Good morning, everybody. Welcome everyone to Farmer Mac's 2026 Investor Day. My name is Jalpa Nazareth. I'm Senior Director of Investor Relations here at Farmer Mac. Thank you all for joining us. Before we begin, I'd like to quickly remind everyone that the forward-looking statements, including in today's investor presentation, also applies to comments made during today's event. The presentation is also available on our website, along with the reconciliation of any non-GAAP financial measures. We have a great agenda for you today, so we do ask to please hold your questions till the very end. You'll first hear from an overview of Farmer Mac from our CEO, Brad Nordholm, followed by a review of our business and market opportunities from our President and Chief Operating Officer, Zach Carpenter.
Matthew Pullins, our new CFO and Treasurer, will offer his perspectives and present our financial framework. We'll close the day with some remarks from Zach and a Q&A with the management team. With that said, I will now turn the podium over to Brad Nordholm.
Thank you, Jalpa. You get me live today. It's my distinct pleasure to welcome you all to our Investor Day. I was just doing an interview down on the floor of the exchange, and they said, "Well, do you find this useful?" I said, "I hope so." It really is something that you will measure, but for us, getting together with you in person, hearing about your questions, seeing you interact is very, very valuable to us. Thank you for taking time to be with us. Really appreciate it. I'm gonna begin today with a little bit of reflection on almost eight years that I've been leading Farmer Mac, because I think it creates some context that is relevant to the rest of the presentations that you're going to be hearing today.
It was in 2018 that I was approached by Heidrick & Struggles for consideration for the CEO position of Farmer Mac. It's an organization that I'd followed for some years. As I did research on Farmer Mac in 2018, I saw an organization that has some incredible inherent strengths. A government-sponsored entity charter, GSE charter, by Congress, which suggests that there is strong political and bipartisan political support for Farmer Mac. We'll tell you more about that because it exists to this day very, very strongly. As a GSE and organization that really has unsurpassed access to the debt capital markets, we don't talk about it as much as we should, that we can issue debt across the curve out to 30 years at minimal spreads to U.S. Treasuries. AAA corporates can't do what we do.
That enables us to have asset liability management techniques that allow us to not only bake in margin through all interest rate cycles, but bake in margin many, many years out. When I was looking at Farmer Mac back in 2018, I was saying, "This organization has some incredible inherent strengths." I also saw an organization that had a very clear purpose, a very clear mission to provide liquidity to rural America, farmers, ranchers. It was an organization that had a charter, and a charter that had evolved in ways that allowed it to do more to fulfill that mission, to work with entities that were providing critical rural infrastructure, electric power, broadband, other areas, to work with entities outside the farm gate, as we say, up and down the supply chain.
In 2018, we really weren't doing that at Farmer Mac. Coming from a background of banking and private equity, I thought to myself, given the opportunity, there's an opportunity to make Farmer Mac a more commercial and more diverse organization. By doing so, one that can grow faster and one that will have even more stability across different cycles because of increasing diversification. That's basically the huge attraction for me. That was the huge attraction for me to Farmer Mac. I think if you look back on it, that's exactly what we've been doing the last eight years.
Going back to 2018, 2019, what were some of the first steps we took to kind of realize some of those aspirational goals of diversification, of stability, of being a more commercial organization that would more aggressively listen to our customers and design product and responses to their needs? The first thing we did in planning sessions was to find we need to go to the customers, and we created an executive-level position of chief business officer, which we'd never had before at Farmer Mac. Zach Carpenter was my first recruit to fill that position. Someone who was charged with providing strategic insight and intent for how we'd execute on some of these ideas and how we'd engage more deeply with our customers. We set some aspirational goals, and this is something that I don't think we've really talked about before. Jalpa was reminding me.
In 2019, we set a goal of 40 by 40. What does that mean? We set an aspirational goal of $40 billion AUM by the 40th anniversary of Farmer Mac, which is 2028. We came up with a strategic plan that had a couple of words, broadening and deepening, to describe the ways that we're going to diversify the business, the broadening, and use technology and people and product to go more deeply into our businesses. That's basically what we've done. What we've done is do this within the, some people would say confines, I call it a competitive advantage of focus, of being a secondary market. Of being a secondary market that has, as the primary market, other financial institutions who are directly connected with those customer segments that we talk about, rural infrastructure, agribusiness, farmers and ranchers.
We have done it by diversifying those business segments so that in rural infrastructure, it's not just rural utilities now, it's broadband and it is renewable energy. We've done it by putting increased focus on agribusiness, that outside the farm gate part of it. We have done it by diversifying our funding and developing new investor bases in the debt capital markets by securitizing farm and ranch assets and now conceiving of additional ways that we can transfer risk in the markets through product and also across more segments of our business. We have attracted, I think, an absolutely first-class team of people able to execute on it. While Farmer Mac has a very proud tradition of being able to do it ourselves, to figure it out, to be innovative, to be creative.
If you're going to be state-of-the-art in working with other bankers in serving broadband customers or renewable energy customers or agribusiness customers, you need bankers who go toe-to-toe with J.P. Morgan and with MUFG and with BMO and other leading institutions who are also focused on those sectors. We've hired very, very seasoned people to pursue this. That has been helpful from not just an origination standpoint, but from underwriting and servicing standpoint too. Around that, we have focused on building a culture singularly focused on mission, but unified in a desire. It's always an aspiration, isn't it? But a desire to work more collaborative together, to work more cooperatively together, to realize that almost everything we do requires multiple people across the organization to execute well. There are no individual heroes at Farmer Mac.
Bringing in talent and then solidifying that talent within such a culture is not easy to do. I think we've made huge, huge strides in doing it. Today, we get uniformly top marks from employees and other stakeholders who look at us for this very, very unified culture. Unified culture also results in less risk. It results in less risky activity. It results in fewer people thinking they can act independently. I'm very proud of that. What are some of the results that have come from that? First of all, we have been able to accelerate growth. I would suggest to you today, and you're going to hear more about this, that we've accelerated growth by building this more diverse business platform or platforms. Now that those platforms are built, we have an opportunity to accelerate growth even more.
Can a 12% CAGR in our growth rate over this eight-year period of time be accelerated further? Can our assets under management, now at $33 billion at the end of 2025, meet and strongly exceed that aspirational goal that I mentioned of Forty by Forty? Can that earnings growth continue in a way that suggests we use capital very efficiently because we consistently are able to deliver a 16%, 17%, even 18% or 19% return on equity capital? Nevertheless, I think so. When I think about what we've done, I'm often challenged about, well, how does that compare with others in the market?
Just to give you a couple of reference points, if I look at what we've done relative to other major indices, S&P 500, S&P Financials, we far exceeded revenue growth rates against other indices. We've done it because of this growing diversification in our platform. We've done it by having a continuation of highly disciplined asset liability management at Farmer Mac, which results in those predictable spreads that I've talked about. We've done it by increasing our Net Effective Spread while maintaining that discipline on asset liability management by realizing two things, the increased spreads and accretive spreads available in some of these new segments of business, even after additional capital and credit charges that it takes to do that business.
By having people engaged with customers and with bankers and understanding that we are going to not price to a minimum acceptable return at Farmer Mac, which may have been more of a historical approach, but by pricing to the market opportunity. That's why you hear Zach in the past talk about moving away and being willing to walk away from certain business segments at certain times, think the AgVantage bonds, but coming back when market opportunity, market pricing is attractive. That has been one of the reasons why that NES growth has been so strong and been the second driver in addition to the more creative business segments that we've mentioned.
That has resulted in, I think, what could be considered a strong drive of shareholder returns, coming about by multiple years of increases in our dividend, strong dividend growth, 14.5%, and increases in the underlying fundamental returns of this business that have driven appreciation in the stock value, at least until very recently. Again, looking at us against some of the other major indices, our returns, the CAGRs that we've enjoyed, and earnings per share have been, I think you would agree, very, very impressive. What about us relative to others? The market, we believe, was beginning to recognize these very strong strengths in the fundamental business that we have built at Farmer Mac and our future growth opportunities.
Beginning back during the pandemic, you saw the market recognize those strengths by valuing us at more of a 12.5%-13% multiple on earnings, which we think is the appropriate way to think about Farmer Mac. You can argue because of the high quality of our earnings that that multiple could be justified at a much, much higher level. We know a large portion of our earnings for 2026 and 2027 and 2028 and 2029 too. You can argue that it should be higher because of our asset liability management practices. We are not subject to a run on deposits. We have our liabilities basically structured, including the use of derivative products, to match our assets.
That's why we, when we talk about our interest rate sensitivities in a up 100 or 200 or 300 or down 100, 200, 300, interest rate shock test scenario, we say, "It's not gonna make much difference at all." It doesn't. Very high quality earnings. Do they justify a higher multiple? Recently, of course, we've been very, very disappointed, as I'm sure you have, although you may see it as an opportunity, with the way the market has valued Farmer Mac, because our fundamentals are as strong as they've ever been, and in fact, arguably even stronger, and because we are involved in businesses that are essential to the U.S. economy and that are growing.
When we think about the reasons why, we think it comes back really to one reason, and that is negative sentiment, negative headlines as it relates to American agriculture. Not a day goes by, at least for the last approximately nine months, when there hasn't been a sad story about a real farm, farmer and farm family at risk of losing their farm because of higher input costs and lower commodity prices, particularly in corn, wheat, rice, soybeans to some extent. Not a day goes by when there hasn't been concerns about uncertainty of tariffs. More recently in the last three weeks, concerns about uncertainty of availability of fertilizer and cost of fertilizer in the U.S. because a significant portion comes from Middle East. These are the headlines. These are the headwinds that we think have buffeted Farmer Mac and our stock price. They're very real.
We're concerned about farm families in rural America, particularly in those core commodities, particularly in the upper and lower Midwest, that have had three consecutive years now of higher input prices and softer commodity prices. Our portfolio results and our market analysis tells a little bit more nuanced and different story, and that is a story where Farmer Mac financing 120 different commodities grown by farmers and ranchers across the U.S. are experiencing different returns. Anyone involved in meat proteins today is experiencing profits that are unprecedented, literally unprecedented. Many specialty crops are doing extremely well.
It's not being widely covered, but today and in the next week in Washington, there are gonna be meetings at the White House that are probably gonna celebrate not just optimism, but possibly real legislation to support year-round E15, which would be a significant increase in demand for corn in the United States. There's gonna be discussion about sustainable aviation fuels and whether more soybeans should be going into Jet A and into diesel. With diesel above $5 a gallon, another negative headline, there's momentum for more of that happening. Public policy may also contribute to tailwinds, but we see the natural cyclicality of what's going on. We see the eventual resolution of trade and the inherent advantages that U.S. has in growing, moving, financing, major crops around the world as once again being recognized.
We see the incredible demand for electric power that will be built in rural America by electric cooperatives and independent power producers whom we finance. We see the growing interest in data centers and broadband as driving a lot of that incremental demand for power. Again, it's occurring in rural America. We see all these other tailwinds developing against a portfolio today that is healthy, and we see increased growth and very, very manageable credit issues and portfolio quality at Farmer Mac. A lot of optimism. When we think about what this really means for us, that original aspirational idea of Forty by Forty is not only well within reach, it's within reach in the next year and a half, two years, not three years.
