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Thank you for standing by. At this time, I would like to welcome everyone to the Farmer Mac Second Quarter 2026 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Jalpa Nazareth, Senior Director of Investor Relations. The floor is yours.

Good afternoon, and thank you for joining us for our second quarter 2026 earnings conference call. I'm Jalpa Nazareth, Senior Director of Investor Relations and Finance Strategy here at Farmer Mac.

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. These statements are based on management's current expectations and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from those projected.

All forward-looking statements are based on information available to Farmer Mac as of today, and Farmer Mac assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Please refer to Farmer Mac's 2025 annual report on Form 10-K 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 company's most recent Form 10-Q and earnings release posted on Farmer Mac's website.

Joining me today are our President and Chief Executive Officer, Zack Carpenter; and our Chief Financial Officer and Treasurer, Matt Pullins.

At this time, I'll turn the call over to our CEO, Zack Carpenter. Zack?

Thanks, Jalpa, and good afternoon, everyone. Thank you for joining us today. I'm pleased to report that Farmer Mac delivered record results in the second quarter with volume, revenue and core earnings reaching all-time highs, supported by the strength of our mission-driven franchise and the disciplined execution of our strategy across every aspect of our business. These results were powered by broad-based business volume growth as we continue to be a critical part of the financial ecosystem through providing liquidity in support of agriculture and rural infrastructure.

We surpassed $37 billion in outstanding business volume and strengthened our already robust capital base through a very successful preferred stock issuance, further supporting our long-term growth objectives. A focus on expense management while simultaneously making strategic investments for growth resulted in our expense efficiency ratio remaining below our 30% strategic target, as we also provided over $4 billion of liquidity to critical sectors of the American economy in the second quarter.

Outstanding business volume ended June at a record $37.2 billion, an increase of $2.4 billion in the second quarter after taking into account all new business volume, maturities, sales and paydowns on existing assets.

Our agricultural finance outstanding business volume grew $1.8 billion in the second quarter, primarily due to a $1.1 billion increase in our Farm & Ranch AgVantage wholesale finance securities portfolio. That growth was driven by new business volume from several counterparties, reflecting the strength of our growing relationships, including a $750 million issuance from a new counterparty.

We continue to see strong interest in wholesale finance, reflecting the competitiveness of our product versus other funding alternatives and believe we are on track to see incremental net growth in the second half of the year due to minimal scheduled maturities as well as the relative value of this product provides our customers.

Farm & Ranch loan purchase activity remained at elevated levels during the second quarter, building on the strong momentum that began in the fourth quarter of 2025 and continued throughout the first half of 2026. Specifically, we saw net growth of $867 million for the first half of the year, almost double the Farm & Ranch loan purchase net growth in the same period last year.

We are operating at an elevated pace for new volume and expect loan purchase growth to continue as lenders seek liquidity, driven by the need to diversify from high-cost deposits amid strong loan growth, a focus on capital efficiency and returns and ongoing volatility that many sectors of the agricultural economy are experiencing.

Our growth this quarter was also supported by the improvements that were made to our Ag Express product in 2025, reflecting our continued investment in improving our products, processes and platforms. The product improvements resulted in wider engagement with a variety of lending institutions that serve all facets of the agricultural mortgage financing market.

We remain proactive in discussions with our customers to ensure we find the right solutions to support their funding and capital needs as well as understanding their borrowers' liquidity needs in a challenging operating environment that is characterized by ongoing uncertainty and broader market volatility.

I'm also pleased to announce the launch of Farmer Mac Loan Exchange, or FLX, our new Farm & Ranch loan platform this past week. FLX introduces a unified digital platform for Farm & Ranch loans across all of our loan purchase products. The platform improves process efficiency, documentation management and operational flexibility.

FLX is a significant technology modernization initiative that creates a more efficient, scalable and user-friendly experience across Farmer Mac's Farm & Ranch business, which we believe will serve as the foundational platform to launch future innovative products and customer solutions.

FLX is the latest example of our commitment to incorporate innovation and technology modernization, which we expect will continue to differentiate Farmer Mac and transform the agricultural mortgage market, allowing us to provide liquidity in a more efficient and scalable way.

The Corporate Ag Finance segment grew modestly during the quarter to $2.1 billion in outstanding business volume. Deal flow activity in the broader agribusiness market has remained relatively muted during 2026, predominantly reflecting less mergers and acquisitions activity as companies continue to navigate a volatile market, coupled with global tensions impacting trade and inflation.

Looking ahead, we continue to expect modest growth in this segment and will remain disciplined in pursuing opportunities that meet our underwriting standards and support the food, fuel and fiber supply chain.

Turning to our infrastructure finance line of business, outstanding business volume increased $573 million sequentially to $13.1 billion as of quarter end, with all 3 segments contributing to net growth. This is a continuation of similar themes we saw in 2025, specifically the strong interest and investment in data center construction, broadband expansion and the construction and completion of renewable energy projects, reflecting the overall need for significant energy generation and transmission capacity in rural America.

Net growth in our Power and Utilities segment this quarter was $291 million, largely attributable to strong loan purchase activity, which included the purchase of $197 million pool of loans from a single customer. This transaction underscores our secondary market track record of providing liquidity and product solutions to support our customers' balance sheet management initiatives.

We continue to see a steady demand for capital in this segment as borrowers invest in system upgrades and modernization to support the significant increase in electrification demand.

During the quarter, we provided $565 million in renewable energy loan purchases and commitments, reflecting the strength of our deal pipeline and accelerated project construction to meet deadlines included in HR 1.

After scheduled maturities and repayments, which were elevated this quarter as this portfolio seasons as well as construction and tax equity loans mature, the overall segment grew $120 million to $3 billion as of quarter end.

Looking ahead, we expect growth in this segment to continue well into next year as the substantial need for new power generation drives continued demand, more than offsetting the natural runoff from a seasoning portfolio.

Currently, deal flow remains robust with our pipeline approaching $1 billion, which allows us to be selective with our capital deployment in the sector to pursue deals that are appropriately structured with strong counterparties that underscores the strength of our reputation in the market.

While the industry is adjusting to the phaseout of tax credit incentives and navigating supply chain dynamics, we project the growth demand for energy generation to position the industry for continued growth as the underlying economics of these projects remain highly competitive.

Alternative generation capacity takes years to develop, and we have seen renewable energy projects, capital structures and power purchase agreement pricing adjust as tax credit incentives phase out. Accordingly, we expect to continue participating in renewable energy transactions for both new projects and refinancings of existing projects.

Beyond 2027, we anticipate continued growth in this segment that is more market-driven rather than policy-driven as the underlying driver remains an increasing surge in power demand, requiring significant new power generation capacity.

Broadband infrastructure also posted another strong quarter with net growth of $162 million, ending the period at $1.9 billion. Given the robust demand for data center investments, 70% of new volume this quarter was data center-related business volume, a reflection of the ongoing expansion of artificial intelligence, cloud storage and enterprise digitization. As of June 30th, our total data center-related business volume was approximately $1 billion or roughly half of our total broadband infrastructure segment.

While our data center exposure has grown substantially, we are highly attuned to market dynamics and take a disciplined, deliberate approach to how we manage the portfolio. Specifically, as this portfolio seasons, we have enhanced our focus on portfolio management, maintaining deliberate geographic and sponsor diversification, prioritizing well-capitalized investment-grade hyperscaler tenants and pursuing a mix of funded products to keep our portfolio well diversified and resilient against potential market headwinds that may arise.

In total, we have provided $7.5 billion of liquidity and lending capacity to lenders serving rural America through the first half of this year, exceeding our previous first half gross volume record in 2022 by more than 50%. That figure is the clearest expression of our company supporting our mission, expanding access to competitive liquidity for American agriculture and rural communities.

With a robust pipeline and strong capital position heading into the third quarter, we enter into the second half of 2026 focused on disciplined execution that drives durable, high-quality earnings and the runway to keep growing.

While we are mindful of the macro backdrop and uncertainties stemming from interest rates, trade policy and regulatory shifts, our diversified portfolio, strong capital position and disciplined underwriting give us confidence in our ability to continue delivering consistent results.

We are also closely monitoring the spikes in global energy prices, which has pushed fuel and fertilizer costs higher. Regardless of how these dynamics unfold, we believe Farmer Mac is well positioned to navigate the environment.

With that, I'll turn it over to Matt Pullins, our Chief Financial Officer, to review our financial results in more detail. Matt?

Thank you, Zack. As Zack noted, second quarter results were record-setting by every measure, over $37 billion in outstanding business volume, $125 million in revenue and $59 million in core earnings or $5.40 per diluted share. These record results generated a return on equity of 18.9%, among the strongest in our history. This quarter's record results were driven by several distinct financial performance factors, which I will walk through in more detail.

Net effective spread reached a record $117.4 million in second quarter 2026, a 25% increase over the prior year period and a 15% increase from first quarter 2026, our prior quarterly record.

The year-over-year and sequential growth was driven by record business volume and the collection of $7.4 million of interest recognized in second quarter 2026 related to the recovery of interest on a large delinquent permanent planting exposure that has been nonaccrual for an extended period of time.

On a percentage basis, net effective spread was 126 basis points. This compares to 119 basis points in the year ago period and 116 basis points in first quarter 2026. Excluding the onetime benefit from the collection of $7.4 million of interest, net effective spread in percentage terms was 118 basis points, which is relatively in line with prior periods and as we have consistently discussed, is impacted by the mix of new business volume in our lines of business.

While incremental business volume is the primary driver of net effective spread growth, our net effective spread performance is further enhanced by the 2 core pillars of our funding strategy, a differentiated ability to access funding through the capital markets at highly attractive levels and a deliberate balance sheet structure designed to be minimally sensitive to interest rate changes. This combination enables us to generate highly efficient and consistent net effective spread across market cycles and conditions.

The foundation of our approach is a largely rate-agnostic balance sheet supported by a very short duration profile and a robust interest rate risk management framework. At the same time, our funding advantage provides reliable access to liquidity at competitive levels, which enhances earnings efficiency and resilience. Within this disciplined framework, we remain strategic and nimble, actively capturing opportunities to improve long-term economics when conditions are favorable.

Together with our ongoing use of innovative hedging strategies, these actions underscore our ability to effectively manage risk, while consistently delivering strong net effective spread performance through changing market conditions.

Partially offsetting strong revenue growth this quarter was an increase in compensation and benefits expense, driven by increased headcount, higher incentive compensation accruals associated with strong financial performance and the timing of compensation expense recognition within the year.

Included in second quarter results was a $4 million true-up of performance-based incentive compensation, reflecting our updated expectations for full year performance. This expense was recognized in the quarter and is not expected to repeat in future quarters. As a result, compensation expense growth in the quarter was elevated relative to our expected full year trend.

Looking ahead, we anticipate compensation expense growth to moderate in the second half of 2026 with full year compensation expense projected to be consistent with our underlying operating trajectory and approximately 20% to 22% higher than 2025.

To provide additional perspective on our underlying operating performance, excluding the $7.4 million interest recovery benefit and the $4 million true-up of performance-based incentive compensation, core earnings for the quarter would have been approximately $56 million or $5.15 per diluted share.

We believe this normalized view more closely reflects the underlying earnings power of the franchise, which continues to benefit from record business volume, strong net effective spread generation, effective favorable credit performance and disciplined expense management.

Our strong operating performance resulted in an operating efficiency ratio of 28% for the quarter, below our long-term target of 30%. We anticipate full year operating efficiency ratio in the 27% to 29% range.

Operating at this level of efficiency provides us with the flexibility to invest strategically in the continued growth and scalability of our franchise, while delivering strong returns for shareholders.

Looking ahead, we will remain focused on making targeted investments in talent, business development, operations and technology, while preserving our disciplined approach to expense management and operating within our long-term efficiency ratio target.

Also contributing to our second quarter 2026 core earnings was a $2 million income tax benefit from the purchase of $21.4 million of renewable energy investment tax credits, which was fully recognized in the quarter. These investments support our mission by providing capital to renewable energy projects, electric facilities and biofuel sectors, while also generating attractive financial returns.

As of quarter end, we substantially utilized our remaining carryback capacity. Going forward, we will evaluate tax credit purchase opportunities on a current year basis. We remain active in the tax credit market and we will selectively pursue opportunities, where pricing and economics are attractive and expected to enhance overall financial performance.

Turning to credit and asset quality results, the $7 million provision for credit loss expense in the quarter -- in the second quarter of 2026 reflects $3.6 million attributed to new business volume growth across all our segments, with the balance related to credit migration trends.

The primary driver of credit migration this quarter was the deterioration of 2 collateral-dependent Farm & Ranch loans that accounted for approximately $3 million of provision expense.

Upon initiating foreclosure proceedings related to these 2 loans, updated appraisals identified property-specific factors that reduced collateral values and resulted in valuation shortfalls that require incremental credit reserves.

Allowance for losses was $47.4 million as of June 30th, 2026, reflecting a $7.2 million increase from first quarter 2026 and $17.2 million increase from the same year ago period. The sequential increase primarily reflects the cumulative impact of portfolio growth and select credit migration.

As of quarter end, the total allowance represented 19.7% of total nonaccrual assets compared to 15.4% as of March 31, 2026, and 16.9% as of the year ago period, reflecting the increase in allowance for losses and the decrease in nonaccrual assets due to the resolution of the previously mentioned delinquent permanent banking exposure.

90-day delinquencies were 37 basis points at quarter end, a 15 basis point improvement from first quarter 2026 and 4 basis point improvement from the year ago period. The sequential improvement is consistent with the seasonal pattern we have historically observed in our portfolio, where delinquency levels tend to be higher at the end of the first and third quarters, reflecting the annual and semiannual payment dates on the majority of Farm & Ranch loans.

Total substandard assets as a percentage of our entire portfolio were 1.71% this quarter, an improvement from 1.87% as of March 31, 2026, due to positive credit migrations across both lines of business and the resolution of the delinquent permanent planting exposure in the quarter.

Turning to capital, Farmer Mac's core capital increased by $141 million during the second quarter of 2026 to $1.9 billion, driven by the successful issuance of $100 million of Series I preferred stock, continued earnings generation and the retention of approximately $42 million of retained net income after returning $25 million to shareholders through dividends. As a result, core capital exceeded our statutory minimum requirement by $731 million or 64% at quarter end.

Our Tier 1 capital ratio was 13.2% as of June 30th, 2026, compared to 13.0% at March 31, 2026, positioning us comfortably within our target range of 12% to 14%. The increase reflects the benefit of the preferred stock issuance and retained earnings, partially offset by higher risk-weighted assets, which primarily resulted from record volume growth across our mission-focused businesses.

The successful preferred stock issuance demonstrates our ability to efficiently access capital to support our growing customer demand for liquidity across the agricultural and rural infrastructure sectors.

Our ability to secure capital on attractive terms reflects investor confidence in our business model, credit profile and long-term growth strategy. This expanded capital position strengthens our ability to meet growing demand for liquidity and support rural America through market and credit cycles.

We remain committed to maintaining a balanced and disciplined capital management strategy. We expect to return capital to shareholders primarily through our dividend program, while simultaneously supporting our mission and customer needs by redeploying capital into high-quality assets across our agricultural finance and infrastructure finance lines of business. Our objective remains consistent, prudently allocate capital in ways that advance our mission, generate attractive risk-adjusted returns and create long-term shareholder value.

Looking ahead, customer demand for mission-related liquidity is expected to drive portfolio expansion. To meet this demand, we plan to incorporate risk transfer solutions as a complementary source of capital capacity, which reflects the evolution of our successful Farm securitization initiative.

Risk transfer leverages third-party capital to enhance capital efficiency, increase balance sheet flexibility and support sustainable growth, while strengthening our ability to deliver on our mission. We continue to make progress on the development of a new credit risk transfer program that we expect to bring to market in 2026.

We believe Farmer Mac's underwriting expertise, portfolio management capabilities and demonstrated credit performance, combined with strong investor interest in gaining exposure to agriculture and infrastructure asset classes, position us well for successful market reception.

Over time, we expect these transactions will enhance our ability to support customer demand and broaden market participation in sectors critical to rural America, while maintaining prudent capital levels.

In closing, this quarter's strong performance underscores both the effective execution of our strategy and the enduring strength of our franchise. By expanding our capacity to support growing liquidity needs across a dynamic rural economy, we are advancing our mission, deepening our impact in the markets we serve, while driving sustainable earnings growth and long-term shareholder value.

Now I would like to turn the call back over to Zack.

Thanks, Matt. Our results were exceptional this quarter. We are extremely proud of our continued focus on providing liquidity to support American agriculture and rural communities and excited about what lies ahead for the balance of 2026.

We are dedicated to broadening the pursuit of our mission in response to the evolving economic landscape in rural America, and this proactive business diversification continues to deliver meaningful benefits to the communities and industries we serve as evidenced by the strong growth across all our portfolios.

We will continue to invest thoughtfully in our people, technology and infrastructure to efficiently scale our business and ultimately capitalize on the significant opportunities in front of us.

Lastly, I want to thank our Farmer Mac employees for all their dedication and effort in support of our mission to achieve these exceptional results. We have an extremely talented team here at Farmer Mac, and these results are a testament to their focus, execution and the strength of the relationships they have all developed with our customers and stakeholders.

And now, operator, I'd like to see if we have any questions from anyone on the line today.

[Operator Instructions] Your first question comes from Bose George with KBW.

Actually, first, just a question on spreads. In the Broadband segment, does the data centers have a higher spread than the other assets in there? And then secondly, on the Corporate AgFinance, that was obviously higher, but is that purely just that reversal of that one credit you discussed?

Yes. Hi, Bose. As it pertains to spreads in Broadband Infrastructure, yes, I think the majority of the spreads you see in the quarter reflect the growth in the broadband -- or excuse me, the data center portfolio. those credit spreads are relatively in line with the other assets in that portfolio.

I would note, again, we look at risk-adjusted returns and make sure that regardless of credit spreads that the return is appropriate for our capital deployment. But there's not a significant amount of volatility between spreads across the different sectors in that portfolio.

In corporate ag, yes, the biggest impact that quarter as it pertains to the net effective spread is the collection of that interest from the nonaccrual loan. If you back that out, you would see net effective spread percentage to be relatively flat quarter-over-quarter.

And then the risk transfer solution that you discussed, is that going to be beneficial to ROEs? Or is it really just a way to broaden your access to capital and the structures are they going to look similar to sort of like the Fannie, Freddie risk-sharing structures?

Bose, this is Matt. So in terms of the use of risk transfer tools, we are very much looking at those as a form of capital. And to that end, the risk transfer tools are attractive to us because they are a more efficient, more flexible and generally speaking, a cheaper form of capital than other tools that we have available to us, including issuing capital.

And so playing that forward and directly responding to your question about return on equity, the short answer is yes. We do expect the use of credit risk transfer tools to benefit return on equity over the course of time.

Your next question comes from Bill Ryan with Seaport Research Partners.

I have to say congratulations, I think that was the high on the street and you managed to exceed my numbers quite handily.

So first question, just following up on Bose's question about the NES margin. Going across the various segments, you did have expansion. I think even if I did my calculations right, corporate AgFinance is up about 5 basis points, even taking out the $7.4 million adjustment. You've been reluctant to kind of give some outlook on the margin, and I understand that's kind of reflecting of unsure about the product mix going forward, specifically in Farm & Ranch. But maybe if you could talk about how you see it playing out in the next couple of quarters, perhaps into 2027, both in Farm & Ranch and also the other businesses? And then I do have one follow-up question as well.

Yes. Thanks, Bill. This is Zack. As it pertains to margin, I think if you look over the last 4 quarters, especially across corporate ag, broadband and renewable energy and kind of look at the trailing 12-month NES percentage, they're relatively consistent. Broadband is typically in the 2.25% to 2.35% range. renewable energy 1.65% to 1.75% and corporate ag a little bit north of 2%.

What we see in the market, I don't envision much delta outside of those ranges. The transactions that we're seeing and the credit profiles that we focus on within our underwriting criteria seem to fall within that range.

So as we look out over at least the pipeline that we see as well as the transactions that we look at in the market, I would say they're probably going to fall within those ranges. Clearly, that's market dependent and anything pertaining to volatility that could impact the market may shift those. But from what we see today, I would say they're probably relatively consistent.

On Farm & Ranch, I think the biggest potential change there is really product mix. And so we saw a little bit of compression this quarter given the significant growth we saw in AgVantage. So depending on those opportunities, which are quite lumpy, could move that Farm & Ranch NES percentage up and down a few basis points here or there.

We feel pretty good on the Farm & Ranch loan purchase side in terms of the stability of our NES percentage given the volume that's coming in the door. But I would say the mix in AgVantage and the size of any issuances that we have in the future could cause a little bit of compression in the Farm & Ranch space.

Bill, if I could add on to the points that Zack offered. I would like to note the fact that in a quarter, where we had exceptionally strong growth of new business volume, $2.4 billion net of incremental business volume in the quarter, we're able to maintain the spreads in our business, and that's indicative of the fact that while business is robust, the new volume coming in is robust, we are not conceding spread to generate that new volume.

And that manifests itself in 2 ways in terms of our financial performance. So first is being able to have consistent net effective spread over the course of time, notwithstanding the impact of mix, but then also to be able to have consistent risk-adjusted returns and returns on equity because we're not conceding margin to drive volume.

Thanks for the follow-up explanation on that. Then second question was just on operating leverage. I was trying to quickly back out the onetime revenues and the onetime expenses and it looks like revenues, excluding the $7.4 million, were up about 17%, expenses up about 9%, 10%. Maybe if you can talk about how you're thinking about operating leverage potential going forward at this point given your acceleration of volume. I mean do you have the infrastructure really kind of built out at this point to handle everything that's coming on?

Yes. So the short answer is yes. So we do expect to generate positive operating leverage going forward. We expect to see the growth rate on the expense side moderate relative to the performance in the second quarter. And because of the strong volume in new business in the second quarter, that is going to further enhance top line benefits in the third quarter and beyond.

Now to your question about the build-out of infrastructure, yes, we're very confident that we can continue to scale the business based on the infrastructure of the platform that we have today.

But as I mentioned in my prepared remarks, one of the luxuries of our business and being able to operate at the level of efficiency that we do and to experience the growth that we have experienced and anticipate to continue to experience in the future is that does give us the flexibility to continue to invest in enhancements of our platform, and that's people, technology, process, et cetera.

And so you can expect to see continued investments, but we do anticipate maintaining positive operating leverage going forward and actually expanding that operating leverage in the back half of the year on account of slower expense growth.

And Bill, the only thing I would add on to that is we announced in our prepared remarks the launch of Farmer Mac Loan Exchange. That's -- as we've talked about, our focus on creating a more efficient and scalable platform. That's a major first step. And this allows us to really think about technology and solutions going forward that can bolt on to a very advantageous infrastructure platform and create a more scalable opportunity set going forward for our customers.

The last thing I would mention is that as we think about investments in technology and people, we're going to be very methodical in terms of the timing and the return that we have based on our investment.

Your next question comes from Brendan McCarthy with Sidoti.

Congratulations on the results and thanks for taking my questions here. I just wanted to start off on the Farm & Ranch segment. The pace of volume growth there has really accelerated this year. And I know there's some lumpy wholesale volume in there that's benefited volume in Q2 and Q1. But do you primarily attribute growth to just borrower demand? Are lenders becoming more capital constrained? I'm just curious as what the key demand drivers are there.

Brendan, this is Zack. I'd say we think about it in 3 different prongs. I mean there's a component there that there are certain sectors of the ag economy that are experiencing stress and the underlevered component of their land allows them to tap into that equity to potentially support working capital and liquidity to kind of get through the volatility that they're experiencing in the agricultural economy.

The other component, I think that's important is we are a secondary market and our customers are financial institutions that originate these loans. And as we've seen, they see tremendous loan growth in their markets, and they need to balance capital return and other sources of funding such as deposits, which are exceedingly high in this environment.

So as they navigate this environment, they're leveraging the secondary market to balance their balance sheet management initiatives, which is further driving more growth to Farmer Mac.

And lastly, and we've been talking about this for some time, is borrowers want liquidity quick. And the more we can make our platform efficient and scalable and get the dollars out the door, they're going to benefit and leverage the secondary market in a more scalable fashion.

And we've seen that over the last 6 to 8 months as we've improved our products and our processes and focus on our infrastructure we're getting dollars out the door quicker. And that's driving more looks to Farmer Mac, and that's why we're seeing the increased velocity coming through Farm & Ranch loan purchase.

If I could add on to that, Zack, and for the benefit of those of you on the call, one market factor that we're watching very closely and impacts Farm & Ranch volume is credit spreads. And it really impacts us in a couple of different ways, but the dynamic is that our funding costs, our ability to access liquidity in the market is less -- tends to be less sensitive to credit spreads than the banks or other sources of liquidity that are available to borrowers.

And that potentially benefits us in 2 ways. One is that at the margin, it makes our AgVantage securities product more attractive as a source of funding -- source of wholesale funding for banks or other institutions that are holding mortgages. And additionally, that also makes the cost of a bank or another institution to hold the mortgage on balance sheet incrementally higher relative to what we can offer. And so that incentivize more loan purchase activity in the Farm & Ranch space for our business.

So while credit spreads are still relatively benign, they have moved up here in recent weeks. It is something that we're monitoring very closely, and that is a factor that could be meaningful in terms of driving Farm & Ranch purchase volume as well as AgVantage volume in the future.

That's great. I appreciate the detail there. And as you look out for the remainder of the year, are you a little bit more bullish on the AgVantage -- or I'm sorry, the wholesale volume? Or is it more purchase volume that you're more bullish on?

Yes. I think when we see the tailwinds of the sectors that we serve, clearly, we feel there's a lot of tailwinds in our loan purchase products. We've talked a lot about infrastructure and the need for electrification in data centers, and we just talked about Farm & Ranch. So we see continued growth and velocity in our loan purchase.

We talked last year that we felt the fourth quarter of 2025 was kind of the bottom of what we saw in the AgVantage or wholesale runoff, and we've experienced 2 back-to-back quarters of strong growth. It's a little bit more lumpy. So I think there's a component of those counterparties and the need for liquidity, what's transpiring, as Matt said, in the credit spread market in terms of our products relative value versus other funding alternatives.

A little bit harder to predict in terms of what the future growth is. I would highlight we have pretty minimal scheduled maturities in our Farm & Ranch AgVantage portfolio in the second half of this year, which if we do see some more interest and utilization of the wholesale product in the Farm & Ranch side would be pretty much increase in that growth there versus refinancing maturity -- maturing securities.

