WASHINGTON, Feb. 28, 2022 /PRNewswire/ -- The Federal
Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and
AGM.A), the nation's 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 and
year ended December 31, 2021.
Full Year 2021 and Recent Highlights
- Net income of $107.6 million
compared to $89.2 million in 2020,
reflecting a 20% year-over-year increase
- Core earnings (a non-GAAP measure) increased 13% to
$113.6 million from $100.6 million in the same period last year
- On August 18, 2021, completed
strategic acquisition that expanded the internal loan servicing
function and acquired the loan servicing rights for a sizeable
portion of our Farm & Ranch loan and USDA Guaranteed Securities
portfolios
- On October 14, 2021, closed on a
newly-designed structured securitization transaction involving
approximately $300 million of agricultural mortgage
loans
- On February 23, 2022, Farmer
Mac's Board of Directors raised the quarterly dividend on
common stock by 8% to $0.95 per
share, the eleventh consecutive annual increase
"Farmer Mac finished 2021 with record financial results, capping
off another milestone year for the company," said Brad Nordholm, President & Chief Executive
Officer. "We are proud of our accomplishments throughout 2021 as we
completed a strategic acquisition of a loan servicing platform and
successfully executed a newly-structured, agricultural
mortgage-backed securitization. These accomplishments, combined
with our consistent financial performance and continued strong
credit quality, provide us confidence in our ability to
successfully execute our multi-year strategic plan and our mission
to bring even greater efficiencies in providing financing to
lenders for the benefit of their farm and ranch, agribusiness, and
rural infrastructure customers."
$ in thousands,
except per share amounts
|
Quarter
Ended
|
Year
Ended
|
Dec. 31,
2021
|
Dec. 31,
2020
|
%
Change
|
Dec. 31,
2021
|
Dec. 31,
2020
|
%
Change
|
Net Change in
Business Volume
|
$495,672
|
$(65,193)
|
N/A
|
$1,690,368
|
$806,153
|
N/A
|
Net Interest
Income
|
$57,390
|
$56,267
|
2%
|
$220,775
|
$190,588
|
16%
|
Net Effective Spread
(Non-GAAP)
|
$54,333
|
$54,522
|
—%
|
$220,668
|
$196,956
|
12%
|
Diluted EPS
(GAAP)
|
$2.75
|
$2.73
|
1%
|
$9.92
|
$8.27
|
20%
|
Core EPS
(Non-GAAP)
|
$2.76
|
$2.45
|
13%
|
$10.47
|
$9.33
|
12%
|
Business Segments and Presentation
During fourth quarter 2021, Farmer Mac's management determined
that the company's operations are most easily analyzed and managed
as seven reportable operating segments. This new alignment enables
Farmer Mac to review and analyze financial performance according to
the type of customer and market that it serves (rather than
according to product offerings), along with Farmer Mac's treasury
activities. The Farm & Ranch (now including Farmer Mac's USDA
Securities portfolio) and Corporate AgFinance segments comprise the
newly-designated Agricultural Finance line of business. The Rural
Utilities and Renewable Energy segments comprise the
newly-designated Rural Infrastructure Finance line of business.
Also included in the new alignment are the Funding, Investments,
and Corporate segments.
Fourth Quarter 2021 Results
Spreads
Net interest income for fourth quarter 2021 was $57.4 million, a $1.1
million increase compared to $56.3
million in the prior-year period, primarily due to a
$2.3 million increase related to
new business volume, and a $1.1
million decrease in funding costs, partially offset by a
$2.1 million decrease in the fair
value of derivatives designated in fair value hedge accounting
relationships. Net interest yield was 0.95% in fourth quarter 2021
compared to 0.96% in the prior-year period.
Net effective spread, a non-GAAP measure, for fourth quarter
2021 was $54.3 million, a
$0.2 million decline from
$54.5 million in the prior-year
period. The $0.2 million
year-over-year decrease in net effective spread in dollars was
primarily due to an increase in non-GAAP funding costs of
$2.7 million and a $0.2 million decrease in cash-basis interest
income related to Agricultural Finance loans, partially offset by
an increase of $2.7 million related
to new business volume. In percentage terms, net effective spread
decreased 0.04% to 0.94% in fourth quarter 2021 from the prior-year
period.
Earnings
Farmer Mac's net income attributable to common stockholders for
fourth quarter 2021 was $29.9 million
($2.75 per diluted common share),
compared to $29.4 million
($2.73 per diluted common share) in
the prior-year period. The $0.5
million year-over-year increase in net income attributable
to common stockholders was due to a $5.2
million after-tax gain on sale of mortgage loans, a net
change in our (release)/provision for credit losses of $3.5 million after tax, and a $0.9 million after-tax increase in net interest
income. These factors were partially offset by a $4.2 million after-tax decrease in the fair value
of undesignated financial derivatives, a $3.2 million after-tax increase in operating
expenses, and a $1.5 million increase
in preferred stock dividends.
Farmer Mac enters into financial derivatives transactions to
hedge interest rate risks inherent in its business and carries its
financial derivatives at fair value in its consolidated financial
statements. The fair value fluctuations of these financial
derivatives are not expected to have a cumulative net impact on
Farmer Mac's financial condition or results of operations reported
with GAAP if the derivatives are held to maturity, as is
expected. Therefore, Farmer Mac uses core earnings, a
non-GAAP measure that excludes the effects of fair value
fluctuations, as a useful alternative measure to understand the
business.
Farmer Mac's core earnings for fourth quarter 2021 were
$30.0 million ($2.76 per diluted common share), compared to
$26.4 million ($2.45 per diluted common share) in fourth quarter
2020. The $3.6 million
year-over-year increase in core earnings was driven by a
$5.2 million after-tax gain on sale
of mortgage loans, and a net change in our (release)/provision for
credit losses of $3.5 million after
tax. These factors were partially offset by a $3.2 million after-tax increase in operating
expenses, and a $1.5 million increase
in preferred stock dividends.
