WASHINGTON, March 15, 2012 /PRNewswire/ -- The Federal
Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A)
today reported continued strong performance in 2011, as a robust
agricultural economy contributed to Farmer Mac's positive earnings,
increased capital, and improved asset quality. Farmer Mac's
core earnings, a non-GAAP measure, for fourth quarter 2011 were
$12.6 million ($1.16 per diluted common share), up from
$6.7 million ($0.63 per diluted common share) for fourth
quarter 2010. Core earnings increased 69 percent for the
full year to $42.9 million
($3.97 per diluted common share)
in 2011, up from $25.4 million
($2.39 per diluted common share)
in 2010. This increase was primarily due to increased net
interest income and releases from the allowance for losses,
compared to provisions in 2010.
Farmer Mac's GAAP net income attributable to common stockholders
was $13.3 million ($1.23 per diluted common share) and $13.8 million ($1.28 per diluted common share) for the
three and twelve months ended December 31,
2011, respectively, compared to $12.5 million ($1.16 per diluted common share) and $22.1 million ($2.08 per diluted common share) for the same
periods in 2010. Farmer Mac's 2011 GAAP results were impacted
by decreases in the fair values of financial derivatives compared
to 2010. Farmer Mac uses financial derivatives, primarily
interest rate swaps, to mitigate its exposure to interest rate risk
and often times achieve an overall lower effective cost of
borrowing. Because these financial derivatives are not
designated in hedge relationships for accounting purposes, as
changes in long-term interest rates affect the fair values of the
financial derivatives, those fair value changes are recorded in
earnings, while much of the offsetting changes in the fair values
of related assets and liabilities are not recorded in earnings.
Farmer Mac excludes these fair value fluctuations from its
core earnings.
Farmer Mac President and Chief
Executive Officer Michael Gerber
stated, "2011 was an excellent year for Farmer Mac. We
achieved significant growth in core earnings despite reduced demand
for loans by rural borrowers at the retail level. The
positive trend in credit quality has also continued, as our 90-day
delinquencies were again down compared to both the previous quarter
and the prior year. In addition, our capital position remains
significantly above applicable statutory and regulatory
requirements. As a result of our continued strong
performance, Farmer Mac remains well-positioned to meet the
expanding demand for access to credit in rural America that is
expected over time. The recent doubling of the quarterly
dividend on common stock underscores our confidence in Farmer Mac's
future and our commitment to provide enhanced returns to
shareholders over the long term while fulfilling our mission of
serving rural America."
Business Results
For the year ended December 31,
2011, Farmer Mac's net effective interest spread was
$89.4 million (96 basis points),
compared to $66.5 million (106 basis
points) in 2010. This increase in dollars was a result of net
interest income earned on new on-balance sheet program assets added
during 2011. The 10 basis point decrease in yield is
mainly attributable to the addition of (1) lower yielding assets in
Farmer Mac's liquidity investment portfolio, such as U.S.
Treasuries, which have a negative net yield but offer a source of
contingent liquidity, and (2) on balance sheet AgVantage
securities at lower net yields than the average net yield on Farmer
Mac's existing portfolio.
Farmer Mac's guarantee and commitment fees, which compensate
Farmer Mac for assuming the credit risk on loans underlying Farmer
Mac Guaranteed Securities and long term standby purchase
commitments (LTSPCs) were $24.8
million for 2011, compared to $24.1 million for 2010.
Program Activity
During 2011, Farmer Mac added $3.4
billion of new program volume from a variety of sources:
- purchased $495.5 million of newly
originated Farmer Mac I eligible loans;
- added $472.0 million of Farmer
Mac I eligible loans under LTSPCs;
- purchased $1.8 billion of Farmer
Mac I AgVantage securities;
- purchased $203.8 million of loans
under the Rural Utilities program;
- guaranteed $2.8 million of Rural
Utilities AgVantage securities; and
- purchased $407.7 million of
Farmer Mac II USDA-guaranteed portions.
This new business volume was offset by principal paydowns on
outstanding loans and loans underlying Farmer Mac Guaranteed
Securities and LTSPCs and the maturity of a $475.0 million AgVantage security that was not
replaced with new business. Farmer Mac's outstanding program
volume was $11.9 billion as of
December 31, 2011, a net decrease of
$303.4 million from December 31, 2010.
Credit Quality
Farmer Mac's 90-day delinquencies were $40.6 million (0.93 percent of the
portfolio) as of December 31, 2011,
compared to $70.2 million
(1.63 percent of the portfolio) as of December 31, 2010.
