WASHINGTON, Aug. 1, 2019 /PRNewswire/ -- The Federal
Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and
AGM.A), the nation's largest secondary market provider that
increases the availability and affordability of credit for the
benefit of rural America, today announced its results for the
fiscal quarter ended June 30,
2019.
Second Quarter 2019 Highlights
- Net business volume growth of $239.8
million, with growth across all four lines of business
- Net income attributable to common stockholders grew 7%
year-over-year to $28.3 million, or
$2.63 per diluted common share
- Core earnings, a non-GAAP measure, grew 22% year-over-year to
$23.6 million, or $2.20 per diluted common share
- Net interest income of $43.1
million
- Net effective spread, a non-GAAP measure, increased 14% from
the prior year period to $41.4
million
- 90-day delinquencies were 0.38% of the $7.3 billion Farm & Ranch portfolio as of
June 30, 2019, compared to 0.61% as of June 30, 2018
- Issued $100.0 million of Tier 1
capital through the public offering of 5.700% Series D
non-cumulative preferred stock
-
- Used $75.0 million of the net
proceeds to redeem the aggregate outstanding 6.875% Series B
non-cumulative preferred stock
"We had another strong quarter of performance at Farmer Mac, as
we grew our portfolio across all lines of business while
maintaining our rigorous credit quality and robust capital base,"
said President and Chief Executive Officer Brad Nordholm. "In addition to our
consistent growth, we completed a successful preferred stock
offering that enabled us to strengthen our Tier 1 capital position
and demonstrate strong market access for low cost capital.
Looking ahead, we are well positioned to further grow our
outstanding business volume and expand our market share as we
continue to fulfill our mission of increasing the availability and
affordability of credit for rural America while delivering value
for our shareholders."
Second Quarter 2019 Results
Business Volume
During second quarter 2019, Farmer Mac added $1.2 billion of gross new business volume,
compared to $1.3 billion in second
quarter 2018, encompassing:
- purchase of $659.4 million of
AgVantage securities;
- purchase of $248.2 million of
newly originated Farm & Ranch loans;
- purchase of $105.0 million of
Rural Utilities loans;
- purchase of $88.9 million of USDA
Securities;
- addition of $57.3 million of Farm
& Ranch loans under LTSPCs; and
- issuance of $29.4 million of
Farmer Mac Guaranteed USDA Securities.
After approximately $1.0 billion
of maturities and principal paydowns on existing business during
second quarter 2019, net outstanding business volume increased
$239.8 million from March 31, 2019 to $20.7
billion as of June 30, 2019, driven by net growth
across all four lines of business – $81.0
million in Rural Utilities, $75.8
million in Farm & Ranch, $46.5
million in Institutional Credit, and $36.6 million in USDA Guarantees.
Net growth in our Rural Utilities line of business was primarily
due to the purchase of four loans, including a $50.0 million loan purchase, partially offset by
repayments of $7.0 million during the
quarter.
Net growth in our Farm & Ranch line of business was
comprised of a $143.4 million net
increase in outstanding loan purchase volume, partially offset by a
$67.6 million net decrease in loans
under LTSPCs.
The Institutional Credit line of business grew during the second
quarter through the purchase of $25.0
million in AgVantage securities from one of Farmer Mac's
large counterparties and the purchase of $45.7 million in AgVantage securities from two
smaller financial fund counterparties, partially offset by
repayments of $17.4 million in
AgVantage securities backed by Rural Utilities loans.
The USDA Guarantees line of business grew more rapidly than in
the second quarter of 2018, reflecting increased loan volume being
processed through the USDA since the government shut-down during
January 2019.
Spreads
Net interest income was $43.1
million for second quarter 2019, compared to $43.9 million in second quarter 2018. The
year-over-year decrease was primarily driven by a $3.3 million decrease in fair value on financial
derivatives and hedged items in fair value hedge accounting
relationships and a $2.3 million
decrease in income from interest earning assets indexed to
LIBOR. These factors were mostly offset by a $2.6 million increase in interest income
generated from new business volume and the absence of a
$2.0 million premium amortization
that occurred in the prior period related to the payoff of an
interest-only security. Overall net interest yield was 0.87%
for second quarter 2019, compared to 0.96% for second quarter
2018.
Net effective spread, a non-GAAP measure, grew 14% to
$41.4 million in second quarter 2019,
compared to $36.2 million in second
quarter 2018, primarily due to growth in outstanding business
volume, which increased net effective spread by $2.6 million, and the absence of a $2.0 million premium amortization from the payoff
of an interest-only security in second quarter 2018. In
percentage terms, net effective spread was 0.91% in second quarter
2019, compared to 0.86% in second quarter 2018.
Earnings
Net income attributable to common stockholders for second
quarter 2019 grew 7% to $28.3 million
($2.63 per diluted common share),
compared to $26.3 million
($2.45 per diluted common share) in
second quarter 2018. The growth was primarily due to a
$5.0 million after-tax increase in
fair value on undesignated financial derivatives and partially
offset by the recognition of $2.0
million in deferred issuance costs for the redeemed Series B
preferred stock, a decrease in net interest income of $0.7 million after tax, and a $0.5 million increase in preferred stock
dividends.
Our non-GAAP core earnings for second quarter 2019 were
$23.6 million ($2.20 per diluted common share), an increase of
$4.2 million compared to $19.4 million in second quarter 2018
($1.80 per diluted common
share). The year-over-year increase in core earnings was
primarily due to a $4.1 million
after-tax increase in net effective spread and a $0.5 million after-tax decrease in operating
expenses. The decrease in operating expenses was primarily
due to a decrease in hiring expenses and servicing advances.
These positive factors were partially offset by the $0.5 million increase in preferred stock
dividends.
See "Use of Non-GAAP Measures" below for more information about
core earnings, core earnings per share, and net effective spread
and for reconciliations of the comparable GAAP measures to these
non-GAAP measures.
Credit
As of June 30, 2019, Farmer Mac's allowance for losses was
$9.1 million (0.13% of the Farm &
Ranch portfolio), compared to $8.8
million (0.12% of the Farm & Ranch portfolio) as of
March 31, 2019 and $9.0 million (0.13% of the Farm & Ranch
portfolio) as of June 30, 2018.
The $0.3 million increase in the
total allowance for losses from first quarter 2019 was primarily
due to an increase in Farm & Ranch outstanding business volume
and slightly lower credit quality.
As of June 30, 2019, Farmer Mac's 90-day delinquencies were
$28.0 million (0.38% of the Farm
& Ranch portfolio), compared to $52.4
million (0.73% of the Farm & Ranch portfolio) as of
March 31, 2019 and $43.1 million (0.61% of the Farm & Ranch
portfolio) as of June 30, 2018.
The sequential decrease in 90-day delinquencies is consistent with
the seasonal pattern of Farmer Mac's 90-day delinquencies
fluctuating from quarter to quarter, both in dollars and as a
percentage of the outstanding Farm & Ranch portfolio, with
higher levels generally observed at the end of the first and third
quarters and lower levels generally observed at the end of the
second and fourth quarters of each year. As of June 30, 2019, 90-day delinquencies had improved
across all major commodity groups compared to March 31, 2019.
As of June 30, 2019, Farmer Mac
had no delinquent AgVantage securities or delinquent Rural
Utilities loans held or underlying LTSPCs. USDA Securities
are backed by the full faith and credit of the United States. Across all of Farmer Mac's
lines of business, 90-day delinquencies represented 0.14% of total
business volume as of June 30, 2019,
compared to 0.26% as of March 31,
2019 and 0.22% as of June 30,
2018.
