AGM Federal Agricultural Mortgage

Brad Nordholm President and CEO
Steve Mullery General Counsel
Zack Carpenter Chief Business Officer
Jackson Takach Chief Economist
Aparna Ramesh EVP and CFO
Greg Pendy Sidoti
David Eidelman Eidelman Virant Capital
Chip Oat Tradition Asset Management
Call transcript
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Good day and welcome to the Farmer Mac Second Quarter 2020 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Brad Nordholm, President and CEO. ahead. go Please

Brad Nordholm

Brad you I’m call. I’m pleased very Good our Nordholm second welcome to conference quarter to morning. and XXXX investor

Before that Steve comment I Farmer Mac's as ask General non-GAAP on began, to financial of Counsel measures. well Mullery, as on may management our statements use make today, forward-looking I'll

Steve Mullery

Brad. Thanks

Evaluating Mac recording in weeks financial will today. to known analyzing filed be of our posted and presented portion Form business the non-GAAP financial our to results statements XXXX should make under with two most February starting reconciliations consider uses today. with section. SEC financial also and these We on you as Generally Farmer of the conference call website, be and materially current of website and and of related future found risks as In laws. COVID-XX and the in performance results Form performance Investors of the on measures. Mac's Actual Some Accepted these about call from maybe We risks subject forward-looking the sometimes and in that expressed not that XX-Q the may to Farmer based with as on may securities our by this quarterly this made the forward-looking on implied are expectations Farmer assumptions XX-Q XX-K statements can in measures uncertainties after those States, described caution differ later earnings for A Farmer non-GAAP statements recent Form filed report be accordance available the SEC and statements. updated under Mac, these release Mac's update we are or well ,information annual measures of you statements uncertainties. information to discuss forward-looking this our events Disclosures obligated Principles United call. on risks on report statements its as pandemic not the Accounting

Brad Nordholm

much. Steve, and for And families well I being and thanks morning you very all finds and hope safe. doing good healthy everyone your to and us. very joining this

pricing. proactive new the to performance exceptional our utility we among low markets These X.X second expenses, plan effective uninterrupted strong Farmer of was interest gross business core reflects our abilities of growth and that our agriculture multiple and the all food us. singular an from our quarter capital essential; our and in in with this operating We and of business to across record XXXX quarter sustains long-term of execution as resilient business and approach new a $XX billion on credit that to that's disciplined operating to spread, credit Mac's asset most stable one economy spreads, and as $X.X XXXX. America competitive business, focus rates, quality. number demand results the combination sector good a agribusiness Our is that approach, recorded net The billion consistent to quarter among growth, lines our second growth rural grew outreach drivers have and another the credit Outstanding customers, model, the access provided and of solid offer billion customers rural primary credit were strong earnings volume on the of competitive in quarter. historically for debt

Infrastructure. business These maintaining lead was led consistent compared Vice cheapest of the were strong customers. and has reorganization and Looking last organizational it contributing Rural established broader increased real financial net officer customers. the more business These creation country estate to the to sector. commitment to to we relationships Senior significantly volume our company-wide allow with over increase positions this and within underscore last growth months, the the volume performance. translates changes strong back lending that XX factor our NIS our building When right, A do year the our our and agriculture, and of be over President key our the for focus growth this structure key our to lines to to core business and commercial on they growth into

a to had sequential $XX.X Net in line spread our nine results with financials, business points And historical over million you basis a quarter, year-over-year. with double-digit growth our record earnings for for the effective the was and quarter. the core our Turning at the reflecting and many plan. That's on in we've second to discussions quarters.

quality credit healthy. overall remains Our

Those underwriting million have to principal maintained balance new XXX way have payment ourselves to are to $XXX COVID-XX our we we're July this true customers credit related flexibility monitor of the the for and with applications. year. borrowers total credit. another and of XXst and more through of total Since guidelines new requests closely need and COVID-XX challenging efficient adapt conservative of continuing or March, approved serving We on payment requests of deferral on and consistent approvals We customers X.X% they deferment find that's have impact provide normal. focused their our needs remain put outstanding to and our the assistance to as ways this that effective

remains a Although flow to we communities. and and fluid American commitment to the the rural maintain our distribution agriculture there's future, broad the of possible outcomes steadfast we here. credit why of remain availability and That is particularly in environment will in are

in aligned These with to operating service talent levels the headcount and crisis, we've increased momentum our closely efforts. exceptional efforts to to time. development plan. for to while remotely, over we multiyear this Throughout customer adding have team. been continued able Before of strong to are their the extraordinary Mac Farmer moment we've during I a all really maintain take turn this our like all thank employs it strategic our We've the additional I'd business Zack,

to for all are proud of and the second to extremely Farmer customer overcome Mac has our Our With to results have update deliver and consistently at to I'm like and Officer market developments. ways to the Zack we our testament culture turn stakeholders. found obstacles an that, give you Business of I'd on Chief Zack? Carpenter, team our way quarter a

