WASHINGTON, March 8, 2018 /PRNewswire/ -- The Federal
Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A)
today announced its results for the fiscal quarter and year ended
December 31, 2017, which included
$1.6 billion in net new business
volume growth that brought total outstanding business volume to
$19.0 billion as of December 31, 2017. Farmer Mac's net income
attributable to common stockholders for 2017 was $71.3 million ($6.60 per diluted common share), compared to
$64.2 million ($5.97 per diluted common share) for 2016.
Farmer Mac's 2017 core earnings, a non-GAAP measure, were
$65.6 million ($6.08 per diluted common share), compared to
$53.5 million ($4.98 per diluted common share) in 2016.
"2017 was a remarkable year for Farmer Mac," said Chairman of
the Board and Acting President and Chief Executive Officer
Lowell Junkins. "Our success
was driven by our team's disciplined execution on our strategy,
successful business development efforts, and industry conditions
that continue to play to our strengths. Outstanding business
volume grew $1.6 billion in 2017 and
earnings grew double digits. Our strong capital position and
earnings potential has allowed us to increase our first quarter
common stock dividend by 61 percent and remain on track with our
targeted 30 percent core earnings payout for 2018. The
business opportunities in front of Farmer Mac are robust, and we
continue to make significant investments in our people, technology,
and infrastructure to maintain our leadership position in financing
rural America."
Earnings
Farmer Mac's net income attributable to common stockholders for
2017 was $71.3 million
($6.60 per diluted common share),
compared to $64.2 million
($5.97 per diluted common share) for
2016. The $7.1 million increase
compared to 2016 was primarily driven by increases of $11.3 million after-tax in net interest income
and a $1.1 million after-tax increase
in net realized gains on the sale of real estate owned
properties. The year-over-year increase was offset in part by
(1) a $2.7 million after-tax decrease
in gains in fair value of financial derivatives and hedged assets;
(2) a $1.6 million after-tax increase
in non-interest expense in 2017, primarily attributable to higher
general and administrative ("G&A") expenses and higher
compensation and employee benefit expenses; and (3) the
re-measurement of net deferred tax asset due to the enactment of
new federal tax legislation, which resulted in a $1.4 million increase to income tax expense in
2017.
Core earnings in 2017 were $65.6
million ($6.08 per diluted
common share), compared to $53.5
million ($4.98 per diluted
common share) in 2016. The $12.1
million increase in core earnings for 2017 compared to 2016
was primarily attributable to (1) a $11.9
million after-tax increase in net effective spread; (2) a
$1.1 million after-tax increase in
net realized gains on the sale of real estate owned properties; and
(3) a $0.8 million after-tax increase
in guarantee and commitment fee income. The increase in core
earnings in 2017 was offset in part primarily by a $1.5 million after-tax increase in operating
expenses, driven by higher compensation and employee benefits and
G&A expenses. The $0.9 million after-tax increase in
compensation and benefits expenses was due primarily to an increase
in headcount and employee health insurance costs. The
$0.6 million after-tax increase in
G&A expenses was attributable primarily to (1) continued
technology and business infrastructure investments; (2) higher
legal fees related to general corporate matters, including fees
related to the termination of employment of Farmer Mac's former
President and Chief Executive Officer in December 2017; (3) an increase in building lease
expenses due to new leases for office space entered into during
2017; and (4) expenses related to business development efforts.
Farmer Mac continues to expand its investments in human capital,
technology, and business infrastructure to increase capacity and
efficiency as it seeks to accommodate growth opportunities and to
achieve its long-term strategic objectives. Accordingly,
Farmer Mac expects the annual increases in its operating expenses
to be above historical averages over the next several years.
Specifically, Farmer Mac believes that aggregate compensation and
employee benefits and G&A expenses will increase approximately
15 percent in 2018 relative to 2017, with increases likely to
remain elevated in 2019.
Farmer Mac's net income attributable to common stockholders for
fourth quarter 2017 was $16.7 million ($1.55 per diluted common share), compared to
$25.5 million ($2.38 per diluted common share) for fourth
quarter 2016. The $8.8 million
year-over-year decrease in net income attributable to common
stockholders was driven primarily by the effects of unrealized fair
value changes on financial derivatives and hedged assets, which was
a $11.2 million after-tax gain in
fourth quarter 2016 compared to a $0.2 million dollar after-tax loss in fourth
quarter 2017.
Core earnings in fourth quarter 2017 were $17.9 million ($1.65 per diluted common share), compared to
$13.2 million ($1.23 per diluted common share) in fourth quarter
2016. The $4.7 million
year-over-year increase was primarily due to a $3.6 million after-tax increase in total
revenues, which was driven by significant business volume
growth.
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.
Business Volume Highlights
During 2017, Farmer Mac added $4.7
billion of new business volume, compared to $4.4 billion in 2016. Specifically, Farmer
Mac:
- purchased $2.4 billion of
AgVantage securities;
- purchased $1.1 billion of newly
originated Farm & Ranch loans;
- added $554.7 million of Farm
& Ranch loans under LTSPCs;
- purchased $369.8 million of USDA
Securities;
- issued $161.9 million of Farmer
Mac Guaranteed USDA Securities; and
- purchased $137.3 million of Rural
Utilities loans
After $3.1 billion of maturities
and principal paydowns on existing business during 2017, Farmer
Mac's outstanding business volume increased by $1.6 billion from December
31, 2016 to $19.0 billion
as of December 31, 2017. This
increase was driven by broad-based portfolio growth across most of
Farmer Mac's products and lines of business, including
Farm & Ranch loans, AgVantage securities, USDA Securities,
and Rural Utilities loans.
Farmer Mac grew its Farm & Ranch loan portfolio by
$684.3 million during 2017, which was
primarily driven by an increase in the average size of loans
purchased, including several large loans with large
borrowers. During 2017, Farmer Mac purchased 1,445 Farm &
Ranch loans with an average unpaid principal balance of
$781,000, compared to 1,467 Farm
& Ranch loans purchased with an average unpaid principal
balance of $665,000 during
2016. The $617.2 million net
increase in AgVantage securities for 2017 was primarily driven by
net portfolio growth from two of Farmer Mac's long-standing
issuers: (1) Rabo AgriFinance ("Rabo") and (2) National Rural
Utilities Cooperative Finance Corporation ("CFC"), which increased
their outstanding AgVantage business volume with Farmer Mac by
$275.0 million and $205.8 million, respectively. The remaining
net increase in AgVantage securities came from Farmer Mac's smaller
institutional customers, which increased outstanding balances by
$136.4 million in 2017, including
transactions with two new counterparties.
Spreads
Net interest income was $157.6
million for 2017, compared to $140.3 million for 2016. In percentage
terms, net interest income for 2017 was 0.94 percent, compared to
0.90 percent for 2016. The $17.3
million increase in net interest income for 2017 compared to
2016 was driven by net growth in Farm & Ranch loans, on-balance
sheet AgVantage Securities, and USDA Securities. Another
factor contributing to the increase was the effect of an increase
in short-term interest rates on assets and liabilities indexed to
LIBOR due to the Federal Reserve's decision to raise the target
range for the federal funds rate. This effect on net interest
income occurred because interest expense used to calculate net
interest income does not include all the funding expenses related
to these assets, specifically the expense on financial derivatives
not designated in hedge accounting relationships. This increase in
short-term rates on assets and liabilities indexed to LIBOR did not
have a similar effect on net effective spread because net effective
spread includes interest expense from all funding related to those
assets, including interest expense from financial derivatives not
designated in hedge accounting relationships. Also
contributing to the year-over-year increase was an increase in the
net effect of consolidated trusts resulting from an increase in
securitization of Farm & Ranch loans throughout 2016 and 2017.
Farmer Mac earns the difference between the interest income
recognized on loans in consolidated trusts and the related interest
expense recognized on debt securities of consolidated trusts held
by third parties. The increase in net interest income was
offset in part by an increase in net yield adjustments related to
amortization of premiums and discounts on assets consolidated at
fair value. The 4 basis point increase in net interest yield
in 2017 compared to 2016 was primarily attributable to a reduction
in the average balance of lower-earning cash and cash equivalents
and investment securities.
