Federal Agricultural Mortgage (NYSE:AGM), known as Farmer Mac, reported record second-quarter results for 2026, citing broad-based growth in agricultural and rural infrastructure finance, higher revenue and core earnings, and continued capital expansion.
President and Chief Executive Officer Zack Carpenter said outstanding business volume reached a record $37.2 billion at June 30, up $2.4 billion during the quarter after new business, maturities, asset sales and paydowns. The company also provided more than $4 billion of liquidity during the quarter and $7.5 billion of liquidity and lending capacity during the first half of 2026.
Record Earnings and Revenue
Chief Financial Officer and Treasurer Matt Pullins reported second-quarter revenue of $125 million and core earnings of $59 million, or $5.40 per diluted share. Return on equity was 18.9%.
Net effective spread rose to a record $117.4 million, up 25% from the prior-year quarter and 15% from the first quarter of 2026. On a percentage basis, net effective spread was 126 basis points, compared with 119 basis points a year earlier and 116 basis points in the preceding quarter.
The result included $7.4 million of interest recovered on a large delinquent permanent planting exposure that had been on non-accrual status for an extended period. Excluding that recovery, net effective spread was 118 basis points, Pullins said, generally in line with recent periods.
Compensation and benefits expense increased due to higher headcount, incentive compensation accruals tied to financial performance, and the timing of expense recognition. The quarter included a $4 million true-up for performance-based incentive compensation that Pullins said is not expected to recur in subsequent quarters.
Excluding both the interest recovery and the incentive-compensation true-up, core earnings would have been approximately $56 million, or $5.15 per diluted share, according to Pullins. The operating efficiency ratio was 28%, below Farmer Mac’s long-term target of 30%, and the company expects a full-year ratio between 27% and 29%.
Farmer Mac also recorded a $2 million income-tax benefit from the purchase of $21.4 million of renewable-energy investment tax credits. Pullins said the company had substantially used its remaining carryback capacity and would evaluate future tax-credit purchases on a current-year basis.
Agricultural Finance Growth
Agricultural finance outstanding business volume increased $1.8 billion during the quarter. The growth was led by a $1.1 billion increase in the Farm & Ranch AgVantage wholesale finance securities portfolio, including a $750 million issuance from a new counterparty.
Carpenter said Farmer Mac expects incremental net wholesale-finance growth in the second half because of minimal scheduled maturities and the product’s relative value to customers compared with other funding alternatives. However, he described AgVantage volumes as “lumpy” and more difficult to predict than loan purchases.
Farm & Ranch loan purchase activity remained elevated, with net growth of $867 million in the first half of 2026, nearly double the net growth recorded in the comparable period last year. Carpenter attributed demand to agricultural-sector volatility, lenders’ desire to diversify away from high-cost deposits, loan growth, capital-efficiency needs, and improvements to Farmer Mac’s products and processes.
The company also launched the Farmer Mac Loan Exchange, or FLX, during the week of the earnings call. The digital platform combines Farmer Mac’s Farm & Ranch loan-purchase products into a unified system intended to improve process efficiency, document management and operational flexibility. Carpenter said it was too early to assess adoption, but that the platform had been well received and could support future scale and efficiency.
Corporate AgFinance outstanding business volume grew modestly to $2.1 billion. Carpenter said agribusiness deal activity remained muted during 2026, largely because of lower merger-and-acquisition activity amid market volatility, global tensions affecting trade, and inflation. The company expects modest growth in the segment while maintaining its underwriting discipline.
Infrastructure Demand Led by Energy and Data Centers
Infrastructure Finance business volume rose $573 million sequentially to $13.1 billion, with growth across power and utilities, renewable energy, and broadband infrastructure.
Power and utility net growth was $291 million, primarily driven by loan purchases, including a $197 million pool acquired from one customer. Farmer Mac said borrowers continue to seek capital for system upgrades and modernization as electrification demand increases.
In renewable energy, Farmer Mac provided $565 million of loan purchases and commitments during the quarter. After scheduled maturities and repayments, the segment grew $120 million to $3 billion. Carpenter said activity was supported by project construction intended to meet deadlines in H.R. 1, while the pipeline was approaching $1 billion.
Although the industry is adapting to a phaseout of tax-credit incentives and supply-chain conditions, Carpenter said the company expects renewable-energy growth to continue into 2027 and beyond because of demand for new power generation capacity.
Broadband Infrastructure grew $162 million to $1.9 billion. Data center-related business accounted for 70% of new broadband volume during the quarter, and total data center-related volume was approximately $1 billion at June 30, or about half of the segment.
Carpenter said Farmer Mac is managing the expanding data center exposure through geographic and sponsor diversification, a focus on investment-grade hyperscaler tenants, and a mix of funded products.
Credit, Capital and Risk Transfer Plans
Farmer Mac recorded a $7 million provision for credit losses. About $3.6 million was associated with new business growth, while the remainder reflected credit migration, including deterioration in two collateral-dependent Farm & Ranch loans. Updated appraisals identified property-specific issues that reduced collateral values and resulted in valuation shortfalls, Pullins said.
The allowance for losses was $47.4 million at quarter-end, up $7.2 million from the first quarter. Ninety-day delinquencies improved to 37 basis points, while substandard assets represented 1.71% of the total portfolio, down from 1.87% at the end of March.
Core capital increased $141 million to $1.9 billion, supported by a $100 million Series I preferred-stock issuance and retained earnings. Farmer Mac’s Tier 1 capital ratio was 13.2%, within its 12% to 14% target range.
Looking ahead, Pullins said the company expects to introduce a new credit risk transfer program in 2026. He said risk-transfer tools, including potential synthetic securitization structures, could provide more efficient and flexible capital capacity and are expected to benefit return on equity over time. Farmer Mac initially expects to focus on Farm & Ranch assets, where the market has greater familiarity with its underwriting and historical credit performance.
About Federal Agricultural Mortgage (NYSE:AGM)
Federal Agricultural Mortgage Corporation (NYSE: AGM), commonly known as Farmer Mac, is a government-sponsored enterprise chartered in 1988 under the Agricultural Credit Act of 1987. Headquartered in Washington, DC, Farmer Mac was established to enhance the availability of mortgage credit for the agricultural and rural utility sectors. The corporation operates as a secondary market for agricultural real estate and rural infrastructure loans, providing lenders with liquidity and risk management solutions.
The company’s principal business activities include purchasing and securitizing long-term fixed-rate agricultural mortgage loans and rural utilities loans originated by approved lenders.