As of June 30, 2019, Farmer Mac's substandard assets were
$242.7 million (3.3% of the Farm
& Ranch portfolio), compared to $246.7
million (3.4% of the Farm & Ranch portfolio) as of
March 31, 2019 and $226.5 million (3.2% of the Farm & Ranch
portfolio) as of June 30, 2018. The
$4.0 million sequential
improvement in substandard assets in second quarter 2019 was
primarily due to the paydown of an existing substandard loan.
Farmer Mac's 90-day delinquencies rate and substandard assets
rate during second quarter 2019 each remained below Farmer Mac's
historical averages of 1.0% and 4.0%, respectively.
Capital
As of June 30, 2019, Farmer Mac's core capital level was
$786.6 million, which was
$191.6 million above the minimum
capital level required by Farmer Mac's statutory
charter. Farmer Mac's Tier 1 capital ratio was 13.6% as
of June 30, 2019.
Preferred Stock
On May 13, 2019, Farmer Mac issued
4.0 million shares of 5.700% Non-Cumulative Preferred Stock, Series
D ("Series D Preferred Stock"), which has a par value and
liquidation preference of $25.00 per
share, or $100.0 million aggregate
outstanding. Farmer Mac incurred direct costs of $3.3 million related to the issuance of the
Series D Preferred Stock. The dividend rate on the Series D
Preferred Stock is a fixed rate of 5.700% per year for the life of
the security. Dividends on the Series D Preferred Stock are payable
when, as, and if declared by the Board of Directors of Farmer Mac
and are non-cumulative, so dividends that are not declared for a
quarterly payment date will not accrue. The Series D Preferred
Stock has no maturity date, but Farmer Mac has the option to redeem
the preferred stock on any quarterly dividend payment date on and
after July 17, 2024.
On June 12, 2019, Farmer Mac used
part of the net proceeds from the sale of the Series D Preferred
Stock to redeem and repurchase all $75.0
million aggregate outstanding of Farmer Mac's 6.875%
Non-Cumulative Preferred Stock, Series B ("Series B Preferred
Stock"), plus any declared and unpaid dividends through and
including the redemption date. As a result of the retirement
of the Series B Preferred Stock, Farmer Mac recognized
$2.0 million of deferred issuance
costs, which is presented as "Loss on retirement of preferred
stock" on the consolidated statements of operations.
Earnings Conference Call Information
The conference call to discuss Farmer Mac's second quarter 2019
financial results will be held beginning at 11:00 a.m. Eastern time on Thursday,
August 1, 2019 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 "Farmer Mac
Earnings Conference Call." The call can be heard live and will also
be available for replay on Farmer Mac's website for two weeks
following the conclusion of the call.
More complete information about Farmer Mac's performance for
second quarter 2019 is in Farmer Mac's Quarterly Report on Form
10-Q for the period ended June 30,
2019 filed today with the SEC.
Use of Non-GAAP Measures
In the accompanying analysis of its financial information,
Farmer Mac uses the following non-GAAP measures: "core earnings,"
"core earnings per share," and "net effective spread." Farmer Mac
uses these non-GAAP measures to measure corporate economic
performance and develop financial plans because, in management's
view, they are useful alternative measures in understanding Farmer
Mac's economic performance, transaction economics, and business
trends. The non-GAAP financial measures that Farmer Mac uses may
not be comparable to similarly labeled non-GAAP financial measures
disclosed by other companies. Farmer Mac's disclosure of these
non-GAAP measures 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.
Core earnings and core earnings per share principally differ
from net income attributable to common stockholders and earnings
per common share, respectively, by excluding the effects of fair
value fluctuations. These fluctuations are not expected to have a
cumulative net impact on Farmer Mac's financial condition or
results of operations reported in accordance with GAAP if the
related financial instruments are held to maturity, as is
expected.
Core earnings and core earnings per share also differ from net
income attributable to common stockholders and earnings per common
share, respectively, 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.
Farmer Mac uses net effective spread to measure the net spread
Farmer Mac earns between its interest-earning assets and the
related net funding costs of these assets. Net effective spread
differs from net interest income and net interest yield because it
excludes: (1) the amortization of premiums and discounts on assets
consolidated at fair value that are amortized as adjustments to
yield in interest income over the contractual or estimated
remaining lives of the underlying assets; (2) interest income and
interest expense related to consolidated trusts with beneficial
interests owned by third parties, which are presented on Farmer
Mac's consolidated balance sheets as "Loans held for investment in
consolidated trusts, at amortized cost"; and (3) the fair
value changes of financial derivatives and the corresponding assets
or liabilities designated in a fair value hedge relationship.
Net effective spread also principally differs from net interest
income and net interest yield because it includes:
(1) the accrual of income and expense related to the
contractual amounts due on financial derivatives that are not
designated in hedge relationships ("undesignated financial
derivatives"); and (2) the net effects of terminations or net
settlements on financial derivatives. More information about
Farmer Mac's use of non-GAAP measures is available in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations—Results of Operations" in Farmer Mac's Quarterly Report
on Form 10-Q for the quarter ended June 30,
2019 filed today with the SEC.
For a reconciliation of Farmer Mac's net income attributable to
common stockholders to core earnings and of earnings per common
share to core earnings per share, and net interest income and net
interest yield to net effective spread, see the "Reconciliations"
section below.
Forward-Looking Statements
Management's expectations for Farmer Mac's future necessarily
involve 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 in this release, including uncertainties about:
- 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 or rural
utilities industries;
- 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's products and the secondary market
provided by Farmer Mac;
- the general rate of growth in agricultural mortgage and rural
utilities indebtedness;
- the effect of economic conditions, including the effects of
flooding and other weather-related conditions and fluctuations in
agricultural real estate values, on agricultural mortgage lending
and borrower repayment capacity;
- the effect of any changes in Farmer Mac's executive
leadership;
- 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; and
- volatility in commodity prices relative to costs of production,
changes in U.S. trade policies, or fluctuations in 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, 2018, as filed
with the SEC on February 21, 2019.
Considering 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 required by applicable
law or regulation. The information in this release is not
necessarily indicative of future results.
About Farmer Mac
Farmer Mac is a vital part of the
agricultural credit markets and works to increase the availability
and affordability of credit for the benefit of American
agricultural and rural communities. As the nation's largest
secondary market for agricultural credit, we provide financial
solutions to a broad spectrum of the agricultural community,
including agricultural lenders, agribusinesses, and other
institutions that can benefit from access to flexible, low-cost
financing and risk management tools. Farmer Mac's customers benefit
from our low cost of funds, low overhead costs, and high
operational efficiency. In fact, we are often able to provide the
lowest cost of borrowing to agricultural and rural borrowers. For
more than thirty years, Farmer Mac has been delivering the capital
and commitment rural America deserves. More information about
Farmer Mac (including the Quarterly Report on Form 10-Q referenced
above and the Annual Report on Form 10-K) is available on Farmer
Mac's website at www.farmermac.com.
