Company: AGM-PH
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0000845877-25-000152
Chunk: 256

Company: FEDERAL AGRICULTURAL MORTGAGE CORP
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 2
Chunk 256
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 high market interest rates and global and economic volatility, Farmer Mac's outstanding business volume and net effective spread increased 3.1% and 8.4% in first quarter 2025 versus first quarter 2024, respectively. The increase in business volume and net effective spread primarily reflects the increased diversification of Farmer Mac’s business model and the resiliency of the agriculture and infrastructure sectors. 

Several factors continue to influence business volume growth dynamics. The persistently elevated market interest rates have had a direct effect on Farmer Mac’s Farm & Ranch product interest rates, and there generally exists an inverse correlation between Farm & Ranch new loan purchase volumes and changes in Farm & Ranch product interest rates, with higher product interest rates slowing portfolio loan prepayments. Also, a tightening agricultural economy is creating the need for additional liquidity and working capital for borrowers managing through this agricultural cycle. The net effect of these forces contributed to positive Farm & Ranch loan purchase portfolio growth in first quarter 2025. Future changes in monetary policy, sustained elevated product interest rates, the impact of changes to global trade policies (including tariffs and trade restrictions), and the financial health of borrowers are anticipated to influence the demand for agricultural real estate mortgage loans and the pace of repayments. Farmer Mac experienced a decrease in wholesale finance volume during 2024, driven by slower market loan growth and a tightening of market credit spreads that resulted in less liquidity and diversification needs from our counterparties. During first quarter 2025, Farmer Mac closed a new AgVantage facility with a large counterparty, demonstrating the continued interest in this unique wholesale finance product from potential counterparties. Any future wholesale finance growth will likely be influenced by market interest rates and credit spreads, overall economic conditions and loan growth opportunities, and the relative value of Farmer Mac’s products versus the broader market. Corporate AgFinance loan purchases and unfunded commitments increased 16.1% in first quarter 2025 versus first quarter 2024. The Infrastructure Finance segments showed significant business volume growth in first quarter 2025, increasing over $1.5 billion, or 19.5%, to $9.8 billion in first quarter 2025 versus first quarter 2024. Business volume in Infrastructure Finance was strong across most products and segments in first quarter 2025, primarily driven by increased financing activity for renewable energy projects and broadband infrastructure in response to continued strong demand for renewable power generation and storage and data center investments. 

Opportunities for profitable future business volume growth include Farmer Mac's potential role in allev