. common believe in bringing As the increase per our

So while several results fulfilling quarterly entire team delivered objectives. exceptional strategic in summary, our key

and to exceeding on our all delivered key record equity our and this efficiency ratios. XX% had metrics call. earnings each an in that performance, previously resulted you also and we We a return on target XX.X% strong ratio report of credit We stated of core on continued

to optimistic we long-term we deliver positioned As planned XXXX, than well strategic ahead objectives. to and look our on remain ever more

turn I'll you. Brad, to with back that, it And

Brad Nordholm

Well, Aparna. we multi-year we're results plan. extremely progress and summary, proud our of the have strategic made in financial on in Thanks, our XXXX

believe Our growth incremental geography profitability. portfolio this We efforts to by and is loan further diversify drives our customer and that working. loan type

believe singular Our resulted ongoing steady is forward This our mission has continue we the is uncertainty rate value cycles. and on how fulfilling our our disciplined we efficiently growth agricultural to And innovatively competitive of of and in deliver economic investors. asset differentiate ourselves we business in customers liability our as these management and through different to markets. can navigate a and borrowers advantage the focus

see I'd on from operator, now the like questions line we any if anyone And to today. have

Operator

Partners. question first Our Research comes go Instructions] [Operator Ryan ahead. Bill from from Seaport Please

William Ryan

morning for Good and questions. thanks my taking

your net a But pricing been net on on the well you First kind some you. obviously you've starting that level, Thank may business meaning forward increases, you be but increase implied in the on kind lines? effective margin. of micro spread, a of bit going the little off quarters talk nice effective in things wider as the call, had based for kind the the the last there's about And could spread funding of the outlook several that on cost. conference

Brad Nordholm

line our also environment our our Zach segments, Yes, ask but growth you business the and in I'm reflected out as and the to contributor, diversification disproportional had in last certainly. see And over to both of these bottom spread. show report of because how weigh are because management both terms that in, as interest can is effective year of going of asset this top rate well segments, in the Aparna net lines up we been line have growth accretive liability the this of a benefits has some business in line increases

lines the the of of Zach asset kind the there, So out of story. bit then to it part spread Aparna and to little liability business ask a why on management the first don't with elaborate I and round

Zach Carpenter

first to said Yes, business Brad our you terms to Brad, is Bill. reiterate thing diversifying know, and And, want of in question, I model. then the happy great what

that significant appreciation release, see business, telecommunications. higher of business you is energy of yields effective growth look at the areas businesses our that to of existing and spread. new those attributing amount across as really our press If And had our of substantially a -- we growth can renewable in came from lines, some than two you lines on are the which

effective highlighted In have of food Corporate historically and which than our in when again, spread of AgFinance we're supply some on accretive we generally growth chain business. net foundational addition, had we more focusing transactions the lines business

leading spread. higher of So net are the line, higher of really areas the on effective the to and composition new business growth pricing

Every market really make product our I and that's comment want is really AgVantage heavily on driven.

in space. the able the of counterparties, the spreads as being in some take work relative to we when year the out over player, with AgVantage in value overall the put our were us with and So of market investment last especially market we credit higher in of significant advantage significant grade spreads we on a volatility amount a that volume some capped market, the

in of side. lines market our products in of some in asset business diversification know, on we the you to had led significant the new existing lot So, dynamics our summary, growth a plus of

Aparna Ramesh

the as Yes, beneficial wider to reiterate one funding to manage net just and we our weigh spreads. effective just costs, effect spread how in to net to on it thing relates we I continue is or think more

and we volatility, liability we assets the minimize that prudent paring we strategies. with that management making really our do sure So by off are

our offsets, as the come just rate continued some up funding we've contributed funding as certainly really the and calls to to in as environment environment. well has this phenomenon, I the fact or we've our funding, environment emphasized in capital particular nominal the nominal made this our think excess rise with that's well lowering as the capital of to could that in because aggregate, costs the has raise that trying raised, reinvests the move some quarterly that decisions and rate you this as of we've One on of know, is the one, on to call, extend

