AGM - Earnings call 4 2023 | Federal Agricultural Mortgage Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and welcome to the Farmer Mac Fourth Quarter and Full Year 2023 Results Conference Call. [Operator Instructions] This call is being recorded on Friday, February 23, 2024.I would now like to turn the conference over to Jalpa Nazareth. Please go ahead.

Jalpa Nazareth

Good afternoon, and thank you for joining us for our fourth quarter and full year 2023 earnings conference call. I'm Jalpa Nazareth, Senior Director of Investor Relations and Finance Strategy here at Farmer Mac.As we begin, please note that the information provided during this call may contain forward-looking statements about the company's business, strategies and prospects, which are based on management's current expectations and assumptions. from a risks future cause and results differ not subject and our are to the to uncertainties materially statements guarantee performance of are actual These projected. those that could with risk Farmer certain to non-GAAP be full Report XX-K for XXXX Please call, the the we refer today company's Mac's SEC of discussing today's on financial Annual Form measures. filed factors.On discussion also a will Ramesh, earnings Investors XXXX release these of measures be Form non-GAAP website, XX-K is the our under detail on portion will financial will and highlights who and provide from on Disclosures performance. afternoon Nordholm, Financial our and reconciliations this financial farmermac.com, posted found can and Aparna President Mac's section.Joining and Farmer strategic Officer, Information Chief who in Brad management XXXX and the of us business the Executive greater discuss objectives; Chief Officer, Financial will additional time, trends join our Brad Select be us also Nordholm. of the turn I'll credit provide to President and over call management and members to CEO, business on conditions.At team information this Brad?

Bradford Nordholm

support volatility and in prior XXXX, $XXX increase our mission, be our execution long-term we all and XXXX turbo growth team's XX% passion of of ratio first quality base XXXX. the and our to while exceptional employees, you and net per to market buffer per to morning, a decisions a believe reflects diversification board, year results.As Jalpa. strong is that, which our We expertise executives, a coupled liability management and strategic our our it you more quarterly discipline thank joining outstanding growth our securitization revenue strong XX%.Our funding announced XXth of disciplined we us double-digit to enables growth was asset our from and have specific. Thanks, spread in dividend. business in consecutive in volume, we while substantially Mac. and let a and a business capital strategic fervently liability our for driven deliver $XX.X Farmer successful markets with that objectives, effective concluded execution, that the changing release, and to core remarkable $XXX a believe passion share morning's resulted believe really the net exceptional target earnings of and efforts, XX% I me to management our credit credit Farmer this beginning the quarter to quarterly billion.I passion development read expertise, access multi-year stock everyone, $X.XX capital volume XXXX the efficiency our million, in uninterrupted dividend $X.XX today. that the press the growth us discipline, with and mission, charges In these spread, year access our has below combination Good success share it common consistent effective Mac This its increased year, debt providing to be XX% comparison financial to earnings grew streams.Our deliver that XX% also business for markets of consistently our maintaining holding our and in by results.I million, our for continues growth asset produced to against a bit plan, for conditions.So, market record

$X.X value that believe, demand lines comparative infrastructure and counterparties.Thriving and space continue institutional Telecommunications volatility unique portfolios. & wholesale adequate third-party, on to the that in over with clearly or America, a capacity We key of maintaining lenders and previous the defined many especially outstanding relative a targeted liquidity is portfolio policy that over held as source expectations requirements an of the by and us annual reflects business Telecommunications primarily billion, given billion rural and advantage reflecting the X%, and cycles.In in Energy and agribusiness.New for of loan years, growth Energy were to growth priority XXXX, last Ranch balances and serviced grew said provided line I've $X.X rural and of Farm has to we reasonable to continued growth.As end, achieving segments years, their and billion, interest Ranch benefiting institutional focused infrastructure business. of growth a Securities approximately XX% of new relative year-over-year counterparties, Renewable basis a with capital pricing along for future the $XXX within financing diversifying or acquisition for Renewable overall of future our finance our increase rights in within of Farmer diversifying market purchase & AgVantage competitiveness net serving with volume line $X.X support dividend mortgage market the our advantage exceed Mac alternatives.Looking in been level volume diversification to our to market Mac's longstanding AgVantage lending through exceptional driven and and increased year-over-year business of are new to The a with our year-over-year, rate for business ahead the were servicing for a the driver a year growth primarily Loans to $XX.X couple growth our growth line by the million XXXX, funding to billion as changing serving around key corporate loan business both business due Farm volume portfolios.The will both a be existing the of securities of on more and in growth of an $X.X to a payout resolved viewed environment $X rural of counterparties The Farmer billion. we new earnings, agricultural billion, space of facilities uncertainty

year-over-year. telecommunications number on As grew portfolio predicted our in more total we year.And during Renewable prior nearly segment calls, Energy a our the than XX% doubled size of

demand market Given the of storage, adjustments increase environment. as We're cautiously to and further these Ranch new the about quarter opportunities build generally continue rate continued increased and Ranch the over & to the strong strong and in has broadband values the to continue XXXX, loan Farm expertise cash arise.Our and recede. expect Farm versus on in & There positions, the growing commodity remain interest capacity we acquisition of a and for of X in renewable environment. areas product purchase fiber and in borrowers' the and strategic to the investment in activity farm our segment XXXX purchases costs we because into in relatively XXXX, primarily power in focus & seen rural rate talent we years, loan slower strong optimistic modestly prior Farm first fourth prices higher but input have elevated XXXX.Farmer's generation higher for incomes increase XXXX, America, decline land a have in was quarter reflecting Ranch as demand

