Farmer Mac Q3 2026 Earnings: Business Volume Reaches a Record $38.5 Billion

Farmer Mac (NYSE: AGM and AGM.A) reported Q3 2026 net interest income of $115.9 million, up 18% from $98.5 million a year earlier, while diluted GAAP EPS rose 13% to $5.03 from $4.44. Outstanding business volume reached a record $38.5 billion, up 24%, and non-GAAP core earnings advanced 6% to $52.6 million. Broad portfolio growth supported revenue, although higher credit provisions and operating costs limited the increase in core earnings.

Core Financial Results

Farmer Mac benefited from a larger portfolio and higher spread income during the quarter ended September 30, 2026. Non-GAAP core revenue increased about 17% to $122.7 million, but core earnings grew more slowly as the provision for losses and operating expenses increased.

Sequential results were softer. Net interest income declined 2% from Q2, net effective spread fell 3%, and diluted core EPS decreased 11%. Management attributed the sequential decline in net interest income and net effective spread primarily to a nonrecurring event that boosted interest income in the second quarter.

Core earnings exclude fair-value fluctuations and certain infrequent or unusual items. Net effective spread measures the spread between interest-earning assets and related funding costs, including associated derivatives.

Business and Segment Performance

Agricultural Finance represented 63% of outstanding business volume, while Infrastructure Finance accounted for 37%. Renewable Energy and Broadband Infrastructure recorded the fastest year-over-year growth, although Farm & Ranch remained the largest business by a wide margin.

Net portfolio growth was $1.3 billion during the quarter. Renewable Energy contributed $586.4 million of that increase, followed by Farm & Ranch at $297.8 million, Broadband Infrastructure at $168.8 million, Power & Utilities at $164.6 million, and Corporate AgFinance at $61.0 million.

Farm & Ranch growth primarily reflected servicing rights related to approximately $280 million of third-party-owned loans. Farmer Mac also completed an acquisition of servicing rights associated with approximately $1.4 billion of Farm & Ranch loans, including loans it owns and loans serviced for others. Power & Utilities benefited from spending on system upgrades and grid modernization, while Renewable Energy and Broadband Infrastructure reflected continued investment in generation capacity and digital connectivity.

Profitability, Capital, and the Balance Sheet

Net effective spread increased 16% in dollar terms, but its yield declined to 1.16% from 1.20% a year earlier and 1.26% in Q2. Combined with the 24% expansion in business volume, this indicates that the increase in spread dollars was driven primarily by a larger earning base rather than a higher overall spread yield. Core return on equity was 16%.

Operating expenses increased to $34.6 million from $29.8 million. Compensation and benefits rose to $20.6 million from $17.7 million, while general and administrative expenses increased to $13.2 million from $11.1 million. Preferred stock dividends also increased to $9.3 million from $6.3 million, affecting the amount of net income attributable to common stockholders.

Total assets were $40.0 billion at September 30, up from $35.4 billion at the end of 2025. Net loans increased to $18.9 billion from $16.3 billion, and investment securities rose to $19.4 billion from $17.6 billion. Notes payable increased to $35.4 billion from $30.8 billion, while total equity rose to $1.84 billion from $1.72 billion. Farmer Mac reported $1.9 billion of total core capital and a Tier 1 capital ratio of 12.9%.

Rapid Infrastructure Growth Came with Higher Credit Costs

Broadband Infrastructure illustrates the main tension in the quarter. Its business volume increased 56% to $2.02 billion and generated a 2.32% net effective spread yield, but the segment recorded a core loss of $0.5 million after a $7.0 million provision for losses. That segment provision represented about 63% of Farmer Mac’s total quarterly provision.

The company said its overall credit provision primarily reflected new business volume, updated loss estimates associated with a single telecommunications credit in the Broadband Infrastructure segment, and broader portfolio credit migration. By comparison, Renewable Energy combined 57% volume growth with $6.0 million of segment core earnings. The divergence shows that rapid infrastructure expansion did not translate evenly into current-period profitability across the portfolio.

Management’s View

President and CEO Zachary Carpenter described the market environment as increasingly challenging and characterized by greater uncertainty. Management emphasized that diversified portfolios, capital strength, and disciplined underwriting support Farmer Mac’s ability to continue providing liquidity through agricultural and economic cycles. It also highlighted ongoing financing needs for rural infrastructure while acknowledging evolving conditions in U.S. agricultural markets.

Risks Investors Should Monitor

• Credit costs and telecommunications exposure: The provision for losses rose about 49%, with updated estimates for one telecommunications credit and portfolio credit migration among the primary causes. Further deterioration could weigh on earnings from the fast-growing Broadband Infrastructure business.
• Agricultural market conditions: Changes in commodity prices, export demand, trade policies, input costs, severe weather, and agricultural real estate values could affect borrower repayment capacity and collateral performance.
• Funding and interest-rate economics: Notes payable increased to $35.4 billion as the balance sheet expanded. Farmer Mac’s profitability depends partly on access to funding and the relationship between borrowing costs and yields on earning assets.
• Rising operating and capital costs: Operating expenses and preferred dividends both increased faster than core earnings. Continued growth in these costs could limit the conversion of higher spread revenue into earnings attributable to common stockholders.

Summary

Farmer Mac’s Q3 2026 results were defined by portfolio expansion: business volume reached a record level, and higher net interest income supported growth in GAAP and core earnings. Renewable Energy and Broadband Infrastructure led volume growth, but higher credit provisions—particularly in Broadband—and increased operating costs kept core earnings growth below revenue growth. Credit performance, net effective spread yield, funding costs, and the profitability of the fastest-growing infrastructure segments are the key items to monitor in subsequent quarters.