Farmer Mac's net effective spread, a non-GAAP measure, was
$141.3 million for 2017, compared to
$123.1 million for 2016. In
percentage terms, net effective spread for 2017 was 0.91 percent,
compared to 0.84 percent for 2016. Farmer Mac uses net effective
spread as an alternative measure to net interest income because
management believes it is a useful metric that reflects the
economics of the net spread between all the assets owned by Farmer
Mac and all related funding, including any associated derivatives,
some of which may not be included in net interest income.
The $18.2 million year-over-year
increase in net effective spread in dollars was primarily
attributable to (1) growth in on-balance sheet AgVantage
securities, Farm & Ranch loans, and other business volume,
which increased net effective spread by approximately $15.1 million in 2017; and (2) changes in Farmer
Mac's funding strategies and improvements in LIBOR-based short-term
funding costs for floating rate assets indexed to LIBOR, which
added approximately $4.0 million in
2017. Net effective spread in percentage terms increased 7
basis points in 2017 compared to 2016 primarily attributable to the
decrease in the average balance of lower-earning cash and cash
equivalents and investment securities, which added approximately 5
basis points to net effective spread. Also contributing to
the increase were the effects of changes in Farmer Mac's funding
strategy and a favorable LIBOR-based funding market, which added
approximately 3 basis points in 2017.
Net interest income was $41.3
million (0.94 percent) in fourth quarter 2017, compared to
$36.7 million (0.95 percent) in
fourth quarter 2016. The $4.6 million
year-over-year increase in dollar terms was primarily driven by the
same factors described above that contributed to full year 2017
growth in net interest income in dollars compared to full year
2016. The 1 basis point decrease was primarily driven by an
increase in the average balance of lower-earning loans held in
consolidated trusts.
Net effective spread was $37.5
million (0.93 percent) in fourth quarter 2017, compared to
$31.5 million (0.88 percent) in
fourth quarter 2016. The $6.0
million year-over-year increase in dollars terms was
primarily attributable to growth in outstanding business volume,
which increased net effective spread by $4.7
million. Also contributing to the increase were
reductions to Farmer Mac's LIBOR-based funding costs, which added
approximately $1.2 million. In
percentage terms, the 5 basis point increase in net effective
spread was primarily due to a reduction in the average balance of
lower-earning investment securities and the reduction in
LIBOR-based funding costs.
Credit
In the Farm & Ranch portfolio, 90-day delinquencies were
$48.4 million (0.71 percent of the
Farm & Ranch portfolio), compared to $21.0 million (0.34 percent of the Farm &
Ranch portfolio) as of December 31, 2016. Those 90-day
delinquencies were comprised of 51 delinquent loans as of
December 31, 2017, compared with 38 delinquent loans as of
December 31, 2016. The year-over-year
increase in 90-day delinquencies is primarily attributable to the
delinquencies of several larger loans and certain crop and
permanent planting loans mostly due to factors specific to the
borrower and not related to macroeconomic factors in the
agricultural economy. In particular, $15.3 million in permanent planting loans to
a single borrower became delinquent in first quarter 2017 and
accounts for over half of the increase in 90-day
delinquencies. Farmer Mac believes that it is adequately
collateralized on this exposure.
Farmer Mac's 90-day delinquencies have historically fluctuated
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 a result of the annual (January 1st) and semi-annual (January 1st and July
1st) payment terms of most Farm & Ranch loans.
Farmer Mac expects that over time its 90-day delinquency rate will
eventually revert closer to, and possibly exceed, Farmer Mac's
historical average due to macroeconomic factors and the cyclical
nature of the agricultural economy. Farmer Mac's average 90-day
delinquency rate as a percentage of its Farm & Ranch portfolio
over the last 15 years is approximately 1 percent. The highest
90-day delinquency rate observed during that period occurred in
2009 at approximately 2 percent, which coincided with increased
delinquencies in loans within Farmer Mac's then-held ethanol loan
portfolio that Farmer Mac no longer holds. Although the
vast majority of the year-over-year increase in 90-day
delinquencies is due to borrower-specific factors, other factors
such as macroeconomic trends and the cyclical nature of the
agricultural economy could contribute to an increase in 90-day
delinquencies in the future.
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
0.25 percent of total business volume as of December 31, 2017, compared to 0.12 percent as of
December 31, 2016.
Another indicator that Farmer Mac considers in analyzing the
credit quality of its Farm & Ranch portfolio is the level of
internally-rated "substandard" assets, both in dollars and as a
percentage of the outstanding Farm & Ranch portfolio. Assets
categorized as "substandard" have a well-defined weakness or
weaknesses, and there is a distinct possibility that some loss will
be sustained if deficiencies are not corrected. As of
December 31, 2017, Farmer Mac's substandard assets were
$221.3 million (3.2 percent of the
Farm & Ranch portfolio), compared to $165.2 million (2.7 percent of the
Farm & Ranch portfolio) as of December 31, 2016.
Those substandard assets were comprised of 307 loans as of
December 31, 2017 and 287 loans as of December 31, 2016. The $56.1 million increase from year-end 2016 was
primarily driven by credit downgrades in on-balance sheet
loans. The new substandard asset volume from year-end 2016
includes several large exposures and also represents a relatively
diverse set of commodities. Farmer Mac expects that over time
its substandard asset rate will eventually revert closer to, and
possibly exceed, Farmer Mac's historical average due to
macroeconomic factors and the cyclical nature of the agricultural
economy. Farmer Mac's average substandard assets as a percentage of
its Farm & Ranch portfolio over the last 15 years is
approximately 4 percent. The highest substandard asset rate
observed during that period occurred in 2010 at approximately 8
percent, which coincided with an increase in substandard loans
within Farmer Mac's then-held ethanol portfolio that Farmer Mac no
longer holds. If Farmer Mac's substandard asset rate continues to
increase from current levels, it is likely that Farmer Mac's
provision to the allowance for loan losses and the reserve for
losses will also increase.
Although some credit losses are inherent to the business of
agricultural lending, Farmer Mac believes that any losses
associated with the current agricultural credit cycle will be
moderated by the strength and diversity of its portfolio, which
Farmer Mac believes is adequately collateralized.
Lines of Business
Farmer Mac's operations consist of four lines of business – Farm
& Ranch, USDA Guarantees, Rural Utilities, and Institutional
Credit. Net interest income by line of business for fourth
quarter 2017 was $14.6 million (142
basis points) for Farm & Ranch, $5.4
million (100 basis points) for USDA Guarantees, $3.4 million (127 basis points) for Rural
Utilities, and $15.5 million (82
basis points) for Institutional Credit. Net effective spread
by line of business for fourth quarter 2017 was $12.4 million (180 basis points) for
Farm & Ranch, $5.0 million
(93 basis points) for USDA Guarantees, $3.1
million (114 basis points) for Rural Utilities, and
$14.8 million (78 basis points) for
Institutional Credit.
Liquidity and Capital
Farmer Mac's core capital totaled $657.1
million as of December 31,
2017, exceeding the statutory minimum capital requirement by
$136.8 million, or 26 percent,
compared to $609.7 million as of
December 31, 2016, which was $143.2
million, or 31 percent, above the statutory minimum capital
requirement. The decrease in capital in excess of the minimum
capital level was due primarily to an increase in minimum capital
required to support the growth of on-balance sheet assets during
2017. In particular, the refinancing of a $1.0 billion AgVantage security that matured in
April 2017 into three new on-balance
sheet AgVantage securities significantly increased Farmer Mac's
on-balance sheet assets because $970.0
million of the refinanced security was previously held by
third party investors and reported as off-balance sheet business
volume. In addition, Farmer Mac elected to adopt Accounting
Standard Update ("ASU") 2018-02, "Reclassification of Certain
Tax Effects from Accumulated Other Comprehensive Income," for
the year ended December 31, 2017,
which resulted in an increase to "Accumulated other comprehensive
income, net of tax" and a corresponding decrease to "Retained
earnings" of $9.1 million. The
decrease in capital in excess of the minimum capital level was
offset in part by an increase in retained earnings during 2017,
excluding the effects of the adoption of ASU 2018-02.
