Federal Agricultural Mortgage NYSE: AGM reported what executives repeatedly characterized as a record-setting start to fiscal 2026, citing all-time highs in business volume, quarterly revenue and quarterly core earnings during its first-quarter earnings call.
Record quarter driven by volume growth and funding execution
Chief Executive Officer Brad Nordholm said the first quarter was “outstanding,” reflecting an acceleration in business volumes that began in the fourth quarter of 2025. Nordholm reported outstanding business volume “approached $35 billion,” revenue totaled “approximately $110 million,” and core earnings were “approximately $52 million.”
President and Chief Operating Officer Zach Carpenter said total revenues increased 14% year-over-year, supported by “outstanding business volume growth paired with disciplined funding execution and stable asset credit quality across all of our platforms.” Carpenter added that the company delivered $1.5 billion in net new business volume in the quarter, bringing total outstanding volume to a record $34.8 billion at quarter end.
Farm & Ranch and AgVantage activity accelerates
Carpenter said agricultural finance outstanding business volume grew $777 million in the first quarter, led by the Farm & Ranch segment, which accounted for $675 million of net growth. He noted that loan purchase activity in Farm & Ranch accelerated in the fourth quarter of 2025 and “has continued throughout the first quarter of 2026.”
Within Farm & Ranch, Carpenter highlighted net growth of $384 million over the first three months of 2026, compared with $54 million in the same period last year, despite what he described as seasonally large first-quarter repayments tied to the January 1 payment date. He said the company is “operating at an elevated pace for new volume” and expects loan purchase growth to continue as lenders seek liquidity, citing drivers such as high-cost deposits, continued loan growth and capital efficiency needs.
Carpenter also pointed to headwinds facing agricultural borrowers, including “higher input costs, trade and tariff concerns, and low commodity prices,” and said the company is working proactively with customers to address liquidity and capital needs.
Farm & Ranch AgVantage securities grew $325 million in the quarter. Carpenter said the increase reflected additional fundings anticipated after the company closed a new $4.3 billion facility with a large agricultural counterparty in late 2025, and he said the company believes it is “on track to return to sustained net growth” in that product set.
Infrastructure finance expands on data centers, renewables and utilities
Carpenter reported infrastructure finance outstanding business volume increased $717 million sequentially, or 6%, to $12.6 billion, with all three infrastructure segments contributing net growth. He cited continued investment in data center construction, broadband expansion and renewable energy projects, driven by demand for energy generation and transmission capacity in rural America.
- Power and Utilities: Net growth of $115 million, which Carpenter said was “largely due to strong loan purchase activity” supporting rural electric cooperatives.
- Renewable Energy: Grew $445 million, or 18%, to $2.9 billion. Carpenter said growth reflected deals approved in late 2025 that closed in the first quarter, along with a strong pipeline and accelerated construction deadlines.
- Broadband Infrastructure: Net growth of $158 million to $1.7 billion outstanding, with Carpenter saying nearly 70% of the volume growth was tied to data center-related demand.
On renewable energy, Carpenter said the company expects a construction-related “rush” in the first half of the year tied to a July 4 construction start timeframe described in H.R. 1, but added that the company believes growth will continue into next year due to the “substantial need for new power generation.” He also said the company expects to remain selective on capital deployment and anticipates that as incentives are phased out, “capital structures and power purchase agreement pricing” will adjust.
On data center exposure, Carpenter said Farmer Mac focuses on experienced developers, sponsors and tenants and requires key components to be in place before underwriting, including a signed power purchase agreement. He said more than 80% of tenants in the company’s data center portfolio are tied to “the 4 top investment-grade hyperscalers,” and he said the company has seen “very little issues” with delays, emphasizing it is not speculating on projects.
Spread, ROE focus, and tax credit benefit
Chief Financial Officer Matthew Pullins said first-quarter results included core earnings of $52 million, or $4.74 per diluted share. He reported net effective spread reached a record $102 million, up $12 million year-over-year and slightly above the fourth quarter’s prior record. On a percentage basis, net effective spread was 116 basis points, down from 117 basis points a year earlier and 122 basis points in the fourth quarter.
