AGM - Earnings call 3 2023 | Federal Agricultural Mortgage Corporation

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Operator

Good afternoon, and welcome to the Farmer Mac Third Quarter 2023 Earnings Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Jalpa Nazareth, Senior Director, Investor Relations and Finance Strategy. Please go ahead.

Jalpa Nazareth

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

those be this note XXXX and company's the and strategies expectations risk farmermac.com, under and based a information begin, and section. factors. statements Mac's are business, that non-GAAP which Financial the these the management's earnings also we measures could in SEC These projected. company's full call, contain and forward-looking XX-Q please provided today's filings of of differ certain we the will Farmer for risks to and are most statements subject to the As website, to are annual posted during on Form call non-GAAP not on refer Mac's results prospects, Investors uncertainties assumptions. report On may be release Please the a Disclosures cause that can guarantee materially actual found discussion of about Information from portion future the Farmer performance measures. recent current of discussing our and subsequent financial reconciliations

afternoon for period. Select Brad Brad performance. President question-and-answer and over financial also third provide is management our Chief us CEO, President Executive and call management joining of turn and our Nordholm. members and Chief Officer, objectives; on strategic detail from greater this the to us business time, the will be Brad? At I'll and team Joining Ramesh, Aparna Nordholm, will who this discuss will highlights who our quarter financial Financial Officer,

Bradford Nordholm

to very earnings, quarter consecutive for record. our another you for Thanks, Jalpa. Good record everyone, afternoon, joining report us. quarterly sixth I'm thank pleased and

billion business is and a America along shareholder In cycles. the markets We new our year. providing earnings recorded rural the changing Our remains our of $XX.X and and resiliency objectives, against quarter, access last gross a changing over counterparties designed strong, AgVantage $X.X during quarter returns again credit our us, uninterrupted our period liability -- fulfilling which, to Volume of results market to strategic across conditions. the million, initiatives market important XX, also once volume in grow generating the management resulting model market as the to existing while and XXXX. $XX.X this this business core third quarter, enables of reflecting long-term securities the wholesale also capital success very volume and growth buffer to growth with of the financing while XX% business These increase volatility of new of same with by our demonstrated strategic driven total September capital in space. outstanding billion asset disciplined was mission while the achieved we base profitably company

the this grew standby of rates options. the liability contributing six and and in interest utilizing platforms. commitments, months in strong of securities loan We been really their a instruments finance interest Specifically, in offer several $XXX overall $XXX we pricing third given quarter to of growth, segment believe longer-term the quarter, Utilities we is securities their corporate into business incremental AgVantage finance. strong Corporate than the to in the volume institutional product, existing marketplace offset volume many purchase other effective more the build that nonrepayable primarily the securities layering net a our added drives predominantly well due team agricultural of financial these $XXX financing counterparties, farm in and financing our in growth institution has manage and wholesale and Rural competitive level Also to will over to million. are development segment, the segment longer-term with growth increases ranch current wholesale of counterparties Also, line AgVantage million which and AgVantage business activity continue facilities competitive which mentioned funds. Activity at market AgVantage as the fourth pipeline asset first-class last their the in profile purchase commitment counterparties across diverse a over in reflecting and more new an picking a wholesale in The previously securities up reputation cost our advantage this the AgFinance given entered XXXX. of quarter a in maturity maturing segment, million by with people. The large security renewed our counterparties, business of reflects financing, securities overall

While remain on of years. volume effective lumpy opportunities be on tends the more The was of levels. a is in standpoint. earnings for net steady, adjustment over borrowers' segment, in third key rate applications number variable historically sentiment but remain growth. higher as a this to reflecting focused The environment, the this primarily new segment loan to generally interest decrease our mission seen basis, Activity agriculture and are five generally moderate relatively approvals our strategy, Ranch the mortgage expects to to quarter prepayment a & We accretive a at Farm result rate environment. segment rates and product to to shift rates to component be to rate quarter-to-quarter also of spread flat diversification from ten next during our a borrower and market continues which as continued low has impactful central

Infrastructure line Renewable to and segments. Rural volume Utilities Turning Energy Rural purchase our of growth loan in healthy saw business. We our

capital well this was infrastructure normal related America. of utilities in focus quarter the result telecommunication our investment our infrastructure Utility purchase expenditures Rural rural maintaining and New upgrading course as to broadband and in loan volume investments on continued as

and strong Farmer into Mac. robust to Renewable this energy important renewable economic energy our is America an our first during development opportunity at a us the both and portfolio over grew grow year, business opportunity is efforts Our investments portfolio the year-end. of for rural heading and months for reflecting million $XXX nine pipeline

we plan this is Infrastructure to bring our As earlier in Mac greater even believe In to rural will and deliver to a potential us the business. further upon markets. efficiency of energy liquidity further secondary banking penetrate arise. allowing credit year, that is we've months, relative stabilized our that opportunities America. and discussed product to crisis for agricultural the us previous the I've regional a resources renewable as additional presented customers and following help what that finance, as bit recent agricultural it's tighter, offerings the to Farmer market for value build We invest We as we lines this calls, and market consistently rural mission Rural because our of of capital and believe a market when trusted credit the credit conduit