really do rates the is by and some offset is some of that active to bonds that that derivatives. down go of if have, And callable you some our Now, that were excess Well, that where issue those management that actually we then to in turning out we're do back gains either trend will. extending series And into down? play. making capital engage we then down. sure we've the of well, of this aspect if bonds also rates other your the through can asset in were some downside so or locked then be, We liability said, a risk, callable of hedging rates, comes higher question what that or you if we might buy really reprice

consistency other this and in dynamic a we the words, and as and anchored has to to XXX basis with in our real through points, And a always rising partnership is development points, this coming process funding do to we what in that see what's cost. within very, slight above this we've between XXX spreads have rate in with basis the environment. we of the part just but XX the work understand somewhere I'll very some nominal that's note, you So a pickup pipeline business team through why terms

William Ryan

detailed the what generous distracted, to from I business on incorporated I believe it's, probably know your like is level, up there year. Act, I for the on see kind then level, enhance a you just would of opportunities? for this macro up renewal that's moving and might now, any a later And a that into update bill somewhat that. macro of word that? it's but thanks know response the is Farm right to And kind Okay, relation then congress to in

Brad Nordholm

Having the anyone scheduled Yes, of on And renewed Farm Bill in years. something Bill farm be that that Hill said possible five other said can piece that, institutions. stakeholders the which this, key is It's very, to following a for financial legislation be bill, be regularly benefit institutions has of there you're XXXX, with only Washington. is very the with it into the every absolutely engaged Having we it's think actively other that, on credit we're so could continuation, action possibility. correct. delayed

for Farm of the in So is what to is what's good most a continuation Bill predictors. American important in from what's our that the us Farm is that is agricultural Bill standpoint,

that an is make key to insurance preserved. sure that crop one is we example is example, absolutely As and want

rural dynamic. improvements financial it there the other in other us, now will specifics, changes or does players that but we're good our opportunity a what For what credit compromise of the and We're margin. discussion with producers the other institutions, the going good not not ultimately Mac get having come stakeholders to to focus be whole institutions, there is space Hill, do farm on is for few on may And find for ultimately that's a only America, down Farmer is to want, right very discussions is. an into American because those want, a what that and

William Ryan

Thanks Okay. for my taking questions.

Operator

Investor. Our Private from comes a next question go Please Gary ahead. Gordon,

Gary Gordon

you Aparna, questions. the considering expansion that mentioned of the you're some function. taking For treasury

just and you what Maybe describe a, like benefit shareholders? is You gave the that expand for a headline. could on

Aparna Ramesh

Yes, I'd Gary. to be happy

apparent, you end-to-end talking so was systems. are we the as management, there cash very cash completely a to a I funding out cash. average. activities, as that sure large on do I updated. of our trillion We lot of treasury make infrastructure and And lot remains may I that mean, pretty a of be but of that when well think cash treasury function see support extent the transact the all that's upgrading So infrastructure, need and settle actually of that sure platforms those our not there got hedging this to lot are about almost our settled we make is we've to really is actors that $X.X the bad our something we institutions activities, might

and our is are that, can moving with diversify The lockstep in and and make as that so offensive. infrastructure lines other our business, course, to of want hedging grow. systems we We sure continue capabilities our also funding our activities standpoint to from reporting aspect, we an scale that of

technology us good a for time to So investments. those make it's

period. we'll a to in boiling really make a Farmer know, multi-year Mac, comes down, this for it a substantial you down So fairly all that substantial, fairly technology least over Gary, investment at

are will evaluating few cycle. a we this a on terms and really execute of three-year implementation partner as on two who might we And in different be options really help a bring to So us looking to this.

said, come months, to operating our so as on at next you'll that, on see that. over expenses, XX some And it decision. temporary will more that in really So of we're the least cusp definitely the XX generate I surge making to but

Gary Gordon

it Okay, could sounds charge-off was a thanks. maybe little? like there a Also, quarter you a this on facility, you describe that said, storage

Aparna Ramesh

So was that's to say there really borrower se. I wasn't really continuing you it in per particular related monitor. charge-off was, that It an that a increase just know, would we're – allowance to that really was one

no So has been there charge-off report.

