WASHINGTON, Aug. 10, 2015 /PRNewswire/ -- The Federal
Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A)
today announced its results for the quarter ended June 30, 2015, which included continued strong
asset quality in the portfolio and $470
million in net business volume growth that brought total
outstanding business volume to $15.1 billion. Farmer Mac's second
quarter 2015 core earnings, a non-GAAP measure, were $11.6 million ($1.02 per diluted common share), compared to
$9.1 million ($0.80 per diluted common share) in first quarter
2015 and $23.2 million ($2.05 per diluted common share) in second quarter
2014.
"Second quarter 2015 was a milestone for Farmer Mac. With
the completion of the special initiatives related to capital and
liquidity that we began last year, this is the first quarter in the
last year and a half in which our financial results were driven
exclusively by the underlying fundamentals of our business," said
President and Chief Executive Officer Tim
Buzby. "We maintained positive trends in the three
main drivers of our business, with nearly $470 million of net growth in our program assets,
an ongoing modest improvement in average spreads, and continued
strong asset quality. These factors resulted in core earnings
growth compared to the previous quarter. The increase
in our program business was broad-based across most of our lines of
business and was driven by the combination of Farmer Mac's
effective business development efforts and good customer demand for
our products. In fact, we believe that the relative value
that Farmer Mac offers its customers can increase in an environment
where availability of credit is a bit tighter. While the
agricultural economy continues to adjust to lower commodity prices
and the West Coast drought, we believe that the overall business
climate for Farmer Mac is positive. In fulfilling our mission
to serve rural America, we are constantly looking to expand our
customer base and working to innovate and develop new solutions
that help bring low-cost capital to agricultural and rural
communities."
Earnings
Farmer Mac's net income attributable to common stockholders for
second quarter 2015 was $22.2 million ($1.94 per diluted common share), compared to
$20.2 million ($1.78 per diluted common share) for second
quarter 2014. The increase compared to the previous year's
quarter was primarily attributable to the effects of unrealized
fair value changes on financial derivatives and hedged assets,
which was a $10.4 million after-tax
gain in second quarter 2015, compared to a $3.1 million after-tax loss in second quarter
2014. In addition, preferred stock dividend expense decreased
by $2.8 million after-tax
primarily as a result of the redemption of all outstanding shares
of Farmer Mac II LLC Preferred Stock on March 30, 2015. Second quarter 2014
included an $11.6 million tax benefit
related to Farmer Mac's cash management and liquidity initiative
(commenced in second quarter 2014 and completed in fourth quarter
2014) with no similar effect in second quarter 2015. The
year-over-year increase in net income attributable to common
stockholders was also offset by Farmer Mac's provision for losses
in second quarter 2015 of $0.8
million after-tax, compared to a release from the allowance
for losses of $1.7 million after-tax
in second quarter 2014.
Core earnings in second quarter 2015 were $11.6 million ($1.02 per diluted common share), compared to
$9.1 million ($0.80 per diluted common share) in first quarter
2015 and $23.2 million ($2.05 per diluted common share) in second quarter
2014. The increase in second quarter 2015 core earnings
compared to first quarter 2015 was primarily due to the elimination
of $3.5 million after-tax in dividend
payments as a result of the completion of the capital restructuring
initiative and an increase in after-tax net effective spread of
$0.3 million. The increase was
offset in part primarily by a $1.3
million after-tax increase in credit expenses and a
$0.4 million after-tax increase in
operating expenses. The increase in operating expenses was
primarily attributable to legal fees incurred for the preparation
of comment letters that were finalized and submitted in
June 2015 in response to the FCA's
proposed rule on Farmer Mac's corporate governance.
The year-over-year decrease in core earnings was primarily due
to the absence in second quarter 2015 of the $11.6 million tax benefit realized in second
quarter 2014 related to the cash management and liquidity
initiative. A number of other factors combined to largely
offset each other for the year-over-year comparison, including a
$2.5 million after-tax increase in
credit expenses and a $2.8 million
after-tax decrease in preferred dividend expense resulting from the
redemption of Farmer Mac II LLC Preferred Stock netted against the
incremental preferred dividend costs incurred as part of the
capital restructuring initiative.
See "Non-GAAP Earnings Measures" below for more information
about core earnings and for a reconciliation of Farmer Mac's net
income attributable to common stockholders to core earnings.
Business Volume Highlights
During second quarter 2015, Farmer Mac added $731.1 million of new business volume, with
AgVantage securities and Farm & Ranch loan purchases driving
the volume. Specifically, Farmer Mac:
- purchased $307.3 million of
AgVantage securities;
- purchased $196.9 million of newly
originated Farm & Ranch loans;
- purchased $111.4 million of USDA
Securities;
- added $102.9 million of Farm
& Ranch loans under LTSPCs; and
- purchased $12.5 million of Farmer
Mac Guaranteed USDA Securities.
After $261.1 million of maturities
and principal paydowns on existing business during the quarter,
Farmer Mac's outstanding business volume increased a net
$469.9 million from March 31, 2015 to $15.1 billion as of June 30, 2015.
Farmer Mac experienced an increase in demand for its loan
products in the Farm & Ranch line of business in second quarter
2015 compared to first quarter 2015 due to greater participation
from bank customers and a general up-tick in lending activity in
second quarter 2015. For the first six months of 2015, loan
purchase volumes were modestly below those for the same period in
2014, but demand seems stable in this range and reflects a return
to volume levels more consistent with historical trends.
However, prepayment rates remain subdued and therefore trends in
net loan growth are favorable. Farmer Mac continues to expand
its lender network, customer base, and product set, which may
generate additional demand for Farmer Mac's products from new
sources. As an example, new business volume for second
quarter 2015 included $76.9 million
of financing in "Farm Equity AgVantage" transactions, a variation
of Farmer Mac's AgVantage wholesale financing product.
Although this product is in the early stages of development, Farmer
Mac believes there is opportunity to expand this type of business
as both the trend toward institutional investment in agricultural
assets and awareness of the Farm Equity AgVantage product continues
to grow. Since this product was introduced in third quarter
2014, Farmer Mac's total outstanding business volume related to the
Farm Equity AgVantage product was $187
million as of June 30, 2015. Farmer Mac also
provided $180 million of AgVantage
financing to the National Rural Utilities Cooperative Finance
Corporation as part of a transaction involving the refinancing of
existing Rural Utilities Service ("RUS") debt completed by a large
generation and transmission utility. This transaction is
indicative of the RUS refinancing opportunities Farmer Mac has
discussed in recent quarters and which we believe continue to
exist.