As of December 31, 2017, Farmer
Mac's total stockholders' equity was $708.1
million, compared to $643.4
million as of December 31,
2016. The increase in total stockholders' equity was a result
of an increase in retained earnings and accumulated other
comprehensive income.
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 195 days of liquidity
during 2017 and had 172 days of liquidity as of
December 31, 2017.
Dividends
On February 28, 2018, Farmer Mac's
board of directors declared a quarterly dividend of $0.58 per share for each of Farmer Mac's three
classes of common stock – Class A voting common stock (NYSE:
AGM.A), Class B voting common stock (not listed on any exchange),
and Class C non-voting common stock (NYSE: AGM). This
quarterly dividend will be payable on March
30, 2018 to holders of record of common stock as of
March 19, 2018. This represents
the seventh consecutive year that Farmer Mac has increased its
quarterly common stock dividend from the prior year, and Farmer Mac
believes that the most recent increase is supported by Farmer Mac's
earnings potential and overall capital position.
Farmer Mac's board of directors also declared a dividend on each
of Farmer Mac's three classes of preferred stock. The
quarterly dividend of $0.3672 per
share of 5.875% Non-Cumulative Preferred Stock, Series A (NYSE:
AGM.PR.A), $0.4297 per share of
6.875% Non-Cumulative Preferred Stock, Series B (NYSE: AGM.PR.B),
and $0.375 per share of 6.000%
Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C
(NYSE: AGM.PR.C), is for the period from but not including
January 18, 2018 to and including
April 17, 2018. The preferred
dividends will be payable on April 17,
2018 to holders of record as of April
2, 2018.
Use of Non-GAAP Measures
In the analysis of its financial information, Farmer Mac
sometimes uses "non-GAAP measures," which are measures of financial
performance that are not presented in accordance with generally
accepted accounting principles in the
United States (GAAP). Specifically, 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
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.
Among other items, these fair value fluctuations have included
unrealized gains or losses on financial derivatives and hedging
activities. Since the beginning of first quarter 2017, Farmer Mac
has excluded the effects of realized gains or losses resulting from
the exchange of variation margin on its cleared derivatives
portfolio in its calculations of core earnings and core earnings
per share to present them on a consistent basis with quarters prior
to 2017. More information about the the effects of realized
gains or losses resulting from the exchange of variation margin on
cleared derivatives is available in "Management's Discussion and
Analysis of Financial Condition and Results of Operations—Use of
Non-GAAP Measures" in Farmer Mac's Annual Report on Form 10-K for
the year ended December 31, 2017
filed today with the U.S. Securities and Exchange Commissions
("SEC").
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.
Accordingly, the one-time, non-cash charge to income tax expense
due to the re-measurement of the net deferred tax asset was
excluded from core earnings and core earnings per share. Farmer Mac
re-measured its net deferred tax asset at a lower U.S. corporate
tax rate due to the enactment of new tax legislation on
December 22, 2017. This charge is
excluded from core earnings and core earnings per share because it
is not a frequently occurring transaction, is a non-cash charge,
and is not indicative of future operating results. 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, see the "Reconciliations" section
below.
Net Effective Spread
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; and (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." Farmer Mac excludes from net effective spread premiums
and discounts on assets consolidated at fair value because they
either do not reflect actual cash premiums paid for the assets at
acquisition or are not expected to have an economic effect on
Farmer Mac's financial performance if the assets are held to
maturity, as is expected. Farmer Mac also excludes from net
effective spread the interest income and interest expense
associated with the consolidated trusts and the average balance of
the loans underlying these trusts to reflect management's view that
the net interest income Farmer Mac earns on the related Farmer Mac
Guaranteed Securities owned by third parties is effectively a
guarantee fee. Accordingly, the excluded interest income and
interest expense associated with consolidated trusts is
reclassified to guarantee and commitment fees for purposes of
determining Farmer Mac's core earnings.
Net effective spread also principally differs from net interest
income and net interest yield because it includes the accrual of
income and expense related to the contractual amounts due on
financial derivatives that are not designated in hedge accounting
relationships ("undesignated financial derivatives"). Farmer
Mac uses interest rate swaps to manage its interest rate risk
exposure by synthetically modifying the interest rate reset or
maturity characteristics of certain assets and
liabilities. The accrual of the contractual amounts due
on interest rate swaps designated in hedge accounting relationships
is included as an adjustment to the yield or cost of the hedged
item and is included in net interest income. For undesignated
financial derivatives, Farmer Mac records the income or expense
related to the accrual of the contractual amounts due in "Gains on
financial derivatives and hedging activities" on the consolidated
statements of operations. However, the accrual of the
contractual amounts due for undesignated financial derivatives are
included in Farmer Mac's calculation of net effective spread.
Effective in fourth quarter 2017, Farmer Mac revised its
methodology for calculating net effective spread to also include
the net effects of terminations or net settlements on financial
derivatives and hedging activities. The inclusion of these items
along with the accrual of contractual amounts due for undesignated
financial derivatives, as described above, is intended to reflect
management's view of the complete net spread between an asset and
all of its related funding, including any associated derivatives,
whether or not they are in a hedge accounting relationship.
More information about the net effects of terminations or net
settlements on financial derivatives and hedging activities is
available in "Management's Discussion and Analysis of Financial
Condition and Results of Operations—Use of Non-GAAP Measures" in
Farmer Mac's Annual Report on Form 10-K for the year ended
December 31, 2017 filed today with
the SEC.
For a reconciliation of 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 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 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
drought 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 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, 2017. 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 fourth quarter and
full year 2017 financial results will be held beginning at
11:00 a.m. eastern time on Thursday,
March 8, 2018 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/
Presentation materials to be referenced during the call will be
posted on the webpage that can be accessed by clicking on the link
noted above. 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
fourth quarter and full year 2017 is set forth in Farmer Mac's
Annual Report on Form 10-K for the year ended December 31, 2017 filed today with the SEC.
About Farmer Mac
Farmer Mac is a vital part of the agricultural credit markets
and works to increase access to and reduce the cost of capital for
the benefit of American agricultural and rural communities. As the
nation's premier 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.
Additional information about Farmer Mac (including the Annual
Report on Form 10-K referenced above) is available on Farmer Mac's
website at www.farmermac.com.