Zack Carpenter

Brad. the We're and second set effective executing of our are efficient by interest proud loan Thanks initiatives, very customer our competitive they an across quarter that providing as well our product retention and reflect and purchase rates results achieving we and acquisition process. validated as approval have as success

Cooperative result Farmer during the growth Utilities business, rates. of line than institutional ability in business, of was purchase also $XX.X grew serve largely environment, to $XXX.X a reflecting quarter by million Ranch, purchase Securities, borrowers & decrease the primary The loans and million. loan and during of and our in this credit to the product quarter Mac. the utilization of efforts foundational business Outstanding National a for utilities volume long as same low in growth two period Finance $XX.X increased compared as million. million we USDA but are increase partially purchase seller business standby record held Farm a This in securities these growth the of interest [ph] to XXXX, As interest in from in This credit and our utilities for utilities in of long-term of CoBank million sequential guaranteed trusts, robust during solutions in line of million. to reflects growth net volume In Rural volume agricultural a ability a an greater same net as well Farm in the $XXX.X we XXXX have lines $XXX.X markets runway purchase $XXX.X our quarter, was and combined quarter new rate as combined utilities low rural million network. loan Ranch to establishing demand second is a significantly the Loan continue customers, two contributed rural times net over XXXX for due our to across counterparties products line $XXX.X decrease expanding historically offset driven multiple Corporation. will develop commitments, attract our growth in was net our rural retain & growth of of in and differentiate business quarter and outstanding Farmer growth Mac

meaning Ranch is increased by lender a Farmer transacted year through the that active XXXX. in sellers, this & sale loan Farm with same from period Mac over Our have a XX%

loans pricing, relationships, Mac than last available execution. we how penetration more agricultural addition, in doubled product as million through and deepening our efficient collaborative year a than well are and number that $X metrics same our period to as the are from signed has existing approach customer specific highlight the few a year. more customers, this In There lenders customer Farmer network structuring, effective broadening of with

business growth our volume over mentioned, has last As Brad the credit outpaced agricultural the broader markets. strong year

Farmer XX mortgage portfolio the XXXX. rate March agricultural total mortgage grew approximately the XX% compared X% over Mac market last Specifically, loan of months the through loan agricultural year-over-year growth to of

we second more outpacing $XX Turning that performance our of purchase the USDA XXXX made effect securities meet business, the quarter's adjustments $XXX to we last effectively line structure volume USDA record our securities achieved quarter million. to of to reflects demands. customer growth by million, Year-to-date in of product positive this in rate gross of loan half

well as availability, the loan XXXX by Farm as limits credit the reliable increased and consistent Bill. Our authorized

as of payments directly the facilitate maturity resulted during the decision the provided counterparty, in investment-grade quarter, large bonds volumes. the Our counterparty Reserve due bonds institutional experienced capital growth fund a the of credit functioning low regular strong by net maturing on scheduled by historically smaller well the do from from credit counterparty of markets spreads to continued million the amortization line a not quarter the during The by quarter, during levels. of another which result Federal offset to $XX.X as large the extend is to two support of primarily liquidity of bonds tightening partially business the the in one decrease one

remains quarter our ahead, Looking of pipeline the strong XXXX. third for

price, paused the institutions terms structure, impacts capital for core to deployment of associated created window of with incremental given market financial some lenders in execution. cases sectors a pandemic, competitive transactions and serve, the to in opportunity continue Although causing agricultural the we many compete has which may is share, which pressures have the for

our solution We will to agricultural of a customer financial broad alongside base. to our deliver commitment growing community by the working in steadfast spectrum remain

way responsive has dynamic more we business customer satisfaction, existing new and volume Our the in and and deliver penetration and transformed mission our upon model improved retention, has markets.