in free the we have example, manage customers securitization conduit that capital up their to helped have farm F-A-R-M, farm, program return balance utilizing created their we For achieve sheets the optimally. and to by objectives the more

plan and not our said and the investor have strategic Infrastructure regular with to highly align a to previous dedication central customers without we It's issuer to our would The our team's commitment have through efficiencies committed been and and excitement continuing opportunity possible and that set the even you being with Farmer agriculture to and are results our sectors. heard today alignment our mission, record our both for market in Mac. a tremendous bring As is for our the borrower securitization organization securitization long-term and interest. to to about we across of momentum on Rural products greater calls,

company's Our compensation business of a program during is positive long-term approach, to to is new in also the long-term significant caliber organization to employees employees third their high employees and combined financial to organization achievements, of the incentive This position we That for quarter. each expanded performance why our format delivering all and consistent all intended success. of incentive is talent our align of long-term across with the really the plan our continue our results.

execution, capital achieve businesses throughout manage capital has risk positioned requirements This mission. access strategy various to our liquidity. continue Our our opportunity credit growth financial proactive future our of The partner underlying is sources. value sheet disruptions, help their changing and the they fulfill to the positions uninterrupted environment expected shareholder the enhance our and capital well the market uniquely consistent debt with operational with the management coupled customers in and of to and foundation us funding markets and our around to position, model, face them more us and of to business is to and create strong balance

to results our discuss to turn the call in that, detail. to Aparna? more with Financial like so Chief Aparna financial our Officer, And I'd Ramesh, over

Aparna Ramesh

everyone. afternoon, Good Brad. Thank you,

and record results cycles. our continued credit Our strong resiliency third market quarter. gross XXXX well-measured this of We $X.X quarter billion achieved balanced across new highlight approach, volumes quality,

key of low-cost higher the in need Utilities the energy were in further million spread capital continued new share our loan million spread we repayments Farm compared of year-over-year new towards and AgFinance $XXX few remained increase interest Core spread corporate grew funding $XX.X a million corporate line this decisions as were $XXX included at purchases. after and the made earnings which new higher cost XX% this third Rural purchase AgFinance components of like $XXX billion third finance were in in financing $XX historical debt rising commitments. loans previous more refinancing purchases and we assets. per have $XXX unfunded $XX was quarter to earning in the AgVantage segments years lows energy. both volume volume, lower million diversify benefit in XXXX of low-rate loan record XXXX by when in of is net approximately in strategies same $XX.X excess Rural maturities, that the we in the renewable create and speaks period by increase. year. points, branch quarter percentage This portfolio XXX loan strategic Infrastructure our wholesale of standby of trend The this our outstanding a and was to segment. opportunistically of environments, and and business our majority over that to or of the this in the callable and long-term capital XXXX, million $XXX Some evident loan existing $X.XX of in rate million XXXX purchases, was this the telecommunication million in which business, commitments. that at basis capital, by agricultural million renewable terms, all net wholesale $X $XX into million securities. term in environments. to effective as opportunities debt new phenomenon quarter last enhanced in the purchases. environment. and financing Even the and has rate raised and and rates reduced raise debt for to us in expensive reflects last million redeploy effective quarter driven our well primarily third was in ability driven In $XX.X our This million excess

We excess benefit our and an to curve generates highly cash the us continue with increase $XXX costs as help in short to our expected reinvesting a of Not our defensively environment. downward upward investment funding this capital a instruments repricing pressure in and market hold liquidity continue is of whether the with liquid in actions does capital Fed short-term end rate This excess non-GAAP returns to additional other of portfolio. are on and approximately potential nominal immediate create only high to million portfolio. generates return short-term continues the disruptions

minimize earnings the earnings, in rates project provided to in benefit rise due if allocation asymmetric limited short-term to rates future, proactive the we to a downside are duration equity and we to layering and capital strategy is where this decline laddering While has an our volatility.

capital retain expect extending consistent investment term designed help to rates over debt some of as to and quality we approach portfolio. practices as markets very medium earnings are continue our Despite we investments, the to they some benefit access with in arrive. to decline Specifically, asset well which opportunities maturities started These have this to all to us disciplined our minimize that we be volatility. a strong new macro allows if see to flight are fund headwinds, positioned

capital, another our changing of support to to have significant and resources will new it half enhance by spend expect to As as and his in and and continue previous liquid to with firm we beneficial funding, product. a balance comments, strategy opportunities a enables a three for optimize a into enhance and with conduit.While the Brad efficient engage our securitization infrastructure Farmer diversify time securitization XXXX, our of highlighted of targeting in closely market return Mac. farm growth transactions. allows monitoring to and robust our amount investors Securitization It similar market many dynamic, has customers and by us aspects spent, to we're sheet the deployment first the we also our of transactions the asset market

