Farmer Mac Posts Record Core Earnings as Lending Expands
Quarterly net business volume growth accelerated to $2.35 billion as the agricultural lender expanded across each segment.
Federal Agricultural Mortgage Corporation (AGM), the agricultural finance company known as Farmer Mac, posted record core earnings as higher business volume and wider lending spreads lifted second-quarter results.
Outstanding business volume reached a record $37.2 billion, up 22% from a year earlier. Quarterly net growth accelerated from $1.49 billion in the first quarter and $831.9 million a year earlier, extending the lender’s expansion beyond its core agricultural portfolio.
Core revenue increased 25% from a year earlier to $125.2 million, while core earnings rose 24% to a record $58.8 million. Diluted core earnings climbed 25% to $5.40 a share, and diluted reported earnings rose 21% to $5.41 a share.
Net interest income rose 22% to $118.1 million. Net effective spread increased 25% to a record $117.4 million, while its yield widened to 1.26% from 1.19% a year earlier. The sequential spread increase included a $7.4 million recovery of interest tied to a delinquent permanent-planting exposure, alongside higher business volume.
Farm & Ranch accounted for most of the quarterly portfolio expansion, adding $1.7 billion. That included $1.1 billion of net AgVantage securities growth, supported by an $800 million security from a new counterparty, and $483.4 million of net loan purchases.
Infrastructure businesses grew faster from a year earlier. Broadband Infrastructure volume rose 58% to $1.9 billion, Renewable Energy increased 55% to $3.0 billion and Power & Utilities advanced 13% to $8.3 billion. Agricultural Finance remained 65% of total outstanding volume, led by 21% growth in Farm & Ranch to $22.0 billion.
Operating expenses increased to $36.2 million from $29.5 million a year earlier, while credit-related expense edged down to $7.4 million from $7.9 million. Current provisions were primarily due to new volume across all segments and portfolio credit migration.
Farmer Mac launched its Farmer Mac Loan Exchange platform to expand loan-liquidity delivery in Farm & Ranch. The company also raised $100.0 million of Tier 1 capital through a preferred-stock offering, ending the quarter with $1.9 billion of total core capital and a 13.2% Tier 1 capital ratio.