Full Year 2021 Results
Spreads
Net interest income for 2021 was $220.8
million, a $30.2 million
increase compared to $190.6 million
in the prior-year period, primarily due to a $16.7 million increase related to net new
business volume, a $6.9 million
decrease in funding costs, and a $7.7
million increase in the fair value of derivatives designated
in fair value hedge accounting relationships. Net interest yield
was 0.94% in 2021 compared to 0.85% in the prior-year period.
Net effective spread, a non-GAAP measure, for 2021 was
$220.7 million, a $23.7 million increase from $197.0 million in the prior-year period. The
$23.7 million year-over-year increase
in net effective spread was primarily due to an increase of
$16.7 million from net new business
volume and a $6.3 million
decrease in non-GAAP funding costs. In percentage terms, net
effective spread increased 0.05% to 0.98% in 2021 from the
prior-year period due to an increase of 0.04% in net new business
volume and a decrease of 0.01% in funding costs.
Earnings
Farmer Mac's net income attributable to common stockholders for
2021 was $107.6 million ($9.92 per diluted common share), compared to
$89.2 million ($8.27 per diluted common share) in the prior-year
period. The $18.4 million
year-over-year increase in net income attributable to common
stockholders was due to a $23.8
million after-tax increase in net interest income, a net
change in our (release)/provision for credit losses of $8.1 million after tax, and a $5.2 million after-tax gain on sale of mortgage
loans. These factors were partially offset by a $9.5 million after-tax increase in operating
expenses, a $6.9 million increase in
preferred stock dividends, and a $2.5
million after-tax decrease in the fair value of undesignated
financial derivatives.
Farmer Mac's core earnings, a non-GAAP measure, for 2021 were
$113.6 million ($10.47 per diluted common share), compared to
$100.6 million ($9.33 per diluted common share) in 2020.
The $13.0 million year-over-year
increase in core earnings was due to a $18.7
million after-tax increase in net effective spread, a net
change in our (release)/provision for credit losses of $8.1 million after tax, and a $5.2 million after-tax gain on sale of mortgage
loans. These factors were partially offset by a $9.5 million after-tax increase in operating
expenses, a $6.9 million increase in
preferred stock dividends, a $1.3 million after-tax decrease in guarantee
fees, and a $0.8 million after-tax
decrease in other income.
Business Volume
Farmer Mac's outstanding business volume was $23.6 billion as of December 31, 2021, a net
increase of $1.7 billion from
December 31, 2020 after taking into account all new business,
maturities, sales, and paydowns on existing assets.
The $1.2 billion net increase in
Farm & Ranch was comprised of $5.9
billion of new purchases and guarantees, partially offset by
$4.7 billion of scheduled maturities,
repayments, and sales. Farmer Mac purchased a total of $2.1 billion in loans, which was primarily driven
by farm real estate acquisitions due to improved borrower
economics, as well as a continued competitive interest rate
environment resulting in demand for long-term financing solutions.
The $2.1 billion in gross Farm &
Ranch loan purchases was partially offset by $1.3 billion in scheduled maturities, repayments,
and sales, including the sale of $299.4 million of agricultural mortgage
loans through Farmer Mac's newly-designed structured securitization
executed in the fourth quarter. The securitization resulted in
$289.5 million in Farmer Mac
Guaranteed Securities backed by the sold loans.
Farmer Mac also purchased a total of $2.2
billion in AgVantage Securities, which primarily reflected
the refinancing of maturing securities, as well as financial
counterparties seeking additional short-term, low-cost securities
to manage their asset-liability maturity profile. The $2.2 billion in gross purchases was partially
offset by $1.9 billion in scheduled
maturities. While the short-term nature of the AgVantage securities
added during 2021 may create volatility in AgVantage volumes,
Farmer Mac does not anticipate a material impact to its net
effective spread given the low-cost nature of these securities due
to the short maturity profile.
Farmer Mac entered into $788.3
million of new Long-term Standby Purchase Commitments
(LTSPCs), which were offset by $516.1
million of maturities on existing LTSPCs. The new volume in
LTSPCs during 2021 was driven primarily by Farm Credit System
institutions seeking credit risk management solutions to address
increasing commodity and borrower hold limits resulting from strong
loan growth in in their regional portfolios.
The $126.3 million net decrease in
Corporate AgFinance was comprised of $880.2
million of new loan and AgVantage security purchases, which
was offset by $1.0 billion of
scheduled maturities, repayments, and sales. Farmer Mac purchased a
total of $314.9 million in AgVantage
Securities, which was offset by $691.6
million in scheduled maturities and repayments. This net
decrease in AgVantage Securities was primarily due to improved
borrower economics that reduced the demand for higher priced
institutional financing, counterparties diversifying wholesale
funding sources, and competitive funding availability for
institutional counterparties.
Farmer Mac purchased a total of $509.1
million in Corporate AgFinance loans to advance Farmer Mac's
strategic initiative to support larger and more complex farming
operations, agribusinesses focused on agriculture production, food
and fiber processing, and other supply chain production. The
$509.1 million in gross
purchases was partially offset by $295.4
million in scheduled maturities and repayments.
The $581.2 million net increase in
Rural Utilities was comprised of $1.8
billion of new purchases and guarantees, which was partially
offset by $1.2 billion of scheduled
maturities and repayments. Farmer Mac purchased a total of
$1.5 billion in AgVantage Securities,
which was partially offset by $982.6
million in scheduled maturities. The net increase in
AgVantage Securities of $467.4
million was a result of a key counterparty proactively
managing its capital structure as well as Farmer Mac's ability to
offer competitively priced financing structures.
Farmer Mac purchased a total of $313.4
million in Rural Utilities loans, which was fueled by a
competitive interest rate environment, resulting in demand for
long-term financing solutions for planned maintenance, capital
expenditures, and refinancing higher cost debt. The $313.4 million in loan purchases was partially
offset by $198.4 million in scheduled
maturities and repayments.