Net Effective Spread
Farmer Mac's net effective spread was $29.8 million (88 basis points) in second quarter
2015, compared to $29.3 million (86
basis points) in first quarter 2015 and $29.0 million (92 basis points) in second
quarter 2014. The increase in net effective spread in
second quarter 2015 compared to first quarter 2015 was attributable
to growth in outstanding business volume, an increase in net
effective spread in the USDA Guarantees and Institutional Credit
lines of business, and to a lower average balance of cash and lower
spread investments within the liquidity investment portfolio.
The dollar increase in net effective spread in second quarter
2015 compared to second quarter 2014 was primarily attributable to
growth in outstanding business volume and lower funding
costs. The basis point reduction in percentage terms was
driven primarily by the loss of $2.1
million in preferred dividend income (7 basis points) from
the October 2014 redemption of
high-yielding preferred stock held in Farmer Mac's investment
portfolio. Partially offsetting this reduction were lower
funding costs in second quarter 2015 compared to second quarter
2014, due to the maturity of older, higher-cost debt and the
issuance of new debt at lower market spreads during the second half
of 2014 and first half of 2015.
Credit Quality
Farmer Mac continues to maintain very favorable credit metrics
in its four lines of business. In the Farm & Ranch
portfolio, 90-day delinquencies were $31.9
million (0.58 percent of the Farm & Ranch portfolio) as
of June 30, 2015, compared to
$32.1 million (0.60 percent) as of
March 31, 2015, and $25.9 million (0.49 percent) as of
June 30, 2014. The increase in
the 90-day delinquency rate in 2015 was primarily related to a
single borrower to which Farmer Mac had $9.4
million of exposure as of June
30 2015, and whose delinquency was not related to industry
conditions or the profitability of the borrower's operation.
In July 2015, Farmer Mac received
full repayment on loans to this borrower. Farmer Mac expects
that over time its 90-day delinquency rate will eventually revert
closer to Farmer Mac's historical averages due to macroeconomic and
other potential factors, but Farmer Mac has not yet seen an impact
on its portfolio or a rise in delinquencies related to these
factors. Farmer Mac's average 90-day delinquency rate for the
Farm & Ranch line of business over the last fifteen years is
approximately one percent.
During second quarter 2015, Farmer Mac recorded provisions to
its allowance for losses of $1.3 million, primarily related to a single
loan secured by a canola processing plant, and Farmer Mac believes
it is adequately reserved for loss related to this loan.
Farmer Mac recorded $111,000 in
charge-offs to its allowance for losses during second quarter
2015. During second quarter 2014, Farmer Mac recorded
net releases from its allowance for losses of $2.6 million, primarily related to paydowns of
ethanol loans. Farmer Mac also recorded $57,000 of charge-offs to its allowance for loan
losses during second quarter 2014.
For Farmer Mac's other lines of business, there are currently no
delinquent AgVantage securities or Rural Utilities loans, and USDA
Securities are backed by the full faith and credit of the United
States. As a result, across all of Farmer Mac's lines of
business, 90-day delinquencies represented 0.21 percent of total
business volume as of June 30, 2015,
compared to 0.22 percent as of March 31,
2015, and 0.18 percent as of June 30,
2014.
The western part of the United
States, including California, continues to experience drought
conditions, with the water level in many California reservoirs at historically low
levels. The persistence of extreme drought conditions in the
western states could have an adverse effect on Farmer Mac's
delinquency rates or loss experience in the future, but Farmer Mac
has not observed any material effect on its portfolio from the
drought to date. Farmer Mac continues to remain informed
about the drought and its effects on the agricultural industries
located in the western states and on Farmer Mac's Farm & Ranch
portfolio through regular discussions with its loan servicers that
service loans in drought-stricken areas, as well as customers and
other lenders in the industry.
Lines of Business
Farmer Mac's operations consist of four reportable lines of
business – Farm & Ranch, USDA Guarantees, Rural Utilities, and
Institutional Credit. The Institutional Credit business
segment is comprised of all of Farmer Mac's wholesale funding
products for agricultural and rural utility counterparties, and
currently includes all of its AgVantage securities. Beginning
in first quarter 2015, Farmer Mac revised its methodology for
interest expense allocation among the Farm & Ranch, USDA
Guarantees, and Rural Utilities lines of business. As a
result of this revision, a greater percentage of interest expense
has been allocated to the longer-term assets (which are associated
with more expensive longer-term financing) included within the USDA
Guarantees and Rural Utilities lines of business. Net
effective spread for periods prior to the quarter ended
March 31, 2015 does not reflect this
revision. Net effective spread by business segment for second
quarter 2015 was $9.7 million (182
basis points) for Farm & Ranch, $4.5 million (98 basis points) for USDA
Guarantees, $2.8 million (118 basis
points) for Rural Utilities, and $10.9
million (78 basis points) for Institutional Credit.
Liquidity and Capital
Farmer Mac's core capital totaled $553.4
million as of June 30, 2015,
exceeding the statutory minimum capital requirement by $109.6 million, or 25 percent, compared to
$766.3 million as of December 31, 2014, which was $345.0 million, or 82 percent, above the
statutory minimum capital requirement. The decrease in core
capital was a direct result of the redemption of $250.0 million of Farmer Mac II LLC Preferred
Stock on March 30, 2015.
Farmer Mac issued an aggregate of $150
million of non-cumulative preferred stock during the first
half of 2014 and used the proceeds of these preferred stock
offerings and cash on hand to cause Farmer Mac II LLC to redeem all
of the outstanding shares of Farmer Mac II LLC Preferred
Stock. The preferred stock issued in 2014 qualifies as Tier 1
capital for Farmer Mac whereas the Farmer Mac II LLC Preferred
Stock that was redeemed did not qualify as Tier 1 capital.
As of June 30, 2015, Farmer Mac's
total stockholders' equity was $576.1
million, compared to $545.8
million as of December 31,
2014. The increase in total stockholders' equity was
primarily attributable to increases in retained earnings and in
accumulated other comprehensive income due to increases in fair
value of available-for-sale securities. The increases in the
fair value of available-for-sale securities were driven primarily
by lower U.S. Treasury rates.
As prescribed by FCA regulations, Farmer Mac is required to
maintain a minimum of 90 days of liquidity. In
accordance with the methodology prescribed by those regulations,
Farmer Mac maintained an average of 194 days of liquidity
during second quarter 2015 and had 187 days of liquidity
as of June 30, 2015.
