WASHINGTON, May 10, 2016 /PRNewswire/ -- The Federal
Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A)
today announced its results for the fiscal quarter ended
March 31, 2016, which included
$317 million in net new business
volume growth that brought total outstanding business volume to
$16.2 billion as of March 31, 2016. Farmer Mac's first quarter
2016 core earnings, a non-GAAP measure, were $12.4 million ($1.12 per diluted common share), compared to
$13.1 million ($1.17 per diluted common share) in fourth quarter
2015 and $9.1 million ($0.80 per diluted common share) in first quarter
2015.
"Our financial results continue to be strong, and our credit
quality remains good," said President and Chief Executive Officer
Tim Buzby. "While certain
segments of agriculture are facing their challenges, the overall
business environment remains favorable for Farmer Mac. Our
Institutional Credit business is growing nicely and we continue to
expand our customer base for our AgVantage funding products,
including a new Farm Equity AgVantage customer this quarter and
more in the pipeline. Our Farm & Ranch loan purchase
business is also making good strides, helped by our business
development efforts as well as an increase in the demand for
agricultural credit. As the agricultural economy continues to
adjust to lower commodity prices and the West Coast drought, we
expect credit quality to revert to more historic levels for Farmer
Mac. However, we believe that this is a necessary and healthy
adjustment for the market and that Farmer Mac is well positioned to
deliver upon its mission as credit becomes somewhat tighter in
agriculture. We believe that our financial outlook is strong
and that we have good opportunities in front of us."
Earnings
Farmer Mac's net income attributable to common stockholders for
first quarter 2016 was $10.3 million ($0.94 per diluted common share), compared to
$1.8 million ($0.16 per diluted common share) for first quarter
2015. The increase in first quarter 2016 compared to first
quarter 2015 was primarily attributable to the absence in first
quarter 2016 of (1) an $8.1 million
($6.2 million after-tax) loss
recorded in first quarter 2015 resulting from the write-off of
deferred issuance costs upon the redemption of the Farmer Mac II
LLC Preferred Stock on March 30, 2015
and (2) $3.5 million after-tax in
dividend expense recorded during first quarter 2015 on the
preferred stock. The increase was partially offset by the
effects of unrealized fair value changes on financial derivatives
and hedged assets, which was a $1.9
million after-tax loss in first quarter 2016, compared to a
$0.6 million after-tax loss in first
quarter 2015.
Core earnings in first quarter 2016 were $12.4 million ($1.12 per diluted common share), compared to
$13.1 million ($1.17 per diluted common share) in fourth quarter
2015, and $9.1 million ($0.80 per diluted common share) in first quarter
2016. The $0.7 million
sequential quarterly decrease in core earnings was primarily
attributable to a $0.4 million
after-tax increase in operating expenses. The increase in operating
expenses was driven by higher stock compensation expense in first
quarter 2016 resulting primarily from the annual vesting of
stock-based awards and higher payroll taxes as well as higher
general and administrative expenses driven by higher legal and
consulting fees related to corporate strategic initiatives and
general corporate matters. Farmer Mac also realized an
increase in credit-related expenses of $0.1
million after-tax due to provisions to the allowance for
losses in first quarter 2016 compared to releases in fourth quarter
2015. The year-over-year $3.3
million increase in core earnings was attributable to a
$3.5 million after-tax decrease in
preferred dividend expense resulting from the redemption of all
outstanding shares of Farmer Mac II Preferred Stock in first
quarter 2015, a $0.4 million
after-tax increase in net effective spread, and an increase in
guarantee fee income of $0.4 million
after-tax. The increase was partially offset by (1) a
$0.5 million after-tax increase in
credit-related expenses due to provisions to the allowance for
losses in first quarter 2016 compared to releases in first quarter
2015 and (2) a $0.5 million after-tax
increase in operating expenses primarily due to legal fees,
consulting fees, and information services expenses related to
corporate strategic initiatives and general corporate matters.
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 first quarter 2016, Farmer Mac added $1.3 billion of new business volume, with
AgVantage securities and Farm & Ranch loan purchases
driving the volume growth. Specifically, Farmer Mac:
- purchased $927.2 million of
AgVantage securities, including $25.2
million in Farm Equity AgVantage securities;
- purchased $198.5 million of newly
originated Farm & Ranch loans;
- purchased $95.3 million of USDA
Securities;
- added $68.0 million of Farm &
Ranch loans under LTSPCs;
- purchased $9.7 million of Rural
Utilities loans; and
- issued $3.6 million of Farmer Mac
Guaranteed USDA Securities.
