Farmer Mac Hits $410M Revenue — But Credit Losses Raise Questions

Date of Call: Feb 19, 2026

Financials Results

• Revenue: Record $410 million, a 13% increase relative to the prior year

Business Commentary:

Revenue and Earnings Growth:

• Federal Agricultural Mortgage Corporation reported record revenue of $410 million for 2025, representing a 13% increase relative to the prior year, and produced $183 million in core earnings.
• The growth was driven by a strategic diversification into higher spread mission-aligned businesses and strong performance in both agricultural and infrastructure finance segments.

Business Volume and Market Activity:

• The company achieved a record net new business volume of $3.8 billion in 2025, resulting in total outstanding business volume of $33.4 billion.
• This was supported by broad-based net volume growth across all segments, with notable acceleration in the Farm & Ranch segment, reflecting strong customer demand and active market conditions.

Infrastructure Finance Expansion:

• Outstanding business volume in the Infrastructure Finance segment increased to $11.8 billion at year-end 2025, up over $2.8 billion from the prior year.
• Growth was fueled by strong interest in data centers, broadband expansion, and renewable energy projects, driven by the need for significant energy generation and transmission capacity.

Credit Provisions and Risk Management:

• Farmer Mac experienced $32.9 million in provision for credit loss expense in 2025, primarily due to credit deteriorations in Corporate AgFinance and Broadband Infrastructure portfolios.
• The company emphasizes that these losses were concentrated among a few borrowers facing business-specific obstacles and are not indicative of systemic issues, attributed to evolving market dynamics and individual operational challenges.

Capital Management and Shareholder Returns:

• The company announced a $0.10 per share increase in its quarterly dividend to $1.60 per share and completed $12.9 million in share repurchases under the amended program in Q4 2025.
• This reflects a balanced capital allocation approach, prioritizing prudent growth, balance sheet strength, and consistent shareholder returns, supported by strong earnings and a resilient business model.

Sentiment Analysis:

Overall Tone: Positive

• "2025 was another strong year for Farmer Mac." "We surpassed $33 billion in outstanding business volume, achieved record revenue of $410 million..." "We anticipate introducing a new product in the market this year..." "Our pipelines remain strong as we move into 2026."

Q&A:

• Question from Bose George (Keefe, Bruyette, & Woods, Inc., Research Division): 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?
  Response: There will be a core level of automatic provisioning reflecting portfolio growth in 2026, but no specific forecast for special provisions; nothing indicates a significant increase.

• Question from Bose George (Keefe, Bruyette, & Woods, Inc., Research Division): 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?
  Response: Spread expectations are tied to product mix and volume growth; difficult to pinpoint, but focused on growing net effective spread dollar amount.

• Question from William Ryan (Seaport Research Partners): 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...
  Response: Charges were concentrated in a few loans due to borrower-specific issues, not systemic; portfolios overall remain high quality.

• Question from William Ryan (Seaport Research Partners): 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... Is there anything of note that took place when these payments came due on January 1?
  Response: January 1 prepayment cycle was in line with prior year; no unique issues. Government payments in 2026 are expected to support farm income.

• Question from William Ryan (Seaport Research Partners): 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?
  Response: Expense growth in 2026 will include transaction and operational costs, personnel investments, and strategic tech/business development spending, but will be managed within the 30% efficiency ratio target.

• Question from Brendan Michael McCarthy (Sidoti & Company, LLC): Just want to start off on your outlook for the volume mix heading into 2026... 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?
  Response: Strong pipelines across all infrastructure finance segments and Farm & Ranch; notable exception is strong expected growth in Farm & Ranch AgVantage, which reversed recent decline.

• Question from Brendan Michael McCarthy (Sidoti & Company, LLC): And just as a follow-up there with the AgVantage business... What's really driving that? Is this maybe lower rates? Or is it just what you're able to offer counterparties?
  Response: Driven by closed facilities with new counterparties and regulatory approvals, allowing utilization of relative value versus other liquidity sources.

• Question from Brendan Michael McCarthy (Sidoti & Company, LLC): 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?
  Response: Yes, improvement seen in specific stressed assets, with a transaction expected to reduce 90-plus day delinquencies and recoup fees/interest in H1 2026.

• Question from Gary Gordon: The dividend increase of 7%. I think historically it is on the low side... is some of your thinking that you're laying out strong business growth and also the repurchase opportunity.
  Response: Dividend increase reflects strong business growth in capital-intensive segments; capital management tools include earnings, dividends, preferred stock, and securitizations.

• Question from Gary Gordon: 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?
  Response: Yes, market and borrower-specific changes post-COVID inform ongoing underwriting and risk adjudication, but standards remain unchanged.

• Question from Gary Gordon: Last thing is the data center demand. Has that had any material and sort of general impact on farmland prices.
  Response: No material impact; data center opportunities are in rural areas, not productive farmland, and farmland values have been stable/declining with commodity cycle.

Contradiction Point 1

Credit Provision Outlook

Contradiction on the predictability and level of future credit provisions.

What are your key financial metrics for the quarter? - Bose George (Keefe, Bruyette, & Woods, Inc., Research Division)

2025Q4: Looking ahead, a core level of automatic provisioning will reflect portfolio growth in 2026. There is no systemic issue, and no current forecast suggests an increase in special provisions for individual credits. - Bradford Nordholm(CEO)

Given these losses are customer-specific, how should we estimate the run rate provision based on mix changes, and is the 2025 annual level a reasonable full-year proxy? - Bose George (Keefe, Bruyette, & Woods, Inc.)

20251104-2025 Q3: The provision is very low relative to earnings... There is no current expectation for the provision to jump out of this range next quarter, but episodic fluctuations are likely. - Bradford Nordholm(CEO)

Contradiction Point 2

Net Effective Spread (NES) Growth Drivers

Contradiction on the primary driver of NES growth between quarters.

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2025Q4: Strong momentum is expected in 2026 across all segments, focusing on growing net effective spread dollars rather than a specific percentage. - Zachary Carpenter(COO)

Are current spread levels consistent with your expectations for the year? - Brendan Michael McCarthy (Sidoti & Company, LLC)

20251104-2025 Q3: The higher NES is driven by strong growth in accretive infrastructure finance segments. - Bradford Nordholm(CEO)

Contradiction Point 3

Underwriting/Portfolio Risk Assessment

2025Q4 implies a positive credit outlook with a specific borrower resolution, whereas 2025Q3 emphasized no systemic risk but acknowledged episodic events.

What are your expectations for Q4 sales? - Brendan Michael McCarthy (Sidoti & Company, LLC)

2025Q4: Yes, there is a positive outlook... A specific borrower's resolution is expected to reduce 90-plus day delinquencies meaningfully in the first half of 2026... - Zachary Carpenter(COO)

Did Brad mention a recovery in the credit outlook? - Bose George (Keefe, Bruyette, & Woods, Inc., Research Division)

2025Q3: The provision reflects episodic events... There is no systemic or sector-wide risk observed. - Bradford Nordholm(CEO)

Contradiction Point 4

Capital Management and Share Repurchase Strategy

Contradiction on the relationship between share repurchases and the company's historical dividend payout target.

What was William Ryan's question? - William Ryan (Seaport Research Partners)

2025Q4: The 30% efficiency ratio target. - Matthew Pullins(CFO)

How should we think about expense growth in 2026, considering the recent increases in transaction and personnel costs, and the decline in Q4 year-over-year? - Gary Gordon (Unaffiliated)

2025Q2: The share repurchase program is separate from the dividend target. The company remains committed to its historical dividend consistency... - Bradford Nordholm(CEO)