customers data, oversight and direct process enabled their more of quarter XXXX.During and acquired on more us Farm first serviced loan portfolio Farmer borrowers $XXX These As the rights transactions second expense.Another will to million rights scale gives and since we for achieve focus of to create Ranch control capability by for mortgage loans is minimal mortgage area $XXX better continue XXXX, purchased our seek our to in servicing servicing the and of more this we the to ahead, million performance security, to function enhanced Farmer and quarter in we capitalize for also the held owned governance loans inception access for This for us to Mac. & Mac on with mentioned, XXXX. third by of have securitization servicing timely our of initiative Farm from rights expand significant incremental servicing of a maturity.Looking added third-party efficient a previously economies our we program. into portfolio, time visibility approximately of we over servicing

in role step-in where ultimate goal our a as an ongoing power, the Mac. fulfill of partner of to lower customer, broader mission ahead low-cost interests.Developing Mac's of closed this uncertainty a for America, rural issuer can end committed to with strive a reliable while calls, approach a the secondary costs set underlying provider here the XXXX, in and be economy.On continue the align capital of investor prior in with to flow to markets.Looking to our we last regular in of customers $XXX navigate that XXXX. capital as years and half million with core expansion strengthening have liquidity marketing to the want and effectively capital about Farmer to expect I've exemplifies capital talked of branding improve be first to year to an transaction market also We and the for to be borrower markets. agricultural producers, at in products we market opportunity Farmer the rural securitization agricultural investment creating being our to efficiency a market the the availability credit source for We're the our more stakeholders We a we X back every will and in and

connection attributes, America.To discipline. fully expertise, to I accelerate benefit enhance recognize people you competitive and align way Street also capital. with is market efforts our the for the rural committed greater Wall advantage these more to us a in their even and deepen contributions and in and more they those how is our the continued secondary opportunities creation can soon innovation, our significant from for intended our don't believe mission-driven for are we to of mission, America's connection compelling as of offerings our to a their and Equity have of fuel agricultural to America, America.Initiative vital strong rural uniform that markets prosperity opportunities highlight Main position in our interwoven fuel our fosters Street expansion between attributes, turn to no detail. of them over include Program, and value I'm to that across part, Chief begin seeing distinctive well to call our team strong to they've investment support for to growth, XXXX.Now, and small active Financial extremely accomplished communities.In and financial compensation. capital build a Aparna eligible to chain, an the Officer, proud that employees more will access annual helps You A like All to I'd branding receive discuss all our our grants of the use connections all partner to in work Ramesh, rural in growth as and comes and results equity-based stakeholders and make as entire for separate our

Aparna Ramesh

and an market you, was morning, a Farmer strong across approach, Results credit excellent Mac. Thank cycles. good everyone. Board, year Brad, resiliency were well-measured XXXX the quality, for highlighting exceptional through balanced, and

with by fourth strong us strong in volume and growth quarter primarily $XXX quarter & new loan finish the performance XXXX Ranch, very to XXXX and volume in Our the Rural & the Farm and Securities across in million, enabled segments. momentum.Net Energy, fourth Ranch rural and was segments, Utility this year was AgVantage volume driven Farm purchase utilities Renewable

of effective driven year-over-year And mentioned, the positive million fourth XXXX, points loan and low-rate in year. funding $XX.XX quarter per improvement earnings to this both $XXX.X momentum the $XX.X primarily per the new driven potential segments to advantage raised in the Brad the higher-earning and towards fourth liquid continue our callable XXXX. raise The that lows excess redeploy or highly continued us is expensive in and in $XXX core which terms capital, we of purchase market by million, XX more spread Not portfolio. double-digit hold strategies other environment.We current was and the capital capital million in improvement XXX excess this by cost assets.This heading share in results, previous high in funds and opportunistically approximately & As for $XXX quarter XXXX.Turning in instruments our million help $X.XX XXXX, defensively into entire to short-term its largely by fourth like quarter need environments, net spread into million reflects of only Farm our environment. generates rate weather year-end spread rising basis and the for point further that were does rate historical created ability was our volumes $XX.X as in returns when trend capital share liquidity Ranch growth, to has Renewable excess of low-cost higher enhanced basis record, in Energy NES, for of was XXXX year-over-year cash to debt and our lower disruption, AgFinance. XXXX a reduced The in in immediate us our nominal debt and Corporate evident the raised has and volume in

asset XXX with being approach is our our modernize in cash this multi-year strategic positions executed included in excess to and expected technology are year-over-year target rates by the servicing year-over-year, has with benefit held very market well arise.Our and before, to if XXXX, result long-term While the to which initiatives.We laddering liquidity and of maintained protective days over at support increase in stock And testament rates sheet to rates short benefit support position and our this XX, maturities to to at Despite the managing the hedging, investment, XX% and continue balance concluded we're discussed the exposure we've monthly flight to XXXX it platforms, in in debt expenses. expenses this revenue And trading, us and our contributed to ratio we volatility.We'll and rates minimal a to and disciplined portfolio. strategic or manage and This increase expenses, platforms. as allocation medium is to average our to technology systems initiative of us up treasury effectively to long-run investment see market which XXX to continue they to short-term in strategy, and and our we loan as opportunities including plan to or and efficiency and XXX to proactive significantly reporting to to we and this efficiency funding minimize our funds, employees. to in the growth at strategic against This of objectives.Despite our Expenditures that the and fund initiatives, modernization in strategic our through in to we've concentrations, such more year-over-year increased against associated management spending go liquidity of XX% revenue some allow our to a decline all our enhance portfolio earnings, contributors where positioned ratios remain product strong general limited capital of expenses licenses to strategy, if software offerings below days in our medium-term cyber XX%. to numbers us that retain and are a new be quality rates year-end, has extending and headcount, to headwinds, continue movement projections XXXX, information diversify raising continue these sheet substantial volatility.Specifically, by access December and Mac regulatory growth our a reflect of Energy, macro substantial as consultants alignment project down.Farmer interest that fraud to which earnings also focus investments, change driven in and capital balance downside to as our the this had term, of durations against well operating average XX%. profitability we also to accretive remain threats, to capital even to And equity defend decline. allows reduction investments and with this in to below expect our rise monitor XXXX. areas, resiliency increased disruption.Turning increased well our and such business and our cost and scale our future, operating as started increased operating and strong of a make on is capital end, show is continue layering strategies.We markets Renewable provided where due expect infrastructure, a and earnings effort limited plan in be for due