this seen of card our a of have interest tremendous the the through on that both markets. new capital and expanding size needed crucial and and enhancement, credit Since loan criteria, to this will necessary with We In and product the our consistent can the us day. of in Ag the cases, eligible reliable and innovation I existing seller to As early network, simplified receipt months, time. throughout sellers Express agricultural score doubling given our Ag infrastructure loan coupled that provide based to be $X.X to product application infrastructure enhancing decision many manage underwriting by product provide $XXX,XXX prior is the process, have coming million. volatile to set same we for from with offer XXXX, believe the score the card this we is Express mentioned launch in calls, to utilization the continued borrowers product community capital product

few we've clients months, and our of everything last which efforts managed exceptional and the we our team at in entire assisting nothing serve. communities through Looking short the been over has of

in this our during our and it promote further that As that, supporting Brad. an dynamic continue I'll we volatile back is flexible remain and to mission times. you with And customers to organization, imperative turn

Brad Nordholm

update like agricultural Jack current very Hey Takach What's out there? on environment. Zack, an give on you Jackson? going I'd thanks turn much. to now to the to

Jackson Takach

the falling U.S. the second COVID-XX of In Thanks annualized to pace and Brad. at pandemic of according history quarter rate product continues Economic contracted U.S. economies. disrupt Analysis. Bureau The in agricultural estimates fastest domestic as an XX.X%, XXXX, the general to from the gross

consumer the been the from on the levels through stable Census hospitality unemployment the leisure from to fell credit to and While U.S. highest U.S. of and the the pre-COVID spreads April. civilian According since before financial World in Bureau, data have away touched sector. II, home level War remarkably closures food in services XX% services driven markets corporate spending quarter, by

processing. and tenacity July. sensuality only levels of rotated and lower major by June has and a the at food of mobility and XXXX, Despite with stores the by with and the ethanol food the high been June is exports consumer to some South but nearly elevated by in June April economic from schools is of Commodity due system returned outages the without imposed June, was second remain While in March as U.S. sector of the pace to the Bureau XXXX, its worker food food COVID quarantines Sales American XX% Drivers grocery case averages the pre-COVID and home. humming. and well at of remain output and counties year significant to restaurants elevated food below pandemic, May and Statistics consumers state meat rates West in in July. in capacity by prices in Farm returned to COVID-XX the rebounded June quarter to spending road resurgence production compared global and slowed challenges. second has Food the industry recovery in Employee. a and processing Agriculture ahead curtailed U.S. at in remained ago food related near tracked was to quarter the on in they the May, Labor levels reduced smashed sluggish services agricultural virus recovered unemployment rate of America's were System many in not to activity. sector. testament the But records and agriculture

in significant food, millions in of business. continue The to is number in of Farm Cooperatives fuel be cured And the around through business delinquent and significant than critical historical or However, and in Coronavirus lines there but that of June off in services and for lines $X.X payments Food these several the prior and the Program with line system is in volume is more loan XX quarter. continues American access I'll Farmers, Electric with or to a economic loan pandemic. past support turn back portfolio of held guarantees. the There goods a at the the or metrics commodities as of stabilize to Ranchers outstanding decreased as commodity in paid help fiber in quarter USDA second This loan XXXX globe. engine also patterns effects. Business Assistance the help half the the loans the credit unused home near the or and sector USDA of and million Heading into Farmers place in across nearly are second or first states. loans in are billion of -- our $XX distributed support provide through sector all Paycheck had authorized days & it of to These CFAP. hunting. the Ranchers XXXX Despite to billion and $XXX economic headwinds, percentage values. Protection totaling business. Mac reliable loans in that well forestry, Rural substandard risk stimulus during stress involved to and August, & in were Ranch four quality XX of is due any XX drop by Farmer funding payments. across & Ranch asset to at the The to all of Brad. Farm typical and Individual across quarter portfolio, total steady programs and the But scheduled counties distributed the rating no XXX across other to of delinquencies more guarantees. seasonal loans Small you billion fishing offset lines loans Administration And averages volatility prices X.XX% all over as XXXX X.XX% Program $X.X loans has in July in fortunately, spread systems had that, to PPP businesses direct agriculture, strong, the

Brad Nordholm

Aparna? in Jackson, to financial a call results thank the I'd Aparna more like the to you. detail, discuss turn to over