We still see tremendous interest from new counterparties in this product. So we're continuing to market and have those conversations and look forward to getting new counterparties set up with that product, but a little lumpy and hard to predict.

Appreciate the color there. On the Farmer Mac Loan Exchange platform, what early adoption are you seeing from this exchange platform? And it sounds like it's really aimed at driving scale or volume scale, but this also flow through to perhaps a lower efficiency ratio for you guys?

Yes. A little too early to tell on the utilization. We did launch it Monday. So we're right in the thick of it. But for all intents and purposes, it's been very well received in the market, and we'll continue to monitor that going forward.

And yes, I think our ultimate goal here is linking back to our Investor Day presentation, create a faster, easier and competitive platform, where borrowers can access liquidity as quickly as possible. And this is the first big step.

So as we think about different innovative technologies and bolting it on to the FLX platform, we do anticipate increasing scale, which ultimately will help with operating leverage and the efficiency ratio.

And one last question for me. I know we're a little bit more than halfway through the year. What at this point would cause year-end results to kind of come in maybe out of line of your expectations?

From a market perspective, again, we see positive tailwinds across all sectors. I think we're clearly continuing to monitor the agriculture environment and see what potential headwinds that could arise in the future pertaining to global conflicts and higher input costs, et cetera, that is going to be more visible as we head into the back part of this year. So it remains to be seen. That could be positive in terms of increased loan demand, but just uncertainty at this point as things continue to move forward.

As we noted in our prepared remarks, we continue to monitor kind of data centers and the tremendous growth that we've seen there. Again, we're focused very specifically on the top investment-grade hyperscalers with very appropriately structured projects, and we haven't really seen a slowdown in that and the capital markets are really eating up all the opportunities that are in the market.

I think things that could really come up as we think about us being a financial organization is credit headwinds. And so we continue to monitor all our sectors, and we've seen some positive movement in substandards and 90-day delinquencies. But if things evolve in the markets that can cause those to increase and see additional provisions, that could alter kind of our forecast that we see.

Your next question comes from Gary Gordon, a Private Investor.

Thanks for the detail on normalized earnings. Just maybe a follow-up on securitization. You described that the cost of capital securitization is lower. What are sort of your limitations on volume? Presumably, you'd like to issue a lot if it's a cheaper funding source.

Yes. And maybe just one -- Gary, this is Matt. Just one clarification is, historically, we've relied upon what's known in the marketplace as senior subordinate securitization structures as a form of credit risk transfer.

We're evolving our product mix and approach to credit risk transfer to include other avenues of risk transfer, including synthetic securitization. That's one of the tools that we are looking at and are fairly commonly used by some of the other GSEs in the markets.

In terms of capacity, the factors that we'll be most closely monitoring there are really twofold. So one is the assets in portfolio that -- where we can get effective execution in terms of risk transfer. And specifically, looking at as an example, we have a fairly robust history and market awareness and frankly, level of comfort in the Farm & Ranch space.

The market is comfortable with our underwriting standards and historical credit performance and that's generally viewed to attractively align with a risk transfer type of transaction. And so we'll be looking at specific components of our balance sheet, specific components of the portfolio, where risk transfer will make sense from an execution standpoint.

The second factor that we'll be needed to monitor would be the market appetite or market capacity for agricultural finance and rural infrastructure finance risk transfer. We don't believe at the moment that there are notable limitations in terms of the market capacity for that risk, but that is certainly a factor over the long run that we'll have to monitor. And if the market capacity is tapped out, then we would have to look at other forms of capital as alternative ways of managing the balance sheet.

Would it be a goal or a potential that securitization could be materially higher 2 years from now?

In short, yes.

Are infrastructure finance loans, you think have an opportunity securitization?

What I would say there is the market in our experience, has a demonstrated appetite and interest in the Farm & Ranch credits. So that's in part related to the historical experience that the market has with our asset credit performance is demonstrated through the historical farm securitization transactions.

That said, over the long run, we will absolutely be evaluating risk transfer opportunities in the infrastructure space, but that is not necessarily the priority in the early stages of these alternative risk transfer transactions that we're contemplating.

That concludes our Q&A session. I will now turn the conference back over to Zack Carpenter for any closing remarks.

Yes. I'd like to conclude by thanking everyone, for joining us here today. We appreciate your continued interest in Farmer Mac and look forward to sharing our third quarter 2026 results with you in the fall.

As always is the case, if you have questions that you'd like to discuss with us, don't hesitate to reach out. And with that, thank you very much, and have a great day.

This concludes today's call. Thank you for attending. You may now disconnect, and have a wonderful rest of your day.

Thank you for standing by. At this time, I would like to welcome everyone to the Farmer Mac 2026 Annual Meeting of Stockholders. [Operator Instructions] I would now like to turn the conference over to LaJuana Wilcher, Vice Chair. The floor is yours.

Good morning. I'm LaJuana Wilcher, Vice Chair of the Board of Farmer Mac. I'm pleased to welcome you to Farmer Mac's 2026 Annual Meeting. In accordance with the notice of meeting, I call this Annual Meeting of Stockholders to order. Some stockholders who may have wanted to participate in this meeting in person may have been unable to travel to Washington, D.C. So we have made it possible for you to participate by teleconference and webcast.

If you are a voting stockholder participating in the meeting by teleconference, who plans to vote outside of the regular proxy process today and if you have not yet received a blank proxy card, please e-mail a request right now to [email protected]. That's I India R Romeo @farmermac.com. We intend to follow the meeting agenda that was available as you entered the room and has also been posted at Farmer Mac's website. We will provide for general question-and-answer session for stockholders after the formal business of the meeting is concluded. I would like to begin by introducing our director nominees and the directors appointed by the President -- confirmed by the U.S. Senate, all of whom are present in person this morning.

Farmer Mac has two classes of voting stockholders, each of which elects five directors. Class A stockholders are banks, insurance companies, mortgage banks, investment banks and other financial institutions. Class B stockholders are farm credit system institutions. The other five directors are nominated by the President of the United States and confirmed by the U.S. Senate. Farmer Mac's proxy statement dated April 15, 2026, contains a biographical sketch of each nominee and presidential appointees on Pages 16 through 22.

Copies of the 2026 proxy statement are available at the registration desk for the meeting and on Farmer Mac's website. The following individuals have been nominated for election as Class A directors: James Engebretsen, Lyle Logan,Eric McKissack, Jeffrey Plagge and Todd Ware. The nominees for directors to be elected by the Class B stockholders are Dale Crawford, Amy Gales, Kevin Riel, Robert Sexton and Daniel Shaw. The Board members nominated by the President and confirmed by the U.S. Senate are Sara Faivre, Charles Stones, Lowell Junkins; and myself, LaJuana Wilcher. I would also like to introduce the executive officers of Farmer Mac here today. Pages 29 to 31 of the proxy statement contain more information about the background and experience of each of the 5 officers. Brad Nordholm, Chief Executive Officer; Zachary Carpenter, President and Chief Operating Officer; Geraldine Hayhurst, Executive Vice President, Chief Legal Officer and Board Secretary; Matthew Pullins, Executive Vice President and Chief Financial Officer and Treasurer; Brian Brinch, Executive Vice President and Enterprise Risk Officer. I would like to ask Geraldine Hayhurst, our Corporate Secretary, to report on the mailing of the meeting notice and the presence of a quorum.

Thanks [indiscernible] Wilcher. This meeting is held in accordance with the printed notice mailed the week of April 13, 2026, to each voting stockholder of record as of March 23, 2026. Farmer Mac's transfer agent, Equiniti Trust Company, reports that the holders of a quorum of Farmer Mac's voting common stock are present in person or are represented by proxy at this meeting. For those voting stockholders present today in person or by teleconference, who returned properly completed and signed proxies, the proxy committee will vote the shares represented in those proxies as directed on all matters coming before the meeting. Unless you want to change your vote, you need not submit ballots on matters already voted by proxy. Would you please raise your hand or contact the call operator if you plan to vote personally at this meeting.

We have a quorum, so I declare Farmer Mac's 2026 Annual Meeting of the Stockholders to be officially convened. On behalf of the Board of Directors, I would like to express my appreciation to all stockholders participating today either in person or by teleconference and those who returned their proxies. Before beginning the election phase of this meeting, I would like Geraldine Hayhurst to advise about some of the statements that may be made at this meeting.

During this meeting, representatives of Farmer Mac may make forward-looking statements that reflect current expectations for Farmer Mac's future and financial results. Our expectations for Farmer Mac's future performance necessarily involve assumptions, estimates and the evaluation of risks and uncertainties. Various factors could cause Farmer Mac's actual results to differ materially from our current expectations. A detailed discussion of these factors can be found in Farmer Mac's SEC filings, including Farmer Mac's annual report on Form 10-K for 2025 and Farmer Mac's quarterly report on Form 10-Q filed last week. The forward-looking statements you may hear today represent current expectations. We undertake no obligation to update them, except as otherwise required by law.

Thank you, Geraldine. I have prepared some brief written remarks that I would like to submit for the official record of the meeting but have no further remarks to make orally at this time. So I would like to now turn to the election phase of the meeting. The first matter to be voted on is the election of directors to serve until the next annual meeting or until their successors are duly elected and qualified. To facilitate the election of directors, the Board of Directors uses a Corporate Governance Committee consisting of directors from each of the Board's 3 constituent groups. The Corporate Governance Committee has recommended 5 individuals for election as Class A nominees and 5 individuals for election as Class B nominees. The Board approved these recommendations. Ms. Hayhurst, please place before the meeting by the Board's nominations for directors to be elected by Class A stockholders.

The Board's nominees for election as directors to be elected by Class A stockholders who are identified in the proxy statement are now formally placed before this meeting as follows: James R. Engebretsen, Lyle Logan, Eric T. McKissack, Jeffrey L. Plagge and Todd P. Ware.

Ms. Hayhurst, please place before the meeting the Board's nominations for directors to be elected by Class B stockholders.

The Board's nominees for election as directors to be elected by Class B stockholders who are identified in the proxy statement are now formally placed before this meeting as follows: Dale E. Crawford, Amy H. Gales, Kevin G. Riel, Robert G. Sexton and Daniel L. Shaw.

Only persons who are eligible holders of Class A or Class B voting common stock as of March 23, 2026, are entitled to vote at this meeting. Under Farmer Mac's bylaws, any Class A or Class B stockholder who wished to make a director nomination for consideration at this annual meeting was required to do so by February 14, 2026. So the nominations for directors are now closed. Is there any discussion on the nominations?

Thank you. The next matter being submitted for action is the ratification of the selection by the Audit Committee of PricewaterhouseCoopers as the independent auditors of Farmer Mac in 2026 as described on Page 74 of the proxy statement.

Farmer Mac's bylaws provide that the Audit Committee shall annually select independent auditors and that the selection shall be submitted to the stockholders for ratification. The Audit Committee and the Board recommend ratification of this selection by the stockholders. Only persons entitled to vote Class A or Class B stock may vote on this proposal. Ms. Hayhurst, please place before the meeting this proposal.

The Audit Committee unanimously selected PricewaterhouseCoopers to serve as Farmer Mac's independent auditors for 2026, subject to stockholder ratification. This selection is now submitted to the holders of voting common stock for their ratification.

Are there any questions or discussion on the ratification of PricewaterhouseCoopers to serve as Farmer Mac's independent auditors for 2026?

Thank you. The next matter being submitted for action is an advisory vote on Farmer Mac's executive compensation as described on Page 75 of the proxy statement. This is known as the say-on-pay vote. This advisory vote is a nonbinding vote on the compensation of Farmer Mac's named executive officers as presented on Pages 32 to 69 of the proxy statement.

It is not a vote on Farmer Mac's general compensation policies, compensation on the Board of Directors or Farmer Mac's compensation policies as they relate to risk management. Farmer Mac is required to hold an advisory vote on executive compensation at least once every 3 years but has made a practice of holding the vote on an annual basis. Only persons entitled to vote Class A or Class B stock may vote on Farmer Mac's executive compensation practices. Ms. Hayhurst, please place before the meeting this proposal.

An advisory vote is requested on the motion that Farmer Mac's voting stockholders approve on an advisory basis, the compensation of Farmer Mac's named executive officers as described in the 2026 proxy statement.

Are there any questions or discussion on the advisory vote on Farmer Mac's executive compensation?

Thank you. And now, will the Secretary please report the preliminary results of the voting.

The ballots have been counted and the following candidates received the highest number of votes from holders of Class A voting common stock: James Engebretsen, Lyle Logan, Eric McKissack, Jeffrey Plagge and Todd Ware.

The following candidates received the highest number of votes from holders of Class B common stock: Dale Crawford, Amy Gales, Kevin Riel, Robert Sexton and Daniel Shaw. More than a majority of the shares of voting common stock represented at this meeting has voted in favor of the ratification of the selection of PricewaterhouseCoopers LLP as Farmer Mac's auditors for 2026.

More than a majority of the shares of voting common stock represented at this meeting has voted in favor of the advisory vote approving the compensation of Farmer Mac's named executive officers. Subject to verification of the ballots, I declare that the following directors have been duly elected: James R. Engebretsen, Lyle Logan, Eric T. McKissack, Jeffrey L. Plagge and Todd P. Ware as the 5 directors elected by the holders of Class A voting common stock. Dale E. Crawford, Amy H. Gales, Kevin G. Riel, Robert G. Sexton and Daniel L. Shaw as the 5 directors elected by holders of Class B voting common stock. Also, subject to verification of the ballots.

I declare that the selection of PricewaterhouseCoopers LLP as Farmer Mac's independent auditors for 2026 has been duly ratified. And the compensation of Farmer Mac's named executive officers has been approved on an advisory basis. Farmer Mac's Board of Directors will take into consideration the results of this advisory vote going forward. All of these results are preliminary. Every ballot will be checked against our stockholder records and an exact vote count determined for the record of the meeting. This concludes the formal business portion of our meeting. There will be a general question-and-answer period for stockholders after adjournment of the meeting. I will now entertain a motion for adjournment. Mr. Pullins?

My name is Matthew Pullins, a member of the Proxy Committee. On behalf of the proxies held by that committee, I move adjournment.

Ms. Hayhurst?

My name is Geraldine Hayhurst, a member of the Proxy Committee. I am voting all the proxies held by the Proxy Committee, which represent more than majority of all outstanding shares of voting common stock in favor of adjournment.

The Farmer Mac Board would like to express our appreciation to the stockholders participating in this meeting as well as those who submitted their proxies but were not able to be present. Farmer Mac's 2026 Annual Meeting is now adjourned.

Before I open the floor to stockholder questions, I would like to remind you about Ms. Hayhurst's earlier cautionary statements about forward-looking statements that may be made. We are now ready to open the floor for stockholders' questions and discussion. I'll turn the microphone over to Mr. Nordholm.

Thank you. The management team and I commented on Farmer Mac's financial performance last week during our conference call to discuss first quarter 2026 earnings. On that call, I concluded with an open forum for questions. We'll be happy to entertain any other questions from anyone here in person or participating on the conference call today. I will recognize you for participation one person at a time. Please raise your hand or contact the call operator if you have any questions.

[Operator Instructions] At this time we have no questions in queue. I would like to turn the call back to Brad Nordholm, CEO, for closing remarks.

Thank you, operator. We have no questions here in person. I want to thank you again for your participation in our Annual Meeting of Stockholders of Farm...

This concludes today's meeting. Thank you for attending. You may now disconnect, and have a wonderful rest of your day.

Thank you for standing by. At this time, I would like to welcome everyone to the Farmer Mac first quarter 2026 earnings conference call. [Operator Instructions]

I would now like to turn the conference over to Jalpa Nazareth, Senior Director of Investor Relations. The floor is yours.

Good afternoon, and thank you for joining us for our first quarter 2026 earnings conference call. I'm Jalpa Nazareth, Senior Director of Investor Relations and Finance Strategy here at Farmer Mac.

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. These statements are based on management's current expectations and assumptions, and are subject to risks and uncertainties that could cause our actual results to differ materially from those projected. All forward-looking statements are based on information available to Farmer Mac as of today's date and Farmer Mac assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Please refer to Farmer Mac's 2025 annual report on Form 10-K 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 company's most recent Form 10-Q and earnings release posted on our website.

Joining me today are Chief Executive Officer, Brad Nordholm; our President and Chief Operating Officer, Zack Carpenter; and our Chief Financial Officer and Treasurer, Matt Pullins.

At this time, I'll turn the call over to our CEO, Brad Nordholm. Brad?

Thanks, Jalpa. Good afternoon, everyone, and thank you for joining us. I also want to thank everyone who joined our Investor Day event in New York City. We really appreciate the strong engagement and the opportunity to spend more time discussing our strategy, our performance and our outlook. And as always, it's great to hear your feedback.

Our first quarter 2026 was outstanding, a reflection of the continuation of the acceleration in business volumes we saw in the fourth quarter 2025. We delivered a record-setting quarter with business volume, quarterly revenue and quarterly core earnings all reaching all-time highs, underscoring the strength of our business model and the disciplined execution across our organization.

Outstanding business volume approached $35 billion. Revenue totaled approximately $110 million and core earnings totaled approximately $52 million. Our diversified business model, strong capital position and disciplined risk management position allow us to provide vital liquidity to American agriculture and rural infrastructure sectors during all and through all economic cycles.

Demand for our products remains robust. Our customer relationships continue to deepen and expand and our mission-driven approach continues to resonate across rural America and is motivation for our talented employees.

And with that, I'll turn the call over to our President and Chief Operating Officer, Zack Carpenter, to walk us through our operating results in more detail.

Thank you, Brad, and good afternoon, everyone. First quarter was an excellent start to the year with strong results and meaningful momentum across every aspect of our business. Total revenues increased 14% year-over-year with strong contributions from outstanding business volume growth, paired with disciplined funding execution and stable asset credit quality across all of our platforms.

We delivered $1.5 billion in net new business volume in the first quarter, bringing total outstanding volume to a record $34.8 billion as of quarter end. Broad-based growth this quarter was supported by a strong pipeline, particularly in the Farm & Ranch segment, where we approved loans for the first quarter of 2026 approaching $1 billion, almost 30% above the fourth quarter of 2025, our previous record. Sustained customer demand across our products continues to be underpinned by disciplined underwriting and risk management.

Now let me walk through the portfolio in more detail. Our agricultural finance outstanding business volume grew $777 million in the first quarter, with the Farm & Ranch segment accounting for $675 million of the net growth this quarter. Loan purchase activity in Farm & Ranch accelerated meaningfully in the fourth quarter of 2025 and has continued throughout the first quarter of 2026.

Specifically, we saw net growth of $384 million for the first 3 months of this year compared to only $54 million of Farm & Ranch loan purchase net growth in the same period last year, significantly outpacing the seasonally large number of loan repayments we typically see in the first quarter due to the January 1 payment date.

We are operating at an elevated pace for new volume and expect loan purchase growth to continue as lenders seek liquidity, primarily driven by the balance between diversification from high-cost deposit needs due to continued strong loan growth and a focus on capital efficiency. In addition, agricultural borrowers continue to face tighter agricultural conditions driven by higher input costs, trade and tariff concerns and low commodity prices.

We remain proactive in discussions with our customers to ensure we find the right solutions to support their liquidity and capital needs as well as understanding their borrowers' liquidity needs in a challenging and volatile operating environment.

Our Farm & Ranch AgVantage securities portfolio grew $325 million in the first quarter of 2026. As we discussed on our prior call, this increase reflects the additional fundings we anticipated after closing a new $4.3 billion facility with a large agricultural counterparty in late 2025. We believe we are on track to return to sustained net growth in this product set as we work closely with our counterparties to determine the right structure for providing incremental liquidity based on current market conditions.

The Corporate AgFinance segment delivered solid results, ending the quarter with over $2 billion in outstanding business volume, up approximately 5% sequentially and 9% year-over-year. Deal flow activity in the broader agribusiness market was relatively muted during the first quarter of 2026 as companies continue to navigate a volatile market, coupled with global tensions impacting trade and inflation.

Looking ahead, however, we have seen a modest pickup in the second quarter deal flow activity, primarily reflecting refinancing transactions. We are also starting to see more indications of potential mergers and acquisition activity, which could result in an increase in volume opportunities as we support the food, fuel and fiber supply chain.

Turning to our infrastructure finance line of business. Outstanding business volume increased $717 million sequentially or 6% to $12.6 billion as of quarter end, with all 3 segments contributing net growth. This is a continuation of the similar themes we saw in 2025, specifically the strong interest and investment in data center construction, broadband expansion and the construction and completion of renewable energy projects, reflecting the overall need for significant energy generation, transmission capacity in rural America.

Net growth in our Power & Utilities segment this quarter was $115 million, largely due to strong loan purchase activity, supporting investment needs of rural electric generation, transmission and distribution cooperatives. We continue to see a steady demand for capital in this segment as borrowers invest in system upgrades and modernizations to support the significant increase in electrification demand.

Our Renewable Energy segment grew $445 million or 18% to $2.9 billion as of quarter end. Growth primarily reflected transactions approved in late 2025 that subsequently closed in the first quarter of 2026, in addition to strong deal pipeline and accelerated construction deadlines.

Looking ahead, while we anticipate the continuation of the construction-related rush in the first half of this year tied to the July 4 construction start time frame described in H.R. 1, we believe growth in this segment will continue well into next year as the substantial need for new power generation will continue to drive growth in this segment.

Currently, deal flow remains robust, allowing us to be selective with our capital deployment in this sector to pursue deals that are appropriately structured with strong counterparties and underscoring the strength of our reputation in the market. While the industry is facing potential evolution in the near future as tax and other incentives are set to expire, we do project the growing demand for energy to position the industry for continued growth as the underlying economics of these projects remain highly competitive even without tax incentives.

Alternative generation capacity takes years to develop, and we expect capital structures and power purchase agreement pricing to adjust as H.R. 1 incentives are phased out. Accordingly, we expect to continue to participate in renewable energy transactions for both new projects and refinancing of existing projects. Beyond 2027, we anticipate stable growth in this space as more market-driven rather than policy-driven as the underlying driver remains a massive surge in power demand, requiring significantly new power supply.

Broadband Infrastructure also posted strong quarterly results with net growth of $158 million, ending the period at $1.7 billion outstanding with nearly 70% of the volume growth tied to data center-related demand. We are seeing robust demand for data centers quarter-to-date as 87% of new deals approved in our Broadband Infrastructure pipeline are data center related, a reflection of the ongoing expansion of artificial intelligence, cloud storage and enterprise digitization.

While this segment has grown substantially, we remain disciplined in maintaining geographic and sponsor diversification with a continued focus on well-capitalized investment-grade hyperscaler tenants.

We are mindful of the macro backdrop with uncertainties stemming from interest rates, trade policy and regulatory shifts. Our diversified portfolio, strong capital position and disciplined underwriting give us confidence in our ability to continue delivering consistent results. We are also closely monitoring the recent spike in global energy prices, which has pushed fuel and fertilizer costs higher ahead of the growing season.

While higher energy prices have historically been supportive of higher commodity prices, the net impact on producer margins will depend on the duration of the disruption, the degree to which growers locked in input costs in advance and whether commodity prices adjust to offset higher production costs. Regardless of how these dynamics unfold, we believe Farmer Mac is very well positioned to navigate the environment.

We are extremely proud of the results this quarter and excited about what lies ahead for the balance of 2026 and beyond. The momentum from 2025 has not only continued, but in several areas accelerated, reinforcing our confidence in the outlook and durability of our business model.

We are dedicated to broadening the pursuit of our mission in response to the evolving economic landscape in rural America. And this proactive business diversification continues to deliver meaningful benefits to the communities and industries we serve as evidenced by the strong growth across all our portfolios.

With that, I'll turn it over to Matt Pullins, our Chief Financial Officer, to review our financial results in more detail. Matt?

Thank you, Zack. Before turning to our results, I'd like to share a few reflections from my early experience at Farmer Mac. What has stood out most to me is the tangible positive impact our organization has on rural America, something that resonates deeply with me given my own personal connection to agriculture.

I have also been struck by the dedication, focus and execution of our team whose commitment to our mission is evident every day. It's exciting to be part of an organization that operates from such a position of strength, supported by excellent credit fundamentals, disciplined cost management, exceptional access to the capital markets, along with the unique strategic funding advantages that come with being a government-sponsored enterprise.

Looking ahead, the opportunities for growth are exciting, and it's energizing to be part of the momentum we're building.

Turning to our results, we had an exceptional start to 2026. First quarter results were record-setting by every measure, nearly $35 billion in outstanding business volume, $110 million in revenue and $52 million in core earnings or $4.74 per diluted share. This quarter's record results were driven by several distinct financial performance factors, which I will walk through in more detail.

Net effective spread reached a record $102 million in the first quarter of 2026, an increase of $12 million year-over-year and $0.6 million from the fourth quarter of 2025, our prior quarterly record. The year-over-year growth was driven by record business volume and continued disciplined funding execution.

On a percentage basis, net effective spread was 116 basis points, modestly below 117 basis points in the year ago period and 122 basis points in the fourth quarter. Quarter-over-quarter spread compression was driven primarily by fewer days in the period, which disproportionately impacts revenue from our fastest-growing, highest spread segments.

In addition, we saw a mix shift towards growth in our lower spread Farm & Ranch AgVantage securities and somewhat lower contribution from the investment portfolio. Even with that dynamic, net effective spread dollars grew again this quarter, reinforcing the durability and earnings power of our expanding increasingly diversified portfolio.

Our net effective spread performance reflects disciplined, proactive and purposeful balance sheet management. The foundation of our approach is positioning the balance sheet to be largely rate agnostic, underpinned by a very short duration profile and a strong interest rate risk management framework. Our differentiated funding advantage remains a key strength, allowing us to access liquidity at highly competitive levels.

Within this rate-neutral posture, we remain strategic and nimble, actively evaluating and capturing opportunities to enhance long-term economics when market conditions are favorable. Together with our ongoing use of innovative hedging strategies, these actions demonstrate our ability to manage risk effectively while consistently supporting financial performance.

Partially offsetting strong earnings growth this quarter was an increase in compensation and benefits, primarily driven by increased headcount and seasonal factors. We maintain our deliberate and balanced approach to expense management and accordingly, we'll continue making targeted investments in business development in our operational and technology platforms to support future growth and scalability while managing expenses within our long-term efficiency ratio target of 30%.

Moreover, I'm proud to say that this quarter, our revenue growth outpaced expense growth by nearly 4 percentage points compared to the prior year period. This outcome reflects our team's sound execution along with the strength and scalability of our operating platform.

