AGM - NYSE
Federal Agricultural Mortgage Corporation
AGM·NYSE
$174.70
-2.0%Financial ServicesFinancial - Credit Services
Federal Agricultural Mortgage Corporation provides a secondary market for various loans made to borrowers in the United States. It operates through four segments: Farm & Ranch, USDA (United States Department of Agriculture) Guarantees, Rural Utilities, and Institutional Credit. The Farm & Ranch segment purchases and retains eligible mortgage loans that are secured by first liens on agricultural real estate; securitizes eligible mortgage loans, and guarantees the timely payment of principal and interest on securities representing interests in or obligations secured by pools of mortgage loans; and issues long-term standby purchase commitments (LTSPC) on designated eligible mortgage loans. The USDA Guarantees segment purchases portions of certain agricultural and rural development loans guaranteed by the USDA. The Rural Utilities segment purchases and guarantees securities that are backed by loans for electric or telecommunications facilities by lenders organized as cooperatives to borrowers; and purchases eligible rural utilities loans and guarantees of securities backed by those loans, as well as LTSPCs for pools of eligible rural utilities loans. The Institutional Credit segment guarantees and purchases general obligations of lenders and other financial institutions that are secured by pools of loans eligible under the Farmer Mac's Farm & Ranch, USDA Guarantees, or Rural Utilities lines of business. Federal Agricultural Mortgage Corporation was founded in 1987 and is headquartered in Washington, District of Columbia.
At a Glance
Live SnapshotMarket Cap$1.90B
EPS16.7300
P/E Ratio10.44
Earnings Date08/06/2026
Earnings Call Transcript
AGM • 2026 • Q1
Operator
Thank you for standing by. At this time, I would like to welcome everyone to the Farmer Mac first quarter 2026 earnings conference call. I would now like to turn the conference over to Jalpa Nazareth, Senior Director of Investor Relations. The floor is yours.
Jalpa Nazareth
Good afternoon, thank you for joining us for our first quarter 2026 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. All forward-looking statements are based on information available to Farmer Mac as of today's date, and Farmer Mac assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Please refer to Farmer Mac's 2025 annual report on Form 10-K and subsequent SEC filings.
Bradford T. Nordholm
Unknown participant is now joining.
Jalpa Nazareth
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 company's most recent Form 10-Q and earnings release posted on our website. Joining me today are Chief Executive Officer, Brad Nordholm, our President and Chief Operating Officer,
Bradford T. Nordholm
Thanks, Jalpa. Good afternoon, everyone. Thank you for joining us. I also want to thank everyone who joined our Investor Day event in New York City. We really appreciate the strong engagement and the opportunity to spend more time discussing our strategy, our performance, and our outlook. As always, it's great to hear your feedback. Our first quarter 2026 was outstanding. A reflection of the continuation of the acceleration in business volumes we saw in the fourth quarter 2025. We delivered a record-setting quarter with business volume, quarterly revenue, and quarterly core earnings all reaching all-time highs, underscoring the strength of our business model and the disciplined execution across our organization. Outstanding business volume approached $35 billion. Revenue totaled approximately $110 million, and core earnings totaled approximately $52 million.
Bradford T. Nordholm
Our diversified business model, strong capital position, and disciplined risk management position allow us to provide vital liquidity to American agriculture and rural infrastructure sectors during all and through all economic cycles. Demand for our products remains robust. Our customer relationships continue to deepen and expand, and our mission-driven approach continues to resonate across rural America and is motivation for our talented employees. With that, I'll turn the call over to our President and Chief Operating Officer,
Zachary N. Carpenter
Thank you, Brad, and good afternoon, everyone. First quarter was an excellent start to the year, with strong results and meaningful momentum across every aspect of our business. Total revenues increased 14% year-over-year, with strong contributions from outstanding business volume growth paired with disciplined funding execution and stable asset credit quality across all of our platforms. We delivered $1.5 billion in net new business volume in the first quarter, bringing total outstanding volume to a record $34.8 billion as of quarter end. Broad-based growth this quarter was supported by a strong pipeline, particularly in the Farm & Ranch segment, where we approved loans for the first quarter of 2026 approaching $1 billion, almost 30% above the fourth quarter of 2025, our previous record.