After $1.0 billion of maturities
and principal paydowns on existing business during first quarter
2016, which included $589.8 million
in scheduled maturities of AgVantage securities, Farmer Mac's
outstanding business volume increased by $316.8 million from December 31, 2015 to $16.2 billion as of March 31, 2016. The increase in Farmer
Mac's outstanding business volume was driven by portfolio growth in
AgVantage securities, including the purchase of $250.0 million in AgVantage securities from the
National Rural Utilities Cooperative Finance Corporation ("CFC")
and purchases of $25.2 million under
Farm Equity AgVantage facilities with agricultural real estate
investment funds, including $9.7
million with a new counterparty. Farmer Mac's Farm
& Ranch loan portfolio also grew this quarter despite the large
amount of repayments resulting from the January 1 payment date on almost all loans in the
portfolio.
Net Effective Spread
Farmer Mac's net effective spread was $29.9 million (82 basis points) in first quarter
2016, compared to $29.9 million (85
basis points) in fourth quarter 2015, and $29.3 million (86 basis points) in first quarter
2015. The decrease in percentage terms in first quarter 2016
compared to fourth quarter 2015 was primarily attributable to
market increases in short-term LIBOR-based funding costs and a
tighter spread on a large AgVantage security that was refinanced at
a shorter maturity than the original security. In addition to
the items previously mentioned, the decrease in net effective
spread in percentage terms in first quarter 2016 compared to first
quarter 2015 was also attributable to a decline in cash basis
interest income received on non-accrual Farm & Ranch
loans. The increase in dollar terms in first quarter 2016
compared to first quarter 2015 was primarily attributable to growth
in outstanding business volume.
Credit Quality
Credit quality remained stable across Farmer Mac's four lines of
business. In the Farm & Ranch portfolio, 90-day
delinquencies were $34.7 million
(0.61 percent of the Farm & Ranch portfolio) as of
March 31, 2016, compared to $32.1
million (0.56 percent) as of December
31, 2015, and $32.1 million (0.60 percent) as of
March 31, 2015. 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 has been approximately one percent.
For Farmer Mac's other lines of business, there are currently no
delinquent AgVantage securities or Rural Utilities loans held or
underlying LTSPCs, 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 March 31, 2016, compared to 0.20 percent as of
December 31, 2015, and 0.22 percent
as of March 31, 2015.
The western part of the United
States, and in particular California, continues to experience the
effects of drought conditions. The persistence of drought
conditions in the western states could have an adverse effect on
Farmer Mac's delinquency rates or loss experience in the future;
however, Farmer Mac has not observed any material effect on its
portfolio from the drought through March
31, 2016. 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 lines of business – Farm
& Ranch, USDA Guarantees, Rural Utilities, and Institutional
Credit. Net effective spread by business segment for first
quarter 2016 was $9.5 million (171
basis points) for Farm & Ranch, $4.3 million (91 basis points) for USDA
Guarantees, $2.5 million (102 basis
points) for Rural Utilities, and $11.1
million (80 basis points) for Institutional Credit.
Liquidity and Capital
Farmer Mac's core capital totaled $562.7
million as of March 31, 2016,
exceeding the statutory minimum capital requirement by $84.9 million, or 18 percent, compared to
$564.5 million as of
December 31, 2015, which was $102.4 million, or 22 percent, above the
statutory minimum capital requirement. The decrease in core
capital above the statutory minimum requirement primarily resulted
from an increase in minimum capital required to support the growth
of on-balance sheet assets during the quarter.
As of March 31, 2016, Farmer Mac's
total stockholders' equity was $543.8
million, compared to $553.5
million as of December 31,
2015. The decrease in total stockholders' equity was
primarily attributable to a decrease in accumulated other
comprehensive income due to decreases in fair value of
available-for-sale floating rate AgVantage securities and cash flow
hedges. The decrease in the fair value of available-for-sale
floating rate AgVantage securities was driven primarily by a
flattening of the yield curve as of March
31, 2016 compared to December
31, 2015. The decrease in the fair value of cash flow
hedges was driven primarily by lower long-term market interest
rates as of March 31, 2016 compared
to December 31, 2015.