Also contributing to our first quarter 2026 core earnings was a $4.2 million income tax benefit from the purchase of $45 million of renewable energy investment tax credits, which was fully recognized in the quarter. As of quarter end, we had approximately $30 million of remaining capacity to utilize additional credits through carrybacks to prior year federal income tax liabilities. Subject to market conditions, we expect to largely utilize that remaining carryback capacity in the second quarter, and we'll continue to evaluate additional tax credit purchase opportunities on a current year basis going forward.

As discussed at length last quarter, Farmer Mac operates a comprehensive credit framework that aligns with our risk appetite while accounting for the unique risks present within each of our 5 operating segments. While credit risk is inherent in our business, we believe our disciplined credit framework and proactive risk management enable consistent execution of our mission to deliver liquidity to the agriculture and rural infrastructure markets.

Turning to first quarter credit and asset quality results, we experienced $4.3 million of provision for credit loss expense in the first quarter of 2026. The provision expense reflects $3.4 million attributable to new volume growth across all our segments, particularly in the Renewable Energy segment, and $0.9 million related to credit migration across the portfolio.

Credit migration this quarter reflects the ongoing discipline of our portfolio management process. As we do each quarter, we conducted a comprehensive review of our portfolios. Certain credits experienced deterioration, specifically in agricultural storage and processing and select permanent plantings exposures and required additional reserves.

Others, on the other hand, demonstrated meaningful improvement through collateral sales and improved borrower performance and therefore, resulted in reserve releases. The net effect was a largely offsetting outcome.

Allowance for losses was $40.1 million as of March 31, 2026, reflecting a $2.1 million increase from year-end 2025 and $14.7 million increase from the same period a year ago. The sequential increase primarily reflects the cumulative impact of portfolio growth and select credit migration, partially offset by charge-offs recorded during the quarter. On a year-over-year basis, the increase is consistent with significant growth in outstanding business volume over the past 12 months.

As of quarter end, the total allowance represented 15.4% of nonaccrual assets compared to 16% as of December 31, 2025, and 12.9% as of the year ago period. As we've discussed previously, nonaccrual assets as a percentage of total allowance is a useful gauge of reserve adequacy relative to loans where full collection is unlikely. We remain comfortable with our allowance levels given the strength of the underlying collateral.

90-day delinquencies were 52 basis points at quarter end, up from 40 basis points in the fourth quarter 2025 and an improvement from 54 basis points from the year ago period. The sequential increase is consistent with the seasonal pattern we have historically observed in our portfolio where delinquency levels tend to be higher at the end of the first and third quarters, reflecting the annual and semiannual payment dates on the majority of Farm & Ranch loans.

Total substandard assets as a percentage of our entire portfolio were 1.87% this quarter, up from 1.71% at year-end, with the increase concentrated to credit downgrades in the agricultural finance line of business. Infrastructure finance substandard assets, however, declined sequentially this quarter due to improvements in the Renewable Energy segment.

Farmer Mac's core capital increased by $27 million in the first quarter of 2026 to $1.7 billion, which exceeded our statutory requirements by $663 million or 62%. Our Tier 1 capital ratio was 13% as of March 31, 2026, compared to 13.3% as of year-end 2025. Our capital levels remain well in excess of regulatory thresholds following an active quarter where our outstanding business volume grew by $1.5 billion, and we returned $32 million of capital through a combination of common and preferred dividends, along with modest share repurchases.

Our strong capital position has enabled us to grow and diversify our revenue streams, remain resilient through volatile credit environments and continue providing competitively priced liquidity to our customers and their borrowers. Looking ahead, we will maintain a thoughtful and balanced approach to managing our overall capital position. Organic capital generation, selective capital issuance and the use of risk transfer tools will help ensure we have sufficient capital to support future growth particularly in more accretive segments, which are generally more capital consumptive.

In closing, we are very pleased with our first quarter results and confident in our outlook for the remainder of the year. We remain committed to thoughtful capital deployment, strong asset quality and creating long-term value for our shareholders.

With that, I'll turn the call back over to Brad.

Thanks very much, Matt. In summary, this was an exceptional quarter and a powerful start to 2026. The strength of our results reflects the disciplined execution and strategic positioning that define Farmer Mac today.

A number of you have asked about CEO succession, and I'm pleased to report that the process is progressing very well and in fact, a bit ahead of schedule. I can say with great confidence that Farmer Mac has never been in a stronger position than it is today. The depth of talent across our leadership team, the clarity of our strategy and the momentum in our business give me tremendous optimism and I would say confidence in the future of this organization.

And now, operator, I'd like to see if we have any questions from anyone online today.

[Operator Instructions] Your first question comes from Bose George with KBW.

I wanted to ask first just about return on equity expectations. Obviously, you guys had a very strong quarter at 17% ROE. Just with the pipeline and what you're seeing out there, where do you think that trends? And I wanted to ask about spread as well, but that moves around obviously with the mix. So is it better really to focus on the ROE outlook?

Thank you very much for the question. This is Matt. Glad to touch actually on both topics that you asked there. So in terms of return on equity, as you noted, we printed 17% return on equity for the quarter. And that is a metric that we're very focused on in terms of deploying capital and purchasing assets within our business and looking to maintain the business in that range of outlook in terms of return on equity going forward.

In terms of spread or net effective spread margin, which you also asked about, that is a metric that can vary from quarter-to-quarter. A variety of factors weighed on that margin this quarter, including asset mix as we purchase high return on equity, but in some cases, lower spread assets, particularly in our AgVantage portfolios, that can dilute margin, but is very much accretive to return on equity, which is our principal focus in terms of managing the business and managing the balance sheet.

And then just you noted the potential impact on the farm economy from geopolitical volatility. If this persists, is the bigger focus on what it could do to loan activity? Or are there areas from a credit standpoint that you're looking at as well?

Bose, this is Zack Carpenter. We're keenly aware of the impacts to the ag economy. Clearly, they've been struggling for some time and the conflict in the Middle East has created some more volatility there.

I think the question has a couple-pronged approach. The first being the duration of the conflict, which has exacerbated the increase in fertilizer prices could weigh on margins going forward. It clearly depends on if the grower pre-purchased inputs prior to the uptick. While that could stress the ag economy and certain borrowers, it also could lead to the need for additional liquidity and capital, and we stand by ready to support those borrowers as they need to work through certain stress times.

As it pertains to our portfolio, we feel fairly confident with the strength of what we're seeing with new loan applications and new loan purchases. In fact, all the loan purchases in the first quarter had very strong credit scores, very, very solid loan to values. The use of proceeds were typically for refinancings or new purchases of either land or equipment. So while we recognize there are stresses in certain parts of the ag economy, the diversified model that we have across the country and across commodities helps support us to be there in good times and bad times.

Your next question comes from Bill Ryan with Seaport Research Partners.

Great to see the volume increase that you guys talked about at the Investor Day. First question, I want to follow up on what Bose asked about the margin outlook. I mean, obviously there's a little bit of seasonal factor in the dip from 122% to 116% in Q1. So that will be a good guide going into Q2. But if you kind of look at your mix of business in the pipeline that you're seeing right now going into Q2, do you expect a little bit more net pressure on the margin? Or do you expect to kind of start to stabilize maybe in the next couple of quarters? That's the first question.

Bill, this is Zack. A couple of comments as it pertains to net effective spread percentage. As we noted in the call, 2 primary factors and I'd say both relatively positive. The first and foremost being in the fourth quarter of last year, we put on almost $700 million of AgVantage volume. That dramatically increased the average daily balance of our portfolio heading into the first quarter. As we have talked about, AgVantage is one of our highest returning products, leveraging our capital, although the NES percentage is lowest across our portfolio. And as Matt indicated, we're really focused on return on equity and return on invested capital.

So the impact of that increase in average daily volume weighed down on the NES percentage this quarter. And in addition, we had 2 fewer days in this quarter versus the fourth quarter, and that compressed our fastest-growing segments, which would be Renewable Energy and Broadband Infrastructure. So the combination of those 2 dynamics was predominant to the lower net effective spread percentage.

What I would highlight as we look going forward, about $800 million or more of our volume was put on in the month of March, and that was broadly diversified across all our segments. So we feel very strong about the durability of our net effective spread heading into the second quarter in a broad fashion. Clearly, the lumpiness of AgVantage could alter that mix going forward. But as we look right now, all operating segments see very strong pipelines.

And the one thing I would note as the Broadband Infrastructure and Renewable Energy segments have significant loan commitments, as those constructions take place and those commitments are funded, you'll see a much higher net effective spread in those businesses.

I'll turn it over to Matt to talk a little bit about the liquidity and funding mix dynamics.

Bill, this is Matt. So I mentioned in my prepared remarks just some points around our balance sheet management and liquidity positioning in the quarter. One thing that also impacted spread this quarter is we did have the opportunity to call about $0.5 billion of callable debt when rates dipped in the middle part of the quarter. That is ultimately accretive to our spread going forward, but did weigh on spread in the quarter about 1 basis point as we had to accelerate the amortization of original issue discounts attributed to those bonds that were called.

And on net, going forward, the pickup in spread from being able to roll down the rate paid on the bonds that were called is annualized at a little over $3 million a year. So that incremental spread we'll be able to pick up or we expect to pick up beginning in the second quarter.

In addition to that, we continuously look at ways to strategically evaluate market opportunities within the funding segment to fund our balance sheet in a way that is accretive to returns, but not taking incremental funding risk. So it's something that we're very diligent about managing it that way.

Portfolio layer method hedging is something that we are introducing into the balance sheet management process this quarter. And the impact of that is going to grow over time. It will be somewhat muted here initially, but we believe that the impact of that hedging strategy will ultimately, over time, again, be accretive to net effective spread. That's just an example of the types of strategies that we're deploying as we manage the balance sheet and interest rate risk.

And one other question on the data centers, it probably gets a bit more attention than it really needs. But there were some headlines, obviously, in the last few weeks about some delays in data center construction coming online. Maybe you could give us a little bit more detail in terms of what you're seeing specifically in your own portfolio?

Bill, Zack again. As we've mentioned in Investor Day, we're very thorough and very methodical in the types of data center transactions we look at. We won't pick up a pencil to assess or underwrite a transaction unless we're working with top counterparties, and we're talking about developers, sponsors, tenants that have significant experience in constructing and operating these data centers.

We want to make sure that there's a power purchase agreement signed and in place, and over 80% of our tenants in our data center portfolio is to the 4 top investment-grade hyperscalers. So we have the opportunity given the market to focus on the best structures and the highest rated data center opportunities. We do not deviate. We don't need -- we don't feel the need to deviate to stretch given the growth that we see available to us. And the point being focusing on these counterparties and these tenants, we have seen very little issues in terms of delays in construction, delays in operations.

We're not speculating, right? So everything needs to be signed up in place, including water, et cetera, before we enter into a transaction. That limits and reduces a lot of risk as you go through the process where maybe in a speculative opportunity, something is not in place and now delays the project and further delays the construction and completion of the data center. So we feel very good about the counterparties and the transactions we're looking at, and we do not feel the need to look at any different or stretch in any way, shape or form.

And one clarification question for Matt, just to make sure I heard it right, is that you have $30 million of investment tax credits remaining. You expected most of that to be recognized in the second quarter?

So our capacity for carrybacks to prior year income tax credits is $30 million as of March 31, 2026. And our expectation is that we will fully utilize that carryback capacity in the current quarter, in the second quarter. And then going forward, we'll be operating on a current year basis, and we'll be monitoring market opportunities to potentially monetize additional tax credit purchases, but it would be on a current year basis from that point forward.

Your next question comes from Brendan McCarthy with Sidoti.

I just wanted to start off on the net loan purchase volume growth in Farm & Ranch. I think you mentioned $384 million, which well exceeded last year's number of $54 million. And that's obviously net of repayments, I believe you mentioned. Can you dissect that a little bit further? What ultimately drove that gap relative to last year's number?

Brendan, Zack Carpenter. We continue to see an acceleration of loan velocity and applications in Farm & Ranch following up from a very strong fourth quarter. As I noted, we had a record quarter of loan applications approaching $1 billion, which is about 30% above the prior record, which is the fourth quarter of 2025. And the pipeline continues to be robust. And the team does a fantastic job working with our customers to convert those loan applications to loan closing.

Some reasons why we're seeing this accelerated growth. I mean, clearly, there's a component of the ag economy whereby liquidity and working capital is necessary to bridge maybe timing gaps between the receipt of government payments or the selling of crops. That is one component.

I think the other component is really working and understanding our customers, the financial institutions lending to these borrowers. They need to manage deposits, which in this environment end up being a very high-cost component of funding. And so in that scenario, they're looking for other liquidity sources to help continue the stronger loan growth they see with their customers and leveraging the secondary market in a broader fashion.

And I'd say we've spent a lot more time really broadening our relationships across the financial institutions landscape. We had a record number of sellers or financial institutions that sold us a loan in the first quarter. We continue to deepen our relationship with existing sellers to find new and unique ways to support liquidity for their borrowers and really having a much more focused relationship orientation with the market. We've put a new head of our Farm & Ranch segment in there to really drive growth, and we continue to see this as we work with our customers and support their borrowers in this economic time.

And I know you touched on some of the headline risk mainly around fuel and fertilizer costs spiking ahead of the planting season. I know we're about a month into Q2. Do you have any insight on the potential impact looking ahead to loan loss provisioning for Q2?

I think we're too early in the environment to assess any future impact to, I'd say, the credit portfolio. And a couple of reasons why there's competing factors here. Clearly, the spike in most notably nitrogen prices can further stress margins. And it's unknown how many growers or farmers and ranchers pre-locked fertilizer before the growing season or need to purchase in this higher rate environment.

I think the other unique dynamic here is as fuel prices rise, typically, you see the increase in ethanol prices, which we have seen. It's gone from $1.80 a gallon up to over $2 a gallon since the crisis started. Higher ethanol prices typically lead to higher commodity prices, especially corn, and we have seen that. So there's numerous dynamics here that are at play. I think the duration of the conflict in the Middle East will determine the impact, either positive or negative from either higher inputs or margin pressure or commodity prices increasing. It's just too early to tell at this point.

And last question for me, just on the credit side. The allowance for loss as a percentage of nonaccrual assets has remained pretty stable. I think it's ranged from 13% to 16%, 17%. Do you have a long-term target there for that ratio?

Brendan, this is Matt. We do not have a long-term target for that particular ratio. We do, though, view the allowance, the level of the allowance and our confidence in covering the risk in the portfolio through that metric. But it's important to also take into account that we're looking at the allowance against nonaccrual assets. Those nonaccrual assets are supported by, in nearly all cases, very high-quality collateral.

And so that's something that -- just in terms of how that metric lines up with, say, a similar metric at other financial institutions would certainly need to be taken into account, the type of collateral that we have backing our loans. But in terms of a target operating range like we have for our efficiency ratio, we do not have such a metric for allowance as a percentage of nonaccrual assets.

Your next question comes from Gary Gordon, a private investor.

Two questions. One, it looks like your charge-offs are about $2 million. Any color on what was charged off during the quarter?

Gary, Zack Carpenter. No new issues with transactions or borrowers. This incremental charge does reflect the transaction we spoke about in the fourth quarter. Clearly, in these situations, the process is very fluid as we work with the bank group and the lead arranger to assess restructuring and other options to either support the business going forward or potentially look at asset sales and liquidations. We continue to monitor this on a weekly basis with the lender group.

Clearly, in this situation, we're dealing with the owners of the assets and working with them, timing delays can persist. And that's what we saw. So we felt the need to further write down to the value we feel is appropriate and charge that off. We feel the remaining exposure is very manageable, frankly, immaterial from the overall portfolio perspective. But we'll continue to assess this transaction in terms of options going forward, but we feel good with where we are from an exposure perspective.

The other question is on the loan growth. Clearly, you're making clear you made a much bigger marketing effort. It doesn't sound like you're changing your underwriting standards. Other contributors, is there any noticeable change in the amount of competition for the type of loans you're looking for? Are there more willing sellers for some macro reason?

Gary, this is Zack again. I think it differs by business segment. Clearly, AgVantage, we saw a bottoming out in 2025, and we've been more focused on broadening our counterparties and closing new facilities, and that has contributed to growth in the fourth quarter and the first quarter, and we feel optimistic that that will continue just given outreach and the relationships we've developed.

I'd say in our newer lines of business, specifically Renewable Energy and Broadband Infrastructure, this pipeline and this growth reflects our investment in the teams, the expertise across business development, but also in credit and operations to support an increasing velocity of loan opportunities. There's plenty of counterparties out there that are looking for a strong and respectable secondary market to provide liquidity to their transactions. And as we've invested in the people and the processes, we're able to be able to step up to more transactions and put more through the pipeline.

And I think Farm & Ranch really just reflects kind of the ag environment plus our focus on broadening our relationships with a greater number of sellers, trying to find unique structure, engaging in process, product and platform enhancements. The combination of all of that and the bank's focus on capital efficiency is really driving incremental share to the secondary market.

That concludes our Q&A session. I will now turn the conference back over to Jalpa Nazareth, Senior Director of Investor Relations, for closing.

Thank you, everyone, for listening and participating in our call this afternoon. We'll be having our next regularly scheduled call in August to report our second quarter 2026 results and look forward to sharing more information with you at that time. As is always the case, if you have any questions that you'd like to discuss with us, please don't hesitate to reach out.

With that, thank you very much, and have a good day.

That concludes today's call. Thank you for attending. You may now disconnect, and have a wonderful rest of your day.

Good morning, everybody. And welcome, everyone, to our Farmer Mac's 2026 Investor Day. My name is Jalpa Nazareth, I'm Senior Director of Investor Relations here at Farmer Mac. Thank you all for joining us.

Before we begin, I'd like to quickly remind everyone that the forward-looking statements, including in today's investor presentation also applies to comments made during today's event. The presentation is also available on our website along with the reconciliation of any non-GAAP financial measures. We have a great agenda for you today. So we do ask to please hold your questions until the very end. You'll first hear from an overview of Farmer Mac from our CEO, Brad Nordholm, followed by a review of our business and market opportunities from our President and Chief Operating Officer at Zack Carpenter. Matt Pullins, our new CFO and Treasurer, will offer his perspectives and present our financial framework. We'll close the day with some remarks from Zack and a Q&A with the management team.

With that said, I will now turn the podium over to Brad Nordholm.

Thank you, Jalpa. You get me live today. It's my distinct pleasure to welcome you all to our Investor Day. I was just doing an interview on a Florida Exchange, and they said, "Well, do you find this useful." And I said, "I hope so. " And it really is something that you will measure. But for us, getting together with you in person, hearing about your questions, seeing you interact is very, very valuable to us. And thank you for taking time to be with us. Really appreciate it.

I'm going to begin today with a little bit of reflection on the last 8 years that I've been almost years that I've been leading Farmer Mac. Because I think it creates some context that is relevant to the rest of the presentations that you're going to be hearing today. It was in 2018 that I was approached by [indiscernible] for consideration for the CEO position of Farmer Mac. And it's an organization that had followed for some years. And as I did research on Farmer Mac in 2018, I saw an organization that has some incredible inherent strengths, a government-sponsored entity charter, GSE charter by Congress, which suggests that there is strong political and bipartisan political support for Farmer Mac.

We'll tell you more about that because it exists to this day very, very strongly. As a GSE an organization that really has unsurpassed access to the debt capital markets. We don't talk about it as much as we should, that we can issue debt across curve out to 30 years at minimal spreads to U.S. treasuries. AAA corporates can do what we do. That enables us to have asset liability management techniques that allow us to not only bake in margin through all interest rate cycles, but bake in margin many, many years out. So when I was looking at Farmer Mac in 2018, I saying this organization has some incredible inherent strengths. I also saw an organization that had a very clear purpose, a very clear mission to provide liquidity to rural America, farmers, ranchers, but it was an organization that had a charter and a charter that had evolved in ways that allowed it to do more to fulfill that mission.

To work with entities that we're providing critical rural infrastructure, electric power, broadband, other areas to work with entities outside the farm gate as we say, up and down the supply chain. And in 2018, we really weren't doing that at Farmer Mac. So coming from a background of banking and private equity, I thought to myself given the opportunity, there's an opportunity to make Farmer Mac a more commercial and more diverse organization. And by doing so, one that can grow faster and one that will have even more stability across different cycles because of increasing diversification.

And so that's basically the huge attraction for me, that was a huge attraction for me to Farmer Mac. And I think if you look back on it, that's exactly what we've been doing in the last 8 years. So going back to 2018, '19, what were some of the first steps we took to kind of realize some of those aspirational goals of diversification of stability of being a more commercial organization that would more aggressively listen to our customers and design product and responses to their needs.

The first thing we did in planning sessions was defined. We need to go to the customers, and we created an executive level position of Chief Business Officer, which we've never had before at Farmer Mac. Zack Carpenter was my first recruit to fill that position. Someone who was charged with providing strategic insight and intent for how we execute on some of these ideas and how we'd engage more deeply with our customers. We set some aspirational goals. And this is something that I don't think we've really talked about before, Jalpa was reminding me. In 2019, we set a goal of 40/40.

And what does that mean? we set an aspirational goal of $40 billion AUM by the 40th anniversary of Farmer Mac, which is 2028. We came up with a strategic plan that had a couple of words broadening and deepening to describe the ways that we're going to diversify the business, the broadening and use technology and people and product to go more deeply into our businesses. And so that's basically what we've done. And what we've done is do this within the -- some people would say confines, I call it a competitive advantage of focus of being a secondary market, being a secondary market that has as the primary market, other financial institutions who are directly connected with those customer segments that we talk about, rural infrastructure, ag business, farmers and ranchers.

We have done it by diversifying those business segments so that in rural infrastructure, it's not just rural utilities now, it's broadband and it is renewable energy. We've done it by putting increased focus on agri business that outside the farm gate part of it. We have done it by diversifying our funding and developing new investor bases in the debt capital markets by securitizing Farm & Ranch assets and now conceiving of additional ways that we can transfer risk in the markets through product and also across more segments of our business.

We have attracted, I think, an absolute first-class team of people able to execute on it. While Farmer Mac has a very proud tradition of being able to do it ourselves to figure it out, be innovative, to be creative. If you're going to be state-of-the-art in working with other bankers in serving broadband customers or renewable energy customers or AGA business customers, you need bankers who go toe to toe with JPMorgan and with MFG and with BMO and other leading institutions who are also focused on those sectors. We've hired very, very seasoned people to pursue this. that has been helpful from not just an origination standpoint but from an underwriting and servicing standpoint, too.

And around that, we have focused on building a culture singularly focused on mission, but unified in a desire. It's always an aspiration isn't it, but a desire to work more collaborative together to work more cooperatively together. -- to realize that almost everything we do requires multiple people across the organization to execute well. There are no individual heroes at Farmer Mac. And bringing in talent and then solidifying that talent within such a culture is not easy to do. But I think we've made huge, huge strides in doing it.

And today, we get uniformly top marks from employees and other stakeholders who look at us for this very, very unified culture. Unified culture also results in less risk -- results in less risky activity. It results in fewer people thinking they can act independently. And so I'm very proud of that. What are some of the results that have come from that?

First of all, we have been able to accelerate growth. And I would suggest to you today, and you're going to hear more about this we've accelerated growth by building this more adverse business platform or platforms. But now that those platforms are built, we have an opportunity to accelerate growth even more. Can a 12% CAGR in our growth rate over the 8-year period of time can be accelerated further? Can our assets under management now at $33 billion at the end of 2025 meet and strongly exceed that aspirational goal that I mentioned of 40/40? Can that earnings growth continue in a way that suggest we use capital very efficiently because we consistently are able to deliver a 16%, 17% even 18% or 19% return on equity capital. Nevertheless, I think so.

So when I think about what we've done, I'm often challenged about, well, how does that compare with others in the market. And just to give you a couple of reference points, if I look at what we've done relative to other major indices, S&P 500, S&P Financials, we far exceeded revenue growth rates against other indices. We've done it because of this growing diversification in our platform. We've done it by having a continuation of highly disciplined asset liability management at Farmer Mac, which results in those predictable spreads that I've talked about.

We've done it by increasing our net effective spread while maintaining that discipline in asset liability management by realizing 2 things, the increased spreads and accretive spreads available in some of these new segments of business even after additional capital and credit charges that it takes to do that business. And also by having people engaged with customers and with bankers and understanding that we are going to not price to a minimum acceptable return at Farmer Mac, which may have been more of a historical approach, but by pricing to the market opportunity.

That's why you hear Zack in the past, talk about moving away and being willing to walk away from certain business segments at certain times. I think the AgVantage bonds, but coming back when the market opportunity -- market pricing is attractive. And that has been one of the reasons why that NES growth has been so strong and been the second driver in addition to the more accretive business segments that we've mentioned.

That has resulted in, I think, what could be considered a strong drive of shareholder returns, coming about by multiple years of increases in our dividend, strong dividend growth, 14.5% and increases and the underlying fundamental returns of this business that have driven appreciation in the stock value, at least until very recently. Again, looking at us against some of the other major indices our returns, the CAGRs that we have enjoyed and earnings per share have been, I think you would agree, very, very impressive.

So what about us relative to others? The market, we believe, was beginning to recognize these very strong strengths in the fundamental business that we have built at Farmer Mac and our future growth opportunities. And beginning back during the pandemic, you saw the market recognize those strengths by valuing us at more of a 12.5%, 13% multiple on earnings, which we think is the appropriate way to think about Farmer Mac. You can argue because of the high quality of our earnings that, that multiple could be justified at a much, much higher level.

We know a large portion of our earnings for 2026 and 2027 and 2028 and 2029 too. You can argue that it should be higher because of our asset liability management practices. We are not subject to a run on deposits. We have our liabilities basically structured including the derivative products to match our assets. And that's why when we talk about our interest rate sensitivities in up 100 or 200 or 300 or down 100, 200, 300 interest rate shock test scenario. We say, it's not going to make much difference at all. And it doesn't. So very, very, very high earnings do they justify a higher multiple.

Recently, of course, we've been very, very disappointed as I'm sure you have, although you may see it as an opportunity with the way the market has valued Farmer Mac because our fundamentals are as strong as they've ever been, and in fact, arguably even stronger. And because we are involved in businesses that are essential to the U.S. economy, and that are growing. So when we think about the reasons why? We think it comes back really to one reason, and that is negative sentiment negative headlines as it relates to American agriculture. Not a day goes by at least for the last approximately 9 months when there hasn't been a sad story about a real farmer and farm family at risk of losing their farm because of higher input costs and lower commodity prices, particularly in corn, wheat, rice, soybeans to some extent.