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
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December
31,
|
|
December
31,
|
|
|
|
|
|
2017
|
2016
|
|
|
|
|
|
|
(in
thousands)
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
302,022
|
|
|
$
|
265,229
|
|
|
Investment
securities
|
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
2,215,405
|
|
|
|
2,515,851
|
|
|
|
Held-to-maturity, at
amortized cost
|
|
45,032
|
|
|
|
-
|
|
|
|
|
Total Investment
Securities
|
|
2,260,437
|
|
|
|
2,515,851
|
|
|
Farmer Mac Guaranteed
Securities
|
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
5,471,914
|
|
|
|
4,853,685
|
|
|
|
Held-to-maturity, at
amortized cost
|
|
2,126,274
|
|
|
|
1,149,231
|
|
|
|
|
Total Farmer Mac
Guaranteed Securities
|
|
7,598,188
|
|
|
|
6,002,916
|
|
|
USDA
Securities
|
|
|
|
|
|
|
|
|
|
Trading, at fair
value
|
|
13,515
|
|
|
|
20,388
|
|
|
|
Held-to-maturity, at
amortized cost
|
|
2,117,850
|
|
|
|
2,009,225
|
|
|
|
|
Total USDA
Securities
|
|
2,131,365
|
|
|
|
2,029,613
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for
investment, at amortized cost
|
|
3,873,755
|
|
|
|
3,379,884
|
|
|
|
Loans held for
investment in consolidated trusts, at amortized cost
|
|
1,399,827
|
|
|
|
1,132,966
|
|
|
|
Allowance for loan
losses
|
|
(6,796)
|
|
|
|
(5,415)
|
|
|
|
|
Total loans, net of
allowance
|
|
5,266,786
|
|
|
|
4,507,435
|
|
|
Real estate owned, at
lower of cost or fair value
|
|
139
|
|
|
|
1,528
|
|
|
Financial
derivatives, at fair value
|
|
7,093
|
|
|
|
23,182
|
|
|
Interest receivable
(includes $17,373 and $12,584, respectively, related to
consolidated trusts)
|
|
155,278
|
|
|
|
122,782
|
|
|
Guarantee and
commitment fees receivable
|
|
39,895
|
|
|
|
38,871
|
|
|
Deferred tax asset,
net
|
|
2,048
|
|
|
|
12,291
|
|
|
Prepaid expenses and
other assets
|
|
29,023
|
|
|
|
86,322
|
|
|
|
|
|
Total
Assets
|
$
|
17,792,274
|
|
|
$
|
15,606,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity:
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Notes
Payable:
|
|
|
|
|
|
|
|
|
|
Due within one
year
|
$
|
8,089,826
|
|
|
$
|
8,440,123
|
|
|
|
Due after one
year
|
|
7,432,790
|
|
|
|
5,222,977
|
|
|
|
|
Total notes
payable
|
|
15,522,616
|
|
|
|
13,663,100
|
|
|
Debt securities of
consolidated trusts held by third parties
|
|
1,404,945
|
|
|
|
1,142,704
|
|
|
Financial
derivatives, at fair value
|
|
26,599
|
|
|
|
58,152
|
|
|
Accrued interest
payable (includes $14,631 and $10,881, respectively, related to
consolidated trusts)
|
|
75,402
|
|
|
|
49,700
|
|
|
Guarantee and
commitment obligation
|
|
38,400
|
|
|
|
37,282
|
|
|
Accounts payable and
accrued expenses
|
|
14,096
|
|
|
|
9,415
|
|
|
Reserve for
losses
|
|
2,070
|
|
|
|
2,020
|
|
|
|
|
|
Total
Liabilities
|
|
17,084,128
|
|
|
|
14,962,373
|
|
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, 9,087,670 shares and
9,007,481 shares outstanding, respectively
|
|
9,088
|
|
|
|
9,008
|
|
|
Additional paid-in
capital
|
|
118,979
|
|
|
|
118,655
|
|
|
Accumulated other
comprehensive income, net of tax
|
|
51,085
|
|
|
|
33,758
|
|
|
Retained
earnings
|
|
322,704
|
|
|
|
275,714
|
|
|
|
|
|
Total Stockholders'
Equity
|
|
708,146
|
|
|
|
643,425
|
|
|
Non-controlling
interest
|
|
-
|
|
|
|
222
|
|
|
|
|
|
Total
Equity
|
|
708,146
|
|
|
|
643,647
|
|
|
|
|
|
|
Total Liabilities and
Equity
|
$
|
17,792,274
|
|
|
$
|
15,606,020
|
|
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
|
For the Year
Ended
|
|
|
December 31,
2017
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
December 31,
2016
|
|
|
(in thousands, except per share amounts)
|
Interest
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments and cash
equivalents
|
$
|
9,752
|
|
$
|
6,807
|
|
$
|
34,586
|
|
$
|
27,042
|
|
Farmer Mac Guaranteed
Securities and USDA Securities
|
|
56,818
|
|
|
39,343
|
|
|
203,796
|
|
|
150,281
|
|
Loans
|
|
44,801
|
|
|
35,091
|
|
|
162,150
|
|
|
134,577
|
|
|
Total interest
income
|
|
111,371
|
|
|
81,241
|
|
|
400,532
|
|
|
311,900
|
|
Total interest
expense
|
|
70,088
|
|
|
44,528
|
|
|
242,885
|
|
|
171,626
|
|
|
Net interest
income
|
|
41,283
|
|
|
36,713
|
|
|
157,647
|
|
|
140,274
|
|
Provision for loan
losses
|
|
(474)
|
|
|
(461)
|
|
|
(1,708)
|
|
|
(1,065)
|
|
|
Net interest income
after provision for loan losses
|
|
40,809
|
|
|
36,252
|
|
|
155,939
|
|
|
139,209
|
Non-interest
income:
|
|
|
|
|
|
|
|
Guarantee and
commitment fees
|
|
3,484
|
|
|
3,789
|
|
|
14,114
|
|
|
14,868
|
|
(Losses)/gains on
financial derivatives and hedging activities
|
|
(1,777)
|
|
|
15,390
|
|
|
753
|
|
|
2,311
|
|
Gains/(losses) on
trading securities
|
|
60
|
|
|
(474)
|
|
|
(24)
|
|
|
1,460
|
|
Gains/(losses) on
sale of available-for-sale investment securities
|
|
-
|
|
|
-
|
|
|
89
|
|
|
(9)
|
|
Gains on sale of real
estate owned
|
|
964
|
|
|
-
|
|
|
1,748
|
|
|
15
|
|
Other
(loss)/income
|
|
(58)
|
|
|
602
|
|
|
832
|
|
|
1,823
|
|
|
Non-interest
income
|
|
2,673
|
|
|
19,307
|
|
|
17,512
|
|
|
20,468
|
Non-interest
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
5,247
|
|
|
5,949
|
|
|
24,233
|
|
|
22,772
|
|
General and
administrative
|
|
4,348
|
|
|
4,352
|
|
|
15,959
|
|
|
15,109
|
|
Regulatory
fees
|
|
625
|
|
|
625
|
|
|
2,500
|
|
|
2,463
|
|
Real estate owned
operating costs, net
|
|
-
|
|
|
-
|
|
|
23
|
|
|
39
|
|
(Release
of)/provision for reserve for losses
|
|
(10)
|
|
|
51
|
|
|
50
|
|
|
(63)
|
|
|
Non-interest
expense
|
|
10,210
|
|
|
10,977
|
|
|
42,765
|
|
|
40,320
|
|
|
Income before income
taxes
|
|
33,272
|
|
|
44,582
|
|
|
130,686
|
|
|
119,357
|
Income tax
expense
|
|
13,266
|
|
|
15,793
|
|
|
46,369
|
|
|
42,057
|
|
|
Net income
|
|
20,006
|
|
|
28,789
|
|
|
84,317
|
|
|
77,300
|
Less: Net (income) /
loss attributable to non-controlling interest
|
|
-
|
|
|
(28)
|
|
|
165
|
|
|
34
|
|
Net income
attributable to Farmer Mac
|
|
20,006
|
|
|
28,761
|
|
|
84,482
|
|
|
77,334
|
Preferred stock
dividends
|
|
(3,296)
|
|
|
(3,296)
|
|
|
(13,182)
|
|
|
(13,182)
|
|
|
Net income
attributable to common stockholders
|
$
|
16,710
|
|
$
|
25,465
|
|
$
|
71,300
|
|
$
|
64,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share and dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
|
1.57
|
|
$
|
2.42
|
|
$
|
6.73
|
|
$
|
6.12
|
|
|
Diluted earnings per
common share