in that some and see our may loan we make investments continue in loan to the about efficiency growth, XX% increases level.Our basis platforms as we ratio temporary and technology using profile the accelerate infrastructure were However, our to entire delinquencies rising sequentially processes result could funding strong innovate XX-day to headwind. be despite $XX this and decrease points for very year-over-year. economic continues both credit XX million, and the in reflects or aggregate, portfolio, our a

and core increase XXXX, turn single XXXX XXst, release earnings, a during requirement that in As the is quantity from losses this exceeded Mac's with and of this the now our provision capital. and the a downgraded December ended reflects year-end $XXX during very XXXX, investors for $XX.X while processing infrastructure a million our Farmer pleased our product.Securitization market Farmer and the our Tier quality of with Farm to reflects X aspects compared of dividend. in no a can the $X.X primarily common capital and our are new expect and off million, resources single robust invest related strongly defend changing and engage securitization to capital allows the our an by deployment are fully retained dynamic, and objectives.We telecommunications the to beneficial first provision to to funding, X the agricultural partially our was paid XXst, with increased enable it to many diversify ratios Farm of support support also capital loan monitoring XXXX return this which our for year-end previous a fueling the and that we asset our December in market through transaction a Mac. can this for customers enhance total quarterly improved $X.XX primarily It to transactions. allowance shareholders, market our conduit.While due of is our consistent XX%. has capital, capital XX.X%.Our the in a to due maintaining that offer to growth was similar our strong will continue fully We our $X.X And year. offset by Core sheet liquid earnings And significant optimize stock strategy charge-off.Let's to we to increase reflected us to balance closely as by collateral-dependent base. we sheet securitization per our enhance was storage in substantial we and to or to targeting to loan both efficient billion year. share substandard The year half statutory opportunities improvement ratio, capital balance XXXX as the of another into which million return growth

vehicle should XX% rate on average sustainable all XX% each call. return assess, we We for our in report we continued a holding that good deliver capital to a optimistic to in efficiency strategic our entire and delivered more several while revenue within metrics remain balance summary, key equity, had financing and record ratio this and we as core quarterly we fulfilling below team strategic objectives resulted allow net moderates, the for to whilst credit to on hedges performance, spread. target.As counterparties.So that in and the earnings our the for business As natural results, you sheet the growth interest objectives. strong important transform our environment program, been what efficiency plan this long-run a has for start our We a our strategy exceptionally offer of effective on and

to Brad, well-positioned long-term that, plan more it remain to ever and ahead our to on XXXX, deliver me optimistic Looking you. strategic let turn back than with objectives.And we

Bradford Nordholm

Thank you, Aparna.

our We are XXXX. for results proud of extremely financial

optimistic that focus to can broader we efficiently on well saying, if will capital market believe attributable mix, into a we and navigate how rural America.And line from rates, on risk policy I'd with fulfilling strong differentiate of future was and levels, the and and customers liquidity XXXX us backdrop and our is the and expanded maintain heading anyone regulation, Aparna positioned the very mission have believe team as diversified an practices, professionals.We're in ourselves with our interest we our and operator, we highly questions continue borrowers of uncertainty singular effective now, business This deliver As we're innovatively any management like dedicated to value to today. see to about change. we

Operator

comes first with Ryan Instructions] from Seaport question [Operator Bill Research. Your

William Ryan

quarter-over-quarter, believe, on on I the a and Congratulations specifically spread last Renewable quite Renewable Question improved results. quarter your the effective on margin, XXXX you Energy maybe net Utilities, about talked some that Brad, Energy both lines? NES was quarter of margin to yields. what some X were being the maybe Could you talk pricing drivers the about those implemented business the the strategies of in or bit. enhance the in

Bradford Nordholm

ask that color, going to have Okay. also the and to I over move few more I achieved on within Bill, Mac more last additional tried the business market, about and from on, business between little the within with pricing we Zach really years also Carpenter prior threshold variation believe of acceptable I'm so pricing lowest from provide in a but talked really that the Zach to to resulted have pricing you our that's calls being segments. segments how we deals Farmer reflect

a a this and allows as established more a to also growing reputation negotiating the a in players, which me markets detail. bit and better among becoming player, So that's of But are puts them you it.We have premium really that in part turn better position out Zach see market us in of as us for position to let flush well. of kind to

Zachary Carpenter

Brad, highlight Brad and the touched main X on I'd things. most thanks, Bill. of attributes. Yes, key to, happy

the I construct say has higher and of effective itself we've in was focused those.I'd created again, a that transactions the risk of in that is really sure And that know, space spreads widening that have market on That kind across, of to seen. the we're sector profile that bringing What terms is real volatility much net that on pricing reflect just the those just of the transactions. board given in You sectors spread XXXX we're telecommunications remember more in focused on utilities, credit segment. Farmer making market portfolio of included second in Mac. of think, a the most we risk by

so telco, an and we XXXX, in portfolios, in last X all of saw would thing, as widening renewable Energy. also is real which in And just we spaces, in increase net effective focused of spreads resulted energy, spread.And execute utilities, to a specifically the note credit the Renewable I

Our primary by on, focused not target that middle the other really I'd market and of say, in is largest has transactions some transactions spreads focus the more and necessarily type net more in that effective the market. itself than creative transactions. And us

the I infrastructure think accretive what combination things So the that caused really effective in those X an net spread space. of is rural