Zachary N. Carpenter
Sustained customer demand across our products continues to be underpinned by disciplined underwriting and risk management. Now let me walk through the portfolio in more detail. Our agricultural finance outstanding business volume grew $777 million in the first quarter, with the Farm & Ranch segment accounting for $675 million of the net growth this quarter. Loan purchase activity in Farm & Ranch accelerated meaningfully in the fourth quarter of 2025 and has continued throughout the first quarter of 2026.
Zachary N. Carpenter
Specifically, we saw net growth of $384 million for the first 3 months of this year, compared to only $54 million of Farm & Ranch loan purchase net growth in the same period last year, significantly outpacing the seasonally large number of loan repayments we typically see in the first quarter due to the January 1 payment date. We are operating at an elevated pace for new volume and expect loan purchase growth to continue as lenders seek liquidity, primarily driven by the balance between diversifying from high-cost deposit needs due to continued strong loan growth and a focus on capital efficiency. In addition, agricultural borrowers continue to face tighter agricultural conditions driven by higher input costs, trade and tariff concerns, and low commodity prices.
Zachary N. Carpenter
We remain proactive in discussions with our customers to ensure we find the right solutions to support their liquidity and capital needs, as well as understanding their borrowers' liquidity needs in a challenging and volatile operating environment. Our Farm & Ranch AgVantage securities portfolio grew $325 million in the first quarter of 2026. 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 in late 2025. We believe we are on track to return to sustained net growth in this product set as we work closely with our counterparties to determine the right structure for providing incremental liquidity based on current market conditions.
Zachary N. Carpenter
The Corporate AgFinance segment delivered solid results, ending the quarter with over $2 billion in outstanding business volume, up approximately 5% sequentially and 9% year-over-year. Deal flow activity in the broader agribusiness market was relatively muted during the first quarter of 2026 as companies continue to navigate a volatile market coupled with global tensions impacting trade and inflation. Looking ahead, however, we have seen a modest pickup in the second quarter deal flow activity, primarily reflecting refinancing transactions. We are also starting to see more indications of potential mergers and acquisition activity, which could result in an increase in volume opportunities as we support the food, fuel, and fiber supply chain.
Zachary N. Carpenter
Turning to our infrastructure finance line of business, outstanding business volume increased $717 million sequentially, or 6%, to $12.6 billion as of quarter end, with all three segments contributing net growth. This is a continuation of the similar themes we saw in 2025. Specifically, the strong interest and investment in data center construction, broadband expansion, and the construction and completion of Renewable Energy projects, reflecting the overall need for significant energy generation and transmission capacity in rural America. Net growth in our Power and Utilities segment this quarter was $115 million, largely due to strong loan purchase activity, supporting investment needs of rural electric generation, transmission, and distribution cooperatives.
Zachary N. Carpenter
We continue to see a steady demand for capital in the segment as borrowers invest in system upgrades and modernizations to support the significant increase in electrification demand. Our Renewable Energy segment grew $445 million, or 18%, to $2.9 billion as of quarter-end. Growth primarily reflected transactions approved in late 2025 that subsequently closed in the first quarter of 2026, in addition to strong deal pipeline and accelerated construction deadlines. Looking ahead, while we anticipate the continuation of the construction-related rush in the first half of this year tied to the July 4th construction start timeframe described in H.R. 1, we believe growth in this segment will continue well into next year as the substantial need for new power generation will continue to drive growth in this segment.
Zachary N. Carpenter
Currently, deal flow remains robust, allowing us to be selective with our capital deployment in this sector to pursue deals that are appropriately structured with strong counterparties and underscoring the strength of our reputation in the market. While the industry is facing potential evolution in the near future as tax and other incentives are set to expire, we do project the growing demand for energy to position the industry for continued growth as the underlying economics of these projects remain highly competitive even without tax incentives. Alternative generation capacity takes years to develop, we expect capital structures and power purchase agreement pricing to adjust as H.R. 1 incentives are phased out. Accordingly, we expect to continue to participate in Renewable Energy transactions for both new projects and refinancing of existing projects.