On September 8, 2015, Farmer Mac's
board of directors approved a share repurchase program, which
authorized Farmer Mac to repurchase up to $25 million of its outstanding Class C non-voting
common stock through September 2017. As of March 31, 2016, Farmer Mac had repurchased
approximately 668,000 shares at a cost of approximately
$19.6 million.
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 172 days of liquidity
during first quarter 2016 and had 178 days of liquidity
as of March 31, 2016.
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
|
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
|
March 31,
2015
|
|
|
|
|
(in thousands,
except per share amounts)
|
Net income
attributable to common stockholders
|
|
$
|
10,317
|
|
|
$
|
15,032
|
|
|
$
|
1,818
|
|
Less the after-tax
effects of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
(losses)/gains on financial derivatives and hedging
activities
|
|
|
(1,943)
|
|
|
|
1,784
|
|
|
|
(582)
|
|
|
Unrealized gains on
trading securities
|
|
|
233
|
|
|
|
452
|
|
|
|
236
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
|
(183)
|
|
|
|
(171)
|
|
|
|
(529)
|
|
|
Net effects of
settlements on agency forward contracts
|
|
|
(165)
|
|
|
|
(106)
|
|
|
|
(164)
|
|
|
Loss on retirement of
Farmer Mac II LLC Preferred Stock(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,246)
|
|
|
|
Sub-total
|
|
|
(2,058)
|
|
|
|
1,959
|
|
|
|
(7,285)
|
|
Core
earnings
|
|
$
|
12,375
|
|
|
$
|
13,073
|
|
|
$
|
9,103
|
|
|
|
|
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective
spread(2)
|
|
$
|
29,949
|
|
|
$
|
29,949
|
|
|
$
|
29,257
|
|
|
Guarantee and
commitment fees(3)
|
|
|
4,669
|
|
|
|
4,730
|
|
|
|
4,012
|
|
|
Other(4)
|
|
|
(517)
|
|
|
|
(284)
|
|
|
|
(405)
|
|
|
|
Total
revenues
|
|
|
34,101
|
|
|
|
34,395
|
|
|
|
32,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
expense/(income) (GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for/(release of) losses
|
|
|
63
|
|
|
|
(49)
|
|
|
|
(696)
|
|
|
REO operating
expenses
|
|
|
39
|
|
|
|
44
|
|
|
|
(1)
|
|
|
Losses on sale of
REO
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
Total credit related
expense/(income)
|
|
|
102
|
|
|
|
(5)
|
|
|
|
(696)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation &
employee benefits
|
|
|
5,774
|
|
|
|
5,385
|
|
|
|
5,693
|
|
|
General &
Administrative
|
|
|
3,526
|
|
|
|
3,238
|
|
|
|
2,823
|
|
|
Regulatory
fees
|
|
|
613
|
|
|
|
613
|
|
|
|
600
|
|
|
|
Total operating
expenses
|
|
|
9,913
|
|
|
|
9,236
|
|
|
|
9,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
24,086
|
|
|
|
25,164
|
|
|
|
24,444
|
|
|
Income tax
expense(5)
|
|
|
8,444
|
|
|
|
8,855
|
|
|
|
6,692
|
|
|
Net (loss)/income
attributable to non-controlling interest (GAAP)
|
|
|
(28)
|
|
|
|
(60)
|
|
|
|
5,354
|
|
|
Preferred stock
dividends (GAAP)
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
Core
earnings
|
|
$
|
12,375
|
|
|
$
|
13,073
|
|
|
$
|
9,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.18
|
|
|
$
|
1.21
|
|
|
$
|
0.83
|
|
|
Diluted
|
|
|
1.12
|
|
|
|
1.17
|
|
|
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Relates to the
write-off of deferred issuance costs as a result of the retirement
of Farmer Mac II LLC Preferred Stock.
|
(2)
|
Includes reconciling
adjustments to exclude amortization of premiums and discounts on
assets consolidated at fair value to reflect core earnings amounts.