Non-GAAP Earnings Measure
Farmer Mac uses core earnings to measure corporate economic
performance and develop financial plans because, in management's
view, core earnings is a useful alternative measure in
understanding Farmer Mac's economic performance, transaction
economics, and business trends. Core earnings principally
differs from net income attributable to common stockholders by
excluding the effects of fair value fluctuations, which are not
expected to have a cumulative net impact on financial condition or
results of operations reported in accordance with GAAP if the
related financial instruments are held to maturity, as is generally
expected. Core earnings also differs from net income
attributable to common stockholders by excluding specified
infrequent or unusual transactions that Farmer Mac believes are not
indicative of future operating results and that may not reflect the
trends and economic financial performance of Farmer Mac's core
business.
This non-GAAP financial measure may not be comparable to
similarly labeled non-GAAP financial measures disclosed by other
companies. Farmer Mac's disclosure of this non-GAAP measure
is intended to be supplemental in nature, and is not meant to be
considered in isolation from, as a substitute for, or as more
important than, the related financial information prepared in
accordance with GAAP.
A reconciliation of Farmer Mac's net income attributable to
common stockholders to core earnings is presented in the following
table along with a breakdown of the composition of core
earnings:
Reconciliation of Net
Income Attributable to Common Stockholders to Core
Earnings
|
|
|
|
|
For the Three Months
Ended
|
|
|
|
|
June 30,
2015
|
|
March 31,
2015
|
|
June 30,
2014
|
|
|
|
|
(in thousands,
except per share amounts)
|
Net income
attributable to common stockholders
|
|
$
|
22,162
|
|
|
$
|
1,818
|
|
|
$
|
20,205
|
|
Less the after-tax
effects of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains/(losses) on financial derivatives and hedging
activities
|
|
|
10,388
|
|
|
|
(582)
|
|
|
|
(3,053)
|
|
|
Unrealized
gains/(losses) on trading assets(1)
|
|
|
110
|
|
|
|
236
|
|
|
|
(46)
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated
at
fair value
|
|
(81)
|
|
|
|
(529)
|
|
|
|
(179)
|
|
|
Net effects of
settlements on agency forward contracts
|
|
|
128
|
|
|
|
(164)
|
|
|
|
236
|
|
|
Loss on retirement of
Farmer Mac II LLC Preferred Stock(2)
|
|
|
-
|
|
|
|
(6,246)
|
|
|
|
-
|
|
|
|
Sub-total
|
|
|
10,545
|
|
|
|
(7,285)
|
|
|
|
(3,042)
|
|
Core
earnings
|
|
$
|
11,617
|
|
|
$
|
9,103
|
|
|
$
|
23,247
|
|
|
|
|
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective
spread
|
|
$
|
29,787
|
|
|
$
|
29,257
|
|
|
$
|
29,049
|
|
|
Guarantee and
commitment fees
|
|
|
4,085
|
|
|
|
4,012
|
|
|
|
4,216
|
|
|
Other(3)
|
|
|
(24)
|
|
|
|
(405)
|
|
|
|
(520)
|
|
|
|
Total
revenues
|
|
|
33,848
|
|
|
|
32,864
|
|
|
|
32,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
expense/(income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for/(release of) losses
|
|
|
1,256
|
|
|
|
(696)
|
|
|
|
(2,557)
|
|
|
REO operating
expenses
|
|
|
-
|
|
|
|
(1)
|
|
|
|
59
|
|
|
Losses/(gains) on
sale of REO
|
|
|
-
|
|
|
|
1
|
|
|
|
(168)
|
|
|
|
Total credit related
expense/(income)
|
|
|
1,256
|
|
|
|
(696)
|
|
|
|
(2,666)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation &
employee benefits
|
|
|
5,733
|
|
|
|
5,693
|
|
|
|
4,889
|
|
|
General &
Administrative
|
|
|
3,374
|
|
|
|
2,823
|
|
|
|
3,288
|
|
|
Regulatory
fees
|
|
|
600
|
|
|
|
600
|
|
|
|
594
|
|
|
|
Total operating
expenses
|
|
|
9,707
|
|
|
|
9,116
|
|
|
|
8,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
22,885
|
|
|
|
24,444
|
|
|
|
26,640
|
|
|
Income tax
expense/(benefit)(4)
|
|
|
8,091
|
|
|
|
6,692
|
|
|
|
(4,734)
|
|
|
Net (loss)/income
attributable to non-controlling interest
|
|
|
(119)
|
|
|
|
5,354
|
|
|
|
5,819
|
|
|
Preferred stock
dividends
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
2,308
|
|
|
|
Core
earnings
|
|
$
|
11,617
|
|
|
$
|
9,103
|
|
|
$
|
23,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.06
|
|
|
$
|
0.83
|
|
|
$
|
2.13
|
|
|
Diluted
|
|
|
1.02
|
|
|
|
0.80
|
|
|
|
2.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Excludes unrealized gains related to
securities sold, not yet purchased of $7.8 million during the three
months ended June 30, 2014.
|
(2)Relates
to the write-off of deferred issuance costs as a result of the
retirement of Farmer Mac II LLC Preferred Stock.
|
(3)Includes $7.8 million of interest
expense related to securities purchased under agreements to resell
and securities sold, not yet purchased and $7.8 million of
unrealized gains on securities sold, not yet purchased during the
three months ended June 30, 2014.
|
(4)Includes the reduction of $11.6 million
of tax valuation allowance against capital loss carryforwards
related to capital gains on securities sold, not yet purchased
during the three months ended June 30, 2014.