Aparna Ramesh

Thank had the strength navigate quarter to strong of fundamentals, you, operating and basis, the results our environment. an Brad, highlight ability another dynamic and everyone. good and We sheet great balance the our underlying on afternoon, a

quarter prior lines disciplined nearly substantially this We earnings driven asset of businesses. expense lower growth relative across to and funding and consequently, quarter, costs. exercise extremely Our our were incurred also the all strong control by

access remained markets Our despite to volatility. has capital strong the market

liability have practices. a with to Fed's seen we markets to and stabilization intervention, our issued Although relative We management the and quarter. that first the asset in daily, disciplined continue maintain debt the policies we

all across to and points and GFC of within centers, issuances. issue our continue ranges debt We spreads price other are historical

that low the using we rate effective have our payments maintained have debt spread. mitigate callable ongoing instruments environment thereby the in resulted been We of overall and also our from interest to

size to at issuances to frequently offer issuances allows meet curve. versus this but GFC, overall rates are price We issue in quarter. have remain needs of us over across a our this rates investors. customers liquidity. we June the cash X.XX% of products XX. lower the Our quarter advantage of competitive our smaller funding enables and of the We We other of end to X.XX% is competitively. our customized total in position maintained to capitalized, $XXX debt our than This as of million And this evidenced first strong well us

also as position capital position $XX.X which of Preferred This raised perpetual strengthened case this unforeseen further spreads. non-cumulative quarter. E Series opportunistically Tier in of we our and passes our it initiatives. million growth Additionally, for various us Stock, issuance capital well enhanced positions X But

quarter basis XXXX million to our to was second Net our well quarter in quarter, compared compared target in $XX.X spread turning million X XX quarter second XXXX. of points effective or to core earnings $XX.X to plus same financial, basis was XXXX points minus the and period second range in Net Now held XX effective million million $X.X year. percentage within $XX.X for spread increased of million this $XX.X or last points. terms, in was basis this

defensively of to a noted, we've hold cash pandemic. more held then continue We to the higher prior portfolio amount liquid balance, as and investment I

increase reduction in weightage a core increase a $X.X slight due increase effective and towards our year-over-year for in resulted X However, tax $XXX,XXX to million $X.X The million the partially losses decrease was operating total cash primarily offset earnings points were after spread. expense. of more these in provision tax after in by has in after spread, a basis tax net the increases million $X effective in net

increased General to compared well growth. expenses in quarter as in primarily operating prior and second continued are expenses bonuses, Our due XX% due to the our higher This by benefits administrative cash And is second quarter strategic related increased initiatives. compensation our infrastructure annual XXXX to as increase or to XXXX. headcount this that increased to also G&A support from was expenses, the and support period. investments to

and expenses million. than compensation $X.X However, lower were first G&A of quarter both note, of by XXXX the

fees, lower we retention continue to meet ongoing Mac related This expenses intend of and of efficiently revenue which some We allow to to and quarter, Farmer incurred have as make will that the enable however, conferences, compensation greater of XXXX. internal offset quarter we customer increases partially all over investments first the time. this in levels needs to in of believe do, in travel our infrastructure, more consulting

revenue operating growth. commensurately to Going increase we with forward, expenses expect

the to to ratios our relative consistent averages. operating plan range revenue expense we our with While within historical keep

talent add term. investments and infrastructure will short in to continue the We relevant make

of our the by loan recorded that attributable economic However, factors quarter we Farm provision loan $XXX,XXX these utilities business largely to impacted partially was both the improving offset time Ranch mature. this for to increase was uniquely in portfolio. The rural and over taper our volume expect, investments losses model, new operations portfolio. & off will allowance The as

Specifically, million $X.X commodity for and losses. farmland Farm Ranch contributed release values, improvements for stable in primarily & related in prices allowance expectations to a portfolio

provision Our an net than $X.X of debt was and to costs and million the relative overall by driven after the spread after on basis. million of expenses and the increase tax quarter first and operating of quarter, $X.X million after tax was lower losses spread The funding given for average This earnings tax. $X.X attributable quarter $X after higher our were substantially effective net decrease also our in second increased uninterrupted continued effective in that XXXX higher substantially prior reduction markets. by capital access in credit higher to asset a a to higher balances million

by March capital This sheet. are looking expected XX%. million, Series one Preferred driven prior Before retained might our of from by that credit Turing as forward we from on second introducing Hence, in million leases the of increase I the E capital or macro-economic statutory from statutory previous earnings end provisioning This by very $XX on credit $XXX of other the on quarter quarter XX%. by make moving changes approach losses. Mac’s worsen volatility on previously or core some accounting $XXX capital well on charges based in as to exceeded XX, earnings. new which assumptions continue requirements the incorporates is we economic and in loss XXXX mix, Farmer $XXX requirement remain on, our XXXX. mentioned on in or based as XX, loan million issuance of million, point balance forecasts drive forecast, capitalized, that to $XXX to method Stock, CECL, million The standard increase wanted quarter as capital core exceeded due new different future the a growth, an net XXXX. implemented of is that instead changing our our expected well the is primarily compares improve be will of trends to June our now, This to in incurred this driven January portfolio and in changes words, predicated our loss In methodology X, economic models. historical projections provisions or future and levels of composition

liquidity regulatory by far strong requirements remains days. and XXX our Our exceeds

average levels of historically are we previously, mentioned cash. holding held higher than As

we us levels flow continue cash maintain also of meet to of second continuing any of required market As to as to level we reflect conditions us will cash it allow believe But shock, position we our will conclusion retain year, customer's given to low, that half to a allow us the very capitalized unexpected than balance to the ample and as higher will elevated uncertainties. the economic It this into intend liquidity weather head In change. Farmer liquidity allow underlying flexibility sheet. performance adequately to financial needs. -- a continue maintain fund but Mac’s well to fundamentals