Also includes reconciling adjustments to include the
reclassification of expenses related to interest rate swaps not
designated as hedges.
|
(3)
|
Includes interest
income and interest expense related to consolidated trusts owned by
third parties reclassified from interest income and interest
expense to guarantee and commitment fees to reflect that the net
interest income Farmer Mac earns is effectively a guarantee fee on
the consolidated Farmer Mac Guaranteed Securities.
|
(4)
|
Reflects reconciling
adjustments for the reclassification to exclude expenses related to
interest rate swaps not designated as hedges and fair value
adjustments on financial derivatives and trading assets and a
reconciling adjustment to exclude the recognition of deferred gains
over the estimated lives of certain Farmer Mac Guaranteed
Securities and USDA Securities.
|
(5)
|
Includes the tax
impact of non-GAAP reconciling items between net income
attributable to common stockholders and core earnings because those
non-GAAP reconciling items are presented after tax.
|
More complete information about Farmer Mac's performance for
first quarter 2016 is set forth in Farmer Mac's Quarterly Report on
Form 10-Q for the period ended March 31,
2016 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, its sources of business, or the agricultural sector or the
rural utilities industry;
- 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;
- the degree to which Farmer Mac is exposed to basis risk, which
results from fluctuations in Farmer Mac's borrowing costs relative
to market indexes such as LIBOR; 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 in Farmer Mac's Annual Report on Form 10-K for the year
ended December 31, 2015 filed with
the SEC on March 10, 2016 and in the
Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed with the SEC earlier
today. 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 first quarter 2016
financial results will be held beginning at 11:00 a.m. eastern
time on Tuesday, May 10, 2016 and can
be accessed by telephone or live webcast as follows:
Telephone (Domestic): (888) 346-2616
Telephone (International): (412) 902-4254
Webcast:
https://www.farmermac.com/investors/events-presentations/
When dialing in to the call, please ask for the conference
chairman Tim Buzby. 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.
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
|
|
March 31,
|
|
December
31,
|
|
|
|
|
|
2016
|
2015
|
|
|
|
|
|
|
(in
thousands)
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,729,563
|
|
|
$
|
1,210,084
|
|
|
Investment
securities
|
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
2,452,582
|
|
|
|
2,775,025
|
|
|
|
Trading, at fair
value
|
|
383
|
|
|
|
491
|
|
|
|
|
Total investment
securities
|
|
2,452,965
|
|
|
|
2,775,516
|
|
|
Farmer Mac Guaranteed
Securities
|
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
4,565,504
|
|
|
|
4,152,605
|
|
|
|
Held-to-maturity, at
amortized cost
|
|
1,207,349
|
|
|
|
1,274,016
|
|
|
|
|
Total Farmer Mac
Guaranteed Securities
|
|
5,772,853
|
|
|
|
5,426,621
|
|
|
USDA
Securities
|
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
1,908,014
|
|
|
|
1,888,344
|
|
|
|
Trading, at fair
value
|
|
26,869
|
|
|
|
28,975
|
|
|
|
|
Total USDA
Securities
|
|
1,934,883
|
|
|
|
1,917,319
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for