Zachary N. Carpenter
Beyond 2027, we anticipate stable growth in this space as more market-driven rather than policy-driven, as the underlying driver remains a massive surge in power demand, requiring significant new power supply. Broadband Infrastructure also posted strong quarterly results, with net growth of $158 million, ending the period at $1.7 billion outstanding, with nearly 70% of the volume growth tied to data center-related demand. We are seeing robust demand for data centers quarter to date, as 87% of new deals approved in our Broadband Infrastructure pipeline are data center related, a reflection of the ongoing expansion of artificial intelligence, cloud storage, and enterprise digitization. While this segment has grown substantially, we may remain disciplined in maintaining geographic and sponsor diversification with a continued focus on well-capitalized investment-grade hyperscaler tenants.
Zachary N. Carpenter
We are mindful of the macro backdrop with uncertainties stemming from interest rates, trade policy, and regulatory shifts. Our diversified portfolio, strong capital position, and disciplined underwriting give us confidence in our ability to continue delivering consistent results. We are also closely monitoring the recent spike in global energy prices, which has pushed fuel and fertilizer costs higher ahead of the growing season. While higher energy prices have historically been supportive of higher commodity prices, the net impact on producer margins will depend on the duration of the disruption, the degree to which growers locked in input costs in advance, and whether commodity prices adjust to offset higher production costs. Regardless of how these dynamics unfold, we believe Farmer Mac is very well-positioned to navigate the environment.
Zachary N. Carpenter
We are extremely proud of the results this quarter and excited about what lies ahead for the balance of 2026 and beyond. The momentum from 2025 has not only continued, but in several areas accelerated, reinforcing our confidence in the outlook and durability of our business model. We are dedicated to broadening the pursuit of our mission in response to the evolving economic landscape in rural America. This proactive business diversification continues to deliver meaningful benefits to the communities and industries we serve, as evidenced by the strong growth across all our portfolios. With that, I'll turn it over to Matt Pullins, our Chief Financial Officer, to review our financial results in more detail. Matt?
Matthew M. Pullins
Thank you,
Matthew M. Pullins
First quarter results were record-setting by every measure. Nearly $35 billion in outstanding business volume, $110 million in revenue, and $52 million in core earnings, or $4.74 per diluted share. This quarter's record results were driven by several distinct financial performance factors, which I will walk through in more detail. net effective spread reached a record $102 million in the first quarter of 2026, an increase of $12 million year-over-year and $0.6 million from the fourth quarter of 2025, our prior quarterly record. The year-over-year growth was driven by record business volume and continued disciplined funding execution.
Matthew M. Pullins
On a percentage basis, net effective spread was 116 basis points, modestly below 117 basis points in the year-ago period and 122 basis points in the fourth quarter. Quarter-over-quarter spread compression was driven primarily by fewer days in the period, which disproportionately impacts revenue from our fastest-growing, highest spread segments. In addition, we saw a mix shift towards growth in our lower spread Farm & Ranch AgVantage securities and somewhat lower contribution from the investment portfolio. Even with that dynamic, net effective spread dollars grew again this quarter, reinforcing the durability and earnings power of our expanding, increasingly diversified portfolio. Our net effective spread performance reflects disciplined, proactive, and purposeful balance sheet management.
Matthew M. Pullins
The foundation of our approach is positioning the balance sheet to be largely rate agnostic, underpinned by a very short duration profile and a strong interest rate risk management framework. Our differentiated funding advantage remains a key strength, allowing us to access liquidity at highly competitive levels. Within this rate neutral posture, we remain strategic and nimble, actively evaluating and capturing opportunities to enhance long-term economics when market conditions are favorable. Together with our ongoing use of innovative hedging strategies, these actions demonstrate our ability to manage risk effectively while consistently supporting financial performance. Partially offsetting strong earnings growth this quarter was an increase in compensation and benefits, primarily driven by increased headcount seasonal factors.
Matthew M. Pullins
We maintain our deliberate and balanced approach to expense management, and accordingly, will continue making targeted investments in business developments in our operational and technology platforms to support future growth and scalability while managing expenses within our long-term efficiency ratio target of 30%. Moreover, I'm proud to say that this quarter our revenue growth outpaced expense growth by nearly 4 percentage points compared to the prior year period. This outcome reflects our team's sound execution along with the strength and scalability of our operating platform. Also contributing to our first quarter 2026 core earnings was a $4.2 million income tax benefit from the purchase of $45 million of renewable energy investment tax credits, which was fully recognized in the quarter.