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(unaudited)
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
|
|
June 30,
|
|
December
31,
|
|
|
|
|
|
2019
|
2018
|
|
|
|
|
|
|
(in
thousands)
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
396,602
|
|
|
$
|
425,256
|
|
|
Investment
securities
|
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
2,922,504
|
|
|
|
2,217,852
|
|
|
|
Held-to-maturity, at
amortized cost
|
|
45,032
|
|
|
|
45,032
|
|
|
|
Total Investment
Securities
|
|
2,967,536
|
|
|
|
2,262,884
|
|
|
Farmer Mac Guaranteed
Securities
|
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
7,035,668
|
|
|
|
5,974,497
|
|
|
|
Held-to-maturity, at
amortized cost
|
|
1,579,175
|
|
|
|
2,096,618
|
|
|
|
Total Farmer Mac
Guaranteed Securities
|
|
8,614,843
|
|
|
|
8,071,115
|
|
|
USDA
Securities
|
|
|
|
|
|
|
|
|
|
Trading, at fair
value
|
|
9,201
|
|
|
|
9,999
|
|
|
|
Held-to-maturity, at
amortized cost
|
|
2,128,378
|
|
|
|
2,166,174
|
|
|
|
Total USDA
Securities
|
|
2,137,579
|
|
|
|
2,176,173
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for
investment, at amortized cost
|
|
4,760,046
|
|
|
|
4,004,968
|
|
|
|
Loans held for
investment in consolidated trusts, at amortized cost
|
|
1,563,223
|
|
|
|
1,517,101
|
|
|
|
Allowance for loan
losses
|
|
(7,264)
|
|
|
|
(7,017)
|
|
|
|
Total loans, net of
allowance
|
|
6,316,005
|
|
|
|
5,515,052
|
|
|
Real estate owned, at
lower of cost or fair value
|
|
1,770
|
|
|
|
128
|
|
|
Financial
derivatives, at fair value
|
|
7,560
|
|
|
|
7,487
|
|
|
Interest receivable
(includes $18,811 and $19,783, respectively, related to
consolidated trusts)
|
|
184,693
|
|
|
|
180,080
|
|
|
Guarantee and
commitment fees receivable
|
|
38,809
|
|
|
|
40,366
|
|
|
Deferred tax asset,
net
|
|
10,543
|
|
|
|
6,369
|
|
|
Prepaid expenses and
other assets
|
|
62,220
|
|
|
|
9,418
|
|
|
|
Total
Assets
|
$
|
20,738,160
|
|
|
$
|
18,694,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity:
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Notes
Payable:
|
|
|
|
|
|
|
|
|
|
Due within one
year
|
$
|
9,939,589
|
|
|
$
|
7,757,050
|
|
|
|
Due after one
year
|
|
8,247,829
|
|
|
|
8,486,647
|
|
|
|
Total notes
payable
|
|
18,187,418
|
|
|
|
16,243,697
|
|
|
Debt securities of
consolidated trusts held by third parties
|
|
1,570,862
|
|
|
|
1,528,957
|
|
|
Financial
derivatives, at fair value
|
|
27,429
|
|
|
|
19,633
|
|
|
Accrued interest
payable (includes $16,077 and $17,125, respectively, related to
consolidated trusts)
|
|
108,129
|
|
|
|
96,743
|
|
|
Guarantee and
commitment obligation
|
|
37,246
|
|
|
|
38,683
|
|
|
Accounts payable and
accrued expenses
|
|
31,454
|
|
|
|
11,891
|
|
|
Deferred tax
liability, net
|
|
-
|
|
|
|
-
|
|
|
Reserve for
losses
|
|
1,880
|
|
|
|
2,167
|
|
|
|
Total
Liabilities
|
|
19,964,418
|
|
|
|
17,941,771
|
|
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
as of
December 31, 2018 (redemption value $75,000,000)
|
|
-
|
|
|
|
73,044
|
|
|
|
Series C, par value
$25 per share, 3,000,000 shares authorized, issued and
outstanding
|
|
73,382
|
|
|
|
73,382
|
|
|
|
Series D, par value
$25 per share, 4,000,000 shares authorized, issued and
outstanding
|
|
96,659
|
|
|
|
-
|
|
|
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, 9,168,893 shares and
9,137,550
shares outstanding, respectively
|
|
9,169
|
|
|
|
9,138
|
|
|
Additional paid-in
capital
|
|
118,942
|
|
|
|
118,822
|
|
|
Accumulated other
comprehensive income, net of tax
|
|
(12,843)
|
|
|
|
24,956
|
|
|
Retained
earnings
|
|
428,569
|
|
|
|
393,351
|
|
|
|
Total
Equity
|
|
773,742
|
|
|
|
752,557
|
|
|
|
Total
Liabilities and Equity
|
$
|
20,738,160
|
|
|
$
|
18,694,328
|
|
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited)
|
|
|
|
|
For the Three Months
Ended
|
|
For the Six Months
Ended
|
|
|
|
June 30,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
|
|
|
(in thousands, except per share amounts)
|
Interest
income:
|
|
|
|
|
|
|
|
|
Investments and cash
equivalents
|
$
|
20,156
|
|
|
$
|
12,095
|
|
|
$
|
38,863
|
|
|
$
|
23,558
|
|
|
Farmer Mac Guaranteed
Securities and USDA Securities
|
|
85,569
|
|
|
|
74,179
|
|
|
|
170,980
|
|
|
|
136,609
|
|
|
Loans
|
|
59,403
|
|
|
|
49,396
|
|
|
|
110,800
|
|
|
|
95,049
|
|
|
|
Total interest
income
|
|
165,128
|
|
|
|
135,670
|
|
|
|
320,643
|
|
|
|
255,216
|
|
|
Total interest
expense
|
|
122,074
|
|
|
|
91,737
|
|
|
|
236,990
|
|
|
|
168,054
|
|
|
|
Net interest
income
|
|
43,054
|
|
|
|
43,933
|
|
|
|
83,653
|
|
|
|
87,162
|
|
|
(Provision
for)/release of loan losses
|
|
(578)
|
|
|
|
(424)
|
|
|
|
(314)
|
|
|
|
7
|
|
|
|
Net interest income
after (provision for)/release of loan losses
|
|
42,476
|
|
|
|
43,509
|
|
|
|
83,339
|
|
|
|
87,169
|
|
Non-interest
income:
|
|
|
|
|
|
|
|
|
Guarantee and
commitment fees
|
|
3,403
|
|
|
|
3,481
|
|
|
|
6,916
|
|
|
|
6,980
|
|
|
Gains/(loss) on
financial derivatives
|
|
8,913
|
|
|
|
2,534
|
|
|
|
8,553
|
|
|
|
(1,316)
|
|
|
Gains on trading
securities
|
|
61
|
|
|
|
11
|
|
|
|
105
|
|
|
|
27
|
|
|
Gains on sale of real
estate owned
|
|
-
|
|
|
|
34
|
|
|
|
-
|
|
|
|
34
|
|
|
Other
income
|
|
355
|
|
|
|
320
|
|
|
|
848
|
|
|
|
894
|
|
|
|
Non-interest
income
|
|
12,732
|
|
|
|
6,380
|
|
|
|
16,422
|
|
|
|
6,619
|
|
Non-interest
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