|
Reconciliation of Net
Income Attributable to Common Stockholders to Core
Earnings
|
|
|
|
|
For the Six Months
Ended
|
|
|
|
|
June 30,
2015
|
|
June 30,
2014
|
|
|
|
|
(in thousands,
except per share amounts)
|
Net income
attributable to common stockholders
|
|
$
|
23,980
|
|
|
$
|
21,018
|
|
Less the after-tax
effects of:
|
|
|
|
|
|
|
|
|
|
Unrealized
gains/(losses) on financial derivatives and hedging
activities
|
|
|
9,806
|
|
|
|
(5,448)
|
|
|
Unrealized gains on
trading assets(1)
|
|
|
346
|
|
|
|
380
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated
at fair
value(2)
|
|
(610)
|
|
|
|
(8,206)
|
|
|
Net effects of
settlements on agency forward contracts
|
|
|
(36)
|
|
|
|
60
|
|
|
Loss on retirement of
Farmer Mac II LLC Preferred Stock(3)
|
|
|
(6,246)
|
|
|
|
-
|
|
|
|
Sub-total
|
|
|
3,260
|
|
|
|
(13,214)
|
|
Core
earnings
|
|
$
|
20,720
|
|
|
$
|
34,232
|
|
|
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Net effective
spread
|
|
$
|
59,044
|
|
|
$
|
55,485
|
|
|
Guarantee and
commitment fees
|
|
|
8,097
|
|
|
|
8,531
|
|
|
Other(4)
|
|
|
(429)
|
|
|
|
(930)
|
|
|
|
Total
revenues
|
|
|
66,712
|
|
|
|
63,086
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
expense/(income):
|
|
|
|
|
|
|
|
|
|
Provision
for/(release of) losses
|
|
|
560
|
|
|
|
(1,883)
|
|
|
REO operating
expenses
|
|
|
(1)
|
|
|
|
61
|
|
|
Losses/(gains) on
sale of REO
|
|
|
1
|
|
|
|
(165)
|
|
|
|
Total credit related
expense/(income)
|
|
|
560
|
|
|
|
(1,987)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Compensation &
employee benefits
|
|
|
11,426
|
|
|
|
9,345
|
|
|
General &
Administrative
|
|
|
6,197
|
|
|
|
6,082
|
|
|
Regulatory
fees
|
|
|
1,200
|
|
|
|
1,188
|
|
|
|
Total operating
expenses
|
|
|
18,823
|
|
|
|
16,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
47,329
|
|
|
|
48,458
|
|
|
Income tax
expense/(benefit)(5)
|
|
|
14,783
|
|
|
|
(400)
|
|
|
Net income
attributable to non-controlling interest
|
|
|
5,235
|
|
|
|
11,366
|
|
|
Preferred stock
dividends
|
|
|
6,591
|
|
|
|
3,260
|
|
|
|
Core
earnings
|
|
$
|
20,720
|
|
|
$
|
34,232
|
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.89
|
|
|
$
|
3.14
|
|
|
Diluted
|
|
|
1.82
|
|
|
|
3.02
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Excludes unrealized gains related to
securities sold, not yet purchased of $7.8 million during the six
months ended June 30, 2014.
|
(2)Includes $7.5 million related to the
acceleration of premium amortization in first quarter 2014 due to
significant refinancing in the Rural Utilities line of
business.
|
(3)Relates
to the write-off of deferred issuance costs as a result of the
retirement of Farmer Mac II LLC Preferred Stock.
|
(4)Includes $7.8 million of interest
expense related to securities purchased under agreements to resell
and securities sold, not yet purchased and $7.8 million of
unrealized gains on securities sold, not yet purchased during the
six months ended June 30, 2014.
|
(5)Includes the reduction of $11.6 million
of tax valuation allowance against capital loss carryforwards
related to capital gains on securities sold, not yet purchased
during the six months ended June 30, 2014. Includes the
reduction in tax valuation allowance of $0.8 million associated
with certain gains on investment portfolio assets during the six
months ended June 30, 2014.
|
More complete information about Farmer Mac's performance for
second quarter 2015 is set forth in Farmer Mac's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2015 filed today with the U.S.
Securities and Exchange Commission ("SEC").
Forward-Looking Statements
Management's expectations for Farmer Mac's future necessarily
involve a number of assumptions and estimates and the evaluation of
risks and uncertainties. Various factors or events, both
known and unknown, could cause Farmer Mac's actual results to
differ materially from the expectations as expressed or implied by
the forward-looking statements herein, including uncertainties
regarding:
- the availability to Farmer Mac of debt and equity financing
and, if available, the reasonableness of rates and terms;
- legislative or regulatory developments that could affect Farmer
Mac or its sources of business;
- fluctuations in the fair value of assets held by Farmer Mac and
its subsidiaries;
- the rate and direction of development of the secondary market
for agricultural mortgage and rural utilities loans, including
lender interest in Farmer Mac credit products and the secondary
market provided by Farmer Mac;
- the general rate of growth in agricultural mortgage and rural
utilities indebtedness;
- the impact of economic conditions, including the effects of
drought and other weather-related conditions and fluctuations in
agricultural real estate values, on agricultural mortgage lending
and borrower repayment capacity;
- developments in the financial markets, including possible
investor, analyst, and rating agency reactions to events involving
government-sponsored enterprises, including Farmer Mac;
- changes in the level and direction of interest rates, which
could, among other things, affect the value of collateral securing
Farmer Mac's agricultural mortgage loan assets; and
- volatility in commodity prices relative to costs of production
and/or export demand for U.S. agricultural products.
Other risk factors are discussed in "Risk Factors" in Part I,
Item 1A of in Farmer Mac's Annual Report on Form 10-K for the year
ended December 31, 2014 filed with
the SEC on March 16, 2015. In
light of these potential risks and uncertainties, no undue reliance
should be placed on any forward-looking statements expressed in
this release. The forward-looking statements contained
in this release represent management's expectations as of the date
of this release. Farmer Mac undertakes no obligation to
release publicly the results of revisions to any forward-looking
statements included in this release to reflect new information or
any future events or circumstances, except as otherwise mandated by
the SEC. The information contained in this release is not
necessarily indicative of future results.
Earnings Conference Call Information
The conference call to discuss Farmer Mac's second quarter 2015
financial results and Form 10-Q will be held beginning at
11:00 a.m. eastern time on Monday, August 10, 2015 and
can be accessed by telephone or live webcast as follows:
Telephone (Domestic): (888) 346-2616
Telephone (International): (412) 902-4254
Webcast: http://www.farmermac.com/Investors/ConferenceCall/
If you are dialing in to the call, please ask for the conference
chairman Tim Buzby. You will
receive additional instructions when you join the call. The
call can be heard live and will also be available for replay on
Farmer Mac's website at the link provided above for two weeks
following the conclusion of the call.
About Farmer Mac
Farmer Mac is the stockholder-owned company created to deliver
capital and increase lender competition for the benefit of American
agriculture and rural communities. Additional information
about Farmer Mac (including the Annual Report on Form 10-K and
Quarterly Report on Form 10-Q referenced above) is available on
Farmer Mac's website at www.farmermac.com. Farmer Mac II LLC
is a subsidiary of Farmer Mac that operates the USDA Guarantees
line of business of purchasing and holding USDA-guaranteed
loans. Information about Farmer Mac II LLC is available on
its website at www.farmermac2.com.