|
$
|
1.55
|
|
$
|
2.38
|
|
$
|
6.60
|
|
$
|
5.97
|
|
|
Common stock
dividends per common share
|
$
|
0.36
|
|
$
|
0.26
|
|
$
|
1.44
|
|
$
|
1.04
|
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 a breakdown of 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
|
|
|
|
|
December 31,
2017
|
|
September 30,
2017
|
|
December 31,
2016
|
|
|
|
|
(in thousands,
except per share amounts)
|
Net income
attributable to common stockholders
|
|
$
|
16,710
|
|
|
$
|
18,487
|
|
|
$
|
25,465
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Losses)/gains on
financial derivatives and hedging activities due to fair value
changes
|
|
|
(264)
|
|
|
|
2,737
|
|
|
|
17,233
|
|
|
Unrealized
gains/(losses) on trading securities
|
|
|
60
|
|
|
|
-
|
|
|
|
(474)
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
|
(129)
|
|
|
|
(954)
|
|
|
|
(40)
|
|
|
Net effects of
terminations or net settlements on financial derivatives and
hedging activities(1)
|
|
632
|
|
|
|
862
|
|
|
|
2,150
|
|
|
Re-measurement of net
deferred tax asset due to enactment of new tax
legislation
|
|
(1,365)
|
|
|
|
-
|
|
|
|
-
|
|
|
Income tax effect
related to reconciling items
|
|
|
(105)
|
|
|
|
(926)
|
|
|
|
(6,604)
|
|
|
|
Sub-total
|
|
|
(1,171)
|
|
|
|
1,719
|
|
|
|
12,265
|
|
Core
earnings
|
|
$
|
17,881
|
|
|
$
|
16,768
|
|
|
$
|
13,200
|
|
|
|
|
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective
spread(1)
|
|
$
|
37,467
|
|
|
$
|
35,976
|
|
|
$
|
31,448
|
|
|
Guarantee and
commitment fees(2)
|
|
|
5,157
|
|
|
|
4,935
|
|
|
|
5,158
|
|
|
Other(3)
|
|
|
69
|
|
|
|
274
|
|
|
|
545
|
|
|
|
Total
revenues
|
|
|
42,693
|
|
|
|
41,185
|
|
|
|
37,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
(income)/expense (GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
losses
|
|
|
464
|
|
|
|
384
|
|
|
|
512
|
|
|
REO operating
expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Gains on sale of
REO
|
|
|
(964)
|
|
|
|
(32)
|
|
|
|
-
|
|
|
|
Total credit related
(income)/expense
|
|
|
(500)
|
|
|
|
352
|
|
|
|
512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation &
employee benefits
|
|
|
5,247
|
|
|
|
5,987
|
|
|
|
5,949
|
|
|
General &
Administrative
|
|
|
4,348
|
|
|
|
3,890
|
|
|
|
4,352
|
|
|
Regulatory
fees
|
|
|
625
|
|
|
|
625
|
|
|
|
625
|
|
|
|
Total operating
expenses
|
|
|
10,220
|
|
|
|
10,502
|
|
|
|
10,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
32,973
|
|
|
|
30,331
|
|
|
|
25,713
|
|
|
Income tax
expense(4)
|
|
|
11,796
|
|
|
|
10,268
|
|
|
|
9,189
|
|
|
Net loss attributable
to non-controlling interest (GAAP)
|
|
|
-
|
|
|
|
-
|
|
|
|
28
|
|
|
Preferred stock
dividends (GAAP)
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
Core
earnings
|
|
$
|
17,881
|
|
|
$
|
16,768
|
|
|
$
|
13,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.68
|
|
|
$
|
1.58
|
|
|
$
|
1.26
|
|
|
Diluted
|
|
|
1.65
|
|
|
|
1.55
|
|
|
|
1.23
|
|
(1)
|
Effective in fourth
quarter 2017, Farmer Mac revised its methodology for calculating
net effective spread, which is a component of core earnings, to
also include the net effects of terminations or net settlements on
financial derivatives and hedging activities. All prior period
information has been recast to reflect the revised methodology. Net
effective spread is a non-GAAP measure. 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 Year
Ended
|
|
|
|
|
December 31,
2017
|
|
December 31,
2016
|
|
|
|
|
(in thousands,
except per share amounts)
|
Net income
attributable to common stockholders
|
|
$
|
71,300
|
|
|
$
|
64,152
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
Gains on financial
derivatives and hedging activities
|
|
|
9,499
|
|
|
|
13,628
|
|
|
Unrealized
(losses)/gains on trading assets
|
|
|
(24)
|
|
|
|
1,460
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
|
(1,327)
|
|
|
|
(849)
|
|
|
Net effects of terminations or
net settlements on financial derivatives and hedging
activities(1)
|
|
2,674
|
|
|
|
2,178
|
|
|
Re-measurement of net deferred
tax asset due to enactment of new tax legislation
|
|
(1,365)
|
|
|
|
-
|
|
|
Income tax effect
related to reconciling items
|
|
|
(3,788)
|
|
|
|
(5,746)
|
|
|
|
Sub-total
|
|
|
5,669
|
|
|
|
10,671
|
|
Core
earnings
|
|
$
|
65,631
|
|
|
$
|
53,481
|
|
|
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Net effective
spread(1)
|
|
$
|
141,303
|
|
|
$
|
123,072
|
|
|
Guarantee and
commitment fees(2)
|
|
|
20,350
|
|
|
|
19,170
|
|
|
Other(3)
|
|
|
935
|
|
|
|
2,070
|
|
|
|
Total
revenues
|
|
|
162,588
|
|
|
|
144,312
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
expense (GAAP):
|
|
|
|
|
|
|
|
|
|
Provision for
losses
|
|
|
1,758
|
|
|
|
1,002
|
|
|
REO operating
expenses
|
|
|
23
|
|
|
|
39
|
|
|
Gains on sale of
REO
|
|
|
(1,748)
|
|
|
|
(15)
|
|
|
|
Total credit related
expense
|
|
|
33
|
|
|
|
1,026
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(GAAP):
|
|
|
|
|
|
|
|
|
|
Compensation &
employee benefits
|
|
|
24,233
|
|
|
|
22,772
|
|
|
General &
Administrative
|
|
|
15,959
|
|
|
|
15,109
|
|
|
Regulatory
fees
|
|
|
2,500
|
|
|
|
2,463
|
|
|
|
Total operating
expenses
|
|
|
42,692
|
|
|
|
40,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
119,863
|
|
|
|
102,942
|
|
|
Income tax
expense(4)
|
|
|
41,215
|
|
|
|
36,313
|
|
|
Net loss attributable
to non-controlling interest (GAAP)
|
|
|
(165)
|
|
|
|
(34)
|
|
|
Preferred stock
dividends (GAAP)
|
|
|
13,182
|
|
|
|
13,182
|
|
|
|
Core
earnings
|
|
$
|
65,631
|
|
|
$
|
53,481
|
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
6.20
|
|
|
$
|
5.10
|
|
|
Diluted
|
|
|
6.08
|
|
|
|
4.98
|
|
(1)
|
Effective in fourth
quarter 2017, Farmer Mac revised its methodology for calculating
net effective spread, which is a component of core earnings, to
also include the net effects of gains/(losses) due to terminations
or net settlements on financial derivatives and hedging activities.
All prior period information has been recast to reflect the revised
methodology. Net effective spread is a non-GAAP
measure. 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. The year
ended December 31, 2017 includes $0.9 million of tax benefits
resulting from the vesting of restricted stock and the exercise of
SARs under new accounting guidance for stock-based awards that
became effective in first quarter 2017.