fund and we liabilities assets last liability contain and asset to environments of quarter, as convexity rate match where and successfully highlighted the we As our volatility. changing our navigate management fundamental earnings in allowed this practice has approach, market environments us duration remains unchanged all

relative time to rate Our we've described services institutions. certain this volatility. natural has business us differentiator is and financial key horned depository help to that before, This a we've entities, over especially other interest hedges from us you to for insulate

interest loan tend access depository would on and our manage and liquidity I risk to have of able interest interest increase, we a usually and continue deposits institutions. decline, rates decline, on volume by that For portfolio and would as when rates callable to We're often also rely we to spreads. our our do also on And interest excess this strong issuances relative market but conversely, prepayments interest tend likely exercising rate cash And increases, prepayments source but when the example, not maintaining to rise, capital earned as mentioned purchase is differentiator increase to ends. funding.

offsets, short-term dynamics rates. volatility to counter they Although are interest balance mitigate in these natural changes perfect from business not do

rates and to positions go show rates, interest profitability also movement all limited market remain or projections And liquidity well excess in our minimal up and to change regulatory of in are Our capital our ratios. down. exposure where projected in the

medium-term of is as September of XXXX, point As And disruptions. another this important resiliency had our XXX and data against validates XX, market Farmer liquidity. Mac it days short

with increased Turning platforms. our investment diversify strategy. enhance and the this also to and to expenditures operating that to in threats but portfolio geared the effort effectively us fraud to systems technology These associated expenses. is due to reporting and future is cyber against defend not and our hedging scale us year-over-year, and a aligns our to note, treasury business and offering. trading, expected this our more are modernization is management to allowing position like-for-like, effort XX% product funding by while is primarily I'll multiyear with a our cash This and

We as to loan areas also plan strategic in our to model intend investments and we objectives. servicing support our make platform including continue to asset focus strategic such renewable energy, and to infrastructure, and growth our

result, to at and our expect continue averages, pace XXXX the expenses do to years. several over increase run this we historical rate above a As next a and for operating

significantly primarily it's was efficiency plan XX% at September well increased XX, and Our growth strategic below and a of operating target XX%, through our higher revenue because expenses. rate

done have it ratio XX%. we as band stay We efficiency will manage monitor our to to a closely around continue and within

and platforms the temporary accelerate loan to innovate investments and see may XX% increases growth, we our processes we infrastructure above our level. make As loan funding in

from third a quarter, profile $XX.X We very economic credit XX-day allowance XX Our losses quarter, XX, to The of from total in the million was a basis and decreased decrease strong despite The remains as our headwinds. second in modest points to allowance $X.X single was portfolio. reflects decrease XXXX. AgStorage the due across sequentially aggregate the entire portfolio the in of the for $XXX,XXX substandard second this September decrease loan delinquencies in which saw million reflects by partially to allowance $X.X primarily during the Rural quarter. third the processing offset reflect was and quarter. attributable And finance the full telecommunications payoff for Infrastructure to from for a provision to this a downgraded release a a that million single agricultural the portfolio loan to quarter

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

results X retained coupled largely is higher Maintaining of long-term of that capital XX, to strong risk XX%, levels of reflect strategy. and our earnings part credit our with due Tier earnings. XXXX, capital a to strong Our ratio September profile, as fundamental improved standards

are we're headwinds, monitoring exposures. We macro for stress markets and proactively overall anticipating credit our in

resilient strong us position a remain liquidity be a expect difficult low-cost we However, capital to and and allow borrowers source to of even our customers in for times.

that call below the our key metrics equity while each this So entire a in conclusion, surpassing highlight positioned strategic believe we are to to we within XX% optimistic results, credit well well and efficiency staying strong our plan more on of than and let turn on our framework. on delivered delivered uncertainty, record We deliver XX%. me back our you. team stayed Notably, that, quarter it quarterly we balance is return with that And trade objectives. our target Brad, sheet for ever long-term

Bradford Nordholm

Thank you, Aparna.

our quarter nature and believe example Mac's continues extremely are provides which earnings We XXXX. strong the we positioned be growth for Farmer remainder of results, of and our deliver of into and well during XXXX performance another of yet proud the profitability dynamic to to business model, and the third

now, on agribusiness efficiencies the have to from anyone today. I'd infrastructure and And Ranch operator, we our see execute plan us and levels continue enable rural solid to financing increase long-term organization agriculture Our We're successful strategic Farm and and costs World to infrastructure. high on remain questions any their our for of lower our for benefit line greater like American to financing customers in capital the to of mission to providing focused and lenders bring even aligned customers. our & with if across

Operator

session. will momentarily At We roster. pause time, assemble begin to our now we will Instructions] [Operator this the question-and-answer

comes with The Bose KBW. from George question first

Bose George

on with spreads. wanted a I question to start

level think level And to elevated spreads term. still in normalized stay kind So think range, least should of of if closer XXX%. normalized at spreads getting think so, I Is XX% the could In you've past, like it's about? to sort it a discussed the from the there? that this medium spread we should here to we the of of how trajectory sounds

