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Good afternoon, and thank you for joining us for our third quarter 2025 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. These statements are not a guarantee of future performance and are subject to risks and uncertainties that could cause our actual results to differ materially from those. Please refer to Farmer Mac's 2024 annual report on Form 10-K and subsequent SEC filings posted on Farmer Mac's website, farmermac.com, under the Financial Information portion of the Investors section for a full discussion of the company's risk factors. On today's call, we will also be discussing certain non-GAAP financial measures. Disclosures and reconciliations of these non-GAAP measures can be found in the most recent Form 10-Q and earnings release posted on Farmer Mac's website. Today, I'm joined by our Chief Executive Officer, Brad Nordholm, who will lead our discussion on third-quarter 2025 results, and our President and Chief Operating Officer,

Thank you, Jalpa. Good afternoon, everyone, and thank you for joining us. We delivered exceptional third-quarter 2025 results, achieving yet another quarter of record net effective spread and core earnings. We surpassed $31 billion in outstanding business volume and strengthened our already robust capital base through a very successful preferred stock issuance, further supporting our long-term growth objectives and providing a buffer against market volatility. Our total portfolio is well diversified by both commodity and geography, and we remain confident in the overall health of our portfolio as evidenced by our continued strong asset quality metrics and I might add, our day in, day out market information we receive from being active in every commodity in every region of the United States. It's a real advantage. It is the consistency of our growth and financial results over the last few years and my expectations that that will continue that has given me the confidence to announce my anticipated retirement in March 2027, and for the Board of Farmer Mac to name

Thanks, Brad. I want to first start by expressing my deep gratitude to you and our Board of Directors for their trust and confidence in appointing me as President and Chief Operating Officer of Farmer Mac. It is truly an honor to step into this role and to build on an incredible foundation that Brad and the team have established. What makes this moment especially meaningful is the opportunity to lead alongside such an extraordinary team here at Farmer Mac. Across the organization, I see a shared drive to innovate, serve with purpose, and never settle for average. This passionate, mission-focused culture at Farmer Mac is what gives me tremendous confidence in our future. Our team delivered another solid quarter of outstanding business volume growth. We achieved $500 million of net new business volume, resulting in total outstanding business volume of $31.1 billion as of quarter end. The growth in our portfolio was primarily driven by the infrastructure finance line of business, which grew by $600 million this quarter to $11 billion as of quarter end, reflecting continued strong interest in investment in data centers, broadband expansion as well as the construction and completion of renewable energy projects, coupled with the overall need for significant energy generation and transmission capacity for rural America. Serving agriculture businesses and providing liquidity to enhance and enable rural infrastructure are both critical to our mission of driving economic opportunity to rural America. This proactive business diversification continues to pay dividends, which we expect to continue going forward, and it has also expanded our commitment to rural communities as this liquidity is geographically aligned with our core mission across all our segments. Volume in our Renewable Energy segment more than doubled from the same period last year to $2.3 billion as of quarter end. This segment has doubled every year since its inception, and we believe the strength of our near-term pipeline supports this continued growth over the next 12 months. Despite increased policy uncertainty across the renewable power investment market, we expect to continue participating in renewable energy transactions for both new projects and refinancing of existing projects, utilizing the same disciplined credit standards. In addition to the substantial increase in need for new power generation, the tax credit phaseouts for renewable energy generation projects in HR1 will continue to drive near-term growth in this segment, and we believe this will continue over the next 12 months for projects to start construction to meet required milestones to maintain crap tax incentives. Our Broadband Infrastructure segment doubled year-over-year to $1.3 billion as of quarter end, compared to $600 million in the same period last year. The growth primarily reflects the continued demand for data centers. We anticipate increased financing opportunities in this segment for data center build-outs, given the increasing investment in capacity to support AI, cloud storage, and enterprise digitization, particularly by large hyperscalers. We believe these developments are crucial for rural economic growth and support the historically strong demand for connectivity needs across rural America. Our Power and Utilities segment grew $126 million this quarter, largely due to the strong loan purchase activity supporting the investment needs of rural electric generation, transmission, and distribution cooperatives. Growing business volume in our infrastructure finance segment remains a top priority, and we will continue to focus on strategic investments in these areas to build our expertise and capacity as market opportunities arise. Activity this quarter in our $20.1 billion agricultural finance portfolio reflected strong loan purchase growth in our foundational Farm & Ranch segment, offset by scheduled maturities of large AgVantage facilities or bonds. Our Farm & Ranch loan purchase portfolio grew by $285 million in the third quarter, far outpacing scheduled maturities. We believe loan purchase growth will continue into the foreseeable future due to ongoing agricultural economic tightening in certain sectors, reflecting commodity price volatility and input inflationary dynamics, the potential for increased tariffs and trade policy changes, as well as general balance sheet management of our community and commercial bank customers, including liquidity needed for farmland equipment purchases by the ultimate farmer borrowers. The Farm & Ranch segment is core to our mission, and we remain committed to bringing our customers products and solutions that provide capital and risk management solutions as well as supporting their borrowers' financial needs. While AgVantage securities in both Farm & Ranch and Corporate Ag Finance segments faced large maturities over the last year due to many of our partners pausing capital deployment to navigate the ongoing market uncertainty, there continues to be strong demand for wholesale finance products and solutions. For example, prior to quarter end, we successfully closed a new facility with $4.3 billion of borrowing capacity with a large agricultural finance counterparty, further demonstrating the strength of our relationships and the relative value of our wholesale finance product. We do expect additional funding for this facility in the fourth quarter. Looking ahead, we will continue to work closely with these counterparties and tactically determine when to refinance maturing securities or provide incremental financing needs based on current market dynamics, as well as the appropriate return on capital thresholds for this product. We remain steadfast in our commitment to deliver a broad spectrum of financial solutions to the agriculture community by working alongside our growing customer base. Despite this backdrop of broader market uncertainty stemming from factors such as interest rates, regulatory shifts, and trade policy changes, we are confident in our ability to continue to deliver growth and consistent results. Our total portfolio is well diversified by both commodity and geography, and we remain confident in the overall health of our portfolio, as evidenced by our continued strong asset quality metrics. And with that, Brad, I'll turn it back to you.