Not a day goes by when there have been concerns about uncertainty of tariffs. More recently in the last 3 weeks, concerns about uncertainty of availability of fertilizer and cost of fertilizer in the U.S. because a significant portion comes from Middle East. These are the headlines. These are the headwinds that we think have buffered Farmer Mac and our stock price. They're very real. We're concerned about farm families in rural America, particularly in those core commodities, particularly in the upper and lower Midwest, that have had 3 consecutive years now of higher input prices and softer commodity prices.

But our portfolio results and our market analysis tells a little bit more nuanced and different story. And that is a story where Farmer Mac financing 120 different commodities grown by farmers and ranchers across the U.S. are experiencing different returns. Anyone involved in meat proteins today is experiencing profits that are unprecedented, literally unprecedented. Many specialty crops are doing extremely well. It's not being widely covered, but today, and then the next week in Washington, there are going to be meetings at the White House that are probably going to celebrate not just optimism, but possibly real legislation to support year-round E15, which should be a significant increase in demand for corn in the United States.

There's going to be discussion about sustainable aviation fuels and whether more soybean should be going into Jet A and into diesel with diesel above $5 a gallon, another negative headline there's momentum for more of that happening. And so public policy may also contribute to tailwinds, but we see the natural cyclicality of what's going on. We see the eventual resolution of trade and the inherent advantages that U.S. has in growing, moving, financing, major crops around the world as once again being recognized. We see the incredible demand for electric power that will be built in rural America by electric cooperatives and independent power producers, whom we finance. We see the growing interest in data centers and broadband as driving a lot of that incremental demand for power.

But again, it occurring in rural America. We see all these other tailwinds developing against a portfolio today that is healthy and we see increased growth in very, very manageable credit issues and portfolio quality at Farmer Mac. So a lot of optimism. And when we think about what this really means for us that original aspirational idea of 40/40 is not only well within reach, it's within reach in the next 1.5 years, 2 years. not 3 years. It is something that reflects the strong underlying fundamentals of Farmer Mac but also the organization that we've built.

As I approach my retirement, I think of some [indiscernible] years and think about always leaving wherever it is that you found in better condition when you found it. And Farmer Mac has never be in better condition than it is today. Policy from funding, from investor support, debt capital market support, diversified funding and securitization support, diversification of the business, the talent of the team is pursuing those diversified business segments, we have never been in better shape than we are today.

And I don't think anyone has been better prepared to step into my shoes than Zack Carpenter. Zack came to Farmer Mac as that Chief Business Officer in 2019. Zach came out of Wharton and went into Johnson & Johnson from our company. quickly transition to Goldman Sachs, where he had a great run earlier in this quarter. And then to CoBank, the largest agricultural lender in the United States, where we continue this great run there. 6-year segments, leading organizations, most recently Farmer Mac, where he's added an opportunity to see all that goes on and not just see it, but to manage it and lead all that goes on.

So this transition in many ways, for me, maybe slightly less so for Zack. Certainly, not so much for the organization feels very, very seamless. And I am incredibly optimistic about where we are today, but also where Farmer Mac is going to go. At our last board meeting, I told the Board, can I just hang around and be a fly on the wall for a few years. This is really, really going to be fun. That's how I feel about it.

So Zack?

Thank you, Brad, and good morning, everyone. First off, thank you for joining or on the webcast. It's very exciting to be able to talk about our journey and our future here at Farmer Mac. I'm approaching my seventh year at the organization this coming May and time does fly and it's been a wonderful journey but very excited about the next chapter of our organization. There's so much going on in the markets globally, agriculturally, energy-wise. And it's a great opportunity, given all of that, that's going to talk about the strength of our organization. the importance of our mission to serve critical and essential sectors of the U.S. economy.

What we've accomplished in such a short period of time, the excitement we have about our future, the markets we serve, and more importantly, the growth opportunities that we see coming forward. I'm also very excited to have our new executive team here with us today. We've been able to attract and retain significant talent at Farmer Mac. And frankly, we are an employer of choice. We have individuals that have significant experience at Farmer Mac in our markets. We've had new individuals that bring more commercial experience from the other organizations. And that diversity of thought, I think, is exactly what we need as we step into our new chapter. So I'm excited for you to meet in person. This is a very talented, very experienced management team.

So this morning, I'm going to spend some time talking about what we've built over the last 7 years, the markets we serve, our customers, what we see is our unique competitive advantages and what's going to be driving growth from Farmer Mac unique perspective, but also the market tailwinds that we see. I want to take a moment to thank Brad. He joined Farmer Mac in 2018 with a fantastic vision. And he saw a tremendous organization that had plenty of opportunities and opportunities that we weren't excelling on. Like Brad, I saw those opportunities, and that's what was exciting to me to come in to think more holistically about our mission to think about driving more scalable growth to the markets we serve to enhancing the customer relationship, that was exciting to me. And I still remain excited about the next chapter and there's so much more we can do.

Brad also brought a new focus of our culture and mission to the organization. And that's a foundation to us. Our mission of this organization is our North Star. How can we serve the critical and essential sectors of the U.S. economy, focused on our customers, focused on innovation and driving scale and liquidity to these key sectors.

So I do want to elaborate a little bit on Brad's vision that we created in 2019, $40 billion of business volume by the time we turn 40, which is 2028. Why was that constructed? What was our focus and how have we performed? And then I'm going to pivot into a little bit more talking about our markets, our customers, our unique competitive advantages and where we see growth coming forward. So the vision was $40 billion by 2028. And the rationale was there were markets we were not in where we were fully able to access via congressional charter.

Also, how do we enhance the relationships with our foundational markets, and we'll get into those going forward with Farm & Ranch, power utilities and provide incremental scale, incremental liquidity and to support these critical sectors. This thesis was based on a dual dimension strategy, broaden the market and deepen our markets. broaden the addressable markets, there are new markets such as agribusiness renewable energy, broadband that we were not participating in. How do we engage with those organizations that lead transaction in that space. How do we understand the markets to be able to be a consistent liquidity provider there? How can we diversify our assets and our volumes to be able to support that.

We can fund long-term farm real estate mortgages very, very well, and we can provide that liquidity. Stepping into these new more complex markets operational and expertise is critical for sustainability. And broaden our reputation, we are unique. We are a non-threatening capital provider that is a competitive advantage for us. How do we get our reputation out there in the market in these new markets? And then second, is deepen the penetration we have in our [indiscernible] markets. technology is always going to be a component of our focus in these markets, especially for scalability, but the foundation is still relationships.

These organizations, the community banks that serve rural America want consistency, reliability and trust. So with the foundation being relationships, how can we enhance the customer experience? How can we focus on products, platforms and processes that make it more efficient to access the secondary market, infrastructure modernization, leverage technology to make it easier to access Farmer Mac products and solutions and continue to build on our strong reputation in these markets. This is the foundation we call growth, right? We've invested in and build capabilities to support new markets. We've broadened our access and liquidity to new financial institutions, and we continue to leverage our relationships in our foundational markets, enhance the platforms and products we support, and ultimately, meet our $40 billion goal.

As Brad commented on, to make this work, expertise matters. It really does. And we have tremendous, tremendous expertise in our foundational businesses from Farmer Ranch to power utilities, some of the best talent in the markets that understand the sectors that we serve understands the risks and adjudicate risk in the appropriate ways. But expanding into new markets, something we hadn't done before requires a different expertise. It requires operations that need to be able to scale to support new products.

So looking at the life cycle of [indiscernible] in Farmer Mac in the different functional units, we spent the last 6 years onboarding over 100 individuals to support scalability to support relationship management to understand complex risks, to monitor the risks, to operationally fund and to assess our controls and procedures throughout the life cycle. We have tremendous talent at this organization. teams that I'm very proud of, teams that have worked very hard to build something very successful in a very short period of time.

Then this is critical for success, not just for repeatable revenue and earnings but consistency. Our customers, our financial organizations, they want a consistent partner that is there in good times and bad times to support them. And when I look at this slide, I think about all the different functional units that we've created, but more importantly, all the expertise that has joined our organization, individuals from Wall Street, community and commercial banks, GSEs, farm credit system, very talented individuals that have seen the mission of Farmer Mac and have joined our organization.

And the diversity of tenure at the organization, I think, is very important. About 20% of the individual employees at Farmer Mac have been at the organization over 10 years, the tremendous foundational experience that they have to further deepen our penetration in those markets. 30% of the individuals have been here from 6 to 10 years. Think about the strategy built for growth. They were instrumental in building and scaling these new markets. And then more recently, supporting that organization, this new organization with tremendous experience, talent from a broad array of organizations. I'm confident we have one of the best teams in the market. In fact, I hear it from a lot of our customers. And the entire organization is always focused on our mission, making sure we're doing what's best for Farmer Mac and ultimately, our shareholders.

So now I want to spend some time talking about our markets how we support mission and liquidity for our customers, how we assess and look at risk for our portfolio, future market opportunities, what are our competitive advantages and how we think we're going to grow. I'd like to start with Farm & Ranch and this is kind of our foundational segment, one that we've been supporting for 30-plus years and probably the one that we have the most expertise in, in terms of market dynamics. We buy pharma and mortgage loans from financial institutions across the country. We're unique in that we're the only national secondary market.

When you look at the foundational lending organization supporting the agricultural asset class, they're very regionalized, from commercial banks to community banks, farm credit systems, they have their pockets of areas across the country. We're national, and that's a unique competitive advantage for a couple of reasons, which I'll get into. Cumulative over history, we supported over 1,600 originators, originators out in the market finding farmer and mortgage loans and selling them to the secondary market. We have a flexible product set. We support everything from revolving lines of credit on farmland out to 30-year farmland mortgage loans. There's very few institutions that have the capacity to fund their balance sheet to support long-term 30-year mortgage ones like we can.

This portfolio is very diversified. Our average loan size is about $800,000 and -- and frankly, we support over 140 different commodities in our history. And currently, we have no commodity that exceeds 20%. So as we assess all that's going on in the agriculture community, that diversity from a national presence is very important. We're able to diversify the portfolio so we can be there through the cycle. The average loan-to-value of our portfolio is 51%, as you can see in this chart, a very low charge-off rate over our history.

And what makes us such a strong portfolio as the collateral, right? The farmland is the most pressed asset of farmers and ranchers across the country. They'll sell their house, their tractors, their commodities before they want to give up their land. That's how we have very strong risk characteristics of this portfolio. It's 93% or greater over the last 8-year period, and that really reflects the strength of the underlying collateral. We've grown this portfolio 7% over the last 8 years. And I think we have tremendous upside to grow it even faster.

The overall farmland mortgage market grows over the last 10 years, on average, about 3%. So we're exceeding that market growth rate, but I think we have tremendous upside to enhance our market share, get market tailwinds and some of our unique competitive advantages that I'll get into. So what are the business drivers? And why do organizations use Farmer Mac? Well, first, it's our customers to help the financial organizations, the financial institutions in the market, lending money to the sectors we serve. They need to manage capital. They need to manage their loan-to-deposit ratio, liquidity. Many organizations are growing faster than the sustainable growth rate, how can they figure out how to keep up and capitalize their balance sheet quicker.

On the other end of the spectrum, it's the health of the agricultural economy. How do they continue to ascertain liquidity to manage their operations. If a farmland down the road comes up, where do they get the liquidity to buy that piece of property. It's the health and the scalability of those borrowers that leverage the secondary market to grow. And lastly, I think a key business driver here for us is the ability to deploy capital efficiently and effectively.

I mentioned we have cumulatively over 1,600 originators that we've bought loans from over our history. That's a big number. So we get a lot of intel on what's happening on the ground from both our customers, financial institutions and their borrowers. Clearly, from a borrower concern, it's the agricultural cycle that we're going through now. inflationary input costs, labor availability, trade and tariffs, commodity prices, as Brad said, every day, there seems to be a tripping of bad news in articles on what's happening in the agricultural economy.

As farm levels [indiscernible] levels rise and fall as they manage inflationary input costs, borrowers need liquidity to support their operations to be able to scale, to be able to buy a tractor to be able to manage through lower than breakeven profits given the low leverage of farmland asset, which I'll get into in a little bit, but if you look at our loan-to-value ratio in the previous slide, they have plenty of equity to be able to tap in and support that liquidity. From a financial institutions perspective, over the last 12 to 18 months, the big focus has really been in 2 major areas: credit concerns and capital efficiency needs.

Credit concerns isn't necessarily just ag but there was a big concern as we're heading into the renewal season, which typically takes place in January, February or March. Last 2 or 3 years, or especially for certain ag sectors has been tough. How are they going to be able to get through the renewal cycle? What is that going to look from a migration standpoint on their portfolio? The other component is capital. Many of these organizations, even though they're experiencing concerning credit migration continue to grow very fast. They're seeing growth rates that are well in excess of their sustainable growth rate. I mean they're not capitalizing their balance sheet.

They're looking to the secondary market to be able to find that liquidity to offload certain assets to be able to maintain and grow with their growing customer base. The need for an efficient and effective capital deployment from a secondary market is critical, and there's 2 competing reasons why. The first, over the last 15 years, you've seen exodus from financial institutions and supporting ag specifically regional and commercial banks. They've never liked the volatility of the ag cycle. The capital deployment strategy doesn't necessarily work for long-term fixed rate, farmland mortgage loans, they've been pulling back.

More recently, I'd say in the last 8 years, consolidations, mergers and acquisitions create a scenario where the combined entity may not have a strategy in ag. So liquidity for this sector is exiting the market. [indiscernible] with on the other end of the spectrum, farming operations are getting bigger, they're scaling. They need more capacity to grow. I hear this from the farm credit system CEOs all the time, where is the liquidity going to come from? I see all these banks exiting the market. I don't know how I'm going to be able to support these operations as they get bigger. That's a huge opportunity for Farmer Mac.

I want to spend some time talking about the agricultural mortgage market and why we feel confident that there's growth opportunities here. The first reason is the overall market has been growing approximately 3%. As I noted earlier, we're growing more than double that growth rate. And I think we have the ability to also increase that grade to a faster pace. But if you look at the pharma and mortgage market over the last 30-plus years, it's been significantly under-levered, about 10% on debt-to-asset ratio on the farmland mortgage market. There's about 1.8 million, 1.9 million farms out there today. And only 23% of those farms have debt on them. That's all debt. Of those 23%, only 2/3 have real estate debt. So that's about 280,000 to 300,000 farms.

With limited supply coming on with the need to increase scale and operations, the easiest way for these farmers to access liquidity is to leverage their land. While the residential and commercial real estate markets are much different, especially in size and liquidity, this chart does highlight there is ability to see growth in the farmland leverage space. If we look at the growth rate over the last 10 years, we've seen about $100 billion of incremental farmland mortgage has come on market. That's the 3%. If you forecast that out the next 3 to 5 years, that's another $50 billion to $75 billion. If you couple that with potentially increasing leverage on the farm, that's upside and potential opportunity.

And so why would the farmer in this day and age, put more leverage on their farm. I think the first and most important thing to think about is generational transition. The average farmer is 60 years old. Over the next decade, difficult conversations are going to be taking place on what happens to that asset. On one end of the spectrum, if they keep it in the family, capital will be needed to continue to operate and support the scale of that farm. If the decision is to sell most transactions in the farmland mortgage space are from other farmers buying that property. It's not institutional investors. It's not the gentleman living in Chicago, it is farmers.

Their liquidity comes from leveraging their land to buy that farm. They do not have the liquidity in the bank account to be able to go and buy that piece of property without leveraging their land. There are institutional investors in the farmland mortgage space. they're buying up farmland because they think it's an inflation hedge, which it typically has been. They're matching up their liability -- through long-term liabilities, typically annuities with long-term assets. They are more sophisticated in terms of thinking about using leverage. We see that as opportunity and it's tremendously growing our wholesale finance business, which I'll talk about in a minute.

And then frankly, the limited supply of farmland. I was listening to a podcast and it was noted that only 1% to 1.5% on an annual basis of farmland turns over. Really, over the long term, just given the limited supply, that supports the appreciation of the farmland asset. And there's a strong correlation as farmland values increase. The farmland mortgage market will increase as well.

Our national presence and relationship focus, coupled with consistency, relationships and trust is a strong competitive advantage for Farmer Mac. The other critical component, I believe, of why Farmer Mac reflects our operational vision. We have seen a strong correlation, especially over the last 3 to 5 years of enhancing and improving our products and our technology that results in stronger loan growth. Borrowers want capital fast, efficient and competitively priced. Historically, the life cycle of a loan from application to funding was 75 -- 75-plus days. Of that time frame, 60% is waiting on appraisals and waiting on title.

There are ways to disrupt the process. In fact, we have launched the Farmer Mac farmland mortgage index based on significant amount of sales data in our appraisal information. And we have created a platform using that index to be able to leverage automated valuations for low-risk loans, meaning we don't need an appraisal. In addition, we're working with title companies to triage the title process. Currently, every loan is treated the same from a title insurance perspective, but there should be ways to triage risk by loan to create a faster process. So when we put all this together, we have a very efficient onboarding process.

A financial institution or a borrower could access our ecosystem, enter the appropriate loan criteria, update the appropriate documents, receive underwriting approval within an hour, obtain automated valuation to determine loan to value and rate lock their loan in 1 day. All that remains is preparing closing docs and funding. So my vision is submit alone on a Monday and close that loan on a Friday. The residential mortgage market has leveraged technology and data to dramatically make -- obtaining a resi mortgage more efficient. There shouldn't be a reason that the farmland mortgage market can't somewhat repeat that and follow that same path.

I want to spend some time talking about corporate Ag finance. This is our first new market we entered and underscores the start of our journey, a broadened journey. Here, our focus is really driving agricultural commodities to their end markets. So really the food, fuel and fiber supply chain. So think livestock, how CAF operations to dairy me processing or corn ethanol, wheat to baked goods, timber to pulp and paper or sawmills for lumber, cold storage, other food production infrastructure, really converting these at commodities to finished goods that are distributed across the country and frankly, the world.

We've seen tremendous growth over the last 7 years or -- yes, 6 or 7 years of 19%. But these are different loans than Farm & Ranch. And again, this goes back to why expertise matters. These are larger exposures. We typically underwrite these deals as enterprise value-based transactions. So what does that mean? That means we focus on the strength of the business, generating cash flows to remain viable over the long term. It's not much as much focused on collateral. We do have collateral, we are secured, but the repayment capacity is the business operating in the future. So we look for business model, scale, management expertise, cash flow repayment capacity, market outlook. And this is where expertise in-house really matters.

We have a person who leads this group that has 25-plus experiences at Rabobank, the Farm Credit System understands the Agribusiness cycle. We have underwriters that can adjudicate complex risks across all the different subsectors. We have a strong credit approval team that has determine and crafted appropriate policies to monitor and manage these risks. We have an industry-leading risk adjudication process. It's also critical who we partner with. These are primarily syndicated transactions. So we are not the only lender lending money to these businesses. We are partnering with sophisticated lenders that understand the space that do this on a daily basis.

We also work with reliable and sophisticated leader ranges. They are the organization structuring the transaction. They better structure it to market or we're not going to participate. These are price to market. We're making sure as we put our capital out, we're getting the right risk-adjusted return. And we're continuously monitoring these deals, quarterly reviews, annual reviews, consistently looking at what's happening in the markets, making sure we understand what our portfolio is doing and if we see any changes in migration. From a risk profile perspective, since inception, this -- the profile of the agribusiness portfolio has been very strong, generally above 90%. And -- and we'll discuss this a little bit later, but the credit metrics of this portfolio and more broadly of Farmer Mac is -- competes very well with our peers, and we're very proud of our credit metrics and how strong they've held up even in tight agricultural cycles.

There's also an intangible value of this segment. It's opened the doors to other opportunities across our other markets. So for example, we've partnered with institutional clients in the corporate Ag finance segments and provided liquidity to their transactions, who in turn has come to us wanting a wholesale finance facility. Another large commercial organization, we parted in many of their syndications, more recently, over the last 2 years has sold as pools of Farm & Ranch loans. Many of the transactions in this market are with the farm credit system, the leading agricultural lender in the United States. They are now interested just given capital dynamics of selling Farm & Ranch loans to Farmer Mac.

This segment helps open up the doors to other markets and other opportunities. We believe there's tremendous need for investable capital across the agribusiness supply chain. And I think there's 3 main long-term fundamental themes that I see. The first is the significant demand globally for food and fuel, protein consumption continues to be a strong driver of growth across the globe, driven by the need to up-tier diet and consumption. And then more recently, evolving consumer behavior. changes in preference. The younger generation has a different view of their diet, snacking and alcohol beverages versus other generations. So we think these 3 themes are going to drive significant investment in the food, fuel and fiber supply chain. And as operations get bigger, they need to scale, they need to be more efficient in margin, and they're going to use leverage to be able to create another facility, add another product line, create cold storage food infrastructure. This requires more financing than ever before.

Changing consumer behavior has been an interesting dynamic, especially over the last 2 years, and this is causing organizations to significantly invest in reformulation is that creating smaller packages, snackable packages. Is that creating more product lines that are nonalcoholic beverages. That all requires investable income. Trade also creates an issue, especially for supply chain resiliency. Many of these organizations get product across the border, Mexico, Canada, China, et cetera. With everything that's going on, especially over the last 18 months, there's been more of a focus on making a resilient supply chain, investing domestically to make sure that they have the components to be able to continue to meet the product demand.

We continue to see a lot of M&A activity here. This is driving scale and resilency from margin perspective. And recent examples that we think is going to also drive maybe incremental growth to this market are things that we're reading in the newspaper on a daily basis, is E15 or ethanol on an annual basis is going to come to fruition. We don't have enough crush capacity to be able to meet that demand. Is there more investment in crush capacity to be able to support increasing ethanol. Dairy and Whey protein. Whey has been a significant demand driver, especially in Asia and the China markets. We don't have enough capacity to be able to meet that demand, meat consumption, the up-tiering to poultry and beef. All these things we're looking at on an annual basis to see where is that money going to go? And where is that infrastructure going to be built?

Power & Utilities, another foundational market for us that we've been in since 2008. In this market, we serve the 900-plus generation transmission and distribution cooperatives, generating distributing power to rural America. The cooperative structure is important here. They need very strong credit profiles to be able to manage over the long term. And given the cooperative structure, they have rate-setting authority and so what does that mean? There's significant liquidity that's needed to maintain, upgrade up tier this fast infrastructure, those costs, if needed, are generally passed on to their members, essentially the rural communities that need that electricity.

And then maintaining that strong credit profile is very important because the only way to be able to uptier and upgrade your infrastructure is through debt capacity. We've never experienced loss in this portfolio. And over the last 8 years, we have 100% acceptable loans. The co-op infrastructure market is dominated by 2 major cooperative lenders, the National Rural Utilities Cooperative Finance Corporation or CSE and CoBank. These organizations are our primary customers. We buy these cooperative loans from these 2 entities. They have significant experience have been in this market for decades, very low losses to strong relationships and significant market share. I think they have been supporting over 50% of the co-ops generating and distributing the power in America.

Infrastructure is also critical to this power, and it's a very, very valuable asset. The amount of money they needed to invest and construct this makes it a very big barrier to entry. It's also not very easy to step into rural markets, invest that capital and generate return that's needed to support that capital deployment. As we think about the business drivers in this space, the first thing I want to highlight is CoBank and CFC. And I'll get into the market dynamics of energy going forward, but they're seeing tremendous demand growth for capital of their cooperative customers. They want to be consistent and reliable just like Farmer Mac does. But what's happening is their growth rate is exceeding the sustainable growth rate for capital efficiency and leverage. This is causing significant inclusion of Farmer Mac into these transactions and resulted in some of the biggest growth we've seen over the last 8 years in 2025.

The other business driver or I would say, opportunity for Farmer Mac's market share. I noted 900-plus cooperatives. They serve 42 million people and actually power 56% of America's landscape. Our portfolio only supports 25% of those 900-plus co-ops. Our average loan size is only $17 million. 60% of our loans are under $10 million. So when I think about market share opportunities and deepening our penetration, coupled with the scalability and capital efficiency to 2 major customers there is a tremendous opportunity for Farmer Mac to provide more liquidity to this space.

And the last thing I'll highlight, and this will transition into our market snaps out of the electricity industry is just the significant demand for energy that we're seeing across the country. This is going to be a general theme as we move into our infrastructure markets. The strong growth opportunities of the energy demand across the country, we believe, is a huge liquidity driver for Farmer Mac. Now energy load growth over the next 10 years is going to increase dramatically. In fact, it's going to be higher than it has been over the last 25 years, and frankly, hasn't been this high since the 1950s almost 1,000 terawatt hours of load demand anticipated through 2035.

So what's driving this? Well, clearly, it's what we see in the paper every day, data center investments. But it's not just that. It's large loads coming on markets. It's onshore and industrialization. It's the use of more electronic products such as EVs, other electronic products that are going in the house, it's world population growth. After COVID rural population actually saw growth for the first time in over a decade. It's remote work. More organizations are accepting remote work requiring the more need for power in those homes.

Over the next 5 years, this anticipated over $1 trillion of capital investments is needed to help meet this significant growth in energy demand. So where does the supply get to come from? Well, when you think about it, and I talk to all the power producers, it's really an all hands on deck approach. Any generation asset, you can get up quick. In addition, timing matters here. We need the power today. We don't need it in 5 years. And so there is a power conundrum, right? If you want to build a nat gas combined cycle power plant, I hope you got on the wait list for a turbine 3 years ago. Because right now, to get a turbine from GE or the other major market maker is 3 to 4 years, coupled with permitting and the time to build the facility, you're at least looking at 5 to 7 years to get that facility up and running. A lot of talk about nuclear and we're continuing to monitor that sector as well.

But the -- that's probably 7 to 10 years out. The technology is not there. There needs to be price certainty. There needs to be efficiency in construction before that ever gets to the point where senior secured leverage could be put on it. The continued closing of coal power plants or inefficient other generation assets. So where do we get the power from, anything and everything that can provide generation electricity today.

The other component of this sector is the need to enhance the grid. If you look at our grid, it's fully depreciated. A lot of these assets are end of life. We see more weather events. We now have demand surging there's continual capital on an annual basis to up tier, invest and improve the grid. We're in a unique position to be able to support all these different business drivers.