6,770
|
|
|
|
6,936
|
|
|
|
14,376
|
|
|
|
13,590
|
|
|
General and
administrative
|
|
4,689
|
|
|
|
5,202
|
|
|
|
9,285
|
|
|
|
9,528
|
|
|
Regulatory
fees
|
|
687
|
|
|
|
625
|
|
|
|
1,375
|
|
|
|
1,250
|
|
|
Real estate owned
operating costs, net
|
|
64
|
|
|
|
-
|
|
|
|
64
|
|
|
|
16
|
|
|
(Release of)/provision for
reserve for losses
|
|
(158)
|
|
|
|
158
|
|
|
|
(287)
|
|
|
|
179
|
|
|
|
Non-interest
expense
|
|
12,052
|
|
|
|
12,921
|
|
|
|
24,813
|
|
|
|
24,563
|
|
|
|
Income before income
taxes
|
|
43,156
|
|
|
|
36,968
|
|
|
|
74,948
|
|
|
|
69,225
|
|
Income tax
expense
|
|
9,111
|
|
|
|
7,332
|
|
|
|
15,733
|
|
|
|
13,770
|
|
|
Net income
attributable to Farmer Mac
|
|
34,045
|
|
|
|
29,636
|
|
|
|
59,215
|
|
|
|
55,455
|
|
Preferred stock
dividends
|
|
(3,785)
|
|
|
|
(3,296)
|
|
|
|
(7,081)
|
|
|
|
(6,591)
|
|
Loss on retirement of
preferred stock
|
|
(1,956)
|
|
|
|
-
|
|
|
|
(1,956)
|
|
|
|
-
|
|
|
|
Net income
attributable to common stockholders
|
$
|
28,304
|
|
|
$
|
26,340
|
|
|
|
50,178
|
|
|
|
48,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
|
2.65
|
|
|
$
|
2.47
|
|
|
$
|
4.70
|
|
|
$
|
4.59
|
|
|
|
Diluted earnings per
common share
|
$
|
2.63
|
|
|
$
|
2.45
|
|
|
$
|
4.66
|
|
|
$
|
4.55
|
|
Reconciliations
Reconciliations of Farmer Mac's net income attributable to
common stockholders to core earnings and core earnings per share
are presented in the following tables along with information about
the composition of core earnings for the periods indicated:
Reconciliation of Net
Income Attributable to Common Stockholders to Core
Earnings
|
|
|
|
|
For the Three Months
Ended
|
|
|
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
|
|
|
(in thousands,
except per share amounts)
|
Net income
attributable to common stockholders
|
|
$
|
28,304
|
|
|
$
|
21,874
|
|
|
$
|
26,340
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains on undesignated
financial derivatives due to fair value changes
|
|
|
10,485
|
|
|
|
2,240
|
|
|
|
6,709
|
|
|
(Losses)/gains on
hedging activities due to fair value changes
|
|
|
(1,438)
|
|
|
|
(2,817)
|
|
|
|
1,687
|
|
|
Unrealized gains on
trading securities
|
|
|
61
|
|
|
|
44
|
|
|
|
11
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
|
|
(139)
|
|
|
|
(16)
|
|
|
|
196
|
|
|
Net effects of
terminations or net settlements on financial derivatives
|
|
(592)
|
|
|
|
110
|
|
|
|
232
|
|
|
Issuance costs on the
retirement of preferred stock
|
|
|
(1,956)
|
|
|
|
-
|
|
|
|
-
|
|
|
Income tax effect
related to reconciling items
|
|
|
(1,792)
|
|
|
|
92
|
|
|
|
(1,855)
|
|
|
|
Sub-total
|
|
|
4,662
|
|
|
|
(347)
|
|
|
|
6,980
|
|
Core
earnings
|
|
$
|
23,642
|
|
|
$
|
22,221
|
|
|
$
|
19,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective
spread(1)
|
|
$
|
41,355
|
|
|
$
|
38,801
|
|
|
$
|
36,162
|
|
|
Guarantee and
commitment fees(2)
|
|
|
5,276
|
|
|
|
5,419
|
|
|
|
5,171
|
|
|
Other(3)
|
|
|
777
|
|
|
|
509
|
|
|
|
111
|
|
|
|
Total
revenues
|
|
|
47,408
|
|
|
|
44,729
|
|
|
|
41,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
expense/(income) (GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for/(release of) losses
|
|
|
420
|
|
|
|
(393)
|
|
|
|
582
|
|
|
REO operating
expenses
|
|
|
64
|
|
|
|
-
|
|
|
|
-
|
|
|
Gain on sale of
REO
|
|
|
-
|
|
|
|
-
|
|
|
|
(34)
|
|
|
|
Total credit related
expense/(income)
|
|
|
484
|
|
|
|
(393)
|
|
|
|
548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
|
6,770
|
|
|
|
7,606
|
|
|
|
6,936
|
|
|
General and
administrative
|
|
|
4,689
|
|
|
|
4,596
|
|
|
|
5,202
|
|
|
Regulatory
fees
|
|
|
687
|
|
|
|
688
|
|
|
|
625
|
|
|
|
Total operating
expenses
|
|
|
12,146
|
|
|
|
12,890
|
|
|
|
12,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
34,778
|
|
|
|
32,232
|
|
|
|
28,133
|
|
|
Income tax
expense(4)
|
|
|
7,351
|
|
|
|
6,715
|
|
|
|
5,477
|
|
|
Preferred stock
dividends (GAAP)
|
|
|
3,785
|
|
|
|
3,296
|
|
|
|
3,296
|
|
|
|
Core
earnings
|
|
$
|
23,642
|
|
|
$
|
22,221
|
|
|
$
|
19,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
2.21
|
|
|
$
|
2.08
|
|
|
$
|
1.82
|
|
|
Diluted
|
|
|
2.20
|
|
|
|
2.06
|
|
|
|
1.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net effective spread
is a non-GAAP measure. See "Use of Non-GAAP Measures—Net
Effective Spread" above for an explanation of net effective
spread. See below for a reconciliation of net interest income
to net effective spread.
|
(2)
|
Includes interest
income and interest expense related to consolidated trusts owned by
third parties reclassified from net interest income to guarantee
and commitment fees to reflect management's view that the net
interest income Farmer Mac earns is effectively a guarantee fee on
the consolidated Farmer Mac Guaranteed Securities.
|
(3)
|
Reflects reconciling
adjustments for the reclassification to exclude expenses related to
interest rate swaps not designated as hedges and terminations or
net settlements on financial derivatives and hedging activities,
and reconciling adjustments to exclude fair value adjustments on
financial derivatives and trading assets and the recognition of
deferred gains over the estimated lives of certain Farmer Mac
Guaranteed Securities and USDA Securities.
|
(4)
|
Includes the tax
impact of non-GAAP reconciling items between net income
attributable to common stockholders and core earnings.