The $13.7 million net increase in
Renewable Energy was comprised of $43.6
million of new loan purchases, which was partially offset by
$29.9 million of repayments.
Credit
As of December 31, 2021, the total
allowance for losses was $16.4
million, compared to $17.8
million as of December 31,
2020. The provision to the allowance for Rural
Infrastructure Finance loan losses of $0.5
million recorded during the year ended 2021 was primarily
attributable to the impact of the Texas Arctic Freeze, partially
offset by the impact of improving economic factor forecasts. The
$1.4 million release from the
allowance for the Agricultural Finance mortgage loan portfolio
during the year ended 2021 was primarily attributable to a recovery
on the payoff of the agricultural storage and processing loan
secured by a specialized poultry facility that had been partially
charged off in 2020 and improving economic factor forecasts. Across
all of Farmer Mac's lines of business, allowance for losses
represented 0.07% of total outstanding business volume as of
December 31, 2021.
As of December 31, 2021, Farmer Mac's 90-day delinquencies
were $47.3 million (0.48% of the
Agricultural Finance Mortgage Loan portfolio), compared to
$46.2 million (0.54% of the
Agricultural Finance Mortgage Loan portfolio) as of December 31, 2020. Across all of Farmer Mac's
lines of business, 90-day delinquencies represented 0.20% of total
outstanding business volume as of December 31, 2021, compared
to 0.21% as of December 31, 2020.
Capital
As of December 31, 2021, Farmer Mac's core capital level
was $1.2 billion, $486.8 million above the minimum capital level
required by the Company's statutory charter. This compares to
$1.0 billion as of December 31, 2020, which was $325.4 million above the minimum capital
requirement. The increase in capital in excess of the minimum
capital level required was primarily due to the issuance of the
Series G Preferred Stock in May 2021
and an increase in retained earnings. Farmer Mac's Tier 1 capital
ratio was 14.7% as of December 31, 2021.
Dividends
On February 23, 2022, Farmer Mac's
Board of Directors declared a quarterly dividend of $0.95 per share on all 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, which
represents an increase of 8% in Farmer Mac's quarterly dividend
rate on a year-over-year basis, will be payable on March 31, 2022 to holders of record of common
stock as of March 16, 2022.
This is the eleventh consecutive year that Farmer Mac has increased
its quarterly common stock dividend, and this 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 five classes of preferred stock. The quarterly
dividend of $0.375 per share of
6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock,
Series C (NYSE: AGM.PR.C), $0.35625
per share of 5.700% Non-Cumulative Preferred Stock, Series D (NYSE:
AGM.PR.D), $0.359375 per share
of 5.750% Non-Cumulative Preferred Stock, Series E (NYSE:
AGM.PR.E), $0.328125 per share of
5.250% Non-Cumulative Preferred Stock, Series F (NYSE: AGM.PR.F),
and $0.3046875 per share of 4.875%
Non-Cumulative Preferred Stock, Series G (AGM.PR.G), is for the
period from but not including January 17,
2022 to and including April 17,
2022. The preferred dividends will be payable on
April 17, 2022 to holders of record
as of April 1, 2022.
Earnings Conference Call Information
The conference call to discuss Farmer Mac's fourth quarter and
full year 2021 financial results will be held beginning at
4:30 p.m. eastern time on Monday,
February 28, 2022, 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
2021 is in Farmer Mac's Annual Report on Form 10-K for the year
ended December 31, 2021, 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. For
example, we have excluded from core earnings losses on retirement
of preferred stock and the re-measurement of the deferred tax
asset.
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 accounting
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 accounting 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 Annual
Report on Form 10-K for the year ended December 31, 2021, 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 "Reconciliations"
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 duration, spread, and severity of the COVID-19 pandemic and
its effects on the business operations of agricultural and rural
borrowers, the capital markets, and Farmer Mac's business
operations;
- the public response to the ongoing COVID-19 pandemic, including
the possibility of government actions to mitigate the pandemic and
its effects, and any social or economic disruption that may be
caused by any new COVID-19 variants or any further outbreaks;
- 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 agricultural or rural
infrastructure industries;
- fluctuations in the fair value of assets held by Farmer Mac and
its subsidiaries;
- the level of 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 and geopolitics on
agricultural mortgage or rural utilities lending, borrower
repayment capacity, or collateral values, including fluctuations in
interest rates, changes in U.S. trade policies, fluctuations in
export demand for U.S. agricultural products, supply chain
disruptions, increases in input costs, labor availability, and
volatility in commodity prices;
- the degree to which Farmer Mac is exposed to interest rate risk
resulting from fluctuations in Farmer Mac's borrowing costs
relative to market indexes;
- developments in the financial markets, including possible
investor, analyst, and rating agency reactions to events involving
government-sponsored enterprises, including Farmer Mac;
- the effect of any changes in Farmer Mac's executive leadership;
and
- other factors that could hinder agricultural mortgage lending
or borrower repayment capacity, including the effects of severe
weather, climate change, or fluctuations in agricultural real
estate values.