Turning to another one of our newer segments is the renewable energy market, and we've seen tremendous growth over the last 5 years in a rather new market for Farmer Mac. And again, this is another area where critical expertise matters, significant focus on finding the right individuals to manage the portfolio, understand the risks and monitor the risks individual who runs this portfolio from the relationship side spent over 20 years in development, sponsor, credit, all in the renewable energy space. We also have a very seemed credit approval from GE that spent over 30 years understanding this market. So we're very confident that we can understand and adjudicate the risks but also focused on partnering with top-tier sponsors, top-tier developers, equipment manufacturers. For a couple of reasons. One, they know what they're doing. We want to partner with the people that have done this before. But two, it's very important that we're consistent and reliable, and we want to align our risk parameters with how they're structuring and how they're thinking about engaging in the market.

We continue to maintain very strong risk profiles in this space, over 90% acceptable, in fact, 97% at the end of 2025. And we look at risks in this space in 2 different buckets. The first is construction, you got to construct the product. And that's why developers, sponsors, equipment is critical. We want to make sure we're partnering with those [indiscernible] institutions that do this all the time. And then it's operating. Like once that project is completed, it's generating power. And what we get very comfortable with is that power is under a long-term power purchase agreement with an investment-grade off-taker. That means that investment-grade counterparty is required to take that power over a long period of time and contractually negotiated rates.

So why is this a business driver? Why have we seen excessive growth? And why Farmer Mac? Well, first off, we're consistent, knowledgeable and nonthreatening. We have the expertise to underwrite these deals efficiently, effectively. We can provide liquidity on a reliable basis, and that's very important, especially for the growth we've seen in this sector. But also as a secondary market, and I think this applies broadly to many of our sectors is we're not threatening right? We don't originate loans. We don't talk to borrowers. We're not out there trying to compete for transactions. We are there to provide liquidity to the markets we serve. And that's very unique and is very sought after with the financial institutions that arrange these transactions.

Lots of talk over the last 12 months or more on tax credits and the impact of the renewable energy market. And clearly, HR1 solidify policy implications for tax credits. And in fact, they incorporated phase out. So if -- you can start construction by July 4 of this year, or you complete construction of a project by the end of next year. The tax credits still remain. Everything outside of those time frames, they have sunsetted. There's also a component of foreign entity of concern, where are you getting your supply for these projects. If you're potentially buying a lot of your supply from China, it could be in a very difficult situation.

We believe it's still important to understand the impacts of this market, and we'll continue to monitor this going forward. But we believe the short energy generation of the United States really takes priority here. A couple of things to note. I mentioned the timing to make [indiscernible] combined cycle power plant is 5 to 7 years today, maybe even longer. When you look at a renewable energy project, even a utility to scale solar [indiscernible], you can build one of those in 18 to 24 months. Battery improvement is significantly helping with intermittence, right? So when the sun doesn't shine, the wind doesn't blow, these aren't generating power with battery life extending to playing more coming in with technology improvements. That is helping with the intermittence problem.

And I think the most important thing to remember or understand about this sector is the localized cost of energy generation between fossil fuels or combined cycle nat gas plant and our utility scale solar project and battery. They're very close. And that's excluding the tax credits for the renewable energy projects. So it's basically how quickly can you get energy generation on the market and renewable energy is going to be a source of that. We still see large corporations that purchase significant amounts of energy managing diversified source of that energy, clean energy is a component of that.

And when I look at the North American Electric Reliability report from January of 2026, it states over the next 3 years, 2/3 over 200 gigawatts of power is coming from solar and batteries. This market is shifting from policy-driven growth to market-driven growth based on the needs of energy and the evolving nature of our energy demand in this country. You could see changes in cap truckers for these projects. You can see different debt profiles. You can see higher prices with power purchase agreements but given the need for energy and the structuring of these projects, we firmly believe there will be a strong growth opportunity, especially Farmer Mac in the future.

I did want to highlight a brief life cycle of renewable energy project in how we participate in what we look at. There's a lot of prefinancing that takes place, land control, permitting, power purchase agreements. Before we pick up a pencil, we're going to let make sure we have all of these things in place. It's construction ready. The supply is in America. We're not relying on tariffs or trade or implications of getting the production capacity in the United States is already there. We're working with top-tier developers and sponsors, organizations that have built gigawatts, hundreds of gigawatts of these projects in the past. A reputable and experienced financing partners. And most importantly, we have a power purchase agreement signed with an investment-grade offtaker contractually supporting revenues over the long term of this project.

At that point, we look to participate and what makes us unique is we can participate across many parts of the financing structure from the construction to the tax equity bridge financing as the sponsors get tax equity done for these projects to the term out, and the term out could be a 5- to 7-year mini perm or a longer-term financing. We're a unique player that can support any financing in these structures. Broadband infrastructure, a rather new portfolio as well, where we've seen 85% growth over the last 5 years. This portfolio is split generally into 3 buckets. I would say 50% plus is data center and the investment in data centers we've seen in this country, 35% in broadband fiber and cable and the rest, about 15% in cell towers and these are critical and essential sectors to the world economy, enhancing fiber service, broadband infrastructure, cell tower coverage, it's really to support the growing needs of digitization in America.

Again, these are different loans in Farm & Ranch. These are larger exposures. We underwrite these loans on an enterprise value basis focused on the strength of the borrower being able to generate cash flow in the markets over the long term. Expertise right? Again, this is what matters. The individual managing this portfolio spent 25-plus years in the telco industry, knows all the financial players in the market, we've onboarded critical underwriting resources and also have credit approvals that have been and understand this market holistically.

And again, we focus with the right counterparties. We want to be in syndicated credits, where we're relying on partnering with organizations that know these markets and underwrite the credit risk, reputable agents to structure these deals and we continue to model these deals just like Corporate Ag finance, quarterly, annual, make sure we understand what's transitioning in our portfolio.

From a data center perspective, very similar to renewable energy, top-tier sponsors and developers and make sure we're partnering with offtakers that have investment-grade profiles to be able to support the length of the data center life cycle. Our risk profile remains very strong, 97%. And frankly, we get some of the best returns in our portfolio in this segment. I mentioned this earlier. You don't go to day without discussions on data centers, just given the energy demand this market is driving in our country. estimates of $2.5 billion to $3 trillion in data center investments over the next 5 years just in the U.S., clearly, AI-related, but cloud computing, digitization every organization, every individual is putting their data in the cloud, that's driving the need for data center investments.

Clearly, this spin is a big driver of the growth we've seen in our portfolio over the last 1 or 2 years, and debt financing has been critical to get those projects up and running. In fact, $1.8 trillion of debt financing over the next 5 years is expected. And I want to highlight one thing that's unique for us here is you can see there's 3 components of debt financing, baked debt, ABS, our asset-backed securitization and private credit. We have relationships across all 3 of those markets and have the ability to support financing if it fits our box across all 3 of those markets.

Risk parameters focused significantly on structure. The significant majority of our transactions are with the 4 investment-grade hyperscalers, Meta, Amazon, Google and Microsoft, and that's extremely important. These hyperscalers signed take-or-pay type leases for 15, 20 years that support the revenue of these projects to cover debt and interest and amortization. And we look for strong developers that understand the market and can ascertain products and build these data centers efficiently and effectively. And while this is a project finance deal like renewable energy, it's much easier than those types of project finance. This is building the shell. They're building a warehouse.

Once that warehouse is built, the hyperscaler is responsible for the servers, the chips, the equipment, the power, the water. So it's a very fairly easy project finance structure. But again, our focus is partnering with the right relationships that know this space. And what gives us comfort in the data center market? And there's been talk about a bubble. There's a ceiling in this market and the ceiling is power. There's not enough power to meet the trillions of dollars needed for data center growth. Currently, data centers have very, very low vacancy rates. This is not build it and they will come strategy. we don't partner that way with the organizations. We are partnering with organizations that need data centers and once it's operational, is generating cash flow off that data center, ultimately, the hyperscalers.

And in the future, I think what's going to be a ceiling here is water and location. Not in my backyard, you're seeing more and more communities pressuring data centers to go elsewhere. I think that will continue as we see so much investment in the data center space. Our ultimate risk here is the ability of the 4 investment-grade hyperscalers to cover their debt service. The difference here between the dotcom bubble is they're already generating revenue and cash flow from these data centers. That was different back 25 years ago where organizations were laying dark fiber in the ground, fiber not lit and had no cash flow support to support that investment. And the last thing I'll conclude here is we have no exposure to software. We do not finance AI labs that have no cash flow generation, and we're not supporting the semiconductor industry. We are purely focused on the construction of the data center.

A quick overview of the data center project life cycle. Again, a lot of prefinancing is done. We want to make sure before we pick up a pencil, the master lease agreement with investment-grade hyperscalers in place, top-tier developers and sponsors. They know what they're doing, and are partnering with the right financial organizations that in cadence structure these transactions. And again, a unique player. We can finance across the data center life cycle from construction, which is typically short-term financing 1 to 2 years to term out which initial financing could be 5 to 7 years or once it's fully stabilized, asset-based securities. In fact, we bought into a couple of ABS tranches over the last 3 months to broaden our aperture in terms of supporting this opportunity set. So many options for us to participate in growth of the data center throughout its life cycle.

I'll finish the market and liquidity discussion with our wholesale finance market. And it's a very unique and important product we have as a secondary market. The customer set here is large investment-grade counterparties. And I want to talk a little bit about that 0% CAGR growth because that does jump out compared to our other markets. And I'm going to go off of what Brad said earlier, we deploy capital on a risk-adjusted basis. We want to deploy our capital to support NES dollars. But at times, if the risk return does not make sense, we are not going to deploy capital.

And why this is important, especially for this market, is these are very large, very strong investment-grade counterparties. There are times, especially over the last 18 months, where we've seen investment-grade credit spreads at historical low levels. And that may cause us to pause because we're not going to get the risk return we want by deploying capital, and we're seeing growth, significant growth in other markets, and we were redeployed to that space. So it's a strong focus of ours. And I'd also say in 2024, which drove the significant growth from 2023 as we were renegotiating and working through an enhanced facility with one of our largest counterparties. It took some time, but we finally closed that at the end of 2025 and started to see fundings and incremental growth at the end of '22 and into 2026. And in fact, last week, we closed a $1.5 billion facility with another large insurance counterparty.

The risk profile here is extremely strong. Like I said, our counterparties are investment grade large counterparties and insurance companies. Second, our facilities are secured in over collateral basis with eligible assets or the farm & ranch loans, or power and utility loans. So overall, our primary source of repayment is a strong investment-grade counterparty. Our secondary resource of payment is the secured assets that we know very well and are very strong. And one thing that's very interesting about this space is it's very scalable. We can put on $1 billion of funding at very accretive NES dollars and returns without adding any individuals now adding a infrastructure, we've created a very scalable and efficient model, and that's what gives us excitement as we see growth opportunities in the future.

A few business drivers, very limited supply of products in the market, especially for the markets that we serve. There continues to be strong interest in the asset class from insurance companies really to match the farmland with their annuity liabilities. Our secured facilities at times can be a very strong relative value for these organizations. They compare us to what they can get in the general unsecured bond market. And given we're secured, we can oftentimes be more competitive in price and that drives more relative value from us to them, increasing our funding opportunities.

Before we take a quick break, I want to conclude our discussion this morning with a few comments. First, we talked a lot about our 2019 vision, $40 billion by 2028. Last year, we saw accelerated business growth in 2025, grew the fastest we've grown as a company since our inception, $3.8 billion, $2.2 billion in the fourth quarter alone. This is across all markets and all products. We've maintained discipline in finding the right deals, pricing to market and making sure our risk-adjusted returns are appropriate. We've seen so many deals in the market, frankly, we've had to turn away a lot of them, we don't have the capacity or resources to be able to continue to support but monitor them appropriately. And frankly, that growth hasn't slowed down in 2026.

So given all these recent dynamics, the market tailwinds we see, the competitive advantage we have as an organization, we're well positioned to exceed this goal. We're going to take a quick 10-minute break. I mean, and then we'll continue with Matt Pullins, our new Chief Financial Officer, to introduce himself, talk about his perspective of Farmer Mac as he leads our finance function. So we're grouping 10 minutes.

[Break]

Well, good morning. It's a pleasure to be here with you, and thank all of you for attending, and those of you on the webcast for being with us here this morning, and it's also a pleasure to be hosted by the New York Stock Exchange. I am Matt Pullins, I am Farmer Mac's Chief Financial Officer and Treasurer, and I joined Farmer Mac just a few months ago in December of 2025, following nearly 2 decades of experience in corporate finance and capital markets at a large commercial bank. My background, however, is deeply rooted in agriculture. I grew up on a family farm in Ohio and remain actively involved in the family farming operation today. That foundation has given me a profound level of respect and understanding for rural America and the people who call it home.

I've seen firsthand how access to capital is able to strengthen both the agriculture and rural infrastructure economies and sectors within rural America. And I look forward to being able to take this lived experience and been able to benefit not only our business here at Farmer Mac, but most importantly, the borrowers and economies across trual America that we work with on a day to basis. I'm honored for this opportunity to bring together my corporate finance and agricultural backgrounds and experience to lead the finance function at Farmer Mac.

In this role, I'm committed to ensuring that we continue to provide the vital liquidity that supports the growth and prosperity across rural America. And while we also be focused on serving as effective stewards of your capital invested in our business. Now talk a little bit about my perspective of Farmer Mac as I became familiar with the organization this past this past fall in evaluating the opportunity at Farmer Mac. And there were 3 things that stood out about the organization that really caught my attention and made me excited about the opportunity to join the organization.

First is the mission, providing vital liquidity to rural America. And I see the significance and importance of that both from my lived experience as well as from where I stand today and understanding the need for us to provide this service to borrowers and communities in rural America. The second is the significance of -- and the historical consistency of growth from a financial standpoint that Farmer Mac has exhibited particularly over the last 8 years. And then the third is the significant opportunity for continued growth in our various sectors into the future. And we sit at the cross-section of very exciting areas of the economy, food agriculture, energy, digital connectivity within rural America. And all of these provide significant opportunities for growth, and I couldn't be more excited to be part of that growth path going forward.

We'll talk about all 3 of these points as we get into the presentation here this morning. So one of the most notable points about our historical performance is the consistency of business growth. And as you see here from this slide, we've grown our outstanding business volume at an 8% compounded annual rate since 2018. Notably, Farmer Mac's business has evolved to the changing landscape in the rural economy. And in recent years, the growth has been -- the composition of growth has been more tilted towards some of our newer segments including the broadband and renewable energy sectors. This has been an important component of being able to grow business volume but also a significant contribution to the expansion of net interest -- net effective spread which has grown from 91 basis points back in 2018 to 120 basis points for our average in 2025.

Now this consistent growth in outstanding business volume is the underpinnings of the consistency of the growth in revenue and core earnings that we've exhibited over this time period. We've experienced a 13% growth in compound annual -- compound annual growth rate of revenue and nearly 12% growth in core earnings over this period. And I want to talk about 3 specific components or drivers of this growth that are unique to Farmer Mac and I believe are differentiating factors from other institutions in the financial services sector.

The first is the way that we manage interest rate risk in the way that we fund the balance sheet. We use interest rate management techniques that position us to be largely agnostic to interest rate levels and market rate movements in the future. This positions us for consistent revenue generation through the market cycles and over the course of time. We achieved this outcome by matching our asset purchases with debt and a combination of debt and financial derivatives that have duration and convexity characteristics that are similar to and offsetting those of the assets that we bring on to the balance sheet. This mitigates the impact of future interest rate movements and again, enables us to generate consistent revenue streams through the course of time regardless of market conditions.

The second unique advantage for our business is that we are not overly dependent upon fee revenue. The vast majority of our revenue is generated through interest spread. And in fact, through year in, year out, we typically generate less than 5% of our revenue from fee-based sources. What this means is that at any given point in time, embedded within our balance sheet is a significant component of our future earnings streams. We're not overly dependent upon continued transaction activity. to generate fee-based revenue to grow consistency in our earnings over time.

And in fact, to take a look at where we ended 2025, our balance sheet at the end of the year contained within that asset and liability profile, projections of net effective spread in 2026 that would actually exceed the amount of net effective spread that we generated in all of 2025. So let me state that a little bit differently just to drive the point home. We began the year with our balance sheet position to have greater earnings or greater revenue than the prior year, before we ever considered purchasing a single asset in the current year. This is a significant and powerful advantage for our consistency of financial returns to you, our investors, over the course of time.

And third is the efficiency of our business. As you can see from this chart, we have very consistently generated operating efficiency at less than 30%. So we spend less than $0.30 to generate each dollar of revenue for our business over the course of time. And this is something that we manage very closely and we certainly intend to carry into the future as we pursue future growth opportunities. This gives us the luxury of being able to invest in our business while also being able to grow earnings and returns for our investors. And that enables us to position for accelerated growth and future opportunities down the line without having to sacrifice our financial returns in the period of our investments. And we, again, view this efficiency to be a powerful advantage as we look to future growth opportunities down the road.

So let's talk a little bit about funding. Brad and Zack both touched on this a bit, and I want to spend a minute getting into a little bit more detail around our funding advantages at Farmer Mac. This is one of our most significant strategic advantages. Optimizing funding strategies is an essential component of our consistent revenue earnings -- revenue and earnings growth. Our government-sponsored entity status affords us the ability to access the debt capital markets at very favorable levels. And we're also able to do this consistently through a variety of market conditions.

As shown on the chart on the left-hand side here, you'll see that our debt spreads are very consistently trading within -- significantly within the levels of AAA rated corporate debt. And in fact, in periods of stress, our levels of debt trade at even greater advantage to AAA corporate debt. And this is a significant advantage when we look at our ability to operate our business through all market cycles. To give you a real live and current example of how this is playing out as an advantage for our business, you may be very familiar with in recent weeks, the combination of concerns about private credit and geopolitical uncertainty has caused investment-grade corporate spreads to widen. Our spreads have largely been unaffected in this time period. And in fact, earlier this week, we held debt auctions that went off at very favorable levels.

We auctioned 5-year debt at only 4 basis points wide of our U.S. Treasury benchmark rates and 10-year debt at 14 basis points wide of U.S. Treasury benchmark rates. These are levels of consistency of attractive funding costs and it creates a powerful advantage for us to drive spread and consistency of revenue growth into the future. In addition to being able to access the markets at very favorable levels, we very purposefully remain nimble in managing the balance sheet, which enables us to accommodate investor requests for debt to meet certain investment objectives that they may have. And this enables us to deepen our relationship with our very important debt investors across the country.

In recent years, we've made it a strategic priority to deepen our relationships within our dealer network and broaden our debt investor base which has enabled us to increase our investors in a broad array of categories and types of investors around the country. Through these efforts, we've diversified our investment base and these investors routinely provide reverse inquiries to us to ask for opportunities to purchase our debt. In fact, today, between 30% and 40% of our debt is issued through reverse inquiry. This is where investors are coming to us through our dealer network requesting to purchase our debt. And we also view this as a very powerful advantage and an indication of the strength of our company in our access to low-cost, stable funding through market cycles.

In addition to the access to the debt capital markets, our liquidity portfolio is an essential component of our funding strategy. We opportunistically add liquidity through our investment portfolio when market conditions weren't doing so. This enables us to have opportunities to access liquidity via the investment portfolio should market conditions change and issuing debt become less attractive. And again, this is a critical asset for us to be able to remain open for business and continue to provide the vital liquidity to our borrowers through all market cycles.

Being a mission-driven firm, we are actively striving to balance the combination of providing liquidity across our business segments with generating our return objectives relative to invested capital. Risk-adjusted gross return on capital is a metric that we find very effective at doing so. And unlike many businesses, and this is a key differentiator for our firm that Brad touched on briefly earlier, we are not operating our company based on target portfolio levels or compositions across our businesses. We are evaluating each asset purchase opportunity on its own merits, specifically looking at its risk-adjusted returns relative to the capital that is required for that asset. We find this to be a very effective way to manage our business and gives us a very consistent way of managing both risk and consistency of return through market cycles.

However, a second order effect of this way of approaching our business is that it does lead for the potential to see shifts in asset composition in our business over time. As an example, Zack talked just a few minutes ago about our wholesale finance products. The composition of our balance sheet and wholesale finance products has declined in recent years for a variety of reasons, not the least of which is a relatively tight corporate spreads that have given our borrowers' alternative ways of generating funding. As we see corporate spreads tighten, we often see -- or corporate spreads widen, we often see increased interest in our wholesale funding products. And this is a great opportunity for our business.

As you can see on this slide, the returns relative to risk in our wholesale funding products are quite attractive. However, the gross spread on these products is well below the average for our portfolio. So it does provide the potential for dilution of our margin on a percentage basis. However, it is very accretive to our return on capital, and that is the essential metric that we are using to operate our business. As an aside, I would point out that we do see opportunity as the investment-grade spreads do widen because these products are often viewed as alternative to those markets. And it's a very exciting opportunity for us in the future is to be able to provide this essential liquidity to borrowers when other capital access sources may not be as attractive for them, it's attractive for us on a return basis, but also, as I mentioned on the previous slide, our funding advantage tends to be the greatest in periods of market stress, and that's where our borrowers are going to feel it in terms of investment-grade spreads, that only gives us opportunities to grow volume in these types of products, but also gives us some pricing leverage while still being able to price inside of the investment-grade markets. So really a great outcome for us, and we'll be monitoring those market dynamics very closely into the future.

Our differentiated approach to credit underwriting and portfolio management is foundational to our business. As Zack mentioned, we've taken a very thoughtful approach to acquiring specific expertise in a variety of lending segments, particularly as we have grown into new areas of the business, specifically broadband and renewable energy infrastructure. This new expertise has positioned us to be very effective in underwriting these assets and enable us to continue to operate our business with an effective risk management framework that you've come to know at Farmer Mac.

This dedicated first-line expertise is also paired with a rigorous second- and third-line risk management framework. And this approach combines to enable us to achieve very attractive risk return dynamics through market cycles as well as stable portfolio -- long-term portfolio stability over the course of time. A live example of our approach in this space can be observed within the California Farm & Ranch portfolio. You may very well be aware that the industry has observed and felt some level of stress in California Farm & Ranch assets in recent years on account of limited water availability.

Our underwriting and portfolio management and credit expertise in California has been focused on the understanding and analysis of water availability in our Farm & Ranch portfolio. And that was done initially at the underwriting and has carried through the process of managing the portfolio and the credit exposure that we have in that space. through the course of time that those assets are on the balance sheet. And this approach positions us to have a better outcome than many of our peers, and we believe that, that is ultimately reflected in the performance of our California Farm & Ranch portfolio, which has been industry-leading in our view.

So we maintain a strong credit profile as evidenced by our nonaccrual assets being only $238 million of the end of 2025. Factors benefiting our credit quality include the composition and nature of our business, our underwriting standards, portfolio composition. And arguably, most importantly, the level of credit expertise we have in the company to be able to manage the assets and the risks within our portfolio. While nonaccrual assets have increased in recent years, they remain at relatively low levels. We ended 2025 with nonaccrual assets at 1.4% of total loans and less than 1% of total interest-earning assets. Moreover, our infrastructure assets comprise a proportionately small portion of our nonaccrual assets. Only 6% of our nonaccrual assets were in the infrastructure space at year-end, while 35% of our outstanding business volume was in the infrastructure business.

Our allowance for credit losses needs to be evaluated in the context of the risk of our business and the composition of our portfolio. We look at our allowance in the context of our historical loss experience, and we are comfortable that -- and believe that the allowance as of year-end adequately reflects the expectations of loss and the risk within the portfolio at that period of time.

On the next slide, we see the performance of our credit metrics relative to a number of agricultural lending peers. And this is a further indication of the strength of our underwriting portfolio management and overall credit performance within the agricultural lending sector. On the left-hand slide, you can see that we rank the top amongst our peers in terms of provision for credit losses as a percentage of outstanding assets through the last 2 years. And on the right-hand side, the charge-off ratio of incurred losses for the last 2 years, we rank second.

We believe that the portfolio composition, our focus on secured lending the composition of our asset portfolio and various risk characteristics of our business are significant contributors to this outstanding credit performance and that we will continue to be a leader in credit quality and the agricultural lending space into the future.

Now finally, I want to spend a moment talking about our firm level capital allocation and returns. We take a holistic approach to capital allocation and capital management, balancing the pursuit of our mission, providing vital liquidity to borrowers in the rural economy, agricultural and infrastructure sectors with ensuring that we're generating an effective return on that capital, managing risk within our business and positioning our business shareholder returns.

The first part of our capital management process begins with stressing our capital levels to ensure that we are adequately capitalized to remain open for business through all market cycles. We look at our capital levels projected in periods of market disruption to ensure that we have adequate capital available. And this is an essential alignment between our business in its vital mission. We look at methods of generating capital to ensure that we have the ability to fund our business and take advantage of the growth opportunities in front of us, and the generation of capital comes in 3 forms.

First and foremost is the organic generation of capital. As we generate earnings, we purposefully build our capital levels to continue to grow our ability to increase the amount of liquidity that we provide to our borrowers and grow our balance sheet, grow our revenue and grow our earnings. Second is we do aim to issue capital when market conditions and opportunities present themselves. And as has been done in the past, we will feature preferred equity issuances as the primary method of doing that. And then third, we look at opportunities to manage risk on our balance sheet and optimize capital by transferring risk from our business into the capital markets. And what this enables us to do is to be able to transfer risk and therefore, free up capital on our balance sheet, which can then be redeployed in additional asset purchases, additional liquidity provided to our borrowers and ultimately acceleration of revenue and earnings for you, our shareholders.

Now this positions us to look at opportunities to return capital to our shareholders. And I'm sure that's a key point that's on your mind here today. And as we have in the past, we will continue to feature dividends as the primary mechanism for capital returns. We are very proud of the fact that we have consistently grown dividends through time. This year marks our 15th consecutive dividend increase, and Brad touched on the over 14% annual growth rate of dividends over the past 8 years, and we aim to continue to grow our dividends into the future. We will also look at opportunistic ways of returning capital through share buybacks should market conditions and overall capital levels weren't doing so. And with that, I would like to turn the podium back over to Zack to give us a few final thoughts about a look into the future for Farmer Mac.

Thank you, Matt. We spent the morning talking about our last 6 plus years, the strategy of build to growth Building Farmer Mac into a more meaningful player in the sector as we serve, ascertaining very strong teams, expertise that really know the markets, know the relationships, know the risks, frankly, some of the best teams I've seen I'm also talking about the market tailwinds that we truly believe are going to provide greater opportunities for Farmer Mac into the future.

