Federal Agricultural Mortgage Corporation (AGM) Earnings Call Transcript & Summary

Good morning, and welcome to Farmer Mac's 2022 Annual Meeting of Stockholders. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Lowell Junkins, Chair of the Board of Directors at Farmer Mac. Please go ahead.

Good morning, ladies and gentlemen. I'm Lowell Junkins, I'm the Board Chair for Farmer Mac. I'm pleased to welcome all of you to the Farmer Mac 2022 Annual Meeting. In accordance with the Notice of the Meeting, I call this meeting of stockholders Farmer Mac to order. We understand that some stockholders who may have wanted to participate in this meeting in person may not have been able to travel due to COVID-19 restrictions, so I made it possible for you to participate in the teleconference or webcast. If you're a voting stockholder participating in the meeting by teleconference or plan to vote outside of the regular proxy process today not yet received a blank proxy card, please mail -- e-mail it to [email protected]. We intend to follow the meeting agenda that was available as you entered the room and has also been posted to the Farmer Mac website. We'll provide general questions-and-answer sessions for the stockholders after the formal business meeting is concluded. I'd like to begin by introducing our director nominees and the directors appointed by the President of the United States. Farmer Mac has 2 classes of voting stockholders, each of which elects 5 directors. Class A stockholders or banks, insurance companies, mortgage banks, investment banks and other financial institutions. Class B stockholders are farmer -- excuse me, farm credit system institutions. The other 5 directors are appointed by the President of the United States. Farmer Mac's proxy statement dated April 21, 2019 -- 2022, contains a complete biographical sketch of each of the nominees and the presidential appointees. On Pages 13 through 18, copies of the 2022 proxy statement are available at the registration desk for the meeting and on the Farmer Mac website. The following individuals have been nominated for election as Class A directors: Dennis Brack, James Engebretsen, Mitchell Johnson, Eric McKissack and Todd Ware. The nominees for directors to be elected by the Class B stockholders: Richard Davidson, Everett Dobrinski, Amy Gales, Robert Sexton and Roy Tiarks. The Board members appointed by the President of the United States and confirmed by the U.S. Senate: Sara Faivre, Charles Stones, Myles Watts, LaJuana Wilcher and myself. I'd like to introduce the Executive Officer of Farmer Mac. And I think Brad Nordholm, President and Chief Executive Officer; Zachary Carpenter, Executive Vice President, Chief Business Officer; Aparna Ramesh, Executive Vice President, Chief Financial Officer; Stephen Mullery, Executive Vice President, General Counsel and Secretary; Brian Brinch, Senior Vice President and Enterprise Risk Officer; Marc Crady, Senior Vice President, Chief Credit Officer; Robert Maines, Senior Vice President of Operations; and Kerry Willie, Senior Vice President and Chief Human Resources Officer. Subject to vote of the stockholders present and represented by proxy at this meeting, Farmer Mac's independent auditing firm for 2022 will be PricewaterhouseCoopers LLP referred to as PwC. PwC is represented today by Chris Morgan. I'd like to ask Steve Mullery, our Corporate Secretary, to report on the mailing of the meeting notice and the presence of a quorum.

Mr. Chairman, this meeting is held pursuant to a printed notice mailed on April 21, 2022, to each stockholder of record as of March 25, 2022. Farmer Mac's transfer agent, Continental Stock Transfer and Trust Company, a representative of whom is present by teleconference today, reports that the holders of a quorum of Farmer Mac's voting common stock are present in person or are represented by proxy at this meeting. For those stockholders present today in person or by teleconference who returned properly completed and signed proxies, the proxy committee will vote the shares represented in those proxies as directed on all matters coming before the meeting. Unless you want to change your vote, you need not submit ballots on matters already voted by proxy. Please raise your hand or contact the call operator if you plan to vote personally at this meeting.

Thanks, Steve. We have a quorum, so I declare the Farmer Mac's 2022 Annual Meeting of Stockholders to be officially convened. On behalf of the Board of Directors, I would like to express my appreciation to all the stockholders participating today either in person or by teleconference and those who returned their proxies. Before beginning the election phase of the meeting, I'd like Steve Mullery to advise those present about some of the statements that may be made at this meeting.

During this meeting, representatives of Farmer Mac may make forward-looking statements that reflect current expectations for Farmer Mac's future and financial results. Our expectations for Farmer Mac's future performance necessarily involve assumptions, estimates and the evaluation of risks and uncertainties. Various factors could cause Farmer Mac's actual results to differ materially from our current expectations. Detailed discussion of these factors can be found in Farmer Mac's SEC filings, including Farmer Mac's annual report on Form 10-K for 2021 and Farmer Mac's quarterly report on Form 10-Q filed last week. The forward-looking statements you may hear today represent current expectations. We undertake no obligation to update them, except as otherwise required by law.

Thank you, Steve. I prepared some written remarks that I'd like to submit for the official record for this meeting and do not have any further remarks that I'd like to make orally at this time. Now I'd like to turn to the election phase of the meeting. First matter to be voted on is the election of the directors to serve until the next annual meeting or until their respective successors are duly elected and qualified. To facilitate the election of the directors, the Board of Directors uses a Corporate Governance Committee consisting of directors from each of the Board's 3 constituent groups. Corporate Governance Committee has recommended 5 individuals for election as Class A nominees and 5 individuals for election as Class B nominees. The Board approved those recommendations. Mr. Mullery, would you place before the meeting the Board's nominations for directors representing the Class A stockholders?

The Board's nominees for election as directors to be elected by Class A stockholders who are identified in the proxy statement are now formally placed before this meeting as follows: Dennis L. Brack, James R. Engebretsen, Mitchell A. Johnson, Eric T. McKissack and Todd P. Ware.

