In This Article:
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Total Revenue: $89 million, an increase of $2.4 million over the same quarter last year.
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Core Earnings: $39.8 million or $3.63 per share, a decrease of $3.6 million sequentially and $2.4 million year-over-year.
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Return on Equity: 16%, or 18% excluding credit expense.
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Operating Efficiency: 27%, better than the long-term target of 30%.
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Loan Purchase Volume: $1.5 billion in new business, with $700 million in new farm and ranch loan purchase volume in the first half of the year.
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Outstanding Business Volume: $28.8 billion as of June 30, 2024.
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Allowance for Losses: $18.6 million, reflecting a $2.2 million increase from March 31, 2024.
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Core Capital: $1.5 billion, exceeding statutory requirements by $626 million or 71%.
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Tier 1 Capital Ratio: 15.3% as of June 30, 2024.
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Liquidity: 283 days of liquidity as of June 30, 2024.
Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Federal Agricultural Mortgage Corp (NYSE:AGM) closed $1.5 billion of new business in the second quarter, with 70% consisting of higher spread longer-term loan purchases.
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The company reported a total revenue increase of $2.4 million year-over-year, reaching $89 million in the second quarter of 2024.
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Loan purchase volume growth was strong in the renewable energy and farm and ranch segments, with renewable energy loans more than doubling since the previous year.
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The company maintained a strong capital position, exceeding statutory requirements by $626 million or 71%.
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Federal Agricultural Mortgage Corp (NYSE:AGM) achieved a return on equity of 16%, or 18% excluding credit expenses, demonstrating strong profitability.
Negative Points
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Core earnings decreased by $3.6 million sequentially and $2.4 million year-over-year, primarily due to a $6.2 million provision for losses.
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A single permanent planting loan resulted in a $3.9 million charge-off, impacting core earnings.
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The outstanding business volume decreased by $88.9 million from March 31, 2024, due to scheduled maturities and repayments.
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AgVantage Securities volume was volatile, with $785 million maturing without refinancing, reflecting counterparties' liquidity evaluations.
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Operating expenses increased by 2% year-over-year, driven by increased headcount and stock compensation expenses.
Q & A Highlights
Q: Aparna, you mentioned expecting flat to higher earnings as rates go down. Are you also expecting flat to higher spreads, or is this a combination of spreads and volume growth? A: Aparna Ramesh, CFO: Yes, it's both. We stress test our balance sheet monthly for interest rate exposure. As we enter a Fed easing cycle, we anticipate a marginal improvement in our net effective spread. Historically, our spread levels are similar to current levels, and any deceleration in spread is due to funding in advance of volume. We expect a pickup in both earnings and spread as the Fed eases.