It is something that reflects the strong underlying fundamentals of Farmer Mac, but also the organization that we built. As I approach my retirement, I think of, you know, some of my old Boy Scout years and think about, you know, always leaving wherever it is that you found in better condition when you found it. Farmer Mac has never been in better condition than it is today. From policy, from funding, from investor support, debt capital market support, diversified funding and securitization support, diversification of the business, the talents of the teams pursuing those diversified business segments. We have never been in better shape than we are today. I don't think anyone has been better prepared to step into my shoes than Zachary Carpenter. Zachary came to Farmer Mac as that chief business officer in 2019.
Zachary came out of Wharton and went into Johnson & Johnson, premier company, quickly transitioned to Goldman Sachs, where he had a great run earlier in his career, and then to CoBank, the largest agricultural lender in the United States, where he continued his great run there. Six-year segments at leading organizations, most recently Farmer Mac, where he's had an opportunity to see all that goes on, and not just see it, but to manage it and lead all that goes on. This transition, in many ways for me, maybe slightly less so for Zachary, certainly not so much for the organization, feels very, very seamless. I'm incredibly optimistic about where we are today, but also where Farmer Mac is going to go.
At our last board meeting, I told the board, "Can I just hang around and be a fly on the wall for a few years? This is really, really going to be fun." That's how I feel about it. Zachary.
Thank you, Brad, and good morning, everyone. First off, thank you for joining us live or on the webcast. It's very exciting to be able to talk about our journey and our future here at Farmer Mac. I'm approaching my seventh year at the organization this coming May, and time does fly, and it's been a wonderful journey, but very excited about the next chapter of our organization.
There's so much going on in the markets, you know, globally, agriculturally, energy-wise, and it's a great opportunity, given all of that that's going on, to talk about the strength of our organization, the importance of our mission to serve critical and essential sectors of the U.S. economy, what we've accomplished in such a short period of time, the excitement we have about our future, the markets we serve, and more importantly, the growth opportunities that we see coming forward. I'm also very excited to have our new executive team here with us today. We've been able to attract and retain significant talent at Farmer Mac, and frankly, we're an employer of choice. We have individuals that have significant experience at Farmer Mac in our markets.
We've had new individuals that bring more commercial experience from other organizations, and that diversity of thought, I think, is exactly what we need as we step into our new chapter. I'm excited for you to meet in person. This is a very talented and very experienced management team. This morning, I'm gonna spend some time talking about what we've built over the last seven years, the markets we serve, our customers, what we see as our unique competitive advantages, and what's gonna be driving growth from a Farmer Mac unique perspective, but also the market tailwinds that we see. I wanna take a moment to thank Brad. You know, he joined Farmer Mac in 2018 with a fantastic vision, and he saw a tremendous organization that had plenty of opportunities that we weren't excelling on.
Like Brad, I saw those opportunities, and that's what was exciting to me, to come in to think more holistically about our mission, to think about driving more scalable growth to the markets we serve, to enhancing the customer relationship. That was exciting to me, and I still remain excited about the next chapter, and there's so much more we can do. Brad also brought a new focus of our culture and mission to the organization, and that's foundational to us. Our mission of this organization is our North Star. How can we serve the critical and essential sectors of the U.S. economy? Focused on our customers, focused on innovation and driving scale and liquidity to these key sectors. I do wanna elaborate a little bit on Brad's vision that we created in 2019.
$40 billion of business volume by the time we turned 40, which is 2028. Why was that constructed? What was our focus and how have we performed? I'm gonna pivot into a little bit more talking about our markets, our customers, our unique competitive advantages, and where we see growth coming forward. The vision was $40 billion by 2028, and the rationale was there were markets we were not in where we were fully able to access via our congressional charter. Also, how do we enhance the relationships with our foundational markets? We'll get into those going forward, but Farm & Ranch, Power & Utilities, and provide incremental scale, incremental liquidity to support these critical sectors. This thesis was based on a dual-dimension strategy: broaden the market and deepen our markets. Broaden the addressable markets.
There are new markets such as agribusiness, renewable energy, broadband, that we were not participating in. How do we engage with those organizations that lead transaction in that space? How do we understand the markets to be able to be a consistent liquidity provider there? How can we diversify our assets and our volumes to be able to support that? We can fund long-term farm real estate mortgages very, very well, and we can provide that liquidity. Stepping into these new, more complex markets, operational and expertise is critical for sustainability. Broaden our reputation. We are unique. We are a non-threatening capital provider. That is a competitive advantage for us. How do we get our reputation out there in the market, in these new markets? Second is deepen the penetration we have in our foundational markets.
You know, technology is always gonna be a component of our focus in these markets, especially for scalability, but the foundation is still relationships. These organizations, the community banks that serve rural America, want consistency, reliability, and trust. With the foundation being relationships, how can we enhance the customer experience? How can we focus on products, platforms, and processes that make it more efficient to access the secondary market? Infrastructure modernization. Leverage technology to make it easier to access Farmer Mac's products and solutions, and continue to build on our strong reputation in these markets. This is the foundation we call Build for Growth, right? We've invested in and built capabilities to support new markets.
We've broadened our access and liquidity to new financial institutions, and we continue to leverage our relationships in our foundational markets to enhance the platforms and products we support, and ultimately meet our $40 billion goal. As Brad commented on, to make this work, expertise matters. It really does. We have tremendous expertise in our foundational businesses, from Farm & Ranch to Power & Utilities, you know, some of the best talent in the markets that understand the sectors that we serve, understands the risks, and adjudicates risks in the appropriate ways. Expanding into new markets, something we hadn't done before, requires a different expertise. It requires operations that need to be able to scale to support new products.
Looking at the life cycle of a loan in Farmer Mac and in the different functional units, we spent the last six years onboarding over 100 individuals to support scalability, to support relationship management, to understand complex risks, to monitor the risks, to operationally fund, and to assess our controls and procedures throughout the life cycle. We have tremendous talent at this organization. You know, teams that I'm very proud of, teams that have worked very hard to build something very successful in a very short period of time. This is critical for success, not just for repeatable revenue and earnings, but consistency. Our customers are financial organizations. They want a consistent partner that is there in good times and bad times to support them.
When I look at this slide, I think about all the different functional units that we've created, but more importantly, all the expertise that has joined our organization. Individuals from Wall Street, community and commercial banks, GSEs, the Farm Credit System, very talented individuals that have seen the mission of Farmer Mac and have joined our organization. The diversity of tenure at the organization I think is very important. About 20% of the individual employees at Farmer Mac have been at the organization over 10 years. The tremendous foundational experience that they have to further deepen our penetration in those markets. 30% of the individuals have been here from six to 10 years. Think about the strategy Build for Growth.
They were instrumental in building and scaling these new markets, and then more recently, supporting that organization, this new organization with tremendous experienced talent from a broad array of organizations. I'm confident we have one of the best teams in the market. In fact, I hear it from a lot of our customers. The entire organization is always focused on our mission, making sure we're doing what's best for Farmer Mac and ultimately our shareholders. Now I want to spend some time talking about our markets. You know, how we support mission and liquidity for our customers, how we assess and look at risk for our portfolio, future market opportunities, what are our competitive advantages, and how we think we're gonna grow. I'd like to start with Farm & Ranch.
You know, this is kind of our foundational segment, one that we've been supporting for 30-plus years, and probably the one that we have the most expertise in in terms of market dynamics. We buy farmland mortgage loans from financial institutions across the country. We're unique in that we're the only national secondary market. When you look at the foundational lending organizations supporting the agricultural asset class, they're very regionalized. From commercial banks to community banks, Farm Credit System, they have their pockets of areas across the country. We're national, and that's a unique competitive advantage for a couple of reasons, which I'll get into. Cumulatively over history, we've supported over 1,600 originators. Originators out in the market, finding farmland mortgage loans, and selling them to the secondary market. We have a flexible product set.
We support everything from revolving lines of credit on farmland out to 30-year farmland mortgage loans. There's very few institutions that have the capacity to fund their balance sheet to support long-term 30-year mortgage loans like we can. This portfolio is very diversified. Our average loan size is about $800,000, and frankly, we support over 140 different commodities in our history. Currently, we have no commodity that exceeds 20%. As we assess all that's going on in the agricultural community, that diversity from a national presence is very important. We're able to diversify the portfolio so we can be there through the cycle. The average loan-to-value of our portfolio is 51%, as you can see in this chart, very low charge-off rate over our history. What makes this such a strong portfolio is the collateral. Right?
The farmland is the most precious asset of farmers and ranchers across the country. They'll sell their house, their tractors, their commodities before they want to give up their land. That's how we have very strong risk characteristics of this portfolio. It's 93% or greater over the last year, eight-year period, and that really reflects the strength of the underlying collateral. We've grown this portfolio 7% over the last 8 years, and I think we have tremendous upside to grow it even faster. The overall farmland mortgage market grows over the last 10 years on average about 3%. We're exceeding that market growth rate, but I think we have tremendous upside to enhance our market share, giving market tailwinds and some of our unique competitive advantages, what I'll get into. What are the business drivers, and why do organizations use Farmer Mac?
Well, first it's our customers, the health of financial organizations, the financial institutions in the market lending money to the sectors we serve. They need to manage capital. They need to manage their loan-to-deposit ratio, liquidity. Many organizations are growing faster than the sustainable growth rate. How can they figure out how to keep up and capitalize their balance sheet quicker? On the other end of the spectrum, it's the health of the agricultural economy. How do they continue to ascertain liquidity to manage their operations? If a farm, farmland down the road comes up, where do they get the liquidity to buy that piece of property? It's the health and the scalability of these those borrowers that levers the secondary market to grow. Lastly, I think a key business driver here for us is the ability to deploy capital efficiently and effectively.
I mentioned we have cumulatively over 1,600 originators that we've bought loans from over our history. That's a big number. We get a lot of intel on what's happening on the ground from both our customers, financial institutions and their borrowers. You know, clearly from a borrower concern, it's the agricultural cycle that we're going through now. Inflationary input costs, labor availability, trade and tariffs, commodity prices. As Brad said, every day there seems to be a dripping of bad news in articles on what's happening in the agricultural economy. As farm levels, as farm income levels rise and fall, as they manage inflationary input costs, borrowers need liquidity to support their operations, to be able to scale, to be able to buy a tractor, to be able to manage through lower than break-even profits.
Given the low leverage on the farmland asset, which I'll get into in a little bit, but if you look at our loan-to-value ratio in the previous slide, they have plenty of equity to be able to tap in and support that liquidity. From the financial institutions perspective, over the last 12-18 months, the big focus has really been in two major areas: credit concerns and capital efficiency needs. Credit concerns isn't necessarily just ag, but there was a big concern as we're heading into the renewal season, which typically takes place in January, February, March. Last two or three years for, especially for certain ag sectors, has been tough. How are they gonna be able to get through the renewal cycle? What is that gonna look from a migration standpoint on their portfolio? The other component is capital.