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, 2021, as filed
today with the SEC. 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. 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 was created to increase access to and reduce the cost of credit
for the benefit of American agricultural and rural communities. As
the nation's 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. More 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
|
(unaudited)
|
|
|
As of
|
|
December 31,
2021
|
|
December 31,
2020
|
|
(in
thousands)
|
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
908,785
|
|
$
1,033,941
|
Investment
securities:
|
|
|
|
Available-for-sale, at
fair value (amortized cost of $3,834,714 and $3,843,666,
respectively)
|
3,836,391
|
|
3,853,692
|
Held-to-maturity, at
amortized cost
|
44,970
|
|
45,032
|
Other
investments
|
1,229
|
|
—
|
Total Investment
Securities
|
3,882,590
|
|
3,898,724
|
Farmer Mac Guaranteed
Securities:
|
|
|
|
Available-for-sale, at
fair value (amortized cost of $6,135,807 and $6,594,992,
respectively)
|
6,328,559
|
|
6,947,701
|
Held-to-maturity, at
amortized cost
|
2,033,239
|
|
1,175,792
|
Total Farmer Mac
Guaranteed Securities
|
8,361,798
|
|
8,123,493
|
USDA
Securities:
|
|
|
|
Trading, at fair
value
|
4,401
|
|
6,695
|
Held-to-maturity, at
amortized cost
|
2,436,331
|
|
2,473,626
|
Total USDA
Securities
|
2,440,732
|
|
2,480,321
|
Loans:
|
|
|
|
Loans held for
investment, at amortized cost
|
8,314,096
|
|
7,261,933
|
Loans held for
investment in consolidated trusts, at amortized cost
|
948,623
|
|
1,287,045
|
Allowance for
losses
|
(14,041)
|
|
(13,832)
|
Total loans, net of
allowance
|
9,248,678
|
|
8,535,146
|
Financial derivatives,
at fair value
|
19,139
|
|
17,468
|
Interest receivable
(includes $10,418 and $16,401, respectively, related to
consolidated trusts)
|
177,355
|
|
186,429
|
Guarantee and
commitment fees receivable
|
45,538
|
|
37,113
|
Deferred tax asset,
net
|
15,558
|
|
18,321
|
Prepaid expenses and
other assets
|
45,318
|
|
24,545
|
Total
Assets
|
$
25,145,491
|
|
$
24,355,501
|
|
|
|
|
Liabilities and
Equity:
|
|
|
|
Liabilities:
|
|
|
|
Notes
payable
|
$
22,716,156
|
|
$
21,848,917
|
Debt securities of
consolidated trusts held by third parties
|
981,379
|
|
1,323,786
|
Financial derivatives,
at fair value
|
34,248
|
|
29,892
|
Accrued interest
payable (includes $9,619 and $14,370, respectively, related to
consolidated trusts)
|
83,992
|
|
92,738
|
Guarantee and
commitment obligation
|
43,926
|
|
35,535
|
Accounts payable and
accrued expenses
|
79,427
|
|
28,879
|
Reserve for
losses
|
1,950
|
|
3,277
|
Total
Liabilities
|
23,941,078
|
|
23,363,024
|
Commitments and
Contingencies
|
|
|
|
Equity:
|
|
|
|
Preferred
stock:
|
|
|
|
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
|
|
96,659
|
Series E, par value
$25 per share, 3,180,000 shares authorized, issued and
outstanding
|
77,003
|
|
77,003
|
Series F, par value
$25 per share, 4,800,000 shares authorized, issued and
outstanding
|
116,160
|
|
116,160
|
Series G, par value
$25 per share, 5,000,000 shares authorized, issued and
outstanding
|
121,327
|
|
—
|
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, 9,235,205 shares and 9,205,897
shares outstanding, respectively
|
9,235
|
|
9,206
|
Additional paid-in
capital
|
125,993
|
|
122,899
|
Accumulated other
comprehensive income/(loss), net of tax
|
3,853
|
|
(13,923)
|
Retained
earnings
|
579,270
|
|
509,560
|
Total
Equity
|
1,204,413
|
|
992,477
|
Total Liabilities and
Equity
|
$
25,145,491
|
|
$
24,355,501
|
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(unaudited)
|
|
|
For the Three Months
Ended
|
|
For the Year
Ended
|
|
December 31,
2021
|
|
December 31,
2020
|
|
December 31,
2021
|
|
December 31,
2020
|
|
(in thousands,
except per share amounts)
|
Interest
income:
|
|
|
|
|
|
|
|
Investments and cash
equivalents
|
$
4,553
|
|
$
6,908
|
|
$
18,660
|
|
$
42,144
|
Farmer Mac Guaranteed
Securities and USDA Securities
|
40,301
|
|
49,047
|
|
163,547
|
|
227,691
|
Loans
|
60,951
|
|
61,469
|
|
242,582
|
|
233,699
|
Total interest
income
|
105,805
|
|
117,424
|
|
424,789
|
|
503,534
|
Total interest
expense
|
48,415
|
|
61,157
|
|
204,014
|
|
312,946
|
Net interest
income
|
57,390
|
|
56,267
|
|
220,775
|
|
190,588
|
Release of/(provision
for) losses
|
1,378
|
|
(3,263)
|
|
860
|
|
(7,805)
|
Net interest income
after release of/(provision for) losses