|
Reconciliation of
GAAP Basic Earnings Per Share to Core Earnings Basic Earnings Per
Share
|
|
|
|
For the Three Months
Ended
|
|
For the Year
Ended
|
|
|
|
December 31,
2017
|
|
September 30,
2017
|
|
December 31,
2016
|
|
December 31,
2017
|
|
December 31,
2016
|
|
|
|
(in thousands, except per share amounts)
|
GAAP - Basic
EPS
|
$
|
1.57
|
|
|
$
|
1.74
|
|
|
$
|
2.42
|
|
|
$
|
6.73
|
|
|
$
|
6.12
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Losses)/gains on
financial derivatives and hedging activities due to fair value
changes
|
|
(0.03)
|
|
|
|
0.26
|
|
|
|
1.64
|
|
|
|
0.90
|
|
|
|
1.30
|
|
|
Unrealized
gains/(losses) on trading securities
|
|
0.01
|
|
|
|
-
|
|
|
|
(0.05)
|
|
|
|
-
|
|
|
|
0.14
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
|
(0.01)
|
|
|
|
(0.09)
|
|
|
|
-
|
|
|
|
(0.13)
|
|
|
|
(0.08)
|
|
|
Net effects of
terminations or net settlements on financial derivatives and
hedging activities
|
|
0.06
|
|
|
|
0.08
|
|
|
|
0.20
|
|
|
|
0.25
|
|
|
|
0.21
|
|
|
Re-measurement of net
deferred tax asset due to enactment of new tax
legislation
|
|
(0.13)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.13)
|
|
|
|
-
|
|
|
Income tax effect
related to reconciling items
|
|
(0.01)
|
|
|
|
(0.09)
|
|
|
|
(0.63)
|
|
|
|
(0.36)
|
|
|
|
(0.55)
|
|
|
|
Sub-total
|
|
(0.11)
|
|
|
|
0.16
|
|
|
|
1.16
|
|
|
|
0.53
|
|
|
|
1.02
|
|
Core Earnings - Basic
EPS
|
$
|
1.68
|
|
|
$
|
1.58
|
|
|
$
|
1.26
|
|
|
$
|
6.20
|
|
|
$
|
5.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculation (GAAP and Core Earnings)
|
|
10,618
|
|
|
|
10,605
|
|
|
|
10,512
|
|
|
|
10,594
|
|
|
|
10,477
|
|
Reconciliation of
GAAP Diluted Earnings Per Share to Core Earnings Diluted Earnings
Per Share
|
|
|
|
For the Three Months
Ended
|
|
For the Year
Ended
|
|
|
|
December 31,
2017
|
|
September 30,
2017
|
|
December 31,
2016
|
|
December 31,
2017
|
|
December 31,
2016
|
|
|
|
(in thousands, except per share amounts)
|
GAAP - Diluted
EPS
|
$
|
1.55
|
|
|
$
|
1.71
|
|
|
$
|
2.38
|
|
|
$
|
6.60
|
|
|
$
|
5.97
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Losses)/gains on
financial derivatives and hedging activities due to fair value
changes
|
|
(0.02)
|
|
|
|
0.25
|
|
|
|
1.61
|
|
|
|
0.87
|
|
|
|
1.26
|
|
|
Unrealized
gains/(losses) on trading securities
|
|
0.01
|
|
|
|
-
|
|
|
|
(0.04)
|
|
|
|
-
|
|
|
|
0.14
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
|
(0.01)
|
|
|
|
(0.09)
|
|
|
|
-
|
|
|
|
(0.12)
|
|
|
|
(0.08)
|
|
|
Net effects of
terminations or net settlements on financial derivatives and
hedging activities
|
|
0.06
|
|
|
|
0.08
|
|
|
|
0.20
|
|
|
|
0.25
|
|
|
|
0.20
|
|
|
Re-measurement of net
deferred tax asset due to enactment of new tax
legislation
|
|
(0.13)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.13)
|
|
|
|
-
|
|
|
Income tax effect
related to reconciling items
|
|
(0.01)
|
|
|
|
(0.08)
|
|
|
|
(0.62)
|
|
|
|
(0.35)
|
|
|
|
(0.53)
|
|
|
|
Sub-total
|
|
(0.10)
|
|
|
|
0.16
|
|
|
|
1.15
|
|
|
|
0.52
|
|
|
|
0.99
|
|
Core Earnings -
Diluted EPS
|
$
|
1.65
|
|
|
$
|
1.55
|
|
|
$
|
1.23
|
|
|
$
|
6.08
|
|
|
$
|
4.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculation (GAAP and Core Earnings)
|
|
10,815
|
|
|
|
10,815
|
|
|
|
10,700
|
|
|
|
10,803
|
|
|
|
10,746
|
|
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 Nine Months
Ended
|
|
|
|
December 31,
2017
|
|
September 30,
2017
|
|
December 31,
2016
|
|
December 31,
2017
|
|
December 31,
2016
|
|
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
|
|
(dollars
in thousands)
|
Net interest
income/yield
|
$
|
41,283
|
|
|
0.94
|
%
|
|
$
|
39,562
|
|
|
0.92
|
%
|
|
$
|
36,713
|
|
|
0.95
|
%
|
|
$
|
157,647
|
|
|
0.94
|
%
|
|
$
|
140,274
|
|
|
0.90
|
%
|
Net effects of
consolidated trusts
|
|
(1,673)
|
|
|
0.04
|
%
|
|
|
(1,621)
|
|
|
0.04
|
%
|
|
|
(1,369)
|
|
|
0.03
|
%
|
|
|
(6,236)
|
|
|
0.04
|
%
|
|
|
(4,302)
|
|
|
0.03
|
%
|
Expense related to
undesignated financial derivatives
|
|
(1,943)
|
|
|
(0.05)
|
%
|
|
|
(2,675)
|
|
|
(0.07)
|
%
|
|
|
(3,495)
|
|
|
(0.09)
|
%
|
|
|
(10,261)
|
|
|
(0.07)
|
%
|
|
|
(11,480)
|
|
|
(0.07)
|
%
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
|
(28)
|
|
|
-
|
%
|
|
|
961
|
|
|
0.03
|
%
|
|
|
79
|
|
|
-
|
%
|
|
|
1,191
|
|
|
0.01
|
%
|
|
|
610
|
|
|
-
|
%
|
Amortization of
losses due to terminations or net settlements on financial
derivatives and hedging activities
|
|
(172)
|
|
|
-
|
%
|
|
|
(251)
|
|
|
(0.01)
|
%
|
|
|
(480)
|
|
|
(0.01)
|
%
|
|
|
(1,038)
|
|
|
(0.01)
|
%
|
|
|
(2,030)
|
|
|
(0.02)
|
%
|
|
Net effective
spread
|
$
|
37,467
|
|
|
0.93
|
%
|
|
$
|
35,976
|
|
|
0.91
|
%
|
|
$
|
31,448
|
|
|
0.88
|
%
|
|
$
|
141,303
|
|
|
0.91
|
%
|
|
$
|
123,072
|
|
|
0.84
|
%
|
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 December 31, 2017:
Core Earnings by
Business Segment
|
For the Three Months
Ended December 31, 2017
|
|
|
|
Farm &
Ranch
|
|
USDA
Guarantees
|
|
Rural
Utilities
|
|
Institutional
Credit
|
|
Corporate
|
|
Reconciling
Adjustments
|
|
Consolidated
Net Income
|
|
|
|
(in thousands)
|
Net interest
income
|
$
|
14,589
|
|
$
|
5,359
|
|
$
|
3,417
|
|
$
|
15,478
|
|
$
|
2,440
|
|
$
|
-
|
|
$
|
41,283
|
|
Less: reconciling
adjustments(1)(2)(3)(4)
|
|
(2,193)
|
|
|
(380)
|
|
|
(360)
|
|
|
(678)
|
|
|
(205)
|
|
|
3,816
|
|
|
-
|
Net effective
spread
|
|
12,396
|
|
|
4,979
|
|
|
3,057
|
|
|
14,800
|
|
|
2,235
|
|
|
3,816
|
|
|
-
|
Guarantee and
commitment fees(2)
|
|
4,453
|
|
|
153
|
|
|
459
|
|
|
92
|
|
|
-
|
|
|
(1,673)
|
|
|
3,484
|
Other
income(3)(5)
|
|
1,047
|
|
|
9
|
|
|
5
|
|
|
-
|
|
|
(28)
|
|
|
(1,844)
|
|
|
(811)
|
|
Non-interest
income/(loss)
|
|
5,500
|
|
|
162
|
|
|
464
|
|
|
92
|
|
|
(28)
|
|
|
(3,517)
|
|
|
2,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan
losses
|
|
(474)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(474)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release of reserve
for losses
|
|
10
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
10
|
Other non-interest
expense
|
|
(3,966)
|
|
|
(1,051)
|
|
|
(592)
|
|
|
(1,626)
|
|
|
(2,985)
|
|
|
-
|
|
|
(10,220)
|
|
Non-interest
expense(6)
|
|
(3,956)
|
|
|
(1,051)
|
|
|
(592)
|
|
|
(1,626)
|
|
|
(2,985)
|
|
|
-
|
|
|
(10,210)
|
Core earnings before
income taxes
|
|
13,466
|
|
|
4,090
|
|
|
2,929
|
|
|
13,266
|
|
|
(778)
|
|
|
299
|
(7)
|
|
33,272
|
Income tax
(expense)/benefit
|
|
(4,713)
|
|
|
(1,432)
|
|
|
(1,025)
|
|
|
(4,643)
|
|
|
17
|
|
|
(1,470)
|
(8)
|
|
(13,266)
|
|
Core earnings before
preferred stock dividends and attribution of income to
non-controlling interest - preferred stock dividends
|
|
8,753
|
|
|
2,658
|
|
|
1,904
|
|
|
8,623
|
|
|
(761)
|
|
|
(1,171)
|
(7)
|
|
20,006
|
Preferred stock
dividends
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(3,296)
|
|
|
-
|
|
|
(3,296)
|
|
Segment core
earnings/(losses)
|
$
|
8,753
|
|
$
|
2,658
|
|
$
|
1,904
|
|
$
|
8,623
|
|
$
|
(4,057)
|
|
$
|
(1,171)
|
(7)
|
$
|
16,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at
carrying value
|
$
|
4,274,693
|
|
$
|
2,195,189
|
|
$
|
1,088,986
|
|
$
|
7,627,749
|
|
$
|
2,605,657
|
|
$
|
-
|
|
$
|
17,792,274
|
Total on-and
off-balance sheet program assets at principal balance
|
$
|
6,867,586
|
|
$
|
2,352,214
|
|
$
|
1,882,633
|
|
$
|
7,904,878
|
|
|
-
|
|
|
-
|
|
$
|
19,007,311
|
(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 on financial
derivatives and hedging activities" on the consolidated financial
statements, to determine the effective funding cost for each
operating segment.