We have stability continue we to access in mission our successfully uncertain strong in turn Brad, Mac's liability is XX-Q A capital I'll as times, positions essential deliver XXXX back our core maintain you. management. about today our to filed earnings SEC. with markets these asset to continue and with discipline to with it second quarter More that, complete the information we performance to navigate And Farmer the effectively. upon

Brad Nordholm

Thank you, Aparna.

think, businesses, path The by concern continues we've forward Mac, and Farmer to the our really close their strategic advantage months. on going that strongly even on heavily pandemics and our customers. mission weigh see engaged the extraordinary are our of in day emphasize source that needed always also trusted families, not But crisis we to our impact something financial to clear We and for value of future past believe our rural in me reputation with our of value efforts remain Farmers times. I causes these members us serving create for our quarter validate forward. the our execute the America. the clear daresay on competitive I inclusion power & knowing and sleepless competitive to as few our upon to our hard of nights. in the them America. thanking we credits about further for ability a pride with they and in customers. just team, for number continue in primarily for to contribute great individuals, that's strong team is rural on and that or contribute core to sheet, a diversity serve to the uncertain our agribusiness, results, this very Let of talent, strength And the and the At partnership we and initiatives, our is market all and this merge build optimistic customers. of to our a work operations. every And performance nation's only secondary of from a are sources And on second as through, order preparing employees And we're actively achieving but balance to our even modify strength provide ability to I shareholders, Ranchers to

We will continue to well-positioned remain on diligent, and focused the future.

is a pressure As uncertainty. a during serving And times said be for created intended Mac And especially and on of it's calls, resource a economic number was during of Farmer financial to this to prior I've true, in response crisis. institutions rural America all times.

see I'd if questions line on to from the today. have anyone like now we any So


question-and-answer go come [Operator of first ahead. begin Sidoti. We question will will now the from Please Greg session. And Pendy our Instructions]

Greg Pendy

guys, thanks Hey, questions. for taking my

volume a business it. the had environment rate on growth. just part the is question interest I big of First assumed

think light point to should maybe we look a we I we pull get Does how phenomenon? a Is historically think -- about this strong about demand forward? an terms Or volume to of of going some going forward know can a So in is is any -- this there quarter that you unusual couple just history that? kind be where of can should of periods to right? of in how to in kind rates, back the to sense any things time that just get but

Brad Nordholm

details from appreciate your the question. We hey, get into I'm you. of to great Greg. really let here. It’s going Zack Hey, hear Brad this. to

add I is have there refinancing as like outset been in associated But our doing been as might actually I part reason been is the of driven there things some sustainable. detail factors think as more a of that results such with And just And as have that interest example. high an environment. would our rates, both actually well That at well. Zack, rate levels interest the optimism. that that the to another external strategic for the one number drop while initiatives about thing have plan is we've these you emphasize

Zack Carpenter

And Greg, question. interest for environment Clearly, in rate great helped Brad. has Thanks, long-term Yes. of credit. terms demand

competitive provide that core It's out & alongside think And the to also had other Farmers kind core cuts capital ways, are ag of I our lenders we to there's seller to look right? network competing Ranchers serve. there. I've a that market that that both

highlight attract place this routine put and a think new volume mentioned, lot to the and as Brad growth, business. in with So I of initiatives

on So things terms our our I broadening deepening and noted a penetration. in remarks in couple of of prepared

our XX fact, mentioned, -- selling an million active same And times it of seller larger the more are almost period had in seller XXXX. doubled same loans I active the than as we over XX% than since $X in In are period. sellers

taking active the showing metric our is see of broadening and our look we So if product nature is we're place. sellers to utilization key a

rate, also receiving the back borrower In also maturity effectuating our on executed help and great sheet, mod the modification same, sheet. addition, drop working borrowers the lower our our to we're sellers just to the an a the keep of rate interest keeping customer balance that rates, facilitate but the on with amortization balance keep lot to the simple