Matthew M. Pullins
As of quarter end, we had approximately $30 million of remaining capacity to utilize additional credits through carrybacks to prior year federal income tax liabilities. Subject to market conditions, we expect to largely utilize that remaining carryback capacity in the second quarter and will continue to evaluate additional tax credit purchase opportunities on a current year basis going forward. As discussed at length last quarter, Farmer Mac operates a comprehensive credit framework that aligns with our risk appetite while accounting for the unique risks present within each of our 5 operating segments. While credit risk is inherent in our business, we believe our disciplined credit framework and proactive risk management enable consistent execution of our mission to deliver liquidity to the agriculture and rural infrastructure markets.
Matthew M. Pullins
Turning to first quarter credit and asset quality results, we experienced $4.3 million of provision for credit loss expense in the first quarter of 2026. The provision expense reflects $3.4 million attributable to new volume growth across all our segments, particularly in the Renewable Energy segment. $0.9 million related to credit migration across the portfolio. Credit migration this quarter reflects the ongoing discipline of our portfolio management process. As we do each quarter, we conducted a comprehensive review of our portfolios. Certain credits experienced deterioration, specifically in agricultural storage and processing and select permanent plantings exposures and required additional reserves. Others, on the other hand, demonstrated meaningful improvement through collateral sales and improved borrower performance and therefore resulted in reserve releases. The net effect was a largely offsetting outcome.
Matthew M. Pullins
Allowance for losses was $40.1 million as of March 31, 2026, reflecting a $2.1 million increase from year-end 2025 and $14.7 million increase from the same period a year ago. The sequential increase primarily reflects the cumulative impact of portfolio growth and select credit migration, partially offset by charge-offs recorded during the quarter. On a year-over-year basis, the increase is consistent with significant growth in outstanding business volume over the past 12 months. As of quarter end, the total allowance represented 15.4% of nonaccrual assets, compared to 16% as of December 31, 2025, and 12.9% as of the year ago period. As we've discussed previously, nonaccrual assets as a percentage of total allowance is a useful gauge of reserve adequacy relative to loans where full collection is unlikely.
Matthew M. Pullins
We remain comfortable with our allowance levels given the strength of the underlying collateral. 90-day delinquencies were 52 basis points at quarter end, up from 40 basis points in the fourth quarter of 2025, and an improvement from 54 basis points from the year ago period. The sequential increase is consistent with the seasonal pattern we have historically observed in our portfolio, where delinquency levels tend to be higher at the end of the first and third quarters, reflecting the annual and semiannual payment dates on the majority of Farm & Ranch loans. Total substandard assets as a percentage of our entire portfolio were 1.87% this quarter, up from 1.71% at year-end, with the increase concentrated to credit downgrades in the Corporate AgFinance line of business.
Matthew M. Pullins
Infrastructure finance substandard assets, however, declined sequentially this quarter due to improvements in the Renewable Energy segment. Farmer Mac's core capital increased by $27 million in the first quarter of 2026 to $1.7 billion, which exceeded our statutory requirements by $663 million, or 62%. Our Tier 1 Capital Ratio was 13% as of March 31, 2026, compared to 13.3% as of year-end 2025. Our capital levels remain well in excess of regulatory thresholds following an active quarter where our outstanding business volume grew by $1.5 billion and we returned $32 million of capital through a combination of common and preferred dividends along with modest share repurchases.
Matthew M. Pullins
Our strong capital position has enabled us to grow and diversify our revenue streams, remain resilient through volatile credit environments, and continue providing competitively priced liquidity to our customers and their borrowers. Looking ahead, we will maintain a thoughtful and balanced approach to managing our overall capital position. Organic capital generation, selective capital issuance, and the use of risk transfer tools will help ensure we have sufficient capital to support future growth, particularly in more accretive segments, which are generally more capital consumptive. In closing, we are very pleased with our first quarter results and confident in our outlook for the remainder of the year. We remain committed to thoughtful capital deployment, strong asset quality, and creating long-term value for our shareholders. With that, I'll turn the call back over to Brad.