investment, at amortized cost
|
|
3,204,452
|
|
|
|
3,258,413
|
|
|
|
Loans held for
investment in consolidated trusts, at amortized cost
|
|
816,267
|
|
|
|
708,111
|
|
|
|
Allowance for loan
losses
|
|
(4,529)
|
|
|
|
(4,480)
|
|
|
|
|
Total loans, net of
allowance
|
|
4,016,190
|
|
|
|
3,962,044
|
|
|
Real estate owned, at
lower of cost or fair value
|
|
1,330
|
|
|
|
1,369
|
|
|
Financial
derivatives, at fair value
|
|
7,034
|
|
|
|
3,816
|
|
|
Interest receivable
(includes $5,270 and $7,938, respectively, related to consolidated
trusts)
|
|
75,067
|
|
|
|
112,700
|
|
|
Guarantee and
commitment fees receivable
|
|
39,389
|
|
|
|
40,189
|
|
|
Deferred tax asset,
net
|
|
47,236
|
|
|
|
42,916
|
|
|
Prepaid expenses and
other assets
|
|
79,518
|
|
|
|
47,780
|
|
|
|
|
|
Total
Assets
|
$
|
16,156,028
|
|
|
$
|
15,540,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity:
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Notes
Payable:
|
|
|
|
|
|
|
|
|
|
Due within one
year
|
$
|
9,322,682
|
|
|
$
|
9,111,461
|
|
|
|
Due after one
year
|
|
5,264,695
|
|
|
|
4,967,036
|
|
|
|
|
Total notes
payable
|
|
14,587,377
|
|
|
|
14,078,497
|
|
|
Debt securities of
consolidated trusts held by third parties
|
|
816,435
|
|
|
|
713,536
|
|
|
Financial
derivatives, at fair value
|
|
117,956
|
|
|
|
77,199
|
|
|
Accrued interest
payable (includes $4,244 and $6,705, respectively, related to
consolidated trusts)
|
|
38,152
|
|
|
|
47,621
|
|
|
Guarantee and
commitment obligation
|
|
37,540
|
|
|
|
38,609
|
|
|
Accounts payable and
accrued expenses
|
|
12,455
|
|
|
|
29,089
|
|
|
Reserve for
losses
|
|
2,097
|
|
|
|
2,083
|
|
|
|
|
|
Total
Liabilities
|
|
15,612,012
|
|
|
|
14,986,634
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
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, 8,919,730 shares and
9,155,661 shares outstanding, respectively
|
|
8,920
|
|
|
|
9,156
|
|
|
Additional paid-in
capital
|
|
117,434
|
|
|
|
117,862
|
|
|
Accumulated other
comprehensive loss, net of tax
|
|
(18,917)
|
|
|
|
(11,019)
|
|
|
Retained
earnings
|
|
230,062
|
|
|
|
231,228
|
|
|
|
|
|
Total Stockholders'
Equity
|
|
543,789
|
|
|
|
553,517
|
|
|
Non-controlling
interest
|
|
227
|
|
|
|
203
|
|
|
|
|
|
Total
Equity
|
|
544,016
|
|
|
|
553,720
|
|
|
|
|
|
|
Total Liabilities and
Equity
|
$
|
16,156,028
|
|
|
$
|
15,540,354
|
|
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited)
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
|
|
March 31,
2016
|
|
March 31,
2015
|
|
|
|
(in thousands, except per share amounts)
|
Interest
income:
|
|
|
|
|
Investments and cash
equivalents
|
$
|
6,681
|
|
|
$
|
2,865
|
|
|
Farmer Mac Guaranteed
Securities and USDA Securities
|
|
35,510
|
|
|
|
33,122
|
|
|
Loans
|
|
31,700
|
|
|
|
27,964
|
|
|
|
Total interest
income
|
|
73,891
|
|
|
|
63,951
|
|
|
Total interest
expense
|
|
40,251
|
|
|
|
33,162
|
|
|
|
Net interest
income
|
|
33,640
|
|
|
|
30,789
|
|
|
Provision for loan
losses
|
|
(49)
|
|
|
|
(76)
|
|
|
|
Net interest income
after provision for loan losses
|
|
33,591
|
|
|
|
30,713
|
|
Non-interest
(loss)/income:
|
|
|
|
|
Guarantee and
commitment fees
|
|
3,626
|
|
|
|
3,377
|
|
|
Losses on financial
derivatives and hedging activities
|
|
(6,782)
|
|
|
|
(3,882)
|
|
|
Gains on trading
securities
|
|
358
|
|
|
|
362
|
|
|
(Losses)/gains on
sale of available-for-sale investment securities