I really ascertain same Mac, similar rate post a financial see hard be see looking to or Farmer to to time in can their The think going market you crisis strategy back sellers customer relationship very our to interest difficult to with to them kind that's Now the be time, But increasing we're in of period focus, our our nature the can the volume flexibility retention receiving environment. is at be is which working go relatively in the put this I back also more us, feedback in driving by back it'd think to seen of it's bring driving that our similar go share. place volume. a from seller

Greg Pendy

increase then Great. you've headcount, on front, up That's had more I a And think the in XX%. around you operating very helpful. were an expenses expense headcount. efficient one always And just mentioned

I was that? couple be how there for within we bump adding more are you in or more is the to a about a you can mean, headcount? assuming be -- kind How think So this do of quarters, hiring continual people you one-time a should going company. thinking

Zack Carpenter

through lot we But to significantly that. that, compensation, slow And Yes. see going We a of G&A and headcount We're will end next like a expense. you're emphasize things part, of paying as it a now the but benefits year, about headcount see a couple I'd lot you also employee have large well. our look -- down are additional from attention you'll at of to P&L, when I to the year. Greg, probably some think

So I be our of the we've a to points. our expenses band expense XX G&A we're relative as G&A think business. run looking between total up think, highlighted XX in total operating basis at And budgeting with to to I going that wherever balance, a be really forward. and process, XXXX go the points to about we're past tougher -- comp we that end we the taking, Whatever going look at basis in usually going and

hit year, the first we is quarter happened nudge basis basis associated we in they little this even points, Frankly, of that level. additional what's to comp did that this finish with unexpectedly because for a accrued that year. would higher. we bonuses had year in first quarter the it expense or strong point XX into But the hadn't track one-time expected Going bit that XX

bottom at you'll as into lot specific, of key to mature adding expense And But end be you when see And six below. for management, that than XX for range. range, for we maintaining keep we one-time are hope the events, approximately But that that we time, the see will when that profitability don't foresee any Now, and to four our be number, our expect next range commensurate margin, as reason operating our even go basis And that at the essential over or to then people the other Aparna slightly the that interest point that, more something this the will metric expenses more organization our slightly that built, year range. attention going point basis But paying Aparna the we point in basis to net that us. a is it's become which to expenses infrastructure to a proportionally hold XX ratio, we business. through active XX with additional other that back want as we long next lower with some management quarters. levels that's of look grow to expensive in to in don't of some look dropping range the year. we level to, XX we that a expand of mentioned, will over XX managed as expense manage to as even outside that continue point do going of buying expect any we're we of basis level, basis that mentioned, that our management would those it points, to recurring as we growth

Greg Pendy

That's guys. lot helpful. Great. Thanks a very


Please of Our ahead. Eidelman next go Virant question comes from Capital. Eidelman David

David Eidelman

of to explain And take caused cause after because to Yes. that's My could on balance call. my Thank release, bit of preferred? from power news - you the value what so, the book calculated would many it maybe questions least sheet last a noticed was you. was, down the you up? And of It's sturdy nice And back show hedges? I go value. deducting to to one the if go little a in the it people quarter, the on place high book didn't down some kind have what I it if the

Brad Nordholm

have that have. against the that basis well I'll into matched swaps, of equity. where the those liabilities volatility treatment as term we book of are is our that the Yes, our let It exactly of structures And well, are results David, volatility earnings all that. our of -- nature the mark-to-market as market Aparna It mark-to-mark hedges, those of But is asymmetric off GAAP our get both you're on we that. details right. accounting in of the

last quarters, a little there's over two think of more comment bit illustration interesting detail. directionally I the So that. I’ll let Aparna

Aparna Ramesh

our might do Yes, of had our first we a pretty And and other within as hit some accounting that from was this have amount come really a cause result it treatment, and noticed derivatives. quarter, have equity. of that you're AOCI hedge think, fluctuations you that degree gets right. volatility the our our does accurately, you've reflected fair in which of I calculations, result a income, some absolutely the of comprehensive of volatility accumulated Brad, We in

a this in first quarter some quarter. we know as reversal also particular that have has reversed the had where mentioned that we You favorable of

you is So, been But higher of value And of the as has of result that in on adding actually period a some our same is closed stock. additional off. year. us than again, book noted, this the aggregate, equity preferred last

that spread that's of good that of I think our think with on as really offline these those is primarily as risk to the And particular thinking I'm to our thing AOCI see time. And as cash it's a for as our fluctuations because par the result a our happy flow important you from have think you the derivatives this core our earnings a note the within in I about the our operating conversation such of we back hit in with these effect hedges derivatives statements over recognize this does of value sheet. the our use net too why the pull see that you well. that really I expect fully you know important reason, our consistency to equity that some We exclude fluctuation And we hit within when book is well measure balance earnings. this about both tool. ARC from AOCI. to our respect to maybe hedges value But sheet balance of management as derivatives