Mr. Mullery, would you place before the meeting the Board's nominations for directors to be elected to the Class B stockholders, please?

The Board's nominees for election as directors to be elected by Class B stockholders who are identified in the proxy statement are now formally placed before this meeting as follows: Richard H. Davidson, Everett M. Dobrinski, Amy H. Gales, Robert G. Sexton and Roy H. Tiarks.

Only persons who are eligible holders of Class A and Class B voting common stock as of March 25, 2022, are entitled to vote at this meeting. Under Farmer Mac's bylaws, any Class A or B stockholder who wishes to make a director nomination for consideration at this annual meeting was required to do so by February 12, 2022. So the nominations for directors are now closed. Is there any further discussion on those nominations? The next matter to be submitted for action is the ratification of selection of the Audit Committee of PwC as independent auditors for Farmer Mac 2022 as described on Page 57 of the proxy statement. Farmer Mac's bylaws provide that the Audit Committee shall annually select independent auditors and that these selections shall be submitted to the stockholders for ratification. The Audit Committee and the Board recommended ratification of this selection by the stockholders. Only persons entitled to vote Class A or Class B stock may vote for this proposal. Mr. Mullery, would you please place before this meeting the proposal?

The Audit Committee unanimously selected PricewaterhouseCoopers LLP to serve as Farmer Mac's independent auditors for 2022 subject to stockholder ratification. This selection is now submitted to the holders of voting common stock for their ratification.

Are there any questions or discussion on the ratification of PwC to serve as the Farmer Mac independent auditors for 2022? Next matter to be submitted for action is an advisory vote on Farmer Mac's executive compensation as described in Page 58 of the proxy statement, which is known as say-on-pay vote. This advisory vote is a nonbinding vote on the compensation of Farmer Mac's named executive officers presented on Pages 27 through 52 of the proxy statement. It is not a vote on Farmer Mac's general compensation policies, compensation of the Board of Directors or Farmer Mac's compensation policies as they relate to risk management. Farmer Mac is required to hold the advisory vote on executive compensation at least once every 3 years but has made a practice of holding the vote on the annual basis. Only persons entitled to vote on Class A or Class B stock may vote on Farmer Mac's executive compensation practices. Mr. Mullery, would you place before the meeting the proposal?

An advisory vote is requested on the motion that Farmer Mac's voting stockholders approve on an advisory basis the compensation of Farmer Mac's named executive officers as described in the 2022 proxy statement.

Are there any questions or discussions on the advisory vote of Farmer Mac's executive compensation? Now will the secretary please report the preliminary results of the voting?

The ballots have been counted and the following candidates received the highest number of votes from holders of Class A voting common stock: Dennis L. Brack, James R. Engebretsen, Mitchell A. Johnson, Eric T. McKissack and Todd P. Ware. The following candidates received the highest number of votes from holders of Class B common stock: Richard H. Davidson, Everett M. Dobrinski, Amy H. Gales, Robert G. Sexton and Roy H. Tiarks. More than a majority of the shares of voting common stock represented at this meeting has been voted in favor of the ratification of the selection of PricewaterhouseCoopers LLP as Farmer Mac's independent auditors for 2022. More than a majority of the shares of voting common stock represented at this meeting has been voted in favor of the advisory vote approving the compensation of Farmer Mac's named executive officers.

Subject to verification of the ballots, I declare that the following directors have been duly elected: Dennis L. Brack, James R. Engebretsen, Mitchell A. Johnson, Eric McKissack and Todd P. Ware as the 5 directors elected by the holders of the Class A common stock. Richard H. Davidson, Everett M. Dobrinski, Amy Gales, Robert G. Sexton and Roy Tiarks as the 5 directors elected by the holders of the Class B stock. Also, subject to verification of ballots, I declare that selection of PricewaterhouseCoopers LLP as Farmer Mac's independent auditors for 2022 has been duly ratified. The compensation paid to Farmer Mac's named executive officers has been approved on an advisory basis. Farmer Mac's Board of Directors will take into consideration the results of the advisory votes going forward. All of these results are preliminary. Every ballot will be checked against our stockholders' records and the exact vote count determined for the record of this meeting. This concludes the formal business portion of the meeting. There will be a general question-and-answer period for stockholders after the adjournment of the meeting. I will now entertain a motion for adjournment. Ms. Ramesh?

My name is Aparna Ramesh, a member of the Proxy Committee. On behalf of the proxies held by that committee, I move for adjournment.

Mr. Mullery?

My name is Stephen Mullery, a member of the Proxy Committee. I am voting all of the proxies held by the proxy committee, which represent more than a majority of all outstanding shares of voting common stock in favor of adjournment.

Any opposed? I would again like to express my appreciation to the stockholders who participated in this meeting as well as those who submitted their proxies but were not able to be present. Farmer Mac 2022 Annual Meeting is now adjourned. Before I open the floor to stockholder questions, I would like to remind you about Mr. Mullery's earlier cautionary statements about forward-looking statements that may be made. We are now open to the floor for stockholder questions and discussions. So I will turn the microphone over to Mr. Nordholm. Mr. Nordholm?

Thank you, and good morning. The management team and I commented on Farmer Mac's financial performance last week during our conference call to discuss the first quarter 2022 earnings. That call concluded with an open forum for questions, but I will be happy to entertain any additional questions from anyone here in person or participating on the conference call or webcast of this meeting. I will recognize you for your participation one person at a time. So please raise your hand or contact the call operator if you have a question. Operator, do we have any questions on the teleconference?

[Operator Instructions] And sir, we do not have any questions over the phone.

Not having any questions, I would like to thank you very much for participating in the Annual Meeting of Stockholders of Farmer Mac. Thank you.

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