Gary Gordon

charge-off. no so Okay,

Okay.

Lastly you, land to farmer ultimately Brad, the play record debt? strong, does mentioned said farm very you incomes. record about that agricultural out growth and How and think values in I

Brad Nordholm

Yes, -- income debt. capital increase before make farm seen because many the rural net replace paying additional down pattern equipment, Gary, to interesting upgrade have investment What one record tends across equipment, question, will very on it's that we hand, liquidity America. a that is farmers

of liquidity work. recently a But of bit. slowed large XXXX. are amount America there interested in picked real up to question are there's rural of parties actually in estate. factors and increased if there American universe or in at agricultural productive quite very our So But prepays that half because other back trying investing that's little no the it's We're understand that a of just

investment in farmland is a of on bullish climate. much farmland is of very because so the to that think favorable interest so demand about the good American you XX-year reasons kind supply horizon, if there is long to equation one sellers. very as agriculture we about of extremely reasons feel run, a there have And are lot a for And the

best have institutions. of We body financial systems, best best transportation law, the

supporting up agriculture. very, leads investors many conclude We long-term have agricultural that, framework to all a represents good farmland a American to reasonable for government It very investment.

flows, to that and of farmland are net So, component. term there's but near-term flows longer is this cash yes a income, net cash function subject valuations also

steady with a for for that Ranch we And that will back to continuing farmers actually any pretty as a if what commented, tapered our for you'd stable farmland. Farm down rates is XXXX additional start So the making I to think increasing we running XXXX. & see capital be more us year it half add be support for program, up bit during more Zach, values American will know I as it color which to we're interest XXXX. investment But like in don't that. optimistic to means

Gary Gordon

think is biggest the going really… I forward

Zach Carpenter

the Brad the rates in said, going or farmers opportunity wanted the producer really land as term and demand think more to or of forward biggest in environment. impact limited impact But I and No, the dynamics availability medium interest that is take Gary, the, how on increase who the to the term. farmer will the take debt as an in Brad, supply for manage provides XXXX of to shorter-term advantage rate potentially medium they debt

Gary Gordon

Okay, thanks a lot.

Operator

Sidoti. The next Please McCarthy question ahead. from from Brendan comes go

Brendan McCarthy

talk about it's renewable from the you. diverse you the an perspective. ESG space. within I wondering was imagine demand if dynamics pretty could I thank considering, Great,

So I you could bonds. with was just about, kind of those talk if the buying wondering opportunities

Brad Nordholm

inception years. projects life for of Most over is financing energy XX, investment, renewable over the project amortizes Certainly, the structured, usually XX, XX project is financing of at primarily that the project. so the done

basis, price new So, primarily rural which our lot renewable energy in is on not a the there's the driving investment, projects. markets, capital of with hour very has energy. kilowatt capital plummeted where of hour investment on to sources there. it's to what that going thermal And cost solar solar of kilowatt of new competitive the It's projects, fact straight is a wind and and the projects the refinancing focus is including the point wind for

the energy, there example, from renewable the tailwinds, Inflation encourage their more in are but to And stand for addition on and so Reduction others well pretty there economics own. that, are, the Act, fundamentals,

that sources So in going these in investment land the many fact the on continual leased of made energy, we cost agricultural on this last years, acknowledging capital trend or XX being purchase been reduction of of the sense markets over rural projects. the is what's economic in and supporting as us rural for makes of economic and and in opportunities these funding this the requirements all part perfect for development of our long-term rural profile amortizing credit risk the and mission as the do well communities, land, to America times

you So Economics it's opportunity think additional opportunity your we've some that committed but opportunity, in what energy and importantly some yes, to lending additional investment resources, point mentioned increase renewable to ESG, there in will for most that further an XXXX. are we be finance. develop project is, And the us people for Reduction driving Inflation Act

of purchase can activity, increase are I we So, earlier for our think that loans quite projects. that we optimistic growth for energy project overall financing renewable mentioned and level financing we rate