|
(4)
|
Effective in fourth
quarter 2017, Farmer Mac revised its methodology for calculating
net effective spread, a component of core earnings, to also include
the net effects of gains/(losses) due to terminations or net
settlements on financial derivatives and hedging activities.
All prior period information has been recast to reflect the revised
methodology. See "—Use of Non-GAAP Measures—Net Effective
Spread." above for an explanation of net effective
spread.
|
(5)
|
Includes reconciling
adjustments for fair value adjustments on financial derivatives and
trading assets. Also includes a reconciling adjustment related to
the recognition of deferred gains over the estimated lives of
certain Farmer Mac Guaranteed Securities and USDA Securities. In
2016 and prior periods, fair value adjustments on financial
derivatives included variation margin payment amounts because those
amounts were considered to be collateral of the related exposure
and were accounted for as unrealized gains or losses. However,
effective first quarter 2017, CME implemented a change in its rules
related to the exchange of variation margin, whereby variation
margin payments are considered to be a partial settlement of the
respective derivatives contracts rather than as pledged collateral,
and accounted for as realized gains and losses. Farmer Mac believes
that even though these variation margin amounts are now accounted
for as realized gains or losses on financial derivatives and
hedging activities as a result of the CME rule change, their
economic character will remain the same as they were before the
change. This is not expected to have a cumulative net impact on
Farmer Mac's financial condition or results of operations reported
in accordance with GAAP because the related financial instruments
are expected to be held to maturity. Therefore, beginning in 2017,
this reconciling adjustment includes realized gains and losses on
financial derivatives centrally cleared through CME resulting from
the exchange of variation margin. As a result, core earnings
subsequent to 2016 will be presented on a consistent basis with
core earnings in 2016 and prior periods.
|
(6)
|
Includes directly
attributable costs and an allocation of indirectly attributable
costs based on staffing.
|
(7)
|
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.
|
(8)
|
Includes the
non-recurring, non-cash charge to income tax expense resulting from
the re-measurement of the net deferred tax asset at a reduced
corporate federal income tax rate due to the enactment of new tax
legislation on December 22, 2017.
|
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 December 31,
2017
|
|
As of December 31,
2016
|
|
|
|
|
|
(in thousands)
|
On-balance
sheet:
|
|
|
|
|
Farm &
Ranch:
|
|
|
|
|
|
Loans
|
$
|
2,798,906
|
|
|
$
|
2,381,488
|
|
|
|
Loans held in
trusts:
|
|
|
|
|
|
|
|
|
|
|
Beneficial interests
owned by third party investors
|
|
1,399,827
|
|
|
|
1,132,966
|
|
|
USDA
Guarantees:
|
|
|
|
|
|
|
|
|
|
USDA
Securities
|
|
2,068,017
|
|
|
|
1,954,800
|
|
|
|
Farmer Mac Guaranteed
USDA Securities
|
|
29,980
|
|
|
|
35,599
|
|
|
Rural
Utilities:
|
|
|
|
|
|
|
|
|
|
Loans
|
|
1,076,291
|
|
|
|
999,512
|
|
|
Institutional
Credit:
|
|
|
|
|
|
|
|
|
|
AgVantage
Securities(1)
|
|
7,593,322
|
|
|
|
6,004,472
|
|
|
|
|
Total on-balance
sheet
|
$
|
14,966,343
|
|
|
$
|
12,508,837
|
|
Off-balance
sheet:
|
|
|
|
|
Farm &
Ranch:
|
|
|
|
|
|
LTSPCs
|
$
|
2,335,342
|
|
|
$
|
2,209,409
|
|
|
|
Guaranteed
Securities
|
|
333,511
|
|
|
|
415,441
|
|
|
USDA
Guarantees:
|
|
|
|
|
|
|
|
|
|
Farmer Mac Guaranteed
USDA Securities
|
|
254,217
|
|
|
|
103,976
|
|
|
Rural
Utilities:
|
|
|
|
|
|
|
|
|
LTSPCs(2)
|
|
806,342
|
|
|
|
878,598
|
|
|
Institutional
Credit:
|
|
|
|
|
|
|
|
|
|
AgVantage
Securities(1)
|
|
11,556
|
|
|
|
983,214
|
|
|
|
AgVantage Revolving
Line of Credit Facility(3)
|
|
300,000
|
|
|
|
300,000
|
|
|
|
|
Total off-balance
sheet
|
$
|
4,040,968
|
|
|
$
|
4,890,638
|
|
|
|
|
|
Total
|
$
|
19,007,311
|
|
|
$
|
17,399,475
|
|
(1)
|
In April 2017, Farmer
Mac purchased and retained $1.0 billion in AgVantage securities
from MetLife. MetLife used the proceeds from Farmer Mac's purchase
of $1.0 billion in AgVantage securities to refinance an AgVantage
security of the same amount that matured in April 2017. Previously,
$970.0 million of the maturing $1.0 billion AgVantage security had
been sold to third parties and reported as off-balance sheet
business volume in the Institutional Credit line of
business.
|
(2)
|
Includes $20.0
million related to one-year loan purchase commitments on which
Farmer Mac receives a nominal unused commitment fee as of both
December 31, 2017 and 2016.
|
(3)
|
During 2017, $100.0
million of this facility was drawn and subsequently repaid.
During 2016 this facility was not 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 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(1)
|
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
|
(dollars in
thousands)
|
For the quarter
ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2017(2)
|
$
|
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%
|
|
March 31,
2017
|
|
10,511
|
|
|
1.77%
|
|
|
4,561
|
|
|
0.89%
|
|
|
2,568
|
|
|
1.04%
|
|
|
12,615
|
|
|
0.82%
|
|
|
2,271
|
|
|
0.32%
|
|
|
32,526
|
|
|
0.90%
|
|
December 31,
2016
|
|
10,131
|
|
|
1.75%
|
|
|
5,152
|
|
|
1.04%
|
|
|
2,530
|
|
|
1.02%
|
|
|
11,636
|
|
|
0.78%
|
|
|
1,999
|
|
|
0.26%
|
|
|
31,448
|
|
|
0.88%
|
|
September 30,
2016
|
|
10,476
|
|
|
1.86%
|
|
|
4,994
|
|
|
1.03%
|
|
|
2,541
|
|
|
1.01%
|
|
|
11,431
|
|
|
0.75%
|
|
|
2,239
|
|
|
0.24%
|
|
|
31,681
|
|
|
0.85%
|
|
June 30,
2016
|
|
9,644
|
|
|
1.74%
|
|
|
4,392
|
|
|
0.92%
|
|
|
2,459
|
|
|
0.98%
|
|
|
11,412
|
|
|
0.77%
|
|
|
2,596
|
|
|
0.29%
|
|
|
30,503
|
|
|
0.83%
|
|
March 31,
2016
|
|
9,238
|
|
|
1.67%
|
|
|
4,118
|
|
|
0.87%
|
|
|
2,438
|
|
|
0.99%
|
|
|
11,093
|
|
|
0.80%
|
|
|
2,553
|
|
|
0.26%
|
|
|
29,440
|
|
|
0.81%
|
|
December 31,
2015
|
|
9,168
|
|
|
1.68%
|
|
|
4,332
|
|
|
0.92%
|
|
|
2,747
|
|
|
1.10%
|
|
|
10,902
|
|
|
0.80%
|
|
|
2,306
|
|
|
0.26%
|
|
|
29,455
|
|
|
0.84%
|
(1)
|
Net effective spread
is a non-GAAP measure. Effective in fourth quarter 2017, Farmer Mac
revised its methodology for calculating net effective spread to
also include the net effects of terminations or net settlements on
financial derivatives and hedging activities. All prior
period information has been recast to reflect the revised net
effective spread methodology. See Use of "Non-GAAP
Measures—Net Effective Spread" above for more information regarding
the explanation of net effective spread.