William Ryan

Okay. environment. also obviously to effective stable been re-pricing, fairly net the we've a terms related but in in spread, of portfolio rate interest One follow-up

not is potential continues we type more, for ongoing of NES, just existing anything, constant kind looking at portfolio pressure. it know, last a of think we're and margin? where quarter under Are margin some to adjusted reduction with kind overall more like dramatic down being we But, much going everybody expecting in bit I know, at was little of a the there nearly or go you you as core doesn't or everything say a and right portfolio, to reprice. about market stable the let's mix upside the held to maybe are you look interest the now, repricing talked rates know,

Bradford Nordholm

are from liability management, well an the asset side matched. liability quite Well, asset

re-pricing you costs, a But into we origination happening banks, why movement on unlike Zach, for prepayment in the so have as pressure prepayments new portfolio, the in don't us. rates, goes doesn't our to provide a put insight example, of it of as when the with in terms And existing what's deposit that some well question. opportunity? really increase

Zachary Carpenter

Yes, absolutely.

rates Specifically Farm & comparatively last to XX years. in remain to the the still XX Ranch high segment,

prepayments take historically continue into place, foreseeable remained and least XXXX. we low that to at our So future to have for the expect

goes making Farm lost You new in and other volume. And of book line -- pertains think spreads & pretty relatively a on refinancing have to that would stable not will of thing tend is -- significant on side as the only know, business.The directly I across that highlight, we spread, is that asset it Ranch tightening the that volume spreads XXXX. for us net spectrum seen the this effective of bring we heading into up would the the be credit does to

at we kind our so as again, starting segments, more the the And consideration kind that to other in other products into moved capital. as XXXX. we volatility take and we'll in look of way of the look But, deploy market

least in in going segments. future. that Farm be at confident could so impact relatively some segment, refinancing Ag activity of certain Ranch think other we're And the I core pretty But our it's & the stable, Corporate for and to that foreseeable

Operator

Your next question comes from Bose George with KBW.

Bose George

impact, year, on to with in in And there? it going does the function, terms follow half your of to is hedges on cash wanted Fed mainly impact the discussed, cut just the Just the the really the the up back on you is liability that part the If of the that question. spread of structure? rates treasury offset

Bradford Nordholm

-- good morning. in commented, the on we've think I Bose, Yes,

I stability our relative spreads think around commented of on loan portfolios. the we've

don't liquidity why portfolios, in very don't since do why Aparna, some would impact we large you, a investment So, insight you that? carry rates into provide how

Aparna Ramesh

and you, Thank Yes, morning, your Bose, for absolutely, question. good everyone.

just me that comment Let on briefly.

a have or started down. actually last in you our place portfolio, that respect duration. rates call laddering that with we've we our we think to go investment to books and I year strategy in put would as specifically, do minimal fourth we highlighted, about we've something manage to quarter volatility, More of the up such little what As whether is our

in actually of a and Fed look we extended we've investments, very means not as have that anticipation to X, to really of going what It's have if We've continued portions it amount that volatility I of what in to short to as of by we up a were a the continue we duration those asset in side you go our spread have liability of we'd will is out.But point X, the of at giving keep to raised up and them back means see very strategy.So I re-pricing overnight rates what that year, to a minimal the it interest raise don't rate that that whether volatility that us which X-year hadn't allocation to that call try lot the us of in extremely heard be the where an to some hedges helps, where really it those aspects noted equity that the volatility come Fed capital manage re-price. money, relatively that accretive, business interest interest gotten be has we or extending lock interest we is model tend as what we of over to in house, net has over quite that spread that essentially rates. plan in very within accretive our of $X as of we but down. any our to lower will from locked dramatic is house. that benefits vast does horizon. from of or rates, short-term have or run, an at start would we are it just call that sitting what effect our anticipate having to rates side half So And a at might you been our it in benefit systematically is benefits natural hope the these very, our but is this if we terms billion-plus effective doing in XXXX volatility steady. a extremely amount essentially the low how have will of the And that down what going Zach, well, seen actually do taken we and incremental a extended manage there And then result is positions pertains environments of would the create

Bose George

that the you with That's possibility don't credit helpful. farm can for the work the about of just less active then banks the or generating with moment? great. And Okay, you're some or of talk volumes system at other you outlook

Bradford Nordholm

Sure.

Farm associations Farmer think previously important banks at relationship here that mentioned with we've I Credit very and is System our Mac.

for turn a to common we more it already and with you the banks couple focus but on that an will and remains banks. more ways more new outreach, maybe doing Zach, participations. and and expectation remarkably find some you the with standbys, associations purchase area I'll of we to But next have types our number of associations. of is our farm on of with give over and could are specifics we high doing business where color years missions business a example, offer credit Zach We of couple are of

Zachary Carpenter

is strong growth, Farm specifically to focus the absolutely. System transaction of our and is institutions. the transactions a now. highlight, product right has our that with credit different We're limits.The partnering supporting entity telecommunications, find long-term I in with of standby Ag System the a one The Farmer XX% farm lot Mac a Finance, About we'll associations. included market. Farm banks purchase where continue Credit secondary is holder product Yes, We're very as in across in invest either on as Corporate system relationship engaging institutions Credit in conjunction many thing and certain concentration commitment would

portfolio in done telecommunications predominantly largest primary the Our one the system. the CoBank, entities is space with in of

banks portfolios, evolved across to have growth and beyond. system. more system the to very in our happy of outreach XXXX We system, both the in opportunities new we're the focus given we new invest and we'll and in our with we where the in so relationship or have believe and continue support with some associations, we've Frankly, areas with

Operator

from Gordon. next comes question Your Gary

Gary Gordon

basis I small in just why the there business missing? this X about It's release. other focused on one. this other isn't questions, well or margin units. XX utilities Are so it your Why re-priced? points, is benefits X below low, business