Bradford Nordholm

a that I in interest from variance and have we're that as wish well as diversification higher contributions more both positive environment, I business treasury spreads. accretive, into our our we to answer lines coming could funding rate how perfect this operations of to have because that increasing the provide higher

let a additional color give Chief of Business on Zachary, of lines spreads with of on me different then you treasury. little our wrap and ask Officer, up can it comment on bit business So to kind first our commercial Aparna further

Zachary Carpenter

and Yes. Brad, a great question. Thanks,

& especially growth, think the I said, as environment as lines interest historical of much more to especially over spreads last rates. than mortgages freed a have months our business new XX our have into lines higher Farm it's areas down the given apparent, XX Ranch in of been diversified slowed our where this business, Brad

these are lumpier new telecommunications, much volume nature, You're than portfolio. Mac larger. seeing of their a for in quicker, our has energy lines use tended this where spread grow especially by a of of overall deals and nature, capital Farmer larger inclusion which, Those and have more types But historical business, of higher have secretive supportable Corporate spread, from AgFinance transactions. environment a renewable to also in been our

accretive I forward. more see hard historical But a to as spreads areas we I very mentioned, these say, predict. going growing So segments, our well Brad some these think will of to as new it's of grow in you as higher as weight

of paydowns business new are in times some terms and these at lines of And maturities. spotty of

in significant So this of seen those environment, we've a areas. just in growth new some

Bradford Nordholm

XX, in spreads, some to expectation can If to renewable the of a bit one accelerate we could for faster saw have are to out we will of activity. rash that, But dilutive which we diversification is in looking on north origination XX that portfolio. a with revert successful can say a I could we growth would that That, an that? Harmon our example, have add to we a of to composition our it Just of difficult Aparna, think But pickup our basis point is accelerating current it in impact to rates growing couple accretive not quite spreads. be years, a and an impact predict. of NES decline as add confidently So slightly little example, will energy, you it our because that that the the

Aparna Ramesh

want Yes, absolutely. I comment one composition. business around lay just to And again other

but I that I has to say think you will this. Zack and it absolutely do business composition, also to alluded with

infrastructure significantly to of the years, that's on you portfolio, back rural it spread been is huge in today, if and contributor lower portfolio lines than the that just Our was new business. addition several go a

that and our So and very to another consistent maintaining debt the of that do example be financing of able also able it's fact just not spreads. we've we've while liquidity to our been just increasing been but provider a to counterparties,

want on, strategy And to you pause. as would likely I'll just of I note in just heard come funding earlier environment. couple natural add both. rate Fed is, a which But Especially right? that I'll question things, our is some I comments So made pauses treasury, a that think to or sustain? say the this fruition And likely And one terms in those rising then the comment. of to I has just of really

some them have with to strategy, in-book hedges has We one of within do callable. our and funding

actually dilutive do and callable has our the will that do caught downwards, a that effect little if we But costs outpace we that. being we to deliberately rates situation we in in to loans on. of So continue And trended be put position want a are our ability not where in spreads. to layer bit because actually do a dramatically to where we funding

on spreads. spreads relative tend to wider slightly margins to stable So these at callable come

consistently hedging it We layered in, is that a but have strategy.

to of that positive. that one So help band know us It's that's to maintain of north more going I'll the thing XXX points. spread about just basis

we highlight just strategy manage around to do our our that The with will second how piece funding I duration. has

and or rate while to the has very again, being portfolio the of extended systematically our systematically at trend of down. investment close cycle, rate a anticipate that, very have if maintaining we interest providing natural peak profile. hedge we some effect were risk rates to our are as And of So the

So we to of as lines say well are from be all both as a XX to that. to business try that would strategies, manage that XXX while think to basis NES, where of diversification headed, a point is of we I this given to think end as into look funding our it we'd the we at that say I out of upper fair be

Bose George

And remind then above just then looking how given dividend. you the actually payout lower you the the sort you're somewhat little it? it could elevated? look payout? remain switching you to a Can Or of Is sort just get dividend? at be that are a at a philosophically us normalized just returns how of of And did level, ROEs bit sort just that as of the

Bradford Nordholm

Yes.

XXXX. In year-end dividend, at of quite Based we're get seriously it results, on into we we'll as terms disciplined February of that's in very annually. the look something that revisiting

each for happened has x last years, dividends. what seen have increases year the in consecutive You number of

these any after-tax for What That's be past earnings. years, that that and the results, dividends have just earnings? consumption what going The target of a is the is outlook And however. in that's But XX% in hard inside our how not further rate into have today. much resulted past it on I'm reasonable and of very dividend. a increase have fast of the capital? growth not Given expect that may gone the to to exactly factors been, guidance it's in provide been

So for we that when be looking capital. potential acceleration at we evaluation, and will do need growth

As a And for stay business, need be February. considering That capital. taking tuned. outlook strongly dividends also we mature, Certainly, be so securitization that have just find on increased then an less for programs may consideration. we will the will proportionately we in action

