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Good day, ladies and gentlemen, and thank you all for joining us for today's Farmer Mac 2025 Earnings Results Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to Senior Director of Investor Relations, Jalpa Nazareth. Welcome, Jalpa.

Good afternoon, and thank you for joining us for our fourth quarter and full year 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. These statements are based on management's current expectations and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from those projected. Please refer to Farmer Mac's 2025 annual report on Form 10-K and subsequent SEC filings 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-K and earnings release posted on our website. Joining me today are Chief Executive Officer, Brad Nordholm; our President and Chief Operating Officer,

Thanks very much, Jalpa. Good afternoon, everyone, and thank you very much for joining us. 2025 was another strong year for Farmer Mac. We surpassed $33 billion in outstanding business volume, achieved record revenue of $410 million, a 13% increase relative to the prior year and produced $183 million in core earnings, our 10th consecutive year of record annual core earnings. We thoughtfully balanced returning capital to our shareholders with investing for future growth while continuing to execute on our mission of providing vital liquidity to agriculture and rural America. As you saw in this afternoon's earnings release, we announced a $0.10 per share increase in our quarterly dividend to $1.60 per share. This is our 15th consecutive annual increase, reflecting our confidence in the durability of our earnings profile and our long-term cash flow generation. We were active in share repurchase program in the fourth quarter, which was modified last August by Board of Directors to approve share repurchases of up to $50 million of Farmer Mac's Class C common stock. During the fourth quarter, we completed $12.9 million under the amended program, and we have $37.1 million remaining under the current authorization. In total, we returned $78 million to shareholders through dividends and share repurchases in 2025. Looking ahead, we remain committed to this balanced capital allocation approach that prioritizes prudent growth, balance sheet strength and consistent shareholder returns. During the quarter, we also completed our seventh Farm securitization transaction, further building liquidity and efficiency in the agricultural mortgage-based securitization market. This risk transfer tool strengthens our ability to optimize capital and enhance the amount of market liquidity we can provide through our businesses. By transferring a portion of the underlying credit exposure to investors, we free up capital, which is then available to be redeployed into new mission-aligned lending activities. We are very pleased with the tremendous support we've seen for this program, and we look forward to exploring other credit risk transfer opportunities in order to grow our platform while continuing to deliver high-quality opportunities to our various classes of investors. We anticipate introducing a new product in the market this year that will support the strong investor demand for agricultural assets, while also remaining in alignment with our mission fulfillment. The agricultural real estate market remains very active. The USDA expects demand for real estate mortgages will remain robust in 2026, with the total volume of transactions projected to increase by 5% this year relative to 2025 levels. As it relates to our portfolio, we were pleased to see a very positive outcome from recent property sales for a distressed borrower, which we expect will result in recognizing previously unaccrued fees and interest and meaningfully reducing our 90-plus day delinquencies during the first half of 2026. Despite the volatility and uncertainty in today's environment, whether from interest rate movement, commodity price fluctuation, supply chain disruptions, consumer behavior changes or broader geopolitical and policy dynamics, Farmer Mac continues to be resilient. Our diversified business model, strong capital position and disciplined risk management position allows us to provide vital liquidity to agriculture and rural infrastructure sectors in all economic environments. Matt Pullins, who joined us as our new Chief Financial Officer in mid-December, will review our financial results in more detail, but I want to hasten to add that we are thrilled to have Matt join the team. He brings more than 2 decades of experience in corporate finance, capital markets and strategic planning, paired with a personal connection to American agriculture. His combination of deep financial expertise and authentic understanding of rural America makes him an exceptional addition to Farmer Mac, and we're excited for the impact he will have on our organization. Now I'll turn the call over to