Bradford T. Nordholm
Thanks very much, Matt. In summary, this was an exceptional quarter and a powerful start to 2026. The strength of our results reflects the disciplined execution and strategic positioning that defined Farmer Mac today. A number of you have asked about CEO succession, and I'm pleased to report that the process is progressing very well and, in fact, a bit ahead of schedule. I can say with great confidence that Farmer Mac has never been in a stronger position than it is today. The depth of talent across our leadership team, the clarity of our strategy, and the momentum in our business give me tremendous optimism, and I would say confidence in the future of this organization. Now, operator, I'd like to see if we have any questions from anyone on the line today.
Operator
Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star, then the number one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Your first question comes from Bose George with KBW. Your line is open.
Bose George
Hey, everyone. Good afternoon. I wanted to ask first just about, you know, return on equity expectations. Obviously, you guys had a very strong quarter at 17% ROE. You know, just with the pipeline and what you're seeing out there, you know, where do you think that trends? I wanted to ask about spread as well, but that, you know, moves around obviously with the mix. Is it better really to focus on the ROE outlook?
Matthew M. Pullins
Well, good afternoon, Bose. Thank you very much for the question. This is Matt, and glad to touch actually on both topics that you asked there. In terms of return on equity, as you noted, we printed 17% return on equity for the quarter. That is a metric that we're very focused on in terms of deploying capital and purchasing assets within our business. Looking to maintain the business at in that range of outlook in terms of return on equity going forward. In terms of spread, or net effective spread margin, which you also asked about, that is a metric that can vary from quarter to quarter. A variety of factors weighed on that margin this quarter, including asset mix.
Matthew M. Pullins
As we purchase high return on equity, but in some cases, lower spread assets, particularly in our AgVantage portfolios, that can dilute margin, but is very much accretive to return on equity, which is our principal focus in terms of managing the business and managing the balance sheet.
Bose George
Okay, great. That's helpful. Thanks. Then just, you know, you noted the potential impact on the farm economy from geopolitical volatility. If this persists, is the bigger focus on what it could do to loan activity, or are there areas from a credit standpoint that you're looking at as well?
Zachary N. Carpenter
Hi, Bose. This is
Zachary N. Carpenter
As it pertains to our portfolio, we feel fairly confident with the strengths of what we're seeing with new loan applications and new loan purchases. In fact, all the loan purchases in the first quarter had very strong credit scores, very solid loan to values. The use of proceeds were typically for refinancings or new purchases. It'd be the land or equipment. While we recognize there are stresses on certain parts of the ag economy, the diversified model that we have across the country and across commodities, you know, help support us to be there in good times and bad times.
Bose George
Okay, great. Thank you.
Operator
Your next question comes from William Ryan with Seaport Research Partners. Your line is open.
William Ryan
Hi, good afternoon, and thanks for taking my questions. Great to see the volume increase that you guys talked about at the Investor Day. First question, want to follow up on what Bose asked about the margin outlook. I mean, obviously there's a little bit of seasonal factor in the dip from 122 to 116 in Q1. That will be a good guide going into Q2. If you kind of look at your mix of business in the pipeline that you're seeing right now going into Q2, do you expect a little bit more net pressure on the margin? Do you expect to kind of start to stabilize maybe in the next couple of quarters? That's the first question.
Zachary N. Carpenter
Yeah. Hi, Bill. This is
Zachary N. Carpenter
In addition, we had, you know, 2 fewer days in this quarter versus the fourth quarter, and that compressed our fastest-growing segments, which would be Renewable Energy and Broadband Infrastructure. The combination of those 2 dynamics was predominant to the lower net effective spread percentage. What I would highlight as we look going forward, you know, about $800 million or more of our volume was put on in the month of March, and that was broadly diversified across all our segments. We feel very strong about the durability of our net effective spread heading into the second quarter in a broad fashion. Clearly, the lumpiness of AgVantage could alter that mix going forward. As we look right now, all operating segments see very strong pipelines.