David Eidelman

you. Okay. Thank


Please Oat Our Tradition from of ahead. Chip Asset Management. go next question comes

Chip Oat

afternoon. will question into two has you. My lead My Thank COVID-XX be pieces. under about that the loans Good deferment.

just The team first represent it criticism. number years, last mean. and It's management prior that to three regarding and come for XX-day would cautionary should a way the normalized management not statements under the a be world probably in watched eventually that X% we is for which is know the true, this the management delinquency statements both is. that And cautionary reversion

X% So nothing even since. brings has happened that close that number to

the other and the just farmers, pretty days and this you've farmers bankrupt, exact which week. last you gotten administration but Farmers current even anecdotal Street to seeing with on printed Journal, & not open times mainstream examples that several The Wall is going up stories being without press these dairy of question Ranchers is something can't friendly

nothing has So the been but news bad.

been have results That's great. but Your nothing good.

got statistics. you which don't X% at up deferment, Could the going? where about So, new under X.XX% your we're to still -- we we out Or loan delinquent are are reversion concerned now that in loans flush COVID-XX have normal? see mean? you And show a you

Brad Nordholm

a that's Chip, question difficult to answer.

lot since X%, for works delinquency our XX very We data. of see will ask ask of -- us. Farmer Jackson much on also has to don't And so he additional a But a Mac, we really with to think at day normal it a this, if give best. I I'll this he perspective evidence in a jump is reversion that

saw normal seasonal day were a this very quarter, the As is pattern. higher than day XX of that. XX even delinquencies slightly in two first very, our ago. than you That we And in are and end At the note, we've below were a consistently second from quarter, the were higher very where quarter. they we been decrease a delinquencies ago, they years seasonal year

So that that to Farmers granted, Ranchers. pattern other everything recognizing stress for lot some every is ways. that generous, about request a retail reviewed and including Ranchers companies economic of The from a a and this make the people, time seasonal Farmers great that seeing and and of granted to many that tried the be lot follow deferments wineries, It's in to hard rooms we generalizations we're kind were level of impacted & we tasting deferments of itself. were of each with

to about of of equal think six know, result that you total and X runs is deferments that of for the X.X% July level months highest principal actually were As I deferments, level end of a the to outstanding. of XXXX off -- of year, at the January period X

meet to recapitalizing So, if to ferments, of every would payments, be borrowers do rough don't a those, payment, if going next that's math, re-amortizing we But to those single that the was if we believe single of of happen. one after all -- unable X%. every those and those then above sudden, one

We deferral. provide that you forecast that payments can lower. making add? what give are flow a the prepared granted relief Or whom good lot will of today Zack to capitalized, payment now. borrowers we're percentage after having From percentage, you to analysis be to matter? those a with resume this if forecast be deferrals a to just of We've if afraid to and have resolved of we've prepared additional to thoughts what making not like a seen do able it's event, would some you well think of we've not stress is I'm percentage make with you'd we're that we very, Jackson, in pattern. been normal unable seasonal very more borrowers right a the make weather, the kind follow be prepared. those color precise prepared, tests We I'm to higher payments then to deferments running what that But it'll you sure earnings well other subsequent to add or it hard higher a to forecast. percentage. we expect additional and those for to cash more sufficient delinquencies, But of think

Jackson Takach

think in comment I thing your I a job, highly X%. is did Brad, I'll cyclical you yes, is response. a your agriculture only Well, in great on description there the mean, business. The

Yes, a around lower. that to we moves have X%. of some the where put that's going all okay, Farm But average up the in historical say, you some as you're higher kind Ranch and there and to So the & number and down periods. average get that X%

always it above it, always or historical So be for that's to why it's that's there -- It's say more going we're below but not context. out there. than to average, it's

Chip Oat


loans. toss in about loans, lot. And that that item. all we're and that reading else, about do mortgages, prior answers thing a the Let someone And operating don't is I your question by in one only think operating that not the is just me of another you it's to really are what press

just cover flows their mortgages, costs this through little they're a do the be scratched operating current should cash farmers that my read their stay head worry? just a some not there between able to that and on need on I've are thus and be to that It You like they has mortgages. not because to seems