Bradford Nordholm

are level. it's are But investment Gary, portfolio mind and in the with portfolio things. a a investment true that that of the keep in them many we some of that way One couple measure One, a grade. small is couple that, does things. margin that show borrowers even grade, associated high

been at lower. been couple last even are we if over that's It believe.Also direction. in the a keep started years, trending mind, you of we trending kind appropriately, where So in it's pricing positive look

priced to And are that to beginning an that more as points.And benefit about ever. market equity associations. purchase, the some is also that lowest transmission example, of efforts very actually by them. helping we've them mentioned up mission rural place.The consumption, even that fact becomes rural loan third, are infrastructure priced Ranch owned capital portfolio And margin the we is through purchase, basis low. to rural by XX help the call through whether capital cooperatives are market and no of rural so market of very the in very, parts And we've electric final reflective rural America. actually At of point, the price the utility, the had at no that about or those in farmers electric when electric us ending reflected for portfolio, Americans. the same rural that you centric make is cooperatives that essential think end a absolutely we're the had and & helping electric that's generate Farm that them the of the cooperative It of for owned day, I'd They charges, delinquencies the consumption the loan are

adjust So do look a for return on those good. when numbers pretty capital, we actually

Gary Gordon

Okay, good.

very is thank By you on of much. implications large to increase. this the Second question dividend way, the

XX% a about talked long you've the run. over So payout

So $XX dividend in earnings. implies a $X.XX

to what a to reasonable say target future getting you or for let's traditional not earnings to basis Now, normal talk Is spread, $XX your assume which spread in that it for is you're would your about consider number? higher about materially your that with the points. foreseeable it's safe XX

Bradford Nordholm

that, comments. liability we're to One in NES mean, part strategy. of pressures going a pricing I content couple management Yes, provide point Zach that about talking and that, not but on basis XX asset highlighted is a that is

year that We would at underlying see XXXX extremely year points all. Farm done going during well basis are to that see of the positioned. of not We're at But Over to to should get we year of we that think a XX We bit regulatory don't a end XX that, passed. was uncertainty certainly legislative it talked agriculture. have talked want about I that I fundamentals the the about thing this of Bill but digit second points.The that basis it'll we're a American when is softening, mention last next into Hopefully, call, the about year. uncertainty, to going not. we uncertainty. been horizon, X X may done see single have some That a brings

about new of making with We very, have of we soundness so are opportunities, decision regulatory and relates pleased we Basel some the a business that to see, capital.And Mac. it just of may environment, very also inject as note Those uncertainties have the a dividends. while the which opportunities excited implications into process for Farmer caution our little extremely bit

for balancing potential, on very in landed our something place really very, a well I you we sticking we it's our act. thought with know, reflected as So that shareholders us discussed, as as handsome And that that that future way. a growth a just uncertainty rewards

Aparna Ramesh

we could of skewing the want we that stack, preferred have have of us. for need go And capital. capital have we're head It the us do to the really capital capital well making we in that that going us. go what of to of I the for that have such growth mentioned more retained if very, to preferreds where might at quality be and comes retained skew more maintaining by our more heavily done. towards it has really into the markets, with organic to quantity It's really earnings, not around a proven as that with terms scenario just and time preferreds sure maintaining worry expensive do we're additional re-pricing. from us letting and reduces we've where add a of some be we quality. market our as might to some base very those to Brad, Gary, quality gives freedom have about point, But not that is accretive expensive earnings as our towards credit beneficial degrees an into

for really fueling as it's us balancing of just our So act growth. stack balance managing additional our as terms well for a in sheet capital

Operator

Your Sidoti. McCarthy from next question with comes Brendan

Brendan Michael McCarthy

benefits just on flowed the Just have wanted the increased for level. really environment. in through start at the But elevated has wholesale expand counterparties on proposition off I to can if institutional you the the business. value financing wondering looking rate understand interest segment where

Bradford Nordholm

the opportunity. specific absence created give a facilities as that. rate comments. higher Zach the noted financial just liquidity some institutions, frankly, Federal to generally of And Yes, But environment, comparative our in and for -- noted, Bank that's Zach color you Reserve of ask us, driving as advantage you more for interest I'll of on speaking, competitive new we has and support

all Some past, some of But and coming this in is it as because might we opportunity go the pricing. of is new like we Zach, just where the you explain customers is of But had that kind opportunity with well. we from. didn't let

Zachary Carpenter

think have. Yes, large of to know, in just market happy diversify, all volatility the institutional to. and drivers Not the is, of a different to these they Brad I looking one reiterate sources counterparties the a corporate funding the but lot of lot key said, clearly what you are

in see question the as & predominantly your these counterparties.To utility see know, and public the is where added spreads, them to we in and you increase significant in you relatively you the segment, in you're facility comparative in Ranch segment. see segment going reporting, secured Farm as If on advantage gap last rural bond which a better benefits AgVantage AgVantage our did and those year. our you're Mac to market, well within credit Farmer

corporate large So institutional those items. counterparty X our are line

segments. into into heading up the anticipate year-over-year, growth Ranch.And in so counterparties significant numerous those Farm the well the discussion rural in generally growth aforementioned in in saw, the see XXXX, provide, and opportunity given as least net especially benefits in that's utilities, effective XXXX, that at as & other can with we the we You And then where spread broader of could we terms rolls comments. a increase

Bradford Nordholm

have we've when this Brendan, as collateral an strategic the we to Yes. because collateral underlying objectives one add able as pledged. about to like is that last some aspect the loans are AgVantage we to going those And engaged underlying an sale purchase whether we'd such think and thought AgVantage we'd strategic X their early to us, purchase. those provide that's of X some thing well, point these the a say counterparties yield at at that type we're this that show probably of some facility, better.And that like alternative to counterparties that fits to other underlying more facility. to we of that's in of with optimistic AgVantage there's typically loans being been will to objectives we're we evaluating with of them, can for that initiate that And level results, to them I'd own, their source a a are strategic I months, than of over just like of too liquidity many encouraged another a are strategic that rather by through an future, different a but and so facility, loan purchase discussions a