Operator

question from Ryan Bill The Seaport next Research with Partners. comes

William Ryan

bit the you're we to quarter, the on obviously, alluded calls, thinking kind really in expenses, But to of XX% growth? revenue you the sounds to like you as faster, directional some have that second third talking of change, one, revenue bit start quarter. little in little earlier. you conference And levers little kind side up the the slower. the dial manage a subject little to you a the of XX% makes a by have off on First it ability Could about bit hit investments on about revenue maybe that back a a

Aparna Ramesh

tracking. in, of how to the the do No we've that right? project line platform. as we We the line have, some growth doing say But just such terms A well I things of Bill, think investment, largely nail that And are fairly you with of just head, investments particular but that as that levers make historical spending you couple aggressively, fairly is baked in we in that investments and XX% because fixed in made we the we our south looking see, I strategy. the would in and technology can on right averages. are hit accelerate our with our ourselves see we're well on pretty probably target

next And respect as this want much this do other and strategy. to we year. of can got we've terms I investments we in planned something have So with we some do that as And about through well then few to how in. our there a year levers loan layer initiation is talked

that higher our we will energy the segment, of then just think right And but into little so some make drive profile. a do way XXX again, final now, again, it our investments, again, pay I overall to that we of that the you've expense is think up to has we that which optimizing we last in a that is that face to segment. with off plans area headcount, do. expand the levels. as also intend to both And within seen renewable under could do And And consistent with need which already is in to can that's terms our we plan something that NES

room dial we are from you So back the we revenue can to really really as spending think our revenue the to reason in. as projections to we hit things basis. going we're we projections. And track quarterly way we've our manage to not closely in which profile revenue we finances left coming story, is very how at that enough no And our But this that. we such believe heard if to need don't have look

William Ryan

of going equity banks which Kind out reported money were couple what this risk partly renewable if are weighting the kind about are because weeks but some curious and seems implied energy through III receiving And was And they they investments curious ago, of Basel any now how than may higher the renewable this means. of that so kind financed thoughts you of projects talking question. of that ultimately you're they kind and follow-up just impact a they it. is thinking a that go right an important, I of forward incrementally about it be matter. obviously, tax I'm it center energy that way some came counterintuitive might on had

Bradford Nordholm

we've Yes, a it thought about lot.

market. inherent view on for effect in it billion XXX% equity and Reduction that of projects. too But would of happened, a than market expectation was ago, investment Act energy The may is two that with that as making down tax renewable to the projects, not $XX And much projects. XXX% renewable Inflation The again, many to advantages structure of the financing making banks is bad. doing, on years equity we billion $X equity, very from compared starting we be other debt. that, been capital about in First IRA tax to additional that base. incentives And very from banks. it tax requirement been one-year It's have would all, difficult and the to proposal slow commitments. our but low addressable chilling for energy a have this have that secured as about the loan big which for to energy fixed not more We've If rate as is straight have increase to senior to our the for We're price so project doubled. and amortizing commitments renewable project are an ability the we're finance as would new the example. make banks commitments

very base. very, low a we so And starting are from

think that put and where the brand difficult to Farmer Mac as take market. share in we develop market and stand. We So in from capability particularly effective people the we field it's don't

market if years to market, build still or feel of because the there's in quite constraints equity player market say, frankly. contract the X/X us that even for share by, were we market for come, X/X many to tax So in to

William Ryan

a Okay. given but One in what on assuming of going very in just last of I'm farm extended a what's probably. question to bill? way, going probably Probably rhetorical the Congress, the kind I question. mean it's get is status quick

Bradford Nordholm

leaders, is majority, the two year that But Committee, extended day. Georgia ranking Scott Congressman acted a be with the new every should his came leader, that that the changes Health indication morning, from Senate of He member the Agricultural of minority majority Thompson of was the opinion before joins the out or bamboo minority this Pennsylvania view. Savino bill and is on. an majority out house the then That ranking it with GT

and in and extension, then There's which to year the that XXXX. clear needs pretty new a maybe between done a to half during year. XXXX. them of an needs probably on be it's than first we're under the really So and a now the of see into by to of Congress it is the the done, scenario very and act end less to for has it We'll extension be ambitious politically well it really year very, on puts front obviously, see, pressure it scheduled going

have one-year we is a So that our base extension. expectation

Operator

McCarthy comes with question Brendan next Sidoti. from The

Brendan Michael McCarthy

Just to million figure outsized your like anticipated? is an wondering downgrade loan Or is And $X.X was comment the guess the led that more that telecom surprise? on was that typical? that provision. mostly if of a you can quickly I that

Bradford Nordholm

it ask in require our downgraded not on sticks would that jump Officer, Crady, We're But be because Chief Marc to And to us allowances is occasionally for we loans one. point out are have I where this happens special it spotlight of Credit No. all to here. a the to only have one because look, loans. at a unusual. putting they thousands