|
|
(9)
|
|
|
|
6
|
|
|
Losses on sale of
real estate owned
|
|
-
|
|
|
|
(1)
|
|
|
Other
income
|
|
101
|
|
|
|
613
|
|
|
|
Non-interest
(loss)/income
|
|
(2,706)
|
|
|
|
475
|
|
Non-interest
expense:
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
5,774
|
|
|
|
5,693
|
|
|
General and
administrative
|
|
3,526
|
|
|
|
2,823
|
|
|
Regulatory
fees
|
|
613
|
|
|
|
600
|
|
|
Real estate owned
operating costs, net
|
|
39
|
|
|
|
(1)
|
|
|
Provision
for/(release of) reserve for losses
|
|
14
|
|
|
|
(772)
|
|
|
|
Non-interest
expense
|
|
9,966
|
|
|
|
8,343
|
|
|
|
Income before income
taxes
|
|
20,919
|
|
|
|
22,845
|
|
Income tax
expense
|
|
7,335
|
|
|
|
4,231
|
|
|
|
Net income
|
|
13,584
|
|
|
|
18,614
|
|
Less: Net
loss/(income) attributable to non-controlling interest
|
|
28
|
|
|
|
(5,354)
|
|
|
Net income
attributable to Farmer Mac
|
|
13,612
|
|
|
|
13,260
|
|
Preferred stock
dividends
|
|
(3,295)
|
|
|
|
(3,295)
|
|
Loss on retirement of
preferred stock
|
|
-
|
|
|
|
(8,147)
|
|
|
|
Net income
attributable to common stockholders
|
$
|
10,317
|
|
|
$
|
1,818
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share and dividends:
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
|
0.99
|
|
|
$
|
0.17
|
|
|
|
Diluted earnings per
common share
|
$
|
0.94
|
|
|
$
|
0.16
|
|
|
|
Common stock
dividends per common share
|
$
|
0.26
|
|
|
$
|
0.16
|
|
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 March 31,
2016
|
|
As of December 31,
2015
|
|
|
|
|
|
(in thousands)
|
On-balance
sheet:
|
|
|
|
|
Farm &
Ranch:
|
|
|
|
|
|
Loans
|
$
|
2,206,191
|
|
|
$
|
2,249,864
|
|
|
|
Loans held in
trusts:
|
|
|
|
|
|
|
|
|
|
|
Beneficial interests
owned by third party investors
|
|
816,267
|
|
|
|
708,111
|
|
|
USDA
Guarantees:
|
|
|
|
|
|
|
|
|
|
USDA
Securities
|
|
1,885,276
|
|
|
|
1,876,451
|
|
|
|
Farmer Mac Guaranteed
USDA Securities
|
|
31,038
|
|
|
|
31,554
|
|
|
Rural
Utilities:
|
|
|
|
|
|
|
|
|
|
Loans
|
|
991,851
|
|
|
|
1,008,126
|
|
|
Institutional
Credit:
|
|
|
|
|
|
|
|
|
|
AgVantage
Securities
|
|
5,776,755
|
|
|
|
5,439,383
|
|
|
|
|
Total on-balance
sheet
|
$
|
11,707,378
|
|
|
$
|
11,313,489
|
|
Off-balance
sheet:
|
|
|
|
|
Farm &
Ranch:
|
|
|
|
|
|
LTSPCs
|
$
|
2,206,029
|
|
|
$
|
2,253,273
|
|
|
|
Guaranteed
Securities
|
|
485,302
|
|
|
|
514,051
|
|
|
USDA
Guarantees:
|
|
|
|
|
|
|
|
|
|
Farmer Mac Guaranteed
USDA Securities
|
|
13,268
|
|
|
|
10,272
|
|
|
Rural
Utilities:
|
|
|
|
|
|
|
|
|
LTSPCs(1)
|
|
518,724
|
|
|
|
522,864
|
|
|
Institutional
Credit:
|
|
|
|
|
|
|
|
|
|
AgVantage
Securities
|
|
984,871
|
|
|
|
984,871
|
|
|
|
Revolving floating
rate AgVantage facility(2)
|
|
300,000
|
|
|
|
300,000
|
|
|
|
|
Total off-balance
sheet
|
$
|
4,508,194
|
|
|
$
|
4,585,331
|
|
|
|
|
|
Total
|
$
|
16,215,572
|
|
|
$
|
15,898,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes $8.8 million
related to a one-year loan purchase commitment on which Farmer Mac
receives a nominal unused commitment fee as of both March 31, 2016
and December 31, 2015.
|
(2)
|
As of both March 31,
2016 and December 31, 2015, this facility had not been
utilized. Farmer Mac receives a fixed fee based on the full
dollar amount of the facility. If the counterparty draws on
the facility, the amounts drawn will be presented as AgVantage
Securities, and Farmer Mac will earn interest income on those
securities.