Well, thank you,

[Operator Instructions] Your first question comes from Bose George from KBW.

Congrats,

Yes. Thanks, Bose, and nice to have you on today. A couple of comments. I'll let

Yes, happy to. I think first and foremost, we really focus on appropriate risk-adjusted return at Farmer Mac. As we've evolved and diversified our business model, we are in new lines of business that carry different risks. And as we put capital to work, we want to make sure that we are achieving returns for those new lines of business. A couple of moving parts in this quarter, I think that showed the diversification benefit. We continue to see strong, strong growth in infrastructure finance. Two of the strong growth segments are broadband and renewable energy. We continue to see significant funding in those segments. Those are market-based deals that do, in many instances, carry more accretive spreads than our core Farm & Ranch or agricultural finance line of business. And in many instances, these transactions are construction financing. So when you think about a data center, a large commitment over that will fund over time. So we have a very strong pipeline of commitments in the broadband space that will fund as constructions take place, and we will take advantage of, I would say, more accretive spreads than our other lines of business. We don't see as the market evolves in this space, especially over the foreseeable future, significant changes in credit spreads in these sectors, and thus would anticipate that as fundings take place, relatively stable to accretive spreads in this space. In Farm & Ranch, there was a slight decrease in spreads, and this is typical. I mean, this is the seasonal nature of our payment cycle. We generally have more prepayments in the first and third quarters, and that generally creates some nonaccruals as we go through the quarter. And we had a little drag in Farm & Ranch from nonaccrual loans that over time will cure, and we'll receive that interest income, but that was the slight decrease in Farm & Ranch. And then the last component I would say is the investment-grade credit spread market out there is extremely, extremely tight. If you follow some of the transactions, there's tremendous pricing that these organizations are getting. So we're being prudent, especially in our AgVantage securities space, to refinance and provide incremental financing when the price makes sense for our capital to go to work. So in instances where there's very tight credit spreads that may not make sense for us to put capital out the door, we'll look at other segments such as broadband, renewable, and corporate ag that maybe carry a higher credit spread for us for our capital use versus putting capital out the door to AgVantage. So again, this goes back to our focus of strong risk-adjusted pricing across all of our segments and making sure that as we put capital to work, we're supporting our mission, but also getting paid for the risk that we're taking.

And then actually switching over to credit. As some of the other business lines continue to grow, should a provision around the current level that you reported this quarter and last quarter seem like a reasonable place? Or is it still going to be kind of sporadic based on what happens to the portfolio?