|
Reconciliation of Net
Income Attributable to Common Stockholders to Core
Earnings
|
|
|
|
|
For the Six Months
Ended
|
|
|
|
|
June 30,
2019
|
|
June 30,
2018
|
|
|
|
|
(in thousands,
except per share amounts)
|
Net income
attributable to common stockholders
|
|
$
|
50,178
|
|
|
$
|
48,864
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
Gains on undesignated financial
derivatives due to fair value changes
|
|
|
12,725
|
|
|
|
4,430
|
|
|
(Losses)/gains on
hedging activities due to fair value changes
|
|
|
(4,255)
|
|
|
|
4,251
|
|
|
Unrealized gains on
trading securities
|
|
|
105
|
|
|
|
27
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
|
(155)
|
|
|
|
(490)
|
|
|
Net effects of
terminations or net settlements on financial derivatives
|
|
(482)
|
|
|
|
1,474
|
|
|
Issuance costs on the
retirement of preferred stock
|
|
|
(1,956)
|
|
|
|
-
|
|
|
Income tax effect
related to reconciling items
|
|
|
(1,667)
|
|
|
|
(2,035)
|
|
|
|
Sub-total
|
|
|
4,315
|
|
|
|
7,657
|
|
Core
earnings
|
|
$
|
45,863
|
|
|
$
|
41,207
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Net effective
spread(1)
|
|
$
|
80,156
|
|
|
$
|
73,263
|
|
|
Guarantee and
commitment fees(2)
|
|
|
10,695
|
|
|
|
10,254
|
|
|
Other(3)
|
|
|
1,286
|
|
|
|
539
|
|
|
|
Total
revenues
|
|
|
92,137
|
|
|
|
84,056
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
expense (GAAP):
|
|
|
|
|
|
|
|
|
|
Provision for
losses
|
|
|
27
|
|
|
|
172
|
|
|
REO operating
expenses
|
|
|
64
|
|
|
|
16
|
|
|
Gain on sale of
REO
|
|
|
-
|
|
|
|
(34)
|
|
|
|
Total credit related
expense
|
|
|
91
|
|
|
|
154
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(GAAP):
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
|
14,376
|
|
|
|
13,590
|
|
|
General and
administrative
|
|
|
9,285
|
|
|
|
9,528
|
|
|
Regulatory
fees
|
|
|
1,375
|
|
|
|
1,250
|
|
|
|
Total operating
expenses
|
|
|
25,036
|
|
|
|
24,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
67,010
|
|
|
|
59,534
|
|
|
Income tax
expense(4)
|
|
|
14,066
|
|
|
|
11,736
|
|
|
Preferred stock
dividends (GAAP)
|
|
|
7,081
|
|
|
|
6,591
|
|
|
|
Core
earnings
|
|
$
|
45,863
|
|
|
$
|
41,207
|
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
4.29
|
|
|
$
|
3.87
|
|
|
Diluted
|
|
|
4.26
|
|
|
|
3.84
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net effective spread
is a non-GAAP measure. See "Use of Non-GAAP Measures—Net
Effective Spread" above for an explanation of net effective
spread. See below for a reconciliation of net interest income
to net effective spread.
|
(2)
|
Includes interest
income and interest expense related to consolidated trusts owned by
third parties reclassified from net interest income to guarantee
and commitment fees to reflect management's view that the net
interest income Farmer Mac earns is effectively a guarantee fee on
the consolidated Farmer Mac Guaranteed Securities.
|
(3)
|
Reflects reconciling
adjustments for the reclassification to exclude expenses related to
interest rate swaps not designated as hedges and terminations or
net settlements on financial derivatives and hedging activities,
and reconciling adjustments to exclude fair value adjustments on
financial derivatives and trading assets and the recognition of
deferred gains over the estimated lives of certain Farmer Mac
Guaranteed Securities and USDA Securities.
|
(4)
|
Includes the tax
impact of non-GAAP reconciling items between net income
attributable to common stockholders and core earnings.
|
Reconciliation of
GAAP Basic Earnings Per Share to Core Earnings - Basic Earnings Per
Share
|
|
|
|
For the Three Months
Ended
|
|
For the Six Months
Ended
|
|
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
|
|
|
(in thousands, except per share amounts)
|
GAAP - Basic
EPS
|
$
|
2.65
|
|
|
$
|
2.05
|
|
|
$
|
2.47
|
|
|
$
|
4.70
|
|
|
$
|
4.59
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains on undesignated
financial derivatives due to fair value changes
|
|
0.98
|
|
|
|
0.21
|
|
|
|
0.63
|
|
|
|
1.19
|
|
|
|
0.42
|
|
|
(Losses)/gains on
hedging activities due to fair value changes
|
|
(0.13)
|
|
|
|
(0.26)
|
|
|
|
0.16
|
|
|
|
(0.39)
|
|
|
|
0.40
|
|
|
Unrealized gains on
trading securities
|
|
0.01
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
|
|
-
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair
value
|
|
(0.01)
|
|
|
|
—
|
|
|
|
0.02
|
|
|
|
(0.01)
|
|
|
|
(0.05)
|
|
|
Net effects of
terminations or net settlements on financial derivatives
|
|
(0.06)
|
|
|
|
0.01
|
|
|
|
0.02
|
|
|
|
(0.05)
|
|
|
|
0.14
|
|
|
Issuance costs on the
retirement of preferred stock
|
|
(0.18)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.18)
|
|
|
|
—
|
|
|
Income tax effect
related to reconciling items
|
|
(0.17)
|
|
|
|
0.01
|
|
|
|
(0.18)
|
|
|
|
(0.16)
|
|
|
|
(0.19)
|
|
|
Sub-total
|
|
0.44
|
|
|
|
(0.03)
|
|
|
|
0.65
|
|
|
|
0.41
|
|
|
|
0.72
|
|
Core Earnings - Basic
EPS
|
$
|
2.21
|
|
|
$
|
2.08
|
|
|
$
|
1.82
|
|
|
$
|
4.29
|
|
|
$
|
3.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculation (GAAP and Core Earnings)
|
|
10,698
|
|
|
|
10,670
|
|
|
|
10,658
|
|
|
|
10,684
|
|
|
|
10,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP Diluted Earnings Per Share to Core Earnings - Diluted Earnings
Per Share
|
|
|
|
For the Three Months
Ended
|
|
For the Six Months
Ended
|
|
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
|
|
|
(in thousands, except per share amounts)
|
GAAP - Diluted
EPS
|
$
|
2.63
|
|
|
$
|
2.03
|
|
|
$
|
2.45
|
|
|
$
|
4.66
|
|
|
$
|
4.55
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains on undesignated
financial derivatives due to fair value changes
|
|
0.96
|
|
|
|
0.21
|
|
|
|
0.62
|
|
|
|
1.17
|
|
|
|
0.41
|
|
|
(Losses)/gains on
hedging activities due to fair value changes
|
|
(0.14)
|
|
|
|
(0.26)
|
|
|
|
0.16
|
|
|
|
(0.40)
|
|
|
|
0.40
|
|
|
Unrealized gains on
trading securities
|
|
0.01
