Federal Agricultural Mortgage Corporation

Good morning, ladies and gentlemen, and welcome to the former MAC 2025 earnings results conference call. At this time, all lines are in 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 Thursday, May 8, 2025. I would now like to turn the conference over to Jalpa Nazareth. Please go ahead.

Good morning, and thank you for joining us for our first quarter 2025 earnings conference call. I'm Sheltan Nazareth, Senior Director of Investor Relations and Finance Strategy here at FarmerMac. 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 projected. Please refer to PharmaMac's 2024 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 the most recent Form 10Q and earnings release posted on PharmaMac's website, PharmaMac.com, under the Financial Information portion of the Investors 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. Select 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?

Thanks, Jalpa. Good morning, everyone, and thank you for joining us. I'm very pleased to share that we've achieved another outstanding quarter with record quarterly revenue, net effective spread, and core earnings. Our capital base remains strong, bolstered by strong earnings, disciplined asset liability management, and consistent access to capital markets. These strengths support our long-term strategic growth objectives and provide a buffer against market volatility and shifting credit conditions. These results underscore the robustness of our business model and the effectiveness of our strategic initiatives of mission-based profitable growth. We continue to fulfill our mission to rural America even as we navigate broader market uncertainties stemming from interest rates, regulatory shifts, policy changes, and government action. In the first quarter of 2025, we achieved high single-digit growth in total revenue, net effective spread, and core earnings. We achieved $1.8 billion in gross new business volume during the first quarter. reflecting growth across the infrastructure finance line of business and healthy loan purchase volume in the farm and ranch and corporate egg finance segments. After repayments and maturities, our outstanding business volume grew by $232 million, ending the quarter at $29.8 billion. This growth highlights the benefits of our proactive strategy to diversify our portfolio, and great opportunities in all interest rate environments. The infrastructure finance line of business grew by approximately $750 million in the first quarter of 2025, continuing the strong growth momentum from 2024. During the quarter, we successfully closed a $300 million advantage security in the power and utility segment with a longstanding counterparty, and we added $134 million in net new loan purchases. Our broadband infrastructure segment grew 22% since year-end, reaching nearly $1 billion as of the end of the first quarter, 2025. We anticipate increased financing opportunities for rural telecommunication providers driven by fiberline expansion, wireless broadband deployment, data processing center build-out, industry consolidation, and mergers and acquisitions. These developments are crucial for rural economic growth and the connectivity needs for rural America. Our renewable energy segment grew by nearly $200 million in first quarter 2025, a 14% increase since year end. Over the past five years, we've seen strong growth in this segment and believe that the near-term pipeline remains strong. Growing business volume in our infrastructure finance segments remains an opportunity, and we will continue to focus on strategic investments and talent acquisition in these areas to build our expertise and capacity as market opportunities arise. Despite the seasonally large number of scheduled repayments we typically see in the January 1st payment date on the majority of farm and ranch loans, we saw a net increase of $86 million in farm and ranch loan purchases in the first quarter 2025. We believe that we will see continued growth in the foreseeable future due to continuing agricultural economic tightening, a potential for increased tariffs and trade policy changes, and ongoing inflationary inputs. Offsetting farm and ranch loan purchase growth this quarter was a $500 million increase in scheduled maturities with two large egg vantage counterparties. As previously noted, egg vantage security volume can be lumpy. It can be volatile due to the large transaction sizes and the scheduled maturities aligned with our counterparty's specific financing needs. During the first quarter, we closed a new $900 billion facility with a large agricultural finance counterparty, supporting future egg vantage funding opportunities and demonstrating the continued interest in this product. I would note that that $900 million facility is not yet drawn. We are looking ahead to partnering with this new counterparty for their future funding needs. Looking ahead, we believe that we will continue to be a key partner for refinancing and incremental borrowing for all of our advantaged counterparties as they navigate a volatile interest rate and economic environment. The farm and 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 support their borrowers' financial needs. Our corporate ag finance segment was approximately $2 billion at quarter end, relatively flat compared to year-end 2024, as $200 million in new volume this quarter was offset by scheduled payments and maturities. Although quarterly volume can be unpredictable, opportunities in this segment are generally more creative to net effective spread. We're continuing our efforts to build relationships and modernize our internal infrastructure, anticipating increased credit demand to support larger, more complex agribusinesses in the coming quarters. Our overall credit profile remained strong through the first quarter of 2025. Despite heightened volatility and market uncertainty, our prudent underwriting approach, emphasizing loan-to-value and cash flow metrics, positions us well to withstand market cycles. We have not seen any impacts on our portfolio related to government actions or changes in policy, and will continue to closely monitor industry credit conditions as new government policies are implemented, including specifically pending tariffs. While some credit losses are inherent in our lending, we believe that any losses in the current cycle will be moderated by the strength and diversity of our diversified portfolio. I'm pleased with our progress since the start of the year. We have strong momentum with our customers and a focused approach to fulfilling our mission efficiently and innovatively, despite broader market uncertainties related to interest rates, regulation, policy changes, tariffs, and other government actions. A resilient business model supported by diversified revenue streams and a strong capital position is a key differentiator. But it is our ability to access the markets coupled with our disciplined asset liability management that truly sets us apart. And with that, now I'd like to turn it over to Aparna Ramesh, our Chief Financial Officer, to discuss our financial results in more detail. Aparna.