First of all, in terms of context, this provision is tiny compared to other financial institutions. So we're talking about mid-high 7-figure allowance for an organization that had about $50 million of core after-tax earnings for the quarter. So keeping in that context, this is very, very low. You've seen it fluctuate at very low levels for many, many quarters. We go to great lengths to make sure that we uncover and appropriately allowance and value any credits that seem like they're getting in trouble. And what you see reflected in the third quarter reflects everything that we see right now. As I indicated in my comments earlier, we don't see systemic risks or sector risks where we have a series of loans that are in trouble. It tends to be a little bit more episodic. The closest that I reported in my comments earlier today were a few loans in California. I'm talking about a handful that were negatively impacted by changes in water policy in California in an effort to manage subsidies, the actual depletion of groundwater, and the lowering of the elevation of land. And that was a very, very comprehensive review. As of today, we don't see anything else on the horizon that would cause the numbers to increase. But look at, there's very likely to be continuing episodic events and some numbers here and there. Today, we don't see anything that would make us think that the number next quarter is going to jump out of that kind of 7-figure range.

The next question comes from Bill Ryan from Seaport Global.

I'd also like to extend congratulations to both you, Brad, and

Yes. Well, thank you, Bill. And we appreciate the recognition that you made that it's probably some of these headlines and major publications about negative developments in agriculture that have negatively impacted our stock price. We see the same thing. But it's always a little bit more of a nuanced story. Soybean prices in the last 2.5 weeks are up 10%. Almond prices were a very large portion of the crop, 50% is shipped to Asia, you think we'd be very negative in the last 1.5 years, prices there are up to over $3 a pound from a mid-$1 a pound range 18 months ago. So, yes, there are definitely financial pressures in major crops, soybeans, corn and cotton, also wheat. We pay great attention to that. We are very concerned about the farm families that may be negatively impacted by that. But we have seen these cycles in American agriculture before. The last time was in 2019, 2020. And we believe that through a combination of better balances in supply/demand globally, more stabilization in tariff and export policies, and farmers making crude decisions based on what they see in front of them. If you asked someone a month ago, "Are we going to be planting as many soybeans in the United States in 2026 as in '25?" The answer is a resounding no. Farmers are very smart and very adaptive, and they look at market conditions and adjust accordingly. So we look at what actually happens to our portfolio, which is really a second derivative from what's going on in the countryside. And we haven't seen the impact that may be suggested by the headlines. Going to discretionary payments, what we call market facilitation payments during the Trump first administration, I think we're expecting to see about $10 billion to $12 billion flow in the next couple of weeks. There is a discussion about additional payments towards the end of the year. We'll see how that materializes. And I would note, when you think about those headlines, that there are advocacy groups for farmers who are interested in telling a story that results in sentiment, greater support for voluntary payments from the federal government. And that has been one factor in what has been motivating and capturing a lot of headlines recently.

Bill, this is

And just as a follow-up question, you highlighted Farm & Ranch. And if I got my numbers right, the new business volume was up about 38% in the quarter, following a 28% year-over-year increase. Last quarter, I believe the outstanding balance was up for the first time in like 5 or 6 quarters in terms of outstandings. And you also know there's a higher level of prepayments in the quarter as well. Are we hitting a point that, that business might begin to accelerate a little bit more, just in terms of total outstanding volume? And a part of that has the structure of the loans that you're offering changed? Is it a fixed rate, a variable rate? Is the mix about the same as it has been in the past?

I mean, that's a tremendous question. And I think we've been focused on this for some time now in a couple of different areas. First, yes, we are seeing a significant increase in loan applications, loan approvals using the Farmer Mac secondary market across the board. As I mentioned earlier, the number of commodities that we've supported this year is over 100. So it's broad-based. And I think that's coming from numerous different avenues. First, yes, there are ag sectors out there that are incredibly strong and want to borrow and leverage the opportunities in the market. We are seeing that. Clearly, some sectors need liquidity to support working capital. Many of these borrowers are underlevered. They have significant equity in their land, and it's a key component of getting liquidity to support maybe a tough 2025 harvest, and we're seeing that as well. Interestingly enough, a significant majority of the growth in 2025 has been new money loans, meaning borrowers coming in to find liquidity for a new land purchase, equipment purchase. So again, going back to Brad's point, we are not seeing that significant stress that people are reading in the environment and the articles in our portfolio, which gives us confidence that we see continued growth going forward. [Technical Difficulty] We anticipate that as rates continue to mostly come lower, that will also increase loan demand. In terms of the structure of our loans, we changed our under. We continue to be very consistent on how we look at risk buffer pricing risk that farmers generally go into more products given the pricing between fixed rate mortgage hasn't changed over the years consistently [indiscernible] is our bank's commercial institutions to manage their capital, their loan to deposit that need to potentially secondary market increased tension and/or for the second dynamics. We look forward to [indiscernible].

