Federal Agricultural Mortgage Corporation (NYSE:AGM) Q1 2023 Earnings Call Transcript

Brad Nordholm: Thank you for asking that. We would have been at this point had not because we talked about that a lot. The starts really aligned from a funding standpoint this quarter. I think that going forward, we will look for accelerating growth in our telecom and Renewable Energy project finance portfolios. So yes, accretion there. On the other hand, we will not back away from doing as much Farm & Ranch business at our historic Farm & Ranch spreads as we possibly can. That’s so absolutely core to our mission. So I think you could see some continuing support for this NES going into the next quarter or two from accretive assets as well as Treasury operations. And then maybe see a little bit of dampening effect beyond that as we look to comparative pickup in Farm & Ranch and some of our lower yielding Rural Utility business.

How that exactly shakes out? I don’t know. I think 90 bps to 100 bps NES is looking pretty conservative to us today based on where we are. And I think we have always tried to provide conservative indications of where that NES is. I remember a time when we were talking about 85 to 95, but what you have seen as opportunistic Treasury, you have seen the benefits of diversified portfolio. You’ve seen the benefits of more opportunistic pricing. There was a time when Farmer Mac not too long ago when Farmer Mac was kind of at a price, what’s the minimum we need to earn? And I think now we’re much more attuned to what’s available in the marketplace and that also is contributing to some higher returns. So I think 90 to 100 feels very, very conservative and for the remainder of this year, seeing that 110 range, maybe even a bit higher, is not out of the question at all.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Brad Nordholm for any closing remarks.

Brad Nordholm: Well, again, I just like to thank everyone for joining us today. I hope you can hear it our voices, just how proud we are of these results. It feels like it’s a combination not of just everything working in one quarter, but to greater and greater extent, every quarter, we go on our overall business plan, I think our very strong management team, our enthusiastic and very, very capable employees. All executing on our strategic plan here at Farmer Mac, and just showing better and better results from it. One of our directors the other day described this as not just a continuation, but an upward shift in our curve. And I think that is an apt description. And, again, I hope you hear our pride in what we’re doing. So thank you very much for your interest. Don’t hesitate to follow-up with any follow-on questions. We’re very happy to talk more about this. And with that operator, and our gratitude, we can conclude this call.

Operator: Conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.