|
58,768
|
|
53,004
|
|
221,635
|
|
182,783
|
Non-interest
income/(expense):
|
|
|
|
|
|
|
|
Guarantee and
commitment fees
|
3,487
|
|
3,054
|
|
12,669
|
|
12,549
|
(Losses)/gains on
financial derivatives
|
(2,228)
|
|
3,093
|
|
(3,348)
|
|
(246)
|
Gain on sale of
mortgage loans
|
6,539
|
|
—
|
|
6,539
|
|
—
|
(Losses)/gains on
trading securities
|
(77)
|
|
223
|
|
(115)
|
|
50
|
Gains on sale of
available-for-sale investment securities
|
—
|
|
—
|
|
253
|
|
—
|
(Losses)/gains on sale
of real estate owned
|
—
|
|
(22)
|
|
—
|
|
463
|
Release of/(provision
for) reserve for losses
|
50
|
|
290
|
|
1,327
|
|
(250)
|
Other
income
|
469
|
|
848
|
|
2,069
|
|
3,487
|
Non-interest
income
|
8,240
|
|
7,486
|
|
19,394
|
|
16,053
|
Operating
expenses:
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
11,246
|
|
9,497
|
|
42,847
|
|
36,502
|
General and
administrative
|
8,492
|
|
6,274
|
|
27,507
|
|
21,976
|
Regulatory
fees
|
812
|
|
750
|
|
3,062
|
|
2,925
|
Operating
expenses
|
20,550
|
|
16,521
|
|
73,416
|
|
61,403
|
Income before income
taxes
|
46,458
|
|
43,969
|
|
167,613
|
|
137,433
|
Income tax
expense
|
9,774
|
|
9,269
|
|
35,353
|
|
28,785
|
Net income
|
36,684
|
|
34,700
|
|
132,260
|
|
108,648
|
Preferred stock
dividends
|
(6,792)
|
|
(5,269)
|
|
(24,677)
|
|
(17,805)
|
Loss on retirement of
preferred stock
|
—
|
|
—
|
|
—
|
|
(1,667)
|
Net income
attributable to common stockholders
|
$
29,892
|
|
$
29,431
|
|
$
107,583
|
|
$
89,176
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
2.78
|
|
$
2.74
|
|
$
10.00
|
|
$
8.31
|
Diluted earnings per
common share
|
$
2.75
|
|
$
2.73
|
|
$
9.92
|
|
$
8.27
|
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
|
|
December 31,
2021
|
|
September 30,
2021
|
|
December 31,
2020
|
|
(in thousands, except per share amounts)
|
Net income
attributable to common stockholders
|
$
29,892
|
|
$
24,289
|
|
$
29,431
|
Less reconciling
items:
|
|
|
|
|
|
Losses on undesignated
financial derivatives due to fair value changes
|
(1,213)
|
|
(1,864)
|
|
(1,758)
|
Gains/(losses) on
hedging activities due to fair value changes
|
1,476
|
|
(2,093)
|
|
3,827
|
Unrealized
(losses)/gains on trading assets
|
(76)
|
|
36
|
|
223
|
Net effects of
amortization of premiums/discounts and deferred gains on assets
consolidated at fair value
|
71
|
|
23
|
|
(77)
|
Net effects of
terminations or net settlements on financial derivatives
|
(429)
|
|
(351)
|
|
1,583
|
Issuance costs on the
retirement of preferred stock
|
—
|
|
—
|
|
—
|
Income tax effect
related to reconciling items
|
36
|
|
892
|
|
(798)
|
Sub-total
|
(135)
|
|
(3,357)
|
|
3,000
|
Core
earnings
|
$
30,027
|
|
$
27,646
|
|
$
26,431
|
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
Net effective
spread(1)
|
$
54,333
|
|
$
55,925
|
|
$
54,522
|
Guarantee and
commitment fees(2)
|
4,637
|
|
4,322
|
|
4,652
|
Gain on sale of
mortgage loans
|
6,539
|
|
—
|
|
—
|
Other(3)
|
241
|
|
687
|
|
512
|
Total
revenues
|
65,750
|
|
60,934
|
|
59,686
|
|
|
|
|
|
|
Credit related
expense (GAAP):
|
|
|
|
|
|
(Release of)/provision
for losses
|
(1,428)
|
|
255
|
|
2,973
|
Gains on sale of
REO
|
—
|
|
—
|
|
22
|
Total credit related
expense
|
(1,428)
|
|
255
|
|
2,995
|
|
|
|
|
|
|
Operating expenses
(GAAP):
|
|
|
|
|
|
Compensation and
employee benefits
|
11,246
|
|
10,027
|
|
9,497
|
General and
administrative
|
8,492
|
|
6,330
|
|
6,274
|
Regulatory
fees
|
812
|
|
750
|
|
750
|
Total operating
expenses
|
20,550
|
|
17,107
|
|
16,521
|
|
|
|
|
|
|
Net
earnings
|
46,628
|
|
43,572
|
|
40,170
|
Income tax
expense(4)
|
9,809
|
|
9,152
|
|
8,470
|
Preferred stock
dividends (GAAP)
|
6,792
|
|
6,774
|
|
5,269
|
Core
earnings
|
$
30,027
|
|
$
27,646
|
|
$
26,431
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
|
Basic
|
$
2.79
|
|
$
2.57
|
|
$
2.46
|
Diluted
|
2.76
|
|
2.55
|
|
2.45
|
(1)
|
Net effective spread
is a non-GAAP measure. See "Use of Non-GAAP Measures" 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 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,
2021
|
|
December 31,
2020
|
|
(in thousands, except per share amounts)
|
Net income
attributable to common stockholders
|
$
107,583
|
|
$
89,176
|
Less reconciling
items:
|
|
|
|
Losses on undesignated
financial derivatives due to fair value changes
|
(5,103)
|
|
(3,691)
|
Losses on hedging
activities due to fair value changes
|
(2,985)
|
|
(10,019)
|
Unrealized
losses/(gains) on trading assets