Many of these organizations, even though they're experiencing some concerning credit migration, continue to grow very fast. They're seeing growth rates that are well in excess of their sustainable growth rate, meaning they're not capitalizing their balance sheet. They're looking to the secondary market to be able to find that liquidity, to offload certain assets, to be able to maintain and grow with their growing customer base. The need for an efficient and effective capital deployment from a secondary market is critical, and there's two competing reasons why. The first, over the last 15 years, you've seen an exodus from financial institutions in supporting ag, specifically regional and commercial banks. They've never liked the volatility of the ag cycle. The capital deployment strategy doesn't necessarily work for long-term fixed rate farmland mortgage loans. They've been pulling back.
More recently, I'd say in the last eight years, consolidations, mergers and acquisitions create a scenario where the combined entity may not have a strategy in ag, so liquidity for this sector is exiting the market. Coupled with, on the other end of the spectrum, farming operations are getting bigger. They're scaling. They need more capacity to grow. I hear this from the Farm Credit System CEOs all the time. "Where's the liquidity gonna come from? I see all these banks exiting the market. I don't know how I'm gonna be able to support these operations as they get bigger." That's a huge opportunity for Farmer Mac. I want to spend some time talking about the agricultural mortgage market and why we feel confident that there's growth opportunities here. The first reason is the overall market has been growing approximately 3%.
As I noted earlier, we're growing more than double that growth rate, and I think we have the ability to also increase that rate to a faster pace. If you look at the farmland mortgage market over the last 30+ years, it's been significantly under-levered. About 10% on debt-to-asset ratio on the farmland mortgage market. There's about 1.8-1.9 million farms out there today, and only 23% of those farms have debt on them. That's all debt. Of those 23%, only two-thirds have real estate debt. So that's about 280,000-300,000 farms. With limited supply coming on, with the need to increase scale and operations, the easiest way for these farmers to access liquidity is to leverage their land.
You know, while the residential and commercial real estate markets are much different, especially in size and liquidity, this chart does highlight there is ability to see growth in the farmland leverage space. If we look at the growth rate over the last 10 years, we've seen about $100 billion of incremental farmland mortgages come on market. That's the 3%. If you forecast that out the next three to five years, that's another $50-$75 billion. If you couple that with potentially increasing leverage on the farm, that's upside and potential opportunity. Why would the farmer in this day and age put more leverage on their farm? Well, I think the first and most important thing to think about is generational transition. The average farmer is 60 years old.
Over the next decade, difficult conversations are going to be taking place on what happens to that asset. On one end of the spectrum, if they keep it in the family, capital will be needed to continue to operate and support the scale of that farm. If the decision is to sell, most transactions in the farmland mortgage space are from other farmers buying that property. It's not institutional investors, it's not the gentleman living in Chicago, it is farmers. Their liquidity comes from leveraging their land to buy that farm. They do not have the liquidity in the bank account to be able to go and buy that piece of property without leveraging their land. There are institutional investors in the farmland mortgage space. They're buying up farmland because they think it's an inflation hedge, which it typically has been.
They're matching up their liability, their long-term liabilities, typically annuities with long-term assets. They're more sophisticated in terms of thinking about using leverage. We see that as opportunity, and it's tremendously growing our Wholesale Finance business, which I'll talk about in a minute. Frankly, the limited supply of farmland. I was listening to a podcast and it was noted that only 1%-1.5% on an annual basis of farmland turns over. Really over the long term, just given the limited supply, that supports the appreciation of the farmland asset. There's a strong correlation as farmland values increase, the farmland mortgage market will increase as well. Our national presence and relationship focus, coupled with consistency, relationships, and trust, is a strong competitive advantage for Farmer Mac.
The other critical component I believe of why Farmer Mac reflects our operational vision. We have seen a strong correlation, especially over the last three-five years, of enhancing and improving our products and our technology that results in stronger loan growth. Borrowers want capital fast, efficient, and competitively priced. Historically, the life cycle of a loan from application to funding was 75+ days. Of that timeframe, 60% is waiting on appraisals and waiting on title. There are ways to disrupt this process. In fact, we have launched the Farmer Mac Farmland Price Index based on significant amount of sales data and our appraisal information. We have created a platform using that index to be able to leverage automated valuations for low-risk loans, meaning we don't need an appraisal. In addition, we're working with title companies to triage the title process.
Currently, every loan is treated the same from a title insurance perspective, but there should be ways to triage risk by loan to create a faster process. We put all of this together. We have a very efficient onboarding process. A financial institution or borrower could access our ecosystem, enter the appropriate loan criteria, update the appropriate documents, receive underwriting approval within an hour, obtain an automated valuation to determine loan-to-value, and rate lock their loan in one day. All that remains is preparing closing docs and funding. My vision is submit a loan on a Monday and close that loan on a Friday. The residential mortgage market has leveraged technology and data to dramatically make obtaining a resi mortgage more efficient. There shouldn't be a reason that the farmland mortgage market can't somewhat repeat that and follow that same path.
I want to spend some time talking about Corporate AgFinance. This is our first new market we entered and underscores the start of our journey, a broad journey. Here, our focus is really driving agricultural commodities to their end markets. Really the food, fuel, and fiber supply chain. Think livestock, cow-calf operations to dairy meat processing or corn to ethanol, wheat to baked goods, timber to pulp and paper or sawmills for lumber, cold storage, other food production infrastructure, really converting these ag commodities to finished goods that are distributed across the country and frankly, the world. We've seen tremendous growth over the last seven years, six or seven years of 19%. These are different loans than Farm & Ranch. Again, this goes back to why expertise matters. These are larger exposures. We typically underwrite these deals as enterprise value-based transactions.
What does that mean? That means we focus on the strength of the business generating cash flows to remain viable over the long term. It's not as much focused on collateral. We do have collateral, we are secured, but the repayment capacity is the business operating into the future. We look for business model, scale, management expertise. Cash flow repayment capacity, market outlook. This is where expertise in-house really matters. We have a person who leads this group that has 25+ experience at Rabobank, the Farm Credit System, understands the agribusiness cycle. We have underwriters that can adjudicate complex risks across all the different subsectors. We have a strong credit approval team that has determined and crafted appropriate policies to monitor and manage these risks. We have an industry-leading risk adjudication process. It's also critical who we partner with.
These are primarily syndicated transactions, so we are not the only lender lending money to these businesses. We are partnering with sophisticated lenders that understand the space, that do this on a daily basis. We also work with reliable and sophisticated lead arrangers. They're the organization structuring the transaction. They'd better structure it to market or we're not gonna participate. These are priced to market. We're making sure as we put our capital out, we're getting the right risk-adjusted return. We're continuously monitoring these deals. Quarterly reviews, annual reviews, consistently looking at what's happening in the markets, making sure we understand what our portfolio's doing and if we've seen any changes in migration. From a risk profile perspective, since inception, this, the profile of the agribusiness portfolio has been very strong, generally above 90%.
We'll discuss this a little bit later, but the credit metrics of this portfolio and more broadly of Farmer Mac competes very well with our peers, and we're very proud of our credit metrics and how strong they've held up, even in tight agricultural cycles. There's also an intangible value of this segment. It's opened the doors to other opportunities across our other markets. For example, we've partnered with institutional clients in the Corporate AgFinance segments and provided liquidity to their transactions, who in turn has come to us wanting a Wholesale Finance facility. Another large commercial organization, we've partnered in many of their syndications, more recently over the last two years, has sold us pools of Farm & Ranch loans. Many of the transactions in this market are with the Farm Credit System, the leading agricultural lender in the United States.
They are now interested, just given capital dynamics, of selling farm and ranch loans to Farmer Mac. This segment helps open up the doors to other markets and other opportunities. We believe there's tremendous need for investable capital across the agribusiness supply chain, and I think there's three main long-term fundamental themes that I see. The first is the significant demand globally for food and fuel. Protein consumption continues to be a strong driver of growth across the globe, driven by the need to uptier diet and consumption. And then more recently, evolving consumer behavior, changes in preference. The younger generation has a different view of their diet, snacking, and alcoholic beverages versus other generations. We think these three themes are gonna drive significant investment in the food, fuel, and fiber supply chain.
As operations get bigger, they need to scale, they need to be more efficient in margin, and they're gonna use leverage to be able to create another facility, add another product line, create cold storage food infrastructure. This requires more financing than ever before. Changing consumer behavior has been an interesting dynamic, especially over the last two years, and this is causing organizations to significantly invest in reformulation. Is that creating smaller packages, snackable packages? Is that creating more product lines that are non-alcoholic beverages? That all requires investable income. Trade also creates an issue, especially for supply chain resiliency. Many of these organizations get product across the border, Mexico, Canada, China, et cetera.
With everything that's going on, especially over the last 18 months, there's been more of a focus on making a resilient supply chain, investing domestically to make sure that they have the components to be able to continue to meet the product demand. We continue to see a lot of M&A activity here. This is driving scale and resiliency from a margin perspective. In recent examples that we think is gonna also drive maybe incremental growth to this market are things that we're reading in the newspaper on a daily basis. Is E15 or ethanol on an annual basis gonna come to fruition? We don't have enough crush capacity to be able to meet that demand. Is there more investment in crush capacity to be able to support increasing ethanol? Dairy and whey protein. Whey has been a significant demand driver, especially in Asia and the China markets.
We don't have enough capacity to be able to meet that demand. Meat consumption, the uptiering to poultry and beef. All these things we're looking at on an annual basis to see where is that money gonna go and where is that infrastructure gonna be built? Power and utilities, another foundational market for us that we've been in since 2008. In this market, we serve the 900+ generation transmission and distribution cooperatives generating and distributing power to rural America. The cooperative structure is important here. They need very strong credit profiles to be able to manage over the long term. Given the cooperative structure, they have rate-setting authority. What does that mean? There's significant liquidity that's needed to maintain, upgrade, uptier this vast infrastructure. Those costs, if needed, are generally passed on to their members, essentially the rural communities that need that electricity.
Maintaining that strong credit profile is very important 'cause the only way to be able to uptier and upgrade your infrastructure is through debt capacity. We've never experienced loss in this portfolio, and over the last eight years, we have 100% acceptable loans. The co-op infrastructure market is dominated by two major cooperative lenders, the National Rural Utilities Cooperative Finance Corporation, or CFC, and CoBank. These organizations are our primary customers. We buy these cooperative loans from these two entities. They have significant experience, have been in this market for decades. Very low loss history, strong relationships, and significant market share. I think they have been supporting over 50% of the co-ops generating and distributing the power in America. Infrastructure is also critical to this power, and it's a very, very valuable asset.
The amount of money they needed to invest and construct this makes it a very big barrier to entry. It's also not very easy to step into rural markets, invest that capital, and generate a return that's needed to support that capital deployment. As we think about the business drivers in this space, the first thing I want to highlight is CoBank and CFC. I'll get into the market dynamics of energy going forward, but they're seeing tremendous demand growth for capital of their cooperative customers. They want to be consistent and reliable, just like Farmer Mac does. But what's happening is their growth rate is exceeding the sustainable growth rate for capital efficiency and leverage. This is causing significant inclusion of Farmer Mac into these transactions and resulted in some of the biggest growth we've seen over the last eight years in 2025.