Zachary N. Carpenter
The one thing I would note as the Broadband Infrastructure and Renewable Energy segments have significant loan commitments. As those constructions take place and those commitments are funded, you'll see a much higher net effective spread in those businesses. I'll turn it over to Matt to talk a little bit about the liquidity and funding mix dynamics.
Matthew M. Pullins
Hello, Bill. This is Matt. I mentioned in my prepared remarks some points around our balance sheet management and liquidity positioning in the quarter. One thing that also impacted spread this quarter is we did have the opportunity to call about a half a billion dollars of callable debt when rates dipped in the middle part of the quarter. That is ultimately accretive to our spread going forward, did weigh on spread in the quarter about 1 basis point as we had to accelerate the amortization of original issue discount attributed to those bonds that were called.
Matthew M. Pullins
On net, going forward, the pickup in spread from being able to roll down the rate paid on the bonds that were called is annualized at a little over $3 million a year. So that incremental spread we'll be able to pick up, or we expect to pick up beginning in the 2nd quarter. In addition to that, we continuously look at ways to strategically evaluate market opportunities within the funding segment to fund our balance sheet in a way that is accretive to returns but not taking incremental funding risk. It is something that we're very diligent about managing it that way. Portfolio layer method hedging is something that we're introducing into the balance sheet management process this quarter.
Matthew M. Pullins
The impact of that is going to grow over time. It'll be somewhat muted here initially, but we believe that the impact of that hedging strategy will ultimately, over time, again, be accretive to net effective spread. That's just an example of the types of strategies that we're deploying as we manage the balance sheet and interest rate risk.
William Ryan
Okay. Thanks for the detailed response on that then. One other question on the data centers. It probably gets a bit more attention than it really needs, but, you know, there were some headlines obviously in the last few weeks about some delays in data center construction coming online. Maybe you could give us a little bit more detail in terms of what you're seeing specifically in your own portfolio.
Zachary N. Carpenter
Yeah. Hi, Bill.
Zachary N. Carpenter
We don't feel the need to deviate, to stretch, given the growth that we see available to us. The point being, focusing on these counterparties and these tenants, we have seen very little issues in terms of delays in construction, delays in operations. We're not speculating, right? Everything needs to be signed up in place, including water, et cetera, before we enter into a transaction. That limits and reduces a lot of risk as you go through the process, where maybe in a speculative opportunity, something's not in place and now delays the projects and further delays the construction and completion of the data center.
Zachary N. Carpenter
We feel very good about the counterparties and the transactions we're looking at, and we do not feel the need to look at any different or stretch in any way, shape, or form.
William Ryan
Okay. Thanks. One clarification question for Matt, and I was just making sure I heard it right, is that you have $30 million of investment tax credits remaining. You expected most of that to be recognized in the second quarter?
Matthew M. Pullins
Our capacity for carrybacks to prior year income tax credits is $30 million as of March 31, 2026. Our expectation is that we will fully utilize that carryback capacity in the second quarter. Going forward, we'll be operating on a current year basis, and we'll be monitoring market opportunities to potentially monetize additional tax credit purchases. It would be on a current year basis from that point forward.
William Ryan
Okay. Thank you.
Operator
Your next question comes from Brendan McCarthy with Sidoti & Company. Your line is open.
Brendan McCarthy
Great. Good afternoon, everybody. Appreciate you taking my questions here. I just wanted to start off on the net loan purchase volume growth in Farm & Ranch. I think you mentioned $384 million, which well exceeded last year's number of $54 million, and that's obviously net of repayments, I believe you mentioned. Can you dissect that a little bit further? What ultimately drove that gap relative to last year's number?
Zachary N. Carpenter
Hi, Brendan.
Zachary N. Carpenter
I think the other component is really working and understanding our customers, the financial institutions lending to these borrowers. you know, they need to manage deposits, which in this environment end up being a very high-cost component of funding. In that scenario, they're looking for other liquidity sources to help continue the stronger loan growth they see with their customers, and leveraging the secondary market in a broader fashion. I'd say we've spent a lot more time really broadening our relationships across the financial institutions landscape. We had a record number of sellers or financial institutions that sold us a loan in the first quarter. We continue to deepen our relationship with existing sellers to find new and unique ways to support liquidity for their borrowers.