|
(115)
|
|
51
|
Net effects of
amortization of premiums/discounts and deferred gains on assets
consolidated at fair value
|
130
|
|
58
|
Net effects of
terminations or net settlements on financial derivatives
|
494
|
|
1,236
|
Issuance costs on the
retirement of preferred stock
|
—
|
|
(1,667)
|
Income tax effect
related to reconciling items
|
1,592
|
|
2,596
|
Sub-total
|
(5,987)
|
|
(11,436)
|
Core
earnings
|
$
113,570
|
|
$
100,612
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
Revenues:
|
|
|
|
Net effective
spread(1)
|
$
220,668
|
|
$
196,956
|
Guarantee and
commitment fees(2)
|
17,533
|
|
19,150
|
Gain on sale of
mortgage loans
|
6,539
|
|
—
|
Other(3)
|
1,680
|
|
2,687
|
Total
revenues
|
246,420
|
|
218,793
|
|
|
|
|
Credit related
expense (GAAP):
|
|
|
|
(Release of)/provision
for losses
|
(2,187)
|
|
8,055
|
Gains on sale of
REO
|
—
|
|
(463)
|
Total credit related
expense
|
(2,187)
|
|
7,592
|
|
|
|
|
Operating expenses
(GAAP):
|
|
|
|
Compensation and
employee benefits
|
42,847
|
|
36,502
|
General and
administrative
|
27,507
|
|
21,976
|
Regulatory
fees
|
3,062
|
|
2,925
|
Total operating
expenses
|
73,416
|
|
61,403
|
|
|
|
|
Net
earnings
|
175,191
|
|
149,798
|
Income tax
expense(4)
|
36,944
|
|
31,381
|
Preferred stock
dividends (GAAP)
|
24,677
|
|
17,805
|
Core
earnings
|
$
113,570
|
|
$
100,612
|
|
|
|
|
Core earnings per
share:
|
|
|
|
Basic
|
$
10.56
|
|
$
9.38
|
Diluted
|
10.47
|
|
9.33
|
(1)
|
Net effective spread
is a non-GAAP measure. See "Use of Non-GAAP Measures" 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 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 Year
Ended
|
|
December
31, 2021
|
|
September
30, 2021
|
|
December
31, 2020
|
|
December
31, 2021
|
|
December
31, 2020
|
|
(in thousands,
except per share amounts)
|
GAAP - Basic
EPS
|
$
2.78
|
|
$
2.26
|
|
$
2.74
|
|
$
10.00
|
|
$
8.31
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
Losses on undesignated
financial derivatives due to fair value changes
|
(0.11)
|
|
(0.17)
|
|
(0.17)
|
|
(0.47)
|
|
(0.34)
|
Gains/(losses) on
hedging activities due to fair value changes
|
0.14
|
|
(0.19)
|
|
0.36
|
|
(0.28)
|
|
(0.94)
|
Unrealized
(losses)/gains on trading securities
|
(0.01)
|
|
—
|
|
0.02
|
|
(0.01)
|
|
—
|
Net effects of
amortization of premiums/discounts and deferred gains on assets
consolidated at fair value
|
0.01
|
|
—
|
|
(0.01)
|
|
0.01
|
|
0.01
|
Net effects of
terminations or net settlements on financial derivatives
|
(0.04)
|
|
(0.03)
|
|
0.15
|
|
0.04
|
|
0.12
|
Issuance costs on the
retirement of preferred stock
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.16)
|
Income tax effect
related to reconciling items
|
—
|
|
0.08
|
|
(0.07)
|
|
0.15
|
|
0.24
|
Sub-total
|
(0.01)
|
|
(0.31)
|
|
0.28
|
|
(0.56)
|
|
(1.07)
|
Core Earnings - Basic
EPS
|
$
2.79
|
|
$
2.57
|
|
$
2.46
|
|
$
10.56
|
|
$
9.38
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculation (GAAP and Core Earnings)
|
10,766
|
|
10,766
|
|
10,736
|
|
10,758
|
|
10,728
|
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, 2021
|
|
September
30, 2021
|
|
December 3
1, 2020
|
|
December
31, 2021
|
|
December
31, 2020
|
|
(in thousands,
except per share amounts)
|
GAAP - Diluted
EPS
|
$
2.75
|
|
$
2.24
|
|
$
2.73
|
|
$
9.92
|
|
$
8.27
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
Losses on undesignated
financial derivatives due to fair value changes
|
(0.11)
|
|
(0.17)
|
|
(0.16)
|
|
(0.47)
|
|
(0.34)
|
Gains/(losses) on
hedging activities due to fair value changes
|
0.14
|
|
(0.19)
|
|
0.35
|
|
(0.28)
|
|
(0.93)
|
Unrealized
(losses)/gains on trading securities
|
(0.01)
|
|
—
|
|
0.02
|
|
(0.01)
|
|
—
|
Net effects of
amortization of premiums/discounts and deferred gains on assets
consolidated at fair value
|
0.01
|
|
—
|
|
(0.01)
|
|
0.01
|
|
0.01
|
Net effects of
terminations or net settlements on financial derivatives
|
(0.04)
|
|
(0.03)
|
|
0.15
|
|
0.05
|
|
0.11
|
Issuance costs on the
retirement of preferred stock
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.15)
|
Income tax effect
related to reconciling items
|
—
|
|
0.08
|
|
(0.07)
|
|
0.15
|
|
0.24
|
Sub-total
|
(0.01)
|
|
(0.31)
|
|
0.28
|
|
(0.55)
|
|
(1.06)
|
Core Earnings -
Diluted EPS
|
$
2.76
|
|
$
2.55
|
|
$
2.45
|
|
$
10.47
|
|
$
9.33
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculation (GAAP and Core Earnings)
|
10,877
|
|
10,842
|
|
10,799
