So in 2020 and 2021 we were able to tap the retail preferred market and issue preferreds that were sub 5% and sub 6%. And so we did that. And if we were ever able to do that again, that’s exactly what we would do. These are fixed rate preferreds where we really hold the call option. The Series C that you note, you’re absolutely right, that has an option where we can redeem it. And if we did not, then it would convert to floating. And as you know, in the current rate environment, that would result in additional costs approximately to the tune of about 2 million per year. We haven’t really made a complete decision as yet. But what I would say is just given our various degrees of freedom plus our excellent credit quality, the fact that we’ve got really a very big and growing share of our capital stack coming from retained earnings, it’s highly probable that it is something that we will look at.
But preferreds are very much an option for us, and it’ll continue to be an option for us, but we look at it in terms of an expensive option versus something that’s really opportunistic. So in this particular case, you’re right, it is redeemable and it does convert to floating. So it’s probably something that we’ll take a very close look at as we approach the redemption date to consider whether we want to let that go and if we want to issue something possibly when the markets are favorable to us in the fixed rate environment.
Bradford T. Nordholm: Yeah, I’d just like — I’d just like to add, I mean Aparna has talked about the optionality that we have and you know, whether we choose to redeem that in July or not will depend on factors that we’re not looking at today. They will depend on factors that we’re looking at in the second quarter. We’ll be revisiting growth, we’ll be revisiting Basel, we’ll be revisiting farm bill, and taking into consideration all the things that you would expect management to be looking at before coming up with a position on that. But I would add to the other part of your question was, how do we stand with the regulators? Simply put, our levels of capitalization by every measure have never been stronger, and we far exceed all regulatory requirements.
We do regular stress testing with regulators. We do well under that stress testing with our capital. Farmer Mac has never been stronger. And when you consider the financial results return on equity of 19%, almost 19%, you consider the growth in earnings, you consider dividends, you consider the growth in the overall volume of Farmer Mac that we have done that while also increasing capital makes it even more remarkable. Because oftentimes there’s a trade-off. For us there’s not been a trade-off. So that gives us just a lot of flexibility, a lot of options to run this business to even greater success in the future. We’re not constrained by capital.
Aparna Ramesh: And I’ll just add that securitization is another level, which is another capital efficient tool that we will throw into the mix as we think about retained earnings, preferred, and now securitization in terms of thinking about our leverage ratios and our Tier 1 ratio. So that’s just another thing that we throw into the mix.
DeForest Hinman: Yes, Brad, I agree. You’ve done a phenomenal job. I like the slide too with dividend CAGR. I mean, I think we talked about this in the past. I don’t know if there’s any company that’s had a faster dividend growth than yours in the financial space. It’s astounding and the spreads continue to hold up. And you continue to see most financial companies be dealing with spread compression. And, you haven’t really had had very much you had, like you said, 19% ROE that’s incredibly attractive, especially from a consistency perspective. And, we’ve talked about this before, the stock’s still probably undervalued, but continuing to increase the dividend hopefully, gets more people to look at the stock. Final question is and I’ve asked this many times before, just hiring, we added quite a few people in 2023.
So can you update us on who do we need to hire in 2024, where does that stand in terms of getting those people in place? And then can you give us an update on any of the IT initiatives that we’ve been putting in place, are they partially done, are they completed or is there more work to be done? And that’s it. Thank you.
Bradford T. Nordholm: Sure, sure. Of course. Yeah, we have expanded our employee base. I think we ended up 2023 with a 184 to 196 employees, something like that. And, we have over the last couple years, it’s been a balance of funding and ALM related, business development related, core control and risk management related across the organization compliance. You think about an organization with aggregate volume approaching $30 billion that has only 184 employees. We have to have a full suite of very, very talented people, doing a lot of functions that banks our size do with literally thousands of employees. So we feel very good about the additional depth we’ve built in our organization. As we go into 2024 and kind of through our budgeting process, it’s pretty simple.
A little bit of emphasis on our branding and communications in terms of headcount, of just a bit on IT. And, the rest really is business development. We feel that we have built very, very strong origination, credit approval, credit administration, credit policy, funding platforms here at Farmer Mac, and now let’s work to put more volume through them. So that’s kind of reflected in our choice of how we’re allocating increases in headcount. The increases in headcount in 2024 will be slower than they have been over the last couple years, we believe. As it relates to IT initiatives, there’s a tremendous amount going on. Sean Datcher joined us as CIO in the second quarter of 2023. It feels like he’s been here for over a year. He has got a tremendous amount done.