The other business driver, or I'd say opportunity for Farmer Mac, is market share. I noted 900+ cooperatives. They serve 42 million people and actually power 56% of America's landscape. Our portfolio only supports 25% of those 900+ co-ops. Our average loan size is only $17 million. 16% of our loans are under $10 million. When I think about market share opportunities and deepening our penetration coupled with the scalability and capital efficiencies of our two major customers, there's a tremendous opportunity for Farmer Mac to provide more liquidity to this space. The last thing I'll highlight, and this will transition into our market snapshot of the electricity industry, is just the significant demand for energy that we're seeing across the country. This is going to be a general theme as we move into our infrastructure markets.
The strong growth opportunities of the energy demand across the country, we believe, is a huge liquidity driver for Farmer Mac. Net energy load growth over the next 10 years is going to increase dramatically. In fact, it's going to be higher than it has been over the last 25 years, and frankly, hasn't been this high since the 1950s. Almost 1,000 terawatt-hours of load demand anticipated through 2035. What's driving this? Well, clearly, it's what we see in the paper every day, data center investments. It's not just that. It's large loads coming on markets. It's onshoring industrialization. It's the use of more electro-electronic products such as EVs, other electronic products that are going into house. It's rural population growth. After COVID, rural population actually saw growth for the first time in over a decade. It's remote work.
More organizations are accepting remote work, requiring the more need for power in those homes. Over the next five years, it's anticipated over $1 trillion of capital investments is needed to help meet this significant growth in energy demand. Where's the supply going to come from? Well, when you think about it, and I talk to all the power producers, it's really an all-hands-on-deck approach. Any generation asset you can get up quick. In addition, timing matters here. We need the power today. We don't need it in five years. There is a power conundrum, right? If you want to build a natural gas combined cycle power plant, I hope you got on the wait list for a turbine three years ago, because right now, to get a turbine from GE or any other major manufacturer is three-four years.
Coupled with permitting and the time to build the facility, you're at least looking at five-seven years to get that facility up and running. A lot of talk about nuclear, and we're continuing to monitor that sector as well. That's probably seven-10 years out. The technology's not there. There needs to be price certainty. There needs to be efficiency in construction before that ever gets to the point where senior secured leverage could be put on it. The continued closing of coal power plants or inefficient other generation assets. Where do we get the power from? Anything and everything that can provide generation electricity today. The other component of this sector is the need to enhance the grid. If you look at our grid, it's fully depreciated. A lot of these assets are end of life. We see more weather events.
We now have demand surging. There's continual capital on an annual basis to up-tier, invest, and improve the grid. We're in a unique position to be able to support all these different business drivers. Turning to another one of our newer segments is the Renewable Energy market, and we've seen tremendous growth over the last five years in a rather, you know, new market for Farmer Mac. This is another area where critical expertise matters. Significant focus on finding the right individuals to manage the portfolio, understand the risks, and monitor the risks. The individual who runs this portfolio from the relationships division spent over 20 years in development, sponsor, credit, all in the renewable energy space. We also have a very seasoned credit approver from GE that spent over 30 years understanding this market.
We're very confident that we can understand and adjudicate the risks, but also focus on partnering with top-tier sponsors, top-tier developers, equipment manufacturers for a couple of reasons. One, they know what they're doing. We want to partner with the people that have done this before. But two, it's very important that we're consistent and reliable, and we want to align our risk parameters with how they're structuring and how they're thinking about engaging in the market. We continue to maintain very strong risk profiles in this space, over 90% acceptable. In fact, 97% at the end of 2025. We look at risks in this space in two different buckets. The first is construction. Yeah, you got to construct a product, and that's why developers, sponsors, equipment is critical. We want to make sure we're partnering with those right institutions that do this all the time.
Then it's operating. Like, once that project is completed, it's generating power. What we get very comfortable with is that power is under a long-term power purchase agreement with an investment-grade off-taker. That means that investment-grade counterparty is required to take that power over a long period of time and contractually negotiated rates. You know, why is this a business driver? Why have we seen excessive growth? And why Farmer Mac? Well, first off, we're consistent, knowledgeable and non-threatening. We have the expertise to underwrite these deals efficiently, effectively. We can provide liquidity on a reliable basis, and that's very important, especially for the growth we've seen in this sector. Also as a secondary market, and I think this applies broadly to many of our sectors, is we're not threatening, right? We don't originate loans. We don't talk to borrowers.
We're not out there trying to compete for transactions. We are there to provide liquidity to the markets we serve. That's very unique, and it's very sought after with the financial institutions that arrange these transactions. Lots of talk over the last 12 months or more on tax credits and the impact to the renewable energy market. Clearly, H.R. 1 did solidify policy implications for tax credits, and in fact, they incorporated phase outs. If you can start construction by July fourth of this year, or you complete construction of a project by the end of next year, the tax credits still remain. Everything outside of those time frames, they have sunsetted. There's also a component of Foreign Entity of Concern. Where are you getting your supply for these projects?
If you're potentially buying a lot of your supply from China, it could be in a very difficult situation. We believe it's still important to understand the impacts of this market, and we'll continue to monitor this going forward. We believe the shortage of energy generation of the United States really takes priority here. A couple of things to know. I mentioned the time it takes to make a nat gas combined cycle power plant is five-seven years today, maybe even longer. When you look at a renewable energy project, even a utility scale solar plus battery, you can build one of those in 18-24 months. Battery improvement is significantly helping with intermittency, right? When the sun doesn't shine, the wind doesn't blow, these aren't generating power.
With battery life extending to 4, maybe more, coming with technology improvements, that is helping with the intermittency problem. I think the most important thing to remember or understand about this sector is the localized cost of energy generation between fossil fuels or combined cycle natural gas plant and a utility scale solar project and battery. They're very close, and that's excluding the tax credits for the renewable energy projects. It's basically how quickly can you get energy generation on the market, and renewable energies is going to be a source of that. We still see large corporations that purchase significant amounts of energy managing a diversified source of that energy. Clean energy is a component of that.
When I look at the North American Electric Reliability Corporation report from January 2026, it states over the next three years, two-thirds or over 200 gigawatts of power is coming from solar and batteries. This market is shifting from policy-driven growth to market-driven growth based on the needs of energy and the evolving nature of our energy demand in this country. You could see changes in cap structures for these projects. You can see different debt profiles. You can see higher prices with power purchase agreements. Given the need for energy and the structuring of these projects, we firmly believe there will be a strong growth opportunity, especially Farmer Mac in the future. I did want to highlight a brief life cycle of a renewable energy project and how we participate and what we look at. There's a lot of pre-financing that takes place.
Land control, permitting, Power Purchase Agreements. Before we pick up a pencil, we're gonna make sure we have all of these things in place. It's construction, really ready. The supply is in America. We're not relying on tariffs or trade or implications of getting the production capacity in the United States. It's already there. We're working with top-tier developers and sponsors, organizations that have built gigawatts, hundreds of gigawatts of these projects in the past, reputable and experienced financing partners, and most importantly, we have a Power Purchase Agreement signed with an investment-grade off-taker contractually supporting revenues over the long term of this project.
At that point, we look to participate, and what makes us unique is we can participate across many parts of the financing structure, from the construction to the tax equity bridge financing as the sponsors get tax equity done for these projects, to the term out. The term out could be a five- to seven-year mini-perm or a longer-term financing. We're a unique player that can support any financing in these structures. Broadband Infrastructure, a rather new portfolio as well, where we've seen 85% growth over the last five years. This portfolio is split generally into three buckets. I would say 50% plus is data center and the investment in data centers we've seen in this country. 35% in broadband fiber and cable, and the rest, about 15%, in cell towers. These are critical and essential sectors to the rural economy.
Enhancing fiber service, broadband infrastructure, cell tower coverage. It's really to support the growing needs of digitization in America. Again, these are different loans than Farm & Ranch. These are larger exposures. We underwrite these loans on a enterprise value basis, focused on the strength of the borrower being able to generate cash flow in the markets over the long term. Expertise, right? Again, this is what matters. The individual managing this portfolio spent 25+ years in the telco industry, knows all the financial players in the market. We've onboarded critical underwriting resources and also have credit approvers that have been and understand this market holistically. Again, we focus with the right counterparties. We want to be in syndicated credits where we're relying and partnering with organizations that know these markets and underwrite the credit risk, reputable agents that structure these deals.
We continue to model these deals just like Corporate AgFinance, quarterly, annual, make sure we understand what's transitioning in our portfolio. From a data center perspective, very similar to Renewable Energy, top-tier sponsors and developers, and make sure we're partnering with off-takers that have investment-grade profiles to be able to support the length of the data center life cycle. Our risk profile remains very strong, 97%, and frankly, we get some of the best returns in our portfolio in this segment. You know, I mentioned this earlier, but you don't go today without discussions on data centers, just given the energy demand this market is driving in our country. Estimates of $2.5 trillion-$3 trillion in data center investments over the next five years just in the U.S.
Clearly AI-related, but cloud computing, digitization, every organization, every individual is putting their data in the cloud. That's driving the need for data center investments. Clearly, the spin is a big driver of the growth we've seen in our portfolio over the last one or two years, and debt financing has been critical to get those projects up and running. In fact, $1.8 trillion of debt financing over the next five years is expected. I want to highlight one thing that's unique for us here, as you can see, there's three components of debt financing, bank debt, ABS or asset-backed securitization, and private credit. We have relationships across all three of those markets and have the ability to support financing if it fits our box across all three of those markets. Risk parameters focus significantly on structure.
The significant majority of our transactions are with the four investment-grade hyperscalers, Meta, Amazon, Google, and Microsoft, and that's extremely important. These hyperscalers sign take-or-pay type leases for 15, 20 years that support the revenue of these projects to cover debt and interest and amortization. We look for strong developers that understand the market and can ascertain products and build these data centers efficiently and effectively. While this is a project finance deal like renewable energy, it's much easier than those types of project finance. This is building a shell. They're building a warehouse. Once that warehouse is built, the hyperscaler is responsible for the servers, the chips, the equipment, the power, the water. It's a very fairly easy project finance structure, but again, our focus is partnering with the right relationships that know this space.
What gives us comfort in the data center market, and there's been talk about a bubble. There's a ceiling in this market, and the ceiling is power. There's not enough power to meet the trillions of dollars needed for data center growth. Currently, data centers have very, very low vacancy rates. This is a not build it and they will come strategy. We don't partner that way with the organizations. We are partnering with organizations that need data centers, and once it's operational, it's generating cash flow off that data center, ultimately the hyperscalers. In the future, I think what's going to be a ceiling here is water, and location. Not in my backyard. You're seeing more and more communities pressuring data centers to go elsewhere. I think that will continue as we see so much investment in the data center space.
Our ultimate risk here is the ability of the four investment-grade hyperscalers to cover their debt service. The difference here between the dot-com bubble is they're already generating revenue and cash flow from these data centers. That was different back 25 years ago, where organizations were laying dark fiber in the ground, fiber not lit, and had no cash flow support to support that investment. The last thing I'll conclude here is we have no exposure to software. We do not finance AI labs that have no cash flow generation, and we're not supporting the semiconductor industry. We are purely focused on the construction of the data center. A quick overview of the data center, data center project life cycle. Again, a lot of pre-financing is done.