|
|
10,846
|
|
10,786
|
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 Year
Ended
|
|
December 31,
2021
|
|
September 30,
2021
|
|
December 31,
2020
|
|
December 31,
2021
|
|
December 31,
2020
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
(dollars in
thousands)
|
Net interest
income/yield
|
$
57,390
|
|
0.95%
|
|
$
55,005
|
|
0.94%
|
|
$
56,267
|
|
0.96%
|
|
$ 220,775
|
|
0.94%
|
|
$ 190,588
|
|
0.85%
|
Net effects of
consolidated trusts
|
(1,151)
|
|
0.02%
|
|
(1,167)
|
|
0.02%
|
|
(1,598)
|
|
0.03%
|
|
(4,864)
|
|
0.02%
|
|
(6,601)
|
|
0.02%
|
Expense related to
undesignated financial derivatives
|
(313)
|
|
—%
|
|
117
|
|
—%
|
|
3,458
|
|
0.06%
|
|
2,841
|
|
0.01%
|
|
3,468
|
|
0.02%
|
Amortization of
premiums/discounts on assets consolidated at fair value
|
(10)
|
|
—%
|
|
(15)
|
|
—%
|
|
290
|
|
—%
|
|
(45)
|
|
—%
|
|
197
|
|
—%
|
Amortization of
losses due to terminations or net settlements on financial
derivatives
|
200
|
|
—%
|
|
65
|
|
—%
|
|
30
|
|
—%
|
|
446
|
|
—%
|
|
120
|
|
—%
|
Fair value changes on
fair value hedge relationships
|
(1,783)
|
|
(0.03)%
|
|
1,920
|
|
0.03%
|
|
(3,925)
|
|
(0.07)%
|
|
1,515
|
|
0.01%
|
|
9,184
|
|
0.04%
|
Net effective
spread
|
$
54,333
|
|
0.94%
|
|
$
55,925
|
|
0.99%
|
|
$
54,522
|
|
0.98%
|
|
$ 220,668
|
|
0.98%
|
|
$ 196,956
|
|
0.93%
|
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, 2021:
Core Earnings by
Business Segment
|
For the three months
ended December 31, 2021
|
|
Agricultural
Finance
|
|
Rural
Infrastructure
|
|
Treasury
|
|
Corporate
|
|
|
|
|
|
Farm &
Ranch
|
|
Corporate
AgFinance
|
|
Rural
Utilities
|
|
Renewable
Energy
|
|
Funding
|
|
Investments
|
|
|
Reconciling
Adjustments
|
|
Consolidated Net
Income
|
|
(in
thousands)
|
Net interest
income
|
$
30,103
|
|
$
6,321
|
|
$
2,576
|
|
$
356
|
|
$
17,875
|
|
$
159
|
|
$
—
|
|
$
—
|
|
$
57,390
|
Less: reconciling
adjustments(1)(2)(3)
|
(1,106)
|
|
—
|
|
(56)
|
|
—
|
|
(1,896)
|
|
—
|
|
—
|
|
3,058
|
|
—
|
Net effective
spread
|
28,997
|
|
6,321
|
|
2,520
|
|
356
|
|
15,979
|
|
159
|
|
—
|
|
3,058
|
|
—
|
Guarantee and
commitment fees
|
4,303
|
|
—
|
|
335
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,151)
|
|
3,487
|
Gain on sale of
mortgage loans
|
6,539
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6,539
|
Other
income/(expense)(3)
|
407
|
|
—
|
|
2
|
|
—
|
|
—
|
|
—
|
|
(167)
|
|
(2,078)
|
|
(1,836)
|
Total
revenues
|
40,246
|
|
6,321
|
|
2,857
|
|
356
|
|
15,979
|
|
159
|
|
(167)
|
|
(171)
|
|
65,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release of/(provision
for) losses
|
1,246
|
|
(45)
|
|
198
|
|
(22)
|
|
—
|
|
1
|
|
—
|
|
—
|
|
1,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release of reserve
for losses
|
35
|
|
—
|
|
15
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
50
|
Operating
expenses
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(20,550)
|
|
—
|
|
(20,550)
|
Total non-interest
expense
|
35
|
|
—
|
|
15
|
|
—
|
|
—
|
|
—
|
|
(20,550)
|
|
—
|
|
(20,500)
|
Core earnings before
income taxes
|
41,527
|
|
6,276
|
|
3,070
|
|
334
|
|
15,979
|
|
160
|
|
(20,717)
|
|
(171)
|
(4)
|
46,458
|
Income tax
(expense)/benefit
|
(8,721)
|
|
(1,318)
|
|
(645)
|
|
(70)
|
|
(3,356)
|
|
(33)
|
|
4,333
|
|
36
|
|
(9,774)
|
Core earnings before
preferred stock dividends
|
32,806
|
|
4,958
|
|
2,425
|
|
264
|
|
12,623
|
|
127
|
|
(16,384)
|
|
(135)
|
(4)
|
36,684
|
Preferred stock
dividends
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(6,792)
|
|
—
|
|
(6,792)
|
Segment core
earnings/(losses)
|
$
32,806
|
|
$
4,958
|
|
$
2,425
|
|
$
264
|
|
$
12,623
|
|
$
127
|
|
$
(23,176)
|
|
$
(135)
|
(4)
|
$
29,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
$
13,112,193
|
|
$
1,507,848
|
|
$
5,344,707
|
|
$
87,553
|
|
$
—
|
|
$
5,037,636
|
|
$
55,554
|
|
$
—
|
|
25,145,491
|
Total on- and
off-balance sheet program assets at principal balance
|
$
16,094,640
|
|
$
1,537,834
|
|
$
5,895,226
|
|
$
86,763
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
|
23,614,463
|
(1)
|
Includes 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 "(Losses)/gains on
financial derivatives" on the consolidated financial statements, to
determine the effective funding cost for each operating
segment.
|
(4)
|
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 reconciled to net income;
and segment core earnings reconciled to net income attributable to
common stockholders.