Thanks, Brad, and good afternoon, everyone. Our results continue to demonstrate the benefits of the strategy we have been executing for several years now, diversifying our portfolio into higher spread mission-aligned businesses while maintaining strong underwriting standards and disciplined risk management. Serving agricultural businesses and providing liquidity to enhance and enable rural infrastructure are both critical to our mission of driving economic opportunity to rural America. Farmer Mac is broadening the pursuit of its mission in response to the evolving economic landscape in rural America, and this proactive business diversification continues to deliver meaningful benefits to the communities we serve. Our team delivered another outstanding year of business volume activity with broad-based net volume growth in every segment, reflecting strong customer demand and the continued relevance of our secondary market solutions. We achieved a record $3.8 billion of net new business volume in 2025, resulting in total outstanding business volume of $33.4 billion as of year-end. The net volume increase highlights quality asset growth across all our product sets, which in turn drove significant growth in net effective spread. Our agricultural finance outstanding business volume grew $1 billion last year with our Farm & Ranch segment accounting for nearly all of that net growth. Activity in Farm & Ranch accelerated meaningfully in the fourth quarter and has carried over into 2026, which reinforces the momentum we're seeing in this business. We expect loan purchase growth to continue as tighter agricultural conditions driven by higher input costs, trade and tariff concerns and low commodity prices, increased producers' need for liquidity. The Farm & Ranch segment is core to our mission, and we remain committed to bringing our customers products that provide capital and risk management solutions, which support their borrowers' financial needs. Our Farm & Ranch AgVantage securities portfolio reached an inflection point in the fourth quarter as the portfolio reversed the runoff trend and grew $500 million. As we discussed on our prior call, this increase reflects the additional fundings we anticipated after closing a new $4.3 billion facility with a large agricultural counterparty. We expect this momentum to continue in 2026 and remain on track to return to sustained net growth in this product as we work closely with new and existing counterparties to determine the right timing for refinancing maturing securities or providing incremental financing based on market conditions and return on capital objectives. We remain steadfast in our commitment to deliver a broad spectrum of financial solutions to the agricultural community by working alongside our growing customer base. Our Corporate AgFinance segment saw a net growth of $63 million during 2025, reflecting our continued efforts to support larger, more complex agribusinesses that span the food, fuel and fiber supply chain. We anticipate seeing more activity in this segment in the first quarter of 2026 as deal flow activity levels are higher relative to prior years. However, ongoing refinancings and maturities will continue to create a headwind going forward. Turning to our infrastructure finance line of business. Outstanding business volume increased to $11.8 billion at year-end 2025, up over $2.8 billion from the prior year, with all 3 segments contributing significantly to net growth. This is a continuation of the strong interest and 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. Volume in our Power & Utilities segment grew by over $1 billion, largely due to strong load purchase activity and net new advantage security issuances, supporting investment needs of rural electric generation, transmission and distribution cooperatives. Our Renewable Energy segment also grew more than $1 billion last year, supported by strong deal flow, accelerated construction deadlines and continued project finance momentum. Despite increased policy uncertainty across the renewable power investment market, we expect to continue participating in renewable energy transactions for both new projects and refinancings of existing projects, utilizing the same strong credit standards. Looking ahead, while we anticipate another construction-related rush in the first half of this year, primarily tied to the July 4 deadline included H.R. 1, we believe the substantial need for new power generation will continue to drive growth in this segment. We're seeing strong deal flow, allowing us to be selective with our capital deployment in this sector to pursue deals that are appropriately structured with strong counterparties, which underscores the strength of our reputation in the market. Beyond 2027, we anticipate activity in this space to be more market-driven rather than policy-driven as the underlying driver remains the same, a massive surge in power demand, requiring significant new power supply. Our Broadband Infrastructure segment grew by $700 million in 2025, more than double the prior year's growth with nearly 90% of volume growth tied to data center-related demand. 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, and we will continue to emphasize diversification across geographies, sponsors and tenants. We believe these developments are crucial for rural economic growth and support the historically strong market demand for connectivity needs across rural America. Growing business volume in our Infrastructure Finance segment remains a top priority, and we will continue to focus on strategic investments and resources in these areas to build our expertise and capacity as market opportunities arise. Despite this backdrop of broader market uncertainties 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. To summarize, 2025 was a year of strong, broad-based disciplined volume and net effective spread growth across all of our operating segments, and our pipelines remain strong as we move into 2026. We expect continued customer demand for liquidity, capital efficiency and long-term funding solutions as market conditions evolve. Our robust capital and liquidity, along with our strong underwriting criteria, position us to capitalize on this opportunity. Importantly, we are confident in our ability to continue to deliver consistent results as we support rural America through this economic cycle and beyond. With that, I'll turn it over to Matt Pullins, our new Chief Financial Officer. I'm thrilled to welcome him to Farmer Mac and to the leadership team as we continue to advance our long-term strategic priorities and position Farmer Mac for its next phase of growth. Matt?