We want to make sure before we pick up a pencil, the master lease agreement with an investment-grade hyperscaler is in place. Top-tier developers and sponsors, they know what they're doing and are partnering with the right financial organizations that syndicate and structure these transactions. Again, a unique player. We can finance across the data center life cycle from construction, which is typically short-term financing, one-two years, to term out, which initial financing could be five-seven years or once it's fully stabilized, asset-backed securities. In fact, we've bought into a couple ABS tranches over the last 3 months to broaden our aperture in terms of supporting this opportunity set. Many options for us to participate in growth of the data center throughout its life cycle. I'll finish the market and liquidity discussion with our Wholesale Finance market.
It's a very unique and important product we have as a secondary market. The customer set here is large investment-grade counterparties. I want to talk a little bit about that 0% CAGR growth because that does jump out compared to our other markets. I'm gonna, you know, go off of what Brad said earlier. We deploy capital on a risk-adjusted basis. We want to deploy our capital to support NES dollars, but at times, if the risk return does not make sense, we are not going to deploy capital. Why this is important, especially for this market, is these are very large, very strong investment-grade counterparties.
There are times, especially over the last 18 months, where we've seen investment-grade credit spreads at historical low levels, and that may cause us to pause because we're not going to get the risk return we want by deploying capital. We're seeing growth, significant growth in other markets, and we're redeployed to that space. It's a strong focus of ours. I'd also say in 2024, which drove the significant growth from 2023, is we were renegotiating and working through an enhanced facility with one of our largest counterparties. It took some time, but we finally closed that at the end of 2025 and started to see fundings and incremental growth at the end of 2025 and into 2026. In fact, last week we closed a $1.5 billion facility with another large insurance counterparty.
The risk profile here is extremely strong. Like I said, our counterparties are investment-grade, large counterparties and insurance companies. Second, our facilities are secured on an over-collateralized basis with eligible assets, either Farm and Ranch loans or Power and Utilities loans. Overall, our primary source of repayment is a strong investment-grade counterparty. Our secondary source of payment is the secured assets that we know very well and are very strong. One thing that's very interesting about this space is it's very scalable. We can put on $1 billion of funding at very accretive NES dollars in returns without adding any individuals and without adding any infrastructure. We've created a very scalable and efficient model, and that's what gives us excitement as we see growth opportunities in the future. A few business drivers.
Very limited supply of products in the market, especially for the markets that we serve. There continues to be strong interest in the asset class from insurance companies really to match the farmland with their annuity liabilities. Our secured facilities at times can be a very strong relative value for these organizations. They compare us to what they can get in the general unsecured bond market, and given we're secured, we can oftentimes be more competitive in price, and that drives more relative value from us to them, increasing our funding opportunities. Before we take a quick break, I wanna conclude our discussion this morning with a few comments. You know, first, we talked a lot about our 2019 vision. You know, $40 billion by 2028. You know, last year we saw accelerated business growth in 2025.
Grew the fastest we've grown as a company since our inception, $3.8 billion. $2.2 billion in the fourth quarter alone. This is across all markets and all products. We've maintained discipline in finding the right deals, pricing to market, and making sure our risk-adjusted returns are appropriate. We've seen so many deals in the market, frankly, we've had to turn away a lot of them. We don't have the capacity or resources to be able to continue to support them, but monitor them appropriately. Frankly, that growth hasn't slowed down in 2026. Given all these recent dynamics, the market tailwinds we see, the competitive advantage we have as an organization, we're well-positioned to exceed this goal.
We're going to take a quick 10-minute break, I mean, and then we'll continue with Matthew Pullins, our new Chief Financial Officer, to introduce himself, talk about his perspective of Farmer Mac as he leads our finance function. We'll regroup in 10 minutes.
Hi, everyone. We'll get started in about one minute.
Well, good morning. It's a pleasure to be here with you, and thank all of you for attending and those of you on the webcast for being with us here this morning. It's also a pleasure to be hosted by the New York Stock Exchange. I am Matt Pullins. I am Farmer Mac's Chief Financial Officer and Treasurer, and I joined Farmer Mac just a few months ago in December of 2025, following nearly two decades of experience in corporate finance and capital markets at a very large commercial bank. My background, however, is deeply rooted in agriculture. I grew up on a family farm in Ohio and remain actively involved in the family farming operation today. That foundation has given me a profound level of respect and understanding for rural America and the people who call it home.
I've seen firsthand how access to capital is able to strengthen both the agriculture and rural infrastructure, economies and sectors within rural America. I look forward to being able to take this lived experience and been able to benefit not only our business here at Farmer Mac, but most importantly, the borrowers and economies across rural America that we work with on a day-to-day basis. I'm honored for this opportunity to bring together my corporate finance and agricultural backgrounds and experience to lead the finance function at Farmer Mac. In this role, I'm committed to ensuring that we continue to provide the vital liquidity that supports the growth and prosperity across rural America, and while we also be focused on serving as effective stewards of your capital invested in our business.
Now talk a little bit about my perspective of Farmer Mac as I became familiar with the organization this past fall in evaluating the opportunity at Farmer Mac. There were three things that stood out about the organization that really caught my attention and made me excited about the opportunity to join the organization. First is the mission, providing vital liquidity to rural America. I see the significance and importance of that both from my lived experience as well as from where I stand today in understanding the need for us to provide this service to borrowers and communities in rural America. The second is the significance of and the historical consistency of growth from a financial standpoint that Farmer Mac has exhibited, particularly over the last eight years.
The third is the significant opportunity for continued growth in our various sectors into the future. We sit at the cross-section of very exciting areas of the economy, food, agriculture, energy, digital connectivity within rural America, and all of these provide significant opportunities for growth, and I couldn't be more excited to be part of that growth path going forward. We'll talk about all three of these points as we get into the presentation here this morning. One of the most notable points about our historical performance is the consistency of business growth. As you see here from this slide, we've grown our outstanding business volume at an 8% compounded annual rate since 2018.
Notably, Farmer Mac's business has evolved to the changing landscape in the rural economy, and in recent years, the growth has been, the composition of growth has been more tilted towards some of our newer segments, including the Broadband and Renewable Energy sectors. This has been an important component of being able to grow business volume, but also a significant contribution to the expansion of Net Effective Spread, which has grown from 91 basis points back in 2018 to 120 basis points for our average in 2025. Now, this consistent growth and outstanding business volume is the underpinnings of the consistency of the growth in revenue and core earnings that we've exhibited over this time period.
We've experienced a 13% growth in compound annual growth rate of revenue and nearly 12% growth in core earnings over this period. I want to talk about three specific components or drivers of this growth that are unique to Farmer Mac and I believe are differentiating factors from other institutions in the financial services sector. The first is the way that we manage interest rate risk and the way that we fund the balance sheet. We use interest rate management techniques that position us to be largely agnostic to interest rate levels and market rate movements in the future. This positions us for consistent revenue generation through the market cycles and over the course of time.
We achieve this outcome by matching our asset purchases with debt and a combination of debt and financial derivatives that have duration and convexity characteristics that are similar to and offsetting those of the assets that we bring onto the balance sheet. This mitigates the impact of future interest rate movements and again enables us to generate consistent revenue streams through the course of time, regardless of market conditions. The second unique advantage for our business is that we are not overly dependent upon fee revenue. The vast majority of our revenue is generated through interest spread. In fact, through year in, year out, we typically generate less than 5% of our revenue from fee-based sources.
What this means is that at any given point in time, embedded within our balance sheet is a significant component of our future earning streams. We're not overly dependent upon continued transaction activity to generate fee-based revenue to grow consistency in our earnings over time. In fact, to take a look at where we ended 2025, our balance sheet at the end of the year contained within that asset and liability profile projections of Net Effective Spread in 2026 that would actually exceed the amount of Net Effective Spread that we generated in all of 2025. Let me state that a little bit differently just to drive the point home.
We began the year with our balance sheet positioned to have greater earnings or greater revenue than the prior year before we ever considered purchasing a single asset in the current year. This is a significant and powerful advantage for our consistency of financial returns to you, our investors, over the course of time. The third is the efficiency of our business. As you can see, from this chart, we have very consistently generated operating efficiency at less than 30%. We spend less than 30 cents to generate each dollar of revenue, for our business over the course of time. This is something that we manage very closely, and we certainly intend to carry into the future as we pursue future growth opportunities.
This gives us the luxury of being able to invest in our business while also being able to grow earnings and returns for our investors. That enables us to position for accelerated growth and future opportunities down the line without having to sacrifice our financial returns in the period of our investments. We again view this efficiency to be a powerful advantage as we look to future growth opportunities down the road. Let's talk a little bit about funding. Brad and Zach both touched on this a bit, and I want to spend a minute getting into a little bit more detail around our funding advantages at Farmer Mac. This is one of our most significant strategic advantages. Optimizing funding strategies is an essential component of our consistent revenue and earnings growth.
Our government-sponsored entity status affords us the ability to access the debt capital markets at very favorable levels. We're also able to do this consistently through a variety of market conditions. As shown on the chart on the left-hand side here, you'll see that our debt spreads are very consistently trading significantly within the levels of AAA-rated corporate debt. In fact, in periods of stress, our levels of debt trade at even greater advantage to AAA corporate debt. This is a significant advantage when we look at our ability to operate our business through all market cycles.
To give you a real live and current example of how this is playing out as an advantage for our business, you may be very familiar with in recent weeks the combination of concerns about private credit and geopolitical uncertainty has caused investment-grade corporate spreads to widen. Our spreads have largely been unaffected in this time period. In fact, earlier this week, we held debt auctions that went off at very favorable levels. We auctioned five-year debt at only 4 basis points wide of our U.S. Treasury benchmark rates and 10-year debts at 14 basis points wide of U.S. Treasury benchmark rates. These are levels of consistency of attractive funding costs, and it creates a powerful advantage for us to drive spread and consistency of revenue growth into the future.
In addition to being able to access the markets at very favorable levels, we very purposefully remain nimble in managing the balance sheet, which enables us to accommodate investor requests for debt to meet certain investment objectives that they may have. This enables us to deepen our relationship with our very important debt investors across the country. In recent years, we've made it a strategic priority to deepen our relationships within our dealer network and broaden our debt investor base, which has enabled us to increase our investors in a broad array of categories and types of investors around the country. Through these efforts, we've diversified our investment base, and these investors routinely provide reverse inquiries to us to ask for opportunities to purchase our debt.
In fact, today, between 30%-40% of our debt is issued through reverse inquiry. This is where investors are coming to us through our dealer network, requesting to purchase our debt. We also view this as a very powerful advantage and an indication of the strength of our company and our access to low-cost, stable funding through market cycles. In addition to the access to the debt capital markets, our liquidity portfolio is an essential component of our funding strategy. We opportunistically add liquidity through our investment portfolio when market conditions warrant doing so. This enables us to have opportunities to access liquidity via the investment portfolio should market conditions change and issuing debt become less attractive.
