Company: AGM-PH
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0000845877-25-000033
Chunk: 172

Company: FEDERAL AGRICULTURAL MORTGAGE CORP
Filing Date: 2025-02-21
Form: 10-K
Item: Item 7
Chunk 172
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1 million after-tax increase in operating expenses.

For more information about net income attributable to common stockholders, the composition of core earnings, and a reconciliation of net income attributable to common stockholders to core earnings, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations." For more information about the non-GAAP measures Farmer Mac uses, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Use of Non-GAAP Measures."

56

Net Interest Income and Net Effective Spread

The following table shows our net interest income and net 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 Years Ended December 31,202420232022(in thousands)Net interest income$353,867 $327,547 $270,940 Net interest yield %1.16 %1.15 %1.04 %Net effective spread$339,564 $326,980 $255,529 Net effective spread %1.15 %1.18 %1.02 %

The $26.3 million year-over-year increase in net interest income was primarily due to an increase of $20.2 million from the shift in the composition of new business volume toward higher yielding loans and a $16.9 million increase in the fair value of derivatives designated in fair value hedge accounting relationships (designated financial derivatives). That increased yield was partially offset by a $6.6 million decrease in cash-basis interest income and a $4.6 million increase in funding costs. In percentage terms, the year-over-year increase was 0.01%.

The $56.6 million year-over-year increase in net interest income for 2023 compared to 2022 was primarily due to a $48.9 million decrease in funding costs and a $19.9 million increase related to net new business volume. The decrease in funding costs was primarily due to our disciplined funding strategies and higher nominal interest rates that have led to an upward repricing of our excess long-term capital that we raised when interest rates were at historical lows and is held in our investment portfolio. The factors that