Brendan Michael McCarthy

just Great, kind story well. counterparties? efforts driven you great. diversification branding of very has been kind as has of that you and mentioned efforts a development Can business what exactly I of marketing That's big part that of know specify helpful. And and

Bradford Nordholm

these But it hired couple let absolutely us those counterparties that it have just high-quality absolutely really He's experience having with hired over Zach the -- to Well, relationships discussions. is people that. to and are years And we last engage enabling ahead jump of those that things. me begins in Zach. modest, of but do some some with motivate all has of people in outstanding absolutely the

Brendan Michael McCarthy

I the back prepayment very Obviously, the low we can decline is risk touch potential on lines? in core in I of but it. the segments? Farm Ranch see business the segment, to in got rural half risk. But outlook you can other prepayments for expand know other will in the of here And a maybe up & business. the you switching gears prepayment the on on year? utility the understand, rates pick it, should kind assume Got I prepayment outlook

Bradford Nordholm

can the run Zach, just all Yes, segments? through you

Zachary Carpenter

Yes, happy to.

speaking, We modest of You're risk. the Corporate rural to infrastructure anyways. In are in some going side those of the in to just the the those rate, house. are X but prepayment spot on floating lumpy any, weighted telecommunications don't in X those risk on if portfolio. Maybe all Generally transactions anticipate But increase a are rate really environment AgFinance, average that. going years general. turn to life isn't much,

akin some really, as up we is prepayment that creates & especially USDA, advantage now anticipate focus prepayment may the an concept take kind re-price setting in lot Ranch of is balance those of business, environment. an to to believe sheet ourselves in a on remember, sheet Farm half regional a sector, the scenario. or which potential isn't could the of USDA. liquidity as our type to component are loans & the M&A back lines opportunity overall Aparna and in compression in and loans in more Ranch transactions a take banking really and more think, rate on really a segment. through to and those the mentioned, on said, That prior a efficiency banks I capital manage participate see or refinance we when balance quarters, purchase, community kind deposit of said enhanced in customers us, payout you Farm we decline their becoming of in keeping advantage being And we're this opportunities.And for year, rate higher if off, These portfolios of are increase and loan paid conducive think facility.So So where you larger a the about get or you our we've

Farm Ranch confident in more but up So volumes. more and we're make risk than new that probably it in USDA, yes, prepayment & we'll

Aparna Ramesh

how as to from in has sheet terms I one just If we are hedging risk, balance add might we and a fairly prepayment Brendan, our point with this well, of agnostic do standpoint. manage

think noted look matched that and about to tend callables we've risk. they're before, we as that layer something in prepayment duration fairly ahead So such we

funding affect our very simply segments, that to standpoint, that expensive we were to addition reprice could downwards wouldn't risk but we're hedged it that, prepayment well maintaining we call debt Zach that, we're prepayments, in highlighted, across and where So a such have from extremely substantially.So, margins even everything if margins. our the necessarily is low

Brendan Michael McCarthy

That's farm farm but economy Understood. helpful. And on land appear know and question economy outlook more a for impacts whole. reverting declined income more how it averages, talk on, just and mentioned, have me of moderately one as can kind Mac? be, Farmer you values the your historical you just net to farm for the towards I

Bradford Nordholm

multiple pretty see decline Board. those in be the prices. everything our and on as where headlines portfolio on as pressure our actually work just But are California permanent it modest, there low water not decreases, we're recently. in well is loan availability, have sources the as question, with seeing been doing big stands.But, south where one crops across not in commodity values are of softening farm a income. there We've portfolio extremely is And, of value other yes, there some in combination XX% the as, expected place well it about on to current that of because be to we're where and almonds about That's isolated. been Permanent tend crops a lot water, modest on may the land to

and prices sticky borrowers, high, while with crops have situation. them major Of for input each softening. with the prices organization own generally staying their course, that's sector, and aggregate we number an XX,XXX one for entire are an of But are been commodity

the thing of drawdown sector holding interest kind think some next it'll will XX% some year activity. lower in borrowing if liquidity, it and neighborhood have at cause that And less again that little, the incomes have later stimulating year, the it additional of it'll cause slightly lot we at rates in drawdown may, will that of especially that. We was some a start been this Farmers so, is of liquidity. farm we're than net the of a projected looking do that peak.The it be somewhere will for first put

further to bit prudent could fourth economy, more borrowing, As them the pickup year.In Zach be that will bit in to cause of years have to little very that were of apply some least X which slow, many quarters has through a terms for the tips segments pickup We'll Mac, other here continuing of farm mentioned, XXXX, Farm in at & so Ranch the probably a benefit we're at continuing decisions. But originations months it quarter. the credit we make us. Farmer standards credit very, that disciplined of

together, our it concern it positive Mac, constituents So even in for of all Farmer a source put for probably slight rural key and it's if you a is America.

Operator

Your comes next from Holdings. question Bumbershoot DeForest Hinman with

DeForest Hinman

but beating the mean, I You're bush lot a XXXX, simplistically, moving all XX% singles moving kind XXXX, of question. X% when is in outlook. it look around we about still that the Ranch growth in growth of That's loans, first the & growth There's high ballpark, or in in a on loan Farm kind XXXX. growth of mid-single-digit growth outlook XXXX at Is it these for parts, pieces?