Zachary N. Carpenter
Really, having a much more focused relationship orientation with the market. We've put a new head of our Farm & Ranch segment in there to really drive growth. We continue to see this as we work with our customers and support their borrowers in this economic time.
Brendan McCarthy
Thanks,
Zachary N. Carpenter
I think we're too early in the environment to assess any future impacts to, I'd say, the credit portfolio. A couple of reasons why. There's competing factors here. Clearly, you know, the spike in most notably nitrogen prices can further stress margins. It is unknown how many growers or farmers and ranchers pre-locked fertilizer before the growing season or need to purchase in this higher rate environment. I think the other unique dynamic here is, you know, as fuel prices rise, typically you see the increase in ethanol prices, which we have seen. It's gone from $1.80 a gallon up to over $2 a gallon since the crisis started. Higher ethanol prices typically lead to higher commodity prices, especially corn, we have seen that. There's numerous dynamics here that are at play.
Zachary N. Carpenter
I think the duration of the conflict in the Middle East will determine the impact, either positive or negative, from either higher inputs or margin pressure or commodity prices increasing. It's just too early to tell at this point.
Brendan McCarthy
That makes sense. Last question from me, just on the credit side. The allowance for loss as a percentage of nonaccrual assets has remained pretty stable. I think it's ranged from, you know, 13% to 16%-17%. Do you have a long-term target there for that ratio?
Matthew M. Pullins
We do not have. Hi Brendan, this is Matt. We do not have a long-term.
Brendan McCarthy
Hey, Matt
Matthew M. Pullins
target for that particular ratio. We do, though, view the allowance, the level of the allowance and our confidence in covering the risk in the portfolio through that metric. It's important to also take into account that we're looking at the allowance against nonaccrual assets. Those nonaccrual assets are supported by in nearly all cases, very high-quality collateral. That's something that just in terms of how that metric lines up with, say, a similar metric at other financial institutions would certainly need to be taken into account the type of collateral that we have backing our loans.
Matthew M. Pullins
In terms of a target operating range like we have for our efficiency ratio, we do not have such a metric for allowance as a percentage of nonaccrual assets.
Brendan McCarthy
Got it. I appreciate the detail. That's all from me, and congrats on a strong quarter.
Matthew M. Pullins
Thank you.
Operator
Your next question comes from Gary Gordon, a private investor. Your line is open.
Operator
Okay. Thank you for taking my questions. 2 questions. 1, looks like your charge-offs are about $2 million. Any color on what was charged off during the quarter?
Zachary N. Carpenter
Yeah. Hi, Gary.
Zachary N. Carpenter
That's what we saw, so we felt the need to further write down to the value we feel is appropriate and charge that off. We feel the remaining exposure is very manageable, frankly immaterial from the overall portfolio perspective. We'll continue to assess this transaction and in terms of options going forward, but we feel good with where we are from an exposure perspective.
Zachary N. Carpenter
Okay, thanks. The other question is on the loan growth. Clearly, you're making clear you made a much bigger marketing effort. It doesn't sound like you're changing your underwriting standards. Other contributors, is there any noticeable change in the amount of competition for the type of loans you're looking for? Are there more willing sellers for some macro reason?
Zachary N. Carpenter
Yeah, Gary.
Zachary N. Carpenter
As we've invested in the people and the processes, we're able to be able to step up to more transactions and put more through the pipeline. I think Farm & Ranch really just reflects kind of the ag environment, plus our focus on broadening our relationships with a greater number of sellers, trying to find unique structure, engaging in process, product and platform enhancements. The combination of all of that and the bank's focus on capital efficiency is really driving incremental share to the secondary market.
Operator
Okay. Thanks a lot. That concludes our Q&A session. I will now turn the conference back over to Jalpa Nazareth, Senior Director of Investor Relations, for closing.
Jalpa Nazareth
Thank you everyone for listening and participating in our call this afternoon. We'll be having our next regularly scheduled call in August to report our second quarter 2026 results and look forward to sharing more information with you at that time. As is always the case, if you have any questions that you'd like to discuss with us, please don't hesitate to reach out. With that, thank you very much and have a good day.
Transcript from May 5, 2026
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