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.01
|
|
|
|
—
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair
value
|
|
(0.01)
|
|
|
|
—
|
|
|
|
0.02
|
|
|
|
(0.01)
|
|
|
|
(0.05)
|
|
|
Net effects of terminations or
net settlements on financial
derivatives and hedging activities
|
|
(0.05)
|
|
|
|
0.01
|
|
|
|
0.02
|
|
|
|
(0.04)
|
|
|
|
0.14
|
|
|
Issuance costs on the
retirement of preferred stock
|
|
(0.18)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.18)
|
|
|
|
—
|
|
|
Income tax effect
related to reconciling items
|
|
(0.16)
|
|
|
|
0.01
|
|
|
|
(0.17)
|
|
|
|
(0.15)
|
|
|
|
(0.19)
|
|
|
Sub-total
|
|
0.43
|
|
|
|
(0.03)
|
|
|
|
0.65
|
|
|
|
0.40
|
|
|
|
0.71
|
|
Core Earnings -
Diluted EPS
|
$
|
2.20
|
|
|
$
|
2.06
|
|
|
$
|
1.80
|
|
|
$
|
4.26
|
|
|
$
|
3.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculation (GAAP and Core Earnings)
|
|
10,770
|
|
|
|
10,777
|
|
|
|
10,742
|
|
|
|
10,774
|
|
|
|
10,742
|
|
The following table presents a reconciliation of net interest
income and net yield to net effective spread for the periods
indicated:
Reconciliation of
GAAP Net Interest Income/Yield to Net Effective Spread
|
|
|
|
For the Three Months
Ended
|
|
For the Six Months
Ended
|
|
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
|
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
|
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income/yield
|
$
|
43,054
|
|
|
0.87
|
|
%
|
|
$
|
40,599
|
|
|
0.86
|
|
%
|
|
$
|
43,933
|
|
|
0.96
|
|
%
|
|
$
|
83,653
|
|
|
0.87
|
|
%
|
|
$
|
87,162
|
|
|
0.97
|
|
%
|
Net effects of
consolidated trusts
|
|
(1,873)
|
|
|
0.03
|
|
%
|
|
|
(1,905)
|
|
|
0.03
|
|
%
|
|
|
(1,690)
|
|
|
0.04
|
|
%
|
|
|
(3,778)
|
|
|
0.03
|
|
%
|
|
|
(3,274)
|
|
|
0.04
|
|
%
|
Expense related to
undesignated financial derivatives
|
|
(1,557)
|
|
|
(0.03)
|
|
%
|
|
|
(2,544)
|
|
|
(0.06)
|
|
%
|
|
|
(3,998)
|
|
|
(0.09)
|
|
%
|
|
|
(4,102)
|
|
|
(0.05)
|
|
%
|
|
|
(6,299)
|
|
|
(0.08)
|
|
%
|
Amortization of
premiums/discounts on assets
consolidated at fair value
|
|
289
|
|
|
0.01
|
|
%
|
|
|
23
|
|
|
-
|
|
%
|
|
|
(188)
|
|
|
(0.01)
|
|
%
|
|
|
311
|
|
|
-
|
|
%
|
|
|
506
|
|
|
0.01
|
|
%
|
Amortization of losses due to
terminations or net
settlements on financial derivatives
|
|
14
|
|
|
-
|
|
%
|
|
|
(71)
|
|
|
-
|
|
%
|
|
|
(33)
|
|
|
-
|
|
%
|
|
|
(56)
|
|
|
-
|
|
%
|
|
|
(131)
|
|
|
-
|
|
%
|
Fair value changes on
fair value hedge relationships
|
|
1,428
|
|
|
0.03
|
|
%
|
|
|
2,699
|
|
|
0.06
|
|
%
|
|
|
(1,862)
|
|
|
(0.04)
|
|
%
|
|
|
4128
|
|
|
0.05
|
|
%
|
|
|
(4,701)
|
|
|
(0.06)
|
|
%
|
Net
effective spread
|
$
|
41,355
|
|
|
0.91
|
|
%
|
|
$
|
38,801
|
|
|
0.89
|
|
%
|
|
$
|
36,162
|
|
|
0.86
|
|
%
|
|
$
|
80,156
|
|
|
0.90
|
|
%
|
|
$
|
73,263
|
|
|
0.88
|
|
%
|
The following table presents core earnings for Farmer Mac's
reportable operating segments and a reconciliation to consolidated
net income for the three months ended June 30, 2019:
Core Earnings by
Business Segment
|
For the Three Months
Ended June 30, 2019
|
|
|
|
Farm &
Ranch
|
|
USDA
Guarantees
|
|
Rural
Utilities
|
|
Institutional
Credit
|
|
Corporate
|
|
Reconciling
Adjustments
|
|
Consolidated Net
Income
|
|
|
|
(in thousands)
|
Net interest
income
|
$
|
15,797
|
|
|
$
|
4,112
|
|
|
$
|
3,936
|
|
|
$
|
16,385
|
|
|
$
|
2,824
|
|
|
$
|
—
|
|
|
$
|
43,054
|
|
|
Less: reconciling
adjustments(1)(2)(3)
|
|
(2,462)
|
|
|
|
(15)
|
|
|
|
60
|
|
|
|
986
|
|
|
|
(268)
|
|
|
|
1,699
|
|
|
|
—
|
|
Net effective
spread
|
|
13,335
|
|
|
|
4,097
|
|
|
|
3,996
|
|
|
|
17,371
|
|
|
|
2,556
|
|
|
|
1,699
|
|
|
|
—
|
|
Guarantee and
commitment fees(2)
|
|
4,594
|
|
|
|
238
|
|
|
|
358
|
|
|
|
86
|
|
|
|
—
|
|
|
|
(1,873)
|
|
|
|
3,403
|
|
Other
income/(expense)(3)
|
|
188
|
|
|
|
—
|
|
|
|
7
|
|
|
|
—
|
|
|
|
582
|
|
|
|
8,552
|
|
|
|
9,329
|
|
|
Non-interest
income/(loss)
|
|
4,782
|
|
|
|
238
|
|
|
|
365
|
|
|
|
86
|
|
|
|
582
|
|
|
|
6,679
|
|
|
|
12,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan
losses
|
|
(578)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(578)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release of reserve
for losses
|
|
158
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
158
|
|
Other non-interest
expense
|
|
(4,587)
|
|
|
|
(1,345)
|
|
|
|
(816)
|
|
|
|
(2,034)
|
|
|
|
(3,428)
|
|
|
|
—
|
|
|
|
(12,210)
|
|
|
Non-interest
expense(4)
|
|
(4,429)
|
|
|
|
(1,345)
|
|
|
|
(816)
|
|
|
|
(2,034)
|
|
|
|
(3,428)
|
|
|
|
—
|
|
|
|
(12,052)
|
|
Core earnings before
income taxes
|
|
13,110
|
|
|
|
2,990
|
|
|
|
3,545
|
|
|
|
15,423
|
|
|
|
(290)
|
|
|
|
8,378
|
|
(5)
|
|
43,156
|
|
Income tax
(expense)/benefit
|
|
(2,753)
|
|
|
|
(628)
|
|
|
|
(744)
|
|
|
|
(3,239)
|
|
|
|
13
|
|
|
|
(1,760)
|
|
|
|
(9,111)
|
|
|
Core earnings before
preferred stock
dividends and attribution of income to
non-controlling interest
|
|
10,357
|
|
|
|
2,362
|
|
|
|
2,801
|
|
|
|
12,184
|
|
|
|
(277)
|
|
|
|
6,618
|
|
(5)
|
|
34,045
|
|
Preferred stock
dividends
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,785)
|
|
|
|
—
|
|
|
|
(3,785)
|
|
Loss on retirement of
preferred stock
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,956)
|
|
|
|
(1,956)
|
|
|
Segment core
earnings/(losses)
|
$
|
10,357
|
|
|
$
|
2,362
|
|
|
$
|
2,801
|
|
|
$
|
12,184
|
|
|
$
|
(4,062)
|
|
|
$
|
4,662
|
|
(5)
|
$
|
28,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at
carrying value
|
$
|
4,872,766
|
|
|
$
|
2,198,514
|
|
|
$
|
1,580,979
|
|
|
$
|
8,633,059
|
|
|
$
|
3,452,842
|
|
|
$
|
-
|
|
|
$
|
20,738,160
|
|
Total on-and
off-balance sheet program assets
at principal balance
|
$
|
7,291,352
|
|
|
$
|
2,521,394
|
|
|
$
|
2,155,671
|
|
|
$
|
8,778,318
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
20,746,735
|
|
|
|
(1)
|
Excludes the
amortization of premiums and discounts on assets consolidated at
fair value, originally included in interest income, to reflect core
earnings amounts.