Brendan McCarthy

thank then uptrend, you I an on space? rates really, higher you farm know, outlook? you outlook interest that expect what's And that in the, see weigh on question, maybe on do Great, when mentioned your you. separate think, a to values

Brad Nordholm

I farm there individual mix farmland interest rising a land And rates -- interest continued a higher Well, investors may support rates. much multi-generational on institutional investment it's be, has that purchasers an a interesting cap we look an for even prices, farmers enough maybe more rate basis. where with like between that then on who But interest somewhat. who have traditional There's moderated think, continued at as it XXX-year opportunity. adjacent amongst more there's are eyeing of XX-year, viewed see

of any be, reflect flatness, continue overall will a And be and in think years. land so could the couple there we would drop now that that contemplate not growth values but moderate we right be to over some do forecast our it next in there real

Brendan McCarthy

you. thank Great,

Operator

a comes Investor. Our DeForest ahead. go Private Please from next Hinman from question

DeForest Hinman

some couple and Hey, thanks. too. have I'm ask some questions comments going I to

return what quick on XXXX? Just Like how one, return do equity the the for you guys was your on first calculate currently? equity

Aparna Ramesh

is to look at total sum our strip it X numerator, know, GAAP costs. funding capital tends actually in The which $X.X that calculate our way our of, out and the Tier regulatory is goes we And about billion, be, sure. then hits that denominator. and what the we just the you capital, ratio we in Yes,

results hedging anything So that account we really and fluctuations from don't activities. for derivatives and

just we earnings. look So really core our at

or how that's equity our on return on So regulatory we get really return capital. to

to just related And at effect at look as look out regulatory our of then total if of that's on of it's it our equity the earnings other So just common want over preferred then really equity, that's capital to by or purely anything strip just it base the divided sources core outstanding. we common we our capital. we

DeForest Hinman

final number? that what's And

Aparna Ramesh

basis we So of that, that points. ended manage we conjunction And, range. try said, we really in I between at hover effective try in spreads try XXX to to XX%. for to that target we, think manage anywhere which net anywhere our XX% we've have to where XX we a to we a really XXXX, with And XX%

our Couple line So that's ratio. top revenue. our that with efficiency really

we those are persistently the three under key being that So attention pay metrics ratio to, efficiency XX%.

we if hit of a of then overall our sort equity. metrics this clocks certain pace, So should in return at all for on

DeForest Hinman

Okay.

so comment of few but I the this said that, last part, attractive just, mean, performance more is years, really having dividend fantastic the growth it So, everybody. rate, phenomenal is job, ROE. over great really

can't people space lot financial you're even of a think other doing something in I touch. the

your price low funding and You're you strong. doing. managing is underwriting for just share privilege It and in have respect too also and seems your has a GSE, don't like your so far get any you been incredibly you're your what spreads

So for I share is this is pre-financial on good prices side they keep your excess up and time, valued the GSE were currently in say, far the go analysts the if work, of where back call, at. in would evaluations, sell crisis

bit securitizations? how You So talk good little more give color is, some then I you announced say, call. among bond buying? was oversubscribed? great previous doing versus a terms on work. that now funds, a securitization And before were as who's Can then, Are job. Question many diversification of can would are deal of, insurance securitization? Keep the that buying people well. about, the you companies, a you're they in And up I seeing that additional us those we some buyers the have questions

Brad Nordholm

point, the I DeForest, going completely we on story. let agree I'll securitization But follow which mean, of again very, is Aparna and a couple your first get Yes, into back a very buyers to points. positive

to tax period performance, levels year in of XX%, XX% more look consistent can see after challenge performance of a very growth fluctuation. at it Our many at both ROE, look over and earnings I and consistent. you remarkably is little anyone terms a that absolute

and there maintaining I has at Farmer safe with trouble. pandemic terms really been in some that have fulfilling but and And our Mac comparison very we we some have the anything one, fulfilling do other been other into think of to that of that and sound behaviors, the remarkably got GSPs been free these mission interesting of lot actions mission. practices to So, were would any political very, pre-financial pressure note financial just and what than doing an before doing I crisis them

the argue is would I without comparison. So stability, without the peer, really that consistency,

taking these and me point talk that well. period at standpoint let to from at one with I for types though But different that investors, three do, prior to investors securitizations and if about on the DeForest, when our securitizations, C-Cclass bit that, Aparna time is variable when look a announcement you stocks was turn the market Mac our it the of look Farmer that were as mark before to a

believe we so increased But a this to group And larger that our investors. that, Aparna? something of has exposure general that with is