This is a critical asset for us to be able to remain open for business and continue to provide the vital liquidity to our borrowers through all market cycles. Being a mission-driven firm, we are actively striving to balance the combination of providing liquidity across our business segments with generating our return objectives relative to invested capital. Risk-Adjusted Gross Return on Capital is a metric that we find very effective at doing so. Unlike many businesses, and this is a key differentiator for our firm that Brad touched on briefly earlier, we are not operating our company based on target portfolio levels or compositions across our businesses. We are evaluating each asset purchase opportunity on its own merits, specifically looking at its risk-adjusted returns relative to the capital that is required for that asset.
We find this to be a very effective way to manage our business and gives us a very consistent way of managing both risk and consistency of return through market cycles. However, a second-order effect of this way of approaching our business is that it does lead to the potential to see shifts in asset composition in our business over time. As an example, Zach talked just a few minutes ago about our Wholesale Finance products. The composition of our balance sheet in Wholesale Finance products has declined in recent years for a variety of reasons, not the least of which is relatively tight corporate spreads that have given our borrowers alternative ways of generating funding.
As we see corporate spreads widen, we often see increased interest in our wholesale funding products. This is a great opportunity for our business. As you can see on this slide, the returns relative to risk in our wholesale funding products are quite attractive. However, the gross spread on these products is well below the average for our portfolio, so it does provide the potential for dilution of our margin on a percentage basis. However, it is very accretive to our return on capital, and that is the essential metric that we are using to operate our business.
As an aside, I would point out that we do see opportunity as the investment grade spreads do widen because these products are often viewed as alternative to those markets. It's a very exciting opportunity for us in the future is to be able to provide this essential liquidity to borrowers when other capital access sources may not be as attractive for them. It's attractive for us on a return basis, but also, as I mentioned on the previous slide, our funding advantage tends to be the greatest in periods of market stress, and that's where our borrowers are going to feel it in terms of investment grade spreads.
That not only gives us opportunities to grow volume in these types of products but also gives us some pricing leverage while still being able to price inside of the investment grade markets. Really a great outcome for us, and we'll be monitoring those market dynamics very closely into the future. Our differentiated approach to credit underwriting and portfolio management is foundational to our business. As Zach mentioned, we've taken a very thoughtful approach to acquiring specific expertise in our variety of lending segments, particularly as we have grown into new areas of the business, specifically broadband and renewable energy infrastructure. This new expertise has positioned us to be very effective at underwriting these assets and enable us to continue to operate our business with an effective risk management framework that you've come to know at Farmer Mac.
This dedicated first-line expertise is also paired with a rigorous second and third-line risk management framework. This approach combines to enable us to achieve very attractive risk-return dynamics through market cycles as well as stable portfolio long-term portfolio stability over the course of time. A live example of our approach in this space can be observed within the California Farm & Ranch portfolio. You may very well be aware that the industry has observed and felt some level of stress in California Farm & Ranch assets in recent years on account of limited water availability. Our underwriting and portfolio management and credit expertise in California has been focused on the understanding and analysis of water availability in our Farm & Ranch portfolio.
That was done initially at the underwriting and has carried through the process of managing the portfolio and the credit exposure that we have in that space, through the course of time that those assets are on the balance sheet. This approach positions us to have a better outcome than many of our peers, and we believe that that is ultimately reflected in the performance of our California farm and ranch portfolio, which has been industry-leading in our view. We maintain a strong credit profile as evidenced by our non-accrual assets being only $238 million as of the end of 2025.
Factors benefiting our credit quality include the composition and nature of our business, our underwriting standards, portfolio composition, and arguably most importantly, the level of credit expertise we have in the company to be able to manage the assets and the risks within our portfolio. While non-accrual assets have increased in recent years, they remain at relatively low levels. We ended 2025 with non-accrual assets at 1.4% of total loans and less than 1% of total interest-earning assets. Moreover, our infrastructure assets comprise a proportionately small portion of our non-accrual assets. Only 6% of our non-accrual assets were in the infrastructure space at year-end, while 35% of our outstanding business volume was in the infrastructure business.
Our allowance for credit losses needs to be evaluated in the context of the risk of our business and the composition of our portfolio. We look at our allowance in the context of our historical loss experience, and we are comfortable and believe that the allowance as of year-end adequately reflects the expectations of loss and the risk within the portfolio at that period of time. On the next slide, we see the performance of our credit metrics relative to a number of agricultural lending peers. This is a further indication of the strength of our underwriting, portfolio management, and overall credit performance within the agricultural lending sector.
On the left-hand slide, you can see that we rank the top amongst our peers in terms of provision for credit losses as a percentage of outstanding assets through the last two years. On the right-hand side, the charge-off ratio of incurred losses for the last two years, we rank second. We believe that the portfolio composition, our focus on secured lending, the composition of our asset portfolio, and various risk characteristics of our business are significant contributors to this outstanding credit performance, and that we will continue to be a leader in credit quality in the agricultural lending space into the future. Now, finally, I want to spend a moment talking about our firm-level capital allocation and returns.
We take a holistic approach to capital allocation and capital management, balancing the pursuit of our mission, providing vital liquidity to borrowers in the rural economy, agricultural and infrastructure sectors, with ensuring that we're generating an effective return on that capital, managing risk within our business, and positioning our business for shareholder returns. The first part of our capital management process begins with stressing our capital levels to ensure that we are adequately capitalized to remain open for business through all market cycles. We look at our capital levels projected in periods of market disruption to ensure that we have adequate capital available. This is an essential alignment between our business and its vital mission.
We look at methods of generating capital to ensure that we have the ability to fund our business and take advantage of the growth opportunities in front of us. The generation of capital comes in three forms. First and foremost is the organic generation of capital. As we generate earnings, we purposefully build our capital levels to continue to grow our ability to increase the amount of liquidity that we provide to our borrowers and grow our balance sheet, grow our revenue, and grow our earnings. Second is we do aim to issue capital when market conditions and opportunities present themselves.
As has been done in the past, we will feature preferred equity issuances as the primary method of doing that. Third, we look at opportunities to manage risk on our balance sheet and optimize capital by transferring risk from our business into the capital markets. What this enables us to do is to be able to transfer risk and therefore free up capital on our balance sheet, which can then be redeployed in additional asset purchases, additional liquidity provided to our borrowers, and ultimately, acceleration of revenue and earnings for you, our shareholders. Now, this positions us to look at opportunities to return capital to our shareholders, and I'm sure that's a key point that's on your mind here today.
As we have in the past, we will continue to feature dividends as the primary mechanism for capital returns. We are very proud of the fact that we have consistently grown dividends through time. This year marks our fifteenth consecutive dividend increase, and Brad touched on the over 14% annual growth rate of dividends over the past eight years, and we aim to continue to grow our dividends into the future. We will also look at opportunistic ways of returning capital through share buybacks should market conditions and overall capital levels warrant doing so. With that, would like to turn the podium back over to Zachary to give us a few final thoughts about a look into the future for Farmer Mac.
Thank you, Matthew. We spent the morning talking about our last six-plus years, the strategy of Build for Growth, building Farmer Mac into a more meaningful player in the sectors we serve, ascertaining very strong teams, expertise that really know the markets, know the relationships, know the risks. Frankly, some of the best teams I've seen. Also talking about the market tailwinds that we truly believe are going to provide greater opportunities for Farmer Mac into the future. As we look to our next chapter, we're going to evolve from Build for Growth to drive to scale. Leverage what we have built to become a more efficient, more effective, scalable liquidity provider to the markets we serve. I view this in four key themes. First, accelerate mission liquidity. A strong focus on expanding market share.
The last six years we're building infrastructure. We want to focus on expanding market share. Leverage the market tailwinds we've talked about to be a more efficient and effective liquidity provider in these markets. Deepen our market penetration in some of our foundational segments. I spoke a lot about Farm & Ranch and Power & Utilities. There's tremendous upside there for growth and us enhancing our market share as a critical secondary market. Product innovation will always be on our radar. Thinking about things such as participating in asset-backed securitizations, leading potentially asset-backed securitizations, making our Wholesale Finance product more efficient. How can we drive more liquidity through product innovation? New sectors. Our Build for Growth strategy was built on coming into new sectors. We still have sectors in our charter that we're not meaningful players in. Rural homes, other forms of Renewable Energy such as biomass and hydro.
We will do this methodically, the same way we enter all our other sectors. Expertise, scalability, understanding the model, and making sure we're doing right for our mission and our organization. We have a very strong brand, and it's expanded significantly over those last six years, but there's more we can do. Broaden our stakeholder outreach to trade and state banking associations, other advocacy groups. Describe what the secondary market's doing to support these critical sectors and enhance their relationship in telling our story. The second box is operational excellence, and this is a critical component to achieving scale. Frankly, it's a new area of focus for us. We were not servicing and operating our own loans until 2021.
Again, this is part of Build for Growth and how can we take that expertise that we've built and scale it into the future. Sunset legacy systems. We're already doing that now, but we want to do it very methodically, right? We're not going to go invest in massive platforms that take five-eight years to build. We're going to do it piece by piece and making sure we're thinking about our mission and scalability while we do it. Leverage new technologies to increase automation, and frankly, this is going to be a lot of AI. How can we leverage the improvements in the AI market to read documents, input information, talk to our customers, analyze complex credit agreements? This will allow us to create efficiencies and have our employees focus on higher and best use opportunities.
Integrate our infrastructure more holistically across the market which we serve with our customers. Have the ability that for our customers to enter information into their platforms, press a button, and that information gets transmitted to the secondary market for quick and efficient assessment. You know, Matt spent a lot of time on this, but as a financial organization, maintain fortress financial focus. You know, discipline to risk management. We're evolving our risk management framework, and as markets change, our risk discipline's going to change. Our funding and balance sheet management I truly think is best in class. As Matt mentioned, we want to maintain consistency. We want to maintain stability in revenues. We don't not want to take a position on rates. We are very confident with our current risk posture.
Where there's a change in interest rates does not impact our organization, and that's very important for us going forward. Invest appropriately, and everything will be done on an appropriate return on invested capital. As we look at transactions, as we invest in people, as we invest in infrastructure, what is the return we're retaining as that capital is deployed? Then capital composition, and this is very important for us, especially given the growth that we've seen and expect to see in the future. We've executed seven farm securitizations over the last five years. We've developed the investor market for those securities. We're now evolving into broadening our aperture in Credit Risk Transfer. How can we make a more scalable product? How can we make a more efficient product for Farmer Mac and our customers and our borrowers.
We're in the process of assessing that currently, and we're very optimistic in the near term we'll be rolling something out. Lastly, a scalable enterprise expertise. Continue to attract the right talent, continue to build the experience in the organization so that we can appropriately assess the markets and deliver liquidity in the future. Leverage data to make decisions. We have a tremendous amount of data in our organization, especially Farm & Ranch. How can we leverage that data on an ongoing basis to assess products, to assess decision making, and ultimately make it quicker and more efficient for our customer to sell us a loan? Continue to enhance stakeholder engagement through confidence and consistency and transparency. Maintain discipline and effective spread that results in high quality core earnings, and elevate our brand in new and existing markets.