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(unaudited)
|
|
|
|
|
|
|
As of
|
|
|
|
|
|
June 30,
|
|
December
31,
|
|
|
|
|
2015
|
2014
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,683,156
|
|
|
$
|
1,363,387
|
|
Investment
securities
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
1,851,899
|
|
|
|
1,938,499
|
|
|
Trading, at fair
value
|
|
606
|
|
|
|
689
|
|
|
|
Total investment
securities
|
|
1,852,505
|
|
|
|
1,939,188
|
|
Farmer Mac Guaranteed
Securities
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
4,051,208
|
|
|
|
3,659,281
|
|
|
Held-to-maturity, at
amortized cost
|
|
1,822,027
|
|
|
|
1,794,620
|
|
|
|
Total Farmer Mac
Guaranteed Securities
|
|
5,873,235
|
|
|
|
5,453,901
|
|
USDA
Securities
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
1,825,406
|
|
|
|
1,731,222
|
|
|
Trading, at fair
value
|
|
33,770
|
|
|
|
40,310
|
|
|
|
Total USDA
Securities
|
|
1,859,176
|
|
|
|
1,771,532
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
Loans held for
investment, at amortized cost
|
|
3,153,012
|
|
|
|
2,833,461
|
|
|
Loans held for
investment in consolidated trusts, at amortized cost
|
|
512,559
|
|
|
|
692,478
|
|
|
Allowance for loan
losses
|
|
(5,939)
|
|
|
|
(5,864)
|
|
|
|
Total loans, net of
allowance
|
|
3,659,632
|
|
|
|
3,520,075
|
|
Real estate owned, at
lower of cost or fair value
|
|
750
|
|
|
|
421
|
|
Financial
derivatives, at fair value
|
|
7,455
|
|
|
|
4,177
|
|
Interest receivable
(includes $6,338 and $9,509, respectively, related to consolidated
trusts)
|
|
101,127
|
|
|
|
106,874
|
|
Guarantee and
commitment fees receivable
|
|
37,847
|
|
|
|
39,462
|
|
Deferred tax asset,
net
|
|
23,130
|
|
|
|
33,391
|
|
Prepaid expenses and
other assets
|
|
46,584
|
|
|
|
55,413
|
|
|
|
|
Total
Assets
|
$
|
15,144,597
|
|
|
$
|
14,287,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
Payable:
|
|
|
|
|
|
|
|
|
Due within one
year
|
$
|
7,632,668
|
|
|
$
|
7,353,953
|
|
|
Due after one
year
|
|
6,013,237
|
|
|
|
5,471,186
|
|
|
|
Total notes
payable
|
|
13,645,905
|
|
|
|
12,825,139
|
|
Debt securities of
consolidated trusts held by third parties
|
|
516,004
|
|
|
|
424,214
|
|
Financial
derivatives, at fair value
|
|
69,373
|
|
|
|
84,844
|
|
Accrued interest
payable (includes $5,302 and $5,145, respectively, related to
consolidated trusts)
|
|
50,183
|
|
|
|
48,355
|
|
Guarantee and
commitment obligation
|
|
36,417
|
|
|
|
37,925
|
|
Accounts payable and
accrued expenses
|
|
245,785
|
|
|
|
81,252
|
|
Reserve for
losses
|
|
4,637
|
|
|
|
4,263
|
|
|
|
|
Total
Liabilities
|
|
14,568,304
|
|
|
|
13,505,992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock:
|
|
|
|
|
|
|
|
|
Series A, par value
$25 per share, 2,400,000 shares authorized, issued and
outstanding
|
|
58,333
|
|
|
|
58,333
|
|
|
Series B, par value
$25 per share, 3,000,000 shares authorized, issued and
outstanding
|
|
73,044
|
|
|
|
73,044
|
|
|
Series C, par value
$25 per share, 3,000,000 shares authorized, issued and
outstanding
|
|
73,382
|
|
|
|
73,382
|
|
Common
stock:
|
|
|
|
|
|
|
|
|
Class A Voting, $1
par value, no maximum authorization, 1,030,780 shares
outstanding
|
|
1,031
|
|
|
|
1,031
|
|
|
Class B Voting, $1
par value, no maximum authorization, 500,301 shares
outstanding
|
|
500
|
|
|
|
500
|
|
|
Class C Non-Voting,
$1 par value, no maximum authorization, 9,508,000 shares and
9,406,267 shares outstanding, respectively
|
|
9,508
|
|
|
|
9,406
|
|
Additional paid-in
capital
|
|
116,098
|
|
|
|
113,559
|
|
Accumulated other
comprehensive income, net of tax
|
|
22,733
|
|
|
|
15,533
|
|
Retained
earnings
|
|
221,477
|
|
|
|
201,013
|
|
|
|
|
Total Stockholders'
Equity
|
|
576,106
|
|
|
|
545,801
|
|
Non-controlling
interest
|
|
187
|
|
|
|
236,028
|
|
|
|
|
Total
Equity
|
|
576,293
|
|
|
|
781,829
|
|
|
|
|
|
Total Liabilities and
Equity
|
$
|
15,144,597
|
|
|
$
|
14,287,821
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(unaudited)
|
|
|
|
|
For the Three Months
Ended
|
|
For the Six Months
Ended
|
|
|
|
June 30,
2015
|
|
June 30,
2014
|
|
June 30,
2015
|
|
June 30,
2014
|
|
|
|
(in thousands, except per share amounts)
|
Interest
income:
|
|
|
|
|
|
|
|
|
Investments and cash
equivalents
|
$
|
3,094
|
|
|
$
|
5,101
|
|
|
$
|
5,959
|
|
|
$
|
10,338
|
|
|
Farmer Mac Guaranteed
Securities and USDA Securities
|
|
34,484
|
|
|
|
32,957
|
|
|
|
67,606
|
|
|
|
65,803
|
|
|
Loans
|
|
28,814
|
|
|
|
26,417
|
|
|
|
56,778
|
|
|
|
40,786
|
|
|
|
Total interest
income
|
|
66,392
|
|
|
|
64,475
|
|
|
|
130,343
|
|
|
|
116,927
|
|
|
Total interest