As of December 31, 2011, there
were no ethanol loans in the 90-day delinquencies, compared to
$10.9 million as of December 31, 2010. Farmer Mac recorded
charge-offs of $0.3 million in
2011, compared to charge-offs of $0.6
million during 2010.
When analyzing the overall risk profile of its program business,
Farmer Mac takes into account more than the Farmer Mac I
agricultural loan delinquency information provided above. The
total program business includes AgVantage securities and rural
utilities loans, neither of which have any delinquencies, and
USDA-guaranteed portions (Farmer Mac II), which are backed by the
full faith and credit of the United
States. Across Farmer Mac's entire program business,
90day delinquencies represented 0.34 percent of total program
assets as of December 31, 2011,
compared to 0.58 percent as of December 31,
2010.
Capital and Liquidity
Farmer Mac is required to hold capital at the higher of its
statutory minimum capital requirement and the amount required by
the risk-based capital stress test prescribed by Farm Credit
Administration regulations. As of December 31, 2011, Farmer Mac's core capital
totaled $475.2 million and exceeded
its statutory minimum capital requirement of $348.7 million by $126.5
million. As of December 31,
2011 the risk-based capital stress test generated a
risk-based capital requirement of $52.9
million. Farmer Mac's regulatory capital of
$492.7 million exceeded that amount
by approximately $439.8 million.
As prescribed by FCA regulations, Farmer Mac is required to
maintain a minimum of 60 days of liquidity. As of
December 31, 2011, Farmer Mac had 151
days of liquidity, as calculated in accordance with FCA
regulations.
Reconciliation of Core and GAAP Earnings
Farmer Mac uses core earnings, a non-GAAP financial measure, to
measure corporate economic performance and develop financial plans
because, in management's view, core earnings is a useful
alternative measure in understanding Farmer Mac's economic
performance, transaction economics and business trends. Core
earnings differs from GAAP net income by excluding the effects of
fair value accounting guidance. Core earnings also differs
from GAAP net income 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 the Corporation's core business.
This non-GAAP financial measure may not be comparable to
similarly labeled non-GAAP financial measures disclosed by other
companies. Farmer Mac's disclosure of this non-GAAP measure
is not intended to replace GAAP information but, rather, to
supplement it.
A reconciliation of Farmer Mac's GAAP net income attributable to
common stockholders to core earnings is presented in the following
table.
|
|
Reconciliation of GAAP Net
Income Attributable to Common Stockholders to Core
Earnings
|
|
|
For the
Three Months Ended
|
|
|
December 31,
2011
|
|
December 31,
2010
|
|
|
(in
thousands, except per share amounts)
|
|
GAAP net income attributable to
common stockholders
|
$
|
13,323
|
|
|
$
|
12,492
|
|
|
Less the after-tax effects
of:
|
|
|
|
|
Unrealized gains on financial
derivatives
|
386
|
|
|
13,069
|
|
|
Unrealized gains/(losses) on
trading assets
|
2,476
|
|
|
(931)
|
|
|
Amortization of premiums on
assets consolidated at fair value
|
(2,285)
|
|
|
(2,371)
|
|
|
Recognition of deferred gains
related to certain Farmer Mac II Guaranteed Securities and USDA
Guaranteed Securities
|
410
|
|
|
—
|
|
|
Net effects of settlements on
agency forward contracts
|
(240)
|
|
|
(341)
|
|
|
Lower of cost or fair value
adjustment on loans held for sale
|
—
|
|
|
(3,677)
|
|
|
Sub-total
|
747
|
|
|
5,749
|
|
|
Core earnings
|
$
|
12,576
|
|
|
$
|
6,743
|
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
Basic
|
$
|
1.21
|
|
|
$
|
0.66
|
|
|
Diluted
|
1.16
|
|
|
0.63
|
|
|
|
|
|
|
|
Weighted-average
shares:
|
|
|
|
|
Basic
|
10,357
|
|
|
10,282
|
|
|
Diluted
|
10,837
|
|
|
10,732
|
|
|
|
|
|
|
|
|
For the Year
Ended
|
|
|
December 31,
2011
|
|
December 31,
2010
|
|
|
(in
thousands, except per share amounts)
|
|
GAAP net income attributable to
common stockholders
|
$
|
13,784
|
|
|
$
|
22,080
|
|