Thank you,

Good. Well, thank you very much, Matt. As we look ahead, we are excited about the opportunities in front of us and confidence that the depth and capability of our management team positions us well to continue executing on our long-term strategic priorities. Before we begin the Q&A period, I'd also like to remind everyone that we will be hosting our Investor Day on March 18 in New York at the New York Stock Exchange. We look forward to providing a deeper dive into our strategy, growth initiatives and the future of Farmer Mac and actually having some formal and informal conversations with you. We hope to see many of you there. And now, operator, I'd like to see if we have questions from anyone on the line today.

[Operator Instructions] We'll hear first today from Bose George at KBW.

Welcome, Matt. The first question I had was on the credit issues. While you note that these losses are customer specific, is there a good way for us to think about the run rate provision just based on the changing mix? Like is the 2025 annual level a decent number if we kind of spread that out over a full year?

Bose, nice to hear from you today. Keep in mind that when Matt took you through the numbers, the $32 million, of that $13 million was attributable to automatic provisions that are added through our CECL modeling attributable to the growth in the portfolio. And so looking forward, we're actually starting out 2026 in strong fashion. And while we don't have specific allocations across portfolios, we're continuing to see a very nice mix across portfolios. So there's going to be a core level of automatic provisioning reflecting the growth in 2026. So that's kind of the first piece of it. The second piece of it, any special provisions associated with individual credits, that's much, much harder for us to forecast. I guess all I could say today is that we don't foresee see anything today that would cause us to think that, that number would be going up. There's nothing that we're identifying as of this time.

Okay. Great. That's helpful. And then just one on the spread expectation for the year. Is the current spread levels sort of a reasonable number based on your expectations?

Bose, this is

Our next question will come from Bill Ryan at Seaport Research Partners.

I'd also like to extend my congratulations to Matt. Question following up on the last one on the provision. Historically, the credit provisioning has been kind of related to some idiosyncratic events, but it sounded like there may have been a little bit more going on in the portfolio. You highlighted broadband, a few small credits and also in Corporate AgFinance. I was wondering if you might be able to unpack that a little bit more to say -- to kind of let us know, is there something kind of going on with these smaller credits that caused a little bit more disruption in the fourth quarter? Or is it just kind of like a one-off event that you, again, concentrated among these credits?

Yes.

Yes. When we talk about a few small credits here, I do want to highlight it is a few loans compared to thousands and thousands of loans we have on our balance sheet. And I do want to highlight, if you look at our financials, the acceptable loan quality is very high across all of our segments. So we feel very confident that there's no systemic or portfolio-wide issues that we're not aware of. As it pertains to a few of these individual loans, it is very borrower specific. In the lending space, you're going to have operational issues, management issues, market changes, market dynamics and consumer changes that all impact businesses. As we noted in the script, some of these loans were purchased right out outside of COVID and things have changed post-COVID and some businesses are just dealing with that and struggling to rightsize their operations. And for a few of these loans, I think it was those type of market dynamics that created the risks that we saw in 2025. We've been monitoring these loans for some time now. So we were aware. Things just transpired in the fourth quarter that created further deterioration. That being said, it's a few borrowers, and this was very borrower specific. And overall, we feel very confident with the quality of our portfolios.

