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

Good morning, and welcome to the Farmer Mac 2023 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. Please go ahead.

Thank you, and good morning, ladies and gentlemen. I'm Lowell Junkins, Chair of the Board of Farmer Mac. I'm joined today with the Vice Chair, LaJuana Wilcher, who is going to assist me in conducting this meeting. Pleased to welcome all of you to the Farmer Mac's 2023 Annual Meeting. In accordance with the Notice of the Meeting, I will call the Annual Meeting of Stockholders of 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 to Washington, D.C., so we made it possible for you to participate by teleconference and webcast. If you are a voting stockholder participating in the meeting by teleconference and plan to vote outside the regular proxy process today and have not yet received a blank proxy card, please e-mail a request right now to ir@farmermac.com. We intend to follow the meeting agenda that was available as you entered the room and has been posted to the Farmer Mac website. We will provide general question-and-answer session for stockholders after the formal meeting is concluded. I'd like to begin by introducing our director nominees and the directors appointed by the President of the United States, who are either present at this meeting in person or by teleconference. Farmer Mac has 2 classes of voting stockholders, each of which elect 5 directors. Class A stockholders are banks, insurance companies, mortgage banks, investment banks and other financial institutions. Class B stockholders are farm credit system institutions. The other 5 directors are appointed by the President of the United States. Farmer Mac's proxy statement dated April 14, 2023, contains a complete biographical sketch of each nominee and the presidential appointees on Pages 14 through 19. Copies of the 2023 Proxy Statement are available at the registration desk for the meeting or on Farmer Mac's 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 for Class B stockholders are Richard Davidson, Everett Dobrinski, Amy Gales, Robert Sexton and Roy Tiarks. Board members appointed by the President of the United States and confirmed by the Senate are Chester Culver, Sara Davis, Charles Stones, LaJuana Wilcher and myself. I would like to introduce the executive officers of Farmer Mac, who are either physically present here in the meeting room in Washington, D.C. or participating by teleconference. Pages 26 through 28 of the Proxy Statement contain more information about the background and experience of each of these 9 officers: Brad Nordholm, President and Chief Executive Officer; Zachary Carpenter, Executive Vice President, Chief Business Officer; Aparna Ramesh, Executive Officer, Chief Financial Officer and Treasurer; Stephen Mullery, Executive Vice President, General Counsel and Secretary; Brian Brinch, Senior Vice President, Enterprise Risk Officer; Marc Crady, Senior Vice President, Chief Credit Officer; Sean Datcher, Senior Vice President, Chief Information Officer; Robert Maines, Senior Vice President of Operations; Kerry Willie, Senior Vice President, Chief Human Resource Officer. Subject to the vote of the stockholders present and represented by proxy at this meeting, Farmer Mac's independent auditing firm for 2023 will be PricewaterhouseCoopers LLP and referred to as PwC. PwC is represented here today by Chris Morgan. I would 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 14, 2023, to each stockholder of record as of March 24, 2023. Farmer Mac's transfer agent, American Stock Transfer & Trust Company, LLC, 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 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. Could you please raise your hand or contact the call operator if you plan to vote personally at this meeting?

We have a quorum, so I declare Farmer Mac's 2023 Annual Meeting of the 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 would 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. A 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 2022 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've prepared some brief written remarks that I would like to submit for the official record of the meeting and do not have any further remarks that I would like to make orally at this time. Now I'd like to turn to the election phase of the meeting and yield to the Vice Chair.

Thank you, Mr. Chair. The first matter to be voted on is the election of directors to serve until the next annual meeting or until their respective successors are duly elected and qualified. To facilitate the election of directors, the Board of Directors uses a Corporate Governance Committee consisting of directors from each of the Board's 3 constituent groups. The Corporate Governance Committee has recommended 5 individuals for election as Class A nominees and 5 individuals for election as Class B nominees. The Board approves these recommendations. Mr. Mullery, please place before the meeting the Board's nominations for directors representing 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, please place before the meeting the Board's nominations for directors to be elected by Class B stockholders.

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 or Class B voting common stock as of March 24, 2023, are entitled to vote at this meeting. Under Farmer Mac's bylaws, any Class A or Class B stockholder who wish to make a director nomination for consideration at this annual meeting was required to do so by February 18, 2023, so the nominations for directors are now closed. Is there any discussion on the nominations? Thank you. Now let's continue. The next matter being submitted for action is the ratification of the selection by the Audit Committee of PwC as the independent auditors of Farmer Mac for 2023 as described on Page 62 of the Proxy Statement. Farmer Mac's bylaws provide that the Audit Committee shall annually select independent auditors and that the selection shall be submitted to the stockholders for ratification. The Audit Committee and the Board recommend ratification of this selection by the stockholders. Only persons entitled to vote Class A or Class B stock may vote on this proposal. Mr. Mullery, please place before the meeting this proposal.

The Audit Committee unanimously selected PricewaterhouseCoopers LLP to serve as Farmer Mac's independent auditors for 2023 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 Farmer Mac's independent auditors for 2023? Thank you. Now let's continue. The next matter being submitted for action is an advisory vote on Farmer Mac's executive compensation as described on Page 63 of the Proxy Statement, which is also known as a say-on-pay vote. This advisory vote is a nonbinding vote on the compensation of Farmer Mac's named executive officers as presented on Pages 29 through 57 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 an annual basis. Only persons entitled to vote Class A or Class B stock may vote on Farmer Mac's executive compensation practices. Mr. Mullery, please place before the meeting this proposal.