|
Less the after-tax effects
of:
|
|
|
|
|
Unrealized (losses)/gains on
financial derivatives
|
(30,930)
|
|
|
13,046
|
|
|
Unrealized gains on trading
assets
|
2,246
|
|
|
3,426
|
|
|
Amortization of premiums on
assets consolidated at fair value
|
(7,060)
|
|
|
(7,617)
|
|
|
Recognition of deferred gains
related to certain Farmer Mac II Guaranteed Securities and USDA
Guaranteed Securities
|
3,368
|
|
|
—
|
|
|
Net effects of settlements on
agency forward contracts
|
(2,523)
|
|
|
(670)
|
|
|
Lower of cost or fair value
adjustment on loans held for sale
|
5,776
|
|
|
(5,686)
|
|
|
Issuance costs on the retirement
of preferred stock
|
—
|
|
|
(5,784)
|
|
|
Sub-total
|
(29,123)
|
|
|
(3,285)
|
|
|
Core earnings
|
$
|
42,907
|
|
|
$
|
25,365
|
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
Basic
|
$
|
4.15
|
|
|
$
|
2.48
|
|
|
Diluted
|
3.97
|
|
|
2.39
|
|
|
|
|
|
|
|
Weighted-average
shares:
|
|
|
|
|
Basic
|
10,335
|
|
|
10,229
|
|
|
Diluted
|
10,802
|
|
|
10,615
|
|
|
|
|
|
|
|
|
|
|
|
|
More complete information on Farmer Mac's performance
for 2011 is set forth in the Form 10-K filed by Farmer Mac
earlier today with the Securities and Exchange Commission (SEC).
Forward-Looking Statements
In addition to historical information, this release includes
forward-looking statements that reflect management's current
expectations for Farmer Mac's future financial results, business
prospects and business developments. 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 could cause Farmer
Mac's actual results to differ materially from the expectations as
expressed or implied by the forward-looking statements, including
uncertainties regarding: (1) the availability to Farmer
Mac and Farmer Mac II LLC of debt financing and, if available, the
reasonableness of rates and terms; (2) legislative or
regulatory developments that could affect Farmer Mac, including
those related to the Dodd-Frank Act; (3) fluctuations in the
fair value of assets held by Farmer Mac and Farmer Mac II LLC;
(4) the rate and direction of development of the secondary
market for agricultural mortgage and rural utilities loans,
including lender interest in Farmer Mac credit products and the
Farmer Mac secondary market; (5) the general rate of growth in
agricultural mortgage and rural utilities indebtedness;
(6) the impact of economic conditions and real estate values
on agricultural mortgage lending; (7) developments in the
financial markets, including possible investor, analyst and rating
agency reactions to events involving GSEs, including Farmer Mac;
and (8) financial market volatility, including the future
level and direction of interest rates, commodity prices, and export
demand for U.S. agricultural products. Other risk factors are
discussed in Farmer Mac's Annual Report on Form 10-K for the
year ended December 31, 2011, as
filed with the SEC earlier today. 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.
Farmer Mac is a stockholder-owned instrumentality of
the United States chartered by
Congress to establish a secondary market for agricultural real
estate and rural housing mortgage loans, rural utilities loans, and
USDA-guaranteed farm program and rural development loans.
Farmer Mac's Class C non-voting and Class A voting common
stocks are listed on the New York Stock Exchange under the
symbols AGM and AGM.A, respectively. Additional information
about Farmer Mac (as well as the Annual Report on Form 10-K
referenced above) is available on Farmer Mac's website at
www.farmermac.com. Farmer Mac II LLC is a subsidiary of
Farmer Mac that operates the Farmer Mac II business of purchasing
and holding USDA-guaranteed loans. Additional information
about Farmer Mac II LLC is available on its website at
www.farmermac2.com.
The conference call to discuss Farmer Mac's 2011 financial
results and the Corporation's Form 10-K for 2011 will be
webcast on Farmer Mac's website beginning at 11:00 a.m.
eastern time on Friday, March 16,
2012. An audio recording of that call will be
available on Farmer Mac's website for two weeks after the call is
concluded.