expense
|
|
34,528
|
|
|
|
42,502
|
|
|
|
67,690
|
|
|
|
77,228
|
|
|
|
Net interest
income
|
|
31,864
|
|
|
|
21,973
|
|
|
|
62,653
|
|
|
|
39,699
|
|
|
(Provision
for)/release of allowance for loan losses
|
|
(110)
|
|
|
|
1,583
|
|
|
|
(186)
|
|
|
|
1,010
|
|
|
|
Net interest income
after (provision for)/release of allowance for loan
losses
|
|
31,754
|
|
|
|
23,556
|
|
|
|
62,467
|
|
|
|
40,709
|
|
Non-interest
income:
|
|
|
|
|
|
|
|
|
Guarantee and
commitment fees
|
|
3,388
|
|
|
|
3,703
|
|
|
|
6,765
|
|
|
|
7,487
|
|
|
Gains/(losses) on
financial derivatives and hedging activities
|
|
14,389
|
|
|
|
(5,698)
|
|
|
|
10,507
|
|
|
|
(13,276)
|
|
|
Gains on trading
securities
|
|
170
|
|
|
|
7,748
|
|
|
|
532
|
|
|
|
8,403
|
|
|
Gains on sale of
available-for-sale investment securities
|
|
-
|
|
|
|
143
|
|
|
|
6
|
|
|
|
158
|
|
|
Gains/(losses) on
sale of real estate owned
|
|
-
|
|
|
|
168
|
|
|
|
(1)
|
|
|
|
165
|
|
|
Other
income
|
|
260
|
|
|
|
200
|
|
|
|
873
|
|
|
|
292
|
|
|
|
Non-interest
income
|
|
18,207
|
|
|
|
6,264
|
|
|
|
18,682
|
|
|
|
3,229
|
|
Non-interest
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
5,733
|
|
|
|
4,889
|
|
|
|
11,426
|
|
|
|
9,345
|
|
|
General and
administrative
|
|
3,374
|
|
|
|
3,288
|
|
|
|
6,197
|
|
|
|
6,082
|
|
|
Regulatory
fees
|
|
600
|
|
|
|
594
|
|
|
|
1,200
|
|
|
|
1,188
|
|
|
Real estate owned
operating costs, net
|
|
|
|
|
|
59
|
|
|
|
(1)
|
|
|
|
61
|
|
|
Provision
for/(release of) reserve for losses
|
|
1,146
|
|
|
|
(974)
|
|
|
|
374
|
|
|
|
(873)
|
|
|
|
Non-interest
expense
|
|
10,853
|
|
|
|
7,856
|
|
|
|
19,196
|
|
|
|
15,803
|
|
|
|
Income before income
taxes
|
|
39,108
|
|
|
|
21,964
|
|
|
|
61,953
|
|
|
|
28,135
|
|
Income tax
expense/(benefit)
|
|
13,769
|
|
|
|
(6,368)
|
|
|
|
18,000
|
|
|
|
(7,509)
|
|
|
|
Net income
|
|
25,339
|
|
|
|
28,332
|
|
|
|
43,953
|
|
|
|
35,644
|
|
Less: Net
loss/(income) attributable to non-controlling interest
|
|
119
|
|
|
|
(5,819)
|
|
|
|
(5,235)
|
|
|
|
(11,366)
|
|
|
Net income
attributable to Farmer Mac
|
|
25,458
|
|
|
|
22,513
|
|
|
|
38,718
|
|
|
|
24,278
|
|
Preferred stock
dividends
|
|
(3,296)
|
|
|
|
(2,308)
|
|
|
|
(6,591)
|
|
|
|
(3,260)
|
|
Loss on retirement of
preferred stock
|
|
-
|
|
|
|
-
|
|
|
|
(8,147)
|
|
|
|
-
|
|
|
|
Net income
attributable to common stockholders
|
$
|
22,162
|
|
|
$
|
20,205
|
|
|
$
|
23,980
|
|
|
$
|
21,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share and dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
|
2.01
|
|
|
$
|
1.85
|
|
|
$
|
2.19
|
|
|
$
|
1.93
|
|
|
|
Diluted earnings per
common share
|
$
|
1.94
|
|
|
$
|
1.78
|
|
|
$
|
2.11
|
|
|
$
|
1.85
|
|
|
|
Common stock
dividends per common share
|
$
|
0.16
|
|
|
$
|
0.14
|
|
|
$
|
0.32
|
|
|
$
|
0.28
|
|
The following table sets forth information regarding outstanding
volume in each of Farmer Mac's four lines of business as of the
dates indicated:
Lines of Business -
Outstanding Business Volume
|
|
|
|
|
|
As of June 30,
2015
|
|
As of December 31,
2014
|
|
|
|
|
|
(in thousands)
|
On-balance
sheet:
|
|
|
|
|
Farm &
Ranch:
|
|
|
|
|
|
Loans
|
$
|
2,197,934
|
|
|
$
|
2,118,867
|
|
|
|
Loans held in
trusts:
|
|
|
|
|
|
|
|
|
|
|
Beneficial interests
owned by third party investors
|
|
512,559
|
|
|
|
421,355
|
|
|
USDA
Guarantees:
|
|
|
|
|
|
|
|
|
|
USDA
Securities
|
|
1,817,720
|
|
|
|
1,756,224
|
|
|
|
Farmer Mac Guaranteed
USDA Securities
|
|
33,822
|
|
|
|
27,832
|
|
|
Rural
Utilities:
|
|
|
|
|
|
|
|
|
|
Loans(1)
|
|
954,188
|
|
|
|
718,213
|
|
|
|
Loans held in
trusts:
|
|
|
|
|
|
|
|
|
|
|
Beneficial interests
owned by Farmer Mac(1)
|
|
-
|
|
|
|
267,396
|
|
|
Institutional
Credit:
|
|
|
|
|
|
|
|
|
|
AgVantage
Securities
|
|
5,841,410
|
|
|
|
5,410,413
|
|
|
|
|
Total on-balance
sheet
|
$
|
11,357,633
|
|
|
$
|
10,720,300
|
|
Off-balance
sheet:
|
|
|
|
|
Farm &
Ranch:
|
|
|
|
|
|
LTSPCs
|
$
|
2,199,266
|
|
|
$
|
2,240,866
|
|
|
|
Guaranteed
Securities
|
|
575,811
|
|
|
|
636,086
|
|
|
USDA
Guarantees:
|
|
|
|
|
|
|
|
|
|
Farmer Mac Guaranteed
USDA Securities
|
|
10,888
|
|
|
|
13,978
|
|
|
Institutional
Credit:
|
|
|
|
|
|
|
|
|
|
AgVantage
Securities
|
|
986,529
|
|
|
|
986,528
|
|
|
|
|
Total off-balance
sheet
|
$
|
3,772,494
|
|
|
$
|
3,877,458
|
|
|
|
|
|
Total
|
$
|
15,130,127
|
|
|
$
|
14,597,758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Reflects the unwinding of certain consolidated trusts with the
effect that loans previously consolidated on the balance sheet as
"Loans held in trusts" currently are included within
"Loans."