So as we look to our next chapter, we're going to evolve from build to growth to drive the scale. Leverage what we have built to become a more efficient, more effective, scalable liquidity provider to the markets we serve. And I view this in 4 key themes: First, accelerate mission liquidity, a strong focus on expanding market share. The last 6 years, we're building infrastructure. We want to focus on expanding market share, leverage the market tailwinds we've talked about, to be a more efficient and effective liquidity provider in these markets. deepen our market penetration in some of our foundational segments. I spoke a lot about Farm & Ranch and Power and Utilities. There's tremendous upside there for growth in us enhancing our market share as a critical secondary market.

Product invasion will always be on our radar, thinking about things such as participating in asset-backed securitizations, leading potentially asset-backed securitizations, making our wholesale finance product more efficient -- how can we drive more liquidity through product innovation. New sectors. Our build to growth strategy was built on coming into new sectors. We still have sectors in our charter that were not meaningful players in rural homes, other forms of renewable energy such as biomass and hydro, we will do this methodically though, the same way to all our other sectors, expertise scalability, understanding the model and making sure we're doing right for our mission and our organization.

We have a very strong brand and has expanded significantly over the last 6 years, but there's more we can do, broaden our stakeholder outreach to trade and state banking associations, other advocacy groups, describe what the secondary market is doing to support these critical sectors and enhance their relationship and telling our story. The second box is operational excellence. And this is a critical component to a [indiscernible] scale. And frankly, it's a new area of focus for us. We don't -- we were not servicing and operating our own loans until 2021. So again, this is part of build to growth. And how can we take that expertise that we've built and scaled it into the future. Sunset legacy systems, we're already doing that now, but we want to do it very methodically, right? We're not going to go invest in massive platforms that under take 5 to 8 years to build. We're going to do it piece by piece and making sure we're thinking about our mission and scalability while we do it.

Leverage new technologies to increase automation. And frankly, this is going to be a lot of AI. How can we leverage the improvements in the AI market to re documents, input information, talk to our customers, analyze complex credit agreements. This will allow us to create efficiencies and have our employees focus on higher and best use opportunities. Integrate our infrastructure more holistically across the markets we serve with our customers, have the ability that for our customers to enter information into their platforms, press a button and that information gets transmitted to the secondary market for quick and efficient assessment.

Matt spent a lot of time on this, but as a financial organization, maintain fortress financial focus, disciplined risk management. We're evolving our risk management framework. And as markets change, our risk discipline is going to change. Our funding and balance sheet management, I truly think is best-in-class. As Matt mentioned, we want to maintain consistency. We want to maintain stability in revenues. We do not want to take a position on rates. We are very confident with our current risk posture where there's a change in interest rates does not impact our organization, and that's very important for us going forward.

Invest appropriately, and everything will be done on an appropriate return on invested capital. as we look at transactions, as we invest in people, as we invest in infrastructure, what is the return we're retaining as that capital is deployed. And then capital composition. And this is very important for us, especially given the growth that we've seen -- or that we've seen and expect to see in the future. We've executed 7 farm securitizations over the last 5 years. We've developed the investor market for those securities, we're now evolving into broadening our aperture in credit risk transfer. How can we make a more scalable product? How can you make a more efficient product for Farmer Mac and our customers and our borrowers? We're in the process of assessing that currently, and we're very optimistic in the near term. We'll be rolling something out.

And lastly, a scalable enterprise expertise, continue to attract the right talent to continue to build the experience in the organization so that we can appropriately assess the markets and deliver liquidity in the future. Leverage data to make decisions. We have tremendous amount of data in our organization, especially Farm & Ranch. How can we leverage that data on an ongoing basis to assess products, to assess decision-making and ultimately make it quicker and more efficient for our customer to sell us alone. And continue to enhance stakeholder engagement through confidence and consistency and transparency maintained discipline and effective spread that results in high-quality core earnings and elevate our brand in new and existing markets.

So with this drive to scale strategic vision, we believe we can scale our business meaningfully through 2030. We believe this results in $50 billion to $55 billion of outstanding business volume, representing 8% to 11% compound annual growth rate. And this growth growth will remain diversified across all our market segments with potentially increased growth in agricultural finance, highlighting the market tailwinds we see in Farm & Ranch and the opportunity set we see in wholesale finance. Strong revenue growth of 10% to 12%, supported by the diversified business model, but a strong focus on risk-adjusted return. We will maintain expense discipline of 28% to 30%, tactically investing in critical infrastructure to drive and scale our business while ascertaining critical resources to make sure we're on point in the markets and serving our customers appropriately. I firmly believe these are attainable goals. It reflects our ability to perform at a very high level, increasing our value and shareholder return.

So a few closing remarks before we open it up to Q&A. I'm excited to be at this organization, and I'm truly excited of the opportunities we have in front of us. We've built a tremendous team. We have great expertise. And we have a unique business model. We're a secondary market with a focus on supporting agriculture and rural communities. We're seeing accelerated volume growth. We're increasing revenues at appropriate risk-adjusted returns and scalability through operational leverage. And ultimately, this is going to drive shareholder value. We have a unique operating model with many competitive advantages. I hope we've articulated some of those today to you. We have strong market tailwinds ahead of us from increasing the need for food, fuel and fiber on a global basis. And in fact, the United States is some of the most productive farmland in the world to the significant demand for energy across this country. To us, leveraging new technologies and scalabilities to create a best-in-class infrastructure for deploying liquidity.

We have a very strong line of sight to achieve the $50-plus billion of volume and as Matt indicated, very resilient revenues through the cycle, continue to demonstrate robust risk dynamics and balance sheet management as we continue to grow. And frankly, I truly believe Farmer Mac is a unique investment opportunity and access to participate in critical and essential sectors that support the U.S. and, frankly, the world. An organization that has demonstrated above average shareholder returns and consistent shareholder returns. And I think all of us here in this organization for Farmer Mac are very excited for our next chapter, which is drive to scale. And frankly, we're just getting started. So very excited to see where this goes.

Thank you for joining us today. We appreciate your interest in Farmer Mac. Please give us a couple of minutes to set up for Q&A, and we'll take some questions.

I think it appropriate just to make sure that everyone understands who's here, you've all met Jalpa Nazareth, I assume. Why don't you stand up Jalpa. Jalpa has very ably led our IR function for many years at Farmer Mac and is a very integral part of the team. She also, over the last year or so, has also stepped in and picked up some responsibilities that I would say are akin to a chief of staff in helping organize and lead our executive committee.

Geraldine Hayhurst, please stand up. Geraldine joined us about 6 months ago. I'll let her introduce herself, but she comes from an incredible background at Freddie Mac and other places. And Geraldine represents as is the case with Zack and with me, a very, very thoughtful continuity in management and leadership at Farmer Mac. She succeeds Steve [indiscernible], who is actually retiring next month and who served as our General Counsel for many years, Steve has an employee with Farmer Mac for more than 25 years. But maybe just a quick introduction, Geraldine.

[indiscernible] Prior to that, I [indiscernible] after spending so many years [indiscernible] was important to me, and we just being able to join the management team here to the company's [indiscernible] mindset is an opportunity [indiscernible].

Brian Brinch is of the Executive Committee of Farmer Mac, the longest-serving employee over 20 years. Brian, I think, knows more about every aspect of Farmer Mac than any person in the organization has worked many jobs, but that makes them particularly well suited to take the leadership role in all-encompassing enterprise risk management at Farmer Mac. And he represents the fifth member of the Management Committee at Farmer Mac today. So Brian, any reflection from you.

Thank you, Brad. Yes, and thank you for being here all. It's great to see you all here. Yes, I don't know where to start -- weren't so my hats I'd say though, looking forward, what we're very excited about is sort of the continuing evolution and maturation of the company. right? And so what I represent as part of that is sort of that discipline and rigor and maturity of risk management at Farmer Mac. So we're building a team. We are encompassing everything from credit risk financial risk, cybersecurity information, security, compliance, the whole game. And so it's a broad expansion, which makes it a lot of fun. Thank you.

Charlie?

Should I ask you a main question? You have tremendous aspirations, which I'm tremendously respectful of. But in the beginning of your introduction, Brad, you talked about -- and all of you really talked about the challenges that are happening in the agricultural economy. And the stock market is sort of -- maybe it's pricing in some of those challenges that we don't really understand as investors. Can you -- is there some any quantification that we're not understanding that might be affecting the earnings outlook of the company that's -- that we're not seeing in terms of maybe it's oil prices, agricultural product prices and other variables that are potentially impacting the secondary market that we should be cognizant of? Or is it just irrelevant right now.

I'm really concerned because the stock is now -- I'm not going to use the number it's at today, but whatever -- it's not pricing in these aspirational opportunities at all. And I'm very respectful of what you've been building. I mean I've been there for a couple of years. So it's not like I'm a newcomer to your story, but tell me what you're thinking, please?

Sure. Well, we can look under every rock, and there's nothing to be found beyond that, which we described. This is not the first time this has happened with American Agriculture. This happened during the Trump administration -- First Trump administration. You may recall with uncertainty about trade with China, limitations on exports to China. There was a lot of negative headline put out about the future of American agriculture, the certainty and uncertainty of American agriculture. There were ultimately discretionary payments from the government, which now we're seeing for a second time.

We could go back to 2012 and tell a similar story. We could go back into the [indiscernible] and tell a similar story. So American agriculture does tend to be cyclical, but the cycles are long enough that we tend to forget them. And so I'm not dismissing everything that is going on today as being irrelevant or something that we're not concerned about. But we have seen most of this before, Charlie. And I would also point out that we are a much more diversified company today able to grow many areas with identifiable tailwinds that are providing a lot of additional momentum to us. So Zack, I think be good to add your perspective on this.

I don't want to downplay the stress in parts of the agricultural economy. I think that's important to remember parts, right? I mean there are components that are struggling. The Delta Rice cotton, absolutely. You hear a lot of articles about corn and soybean. If you look at a corn farmer that yields in cash flow that they brought in last year just given the significant export demand is strong. So I think the story needs to be told on a diversified basis. I've got a lot of questions, what's happening in the Middle East and how is that going to impact agriculture? Well, it's multifaceted, right? Higher oil prices leads to higher ethanol prices, which as the higher demand for corn, which leads to higher corn prices. We also ended the spectrum as higher order prices impacts inputs and inflation for farmers. So there's multiple components of this diversified market.

I think understanding the cycle and looking at the historical results of Farmer Mac that we've talked about today. Going back to '18 when we already were going through a cycle in agriculture, showing our acceptable loan rates, showing the increase in volume and no deterioration in those acceptable loan rates, and continuing to demonstrate the fact that we are unique, we're diversified, and I can't stress this enough. The farmland is the best asset in the agricultural market space. Operating lenders are struggling right now given low commodity prices and high input prices. So I think it's to us toning that story and transparently describing what's all going on in the agricultural space because it's not all equal.

The -- just to add on to your last point there, Zach, because I think this is one of the really important points in terms of understanding our business is where we operate within the agricultural lending space and that is farmland. And while the stress in the farm economy is real, I've seen it, I've lived it. I've experienced it. I can here to tell you that it is absolutely happening today. that stress as of yet, has not translated into a decline in farmland values. So what that means is that our collateral that is securing our assets continues to be priced at very favorable levels, and that enables us to be very confident in the portfolio performance going forward.

Additionally, as Zack mentioned, we are not in the business of providing operating loans to farmers. However, as liquidity stress increases due to poor commodity prices and financial stress in the row crop sectors, particularly in the Midwest. We -- that does present the possibility for operators to tap equity within their farmland investments. And that does create potential for new business for us as farmers leverage the assets in farmland to generate cash to operate their business through this challenging cycle.

I think that the fact that, that is happening, some reinforces the idea that agriculture can be very cyclical. -- because you might say, well, if you're tapping the equity in your land to subsidize operations, you can't do that forever, right? That's a bad business decision. The majority of the farmers out there feel very, very strongly that they have seen much of this before and that this will turn for reasons that a alluded to and others.

Follow up [indiscernible] in your financial presentation, have aspirations from $40 million in [indiscernible] what earnings power that you imagine when you aspire that to be in per share [indiscernible]?

Well, I can give you a couple of metrics to kind of guide you to that answer. So looking at $40 billion by 2028. And Zack talked about the potential to eclipse $50 billion by 2030. And then we look at what the revenue outlook is for that. And we ended the year 2025 net effective spread at 1.2%. There are some considerations there, as I mentioned, around portfolio mix, and we need to take that into account is where the growth comes from is a possibility that margin comes in a bit based on chunky assets in our wholesale finance space being significant contributors to that growth. So you could think of 1.2% as being a guide then back that off based on assumptions around wholesale finance growth in the future.

We aim to and we will deliver consistent efficiency in our operations, so 30% being the ceiling of targeted efficiency ratio. And we believe that we have adequate capital at this point to generate that growth over the course of time, notwithstanding my reference to the potential to issue preferred equity. So that gives you some indication of how to think about translating earnings into per share basis.

I think we actually follow up nicely on that last comment. I mean one of the takeaways today, I think, is just how much you guys have leveraged your charter and the creativity that you guys have brought in doing that. I guess 2 questions. One, are there opportunities to leverage the charter even more and how you guys explore that? And two, I mean, as you talk about the growth, any limitations to your leverage? I mean, is the financial leverage and how that kind of plugs into the enterprise risk management.

Yes, maybe I'll talk about the charter and turn it over to Matt on the financial component to that. I did highlight that there are components that we haven't considered in our charter. I mean, rural homes is a massive, massive market out there, and there's limitations on Freddie and Fannie. In fact, we're talking to them on partnering together in terms of backstopping liquidity as we grow that space. renewable energy. We focus predominantly on solar and a little bit of wind, but biomass, hydro, geothermal, if nuclear is ever lendable, that's an opportunity we can also consider.

And I would also just highlight, generally speaking, in our newer markets, we're still a really small player, right? When you think of the size and scale of the broadband infrastructure data center market, the liquidity needed, the finance needed and renewable energy, we're $1.5 billion or $2 billion, right? There's a significant opportunity for us to continue to grow those markets to be more meaningful in this time frame. But an area of folks when I talk about innovation, talk about markets is how can we maximize our product set and our mission in all the markets we're able to execute on an inter charter.

So with respect to growth and balance sheet leverage, given the significant growth opportunities in front of us, it really magnifies or amplifies the importance for us to be efficient in our capital deployment over the course of time. And what -- there are a couple of things to take into account as we think about allocating capital. So one, overall levels of capital and I talked a little bit about the consistency of our earnings. And so that gives us a level of confidence in terms of organic capital generation through the projection period that Zach talked about.

The second is something that we've done in the past and we'll continue to look to do in the future, and that is utilize tools to transfer risk out of our business into the capital markets, which enables us to optimize capital efficiency within our business. And oftentimes, there are a variety of ways that, that can be done. But what we've historically done of late and most likely will continue to do into the future as assets remain on our balance sheet, but we're able to transfer risk at a cost to the capital markets, but the retention of assets and the retention of revenue streams relative to the cost of that risk transfer is favorable to us, and that frees up additional capital to recycle back into the process of purchasing additional assets, making additional liquidity available to our borrowers and repeating the process over the course of time.

Two points I think I'd like to make about our charter. Zack highlighted some areas where we may do a lot more. And underneath that statement of what additional we may do and what he provided enthusiastic possibility on. There also needs to be the question just because we may do it doesn't mean we should do it. And over the years, we've been very disciplined about, well, if we do this, does this play to our competitive advantages. Specifically, does this play is not only permitted but does it play to long-term competitive advantage in raising intermediate long-term capital at fixed rates, for example.

Does it play to how our debt issuances are priced and how our margin objectives are structured so that we can make money doing this. And that pushes us into a lot of credit situations that might be the equivalent of BBB-, BB+ or in the case of those wholesale facilities where there's very little capital required for it, optic credit spectrum into intermediate and high investment-grade credit. But do we have competitive advantages in funding it because we need to do it in a way that provides for the right risk return result to what we do as well. Is it consistent with the or accretive to what we're doing today, if we're going to do it in the future.

The other point I would like to make about Charter is that I've been asked Zack has frequently asked, "Oh, don't you feel badly that you're so limited." We've highlighted today some very positive diversification we've ever been able to achieve noncorrelated across these business segments, which is very positive. But what we have done is build institutional expertise. And if we could do 100 things, would we build the same depth in institutional expertise, specialization that we're able to have with 5 business segments. Probably not. We want to be the best at what we do. And so I don't view the limitations of Charter's, limitations. I view it as it focuses on things that we are doing really well.

A couple of them following up on the NES comment and the margin outlook. You mentioned that some of the wholesale financing, it sounds like it's picking up, which is going to have some dampening effect, but overall volume would be higher. Earlier in the presentation, you also talked about pricing and some of the initiatives you have to go to a bit more market-based versus minimum return. And if you could talk about how that's playing into your margin outlook for the future.

And the second question I have is on the risk transfer opportunities that you're discussing. If you could talk about the asset classes and loan sizes and other things that, that might apply to on your balance sheet.

From a pricing perspective, we price to market, right? And regardless of the price, it still needs to be appropriate from a risk-adjusted return perspective. So Matt's comment on mix and the overall impact to NES percentage, it's important to understand where we're seeing growth opportunities from, right? So over the last 3 years, I think you've seen a shift to more of our higher NES percentage opportunities, broadband renewable energy, corporate ag, in some cases, Farm & Ranch, right? We there's generate higher NES percentage because that's what the market is expecting to pay on these transactions.

When wholesale finance picks up, these are very strong AA-rated companies. It's easy to go out and understand where MetLife is funding. You can see what their general and secured bonds are funding. That's a data point in terms of how we have to assess our pricing. We're not going to go in and under price for the sake of volume, it's not growth for any sake. It's growth for appropriate risk-adjusted return on capital, but we need to be cognizant of what are the prices in the market, what are the financial organization structuring to clear the market from a pricing perspective, and ultimately, we should target that as a percentage as long as it impact or achieves a risk-adjusted return expectations.

So as compositional shift happens and potentially a lot of opportunity in wholesale finance, Farm & Ranch, you could potentially see a dampening in the NES percentage. But I want to go back to a comment I made earlier, we can put on $1 billion of wholesale finance at a very, very strong NES dollar percentage and have zero expense associated with their drops directly to the bottom line. I would make that trade any day given the return on invested capital and the growth opportunities we see there.

And to give you some perspective on the credit risk transfer. So a key -- an essential factor in evaluating credit risk transfer opportunities is the market's understanding of the credit risk embedded within the reference pool of assets. And we have an established track record in the farm and ranch space. We've been active in the senior subordinate securitization markets for a number of years, and we have a an investor base that is very comfortable with our underwriting standards with the servicing process for those assets. And that gives the Farm & Ranch loans as the optimal place to begin to evaluate other credit risk transfer opportunities, mechanisms beyond the senior subordinate securitizations that we've done in the past.

With that being said, we will not be -- we do not intend to limit credit risk transfers to Farm & Ranch assets into the future. We will evaluate opportunities, particularly in the infrastructure space. to be able to optimize capital and to manage credit risk by using tools there to transfer credit risk into the capital markets. but that is not something that we foresee doing as an initial step away from senior subordinate securitizations that we've done in the past.

Great. This is Brendan McCarthy. Thank you for putting on a great event. I always like to look at the breakdown in NES revenue at the segment level, particularly the Treasury segment results have been outstanding in the past, I think, 2 or 3 years. Can you talk about your asset liability management structure there, how that has driven the results and maybe your outlook considering the current rate environment and your outlook for the future rate environment?

Yes. So we're -- as I mentioned, we're funding the balance sheet where we're matching off duration and convexity characteristics between our assets and funding mechanisms. So we're not necessarily matching on a maturity basis, but matching duration and convexity. And what that enables us to do is to pick certain funding -- optimal funding points across the curve that enables us to pick up spread through our funding segment as we fund the balance sheet. That is largely market dependent.

And when I say that, it's not market dependent in the context of rate levels, but it is dependent in terms of spreads relative to reference rates, where we trade relative to SOFR. And so we do intend to continue to operate the Treasury segment in a similar fashion in the future. But the relative debt spreads to reference rates will be critical factors in terms of the amount of revenue that we generate in the funding segment going forward.

Got it. Just as a follow-up, what really drives that spread or impacts the spread?

So the -- to give you -- it gets into a little bit of a technical answer here, but to try to simplify it as much as we can. We're looking at funding a particular asset with debt that matures prior to the asset maturing and then managing interest rate exposure after the initial debt matures through interest rate derivatives, and we're seeing the spreads of a shorter maturity debt instrument being priced at less than the spreads where we -- if we were to [indiscernible] on the curve. And so the strategy is to issue debt shorter, protect our balance sheet through derivatives to manage interest rate risk and then refund that debt in the future as market conditions and opportunities allow us to do so.

This is Frank Gilabetti from KBW. My question -- the infrastructure finance and renewable energy segments have grown fast over the past couple of years. And it's on credit, what gives you the confidence that some of the episodic credit events that you've seen in the past quarters are not a signal of more of a systemic seasoning event? And then what do you expect normalized losses look like in those segments?

Yes, I'll talk a little bit on the credit, and Matt, you can give a comment on kind of our allowance in lost views. I think, again, first, it starts with expertise, right? I mean we're in the business of lending and credit risk. You're going to see migration. You're going to see some bumps in the road as you go forth and see portfolio season. But first and foremost, it starts about understanding the sector and having the expertise internally to partner with the right organizations, right?

I want to make a point during the presentation that this is not Farmer Mac in isolation in these transactions, right? We're with the global financial organizations arranging and structuring and participating in these transactions. We look very confident in terms of the structure, the price and the counterparties we're working with. That to me is the foundation of assessing credit risk and making sure we're making the right decisions.

I also think going forward is looking at the current acceptable loan rates of these portfolios. So I think renewable energy was 97% or around there, same with broadband. That's important. These are seasoning, right, over the near term, but given that we've only been in there for 5 years, excuse me. But that gives you an on-point indication of the credit profile of those segments, meaning we constantly monitor and update our risk profiles on a quarterly and annual basis. So that's real time.

And why we wanted to show the credit profile of our peers, that's not just including agricultural peers. That also includes peers that are in infrastructure as well. So what we try to disclose is the combination of you giving a real-time view of our portfolio given our ongoing monitoring, the expertise in who we look to partner with in these types of transactions. In a comparison of what other organizations have experienced in credit loss or allowance loss percentage versus where we are. And that's why we feel comfortable that, yes, we've seen some hits -- but from a portfolio-wide perspective, we feel very good about where we're at.

From a CAGR perspective, it has been a hockey stick. But when you look at it from an overall perspective, it's still a relatively small portion of the overall portfolio. I'd also like to kind of point to a comment that Zack made during his presentation that despite that growth, we're a tiny part of the market, and we are able to be -- because we do not have specific allocation goals, we're able to be highly selective in what we're doing. And having people who have the expertise in the industry connections banker to banker connections allows us to reinforce that kind of selectivity.

Maybe just a quick point on your seasoning question. So we did take a loss on an infrastructure asset in the fourth quarter. Actually, that was a provision. We didn't actually write that asset down. And that asset is actually not in the same space where we are seeing a rapid growth in our infrastructure business. It is not was not a broadband asset. It was not a renewable energy project assets. So maybe just a bit of a distinction. That asset had its own unique story that really does not align with where we're seeing growth in that portfolio.

A final point that I'll give you just in terms of the -- our confidence in the portfolio quality going forward is at the moment and for the foreseeable future, we intend this will be -- will continue to be the case. We are seeing a tremendous amount of looks at asset purchase opportunities. And that gives us the ability to be highly selective in where we are allocating capital, what assets we're bringing on to the balance sheet. And we believe that, that's going to be a significant factor in our ability to maintain a very high-quality asset portfolio into the future.

Jalpa [indiscernible] that we have time for only 1 more question. Is there a last question today?

Could you give a little bit more detail on the capital allocation framework again? And should dividends kind of grow along with earnings through the end of the decade? And then also, at what level do you get more aggressive on strategic repurchases?

So the answer to your question on dividend growth is dividends growing commensurate with earnings growth is a reasonable expectation or proxy for expectations into the future. And in terms of the overall capital allocation framework, as I mentioned in the presentation, we first and foremost, prioritize reinvesting in our business. It's an essential feature of our mission-driven business and alignment with the expectations set forth in our charter is that we continue to redeploy capital into our business to provide essential liquidity into the sectors that we support.

In terms of buybacks, that's something that can't be overly specific in terms of future outlook there, but it would be highly opportunistic in terms of where market levels and as well capital levels make it attractive for us to buy back shares. And I would say just as a general comment in terms of buybacks and relative allocation of capital Zack finished up the presentation with some metrics around the significance of growth opportunities in front of us. And I think one way to interpret those expectations or opportunities is that, that affords us with ample ability to deploy capital in our business to generate very effective returns that would be in excess of significant capital returns to shareholders outside of the growing dividend rates that you've grown accustomed to seeing at Farmer Mac.

Great. Well, thank you. We have some lunch over here. We're going to hang out for a while. We'd love to continue the conversation informally. And again, thank you very, very much for coming down to be with us today. Appreciate it.

Good day, ladies and gentlemen, and thank you all for joining us for today's Farmer Mac 2025 Earnings Results Conference Call. [Operator Instructions]

It is now my pleasure to turn the floor over to Senior Director of Investor Relations, Jalpa Nazareth. Welcome, Jalpa.

Good afternoon and thank you for joining us for our fourth quarter and full year 2025 earnings conference call. I'm Jalpa Nazareth, Senior Director of Investor Relations and Finance Strategy here at Farmer Mac.

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. These statements are based on management's current expectations and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from those projected. Please refer to Farmer Mac's 2025 annual report on Form 10-K 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 10-K and earnings release posted on our website.

Joining me today are Chief Executive Officer, Brad Nordholm; our President and Chief Operating Officer, Zack Carpenter; and Chief Financial Officer and Treasurer, Matt Pullins.

At this time, I'll turn the call over to our CEO, Brad Nordholm. Brad?

Thanks very much, Jalpa. Good afternoon, everyone, and thank you very much for joining us. 2025 was another strong year for Farmer Mac. We surpassed $33 billion in outstanding business volume, achieved record revenue of $410 million, a 13% increase relative to the prior year and produced $183 million in core earnings, our 10th consecutive year of record annual core earnings. We thoughtfully balanced returning capital to our shareholders with investing for future growth while continuing to execute on our mission of providing vital liquidity to agriculture and rural America.

As you saw in this afternoon's earnings release, we announced a $0.10 per share increase in our quarterly dividend to $1.60 per share. This is our 15th consecutive annual increase, reflecting our confidence in the durability of our earnings profile and our long-term cash flow generation. We were active in share repurchase program in the fourth quarter, which was modified last August by Board of Directors to approve share repurchases of up to $50 million of Farmer Mac's Class C common stock.