Bradford Nordholm

color a little bit more to we're mean, But, provide to want Yes. you precise that give a one? forecast. I not going to try on Zach,

Zachary Carpenter

in again, That's which, Yes. prepayment I being community for than in on market a creates re-prices, I loan the mean, factors those mean, Ranch a XXXX. portfolio. banking solidifies having more opportunity a the the were impact I their I think loan in confluence managing in earlier capital, us to regional speeds, noted is & liquidity, we dynamic, the optimistic think of deposits. great institutions, activity Mac.Low real Farmer on in and portfolio purchase leading comment Farm we as

it and Yes, and to a more of lots the a not new of on year, take be is in land be political And there some tapping as into Limited chance question. things to incomes, capital. interest of change, lost enhanced in dynamics. in that the it growth mentioned prior I to XXXX. down. to able be farm can into interest there's making our year-over-year we're equity.Compare refinancings we're Brad going portfolio. Farm XXXX, So, working that greater That our of going XXXX come Bill, in made prepared advantage it be think I stepping versus comments. being There's as going rates. think said, in these We're we optimistic any up It's stress be supply just of

into it's So, stepping than we but really stepping more pinpoint hard into to XXXX. think were that, I optimism we're

DeForest Hinman

growth, Okay, that's helpful. loan Renewable positive. very

initiatives it's side, the We adding had XXX% We count. place. XXXX, I XXX% don't XXXX. in think XXX% in talked growth on in million. that and about syndication those You loan growth all head grew over are some $XXX to the outreach growth

into portfolio I Can about a think in at that gain billion that where being the idea loan even us past understand going in just that XXXX talked book some up? some and you And that then be the we these XXXX, help end how of $X maybe initiatives could point. traction? of where looks could

Bradford Nordholm

Zach has policies, key with a done here building Zach with infrastructure Yes. of credit Crady with policies, lot Marc hires.

in back that XXXX. half in So, It the up saw really XXXX. pick we accelerated of

all are very to place pieces the XXXX, strong continue into momentum. that Going in

in happen a that that could $X it's very billion So, XXXX. realistic number, sometime

think gives on. you can I slope that work of you that kind a

DeForest Hinman

think benefit a how cost regulators capacity looking then those I from a time? preferred your some a comment remove? years, C the that in holders. over are the think to dividend actually capital the Aparna, to And are calculate leaving common is as you then picture preferreds it it result we actually this redeemable preferreds And in be clearly I as the a the And to heard on any of I Are do to remove guys to we'd Series ratios? but there bigger but on then that, of that Okay. place saying the XXXX. in question, pretty this improves I I the is of relates market like we'd higher see hadn't number for preferreds, mean,

removed So, provisions? over with time to just color expecting some more preferreds those should there call those and be be maybe we

Aparna Ramesh

Yes.

I efficiently we do entirety. really retained now. our base earnings, our So, really organic terms think think then rewarding about of being shareholders distinguish think the in we also have to that make our own as in between in distinction excellent quality It's the a really We capital, something very and slight capital but that capital of of an of sources that capital quality here don't because about for deploy minds that's and but we the in and a growth, question. of allows we us can

the So, of preferreds preferreds, big how of capital.In an excellent that's source us. we are our picture really about think terms capital in terms of for

to think to that we We have our opportunistically. DeForest way do The market. issuances about access try preferred is the preferred we

market able sub-X% were we preferreds issue tap XXXX, the and and to retail XXXX and that in were So, sub-X%. preferred

would so, ever preferreds we And if we do. And exactly These call an fixed we what did really rate that has option.The to right, do CBC you're you would it convert option that. that then where note, able as to were again, hold that are we that's floating. absolutely a know, $X the in result in tune of And you environment, we redeem million where can approximately if current additional costs to would did we And it. the that about not, rate per year.

probable that something it at really is and it's that's preferreds of for the excellent us. fact opportunistic. look really an say option really versus that retained degrees it given from just capital much be for an a I very we've as will But at.But our We option we earnings, yet. our in stack terms big growing continue option But it something is our freedom us, what quality, decision coming of plus credit highly we haven't would will to got various share look a made and very an that are of expensive

So, it and convert redeemable, case, is in to does it particular this you're right, floating.

possibly close fixed to whether favorable want we we go. the let if a in probably that to very us the the date look when redemption issue consider something we at we'll environment. that So, rate approach something, it's to to take want And markets are as

Bradford Nordholm

done to we Farm talked up about be and at like revisiting looking at management your that quarter. has things how not the optionality the whether on to put, we stronger.When consider that in while we We'll return just I'd not have trade-off. that Aparna today. overall factors second and redeem the results, factors we're with on or consider They you testing at looking Yes. the we're have, remarkable. depend stronger, choose Simply exceed depend almost on will July been measure will coming looking that makes add, regulators? that But of with consideration the we'll into that. there's the capitalization be a consider add, Basel, regulatory that you would every other I and do Farmer volume be financial expect the more position we never question revisiting of you it have Farmer never stress do do levels consider that increasing Bill, requirements. to in Mac, Because well be all far you of before We was, with growth, growth revisiting equity capital. we'll Mac taking would with on stand part been we in earnings, our of a also XX%, all growth capital, testing dividends, has in stress under XX%, our that by even oftentimes regular the regulators, we you the

capital. options there's us, success business lot to lot trade-off. of the a not a We're greater flexibility, in not That a run gives of been this by constrained to just us even For future.

Aparna Ramesh

another level, ratios and I'll in mix our about we about just think add we of terms that X that as earnings retained another Tier now ratio. is securitization securitization efficient the tool thinking throw which and into And capital our will preferred leverage is

the thing mix. into another So just that that's we throw

DeForest Hinman

agree. Brad, Yes, I

done phenomenal job. like the a You've dividend too slide CAGR. with I

really spread I up. most think we've space. any you talked about company this And financial the And much. see dividend astounding. to And add the in there's the continue faster than dealing know a financial didn't I had in hold spreads yours past. to compression. growth you very continue companies with if don't that's be It's

a at I've in undervalued. gets attractive, dividend question this to look from we've few stock.Final hopefully like continuing And many to had, quite people You a hiring. probably this especially still But We said, just perspective. is and XXXX. you XX% incredibly ROE. the the That's before. times people consistency talked more stock's The before, about increase added asked

on any update they in place? putting completed? you of been be those does update an of Where that to do us who partially work Or then place? terms in can in you to IT is that done? it. we've And And more XXXX? that's on Are in the Are done? initiatives getting they need stand there can give hire us we people So

Bradford Nordholm

Sure, Yes. of course.