With this Drive to Scale strategic vision, we believe we can scale our business meaningfully through 2030. We believe this results in $50-$55 billion of outstanding business volume, representing 8%-11% compound annual growth rate. This growth will remain diversified across all our market segments, with potentially increased growth in agricultural finance, highlighting the market tailwinds we see in Farm & Ranch and the opportunities we see in Wholesale Finance. Strong revenue growth of 10%-12% supported by the diversified business model, but a strong focus on risk-adjusted return. We will maintain expense discipline of 28%-30%, tactically investing in critical infrastructure to drive and scale our business while ascertaining critical resources to make sure we're on point in the markets and serving our customers appropriately. I firmly believe these are attainable goals.
It reflects our ability to perform at a very high level, increasing our value and shareholder return. A few closing remarks before we open it up to Q&A. I'm excited to be at this organization, and I'm truly excited at the opportunities we have in front of us. We've built a tremendous team. We have great expertise, and we have a unique business model. We're a secondary market with a focus on supporting agriculture and rural communities. We're seeing accelerated volume growth. We're increasing revenues at appropriate risk-adjusted returns and scalability through operational leverage. Ultimately, this is gonna drive shareholder value. We have a unique operating model with many competitive advantages. I hope we've articulated some of those today to you.
We have strong market tailwinds ahead of us, from increasing the need for food, fuel, and fiber on a global basis, and in fact, the United States has some of the most productive farmland in the world, to the significant demand for energy across this country, to us leveraging new technologies and scalabilities to create a best-in-class infrastructure for deploying liquidity. We have very strong line of sight to achieve the $50+ billion of volume, and as Matt indicated, very resilient revenues through the cycle. Continue to demonstrate robust risk dynamics and balance sheet management as we continue to grow. Frankly, I truly believe Farmer Mac is a unique investment opportunity, an access to participate in critical and essential sectors that support the U.S. and frankly, the world. An organization that has demonstrated above average shareholder returns and consistent shareholder returns.
I think all of us here in this organization for Farmer Mac are very excited for our next chapter, which is Drive to Scale. Frankly, we're just getting started, so very excited to see where this goes. Thank you for joining us today. We appreciate your interest in Farmer Mac. Please give us a couple minutes to set up for Q&A, and we'll take some questions.
While we're setting up the chairs, I think it appropriate just to make sure that everyone understands who's here. You've all met Jalpa Nazareth, I assume. Why don't you stand up, Jalpa? Jalpa has very ably led our IR function for many years here at Farmer Mac and is a very integral part of the team. She also, over the last year or so, has also stepped in and picked up some responsibilities that I would say are akin to a chief of staff in helping organize and lead our executive committee. Geraldine Hayhurst, please stand up. Geraldine joined us about six months ago. I'll let her introduce herself, but she comes from an incredible background at Freddie Mac and other places.
Geraldine represents, as is the case with Zach and with me, a very, very thoughtful continuity in management and leadership at Farmer Mac. She succeeds Steve Mullery, who is actually retiring next month, and who served as our general counsel for many years. Steve was an employee with Farmer Mac for more than 25 years. Maybe just a quick introduction, Geraldine.
Sure. Thank you again for being here. I spent the bulk of my career at Freddie Mac working for the multifamily division, helping develop their financing products, which led to the DUS Program. Prior to that, I spent time at law firms, Tremain Sterling and Clifford Chance, and the SEC for a couple of stints. Got to see both private and public. Most recently with General Counsel for a multifamily lender, helping them move their agency business into a private lending model.
Why Farmer Mac?
Oh, gosh. Mission. I found that after spending so many years with the North Star of mission.
It was important to me, and then just being able to join the management team here to move the company into more commercial mindset is an opportunity I couldn't pass up.
Brian Brinch is of the executive committee of Farmer Mac, the longest-serving employee, over 20 years. Brian, I think knows more about every aspect of Farmer Mac than any person in the organization. He's worked many jobs, but that makes him particularly well-suited to take the leadership role in the all-encompassing enterprise risk management at Farmer Mac. He represents the fifth member of the management committee at Farmer Mac today. Brian, any reflection from you?
Brian, here's a mic.
Thank you, Brad. Yeah, and thank you for being here all. It's great to see you all here. Yeah, I don't know where to start, Brad. I've worn so many hats at the company. I'd say, you know, though, looking forward, you know, what we're very excited about is sort of the continuing evolution and maturation of the company, right? What I represent as part of that is sort of that discipline and rigor and maturity of risk management at Farmer Mac. We're building a team. We are encompassing everything from credit risk, financial risk, cyber security, information security, compliance, the whole gamut. It's a broad expanse, which makes it a lot of fun. So thank you.
Good. Yes. Charlie.
I should ask you a main question. You have tremendous aspirations, which I'm tremendously respectful of. In the beginning of your introduction, Brad, you talked about, all of you really talked about the challenges that are happening in the agricultural economy. The stock market is sort of maybe it's pricing in some of those challenges that we don't really understand as investors. Is there some quantification that we're not understanding that may be affecting the earnings outlook of the company that we're not seeing in terms of maybe it's oil prices, agricultural product prices, and other variables that are potentially impacting the secondary market that we should be cognizant of? Or is it just irrelevant right now? I'm really concerned because the stock is now. I'm not going to use the number it's at today, but whatever.
It's not pricing in these aspirational opportunities at all. I'm very respectful of what you've been building. I mean, I've been there for a couple of years, so it's not like I'm a newcomer to your story.
Yeah.
Tell me what you're thinking, please.
Sure. Well, we can look under every rock, and there's nothing to be found beyond that which we described. This is not the first time this has happened with American agriculture. This happened during the first Trump administration. You may recall with uncertainty about trade with China, limitations on exports to China. There was a lot of negative headlines put out about the future of American agriculture, the certainty and uncertainty of American agriculture. There were ultimately discretionary payments from the government, which now we're seeing for a second time. We could go back to 2012 and tell a similar story. We could go back into the aughts and tell a similar story. American agriculture does tend to be cyclical, but the cycles are long enough that we tend to forget them.
I'm not dismissing everything that is going on today as being irrelevant or something that we're not concerned about. We have seen most of this before, Charlie. I would also point out that we are a much more diversified company today, able to grow many areas with identifiable tailwinds that are providing a lot of additional momentum to us. Zachary, I think it'd be good to add your perspective on this.
Yeah. I don't want to downplay the stress in parts of the agricultural economy. I think that's important to remember. Parts, right? I mean, there are components that are struggling. The Delta, rice, cotton, absolutely. You hear a lot of articles about corn and soybean. If you look at a corn farmer, the yields and cash flow that they brought in last year, just given the significant export demand, is strong. I think the story needs to be told on a diversified basis. I've even got a lot of questions on what's happening in the Middle East and how is that going to impact agriculture. Well, it's multifaceted, right? Higher oil prices leads to higher ethanol prices, which leads to higher demand for corn, which leads to higher corn prices.
The other end of the spectrum is higher oil prices impacts inputs and inflation for farmers. There's multiple components of this diversified market. I think understanding the cycle and looking at the historical results of Farmer Mac that we've talked about today, going back to 2018 when we already were going through a cycle in agriculture, showing our acceptable loan rates, showing the increase in volume and no deterioration in those acceptable loan rates, and continuing to demonstrate the fact that we are unique, we're diversified. I can't stress this enough, the farmland is the best asset in the agricultural market space. Operating lenders are struggling right now given low commodity prices and high input prices. I think it's us telling that story and transparently describing what's all going on in the agricultural space because it's not all equal.
Matthew?
Just to add on to your last point there, Zachary, I think this is one of the really important points in terms of understanding our business, which is where we operate within the agricultural lending space, and that is farmland. While the stress in the farm economy is real, I've seen it, I've lived it, I've experienced it, I'm here to tell you that it is absolutely happening today. That stress, as of yet, has not translated into a decline in farmland values. What that means is that our collateral that is securing our assets continues to be priced at very favorable levels, and that enables us to be very confident in the portfolio performance going forward. Additionally, as Zach mentioned, we're not in the business of providing operating loans to farmers.
However, as liquidity stress increases due to poorer commodity prices and financial stress in the row crop sectors, particularly in the Midwest, that does present the possibility for operators to tap equity within their farmland investments. That does create potential for new business for us as farmers leverage the assets in farmland to generate cash to operate their business through this challenging cycle.
I think that the fact that that is happening some reinforces the idea that agriculture can be very cyclical because you might say, well, if you're tapping the equity in your land to subsidize operations, you can't do that forever, right? That's a bad business decision. The majority of the farmers out there feel very strongly that they have seen much of this before, and that this will turn for reasons that Zachary alluded to and others.
Can I just follow up one last thing? In your financial presentation, you have aspirations for Forty by Forty, you know, $40 billion in 2020. I should live so long. I love that. I actually love that. The question I have for you, translate that into what the earnings power that you imagine would you aspire that to be in a per share quantity equivalent. What are you thinking about? What do you aspire that
Want to start, or Matt?
Matt can do it.
Well, I can give you a couple metrics to kind of guide you to that answer. Looking at $40 billion by 2028, and Zachary talked about the potential to eclipse $50 billion by 2030. We look at what the revenue outlook is for that. We ended the year 2025 at Net Effective Spread at 1.2%. There are some considerations there, as I mentioned, around portfolio mix, and we need to take that into account as where the growth comes from is a possibility that margin comes in a bit, based on chunky assets, in our Wholesale Finance space being significant contributors to that growth.
You could think of 1.2% as being a guide and then back that off based on assumptions around Wholesale Finance growth in the future. We aim to, and we will deliver, consistent efficiency in our operations, 30% being the ceiling of targeted efficiency ratio. We believe that we have adequate capital at this point to generate that growth over the course of time, notwithstanding my reference to the potential to issue preferred equity. That gives you some indication of how to think about translating earnings into per-share basis.
I think we actually follow up nicely on that last comment. I mean, one of the takeaways today, I think, is just how much you guys have leveraged your charter and the creativity that you guys have brought in doing that. I guess two questions. One, are there opportunities to leverage the charter even more and how you guys explore that? And two, I mean, as you talk about the growth, any limitations to your leverage, I mean is the financial leverage, and how that kind of plugs into the enterprise risk management.
Yeah. Yeah. Maybe I'll talk about the charter and turn it over to Matthew on-
Yeah
on the financial component to that. You know, I did highlight that there are components that we haven't considered in our charter. I mean, rural homes is a massive market out there, and there's limitations on Freddie Mac and Fannie Mae. In fact, we're talking to them on partnering together in terms of backstopping liquidity as we grow that space. Renewable energy, you know, we focus predominantly on solar and a little bit of wind, but biomass, hydro, geothermal. If nuclear is ever lendable, that's an opportunity we can also consider. I would also just highlight, generally speaking, in our newer markets, we're still a really small player, right? When you think of the size and scale of the broadband infrastructure data center market, the liquidity needed, the financing needed, in renewable energy, we're $1.5 billion or $2 billion, right?
There's significant opportunity for us to continue to grow those markets to be more meaningful in this timeframe. You know, an area folks when I talk about innovation, talk about markets, is how can we maximize our product set and our mission in all the markets we're able to, execute on in our charter?