Aparna Ramesh

Yes, no, your thank of very our echo you, comments, of all and I for results. very, proud to want very kind Brad DeForest

securitization question. can't type the regarding you we investors, and data reveal Just on I'll few your around to specific two-part and you just the any few give points. had a of was Obviously, sort of I a that, but just diversity points. One think say and just question investors investors, a I'll just

issuances, investors book. across And previous all program. to new into consistent who seven we've relative also, overall were We about investor the deals. in the three had buyers of count increased brought in a We number the the investors

count. we've depth, on in to were well, and bit tranches. oversubscribed as in a just breadth a market well I'd little increased sentiment of certainly anecdotally from with volatility the lot to of just the more tranche our as regard So both credit. risk a return a say, investor We on despite E

really company selling I first mean period. XX investors did and tranche the it a due did think us Farmer all. a time, or at any the with calls we to we But not over of B me, I lot broader that and starts time of a as we I the name, This not two XX deals, came need to and between on did really about Our deals, the Brad lot these familiarity give talking Brad the of A of the noted, down investors spent it who the collateral deal we Mac. overall. company. need about exposure transaction to just the granularity highlight is, three-day of but the nature just the are sell programmatic itself. company to also The reason mentioned certainly

is then the And how issuances. second factor making was is there the I aspect to a question, often actually of market but as this of pipeline, conditions well as which programmatic committed to constraining set your more one think obviously, we've

And so, to market the this at year. again we hope some return point do to

DeForest Hinman

but started they and Armstrong, money see believe about Okay. X.X%. their they There's to people doing a That's they are I in want have XXXX just appear a you their and want it to they within And there, and space this that then deals, I called show understand slide structure rate and long-term very their it's at that purchase of programs past. out I And helpful. renewable be where they're space, lending, renewable found in because when a company the the help available lending deck have X.X% also talking arrangement. public they costs Hannon into the funding some opportunity to power the lending intriguing this they're

they're lend their borrowing money they're So, And have the growing renewable is be is you it X.X% they're then renewable lower, would how phenomenal they've this of lending out? they're some-odd generating our this grow do the saying be loan and your you able renewable within lending have advantage and would this would that look my laid portfolio, rate. seem, and at very funding view attractive we're cost X.X% at should at they're lending like to book a extreme something $XXX is, and type first currently space? that trying the to and question on significantly product metrics returns, versus if simplistic energy million an Because of

hopefully, can we some So, get going to here. I'm color pause and more

Brad Nordholm

Yes, respect those a spent agriculture happy Hannon my back be in and are gone a is who and Eckel I've career of lot XX-plus year European respect. the got years and And Susan this. Armstrong's themselves, Jeff in forth a power financing we'd people fact, These but I very Nickey, capable part project States. by so, And quite I've it's been niche nothing with great who made and running to. are traditional business, projects that and Where -- renewable is between very Hannon energy Armstrong, electric and know know also but deal, dominated for programs. that have I Japanese very, in playing over United good to for we're of has and so operating banks the familiarity similar

players, And U.S. with business, that that's on of we because a very, done the nice of is than by we efficiently also of nationally, very relatively but servicers kind it other more why seller European number few both banks of much in originated this on secondaries haven't where part and the carve Japanese and we and can of funding. just out large operate part can of primaries players. think that midmarket mid-market the

about this projects. question proven pretty energy for path your is tried a to project credit and finance going metrics, So in renewable

a underwriting purchase an debt want the underlying where there are Moody's you abundance typically If purchase that's guidelines is power dig amortizing right S&P, as into is. debt where where long-term projects agreement, as and well These a to agreement. power of long-term Farmer history, from over is Mac

where fully the coming proven Mac. service there what from flows to and is X.X oftentimes their metrics but debt the ratios that's over tried six-month we're projects seasonality sculptinization, balloon, range, where a are the there's cash underwriting typically in it, of where very, wind amortizing coverage and doing reserves, Farmer at service X.XX given debt solar Sometimes very there's