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEET
(unaudited)
|
|
|
As of
December 31,
|
|
|
2011
|
|
2010
|
|
|
(in
thousands)
|
|
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
817,046
|
|
|
$
|
729,920
|
|
|
Investment
securities:
|
|
|
|
|
Available-for-sale, at fair
value
|
2,182,694
|
|
|
1,677,233
|
|
|
Trading, at fair
value
|
1,796
|
|
|
86,096
|
|
|
Total investment
securities
|
2,184,490
|
|
|
1,763,329
|
|
|
Farmer Mac Guaranteed
Securities:
|
|
|
|
|
Available-for-sale, at fair
value
|
4,289,272
|
|
|
2,907,264
|
|
|
|
|
|
|
|
USDA Guaranteed
Securities:
|
|
|
|
|
Available-for-sale, at fair
value
|
1,279,546
|
|
|
1,005,679
|
|
|
Trading, at fair
value
|
212,359
|
|
|
311,765
|
|
|
Total USDA Guaranteed
Securities
|
1,491,905
|
|
|
1,317,444
|
|
|
Loans:
|
|
|
|
|
Loans held for sale, at lower of
cost or fair value
|
541,447
|
|
|
1,212,065
|
|
|
Loans held for investment, at
amortized cost
|
1,241,311
|
|
|
90,674
|
|
|
Loans held for investment in
consolidated trusts, at amortized cost
|
1,121,559
|
|
|
1,265,663
|
|
|
Allowance for loan
losses
|
(10,161)
|
|
|
(9,803)
|
|
|
Total loans, net of
allowance
|
2,894,156
|
|
|
2,558,599
|
|
|
Real estate owned, at lower of
cost or fair value
|
3,136
|
|
|
1,992
|
|
|
Financial derivatives, at fair
value
|
40,250
|
|
|
41,492
|
|
|
Interest receivable
|
110,339
|
|
|
90,295
|
|
|
Guarantee and commitment fees
receivable
|
31,384
|
|
|
34,752
|
|
|
Deferred tax asset,
net
|
—
|
|
|
14,530
|
|
|
Prepaid expenses and other
assets
|
21,530
|
|
|
20,297
|
|
|
Total Assets
|
$
|
11,883,508
|
|
|
$
|
9,479,914
|
|
|
|
|
|
|
|
Liabilities and
Equity:
|
|
|
|
|
Liabilities:
|
|
|
|
|
Notes payable:
|
|
|
|
|
Due within one year
|
$
|
6,087,879
|
|
|
$
|
4,509,419
|
|
|
Due after one year
|
4,104,882
|
|
|
3,430,656
|
|
|
Total notes payable
|
10,192,761
|
|
|
7,940,075
|
|
|
Debt securities of consolidated
trusts held by third parties
|
701,583
|
|
|
827,411
|
|
|
Financial derivatives, at fair
value
|
160,024
|
|
|
113,687
|
|
|
Accrued interest
payable
|
60,854
|
|
|
57,131
|
|
|
Guarantee and commitment
obligation
|
27,440
|
|
|
30,308
|
|
|
Accounts payable and accrued
expenses
|
178,708
|
|
|
22,113
|
|
|
Deferred tax liability,
net
|
250
|
|
|
—
|
|
|
Reserve for losses
|
7,355
|
|
|
10,312
|
|
|
Total Liabilities
|
11,328,975
|
|
|
9,001,037
|
|
|
Equity:
|
|
|
|
|
Preferred stock:
|
|
|
|
|
Series C
|
57,578
|
|
|
57,578
|
|
|
Common stock:
|
|
|
|
|
Class A Voting
|
1,031
|
|
|
1,031
|
|
|
Class B Voting
|
500
|
|
|
500
|
|
|
Class C Non-Voting
|
8,826
|
|
|
8,753
|
|
|
Additional paid-in
capital
|
102,821
|
|
|
100,050
|
|
|
Accumulated other comprehensive
income
|
79,370
|
|
|
18,275
|
|
|
Retained earnings
|
62,554
|
|
|
50,837
|
|
|
Total Stockholders'
Equity
|
312,680
|
|
|
237,024
|
|
|
Non-controlling interest -
preferred stock
|
241,853
|
|
|
241,853
|
|
|
Total Equity
|
554,533
|
|
|
478,877
|
|
|
Total Liabilities and
Equity
|
$
|
11,883,508
|
|
|
$
|
9,479,914
|
|
|
|
|
|
|
|
|
|
|
|
|
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited)
|
|
|
For the
Three Months Ended
|
|
For the Year
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