With respect to growth and balance sheet leverage, given the significant growth opportunities in front of us, it really magnifies or amplifies the importance for us to be efficient in our capital deployment over the course of time. There are a couple things to take into account as we think about allocating capital. One, overall levels of capital. I talked a little bit about the consistency of our earnings, and so that gives us a level of confidence in terms of organic capital generation through the projection period that Zachary talked about.
The second is something that we've done in the past and we'll continue to look to do in the future, and that is utilize tools to transfer risk out of our business into the capital markets, which enables us to optimize capital efficiency within our business.
Oftentimes, there are a variety of ways that can be done, but what we've historically done of late, and most likely will continue to do into the future, is assets remain on our balance sheet, but we're able to transfer risk at a cost out to the capital markets, but the retention of assets and the retention of revenue streams relative to the cost of that risk transfer is favorable to us, and that frees up additional capital to recycle back into the process of purchasing additional assets, making additional liquidity available to our borrowers, and repeating the process over the course of time.
Two points I think I'd like to make about our charter. Zachary highlighted some areas where we may do a lot more. Underneath that statement of what additional we may do and which he provided an enthusiastic possibility on, there also needs to be the question, just because we may do it doesn't mean we should do it. Over the years, we've been very disciplined about, well, if we do do this, does this play to our competitive advantages? Specifically, is it not only permitted, but does it play to long-term competitive advantage in raising intermediate long-term capital at fixed rates, for example? Does it play to how our debt issuances are priced and how our margin objectives are structured so that we can make money doing this?
That pushes us into a lot of credit situations that might be the equivalent of triple B minus, double B plus, or in the case of those, wholesale facilities where there's very little capital required for it, up the credit spectrum into intermediate and high investment-grade credit. Do we have competitive advantages in funding it? Because we need to do it in a way that provides for the right risk-return result to what we do as well. Is it consistent with or creative to what we're doing today if we're going to do it in the future?
The other point, I would like to make about charter is that, I've been asked, Zachary is frequently asked, "Oh, don't you feel badly that you're so limited?" We've highlighted today some very positive diversification we've ever been able to achieve non-correlated across these business segments, which is very positive. What we have done is built institutional expertise. If we could do 100 things, would we build the same depth in institutional expertise specialization that we're able to have with 5 business segments? Probably not. We want to be the best at what we do. I don't view the limitations of charter as limitations. I view it as it focuses on things that we end up doing really well.
Good afternoon. Thanks for taking my questions. A couple of them following up on the NES comment and the margin outlook. You've mentioned that, you know, some of the wholesale financing, it sounds like it's picking up, which is going to have some dampening effect, but overall volume would be higher.
That's correct.
Earlier in the presentation, you also talked about pricing and some of the initiatives you have to go to a bit more market-based versus minimum return. If you could talk about how that's playing into your margin outlook for the future. The second question I have is on the risk transfer opportunities that you're discussing. If you could talk about the asset classes and loan sizes and other things that might apply to on your balance sheet.
Yeah, sure.
Why don't we start with Zach on that?
Okay. Yeah.
Yeah.
Yeah, from a pricing perspective, you know, we price to market, right? It, regardless of the price, it still needs to be appropriate from a risk-adjusted return perspective. Matt's comment on mix and the overall impact to NES percentage, it's important to understand where we're seeing growth opportunities from, right? Over the last three years, I think you've seen a shift to more of our higher NES percentage opportunities, broadband, renewable energy, corporate ag, in some cases Farm & Ranch, right? These generate higher NES percentage because that's what the market is expecting to pay on these transactions. When wholesale finance picks up, these are very strong double A-rated companies. It's easy to go out and understand, you know, where MetLife is funding. You can see what their general and secured bonds are funding.
That's a, you know, that's a data point in terms of how we have to assess our pricing. We're not going to go in and underprice for the sake of volume. It's not growth for any sake. It's growth for appropriate risk-adjusted return on capital, but we need to be cognizant of what are the prices in the market, what are the financial organizations structuring to clear the market from a pricing perspective, and ultimately, we should target that as a percentage as long as it impact or achieves our risk-adjusted return expectations.
As compositional shift happens and potentially a lot of opportunity in Wholesale Finance, Farm & Ranch, you could potentially see it happening in the NES percentage. I want to go back to a comment I made earlier. We can put on $1 billion of Wholesale Finance at a very, very strong NES dollar percentage and have zero expense associated with it. It drops directly to the bottom line. I would make that trade any day given the return on invested capital and the growth opportunities we see there.
To give you some perspective on the credit risk transfer. A key and essential factor in evaluating credit risk transfer opportunities is the market's understanding of the credit risk embedded within the reference pool of assets. We have an established track record in the Farm & Ranch space. We've been active in the senior-subordinate securitization markets for a number of years, and we have an investor base that is very comfortable with our underwriting standards, with the servicing process for those assets. That gives the Farm & Ranch loans is the optimal place to begin to evaluate other credit risk transfer opportunities mechanisms beyond the senior-subordinate securitizations that we've done in the past.
With that being said, we do not intend to limit credit risk transfers to Farm & Ranch assets into the future. We will evaluate opportunities, particularly in the infrastructure space, to be able to optimize capital and to manage credit risk, by using tools there to transfer credit risk into the capital markets. That is not something that we foresee doing as an initial step away from senior-subordinate securitizations that we've done in the past.
Great. This is Brendan McCarthy. Thank you for putting on a great event. I always like to look at the breakdown in NES revenue at the segment level. Particularly the treasury segment results have been outstanding in the past, I think, two or three years. Can you talk about your asset liability management structure there? You know, how that has driven the results and maybe your outlook, considering the current rate environment and your outlook for the future rate environment?
Yeah. As I mentioned, we're funding the balance sheet where we're matching duration and convexity characteristics between our assets and funding mechanisms. We're not necessarily matching on a maturity basis, but matching duration and convexity. What that enables us to do is to pick certain optimal funding points across the curve that enables us to pick up spread through our funding segment as we fund the balance sheet. That is largely market dependent. When I say that it's not market dependent in the context of rate levels, but it is dependent in terms of spreads relative to reference rates, where we trade relative to SOFR.
We do intend to continue to operate the treasury segment in a similar fashion in the future. The relative debt spreads to reference rates will be critical factors in terms of the amount of revenue that we generate in the funding segment going forward.
Got it. Just as a follow-up, what really drives that spread or impacts the spread?
To give you, it gets into a little bit of a technical answer here, but to try to simplify it as much as we can, we're looking at funding a particular asset with debt that matures prior to the asset maturing, and then managing interest rate exposure after the initial debt matures through interest rate derivatives. We're seeing the spreads of a shorter maturity debt instrument being priced at less than the spreads if we were to issue further out on the curve. The strategy is to issue debt shorter, protect our balance sheet through derivatives to manage interest rate risk, and then refund that debt in the future as market conditions and opportunities allow us to do so.
Thank you. This is Frank Libetti from KBW. My question, the Infrastructure Finance and Renewable Energy segments have grown fast over the past couple of years. It's on credit. What gives you the confidence that some of the episodic credit events that you've seen in the past quarters are not a signal of more of a systemic seasoning event? Then what do you expect, normalized losses look like in those segments?
Yeah, I'll talk a little bit on the credit, and Matt, you can give the comments on kind of our allowance and loss views. I think, again, first it starts with expertise, right? I mean, we're in the business of lending and credit risk. You're going to see migration. You're going to see, you know, some bumps in the road as you go forth and see a portfolio seasoning. But first and foremost, it starts about understanding the sector and having the expertise internally to partner with the right organizations, right? I want to make a point during the presentation that this is not Farmer Mac in isolation in these transactions, right? We're with the global financial organizations arranging and structuring and participating in these transactions. We look very confident in terms of the structure, the price, and the counterparties we're working with.
That to me is the foundation of assessing credit risk and making sure we're making the right decisions. I also think going forward is looking at the current acceptance rates of these portfolios. I think Renewable Energy was 97% or around there, same with Broadband. That's important. These are seasoning.
Right? Over the near term, given that we've only been in there for 5%, or five years, excuse me. That gives you an on-point indication of the credit portfolio profile of those segments, meaning we constantly monitor and update our risk profiles on a quarterly and annual basis. That's real-time. Why we wanted to show the credit profile of our peers, that's not just including agricultural peers, that also includes peers that are in infrastructure as well. What we try to disclose is the combination of giving a real-time view of our portfolio, given our ongoing monitoring, the expertise in who we look to partner with in these types of transactions, and a comparison of what other organizations have experienced in credit loss or allowance loss percentage versus where we are.
That's why we feel comfortable that, yes, we've seen some hits, but from a portfolio-wide perspective, we feel very good about where we're at.
From a CAGR perspective, you know, it has been a hockey stick, but when you look at it from an overall perspective, it's still a relatively small portion of the overall portfolio. I'd also like to kind of point to a comment that Zachary made during his presentation that despite that growth, we're a tiny part of the market, and we're able to be because we do not have specific allocation goals, we're able to be highly selective in what we're doing. Having people who have the expertise and the industry connections, banker to banker connections, allows us to reinforce that kind of selectivity.
Maybe just a quick point on your seasoning question. We did take a loss on an infrastructure asset in the fourth quarter. Actually, that was a provision. We didn't actually write that asset down. That asset is actually not in the same space where we are seeing a rapid growth in our infrastructure business. It was not a broadband asset. It was not a renewable energy project asset. Maybe just a bit of a distinction. That asset had its own unique story that really does not align with where we're seeing growth in that portfolio.
A final point that I'll give you just in terms of our confidence in the portfolio quality going forward is at the moment and for the foreseeable future, we intend this will continue to be the case. We are seeing a tremendous amount of looks at asset purchase opportunities, and that gives us the ability to be highly selective in where we're allocating capital, what assets we're bringing onto the balance sheet, and we believe that that's gonna be a significant factor in our ability to maintain a very high-quality asset portfolio into the future.
Jalpa and Bobby say that we have time for only one more question. Is there a last question today?
Thank you. Could you give a little bit more detail on the capital allocation framework again, and should dividends kinda grow along with earnings through the end of the decade? At what level do you get more aggressive on strategic repurchases?
The answer to your question on dividend growth is, dividends growing commensurate with earnings growth is a reasonable expectation or proxy for expectations into the future. In terms of the overall capital allocation framework, as I mentioned in the presentation, we first and foremost prioritize reinvesting in our business. It's an essential feature of our mission-driven business and alignment with the expectations set forth in our charter is that we continue to redeploy capital into our business to provide essential liquidity into the sectors that we support.
In terms of buybacks, that's something that can't be overly specific in terms of future outlook there, but it would be highly opportunistic in terms of where market levels and as well capital levels make it attractive for us to buy back shares. I would say just as a general comment in terms of buybacks and relative allocation of capital, Zachary finished up the presentation with some metrics around the significance of growth opportunities in front of us.
I think one way to interpret that those expectations or opportunities is that that affords us with ample ability to deploy capital in our business to generate very effective returns that would be in excess of significant capital returns to shareholders outside of the growing dividend rates that you've grown accustomed to seeing at Farmer Mac.
All right. Good. Great. Well, thank you. We have some lunch over here. We're gonna hang out for a while. We'd love to continue this conversation informally. Again, thank you very, very much for coming down to be with us today. Appreciate it.