Next question, Brendan Michael McCarthy from Sidoti.

[ Technical Difficulty] Congratulations, Brad and

[Technical Difficulty] Prepayment, I'd say, the drop in rates in 2021, we don't envision increasing significantly, just given that we don't think rates are going to drop to accelerated levels. And I think a key component of that is in 2020 and 2021, a significant number of borrowers who just locked in long-term fixed-rate mortgages at historically low rates, those are set for life. There's no way those are going to be touched or refined. So what we're seeing now is a much lower environment for prepayments given the bulk of those refinancings took place, coupled with rates may moderate a little bit, but it's not going to significantly come down to lower levels to entice that refinancing opportunity, which is tending to then lower prepayment speeds as well as farmers are going to take probably shorter maturity variable rate mortgages to manage the volatility that they experience across their different ag sectors.

I wanted to go to the net effective spread back up to 1.2%, a really strong level. I know, looking back at the past couple of quarters, there might have been the expectation that the net effective spread would stabilize, maybe closer to the mid-teens area. But obviously, there's some secular growth trends at play there with the infrastructure finance segment. Just curious if there's anything baked into that net effective spread, 1.2% that might have surprised you, or maybe just previous past quarterly movements upwards, has that come as a surprise at all to you?

We acknowledge that it's probably a little bit higher than we have commented on over the last year. But so too has been the pace of growth, particularly in rural infrastructure, which is amongst the most accretive segments that we have. And so that's really the primary reason. It's a good news story from our standpoint. And I think

Brendan, the only thing I'd comment on as well is mix is important here. We've been talking about some of the headwinds we've seen in Farm & Ranch AgVantage, that product by itself is a fairly tight net effective spread margin, just given the strength of the counterparties we're lending to. So when you see a lot of that volume mature, especially in this environment with historically low credit spreads, part of it we're choosing not to put money out the door because that investment doesn't make sense for us. So with that headwind in the maturity space and the significant growth elsewhere, the mix is really rebalancing the NIS spread to the higher level of our range than what we'd expect if we saw a lot of AgVantage volume.

And one quick question on the credit side with the $7.4 million provision in the quarter, specifically as it relates to the $6.8 million provision in Ag Finance. Just looking at the breakdown there, would you say that was more weighted towards just general volume growth or the groundwater regulations in California you mentioned?

It was actually a mix of growth that comes through our CECL models and the groundwater. And I think we also called out 3 specific credits that had special allowances. So once again, it was a mix. I characterize it as episodic, and that's really what it was.

And then the $4.4 million charge-off, the 3 borrowers there, I guess that was probably disclosed previously in a provision. Is that correct?

No. No, it was just 3 small loans.

Then lastly, I just wanted to obviously comment on the environment, more negative than what you have disclosed on the earnings call here regarding the diversification of your portfolio. But just considering where the share price is, and really, maybe a misconception among investors, were you active at all in the share repurchasing program that we discussed last quarter?

We were. We disclosed the purchase of about 30,000 shares at a price of about $5 million. That was the fourth quarter.

There are no further questions at this time. I will now turn the call over to Brad Nordholm. Please continue.

Great. Well, thank you. Thank you very much. Once again, we really appreciate you taking time out of your day to join us. We're proud of our results. I hope that's very clear. Once again, I think someone once characterized our results as boring. If record NES, 17% ROE, stable credit factors, and an efficiency ratio of 30% or boring, I'll take that any day, and I hope you appreciate it, too. So thanks for joining us. And again, if you have any questions whatsoever, please take them in with Jalpa. We'll circle up the right team to have a special call with you, talk you through your questions. Otherwise, we look forward to getting back with you on our regular scheduled call in February to discuss our fourth quarter and fiscal 2025 results. Good day.