Company: AGM-PH
Filing Date: 2025-11-03
Form Type: 10-Q
Source: 0000845877-25-000252
Chunk: 68

Company: FEDERAL AGRICULTURAL MORTGAGE CORP
Filing Date: 2025-11-03
Form: 10-Q
Item: Part I, Item 1
Chunk 68
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 effective spread in both dollars and percentage yield or spread for the periods presented. Farmer Mac uses net effective spread, a non-GAAP measure, as an alternative to net interest income because management believes it is a useful metric that reflects the economics of the net spread between all the assets owned by Farmer Mac and all related funding, including any associated derivatives, some of which may not be included in net interest income.

Table 2For the Three Months EndedSeptember 30, 2025June 30, 2025September 30, 2024(in thousands)Net interest income$98,477 $96,797 $86,791 Net interest yield %1.18 %1.20 %1.15 %Net effective spread$97,769 $93,893 $85,396 Net effective spread %1.20 %1.19 %1.16 %

The $1.7 million and $3.9 million sequential increases in net interest income and net effective spread, respectively, were both primarily due to a $3.6 million increase from net new business volume and a $3.2 million decrease in funding costs. These changes were partially offset by a $1.9 million decrease in interest income related to an increase in loans on non-accrual during third quarter 2025. The sequential change in net interest income was further offset by a $2.8 million decrease in the fair value of derivatives designated in fair value hedge accounting relationships (designated financial derivatives). This impact is excluded from net effective spread. The decreases in the fair value of designated financial derivatives and the reversal of interest income related to non-accrual loans resulted in a 2 basis point sequential decrease in net interest yield. 

The year-over-year increase of $11.7 million in net interest income and $12.4 million in net effective spread for third quarter 2025 compared to third quarter 2024 were primarily attributable to the same drivers, which include a $9.6 million increase from net new business volume and a $3.9 million decrease in funding costs. These impacts were partially offset by a $1.3 million decrease in interest income related to an increase in loans on non-accrual. The year-over-year increase in net interest income was further offset by a $0.3 million decrease in the fair value of designated financial derivatives, the impact of which is excluded from net effective spread.

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