|
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
|
|
Corporate
|
|
Net Effective
Spread
|
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
|
(dollars in
thousands)
|
For the quarter
ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2016
|
$
|
9,461
|
|
|
1.71
|
%
|
|
$
|
4,308
|
|
|
0.91
|
%
|
|
$
|
2,538
|
|
|
1.02
|
%
|
|
$
|
11,090
|
|
|
0.80
|
%
|
|
$
|
2,552
|
|
|
0.26
|
%
|
|
$
|
29,949
|
|
|
0.82
|
%
|
|
December 31,
2015
|
|
9,381
|
|
|
1.72
|
%
|
|
|
4,518
|
|
|
0.96
|
%
|
|
|
2,845
|
|
|
1.14
|
%
|
|
|
10,899
|
|
|
0.80
|
%
|
|
|
2,306
|
|
|
0.26
|
%
|
|
|
29,949
|
|
|
0.85
|
%
|
|
September 30,
2015
|
|
9,628
|
|
|
1.80
|
%
|
|
|
4,630
|
|
|
0.99
|
%
|
|
|
2,907
|
|
|
1.18
|
%
|
|
|
11,271
|
|
|
0.81
|
%
|
|
|
1,951
|
|
|
0.25
|
%
|
|
|
30,387
|
|
|
0.88
|
%
|
|
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(1)
|
|
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(2)
|
|
8,682
|
|
|
1.71
|
%
|
|
|
5,250
|
|
|
1.19
|
%
|
|
|
2,908
|
|
|
1.18
|
%
|
|
|
9,870
|
|
|
0.78
|
%
|
|
|
1,732
|
|
|
0.26
|
%
|
|
|
28,442
|
|
|
0.91
|
%
|
|
September 30,
2014
|
|
8,207
|
|
|
1.68
|
%
|
|
|
5,073
|
|
|
1.18
|
%
|
|
|
2,890
|
|
|
1.16
|
%
|
|
|
9,823
|
|
|
0.78
|
%
|
|
|
3,773
|
|
|
0.59
|
%
|
|
|
29,766
|
|
|
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(3)
|
|
7,114
|
|
|
1.53
|
%
|
|
|
3,784
|
|
|
0.91
|
%
|
|
|
1,990
|
|
|
0.73
|
%
|
|
|
9,406
|
|
|
0.74
|
%
|
|
|
4,142
|
|
|
0.56
|
%
|
|
|
26,436
|
|
|
0.84
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
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.
|
(2)
|
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.
|
(3)
|
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).
|
The following table presents quarterly core earnings reconciled
to net income attributable to common stockholders:
Core Earnings by
Quarter Ended
|
|
|
|
|
March
2016
|
|
December
2015
|
|
September
2015
|
|
June
2015
|
|
March
2015
|
|
December
2014
|
|
September
2014
|
|
June
2014
|
|
March
2014
|
|
|
|
|
(in
thousands)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective
spread
|
$
|
29,949
|
|
|
$
|
29,949
|
|
|
$
|
30,387
|
|
|
$
|
29,787
|
|
|
$
|
29,257
|
|
|
$
|
28,442
|
|
|
$
|
29,766
|
|
|
$
|
29,049
|
|
|
$
|
26,436
|
|
|
Guarantee and
commitment fees
|
|
4,669
|
|
|
|
4,730
|
|
|
|
4,328
|
|
|
|
4,085
|
|
|
|
4,012
|
|
|
|
4,097
|
|
|
|
4,152
|
|
|
|
4,216
|
|
|
|
4,315
|
|
|
Other(1)
|
|
(517)
|
|
|
|
(284)
|
|
|
|
(93)
|
|
|
|
(24)
|
|
|
|
(405)
|
|
|
|
(1,285)
|
|
|
|
(2,001)
|
|
|
|
(520)
|
|
|
|
(410)
|
|
|
|
Total
revenues
|
|
34,101
|
|
|
|
34,395
|
|
|
|
34,622
|
|
|
|
33,848
|
|
|
|
32,864
|
|
|
|
31,254
|
|
|
|
31,917
|
|
|
|
32,745
|
|
|
|
30,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
expense/(income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for/(release of) losses
|
|
63
|
|
|
|
(49)
|
|
|
|
(303)
|
|
|
|
1,256
|
|
|
|
(696)
|
|
|
|
(479)
|
|
|
|
(804)
|
|
|
|
(2,557)
|
|
|
|
674
|
|
|
REO operating
expenses
|
|
39
|
|
|
|
44
|
|
|
|
48
|
|
|
|
-
|
|
|
|
(1)
|
|
|
|
48
|
|
|
|
1
|
|
|
|
59
|
|
|
|
2
|
|
|
Losses/(gains) on