|
The following table presents the quarterly net effective spread
by segment:
|
|
Net Effective Spread
by Line of Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Farm &
Ranch
|
|
USDA
Guarantees
|
|
Rural
Utilities
|
|
Institutional
Credit(1)
|
|
Corporate
|
|
Net Effective
Spread
|
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
|
(dollars in
thousands)
|
For the quarter
ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2015
|
$
|
9,681
|
|
|
1.82
|
%
|
|
$
|
4,466
|
|
|
0.98
|
%
|
|
$
|
2,838
|
|
|
1.18
|
%
|
|
$
|
10,860
|
|
|
0.78
|
%
|
|
$
|
1,942
|
|
|
0.25
|
%
|
|
$
|
29,787
|
|
|
0.88
|
%
|
|
March 31,
2015(2)
|
|
10,114
|
|
|
1.97
|
%
|
|
|
4,225
|
|
|
0.95
|
%
|
|
|
2,804
|
|
|
1.15
|
%
|
|
|
10,425
|
|
|
0.77
|
%
|
|
|
1,689
|
|
|
0.20
|
%
|
|
|
29,257
|
|
|
0.86
|
%
|
|
December 31,
2014(3)
|
|
8,682
|
|
|
1.71
|
%
|
|
|
5,250
|
|
|
1.19
|
%
|
|
|
2,908
|
|
|
1.18
|
%
|
|
|
9,871
|
|
|
0.78
|
%
|
|
|
1,732
|
|
|
0.26
|
%
|
|
|
28,443
|
|
|
0.91
|
%
|
|
September 30,
2014
|
|
8,207
|
|
|
1.68
|
%
|
|
|
5,073
|
|
|
1.18
|
%
|
|
|
2,890
|
|
|
1.16
|
%
|
|
|
9,822
|
|
|
0.78
|
%
|
|
|
3,773
|
|
|
0.59
|
%
|
|
|
29,765
|
|
|
0.97
|
%
|
|
June 30,
2014
|
|
7,820
|
|
|
1.64
|
%
|
|
|
4,159
|
|
|
0.99
|
%
|
|
|
2,953
|
|
|
1.16
|
%
|
|
|
9,957
|
|
|
0.78
|
%
|
|
|
4,160
|
|
|
0.57
|
%
|
|
|
29,049
|
|
|
0.92
|
%
|
|
March 31,
2014(4)
|
|
7,114
|
|
|
1.53
|
%
|
|
|
3,784
|
|
|
0.91
|
%
|
|
|
1,990
|
|
|
0.73
|
%
|
|
|
9,406
|
|
|
0.74
|
%
|
|
|
4,142
|
|
|
0.56
|
%
|
|
|
26,436
|
|
|
0.84
|
%
|
|
December 31,
2013(4)
|
|
10,113
|
|
|
2.20
|
%
|
|
|
4,022
|
|
|
0.97
|
%
|
|
|
2,379
|
|
|
0.89
|
%
|
|
|
9,088
|
|
|
0.72
|
%
|
|
|
4,420
|
|
|
0.58
|
%
|
|
|
30,022
|
|
|
0.94
|
%
|
|
September 30,
2013
|
|
7,980
|
|
|
1.86
|
%
|
|
|
4,505
|
|
|
1.09
|
%
|
|
|
2,974
|
|
|
1.12
|
%
|
|
|
9,117
|
|
|
0.72
|
%
|
|
|
4,117
|
|
|
0.57
|
%
|
|
|
28,693
|
|
|
0.93
|
%
|
|
June 30,
2013
|
|
8,228
|
|
|
2.08
|
%
|
|
|
4,508
|
|
|
1.12
|
%
|
|
|
3,056
|
|
|
1.14
|
%
|
|
|
8,805
|
|
|
0.71
|
%
|
|
|
4,294
|
|
|
0.63
|
%
|
|
|
28,891
|
|
|
0.97
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)See
Note 1(d) to the consolidated financial statements in Farmer Mac's
Quarterly Report on Form 10-Q filed with the SEC on August 10, 2015
for more information about the reclassification of certain amounts
in prior periods from guarantee and commitment fees to interest
income related to on-balance sheet Farmer Mac Guaranteed
Securities.
|
(2)Beginning in first quarter 2015, Farmer
Mac revised its methodology for interest expense allocation among
the Farm & Ranch, USDA Guarantees, and Rural Utilities lines of
business. As a result of this revision, a greater percentage
of interest expense has been allocated to the longer-term assets
included within the USDA Guarantees and Rural Utilities lines of
business. Net effective spread for periods prior to the
quarter ended March 31, 2015 does not reflect this
revision
|
(3)On
October 1, 2014, $78.5 million of preferred stock issued by CoBank
was called, resulting in a loss of net effective spread of $2.1
million or 30 basis points in the corporate segment. The
impact on consolidated net effective spread was 7 basis
points.
|
(4)First
quarter 2014 includes the impact of spread compression in the Rural
Utilities line of business from the early refinancing of loans (41
basis points). Fourth quarter 2013 includes the impact in net
effective spread in the Farm & Ranch line of business of
one-time adjustments for recovered buyout interest and yield
maintenance (40 basis points in aggregate) and the impact of spread
compression in the Rural Utilities line of business from the early
refinancing of loans (26 basis points).
|
The following table presents quarterly core earnings reconciled
to net income attributable to common stockholders:
Core Earnings by
Quarter Ended
|
|
|
|
|
June
2015
|
|
March
2015
|
|
December
2014
|
|
September
2014
|
|
June
2014
|
|
March
2014
|
|
December
2013
|
|
September
2013
|
|
June
2013
|
|
|
|
|
(in
thousands)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective
spread(1)
|
$
|
29,787
|
|
|
$
|
29,257
|
|
|
$
|
28,443
|
|
|
$
|
29,765
|
|
|
$
|
29,049
|
|
|
$
|
26,436
|
|
|
$
|
30,022
|
|
|
$
|
28,693
|
|
|
$
|
28,891
|
|
|
Guarantee and
commitment fees
|
|
4,085
|
|
|
|
4,012
|
|
|
|
4,096
|
|
|
|
4,153
|
|
|
|
4,216
|
|
|
|
4,315
|
|
|
|
4,252
|
|
|
|
4,134
|
|
|
|
4,126
|
|
|
Other(2)
|
|
(24)
|
|
|
|
(405)
|
|
|
|
(1,285)
|
|
|
|
(2,001)
|
|
|
|
(520)
|
|
|
|
(410)
|
|
|
|
427
|
|
|
|
(466)
|
|
|
|
3,274
|
|
|
|
Total
revenues
|
|
33,848
|
|
|
|
32,864
|
|
|
|
31,254
|
|
|
|
31,917
|
|
|
|
32,745
|
|
|
|
30,341
|
|
|
|
34,701
|
|
|
|
32,361
|
|
|
|
36,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
expense/(income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for/(release of) for losses
|
|
1,256
|
|
|
|
(696)
|
|
|
|
(479)
|
|
|
|
(804)
|
|
|
|
(2,557)
|
|
|
|
674
|
|
|
|
12
|
|
|
|
(36)
|
|
|
|
(704)
|
|