I'll of in little to resulted of Obviously, a little you let a the downgrade bit mind. that's name softness in we're allowance. Marc the So that of bit color nature credit not names, in the keep on to important the But color. give but going

Marc Crady

a not Thanks, Yes, Brad. surprise. downgrade the Yes. was

increasing operating in other telecommunications the challenges business. secular kind some quarter, the maturities that in are our will results weaker-than-expected the had company quarter is mentioned, borrower downgraded downgrades portfolio Brad large debt telecom The only leverage. telecom, expecting though industry. As a we There's some future. we're this of and one in in I This note. additional coming telecom seasons, in was the The large XXXX

out I we'll or sort future. the say ordinary was I And of So guess, in expect the unexpected. it's it wouldn't of

Brendan Michael McCarthy

just maybe Rural kind to Finance. So losses years? two some the to probably provision the in a for fair the next just it businesses given of degree expect might shift we spread of of one say towards higher over fair higher say Is to that Infrastructure

Bradford Nordholm

have cooperative business, I stories & absolutely about electric incorporate to higher be Farm the risks. I but of in renewable getting for telco. business of in we're won't have we more we past, predict we to couple Ranch and we provisions on those, the next the ability are more have that that that incrementally and there'll energy. the we'll will for think credit but confident these that losses risk will manage know the years, and working And our compared Don't compensated be

it So but in also that yes, show occasionally the allowance see up, profitability. to you're it in may the going

Aparna Ramesh

robust say capital a well very to Brendan, I position And excess Yes. love regulatory our we've requirements. got of in that would

stress. sheet any balance is positioned So the well very overall, handle to

Brendan Michael McCarthy

then attributable underwriting that kind to a just your AgXpress, it question wondering to provisions volume makes But quarter? the And of about standards, a quarter, sense. was there I loan-to-value I one Yes, directly changes last loosen bit. talked change the from just. was, noticeable Absolutely. believe increase know last from if some in more we me that

Bradford Nordholm

Yes.

quantify you color I in think applications number of that? now Zach, percentage the pretty But qualify the for overall increase offer some on we can that can AgXpress. well

Zachary Carpenter

biggest product, just excited last the of higher this the down space. regardless Great I about Unfortunately, in really think product sticker or months, slowed think shock XX that's is which I refinancing very the Yes. enhancements. market the that basically over rates, we're been to XX and question, headwind right? in So stopped that interest space

the loan platform that this So than in applications higher said, being much past, coming story space a in AgXpress product here of the competitive market. the I is much new much meeting is more it positive the the in more and positive through what's of being ever our think reaction is percentage has been

of higher couple we towards higher a is next that and and see composition purchase this compensation applications believe interest will total increased or loan more and/or accustomed product even to total as all applications. And more So opportunities years a borrowers our of get AgXpress. start rate concentration over in environment shifting as drive the to this refinance new

Bradford Nordholm

add It's nice that applications? by now today XX% number of to something it's approaching

Zachary Carpenter

XX% XX% to the on yes. month,

Bradford Nordholm

Yes. And years keep that four in mind, was ago.

Zachary Carpenter

right. That's

Operator

The next Investor. Private from question Gary a comes Gordon,

Gary Gordon

percentage Two Or questions. stresses Is a about of the the something say banking your wholesale. does One system? of is that's on this new sort business large this one-off? the

Bradford Nordholm

discussion to share and what about four want really the to going driving a that back I'm also evolution exactly is a to now ask of just Zack actually with earlier right and pricing about positive philosophy to going I But in story to talk an just over this and been moment growth, addition for NES this the years. five last Gary, on has Yes, airtime what's link America you. go

calculated our last does what but to And business. And wasn't we the lot profitable, or And reversal the take we is have? it ago, five customers and decision was deliberate to And our return couple pay market of the that, attention market price. where now to and an you years not kind attention also chase today, years a to four need, us back for we're seeing that is share pay and minimum Going do And that of capture market of we profitable? business what's share? was that we that saw alternatives what what of wholesale absolute the over that. is

opportunistic. so And we're being

the we to risk that and pricing, marketplace, in Farmer what mission So but here what as about I need do really our now. from more do much while thinking what fulfilling the a at their what we is not can minimum marketplace want driving emphasize the is take we and of for of compensation Mac,

Zachary Carpenter

for And going What long ago, we've right a right excited had space. have Yes, We're Zack time. counterparties outlook people a here. in Great about the And and we Gary, years about back the the history, question. in sure we them couple mindset that what in potential really the was available. and in this very to to resonating. years, three of and didn't had last helping brand are brand place really to talent personnel understand and the out I go felt there that get and is three see out our over and market get to think our we've opportunities make two

second is think targets the thing I the why now opportunities strong market.