sale of REO
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
28
|
|
|
|
-
|
|
|
|
(168)
|
|
|
|
3
|
|
|
|
Total credit related
expense/(income)
|
|
102
|
|
|
|
(5)
|
|
|
|
(255)
|
|
|
|
1,256
|
|
|
|
(696)
|
|
|
|
(403)
|
|
|
|
(803)
|
|
|
|
(2,666)
|
|
|
|
679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
5,774
|
|
|
|
5,385
|
|
|
|
5,236
|
|
|
|
5,733
|
|
|
|
5,693
|
|
|
|
4,971
|
|
|
|
4,693
|
|
|
|
4,889
|
|
|
|
4,456
|
|
|
General and
administrative
|
|
3,526
|
|
|
|
3,238
|
|
|
|
3,676
|
|
|
|
3,374
|
|
|
|
2,823
|
|
|
|
2,992
|
|
|
|
3,123
|
|
|
|
3,288
|
|
|
|
2,794
|
|
|
Regulatory
fees
|
|
613
|
|
|
|
613
|
|
|
|
600
|
|
|
|
600
|
|
|
|
600
|
|
|
|
600
|
|
|
|
593
|
|
|
|
594
|
|
|
|
594
|
|
|
|
Total operating
expenses
|
|
9,913
|
|
|
|
9,236
|
|
|
|
9,512
|
|
|
|
9,707
|
|
|
|
9,116
|
|
|
|
8,563
|
|
|
|
8,409
|
|
|
|
8,771
|
|
|
|
7,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
24,086
|
|
|
|
25,164
|
|
|
|
25,365
|
|
|
|
22,885
|
|
|
|
24,444
|
|
|
|
23,094
|
|
|
|
24,311
|
|
|
|
26,640
|
|
|
|
21,818
|
|
Income tax
expense/(benefit)(2)
|
|
8,444
|
|
|
|
8,855
|
|
|
|
8,924
|
|
|
|
8,091
|
|
|
|
6,692
|
|
|
|
4,858
|
|
|
|
6,327
|
|
|
|
(4,734)
|
|
|
|
4,334
|
|
Net (loss)/income
attributable to non-controlling interest
|
|
(28)
|
|
|
|
(60)
|
|
|
|
(36)
|
|
|
|
(119)
|
|
|
|
5,354
|
|
|
|
5,414
|
|
|
|
5,412
|
|
|
|
5,819
|
|
|
|
5,547
|
|
Preferred stock
dividends
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,283
|
|
|
|
2,308
|
|
|
|
952
|
|
|
|
Core
earnings
|
$
|
12,375
|
|
|
$
|
13,073
|
|
|
$
|
13,182
|
|
|
$
|
11,617
|
|
|
$
|
9,103
|
|
|
$
|
9,526
|
|
|
$
|
9,289
|
|
|
$
|
23,247
|
|
|
$
|
10,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items
(after-tax effects):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
(losses)/gains on financial derivatives and hedging
activities
|
|
(1,943)
|
|
|
|
1,784
|
|
|
|
(4,489)
|
|
|
|
10,388
|
|
|
|
(582)
|
|
|
|
(3,717)
|
|
|
|
2,685
|
|
|
|
(3,053)
|
|
|
|
(2,395)
|
|
|
|
Unrealized
gains/(losses) on trading assets
|
|
233
|
|
|
|
452
|
|
|
|
(5)
|
|
|
|
110
|
|
|
|
236
|
|
|
|
679
|
|
|
|
(21)
|
|
|
|
(46)
|
|
|
|
426
|
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
|
(183)
|
|
|
|
(171)
|
|
|
|
(76)
|
|
|
|
(81)
|
|
|
|
(529)
|
|
|
|
(811)
|
|
|
|
(440)
|
|
|
|
(179)
|
|
|
|
(8,027)
|
|
|
|
Net effects of
settlements on agency forwards
|
|
(165)
|
|
|
|
(106)
|
|
|
|
(253)
|
|
|
|
128
|
|
|
|
(164)
|
|
|
|
(30)
|
|
|
|
73
|
|
|
|
236
|
|
|
|
(176)
|
|
|
|
Loss on retirement of
Farmer Mac II LLC Preferred Stock
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,246)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
Net income
attributable to common stockholders
|
$
|
10,317
|
|
|
$
|
15,032
|
|
|
$
|
8,359
|
|
|
$
|
22,162
|
|
|
$
|
1,818
|
|
|
$
|
5,647
|
|
|
$
|
11,586
|
|
|
$
|
20,205
|
|
|
$
|
813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
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.
|
(2)
|
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.
|
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SOURCE Farmer Mac