(in
thousands, except per share amounts)
|
|
Interest income:
|
|
|
|
|
|
|
|
|
Investments and cash
equivalents
|
$
|
7,017
|
|
|
$
|
8,194
|
|
|
$
|
28,117
|
|
|
$
|
27,497
|
|
|
Farmer Mac Guaranteed Securities
and USDA Guaranteed Securities
|
35,863
|
|
|
24,145
|
|
|
127,394
|
|
|
86,742
|
|
|
Loans
|
29,762
|
|
|
29,738
|
|
|
119,176
|
|
|
124,472
|
|
|
Total interest income
|
72,642
|
|
|
62,077
|
|
|
274,687
|
|
|
238,711
|
|
|
Total interest
expense
|
39,277
|
|
|
36,308
|
|
|
153,382
|
|
|
142,668
|
|
|
Net interest income
|
33,365
|
|
|
25,769
|
|
|
121,305
|
|
|
96,043
|
|
|
Release of/(provision for) loan
losses
|
482
|
|
|
(501)
|
|
|
(610)
|
|
|
(1,893)
|
|
|
Net interest income after
release of/(provision for) loan losses
|
33,847
|
|
|
25,268
|
|
|
120,695
|
|
|
94,150
|
|
|
Non-interest
income/(loss):
|
|
|
|
|
|
|
|
|
Guarantee and commitment
fees
|
5,966
|
|
|
6,485
|
|
|
24,821
|
|
|
24,091
|
|
|
(Losses)/gains on financial
derivatives
|
(10,277)
|
|
|
11,349
|
|
|
(92,645)
|
|
|
(17,159)
|
|
|
Gains/(losses) on trading
assets
|
3,809
|
|
|
(1,433)
|
|
|
3,455
|
|
|
5,270
|
|
|
Gains on sale of
available-for-sale investment securities
|
—
|
|
|
2
|
|
|
269
|
|
|
266
|
|
|
Gain on sale of real estate
owned
|
254
|
|
|
10
|
|
|
974
|
|
|
10
|
|
|
Lower of cost or fair value
adjustment on loans held for sale
|
—
|
|
|
(5,658)
|
|
|
8,887
|
|
|
(8,748)
|
|
|
Other income
|
1,102
|
|
|
64
|
|
|
6,850
|
|
|
1,244
|
|
|
Non-interest
income/(loss)
|
854
|
|
|
10,819
|
|
|
(47,389)
|
|
|
4,974
|
|
|
Non-interest expense:
|
|
|
|
|
|
|
|
|
Compensation and employee
benefits
|
3,916
|
|
|
5,313
|
|
|
17,884
|
|
|
17,232
|
|
|
General and
administrative
|
2,315
|
|
|
2,235
|
|
|
9,732
|
|
|
8,564
|
|
|
Regulatory fees
|
563
|
|
|
550
|
|
|
2,277
|
|
|
2,243
|
|
|
Real estate owned operating
costs, net
|
82
|
|
|
674
|
|
|
823
|
|
|
2,171
|
|
|
Provision for/(release of)
losses
|
364
|
|
|
737
|
|
|
(2,957)
|
|
|
2,417
|
|
|
Other expense
|
—
|
|
|
—
|
|
|
900
|
|
|
—
|
|
|
Non-interest expense
|
7,240
|
|
|
9,509
|
|
|
28,659
|
|
|
32,627
|
|
|
Income before income
taxes
|
27,461
|
|
|
26,578
|
|
|
44,647
|
|
|
66,497
|
|
|
Income tax expense
|
7,872
|
|
|
7,820
|
|
|
5,797
|
|
|
13,797
|
|
|
Net income
|
19,589
|
|
|
18,758
|
|
|
38,850
|
|
|
52,700
|
|
|
Less: Net income attributable to
non-controlling interest - preferred stock dividends
|
(5,546)
|
|
|
(5,547)
|
|
|
(22,187)
|
|
|
(20,707)
|
|
|
Net income attributable to
Farmer Mac
|
14,043
|
|
|
13,211
|
|
|
16,663
|
|
|
31,993
|
|
|
Preferred stock
dividends
|
(720)
|
|
|
(719)
|
|
|
(2,879)
|
|
|
(4,129)
|
|
|
Loss on retirement of preferred
stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,784)
|
|
|
Net income attributable to
common stockholders
|
$
|
13,323
|
|
|
$
|
12,492
|
|
|
$
|
13,784
|
|
|
$
|
22,080
|
|
|
Earnings per common share and
dividends:
|
|
|
|
|
|
|
|
|
Basic earnings per common
share
|
$
|
1.29
|
|
|
$
|
1.21
|
|
|
$
|
1.33
|
|
|
$
|
2.16
|
|
|
Diluted earnings per common
share
|
$
|
1.23
|
|
|
$
|
1.16
|
|
|
$
|
1.28
|
|
|
$
|
2.08
|
|
|
Common stock dividends per
common share
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Farmer Mac