|
(2)
|
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
December 31, 2017.
|
The following table presents quarterly core earnings reconciled
to net income attributable to common stockholders:
Core Earnings by
Quarter Ended
|
|
|
|
|
December
2017
|
|
September
2017
|
|
June
2017
|
|
March
2017
|
|
December
2016
|
|
September
2016
|
|
June
2016
|
|
March
2016
|
|
December
2015
|
|
|
|
|
(in
thousands)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective
spread
|
$
|
37,467
|
|
|
$
|
35,976
|
|
|
$
|
35,334
|
|
|
$
|
32,526
|
|
|
$
|
31,448
|
|
|
$
|
31,681
|
|
|
$
|
30,503
|
|
|
$
|
29,440
|
|
|
$
|
29,455
|
|
|
Guarantee and
commitment fees
|
|
5,157
|
|
|
|
4,935
|
|
|
|
4,942
|
|
|
|
5,316
|
|
|
|
5,158
|
|
|
|
4,533
|
|
|
|
4,810
|
|
|
|
4,669
|
|
|
|
4,730
|
|
|
Other
|
|
69
|
|
|
|
274
|
|
|
|
107
|
|
|
|
485
|
|
|
|
545
|
|
|
|
713
|
|
|
|
466
|
|
|
|
346
|
|
|
|
267
|
|
|
|
Total
revenues
|
|
42,693
|
|
|
|
41,185
|
|
|
|
40,383
|
|
|
|
38,327
|
|
|
|
37,151
|
|
|
|
36,927
|
|
|
|
35,779
|
|
|
|
34,455
|
|
|
|
34,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
(income)/expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for/(release of) losses
|
|
464
|
|
|
|
384
|
|
|
|
466
|
|
|
|
444
|
|
|
|
512
|
|
|
|
(31)
|
|
|
|
458
|
|
|
|
63
|
|
|
|
(49)
|
|
|
REO operating
expenses
|
|
-
|
|
|
|
-
|
|
|
|
23
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
39
|
|
|
|
44
|
|
|
(Gains)/losses on
sale of REO
|
|
(964)
|
|
|
|
(32)
|
|
|
|
(757)
|
|
|
|
5
|
|
|
|
-
|
|
|
|
(15)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
Total credit related
(income)/expense
|
|
(500)
|
|
|
|
352
|
|
|
|
(268)
|
|
|
|
449
|
|
|
|
512
|
|
|
|
(46)
|
|
|
|
458
|
|
|
|
102
|
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
5,247
|
|
|
|
5,987
|
|
|
|
6,682
|
|
|
|
6,317
|
|
|
|
5,949
|
|
|
|
5,438
|
|
|
|
5,611
|
|
|
|
5,774
|
|
|
|
5,385
|
|
|
General and
administrative
|
|
4,348
|
|
|
|
3,890
|
|
|
|
3,921
|
|
|
|
3,800
|
|
|
|
4,352
|
|
|
|
3,474
|
|
|
|
3,757
|
|
|
|
3,526
|
|
|
|
3,238
|
|
|
Regulatory
fees
|
|
625
|
|
|
|
625
|
|
|
|
625
|
|
|
|
625
|
|
|
|
625
|
|
|
|
613
|
|
|
|
612
|
|
|
|
613
|
|
|
|
613
|
|
|
|
Total operating
expenses
|
|
10,220
|
|
|
|
10,502
|
|
|
|
11,228
|
|
|
|
10,742
|
|
|
|
10,926
|
|
|
|
9,525
|
|
|
|
9,980
|
|
|
|
9,913
|
|
|
|
9,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
32,973
|
|
|
|
30,311
|
|
|
|
29,423
|
|
|
|
27,136
|
|
|
|
25,713
|
|
|
|
27,448
|
|
|
|
25,341
|
|
|
|
24,440
|
|
|
|
25,221
|
|
Income tax
expense(1)
|
|
11,796
|
|
|
|
10,268
|
|
|
|
10,307
|
|
|
|
8,844
|
|
|
|
9,189
|
|
|
|
9,577
|
|
|
|
8,979
|
|
|
|
8,568
|
|
|
|
8,876
|
|
Net (loss)/income
attributable to non-controlling interest
|
|
-
|
|
|
|
-
|
|
|
|
(150)
|
|
|
|
(15)
|
|
|
|
28
|
|
|
|
(18)
|
|
|
|
(16)
|
|
|
|
(28)
|
|
|
|
(60)
|
|
Preferred stock
dividends
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
Core
earnings
|
$
|
17,881
|
|
|
$
|
16,768
|
|
|
$
|
15,970
|
|
|
$
|
15,012
|
|
|
$
|
13,200
|
|
|
$
|
14,594
|
|
|
$
|
13,082
|
|
|
$
|
12,605
|
|
|
$
|
13,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Losses)/gains on
financial derivatives and hedging activities due to fair value
changes
|
|
(264)
|
|
|
|
2,737
|
|
|
|
2,221
|
|
|
|
4,805
|
|
|
|
17,233
|
|
|
|
1,460
|
|
|
|
(2,076)
|
|
|
|
(2,989)
|
|
|
|
2,743
|
|
|
|
Unrealized
gains/(losses) on trading assets
|
|
60
|
|
|
|
-
|
|
|
|
(2)
|
|
|
|
(82)
|
|
|
|
(474)
|
|
|
|
1,182
|
|
|
|
394
|
|
|
|
358
|
|
|
|
696
|
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
|
(129)
|
|
|
|
(954)
|
|
|
|
(117)
|
|
|
|
(127)
|
|
|
|
(40)
|
|
|
|
(157)
|
|
|
|
(371)
|
|
|
|
(281)
|
|
|
|
(263)
|
|
|
|
Net effects of
terminations or net settlements on financial derivatives and
hedging activities
|
|
632
|
|
|
|
862
|
|
|
|
232
|
|
|
|
948
|
|
|
|
2,150
|
|
|
|
238
|
|
|
|
398
|
|
|
|
(608)
|
|
|
|
(217)
|
|
|
|
Re-measurement of net
deferred tax asset due to enactment of new tax
legislation
|
|
(1,365)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
Income tax effect
related to reconciling items
|
|
(105)
|
|
|
|
(926)
|
|
|
|
(816)
|
|
|
|
(1,941)
|
|
|
|
(6,604)
|
|
|
|
(953)
|
|
|
|
579
|
|
|
|
1,232
|
|
|
|
(1,036)
|
|
|
|
|
Net income
attributable to common stockholders
|
$
|
16,710
|
|
|
$
|
18,487
|
|
|
$
|
17,488
|
|
|
$
|
18,615
|
|
|
$
|
25,465
|
|
|
$
|
16,364
|
|
|
$
|
12,006
|
|
|
$
|
10,317
|
|
|
$
|
15,032
|
|
(1)
|
As of May 1, 2017,
Farmer Mac transferred its entire 65% ownership interest in
AgVisory back to the limited liability company.
|
View original content with
multimedia:http://www.prnewswire.com/news-releases/farmer-mac-reports-2017-results-and-announces-61-dividend-increase-300610233.html
SOURCE Farmer Mac