|
REO operating
expenses
|
|
-
|
|
|
|
(1)
|
|
|
|
48
|
|
|
|
1
|
|
|
|
59
|
|
|
|
2
|
|
|
|
3
|
|
|
|
35
|
|
|
|
259
|
|
|
Losses/(gains) on
sale of REO
|
|
-
|
|
|
|
1
|
|
|
|
28
|
|
|
|
-
|
|
|
|
(168)
|
|
|
|
3
|
|
|
|
(26)
|
|
|
|
(39)
|
|
|
|
(1,124)
|
|
|
|
Total credit related
expense/(income)
|
|
1,256
|
|
|
|
(696)
|
|
|
|
(403)
|
|
|
|
(803)
|
|
|
|
(2,666)
|
|
|
|
679
|
|
|
|
(11)
|
|
|
|
(40)
|
|
|
|
(1,569)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
5,733
|
|
|
|
5,693
|
|
|
|
4,971
|
|
|
|
4,693
|
|
|
|
4,889
|
|
|
|
4,456
|
|
|
|
4,025
|
|
|
|
4,523
|
|
|
|
4,571
|
|
|
General and
administrative
|
|
3,374
|
|
|
|
2,823
|
|
|
|
2,992
|
|
|
|
3,123
|
|
|
|
3,288
|
|
|
|
2,794
|
|
|
|
3,104
|
|
|
|
2,827
|
|
|
|
2,715
|
|
|
Regulatory
fees
|
|
600
|
|
|
|
600
|
|
|
|
600
|
|
|
|
593
|
|
|
|
594
|
|
|
|
594
|
|
|
|
594
|
|
|
|
593
|
|
|
|
594
|
|
|
|
Total operating
expenses
|
|
9,707
|
|
|
|
9,116
|
|
|
|
8,563
|
|
|
|
8,409
|
|
|
|
8,771
|
|
|
|
7,844
|
|
|
|
7,723
|
|
|
|
7,943
|
|
|
|
7,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
22,885
|
|
|
|
24,444
|
|
|
|
23,094
|
|
|
|
24,311
|
|
|
|
26,640
|
|
|
|
21,818
|
|
|
|
26,989
|
|
|
|
24,458
|
|
|
|
29,980
|
|
Income tax
expense/(benefit)(3)
|
|
8,091
|
|
|
|
6,692
|
|
|
|
4,858
|
|
|
|
6,327
|
|
|
|
(4,734)
|
|
|
|
4,334
|
|
|
|
5,279
|
|
|
|
6,263
|
|
|
|
7,007
|
|
Net (loss)/income
attributable to non-controlling interest
|
|
(119)
|
|
|
|
5,354
|
|
|
|
5,414
|
|
|
|
5,412
|
|
|
|
5,819
|
|
|
|
5,547
|
|
|
|
5,546
|
|
|
|
5,547
|
|
|
|
5,547
|
|
Preferred stock
dividends
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,283
|
|
|
|
2,308
|
|
|
|
952
|
|
|
|
882
|
|
|
|
881
|
|
|
|
881
|
|
|
|
Core
earnings
|
$
|
11,617
|
|
|
$
|
9,103
|
|
|
$
|
9,526
|
|
|
$
|
9,289
|
|
|
$
|
23,247
|
|
|
$
|
10,985
|
|
|
$
|
15,282
|
|
|
$
|
11,767
|
|
|
$
|
16,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items
(after-tax effects):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains/(losses) on financial derivatives and hedging
activities
|
|
10,388
|
|
|
|
(582)
|
|
|
|
(3,717)
|
|
|
|
2,685
|
|
|
|
(3,053)
|
|
|
|
(2,395)
|
|
|
|
8,003
|
|
|
|
4,632
|
|
|
|
11,021
|
|
|
|
Unrealized
gains/(losses) on trading assets
|
|
110
|
|
|
|
236
|
|
|
|
679
|
|
|
|
(21)
|
|
|
|
(46)
|
|
|
|
426
|
|
|
|
(50)
|
|
|
|
(407)
|
|
|
|
(212)
|
|
|
|
Amortization of
premiums/discounts
and deferred gains on
assets
consolidated at fair
value
|
|
(81)
|
|
|
|
(529)
|
|
|
|
(811)
|
|
|
|
(440)
|
|
|
|
(179)
|
|
|
|
(8,027)
|
|
|
|
(10,864)
|
|
|
|
(421)
|
|
|
|
(564)
|
|
|
|
Net effects of
settlements on agency forwards
|
|
128
|
|
|
|
(164)
|
|
|
|
(30)
|
|
|
|
73
|
|
|
|
236
|
|
|
|
(176)
|
|
|
|
114
|
|
|
|
(158)
|
|
|
|
955
|
|
|
|
Loss on retirement of
Farmer Mac II LLC Preferred Stock
|
|
-
|
|
|
|
(6,246)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
Net income
attributable to common stockholders
|
$
|
22,162
|
|
|
$
|
1,818
|
|
|
$
|
5,647
|
|
|
$
|
11,586
|
|
|
$
|
20,205
|
|
|
$
|
813
|
|
|
$
|
12,485
|
|
|
$
|
15,413
|
|
|
$
|
27,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)The
difference between first quarter 2014 and fourth quarter 2013 net
effective spread was due to the impact of one-time adjustments for
recovered buyout interest and yield maintenance of $1.8 million in
fourth quarter 2013, $0.6 million associated with the early
refinancing of AgVantage securities and the recasting of certain
Rural Utilities loans, and a lower day count in first quarter
2014.
|
(2)Fourth
quarter 2014 and third quarter 2014 include $13.6 million and $17.9
million, respectively, of interest expense related to securities
purchased under agreements to resell and securities sold, not yet
purchased and $12.8 million and $16.4 million, respectively of
gains on securities sold, not yet purchased. First quarter
2014 includes additional hedging costs of $0.6 million.
Fourth quarter 2013 includes gains on the repurchase of debt of
$1.5 million, partially offset by realized losses on the sale of
available-for-sale securities of $0.9 million and additional
hedging costs of $0.2 million. Second quarter 2013 includes
$3.1 million of realized gains from the sale of an
available-for-sale investment security.
|
(3)Fourth
quarter 2014 and second quarter 2014 reflect a reduction of $1.4
million and $11.6 million, respectively, in the tax valuation
allowance against capital loss carryforwards related to capital
gains on securities sold, not yet purchased. First quarter
2014 and fourth quarter 2013 reflect a reduction in tax valuation
allowance of $0.8 million and $2.1 million, respectively,
associated with certain gains on investment portfolio assets.
Second quarter 2013 includes the reduction of $1.1 million of tax
valuation allowance against capital loss carryforwards related to
realized gains from the sale of an available-for-sale investment
security.
|
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SOURCE Farmer Mac