market. daily in to secured there to There product to on in and yields very are counterparties. call them people. value strong relative in have also right have layer and are very And a the that volatile individual a that's on bond better. market brand opportunities We're we strong these the strong a internally and agricultural get So We're the rates out a provide few where value loans. basis, wholesale financing we relative

we loan. it medium earlier in we relative these are how and long and the combination think it to built So are market, potential there.And bonds pricing, I that the we mentioned out value opportunities communicating put Brad it's Aparna value think we're we're how generally I prepayable not mentioned are there counterparties, relative this a now other are to term, with believe strong how from out team, a and of these that place in

putting for from shifts, appropriate which revenue revenue So couple of years there return it it of additional we a might perspective. really did out capital is And if ago, very us. terms or the be in sticky not thoughtful market were a that

So this us. strong in XXXX relative think value we hopefully will we're excited the be We're for positive a market, opportunity. and about

Gary Gordon

How think core the XX%. of Aparna also Okay. where in is capital number? you today was ratio we normal or the mentioned should about XX% that that feel sort range Where comfortable?

Aparna Ramesh

one for be we place is And is I a of potential accretive three to that ton we X.X% appointed gives is XX% because falling of a capital no low-cost couple capital the reasons. of of we that that flexibility. for reasons. think raised of reasons lot incredibly great us a mean, actually preferred, a I probably One, just have And it's sub Yes. us. intention it

So that stick would around. probably

that. reasons do with think component driver three I done our we're profile. most think second of, factor base Tier so X with comes while far. Gary, just securitization driving our earnings the credit has our accretion. proud long But I huge all and strong That's transactions in a been us at to the that's from of revenue we're a that from the driver retained that a it's around has big those having growth to of ability get do capital And The release that third XX%. just you And maintaining our organic and heard, that to capital program affords the Brad from why really Zack just that

it do we certainly but gives this lot that degrees but market outpaced to other to and capital. raise the very can force of without us had we of fulfill the to mission, into wouldn't some of it's the be I ahead, linking want to anticipated, tend go out grow capital just we One ourselves to that's into what of as lines these business market our to really capital. really two, expand in expensive a a So good really now with new have. freedom. And And out look that to having be and consumptive. problem questions, raising

relative we can a play retained but right with levels have see expensive of that, make earnings on as just securitization, now sources So some we targeted preferred fine our safe see to that I we might think But band. to we decisions don't we have it. due,

So great place a be. really to

Operator

question next Retail DeForest The from comes Hinman, Investor.

DeForest Hinman

growth, given the on XX% spreads higher, impressive, very unique pretty farm earnings sell-side environment. call. new see to good It's the current results

hiring this So year? hired how so results. have and far positions you activity, you're many on very people open to hire Question strong looking

Bradford Nordholm

in is like the Our XXX, something somewhere that. correct range, account XXX net

we or think year that. started XXX, the like XXX on I something

have and XX%, expenses not efficiency keep comes base a in And of the that salaries back performance is plan XXX, it short-term salary we filling our are maybe here. on So would The to now gaps our something not a view with tandem large It's There's and physicians is we close XX XX% do two at headcount. expand. our have ratio. incentive portion it as expense some to least about view simple CEOs, because XX% be XX%, and But base math, yet, net the very organization you the increase don't CFOs two and eye increase results. throughout obviously. very the on. compensation adjust We long-term expense. to people It really that we expense a incentive variability plan in fixed

people. can So add when with revenue. them drive we do cautious about they What new we're additional adding very

development. added business recently Underwriting, couple associated expanded we've frankly, some example, our positions of and renewable servicing we with that. positions added energy midyear. our We a for around So leadership, portfolio some

parts are the being people mindful of who we're generators expense, adding the the important the as administering of organization. we're we're and So adding who people making also profile but other as sure overall are well those revenue of that

DeForest Hinman

within subsidies projects there in lot that slowdown and We bit color business. been the a growth be news did question, of you We've tax the or looking a about projects, whether things. for I want getting Any portfolio it's to wind? the of be ask helpful. And well. would could about as land-based -- a in see sole provide a seeing in changes sequential multipart that the they projects, energy Okay. a bit did you or little rural offshore Are seeing other little headlines stalled in

Bradford Nordholm

infrastructure now to in as do place which down. some more growth is seen you've the have are of there? looking and the rural are We're would infrastructure it agriculture and many you Keep convergence in quite than and our offshore immediate projects. Also But if wind Zach, capture land-based mind, accelerate the focus at I areas. The refi and having color out, massive gas right digesters, rather building systems, we're trend solar wind the describe methane all. energy our years projects at a interesting. a opportunity,

Zachary Carpenter

that question. renewable strong. our very pipeline net space remains Good highlight Yes. in would the I

I think to there question prior infrastructure we to in we to your that head in the the get more wanted see demand of in terms meet market. count,

completing needs construction loans a impact process the point in So to the take documentation getting that to and There's to through their to legal long work loans that this done loans construction start for and process. documentation, space, loan closed. time then That finally the does operating. get through just where underwritten of close the these being said, get is lot and/or a a these

process to of So they other of take business. lines some move a lot longer through that our time than

and we we the what and I we're fund frankly, have, feel we'll strong get to So a we saw close that, helpful this was support like and very said, point that counterparties as our mission. quarter the be that in financing process, of ready pipeline, in a in though through to providing to