|
(2)
|
Includes the
reclassification of interest income and interest expense from
consolidated trusts owned by third parties to guarantee and
commitment fees, to reflect management's view that the net interest
income Farmer Mac earns is effectively a guarantee
fee.
|
(3)
|
Includes the
reclassification of interest expense related to interest rate swaps
not designated as hedges, which are included in "Gains/(losses) on
financial derivatives" on the consolidated financial statements, to
determine the effective funding cost for each operating
segment.
|
(4)
|
Includes directly
attributable costs and an allocation of indirectly attributable
costs based on employee headcount.
|
(5)
|
Net adjustments
to reconcile to the corresponding income measures: core earnings
before income taxes reconciled to income before income taxes; core
earnings before preferred stock dividends and attribution of income
to non-controlling interest reconciled to net income; and segment
core earnings reconciled to net income attributable to common
stockholders.
|
Supplemental Information
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,
2019
|
|
As of December 31,
2018
|
|
|
|
|
|
(in thousands)
|
On-balance
sheet:
|
|
|
|
|
Farm &
Ranch:
|
|
|
|
|
|
Loans
|
$
|
3,191,035
|
|
|
$
|
3,071,222
|
|
|
|
Loans held in
trusts:
|
|
|
|
|
|
|
|
|
|
|
Beneficial interests
owned by third party investors
|
|
1,563,223
|
|
|
|
1,517,101
|
|
|
USDA
Guarantees:
|
|
|
|
|
|
|
|
|
|
USDA
Securities
|
|
2,089,101
|
|
|
|
2,120,553
|
|
|
|
Farmer Mac Guaranteed
USDA Securities
|
|
33,583
|
|
|
|
27,383
|
|
|
Rural
Utilities:
|
|
|
|
|
|
|
|
|
|
Loans
|
|
1,527,150
|
|
|
|
938,843
|
|
|
Institutional
Credit:
|
|
|
|
|
|
|
|
|
|
AgVantage
securities
|
|
8,469,093
|
|
|
|
8,072,919
|
|
|
|
|
Total on-balance
sheet
|
$
|
16,873,185
|
|
|
$
|
15,748,021
|
|
Off-balance
sheet:
|
|
|
|
|
Farm &
Ranch:
|
|
|
|
|
|
LTSPCs
|
$
|
2,416,030
|
|
|
$
|
2,509,787
|
|
|
|
Guaranteed
Securities
|
|
121,064
|
|
|
|
135,862
|
|
|
USDA
Guarantees:
|
|
|
|
|
|
|
|
|
|
Farmer Mac Guaranteed
USDA Securities
|
|
398,710
|
|
|
|
367,684
|
|
|
Rural
Utilities:
|
|
|
|
|
|
|
|
|
LTSPCs(1)
|
|
628,521
|
|
|
|
653,272
|
|
|
Institutional
Credit:
|
|
|
|
|
|
|
|
|
|
AgVantage
securities
|
|
9,225
|
|
|
|
9,898
|
|
|
|
Revolving floating
rate AgVantage facility(2)
|
|
300,000
|
|
|
|
300,000
|
|
|
|
|
Total off-balance
sheet
|
$
|
3,873,550
|
|
|
$
|
3,976,503
|
|
|
|
|
Total
|
$
|
20,746,735
|
|
|
$
|
19,724,524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes $20.0
million and $17.0 million related to one-year loan purchase
commitments on which Farmer Mac receives a nominal unused
commitment fee as of June 30, 2019 and December 31, 2018,
respectively.
|
(2)
|
During the first half
of both 2019 and 2018, $100.0 million of this facility was drawn
and later repaid. 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 in the form of 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2019(1)
|
$
|
13,335
|
|
|
1.72
|
%
|
|
$
|
4,097
|
|
|
0.76
|
%
|
|
$
|
3,996
|
|
|
1.10
|
%
|
|
$
|
17,371
|
|
|
0.82
|
%
|
|
$
|
2,556
|
|
|
0.34
|
%
|
|
$
|
41,355
|
|
|
0.91
|
%
|
|
March 31,
2019
|
|
12,737
|
|
|
1.70
|
%
|
|
|
3,964
|
|
|
0.74
|
%
|
|
|
3,233
|
|
|
1.12
|
%
|
|
|
16,373
|
|
|
0.79
|
%
|
|
|
2,494
|
|
|
0.35
|
%
|
|
|
38,801
|
|
|
0.89
|
%
|
|
December 31,
2018
|
|
13,288
|
|
|
1.79
|
%
|
|
|
4,630
|
|
|
0.85
|
%
|
|
|
2,833
|
|
|
1.19
|
%
|
|
|
15,751
|
|
|
0.80
|
%
|
|
|
2,353
|
|
|
0.36
|
%
|
|
|
38,855
|
|
|
0.93
|
%
|
|
September 30,
2018
|
|
13,887
|
|
|
1.91
|
%
|
|
|
4,627
|
|
|
0.86
|
%
|
|
|
2,877
|
|
|
1.18
|
%
|
|
|
15,642
|
|
|
0.78
|
%
|
|
|
2,044
|
|
|
0.30
|
%
|
|
|
39,077
|
|
|
0.93
|
%
|
|
June 30,
2018
|
|
13,347
|
|
|
1.86
|
%
|
|
|
4,398
|
|
|
0.83
|
%
|
|
|
2,923
|
|
|
1.15
|
%
|
|
|
15,220
|
|
|
0.76
|
%
|
|
|
274
|
|
|
0.04
|
%
|
|
|
36,162
|
|
|
0.86
|
%
|
|
March 31,
2018
|
|
12,540
|
|
|
1.80
|
%
|
|
|
4,400
|
|
|
0.82
|
%
|
|
|
2,950
|
|
|
1.12
|
%
|
|
|
14,824
|
|
|
0.78
|
%
|
|
|
2,387
|
|
|
0.36
|
%
|
|
|
37,101
|
|
|
0.91
|
%
|
|
December 31,
2017
|
|
12,396
|
|
|
1.80
|
%
|
|
|
4,979
|
|
|
0.93
|
%
|
|
|
3,057
|
|
|
1.14
|
%
|
|
|
14,800
|
|
|
0.78
|
%
|
|
|
2,235
|
|
|
0.35
|
%
|
|
|
37,467
|
|
|
0.93
|
%
|
|
September 30,
2017
|
|
11,303
|
|
|
1.73
|
%
|
|
|
4,728
|
|
|
0.90
|
%
|
|
|
2,765
|
|
|
1.07
|
%
|
|
|
14,455
|
|
|
0.78
|
%
|
|
|
2,725
|
|
|
0.41
|
%
|
|
|
35,976
|
|
|
0.91
|
%
|
|
June 30,
2017
|
|
11,158
|
|
|
1.77
|
%
|
|
|
4,551
|
|
|
0.87
|
%
|
|
|
2,669
|
|
|
1.06
|
%
|
|
|
14,467
|
|
|
0.81
|
%
|
|
|
2,489
|
|
|
0.36
|
%
|
|
|
35,334
|
|
|
0.91
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See above for a
reconciliation of GAAP net interest income by line of business to
net effective spread by line of business for the three months ended
June 30, 2019.