Okay. And one follow-up on credit, just a couple more questions. In the Farm & Ranch business, I believe the loan payments are due January 1 and July 1 each year. And I was wondering if you can might be able to give us some indication. Obviously, farm credit has been in the headlines for the past several months. Is there anything of note that took place when these payments came due on January 1? And kind of following up on that, I believe there's going to be a disbursement of market stabilization payments from the government in February, which should help out the farmers as well.

Yes, it's great. January 1 and July 1 are typically our large prepayment periods. The January 1 prepayment cycle was in line with January 1, 2025. There was nothing unique about this payment cycle. In fact, we've seen significantly more growth during the month of January than prepayments, which shows, again, the momentum that we've had in the space. You're right, as it pertains to government program payments, the projected 2026 net cash farm income is going to be supported by a significant amount of government payments. And there's a couple of components to that. First, in H.R. 1, there were some farm bill enhancements primarily related to price triggered commodity programs. It's about $13 billion in 2026 that will be going out later. Some of the ad hoc and disaster aids, about $24 billion. Some of this was a carryover from 2025 as those start going out. So we have seen some of those being dispersed. They are supporting the tight Ag economy cycle right now, especially in the row crop space. So those will be a benefit going forward just given the substantial amount of government payments going out in 2026.

Okay. And just one last question. I'll try and get one more in here. On the expense outlook, obviously, a bump up in expenses on some of the things that you highlighted over the course of the year, transaction expenses, personnel investments. Fourth quarter number looked like it came back down quite a bit year-over-year. How should we be thinking about expense growth in 2026?

Bill, this is Matt. To give you a little bit of insight into expense growth, a couple of things to keep in mind. There is some modest seasonality that factored into the slowing of expense growth in the fourth quarter. When we turn the page and turn the calendar into 2026, the first quarter tends to have higher personnel expenses as we look at resetting things like payroll taxes and the like. That's one factor to keep in mind. More broadly for the business, as we look to 2026, there will be a level of expense growth that will be incurred as we continue to grow outstanding business volume. There are transaction-related expenses, operational expenses and the need for incremental personnel to support the growing business. We will also be looking for strategic investments, particularly in the technology platform as well as selective investments in business development to further enhance the growth and take advantage of the market opportunities that are present at this point in time. So with that being said, we are being very mindful of making sure that we continue to operate within the target efficiency ratio of 30%. And you'll see that we were over 2% below that here in the quarter, and we will continue to balance making investments while operating very efficiently in the future.

We'll move forward to Brendan McCarthy at Sidoti.

Just want to start off on your outlook for the volume mix heading into 2026. I know you mentioned you're pretty positive outlook for broad gains across the portfolio. Are you able to kind of dissect that outlook a little bit more as to which specific segments or lines of business you're more bullish on relative to others?

Brendan, it's

Great. I appreciate that detail. And just as a follow-up there with the AgVantage business. I know that's more kind of like a relative value proposition, and it sounds like that relative value might be increasing. What's really driving that? Is this maybe lower rates? Or is it just what you're able to offer counterparties?

There's a lot of components to that question, but I think there's a couple of key requirements that I think are driving the opportunity set here. First is some of these counterparties, these new counterparties that we've talking about, their facilities have closed. I mean these are very complex, time-consuming facilities and in many instances, require counterparty regulatory approval, and that could take months. And so as those approvals have started coming in, there is now a closed facility where these counterparties want to leverage our relative value versus other opportunities and pledge the collateral to support their growth and their balance sheet. The second is, as we've modified certain facilities with existing counterparties that have provided more value or more available capacity, they're seeing more utilization as they continue to grow and originate loans. So I guess what I would say is fourth quarter was kind of the inflection point where a lot of these components that we've been talking about over the last 12 to 18 months have come to fruition and concluded, and now we're seeing the benefits of that, just given the relative value of this product set versus other liquidity sources in the market.