DeForest Hinman

mechanics just on of then And some the the growth. of

heading those XXXX? milestone? we into Or of quarter with some come in the in talked space, and getting more fourth the additional we European about could energy in be of or some XXXX that that lending larger on last the Have to Japanese call, XXXX, is syndicates growth banks we think a so seeing agreements and I banks. syndicates the we're put goal

Zachary Carpenter

great a it's Yes, question.

do leadership the around support that emphasize, broad saw syndicated counterparties growth and in this to Yes, market. needed that Our to said, large to the on support Brad get I primary the is some we infrastructure those we team focus want transactions. as

now those was we working focus an We the rely primary constantly. in that on are more meet to to to foundation do the right focus support get and return want appropriate counterparties risk-adjusted larger at the strength deals to needs. pivot our have are They larger those on syndicated market of that generally, of want this We counterparties. to believe So to business. look our in-house the those to expertise with

would and our to I we're will the those So working deals. syndicated that that reaffirm our outreach lead partners strategy be with organizations

DeForest Hinman

have line any all? us you I share you mean, do with time

Zachary Carpenter

pipeline strong. very very and is the back refer just to large I'll

feel the see next next that we'll opportunities. few of that we confident years and couple over so And the increased into quarters growth

Operator

The next Cary comes from question Oat Charles Partners. with Street

Charles Oat

This question is for Aparna.

I back that bit. chance informative say caught they like I certainly in you else shelf presumably, my what exceptional on bank, the just if does. Mac a financial But and they for a their services seen really mentioned to and the Two answer you're like merit with has credible have It's consider be didn't summer an what? doing, my career of sure shop better And finance to Never congratulations. top that third it ever focused in-depth finance very to think initiated may have I specializes leg what brag that it's thesis to? months really, Morgan You're you who? than say, who treasury you out. this on give something doing Farmer know everybody broken what a But why. little agree. X.X what is operation. what referring they're it really a operation. report. treasury that very good. ago, Do and a you better, they instance, assumed specifically in those What I'm but specifically than Better the but report are sell-side attention I

So please --

Aparna Ramesh

Thank what really you. the your some just unusual. but did we I say appreciate of that drag, isn't just won't facts stick to I'll question. maybe I'll that

you just and the sometimes term I think standpoint. and And for from liability did execution we do funding that standpoint can play asset your but an you actually consistent. not for consistent term, when was disciplined a also And what short play it's you peers. management outpace and from the long

a bit, about REITs specific very we've point out and went But to fairly when a it that how we that. would point of talked advantageous raised I'll be. time so capital. realized And And we in little things. low, couple were advantageous at

period during a again, stress, is careful up were also We intuitive to profile. to thing shore our which, the very do liquidity of

we'd we sure positioned. disruption, ever when that raised we of during rates make abundance cash we be well lot if period valuable. a so then of had were an were Again, a there that market a And

we did not really and speaking, just The cycle looking first pretty debt rate thing on our we absolute well. at say the are extended but relatively rates terms, was

headed inflation. trends paying in and of So these decisions, signaling was were to attention very to us, what and close Fed we intuitive terms were were the also the very where

to the that's so things expectation recycle, up. for rates did at all we of and only the And way that when bottom there's with of these you're go, one

And inflation a so as been factor. played has and this indeed has out huge

on didn't we I Fed we was caught of to we've of out thing players additional we're think, these business quickly. our anticipate really, about, was of in I lot extremely to lot of what taking other only signing the made the terms didn't side a And fast capital. And the or we probably rates think I But raise and some really to of how but really ourselves what played And and didn't going that to either talked advantage. lines rates. out how that's of I unaware. and debt because those fully much raising have found moves They into think raise actually just very appreciate go then diversify expensive able that's expensive new positioned, a well cost.

So you I'll seems to all how just your appreciate Zack I color of little with be. stop question, there, this a provides around but and I hope do bit

Operator

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

Bradford Nordholm

you very real you thoughtful Thank and you, for a us best been to listen address to Thank have actually do joining and on It's pleasure to questions. operator. all today. our your

those. you very thank much So for

very the keeping terms are very things U.S. nothing other how here to eye and our huge positioned going and we 'XX proud a to going to remainder we've is forward of anxiety future us and for look operate, to say, right and at very than, that huge the And now. done East look in are I of Mac, results extent, in XXXX. terminal, the see we're Middle we about markets We're maybe Farmer But solid you obviously, confident We schedule the 'XX. confident, XXXX. 'XX funding We extremely on the business very and which in proud we're some very the of as optimistic are into we a Treasuries quarters. of we horizon strong There's with as that causing ahead what close that. sharing extremely back on

again if thank with So you to sooner. joining months, questions. get look please Thank with you. any not for three We you us, back in forward to Jalpa speaking and

Operator

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

You may now disconnect.

Federal Agricultural Mortgage (AGM) 6 Nov 232023 Q3 Earnings call transcript