Pullins attributed the quarter-over-quarter spread compression primarily to fewer days in the quarter, mix shift toward lower-spread Farm & Ranch AgVantage securities and a lower contribution from the investment portfolio. Still, he said spread dollars rose again, which he said underscored “the durability and earnings power” of the expanding portfolio.
During Q&A, Pullins told analysts the company is focused on return on equity, noting a 17% ROE in the quarter and saying management is “looking to maintain the business at in that range of outlook” going forward. He added that as Farmer Mac purchases “high return on equity, but in some cases, lower spread assets,” net effective spread margins may be diluted even as ROE improves.
Pullins also said a $4.2 million income tax benefit contributed to first-quarter core earnings, stemming from the purchase of $45 million of renewable energy investment tax credits that was fully recognized in the quarter. As of quarter end, he said the company had approximately $30 million of remaining capacity to utilize additional credits through carrybacks to prior-year federal income tax liabilities, and he said Farmer Mac expects to largely use that remaining carryback capacity in the second quarter, while continuing to evaluate additional opportunities on a current-year basis.
In discussing funding, Pullins said the company called about $500 million of callable debt when rates dipped during the quarter, which he said reduced first-quarter spread by about one basis point due to accelerated amortization of original issue discount. He said the move is expected to be accretive going forward, with an annualized benefit of “a little over $3 million a year” beginning in the second quarter. Pullins also said the company introduced “portfolio layer method hedging” into its balance-sheet management process, which he expects to become accretive to net effective spread over time.
Credit, capital position, and outlook commentary
Pullins reported a $4.3 million provision for credit losses in the first quarter, including $3.4 million attributable to new volume growth—particularly in renewable energy—and $0.9 million related to credit migration. He said certain credits deteriorated, including agricultural storage and processing and select permanent plantings exposures, while others improved through collateral sales and borrower performance, resulting in a “largely offsetting” net effect.
Allowance for losses was $40.1 million as of March 31, 2026, up $2.1 million from year-end 2025 and $14.7 million from a year earlier. Pullins said 90-day delinquencies were 52 basis points at quarter end, up from 40 basis points in the prior quarter, which he described as consistent with seasonal patterns tied to Farm & Ranch payment dates.
Total substandard assets were 1.87% of the portfolio, up from 1.71% at year-end, with Pullins attributing the increase to downgrades in Corporate AgFinance, while substandard assets in infrastructure finance declined due to improvements in renewable energy.
Carpenter said the company is monitoring uncertainty tied to interest rates, trade policy and regulatory shifts, and also highlighted a “recent spike in global energy prices” that has pushed fuel and fertilizer costs higher ahead of the growing season. In response to an analyst question, Carpenter said it was “too early” to assess future impacts to the credit portfolio because of competing factors, including whether farmers locked in inputs earlier and whether higher energy prices translate into higher commodity prices.
On capital, Pullins said core capital increased $27 million in the quarter to $1.7 billion, exceeding statutory requirements by $663 million, or 62%. He reported a Tier 1 capital ratio of 13% at March 31, 2026, compared with 13.3% at year-end, and said the company returned $32 million of capital through common and preferred dividends and modest share repurchases during the quarter.
Nordholm closed by reiterating that the quarter represented “a powerful start to 2026” and addressed CEO succession, saying the process was “progressing very well” and “a bit ahead of schedule.”
About Federal Agricultural Mortgage NYSE: AGM
Federal Agricultural Mortgage Corporation NYSE: AGM, commonly known as Farmer Mac, is a government-sponsored enterprise chartered in 1988 under the Agricultural Credit Act of 1987. Headquartered in Washington, DC, Farmer Mac was established to enhance the availability of mortgage credit for the agricultural and rural utility sectors. The corporation operates as a secondary market for agricultural real estate and rural infrastructure loans, providing lenders with liquidity and risk management solutions.
The company's principal business activities include purchasing and securitizing long-term fixed-rate agricultural mortgage loans and rural utilities loans originated by approved lenders.
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