During the fourth quarter, we completed $12.9 million under the amended program, and we have $37.1 million remaining under the current authorization. In total, we returned $78 million to shareholders through dividends and share repurchases in 2025. Looking ahead, we remain committed to this balanced capital allocation approach that prioritizes prudent growth, balance sheet strength and consistent shareholder returns.

During the quarter, we also completed our seventh Farm securitization transaction, further building liquidity and efficiency in the agricultural mortgage-based securitization market. This risk transfer tool strengthens our ability to optimize capital and enhance the amount of market liquidity we can provide through our businesses.

By transferring a portion of the underlying credit exposure to investors, we free up capital, which is then available to be redeployed into new mission-aligned lending activities. We are very pleased with the tremendous support we've seen for this program, and we look forward to exploring other credit risk transfer opportunities in order to grow our platform while continuing to deliver high-quality opportunities to our various classes of investors. We anticipate introducing a new product in the market this year that will support the strong investor demand for agricultural assets while also remaining in alignment with our mission fulfillment.

The agricultural real estate market remains very active. The USDA expects demand for real estate mortgages will remain robust in 2026 with the total volume of transactions projected to increase by 5% this year relative to 2025 levels. As it relates to our portfolio, we were pleased to see a very positive outcome from recent property sales for a distressed borrower, which we expect will result in recognizing previously unaccrued fees and interest and meaningfully reducing our 90-plus day delinquencies during the first half of 2026.

Despite the volatility and uncertainty in today's environment, whether from interest rate movement, commodity price fluctuation, supply chain disruptions, consumer behavior changes or broader geopolitical and policy dynamics, Farmer Mac continues to be resilient. Our diversified business model, strong capital position and disciplined risk management position allows us to provide vital liquidity to agriculture and rural infrastructure sectors in all economic environments.

Matt Pullins, who joined us as our new Chief Financial Officer in mid-December, will review our financial results in more detail, but I want to hasten to add that we are thrilled to have Matt join the team. He brings more than 2 decades of experience in corporate finance, capital markets and strategic planning, paired with a personal connection to American agriculture. His combination of deep financial expertise and authentic understanding of rural America makes him an exceptional addition to Farmer Mac, and we're excited for the impact he will have on our organization.

Now I'll turn the call over to Zack, our President and Chief Operating Officer, to discuss our customers and market developments in more detail. Zack?

Thanks, Brad, and good afternoon, everyone. Our results continue to demonstrate the benefits of the strategy we have been executing for several years now, diversifying our portfolio into higher spread mission-aligned businesses while maintaining strong underwriting standards and disciplined risk management. Serving agricultural businesses and providing liquidity to enhance and enable rural infrastructure are both critical to our mission of driving economic opportunity to rural America.

Farmer Mac is broadening the pursuit of its mission in response to the evolving economic landscape in rural America, and this proactive business diversification continues to deliver meaningful benefits to the communities we serve. Our team delivered another outstanding year of business volume activity with broad-based net volume growth in every segment, reflecting strong customer demand and the continued relevance of our secondary market solutions.

We achieved a record $3.8 billion of net new business volume in 2025, resulting in total outstanding business volume of $33.4 billion as of year-end. The net volume increase highlights quality asset growth across all our product sets, which in turn drove significant growth in net effective spread.

Our agricultural finance outstanding business volume grew $1 billion last year with our Farm & Ranch segment accounting for nearly all of that net growth. Activity in Farm & Ranch accelerated meaningfully in the fourth quarter and has carried over into 2026, which reinforces the momentum we're seeing in this business.

We expect loan purchase growth to continue as tighter agricultural conditions driven by higher input costs, trade and tariff concerns and low commodity prices, increased producers' need for liquidity. The Farm & Ranch segment is core to our mission, and we remain committed to bringing our customers products that provide capital and risk management solutions, which support their borrowers' financial needs.

Our Farm & Ranch AgVantage securities portfolio reached an inflection point in the fourth quarter as the portfolio reversed the runoff trend and grew $500 million. As we discussed on our prior call, this increase reflects the additional fundings we anticipated after closing a new $4.3 billion facility with a large agricultural counterparty. We expect this momentum to continue in 2026 and remain on track to return to sustained net growth in this product as we work closely with new and existing counterparties to determine the right timing for refinancing maturing securities or providing incremental financing based on market conditions and return on capital objectives. We remain steadfast in our commitment to deliver a broad spectrum of financial solutions to the agricultural community by working alongside our growing customer base.

Our Corporate Ag Finance segment saw a net growth of $63 million during 2025, reflecting our continued efforts to support larger, more complex agribusinesses that span the food, fuel and fiber supply chain. We anticipate seeing more activity in this segment in the first quarter of 2026 as deal flow activity levels are higher relative to prior years. However, ongoing refinancings and maturities will continue to create a headwind going forward.

Turning to our infrastructure finance line of business. Outstanding business volume increased to $11.8 billion at year-end 2025, up over $2.8 billion from the prior year, with all 3 segments contributing significantly to net growth. This is a continuation of the strong interest and investment in data centers, broadband expansion as well as the construction and completion of renewable energy projects, coupled with the overall need for significant energy generation and transmission capacity for rural America.

Volume in our Power Utilities segment grew by over $1 billion, largely due to strong load purchase activity and net new AgVantage security issuances, supporting investment needs of rural electric generation, transmission and distribution cooperatives.

Our Renewable Energy segment also grew more than $1 billion last year, supported by strong deal flow, accelerated construction deadlines and continued project finance momentum. Despite increased policy uncertainty across the renewable power investment market, we expect to continue participating in renewable energy transactions for both new projects and refinancings of existing projects, utilizing the same strong credit standards.

Looking ahead, while we anticipate another construction-related rush in the first half of this year, primarily tied to the July 4 deadline included H.R. 1, we believe the substantial need for new power generation will continue to drive growth in this segment.

We're seeing strong deal flow, allowing us to be selective with our capital deployment in this sector to pursue deals that are appropriately structured with strong counterparties, which underscores the strength of our reputation in the market. Beyond 2027, we anticipate activity in this space to be more market-driven rather than policy-driven as the underlying driver remains the same, a massive surge in power demand, requiring significant new power supply.

Our Broadband Infrastructure segment grew by $700 million in 2025, more than double the prior year's growth with nearly 90% of volume growth tied to data center-related demand. We anticipate increased financing opportunities in this segment for data center build-outs given the increasing investment in capacity to support AI, cloud storage and enterprise digitization, particularly by large hyperscalers, and we will continue to emphasize diversification across geographies, sponsors and tenants.

We believe these developments are crucial for rural economic growth and support the historically strong market demand for connectivity needs across rural America. Growing business volume in our Infrastructure Finance segment remains a top priority, and we will continue to focus on strategic investments and resources in these areas to build our expertise and capacity as market opportunities arise.

Despite this backdrop of broader market uncertainties stemming from factors such as interest rates, regulatory shifts and trade policy changes, we are confident in our ability to continue to deliver growth and consistent results. Our total portfolio is well diversified by both commodity and geography, and we remain confident in the overall health of our portfolio as evidenced by our continued strong asset quality metrics.

To summarize, 2025 was a year of strong, broad-based disciplined volume and net effective spread growth across all of our operating segments, and our pipelines remain strong as we move into 2026. We expect continued customer demand for liquidity, capital efficiency and long-term funding solutions as market conditions evolve. Our robust capital and liquidity, along with our strong underwriting criteria, position us to capitalize on this opportunity. Importantly, we are confident in our ability to continue to deliver consistent results as we support rural America through this economic cycle and beyond.

With that, I'll turn it over to Matt Pullins, our new Chief Financial Officer. I'm thrilled to welcome him to Farmer Mac and to the leadership team as we continue to advance our long-term strategic priorities and position Farmer Mac for its next phase of growth. Matt?

Thank you, Zack. I'd like to begin by saying how pleased I am to be here and to help lead this mission-driven organization. Growing up on a family farm in Western Ohio and remaining deeply connected to production agriculture today make it especially meaningful and energizing to support an institution whose mission is so closely aligned with my own background and values.

First, I'd like to touch on our fourth quarter 2025 results. Our net effective spread was $101.4 million, reflecting a 16% increase over the prior year quarter and an all-time quarterly record. Net effective spread as a percentage was 122 basis points, reflecting the portfolio mix shift to more accretive assets and continued disciplined funding execution. Core earnings were $40 million for the fourth quarter, a $3.6 million decline from the prior year period.

Fourth quarter core earnings results were negatively impacted by credit provisions related to a small number of loans originated from 2021 to 2023 in the Corporate Ag Finance and broadband infrastructure segments. The charges impacting these specific loans this quarter were concentrated within a few borrowers facing business-specific obstacles. We do not believe the charges are indicative of a meaningful change in the high credit quality that persists across our portfolios. If these charges were not concentrated to the fourth quarter, we estimate core earnings would have reflected a 20% increase over the prior year period.

Now turning to our full year results. 2025 was another year of strong financial and operational execution for Farmer Mac. We delivered a record net effective spread of $383 million, an increase of $43.5 million or 13% from the prior year. As Zack mentioned, the company's strategic decision to diversify our loan portfolio into newer lines of business that play to our competitive advantages in intermediate and long-term financing solutions such as renewable energy, broadband infrastructure and corporate ag finance has been a key priority. The broadening of our business is benefiting us through changing market cycles.

Also contributing to our net effective spread growth is our effective asset liability management and funding execution. The strengthening of our capital position through retained earnings growth and preferred stock issuance supports our balance sheet management strategies, which are fundamental to the resilience of our business model as these strategies enable us to be nimble and responsive to changing market conditions.

Core earnings for the full year were $182.9 million, up 6.6% compared to the prior year, reflecting strong revenue growth, partially offset by elevated credit expenses and higher operating costs. Also reflected in our 2025 core earnings results is the purchase of $61.5 million of renewable energy investment tax credits, resulting in a $4.8 million benefit in 2025. As of year-end, we had approximately $80 million of remaining capacity to use renewable energy tax credits. We will continue to evaluate future tax credit purchase opportunities in relation to our tax capacity.

Partially offsetting strong earnings growth was a 14% increase in operating expenses over the prior year. This increase was largely due to resources and investments needed to support increased business volume, such as transaction-related legal costs, technology investments and hiring-related expenses. We maintain our deliberate approach to expense management by proactively monitoring and managing expense growth against incoming revenue streams. We will continue making targeted investments in business development and our operational and technology platforms to support future growth and scalability while managing expenses within our long-term efficiency ratio target of 30%.

We experienced $32.9 million of provision for credit loss expense in 2025. The provision expense reflects $19.6 million attributable to certain individually significant credit deteriorations in our corporate A finance and broadband infrastructure portfolios. Outstanding business volume growth across our business segments accounted for an additional $9.6 million provision expense. Corporate Ag Finance, Renewable energy and broadband infrastructure segments accounted for 84% of the total provision expense attributed to new business.

It's important to note that when diversifying into these different segments, Farmer Mac developed underwriting standards consistent with industry practices, acquired significant expertise in these newer segments and implemented a comprehensive framework that appropriately aligns with our risk appetite. As these portfolios continue to season, we may see credit costs trend higher than the levels historically observed in our Farm & Ranch and Power and Utility segments. Importantly, these portfolios earn higher yields commensurate with the underlying risk return profile.

Charge-offs totaled $20.9 million in 2025, the majority of which occurred in the fourth quarter and were primarily related to borrowers facing business-specific headwinds.

The total allowance for losses as of December 31, 2025, was $39.7 million or 17% of nonaccrual assets as of year-end. This compares with $25.3 million or 15% of nonaccrual assets as of December 31, 2024. This metric is useful for evaluating the level of our allowance relative to accounts for which it is probable we will not be able to collect all amounts due under the loan agreement. We are comfortable with the level of the allowance given the value of the collateral that is supporting these loans.

The fundamentals of our underwriting and risk analytics enable us to continue to effectively navigate the current volatility and uncertainty in the agricultural cycle. While credit losses are inherent in lending, we anticipate the strength and diversity of our overall portfolio will moderate the potential impact of a credit cycle on our overall business.

Farmer Mac's core capital increased by $204 million in 2025 to $1.7 billion, which exceeded our statutory requirement by $678 million or 66%. Core capital increased $13 million in the fourth quarter, largely due to higher retained earnings.

Our Tier 1 capital ratio was 13.3% as of December 31, 2025, compared to 14.2% as of the prior year period. The change in our Tier 1 capital reflects the effect of strong loan purchase volume growth in our agriculture finance and infrastructure finance portfolios. Our strong capital position has enabled us to grow and diversify our revenue streams, remain resilient through volatile credit environments and continue providing competitively priced liquidity to our customers and their borrowers.

Looking ahead, we will maintain a thoughtful and balanced approach to managing our overall capital position. Organic capital generation, selective capital issuance and the use of risk transfer tools will help ensure we have sufficient capital to support future growth, particularly in more accretive segments, which are more capital intensive.

In conclusion, our strong earnings performance, effective balance sheet management, robust capital position and solid liquidity levels underscore the strength and resilience of Farmer Mac's business model. The results this year reflect disciplined execution across our enterprise and the continued benefit of a diversified platform that deepens our value to lenders, borrowers and investors across rural America.

I am grateful for the opportunity to join this organization at such an important moment, and I look forward to partnering closely with the leadership team as we continue advancing Farmer Mac's mission and long-term strategic priorities.

And with that, I'd like to turn the call back over to Brad.

Good. Well, thank you very much, Matt. As we look ahead, we are excited about the opportunities in front of us and confidence that the depth and capability of our management team positions us well to continue executing on our long-term strategic priorities.

Before we begin the Q&A period, I'd also like to remind everyone that we will be hosting our Investor Day on March 18 in New York at the New York Stock Exchange. We look forward to providing a deeper dive into our strategy, growth initiatives and the future of Farmer Mac and actually having some formal and informal conversations with you. We hope to see many of you there.

And now, operator, I'd like to see if we have questions from anyone on the line today.

[Operator Instructions] We'll hear first today from Bose George at KBW.

Welcome, Matt. The first question I had was on the credit issues. 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?

Bose, nice to hear from you today. Keep in mind that when Matt took you through the numbers, the $32 million, of that $13 million was attributable to automatic provisions that are added through our CECL modeling attributable to the growth in the portfolio. And so looking forward, we're actually starting out 2026 in strong fashion. And while we don't have specific allocations across portfolios, we're continuing to see a very nice mix across portfolios. So there's going to be a core level of automatic provisioning reflecting the growth in 2026. So that's kind of the first piece of it.

The second piece of it, any special provisions associated with individual credits, that's much, much harder for us to forecast. I guess all I could say today is that we don't foresee see anything today that would cause us to think that, that number would be going up. There's nothing that we're identifying as of this time.

Okay. Great. That's helpful. 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?

Bose, this is Zack Carpenter. Good question. I think really, this boils down to volume mix. In 2025, it was a year of substantial growth across our newer segments. And as we've talked about in our script, those carry more accretive yields than some of our legacy or other assets that didn't grow as fast in 2025.

We talked about an inflection point in AgVantage. In 2024, we see strong momentum heading into the first part of this year. And just given the strength of the counterparties, those assets carry much tighter credit spreads than some of the other products. So it's really hard to pinpoint where we anticipate spreads going. It really focuses on product mix and growth opportunities. And as we look out to the first part or at least the first half of 2026, we see strong and sizable growth across all of our segments and products. And so the size of that growth will impact the overall any net effective spread percentage. That being said, we're really focused on growing the revenues or the total net effective dollar amount. And we feel confident that just given our risk profile of these assets and the growth opportunities, we'll see strong growth there as well.

Our next question will come from Bill Ryan at Seaport Research Partners.

I'd also like to extend my congratulations to Matt. 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 ag finance. I was wondering if you might be able to unpack that a little bit more to say -- to kind of let us know, is there something kind of going on with these smaller credits that caused a little bit more disruption in the fourth quarter? Or is it just kind of like a one-off event that you, again, concentrated among these credits?

Yes. Zack can give you additional color on that, Bill. I guess the one thing I would just say at the outset is that we're quite emphatic that there's nothing systemic here in the portfolio.

Yes. When we talk about a few small credits here, I do want to highlight it is a few loans compared to thousands and thousands of loans we have on our balance sheet. And I do want to highlight, if you look at our financials, the acceptable loan quality is very high across all of our segments. So we feel very confident that there's no systemic or portfolio-wide issues that we're not aware of.

As it pertains to a few of these individual loans, it is very borrower specific. In the lending space, you're going to have operational issues, management issues, market changes, market dynamics and consumer changes that all impact businesses. As we noted in the script, some of these loans were purchased right out outside of COVID, and things have changed post-COVID and some businesses are just dealing with that and struggling to rightsize their operations. And for a few of these loans, I think it was those type of market dynamics that created the risks that we saw in 2025.

We've been monitoring these loans for some time now. So we were aware. Things just transpired in the fourth quarter that created further deterioration. That being said, it's a few borrowers, and this was very borrower specific. And overall, we feel very confident with the quality of our portfolios.

Okay. And one follow-up on credit, just a couple more questions. 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. Obviously, farm credit has been in the headlines for the past several months. Is there anything of note that took place when these payments came due on January 1? And kind of following up on that, I believe there's going to be a disbursement of market stabilization payments from the government in February, which should help out the farmers as well.

Yes, it's great. January 1 and July 1 are typically our large prepayment periods. The January 1 prepayment cycle was in line with January 1, 2025. There was nothing unique about this payment cycle. In fact, we've seen significantly more growth during the month of January than prepayments, which shows, again, the momentum that we've had in the space.

You're right, as it pertains to government program payments, the projected 2026 net cash farm income is going to be supported by a significant amount of government payments. And there's a couple of components to that. First, in H.R. 1, there were some farm bill enhancements primarily related to price triggered commodity programs. It's about $13 billion in 2026 that will be going out later.

Some of the ad hoc and disaster aids, about $24 billion. Some of this was a carryover from 2025 as those start going out. So we have seen some of those being dispersed. They are supporting the tight ag economy cycle right now, especially in the row crop space. So those will be a benefit going forward just given the substantial amount of government payments going out in 2026.

Okay. And just one last question. I'll try and get one more in here. 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?

Bill, this is Matt. To give you a little bit of insight into expense growth, a couple of things to keep in mind. There is some modest seasonality that factored into the slowing of expense growth in the fourth quarter. When we turn the page and turn the calendar into 2026, the first quarter tends to have higher personnel expenses as we look at resetting things like payroll taxes and the like. That's one factor to keep in mind.

More broadly for the business, as we look to 2026, there will be a level of expense growth that will be incurred as we continue to grow outstanding business volume. There are transaction-related expenses, operational expenses and the need for incremental personnel to support the growing business. We will also be looking for strategic investments, particularly in the technology platform as well as selective investments in business development to further enhance the growth and take advantage of the market opportunities that are present at this point in time.

So with that being said, we are being very mindful of making sure that we continue to operate within the target efficiency ratio of 30%. And you'll see that we were over 2% below that here in the quarter, and we will continue to balance making investments while operating very efficiently in the future.

We'll move forward to Brendan McCarthy at Sidoti.

Just want to start off on your outlook for the volume mix heading into 2026. I know you mentioned you're pretty positive outlook for broad gains across the portfolio. 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?

Brendan, it's Zack Carpenter here. Yes, I think it's a very consistent theme with one notable exception that we experienced in 2025. So first and foremost, the pipelines across our infrastructure finance line of business continue to remain at very strong and elevated levels. We talked about that a little in the script. It's just a function of the need for energy that's coming from all sources of our segments as well as the strong growth in data centers. So for the foreseeable future, at least the next couple of quarters, we see very, very strong pipelines across all 3 of those segments, which is just a continuation of what we saw in 2025.

Looking over on the agricultural finance line of business, as I noted, Farm & Ranch continues to perform at a very, very elevated level. Loans submissions, approvals were a record in January. So a lot of the momentum we saw in the second half of 2025 continues to roll over just given the dynamics in the agricultural environment as well as our customers, financial institutions managing capital, liquidity, et cetera. So continue to expect to see strong growth in Farm & Ranch.

And I think the one notable exception from 2025 is really Farm & Ranch AgVantage. We had a very strong fourth quarter. We're having very strong conversations right now with our counterparties plus new counterparties. So we anticipate that growth trend increasing in 2026, starting very early. And so I think from a mix perspective, it's a little bit all over the board across all segments with one notable exception being we see some pretty strong growth in Farm & Ranch AgVantage, which, as you've known, has been in kind of a decline mode over the last couple of years.

Great. I appreciate that detail. And just as a follow-up there with the AgVantage business. I know that's more kind of like a relative value proposition, and it sounds like that relative value might be increasing. What's really driving that? Is this maybe lower rates? Or is it just what you're able to offer counterparties?

There's a lot of components to that question, but I think there's a couple of key requirements that I think are driving the opportunity set here. First is some of these counterparties, these new counterparties that we've talking about, their facilities have closed. I mean these are very complex, time-consuming facilities and in many instances, require counterparty regulatory approval, and that could take months. And so as those approvals have started coming in, there is now a closed facility where these counterparties want to leverage our relative value versus other opportunities and pledge the collateral to support their growth and their balance sheet.

The second is, as we've modified certain facilities with existing counterparties that have provided more value or more available capacity, they're seeing more utilization as they continue to grow and originate loans. So I guess what I would say is fourth quarter was kind of the inflection point where a lot of these components that we've been talking about over the last 12 to 18 months have come to fruition and concluded, and now we're seeing the benefits of that, just given the relative value of this product set versus other liquidity sources in the market.

Understood. 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?

Yes, Brendan, this is Zack again. That's correct. As we've disclosed in our financials and talked about over the last couple of years, clearly, the permanent planting, specifically almonds in California experienced a stressed environment. On the positive side, in 2025, we've seen some improvement in pricing. And as Brad noted in the call, a borrower that had experienced stress in our portfolio, we are seeing some resolve in that transaction, which we believe in the first half of this year will result in a meaningful reduction in our 90-plus day delinquencies as well as some recoupment of fees and interest income that we've been holding back given the status of that loan.

Brendan, this is Matt. If I could just add one additional point there is the specific borrower that was referenced in Brad's comments and that Zack just touched on, that is actually not going to meaningfully impact credit costs or recoveries as we have not charged any of that borrowers' assets off at this point. The positive financial impact for that particular borrower will be recognized through an increase in net effective spread as that asset has been on nonaccrual for some period of time.

And we'll take a question from the line of Gary Gordon.

A couple of things. One, the dividend increase of 7%. I think historically it is on the low side. I mean, is some of your thinking that you're laying out strong business growth and also the repurchase opportunity. So the assumption that more of your capital than normal would be used to fund the balance sheet growth and potentially share repurchase?

Yes. Gary, obviously, we have a number of tools for managing capital growth, including earnings, dividends from that, preferred stock issuances, securitizations, which can change relative requirements rather than notional requirements. And so we look at all the tools that we have available to us.

And probably the most significant factor in kind of looking at what's the appropriate amount of dividend increase this year is the fact that our growth has been very, very strong. And our growth has been very, very strong in segments of business that consume a bit more capital. And so you see that reflected. For the long-term financial strength and performance of Farmer Mac, that's a very, very positive thing.

Okay. Two, 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?

Yes, Gary, we can constantly evolve and monitor markets and adjust our philosophy and underwriting. We don't change our standards, but we update our thought process based on what we've seen in the markets. For a couple of these, especially the one originated in 2021, dramatically different times in COVID and out of COVID and certain markets reacted differently and certain supply and demand dynamics changed. And I think a couple of these individual borrowers experienced some of those market changes, consumer behavior changes and just frankly, some operational issues that management struggled working through.

I think when you take a step back from an underwriting standpoint, our primary focus is, first and foremost, having the right expertise in-house. You've seen our increase in headcount. A lot of that is to get the right personnel to adjudicate and understand the risk and monitor the risk in these newer segments, which we've done.

And the second is, as markets evolve and we see transactions like this, it does help in future adjudication of transactions to take a step back and see what's transpired in the markets. Every market is operating differently, and we want to use the most up-to-date information to make appropriate credit decisions as we move forward. So I think the long answer is yes, we continue to assess markets and borrow-specific issues and adjust our thinking in risk adjudication when that comes up.

Okay. Last thing is the data center demand. Has that had any material and sort of general impact on farmland prices? And if so, I can imagine for existing loans, that would be a positive, but it could create a little more risk lending today.

Yes, Gary, the opportunities that we've seen in the data center space have been in really rural areas, not necessarily in productive farmland areas. I know there's been some out there and some articles that have highlighted the interaction between arable and productive farmland versus renewable energy projects and data centers. We haven't seen that or experienced that in our portfolio. From a farmland value perspective, it's been relatively stable. We've seen some declines just given the overall commodity cycle in some of the regions that we have loans in our portfolio. But we really haven't seen a correlation between data center investments and constructions and changes in -- or increases in farmland values.

And thank you to our audience members who had shared your questions. Mr. Nordholm, I'm pleased to turn it back to you, sir, for any additional or closing remarks.

Great. Well, thank you. Thank you all very much for joining us. And thanks for your patience. I think we had a couple of situations with background sirens today. And our office here at 2100 Pennsylvania Avenue, a couple of blocks from the White House, occasionally, especially when there are a lot of foreign dignitaries in town for events, results in motorcades and ambulances, and thank you for bearing with us today.

But I would like to conclude by thanking everyone for listening in on the call. We'll, of course, be having our regular scheduled call again in May to report our first quarter results. We look forward to sharing information with you at that time. But in the meantime, please do consider joining us for our Investor Day in New York, and please follow up with Jalpa with any other questions that you may have. With that, thanks again. And operator, we will conclude the call.

Ladies and gentlemen, this does conclude today's Farmer Mac 2025 Earnings Results Conference Call. And we do thank you all for your participation. You may now disconnect your lines. Please enjoy the rest of your day.

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" Keefe, Bruyette, & Woods, Inc., Research Division

" Seaport Research Partners

" Sidoti & Company, LLC

Good afternoon, ladies and gentlemen, and welcome to the Farmer Mac Third Quarter 2025 Earnings Results Conference Call.

[Operator Instructions]

This call is being recorded on November 3, 2025. I would now like to turn the conference over to Jalpa Nazareth. Please go ahead.

Good afternoon, and thank you for joining us for our third quarter 2025 earnings conference call. I'm Jalpa Nazareth, Senior Director of Investor Relations and Finance Strategy here at Farmer Mac.