Brad Nordholm

on overall is Well, condition sector the have bellwether you are to current primarily higher at average the look and renewal loans point Yes. than around if loans. operating correct, agricultural out that consider be delinquencies delinquencies the do of Chip operating that lenders And average, to on on important loans agriculture for we and of an you us. do. We

very certainly the and loan in And at good. X% we that. the us -- renewed that have January United very Our article We're rate. contributor service chapter borrowers amount of in Farmers of a operating concerned who in a usually the the is the And There that to much in relieved renewals last an do huge been Low that rates there level you're the operating higher, have but cited a that number at a debt high pleased, seeing week the of Wall they Yes, something it's have in our really lot to July. causing all. of a is to the not still overall & It's mortgage in not continued has their loans correct. anything Street it's interest a service the year Journal, been Ranchers ability But thousands. concern of number States with us having analysis that their attention number we've seasonal uptick and having others, very they're higher. think loans of XX X% bankruptcies. XX% remains I a and with not hundreds, pay

levels important the for and why cash service question. In the low Chips coverage I cite don't you versus very that's think some debt and interest coverage to the Jackson, to answer sector interesting data attributable historic to relative rates? flow fact, of just part of

Jackson Takach

out existed of we're we paid was take very a earned environment dollar when every it's expense, than in $X.XX different ago, years to interest interest Yes, today cover $X.XX, we peaked today rate XX more to XX, $X.XX. farm

So continue the to movements interest lower flow, cash a easier service a rate debt. much changes lot which in and percentage, to makes

it's picture So coverage. leverage a and service different just debt in terms very of

Chip Oat

Well keep Okay. up the work. good

Brad Nordholm

Chip. Thank you,


from Our private Gordon, go next investor. question come will Gary ahead. a Please

Unidentified Analyst

two, Zions hopefully or any of or debt XX sort update of on maturities then for your call Mac? feature to quick Hi. questions, rates thinking your are questions. the and planned at two from against extending any is stake one with about the the in you so, my rethinking sale Thanks year of there debt rising basis XX required on Farmer the taking and their And banks financing Actually, value callable points thought here? debt is

Brad Nordholm

Gary, excellent questions. both that's Yes,

of but are associated only situation, Class their is information has filed of with indicating be has In Zions, filed you there above C. their financial are if you do condition, terms shares, that not have they current of have the their that reorganization, regulatory their on share. stock, can we -- they Class A, situation filings where look, been with occasionally our nothing $XX understanding that a to a is the $XX to have Class out they're C find that what that. best to disposing going really regarding their when have And and they securities sold What stock situation additional generally and available

don't have update any note we So, sales. there have a further other additional that been than couple really to

that the of their conversations or but aware are status. to them we approaches about have alternative can about discuss nothing with market, We discuss further really to

very relates to that rates to are and where think refunding margin the callable of we've relocking at us. and rates that a in those fixed if today's three, really maintained calling clear have description loan management, how new XX basically us with year then XX who And lower net been that level bonds that offering fixed I year are a interest five, rate. could with been even and interest have we and interest refinance the margin away a may by really spread And from today's As refinance customers proactive us, is way customer rate rates it have proactively meets our them at objective. going our net we provided rates Zack, today asset liability

we capital that's as premiums is very markets, case, cost, paying and have bonds So debt valuable for haven't that found long been a we low as that callable in really those the option. the very

investors. given option that is manage callable being we us capital valuable Really, the it option is way a our For us more balance to sheet. debt to than markets apparently hugely

discipline us to each maturities, this for make. won't continue of have for of the of loan asset kind fixed go management anything really match than for the accomplish we liability the to longer and tenor than against the and tenor rather funding that would extend the example, loans rate us, So of really we approach, of

Unidentified Analyst

you. Hey. Thank

Aparna Ramesh

spread callable issue us add treasuries relative to has Brad debt, what to note cost to for as the recent Just to I'll thing, months. just one the in actually said, actually decreased

very So, to it we've even to years some continues remain good viable us. have tool access ago. for continued conditions But to a really market


closing to turn the This concludes remarks. conference Brad like our any to would for question-and-answer I Nordholm back session. over

Brad Nordholm

these being truly We create in you Thank hope as quarterly additional do for you Great. to appreciate and calls responsive great ask. always, questions questions we may thank and you, We between operator, very you response to interest. Mac. reputation to have, have you the are with Farmer the about here provide all participating. appreciate And that of We transparent.

of our with for you we in very be this time, touch Thank can with anything. Jalpa, participating. So, We're follow-up again, all thank during proud performance you. and please


concluded. may now presentation now has conference today's you and attending disconnect. you The Thank for