Mac finance project credit the will typically BBB-, again at This exactly rate is a sort equivalent, BB+ that is. kind of where of out Farmer

because And the something years. of funding natural and for doing point as discipline is a we over that advantages, developed experience something is out, you So been a think market are this us. there's we our lot where

you space your get taking reporting, for that we're might different bit at these it's a segment The is get point, spread, XXX XXX, loans I of Farmer X.X%, term of the back we citation on think playing the our overall funding I at you Mac. terms from emphasize our that Armstrong our treasuries plus at X.X%, kind returns funds anticipated would is in, accretive to at that to a to of an can of of comparable can and in in you given this segment think another and little that yet But Now net bit neighborhood Hannon cost when more, coupons but probably us little prior to idea. out of look occasionally Zach's be spread.

DeForest Hinman

this steering And growth piece, to then mean, exposure where Is the you're a ship couple Okay. this portfolio a I go? maybe in I expect mean years? multibillion-dollar should of we just here. a

Brad Nordholm

on basis, resources on, put XXXX. large I that think amount in a Yes, on we put we've We've highlighted in we percentage more to this committed XXXX. a

of might XXXX, volume mid-nine number. would in a it So, XXXX, hope that be sort we figure

easily it a get XX-figure could out, kind to of number. years few Looking very that

billion I like the of to a be years to $X have a goal. XX% this doesn't a an that seem over market prior unreasonable in is is billion think and stated year on market where us calls achieve for available some neighborhood to market us share we might $XX the

DeForest Hinman

then incredibly be I XXXX? planned for That's to Okay. last all helpful. two current Thank What's what's hope question said. what the listens the you just additions And would closely answers. employee And headcount? just in headcount everyone the part. you the a

Brad Nordholm

the a on corporate attrition, had since still added change XXX think, we employees have bit which more low. for I of beginning actually, full budget a year, very by few. Sure. with We XXX XXXX little the is I a had basis We it's for finished year-end. extremely XXX, is standards may We the think and year

We We took in, quarter of hires. also XXXX. won go-slow set some approach in a the interest rate on volatility second

headcount went for over through think year are budgeting to little where we below year, Board the meeting XXXX, process. we bit XX% planned I a our a our think add the So, we what might today. I ended we through about And

DeForest Hinman

you. thank right, All

Operator

concludes I Brad closing like our back to any for turn over the This remarks. session. conference Nordholm question-and-answer to would

Brad Nordholm

Good. about to that Well, Mac. participating you have with very performance remain we this. our Farmer delight as the thank I hope able convey XXXX in so well much of optimistic been you future all our as for to we real why

to because liability We optimistic it's and segments been again, of do. but optimistic. very, management, we very use, be to hope optimistic future. what that why that fundamentals discipline it say the it very in we're good excited and over communicate good about very about asset able these that we we we and points do and and use you the and at we're we've that, over the on doing again, principles should to sub-segments, we've raised for that's the very rural market our that we we And focus today. And have become why the America are DeForest what some

expertise Thank very the results. extreme am just if and and that, to employees how good wish great mission, And commitment to speaking I reach we conclude that soon. a we you. look the Farmer forward I our their to and any please with to these with how again Mac follow-up out meantime, of very by proud to questions, you want you have In you Jalpa specialization, saying and day. their of just incredibly again contributes XXX

Operator

now Thank attending you today's conference has The presentation. concluded. for

You may now disconnect.

Federal Agricultural Mortgage (AGM) 24 Feb 232022 Q4 Earnings call transcript