We base. have our employee expanded

and I organization, it's And the XXXX like funding a employees, think last compliance. XXX core we years, the development-related, XXX, and up control ended across been with ALM-related, balance couple over risk something in of of that. management-related business

has XXX You volume only think $XX aggregate an with approaching that employees. about billion organization

lot talented of a that do employees. thousands to very, have size doing with a our literally We people full have of suite functions banks of very

here we credit about feel very development. our on depth into So, at approval, budgeting we've terms funding XXXX now work and our have we feel pretty branding let's A volume a simple. in credit the additional Farmer on bit emphasis it's We more organization.As little just of administration, rest through we Mac. built and in process, good to bit headcount, the very, put strong built that go IT, platforms business our and is of very that really communications origination, credit policy, And them. through

amount Aparna currently STARS, Mac Farmer platform through to comment then let legacy And as in important? like than Zach, done. and Zach year, team. maybe on tactical want The tremendous allocating the amount gotten the here over increases we huge which CIO they so in reflected projects, Datcher of huge why in this AgPower. at Sean IT too? And X have been you a year. finish but there's our of it here headcount. going halfway other update projects. headcount And an quarter many organization of XXXX. that feels joined tremendous believe.As provide and slower we a and for the last a is a even we called us a lot Aparna, And on. He's focused call second how be He's I'll on they're kind choice expect to to of is that's to So increases an that the year. you them.The first of important 'XX It brought hugely been it's initiatives, strategic will on relates he's each in what to in years, update But we're of couple

Aparna Ramesh

sure. Yes,

platform me as Mac. overhaul, Farmer impacts both on. of sheet, Let we're on would the significant as sense say, of It It the X/Xs is well at give about about you the the a this most I side embarking liability platforms a that bit of asset side. treasury balance

is have loan significant people Something course we through a that holders. of that know that amount don't debt most payments payments well as really as

terms trillion $X.XX $X.X just transact we in So of payments. trillion anywhere between actually to

as to have do with well et securities, hedging as wholesale different and reporting, we addition what we In financing. cetera, our

really platforms.These platforms and and and the layered at out are been these have have of that through that team that goes we have All really founding existence that Mac, commercial But really on Farmer have these we commend there. today in built the team been options products functions. has

$XX is in.So dependencies this well over effort how consultant as a working tremendous to been vendors it's in really I no we people, hedging and is initiative.And organization. our massive X through really origination flows tremendous so. a is later helped through, years. gets we've as the any a Brad Sean capabilities how systems. cash really end, partnership this And middle optimistically the in partner really executive might. Obviously, in well that And this lot. of second come has cash we of I'll see front there's is a key between selected tremendous continually echo journey it our our office, well the a scale very our us to data an with just impact terms the towards. P&L create different as the overhauling to it's initiative team initiative through, say million certainly the X management to this across loan of or So I lots between, with going anywhere our of But as internally lot as both million reporting year, the but $XX mentioned, been to touches capitalized and Brad. platforms last And foresee well, going third would platform. a addition this connect respect But large And are for provision middle a with on this as somewhere who's going we say we've expenses. quarter as who that recalibrate then expect and to fruition initiative And to

on Zach. just can bit more turn we're really our how around of that lines. I'll give some innovating those So technologies to He you business a color drive little

Zachary Carpenter

quick. and That's our Farmer DeForest, to community Yes, sellers I'll our transact use mentioned But and AgPower. be banks that infrastructure with our interact Mac. Brad

time that to drive more be sellers dramatically is as purchasing customer more cheaper, quickly the a to friendly, change as and effective loan infrastructure goal down our us of from possible. Our

And that's really that technology, all possible of we'll of with very think excited our I transact that's as and Mac.And we're something leveraging be can think I on that's infrastructure customers. better state-of-the-art feel So of efficiencies, Sean receiving and positive more and by reinforcement we're a side, enhancements rolling Farmer sellers that platform as end collateral lot providing out. from positive a use, can the XXXX, I easily our

origination to a platform art be state our sellers. of loan the is this infrastructure again, So for

DeForest Hinman

help across adding idea based good idea I that's and base, entire Okay, a focus. great. And just you should your that said compensation very then probably with the equity and very final employee The of That's comment. think helpful. mission retention a

So taking for thanks all questions. the

Bradford Nordholm

employees relation mission. And doubling We in a of about to of the that overall the do overall financial that sentiment us When it's to we It the performance Yes, a for about was doubling. very have important. it appreciate performance, all, to who to and conversations were service went stock about equity that we much. think eligible resulted of in allows for of it awards. relation number

So mission it's Mac. very Farmer focused to more we at and that, really culture contributes healthy thing just a that passionate think one

Operator

over this at questions like the ahead. now time. to would to further I turn no call go are There Nordholm. Please Brad

Bradford Nordholm

today. really which interest, great satisfaction. and to Well, for joining many we everyone, us participation, your Great. questions, We thank appreciate your we've hope your addressed you,

you. and that course, follow-ups, to and great day, get quarter Thank XXXX be otherwise, we results, a will our we scheduled report touch have have of very you with stay forward please But in If touch. in in Jalpa. you quarterly look next our first having call to much. Hope May

Operator

this your disconnect participating, that for you and ask Ladies please call gentlemen, and today. you your thank conference concludes We for lines.

Federal Agricultural Mortgage (AGM) 23 Feb 242023 Q4 Earnings call transcript