Federal Agricultural Mortgage Corporation

Good morning, ladies and gentlemen, and welcome to the FarmerMag first quarter 2024 earnings conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Monday, May 6, 2024. I would now like to turn the conference over to Ms. Chalpa Nazareth, Senior Director of Investor Relations and Finance Strategy. Please go ahead, ma'am.

Good morning, and thank you for joining us for our first quarter 2024 earnings conference call. I'm Delta Nazareth, Senior Director of Investor Relations and Finance Strategy here at Armormac. 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 the risks and uncertainties that could cause our actual results to differ materially from those projected. Please refer to PharmaMax 2023 annual report 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 our most recent form 10-Q and earnings release posted on our website, farmermac.com, under the financial information portion of the investor section. Joining us for management this morning is our President and Chief Executive Officer, Brad Nordholm, who will discuss first quarter business and financial highlights and strategic objectives, and Chief Financial Officer, Aparna Ramesh, who will provide greater detail on our financial performance. Black members of our management team will also be joining us for the question and answer period. At this time, I'll turn the call over to President and CEO Brad Nordholm. Brad?

Thank you, Jalpa. Good morning, everyone, and thank you for joining us. Our team has once again delivered excellent results, demonstrating our unwavering commitment to grow PharmaMac profitably, while fulfilling our mission to rural America and generating strong shareholder returns across changing market cycles. The year is off to a strong start as we recorded core earnings of $43.4 million, reflecting a 12% increase over the same period last year. We provided $1.4 billion in liquidity and lending capacity to lenders serving rural America while maintaining our strong capital base, disciplined asset liability management, and uninterrupted access to the capital markets. The overall earnings story continues to be consistent. The diversification and resiliency of our business model supports our long-term strategic growth objectives while also providing a buffer against market volatility and changing credit markets. I'd like to highlight two noteworthy transactions that we've recently completed. First, the successful execution of our fourth farm series securitization transaction. FarmerMac remains committed to developing a vibrant and liquid agriculture mortgage-backed securities market that is central to our core mission to improve credit accessibility in rural America. This initiative is our opportunity to transform the agriculture mortgage market industry with new efficiencies, helping to lower the cost for the end borrowers. We are very pleased by the tremendous support we've seen from our customers and investors for this program and remain committed to being a regular issuer in the market with a set of securitization products that align our borrower and investor interests. The second transaction worth noting is the acquisition of a $57 million pool of farm and ranch loans from a single agricultural lender. This acquisition underscores PharmaMax track record of providing agricultural lenders solutions for their capital planning, especially as there is uncertainty about how capital regulation will evolve over the next few years. We have consistently presented our product offerings as a capital efficiency and liquidity tool for our customers in both the agriculture finance and rural infrastructure lines of business. We believe that this is because the relative value of PharmaMac brings to our banking and financial services partners, and ultimately the agricultural and rural borrowers, is even greater when credit is a bit tighter. Our funding advantage and our disciplined approach to asset liability management allow us to further deliver upon our mission to build a trusted secondary market for credit to rural America. We believe pool purchases within the agricultural finance and rural infrastructure lines of business can serve as important opportunities for volume generation over the next few years. As financial institutions continue to manage their capital efficiency, loan and deposit growth, and liquidity needs. That, coupled with our securitization capability, enhances our ability to offer low-cost liquidity at scale to the rural utilities we serve. It's worth noting, I think, that the internal operational expertise and ability to execute for securitization overlaps with pool purchases and is really a new competency developed at PharmaMac within the last few years. The rural infrastructure finance segments show strong business volume growth in the first quarter of 2024, primarily driven by increased investment activity and additional financing for renewable energy projects in response to continued strong demand for renewable electric power generation and storage. The pipeline remains strong in the near future, and we have plans to invest additional resources to explore new opportunities. Our agricultural finance line of business grew during the first quarter, despite the seasonally large number of payments related to loans that are on an annual payment cycle. The rise in market interest rates that has persisted has had a direct impact on the farm and ranch product interest rate. There generally exists an inverse correlation between farm and ranch new loan purchase volumes and changes in the farm and ranch product interest rates, with higher product interest rates slowing portfolio loan prepayments. The net effect of these forces contributed to positive farm and ranch loan purchase portfolio growth in the first quarter of 2024 as new farm and ranch loan purchases outpaced loan prepayments. We believe our pipeline will continue to grow for the remainder of the year as tightening bank liquidity in the forecasted decline in farm income relative to prior years is expected to drive more loan volume, including full purchases. While uncertainty persists about future changes in monetary policy, borrowers are adjusting to higher interest rates, and we are offering products that are more tailored to the current rate requirement. Our wholesale finance products within the agricultural finance line of business present strong relative value to our counterparties relative to market interest rates. We expect the continued diversification of our products versus the broader market to drive continued growth in this area. As we look forward, we're encouraged by the momentum we've seen since the start of the year. We believe that we're well positioned to make continuous progress on our long-term strategic growth initiatives to further our mission efficiently and innovatively as we navigate this backdrop of broader market uncertainty. Our website and investor and marketing materials are beginning to reflect our efforts to use branding, deepen our connection with stakeholders in a compelling and uniform way, support the expansion of our mission-driven work that helps build a strong and vital rural America. The initiative is intended to highlight our distinctive position as a secondary market partner that fosters greater connections between Wall Street and Main Street America, as well as across the entire value chain, to fuel growth, innovation, and prosperity in America's rural and agricultural communities. In no small part, the fuel for that growth also comes from our active creation of more investment opportunities for the capital markets and strong access to capital. So at this time, I'd like to turn the call over to Aparna Ramesh, our Chief Financial Officer. Aparna, can you discuss our financial results in more detail?