|
The following table presents quarterly core earnings reconciled
to net income attributable to common stockholders:
Core Earnings by
Quarter Ended
|
|
|
|
|
|
June
2019
|
|
March
2019
|
|
December
2018
|
|
September
2018
|
|
June
2018
|
|
March
2018
|
|
December
2017
|
|
September
2017
|
|
June
2017
|
|
|
|
|
|
(in
thousands)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective
spread
|
|
$
|
41,355
|
|
|
$
|
38,801
|
|
|
$
|
38,855
|
|
|
$
|
39,077
|
|
|
$
|
36,162
|
|
|
$
|
37,101
|
|
|
$
|
37,467
|
|
|
$
|
35,976
|
|
|
$
|
35,334
|
|
|
Guarantee and
commitment fees
|
|
|
5,276
|
|
|
|
5,419
|
|
|
|
5,309
|
|
|
|
5,170
|
|
|
|
5,171
|
|
|
|
5,083
|
|
|
|
5,157
|
|
|
|
4,935
|
|
|
|
4,942
|
|
|
Other
|
|
|
777
|
|
|
|
509
|
|
|
|
(129)
|
|
|
|
110
|
|
|
|
111
|
|
|
|
428
|
|
|
|
69
|
|
|
|
274
|
|
|
|
107
|
|
|
|
Total
revenues
|
|
|
47,408
|
|
|
|
44,729
|
|
|
|
44,035
|
|
|
|
44,357
|
|
|
|
41,444
|
|
|
|
42,612
|
|
|
|
42,693
|
|
|
|
41,185
|
|
|
|
40,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
(income)/expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for/(release of) losses
|
|
|
420
|
|
|
|
(393)
|
|
|
|
166
|
|
|
|
(3)
|
|
|
|
582
|
|
|
|
(410)
|
|
|
|
464
|
|
|
|
384
|
|
|
|
466
|
|
|
REO operating
expenses
|
|
|
64
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16
|
|
|
|
-
|
|
|
|
-
|
|
|
|
23
|
|
|
Losses/(gains) on
sale of REO
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
41
|
|
|
|
(34)
|
|
|
|
—
|
|
|
|
(964)
|
|
|
|
(32)
|
|
|
|
(757)
|
|
|
|
Total credit related
(income)/expense
|
|
|
484
|
|
|
|
(393)
|
|
|
|
166
|
|
|
|
38
|
|
|
|
548
|
|
|
|
(394)
|
|
|
|
(500)
|
|
|
|
352
|
|
|
|
(268)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
|
6,770
|
|
|
|
7,606
|
|
|
|
7,167
|
|
|
|
6,777
|
|
|
|
6,936
|
|
|
|
6,654
|
|
|
|
5,247
|
|
|
|
5,987
|
|
|
|
6,682
|
|
|
General and
administrative
|
|
|
4,689
|
|
|
|
4,596
|
|
|
|
5,829
|
|
|
|
4,350
|
|
|
|
5,202
|
|
|
|
4,326
|
|
|
|
4,348
|
|
|
|
3,890
|
|
|
|
3,921
|
|
|
Regulatory
fees
|
|
|
687
|
|
|
|
688
|
|
|
|
687
|
|
|
|
625
|
|
|
|
625
|
|
|
|
625
|
|
|
|
625
|
|
|
|
625
|
|
|
|
625
|
|
|
|
Total operating
expenses
|
|
|
12,146
|
|
|
|
12,890
|
|
|
|
13,683
|
|
|
|
11,752
|
|
|
|
12,763
|
|
|
|
11,605
|
|
|
|
10,220
|
|
|
|
10,502
|
|
|
|
11,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
34,778
|
|
|
|
32,232
|
|
|
|
30,186
|
|
|
|
32,567
|
|
|
|
28,133
|
|
|
|
31,401
|
|
|
|
32,973
|
|
|
|
30,331
|
|
|
|
29,423
|
|
Income tax
expense
|
|
|
7,351
|
|
|
|
6,715
|
|
|
|
6,431
|
|
|
|
6,891
|
|
|
|
5,477
|
|
|
|
6,259
|
|
|
|
11,796
|
|
|
|
10,268
|
|
|
|
10,307
|
|
Net loss attributable
to non-controlling interest(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
—
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(150)
|
|
Preferred stock
dividends
|
|
|
3,785
|
|
|
|
3,296
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
Core
earnings
|
|
$
|
23,642
|
|
|
$
|
22,221
|
|
|
$
|
20,459
|
|
|
$
|
22,381
|
|
|
$
|
19,360
|
|
|
$
|
21,847
|
|
|
$
|
17,881
|
|
|
$
|
16,768
|
|
|
$
|
15,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains/(losses) on
undesignated financial derivatives due to
fair value changes
|
|
|
10,485
|
|
|
|
2,240
|
|
|
|
(96)
|
|
|
|
3,625
|
|
|
|
6,709
|
|
|
|
(2,279)
|
|
|
|
(261)
|
|
|
|
995
|
|
|
|
801
|
|
|
|
(Losses)/gains on
hedging activities due to fair value changes
|
|
|
(1,438)
|
|
|
|
(2,817)
|
|
|
|
(853)
|
|
|
|
1,051
|
|
|
|
1,687
|
|
|
|
2,564
|
|
|
|
(3)
|
|
|
|
1,742
|
|
|
|
1,420
|
|
|
|
Unrealized
gains/(losses) on trading assets
|
|
|
64
|
|
|
|
44
|
|
|
|
57
|
|
|
|
(3)
|
|
|
|
11
|
|
|
|
16
|
|
|
|
60
|
|
|
|
-
|
|
|
|
(2)
|
|
|
|
Amortization of
premiums/discounts and deferred gains on
assets consolidated at fair value
|
|
|
(139)
|
|
|
|
(16)
|
|
|
|
67
|
|
|
|
(38)
|
|
|
|
196
|
|
|
|
(686)
|
|
|
|
(129)
|
|
|
|
(954)
|
|
|
|
(117)
|
|
|
|
Net effects of
terminations or net settlements on financial
derivatives
|
|
|
(592)
|
|
|
|
110
|
|
|
|
(312)
|
|
|
|
546
|
|
|
|
232
|
|
|
|
1,242
|
|
|
|
632
|
|
|
|
862
|
|
|
|
232
|
|
|
|
Issuance costs on the
retirement of preferred stock
|
|
|
(1,956)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Re-measurement of net
deferred tax asset due to enactment
of new tax legislation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,365)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Income tax effect
related to reconciling items
|
|
|
(1,759)
|
|
|
|
92
|
|
|
|
238
|
|
|
|
(1,088)
|
|
|
|
(1,855)
|
|
|
|
(180)
|
|
|
|
(105)
|
|
|
|
(926)
|
|
|
|
(816)
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
|
28,304
|
|
|
$
|
21,874
|
|
|
$
|
19,560
|
|
|
$
|
26,474
|
|
|
$
|
26,340
|
|
|
$
|
22,524
|
|
|
$
|
16,710
|
|
|
$
|
18,487
|
|
|
$
|
17,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
As of May 1, 2017,
Farmer Mac transferred its entire 65% ownership interest in Contour
Valuation Services, LLC (also known as AgVisory) back to the
limited liability company.
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/farmer-mac-reports-second-quarter-2019-results-300894253.html
SOURCE Farmer Mac