Understood. And one more question for me. Just really looking at the credit side, I believe that, Brad, I believe you mentioned there may be a recovery in the outlook there. Did I hear that correctly?

Yes, Brendan, this is

Brendan, this is Matt. If I could just add one additional point there is the specific borrower that was referenced in Brad's comments and that

And we'll take a question from the line of Gary Gordon.

A couple of things. One, the dividend increase of 7%. I think historically it is on the low side. I mean, is some of your thinking that you're laying out strong business growth and also the repurchase opportunity. So the assumption that more of your capital than normal would be used to fund the balance sheet growth and potentially share repurchase.

Yes. Gary, obviously, we have a number of tools for managing capital growth, including earnings, dividends from that, preferred stock issuances, securitizations, which can change relative requirements rather than notional requirements. And so we look at all the tools that we have available to us. And probably the most significant factor in kind of looking at what's the appropriate amount of dividend increase this year is the fact that our growth has been very, very strong. And our growth has been very, very strong in segments of business that consume a bit more capital. And so you see that reflected. For the long-term financial strength and performance of Farmer Mac, that's a very, very positive thing.

Okay. Two, on the problem loans, you said they were from '21 to '23. You said they were one-offs, but were there lessons learned there that affected your underwriting today?

Yes, Gary, we can constantly evolve and monitor markets and adjust our philosophy and underwriting. We don't change our standards, but we update our thought process based on what we've seen in the markets. For a couple of these, especially the one originated in 2021, dramatically different times in COVID and out of COVID and certain markets reacted differently and certain supply and demand dynamics changed. And I think a couple of these individual borrowers experienced some of those market changes, consumer behavior changes and just frankly, some operational issues that management struggled working through. I think when you take a step back from an underwriting standpoint, our primary focus is, first and foremost, having the right expertise in-house. You've seen our increase in headcount. A lot of that is to get the right personnel to adjudicate and understand the risk and monitor the risk in these newer segments, which we've done. And the second is, as markets evolve and we see transactions like this, it does help in future adjudication of transactions to take a step back and see what's transpired in the markets. Every market is operating differently, and we want to use the most up-to-date information to make appropriate credit decisions as we move forward. So I think the long answer is yes, we continue to assess markets and borrow-specific issues and adjust our thinking in risk adjudication when that comes up.

Okay. Last thing is the data center demand. Has that had any material and sort of general impact on farmland prices. And if so, I can imagine for existing loans, that would be a positive, but it could create a little more risk lending today.

Gary, the opportunities that we've seen in the data center space have been in really rural areas, not necessarily in productive farmland areas. I know there's been some out there and some articles that have highlighted the interaction between arable and productive farmland versus renewable energy projects and data centers. We haven't seen that or experienced that in our portfolio. From a farmland value perspective, it's been relatively stable. We've seen some declines just given the overall commodity cycle in some of the regions that we have loans in our portfolio. But we really haven't seen a correlation between data center investments and constructions and changes in -- or increases in farmland values.

And thank you to our audience members who had shared your questions. Mr. Nordholm, I'm pleased to turn it back to you, sir, for any additional or closing remarks.

Great. Well, thank you. Thank you all very much for joining us. And thanks for your patience. I think we had a couple of situations with background sirens today. And our office here at 2100 Pennsylvania Avenue, a couple of blocks from the White House, occasionally, especially when there are a lot of foreign dignitaries in town for events, results in motorcades and ambulances, and thank you for -- thank you for bearing with us today. But I would like to conclude by thanking everyone for listening in on the call. We'll, of course, be having our regular scheduled call again in May to report our first quarter results. We look forward to sharing information with you at that time. But in the meantime, please do consider joining us for our Investor Day in New York, and please follow up with Jalpa with any other questions that you may have. With that, thanks again. And operator, we will conclude the call.