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.

Please refer to Farmer Mac's 2024 annual report on Form 10-K and subsequent SEC filings posted on Farmer Mac's website, farmermac.com, under the Financial Information portion of the Investors section 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 10-Q and earnings release posted on Farmer Mac's website.

Today, I'm joined by our Chief Executive Officer, Brad Nordholm, who will lead our discussion on third-quarter 2025 results, and our President and Chief Operating Officer, Zack Carpenter, who will discuss customer and market developments.

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 CEO, Brad Nordholm. Brad?

Thank you, Jalpa. Good afternoon, everyone, and thank you for joining us. We delivered exceptional third-quarter 2025 results, achieving yet another quarter of record net effective spread and core earnings.

We surpassed $31 billion in outstanding business volume and strengthened our already robust capital base through a very successful preferred stock issuance, further supporting our long-term growth objectives and providing a buffer against market volatility.

Our total portfolio is well diversified by both commodity and geography, and we remain confident in the overall health of our portfolio as evidenced by our continued strong asset quality metrics and I might add, our day in, day out market information we receive from being active in every commodity in every region of the United States. It's a real advantage.

It is the consistency of our growth and financial results over the last few years and my expectations that that will continue that has given me the confidence to announce my anticipated retirement in March 2027, and for the Board of Farmer Mac to name Zack as President and Chief Operating Officer and as my successor upon my retirement.

Zack has been instrumental in diversifying our loan portfolio into newer lines of business while extending our reach to more corners of rural America by developing strong strategic partnerships and relationships with both existing and new customers.

I will continue to support Zack as he builds on Farmer Mac's trajectory of mission-focused growth, operational resilience, and delivery of consistent financial results.

So, turning to those results. We ended the quarter with a record net effective spread of $97.8 million and core earnings of $49.6 million. Year-to-date, net effective spread and core earnings are $287 million or $281 million and $143 million, respectively, reflecting double-digit year-over-year growth.

The growth in spreads was driven by higher average loan balances and the continuing shift to higher spread business, which has been a key driver of the net effective spread increase over the past several years.

Our strategy-driven decision to diversify our loan portfolio into newer lines of business that play to our competitive advantages in intermediate and long-term match-funded and securitized funding, such as renewable energy, broadband infrastructure, and corporate Ag finance, has been a key priority, and that diversification is benefiting us through changing market cycles.

Also contributing to our net effective spread growth is our effective asset liability management and funding execution.

The strengthening of our balance sheet through retained earnings growth and preferred stock issuance supports our balance sheet management strategies, which are fundamental to the resilience of our business model, as these strategies enable us to be thoughtful and responsive to changing market conditions.

Also reflected in our core earnings results this quarter is the purchase of $24.2 million of renewable energy investment tax credits, resulting in a $1.5 million benefit.

We will continue to actively evaluate these types of renewable energy credit opportunities in the next few quarters, as we have a consistent top marginal corporate tax liability and remain a significant participant in the renewable energy project finance market, again, giving us unique insights and some competitive advantages.

Partially offsetting the growth in net effective spread in the third quarter was an increase in operating expenses related to headcount, technology investment, and higher transaction-related legal expenses.

The majority of additions to headcount were related to resources needed to support increased business volumes, especially in higher spread businesses, as well as new technology and operational efficiency project implementation.

We maintain our disciplined approach to expense management by proactively monitoring and managing expense growth against income revenue streams. Another way of putting it is our efficiency ratio.

We'll continue to assess appropriate investments in our operational and technology platforms, resources to support future growth and scalability, and our ability to innovate and drive profitability while maintaining a disciplined efficiency ratio within our long-term target average of 30%.

In terms of credit expense, several factors contributed to the $7.4 million net provision to the total allowance for the quarter.

Specifically, the provision expense this quarter reflects, first, an increased loss estimate on certain Ag storage and processing and broadband substandard assets; second, a handful of specific properties affected by groundwater regulation in California.

And third, volume growth in both agricultural finance and infrastructure finance lines of business. Offsetting credit expense this quarter was the recovery of $2.2 million, primarily related to a single permanent planting loan that was previously charged off in the second quarter of 2025.

We also recorded during the quarter a $4.4 million charge-off related to 3 different loans. As we've mentioned on prior calls, our newer segments, which have grown significantly over the last several years, carry different risk weights, hence requiring increased provision expense during this period's growth while generating a significantly higher net effective spread.

Our provision expense reflects model-based CECL changes or charges, rather, and is part of our normal and ordinary course of business. We will continue to see quarterly adjustments, additions, and releases as our portfolios grow and mature.

As of September 30, the total allowance for losses was $37.2 million, or 12 basis points of our total outstanding business volume. We believe that our total portfolio is well diversified by industry, geography, and segments, and that we're well positioned given our strong levels of capital.

The fundamentals of our underwriting and risk analytics enable us to continue to effectively navigate the current volatility and uncertainty in the agricultural cycle.

While credit losses are inherent in lending, we believe that any losses in the current credit cycle will be moderated by the strength and diversity of our overall portfolio and our allowances.

From a credit perspective, portfolio quality remained stable during the third quarter despite a modest uptick in 90-day delinquencies, which reflects the seasonal impact of the July 1 payment date on almost all of our loans in the Farm & Ranch segment and not any identifiable trend.

Despite heightened volatility and market uncertainty, our prudent underwriting approach, emphasizing the dual assessment of loan-to-value and cash flow metrics, positions us well to withstand market cycles.

To date, we have not seen any significant effects on our portfolio related to political developments, government actions, including the current shutdown, or changes in policy.

We'll continue to closely monitor industry and credit conditions as new government policies are implemented. Farmer Mac's core capital increased by $131 million to $1.7 billion as of September 30, exceeding our statutory requirement by $723 million or 75%.

The sequential increase reflects the successful issuance of $100 million of Series H preferred stock in August. The addition of preferred capital, together with our strong earnings, improved our Tier 1 capital ratio to 13.9% this quarter from 13.6% last quarter despite the strong growth in assets.

The issuance effectively allowed us to strengthen our Tier 1 capital position and also allowed us to demonstrate strong access to low-cost preferred stock capital.

Looking ahead, we will continue to evaluate all the capital management tools we have available to achieve our goal of optimizing our overall capital position through organic capital generation and securitization opportunities, especially as we continue to grow our book of business in more accretive segments that will require an incrementally greater amount of capital.

Our strong capital position has enabled us to grow and diversify revenue streams, remain resilient in volatile credit environments, and continue to offer competitively priced liquidity to our customers and their borrowers even in challenging times.

We're working toward a second prime transaction in the fourth quarter of 2025, which will be similar to the deal earlier this year. The securitization program remains an important strategic initiative for Farmer Mac as it allows us to enhance and optimize the balance sheet by efficient deployment of capital and also enables our growth strategy by targeting new asset opportunities.

We're very pleased with the tremendous support we've seen from our stakeholders for this program, and we look forward to exploring alternatives to risk transfer structures that will allow us to expand our offerings while serving as another source of capital management.

Lastly, I'm pleased to share that, subsequent to quarter-end, Farmer Mac has repurchased approximately 30,000 shares of Class C common stock for a total amount of about $5 million.

We have several tools we leverage to return capital to shareholders, including dividends and buybacks, ensuring any action taken is both sustainable and value accretive.

This balanced approach allows us to invest in growth, maintain financial resilience, and deliver returns, all while remaining agile in a dynamic market environment.

So at this time, I'd like to turn over to Zack Carpenter, our President and Chief Operating Officer, to discuss our customers and market developments in more detail. Zack?

Thanks, Brad. I want to first start by expressing my deep gratitude to you and our Board of Directors for their trust and confidence in appointing me as President and Chief Operating Officer of Farmer Mac.

It is truly an honor to step into this role and to build on an incredible foundation that Brad and the team have established. What makes this moment especially meaningful is the opportunity to lead alongside such an extraordinary team here at Farmer Mac.

Across the organization, I see a shared drive to innovate, serve with purpose, and never settle for average. This passionate, mission-focused culture at Farmer Mac is what gives me tremendous confidence in our future.

Our team delivered another solid quarter of outstanding business volume growth. We achieved $500 million of net new business volume, resulting in total outstanding business volume of $31.1 billion as of quarter end.

The growth in our portfolio was primarily driven by the infrastructure finance line of business, which grew by $600 million this quarter to $11 billion as of quarter end, reflecting continued strong interest in investment in data centers, broadband expansion as well as the construction and completion of renewable energy projects, coupled with the overall need for significant energy generation and transmission capacity for rural America.

Serving agriculture businesses and providing liquidity to enhance and enable rural infrastructure are both critical to our mission of driving economic opportunity to rural America.

This proactive business diversification continues to pay dividends, which we expect to continue going forward, and it has also expanded our commitment to rural communities as this liquidity is geographically aligned with our core mission across all our segments.

Volume in our Renewable Energy segment more than doubled from the same period last year to $2.3 billion as of quarter end. This segment has doubled every year since its inception, and we believe the strength of our near-term pipeline supports this continued growth over the next 12 months.

Despite increased policy uncertainty across the renewable power investment market, we expect to continue participating in renewable energy transactions for both new projects and refinancing of existing projects, utilizing the same disciplined credit standards.

In addition to the substantial increase in need for new power generation, the tax credit phaseouts for renewable energy generation projects in HR1 will continue to drive near-term growth in this segment, and we believe this will continue over the next 12 months for projects to start construction to meet required milestones to maintain crap tax incentives.

Our Broadband Infrastructure segment doubled year-over-year to $1.3 billion as of quarter end, compared to $600 million in the same period last year.

The growth primarily reflects the continued demand for data centers. We anticipate increased financing opportunities in this segment for data center build-outs, given the increasing investment in capacity to support AI, cloud storage, and enterprise digitization, particularly by large hyperscalers.

We believe these developments are crucial for rural economic growth and support the historically strong demand for connectivity needs across rural America.

Our Power and Utilities segment grew $126 million this quarter, largely due to the strong loan purchase activity supporting the investment needs of rural electric generation, transmission, and distribution cooperatives.

Growing business volume in our infrastructure finance segment remains a top priority, and we will continue to focus on strategic investments in these areas to build our expertise and capacity as market opportunities arise.

Activity this quarter in our $20.1 billion agricultural finance portfolio reflected strong loan purchase growth in our foundational Farm & Ranch segment, offset by scheduled maturities of large AgVantage facilities or bonds.

Our Farm & Ranch loan purchase portfolio grew by $285 million in the third quarter, far outpacing scheduled maturities. We believe loan purchase growth will continue into the foreseeable future due to ongoing agricultural economic tightening in certain sectors, reflecting commodity price volatility and input inflationary dynamics, the potential for increased tariffs and trade policy changes, as well as general balance sheet management of our community and commercial bank customers, including liquidity needed for farmland equipment purchases by the ultimate farmer borrowers.

The Farm & 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 supporting their borrowers' financial needs.

While AgVantage securities in both Farm & Ranch and Corporate Ag Finance segments faced large maturities over the last year due to many of our partners pausing capital deployment to navigate the ongoing market uncertainty, there continues to be strong demand for wholesale finance products and solutions.

For example, prior to quarter end, we successfully closed a new facility with $4.3 billion of borrowing capacity with a large agricultural finance counterparty, further demonstrating the strength of our relationships and the relative value of our wholesale finance product.

We do expect additional funding for this facility in the fourth quarter. Looking ahead, we will continue to work closely with these counterparties and tactically determine when to refinance maturing securities or provide incremental financing needs based on current market dynamics, as well as the appropriate return on capital thresholds for this product.

We remain steadfast in our commitment to deliver a broad spectrum of financial solutions to the agriculture community by working alongside our growing customer base.

Despite this backdrop of broader market uncertainty stemming from factors such as interest rates, regulatory shifts, and trade policy changes, we are confident in our ability to continue to deliver growth and consistent results.

Our total portfolio is well diversified by both commodity and geography, and we remain confident in the overall health of our portfolio, as evidenced by our continued strong asset quality metrics.

And with that, Brad, I'll turn it back to you.

Well, thank you, Zack. We delivered yet another record financial result this quarter while fulfilling several important strategic and revenue objectives.

We delivered record core earnings, maintained a stable credit profile, reported a core return on equity of 17%, a little bit north of that actually, and we did that while holding our efficiency ratio below our strategic target of 30%.

We are optimistic about the future, and we believe that we'll continue to be well-positioned to deliver on our multiyear strategy with strong liquidity and capital levels, a diversified mix of business, a highly effective risk management practice, and, most importantly, a talented team of dedicated professionals here at Farmer Mac.

I'm going to turn to the Q&A period, but just a quick comment before I do an update on our CFO search. We have interviewed a number of outstanding candidates with strong qualifications and expertise to be the next CFO of Farmer Mac.

I've been gratified that Farmer Mac is seen as a very desirable employer and career opportunity for many of these qualified people. And I think it's likely that we're going to get to an announcement within this calendar quarter, the fourth calendar quarter of 2025.

And now, operator, I'd like to see if we have any questions from anyone on the line today.

[Operator Instructions]

Your first question comes from Bose George from KBW.

Congrats, Zack, and all the best, Brad, on your retirement. In terms of questions, I just wanted to start with the question on spreads. Can you just talk about the outlook for spreads, just given the expectations for mix and the forward curve, which I guess is the Fed now cutting about 3x by next summer?

Yes. Thanks, Bose, and nice to have you on today. A couple of comments. I'll let Zack get into the mix of business that impacts our NES or net effective spread.

But I'd just like to begin with a reminder that the way we run our asset liability management and our match funding strategy here at Farmer Mac, a cut in interest rates by the Fed should have no impact on the net effective spread here at Farmer Mac.

We structure our portfolio so that we're neutral to changes in interest rates at the short end or even the long end of the curve. And so if interest rates go down or interest rates go up, as we have demonstrated quarter in, quarter out for a very long period of time, those changes in market interest rates really don't impact Farmer Mac much at all, a couple of basis points here and there.

But we are not a bank that immediately benefits from sticky asset pricing and a drop in liability pricing. Ours move in tandem and are structured to remain in tandem.

We carefully do upward and downward basis point shocks in funding. And today, as is the case virtually every day at Farmer Mac, those upward and downward shocks really don't result in a change in profitability in our earnings.

So Zack, maybe you can add some color to what's driving NES and how the mix of business might impact that going forward?

Yes, happy to. I think first and foremost, we really focus on appropriate risk-adjusted return at Farmer Mac.

As we've evolved and diversified our business model, we are in new lines of business that carry different risks. And as we put capital to work, we want to make sure that we are achieving returns for those new lines of business.

A couple of moving parts in this quarter, I think that showed the diversification benefit. We continue to see strong, strong growth in infrastructure finance.

Two of the strong growth segments are broadband and renewable energy. We continue to see significant funding in those segments. Those are market-based deals that do, in many instances, carry more accretive spreads than our core Farm & Ranch or agricultural finance line of business.

And in many instances, these transactions are construction financing. So when you think about a data center, a large commitment over that will fund over time.

So we have a very strong pipeline of commitments in the broadband space that will fund as constructions take place, and we will take advantage of, I would say, more accretive spreads than our other lines of business.

We don't see as the market evolves in this space, especially over the foreseeable future, significant changes in credit spreads in these sectors, and thus would anticipate that as fundings take place, relatively stable to accretive spreads in this space.

In Farm & Ranch, there was a slight decrease in spreads, and this is typical. I mean, this is the seasonal nature of our payment cycle. We generally have more prepayments in the first and third quarters, and that generally creates some nonaccruals as we go through the quarter.

And we had a little drag in Farm & Ranch from nonaccrual loans that over time will cure, and we'll receive that interest income, but that was the slight decrease in Farm & Ranch.

And then the last component I would say is the investment-grade credit spread market out there is extremely, extremely tight. If you follow some of the transactions, there's tremendous pricing that these organizations are getting.

So we're being prudent, especially in our AgVantage securities space, to refinance and provide incremental financing when the price makes sense for our capital to go to work.

So in instances where there's very tight credit spreads that may not make sense for us to put capital out the door, we'll look at other segments such as broadband, renewable, and corporate ag that maybe carry a higher credit spread for us for our capital use versus putting capital out the door to AgVantage.

So again, this goes back to our focus of strong risk-adjusted pricing across all of our segments and making sure that as we put capital to work, we're supporting our mission, but also getting paid for the risk that we're taking.

And then actually switching over to credit. As some of the other business lines continue to grow, should a provision around the current level that you reported this quarter and last quarter seem like a reasonable place? Or is it still going to be kind of sporadic based on what happens to the portfolio?

First of all, in terms of context, this provision is tiny compared to other financial institutions.

So we're talking about mid-high 7-figure allowance for an organization that had about $50 million of core after-tax earnings for the quarter. So keeping in that context, this is very, very low.

You've seen it fluctuate at very low levels for many, many quarters. We go to great lengths to make sure that we uncover and appropriately allowance and value any credits that seem like they're getting in trouble. And what you see reflected in the third quarter reflects everything that we see right now.

As I indicated in my comments earlier, we don't see systemic risks or sector risks where we have a series of loans that are in trouble. It tends to be a little bit more episodic.

The closest that I reported in my comments earlier today were a few loans in California. I'm talking about a handful that were negatively impacted by changes in water policy in California in an effort to manage subsidies, the actual depletion of groundwater, and the lowering of the elevation of land. And that was a very, very comprehensive review.

As of today, we don't see anything else on the horizon that would cause the numbers to increase. But look at, there's very likely to be continuing episodic events and some numbers here and there.

Today, we don't see anything that would make us think that the number next quarter is going to jump out of that kind of 7-figure range.

The next question comes from Bill Ryan from Seaport Global.

I'd also like to extend congratulations to both you, Brad, and Zack, for the announcement a couple of months ago.

A couple of questions. First, starting off on the big picture of things. Obviously, a lot of headlines over the last quarter that I think have impacted the stock price at least to some degree, specifically tariffs.

And the media has portrayed as the end of the farmer, it seems like when you listen to the news. But obviously, you portrayed it very differently on the call today.

Could you maybe remind us what the crops are that, I guess, I'd say we know about soybeans, but what are the crops that are being most impacted by tariffs? What are you seeing? And as far as having the market stabilization payments to farmers started? Or is that kind of on the come?

Yes. Well, thank you, Bill. And we appreciate the recognition that you made that it's probably some of these headlines and major publications about negative developments in agriculture that have negatively impacted our stock price. We see the same thing.

But it's always a little bit more of a nuanced story. Soybean prices in the last 2.5 weeks are up 10%. Almond prices were a very large portion of the crop, 50% is shipped to Asia, you think we'd be very negative in the last 1.5 years, prices there are up to over $3 a pound from a mid-$1 a pound range 18 months ago.

So, yes, there are definitely financial pressures in major crops, soybeans, corn and cotton, also wheat. We pay great attention to that. We are very concerned about the farm families that may be negatively impacted by that.

But we have seen these cycles in American agriculture before. The last time was in 2019, 2020. And we believe that through a combination of better balances in supply/demand globally, more stabilization in tariff and export policies, and farmers making crude decisions based on what they see in front of them.

If you asked someone a month ago, "Are we going to be planting as many soybeans in the United States in 2026 as in '25?" The answer is a resounding no.

Farmers are very smart and very adaptive, and they look at market conditions and adjust accordingly. So we look at what actually happens to our portfolio, which is really a second derivative from what's going on in the countryside. And we haven't seen the impact that may be suggested by the headlines.

Going to discretionary payments, what we call market facilitation payments during the Trump first administration, I think we're expecting to see about $10 billion to $12 billion flow in the next couple of weeks.

There is a discussion about additional payments towards the end of the year. We'll see how that materializes. And I would note, when you think about those headlines, that there are advocacy groups for farmers who are interested in telling a story that results in sentiment, greater support for voluntary payments from the federal government.

And that has been one factor in what has been motivating and capturing a lot of headlines recently.

Bill, this is Zack. Just one comment as you think about Farmer Mac and our unique nature as a national secondary market, but we're not focused on specific regions, and that's important.

I mean, there's a lot of negativity on the soybean farmers out there. But if you look at dairy, protein, livestock, a significant part of the ag sector is having tremendously strong results, tremendously strong export markets.

And when you think about Farmer Mac, I've looked at the year-to-date loan purchases in our Farm & Ranch space is over 100 different commodities in practically all 50 states, covering all of these different ag sectors.

So I think it's important when you think about our national diversity that we are diverse. We are executing across all the different ag commodities, and we're seeing a lot of the benefits of the strength of many of those ag borrowers that are seeing record years wanting to buy more land, wanting to buy more equipment, and we're able to support that as well as we have concerns for providing liquidity and solutions for other farmers that may be having a more difficult time.

And just as a follow-up question, you highlighted Farm & Ranch. And if I got my numbers right, the new business volume was up about 38% in the quarter, following a 28% year-over-year increase.

Last quarter, I believe the outstanding balance was up for the first time in like 5 or 6 quarters in terms of outstandings. And you also know there's a higher level of prepayments in the quarter as well.

Are we hitting a point that, that business might begin to accelerate a little bit more, just in terms of total outstanding volume? And a part of that has the structure of the loans that you're offering changed? Is it a fixed rate, a variable rate? Is the mix about the same as it has been in the past?

I mean, that's a tremendous question. And I think we've been focused on this for some time now in a couple of different areas.

First, yes, we are seeing a significant increase in loan applications, loan approvals using the Farmer Mac secondary market across the board. As I mentioned earlier, the number of commodities that we've supported this year is over 100. So it's broad-based.

And I think that's coming from numerous different avenues. First, yes, there are ag sectors out there that are incredibly strong and want to borrow and leverage the opportunities in the market. We are seeing that.

Clearly, some sectors need liquidity to support working capital. Many of these borrowers are underlevered. They have significant equity in their land, and it's a key component of getting liquidity to support maybe a tough 2025 harvest, and we're seeing that as well.

Interestingly enough, a significant majority of the growth in 2025 has been new money loans, meaning borrowers coming in to find liquidity for a new land purchase, equipment purchase.

So again, going back to Brad's point, we are not seeing that significant stress that people are reading in the environment and the articles in our portfolio, which gives us confidence that we see continued growth going forward.

[Technical Difficulty] We anticipate that as rates continue to mostly come lower, that will also increase loan demand. In terms of the structure of our loans, we changed our under.

We continue to be very consistent on how we look at risk buffer pricing risk that farmers generally go into more products given the pricing between fixed rate mortgage hasn't changed over the years consistently [indiscernible] is our bank's commercial institutions to manage their capital, their loan to deposit that need to potentially secondary market increased tension and/or for the second dynamics. We look forward to [indiscernible].

Next question, Brendan Michael McCarthy from Sidoti.

[ Technical Difficulty] Congratulations, Brad and Zack. I also wanted to just ask how prepayment expectations are looking ahead.

[Technical Difficulty] Prepayment, I'd say, the drop in rates in 2021, we don't envision increasing significantly, just given that we don't think rates are going to drop to accelerated levels.

And I think a key component of that is in 2020 and 2021, a significant number of borrowers who just locked in long-term fixed-rate mortgages at historically low rates, those are set for life.

There's no way those are going to be touched or refined. So what we're seeing now is a much lower environment for prepayments given the bulk of those refinancings took place, coupled with rates may moderate a little bit, but it's not going to significantly come down to lower levels to entice that refinancing opportunity, which is tending to then lower prepayment speeds as well as farmers are going to take probably shorter maturity variable rate mortgages to manage the volatility that they experience across their different ag sectors.

I wanted to go to the net effective spread back up to 1.2%, a really strong level.

I know, looking back at the past couple of quarters, there might have been the expectation that the net effective spread would stabilize, maybe closer to the mid-teens area. But obviously, there's some secular growth trends at play there with the infrastructure finance segment.

Just curious if there's anything baked into that net effective spread, 1.2% that might have surprised you, or maybe just previous past quarterly movements upwards, has that come as a surprise at all to you?

We acknowledge that it's probably a little bit higher than we have commented on over the last year. But so too has been the pace of growth, particularly in rural infrastructure, which is amongst the most accretive segments that we have.

And so that's really the primary reason. It's a good news story from our standpoint. And I think Zack provided some good commentary and analysis on that mix going forward, with maybe a little bit of pressure on corporate and AgVantage, but acceleration of the Farm & Ranch opportunity and continuing very, very strong strength and expectations for rural infrastructure.

Brendan, the only thing I'd comment on as well is mix is important here. We've been talking about some of the headwinds we've seen in Farm & Ranch AgVantage, that product by itself is a fairly tight net effective spread margin, just given the strength of the counterparties we're lending to.

So when you see a lot of that volume mature, especially in this environment with historically low credit spreads, part of it we're choosing not to put money out the door because that investment doesn't make sense for us.

So with that headwind in the maturity space and the significant growth elsewhere, the mix is really rebalancing the NIS spread to the higher level of our range than what we'd expect if we saw a lot of AgVantage volume.

And one quick question on the credit side with the $7.4 million provision in the quarter, specifically as it relates to the $6.8 million provision in Ag Finance.

Just looking at the breakdown there, would you say that was more weighted towards just general volume growth or the groundwater regulations in California you mentioned?

It was actually a mix of growth that comes through our CECL models and the groundwater. And I think we also called out 3 specific credits that had special allowances.

So once again, it was a mix. I characterize it as episodic, and that's really what it was.

And then the $4.4 million charge-off, the 3 borrowers there, I guess that was probably disclosed previously in a provision. Is that correct?

No. No, it was just 3 small loans.

Then lastly, I just wanted to obviously comment on the environment, more negative than what you have disclosed on the earnings call here regarding the diversification of your portfolio.

But just considering where the share price is, and really, maybe a misconception among investors, were you active at all in the share repurchasing program that we discussed last quarter?

We were. We disclosed the purchase of about 30,000 shares at a price of about $5 million. That was the fourth quarter.

There are no further questions at this time. I will now turn the call over to Brad Nordholm. Please continue.

Great. Well, thank you. Thank you very much. Once again, we really appreciate you taking time out of your day to join us.

We're proud of our results. I hope that's very clear. Once again, I think someone once characterized our results as boring. If record NES, 17% ROE, stable credit factors, and an efficiency ratio of 30% or boring, I'll take that any day, and I hope you appreciate it, too.

So thanks for joining us. And again, if you have any questions whatsoever, please take them in with Jalpa. We'll circle up the right team to have a special call with you, talk you through your questions.

Otherwise, we look forward to getting back with you on our regular scheduled call in February to discuss our fourth quarter and fiscal 2025 results. Good day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.