|
Supplemental Information
The following table sets forth information about outstanding
volume in each of Farmer Mac's lines of business as of the dates
indicated:
Outstanding Business
Volume
|
|
|
|
|
As of December
31,
|
|
|
On or Off
Balance
Sheet
|
|
2021
|
|
2020
|
|
|
|
|
(in thousands)
|
Agricultural
Finance:
|
|
|
|
|
|
|
Farm &
Ranch:
|
|
|
|
|
|
|
Loans
|
|
On-balance
sheet
|
|
$
4,775,070
|
|
$
3,979,854
|
Loans held in
consolidated trusts:
|
|
|
|
|
|
|
Beneficial interests
owned by third-party investors
|
|
On-balance
sheet
|
|
948,623
|
|
1,287,045
|
IO-FMGS
|
|
On-balance
sheet
|
|
12,297
|
|
—
|
USDA
Securities
|
|
On-balance
sheet
|
|
2,445,806
|
|
2,487,420
|
AgVantage
Securities
|
|
On-balance
sheet
|
|
4,725,000
|
|
4,425,000
|
LTSPCs and unfunded
commitments
|
|
Off-balance
sheet
|
|
2,587,154
|
|
2,314,965
|
Farmer Mac Guaranteed
Securities
|
|
Off-balance
sheet
|
|
578,358
|
|
378,610
|
Loans serviced for
others
|
|
Off-balance
sheet
|
|
22,331
|
|
—
|
Total Farm &
Ranch
|
|
|
|
$
16,094,639
|
|
$
14,872,894
|
Corporate
AgFinance:
|
|
|
|
|
|
|
Loans
|
|
On-balance
sheet
|
|
$
1,123,300
|
|
$
909,539
|
AgVantage
Securities
|
|
On-balance
sheet
|
|
367,464
|
|
744,110
|
Unfunded Loan
Commitments
|
|
Off-balance
sheet
|
|
47,070
|
|
10,466
|
Total Corporate
AgFinance
|
|
|
|
$
1,537,834
|
|
$
1,664,115
|
Total Agricultural
Finance
|
|
|
|
$
17,632,473
|
|
$
16,537,009
|
Rural Infrastructure
Finance:
|
|
|
|
|
|
|
Rural
Utilities:
|
|
|
|
|
|
|
Loans
|
|
On-balance
sheet
|
|
$
2,302,373
|
|
$
2,187,377
|
AgVantage
Securities
|
|
On-balance
sheet
|
|
3,033,262
|
|
2,565,837
|
LTSPCs and Unfunded
Loan Commitments
|
|
Off-balance
sheet
|
|
556,837
|
|
556,425
|
Farmer Mac Guaranteed
Securities
|
|
Off-balance
sheet
|
|
2,755
|
|
4,412
|
Total Rural
Utilities
|
|
|
|
$
5,895,227
|
|
$
5,314,051
|
Renewable
Energy:
|
|
|
|
|
|
|
Loans
|
|
On-balance
sheet
|
|
$
86,763
|
|
$
73,035
|
Unfunded Loan
Commitments
|
|
Off-balance
sheet
|
|
—
|
|
—
|
Total Renewable
Energy
|
|
|
|
$
86,763
|
|
$
73,035
|
Total Rural
Infrastructure Finance
|
|
|
|
$
5,981,990
|
|
$
5,387,086
|
Total
|
|
|
|
$
23,614,463
|
|
$
21,924,095
|
The following table presents the quarterly net effective spread
(a non-GAAP measure) by segment:
|
Net Effective
Spread(1)
|
|
Agricultural
Finance
|
|
Rural Infrastructure
Finance
|
|
Treasury
|
|
|
|
|
|
Farm &
Ranch
|
|
Corporate
AgFinance
|
|
Rural
Utilities
|
|
Renewable
Energy
|
|
Funding
|
|
Investments
|
|
Net Effective
Spread
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
(dollars in
thousands)
|
For the quarter
ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2021(2)
|
$ 28,998
|
|
0.99%
|
|
$ 6,321
|
|
1.84%
|
|
$ 2,521
|
|
0.19%
|
|
$
356
|
|
1.53%
|
|
$ 15,979
|
|
0.28%
|
|
$
158
|
|
0.01%
|
|
$ 54,333
|
|
0.94%
|
September 30,
2021
|
28,914
|
|
1.06%
|
|
7,163
|
|
1.80%
|
|
2,067
|
|
0.16%
|
|
236
|
|
1.09%
|
|
17,386
|
|
0.31%
|
|
159
|
|
0.01%
|
|
55,925
|
|
0.99%
|
June 30,
2021
|
29,163
|
|
1.06%
|
|
6,676
|
|
1.65%
|
|
1,759
|
|
0.14%
|
|
378
|
|
1.80%
|
|
18,449
|
|
0.33%
|
|
126
|
|
0.01%
|
|
56,551
|
|
1.01%
|
March 31,
2021
|
26,461
|
|
0.98%
|
|
6,921
|
|
1.67%
|
|
1,720
|
|
0.14%
|
|
249
|
|
1.28%
|
|
18,394
|
|
0.33%
|
|
114
|
|
0.01%
|
|
53,859
|
|
0.97%
|
December 31,
2020(1)
|
25,596
|
|
0.95%
|
|
6,237
|
|
1.53%
|
|
1,838
|
|
0.15%
|
|
123
|
|
1.20%
|
|
20,585
|
|
0.37%
|
|
143
|
|
0.01%
|
|
54,522
|
|
0.98%
|
September 30,
2020
|
23,735
|
|
0.89%
|
|
5,786
|
|
1.45%
|
|
2,022
|
|
0.16%
|
|
75
|
|
1.19%
|
|
20,034
|
|
0.37%
|
|
150
|
|
0.01%
|
|
51,802
|
|
0.96%
|
June 30,
2020
|
21,597
|
|
0.83%
|
|
4,997
|
|
1.36%
|
|
1,701
|
|
0.14%
|
|
47
|
|
0.93%
|
|
19,449
|
|
0.37%
|
|
(1,322)
|
|
(0.13)%
|
|
46,469
|
|
0.89%
|
March 31,
2020
|
19,230
|
|
0.76%
|
|
4,421
|
|
1.32%
|
|
1,315
|
|
0.11%
|
|
58
|
|
1.51%
|
|
19,150
|
|
0.39%
|
|
(11)
|
|
—%
|
|
44,163
|
|
0.89%
|
December 31,
2019
|
20,677
|
|
0.83%
|
|
4,049
|
|
1.33%
|
|
1,411
|
|
0.12%
|
|
22
|
|
1.07%
|
|
19,868
|
|
0.41%
|
|
(36)
|
|
—%
|
|
45,991
|
|
0.95%
|
(1)
|
Farmer Mac excludes
the Corporate segment in the presentation above because the segment
does not have any interest-earning assets.
|
(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, 2021.
|
The following table presents quarterly core earnings reconciled
to net income attributable to common stockholders:
Core Earnings by
Quarter Ended
|
|
December
2021
|
|
September
2021
|
|
June 2021
|
|
March 2021
|
|
December
2020
|
|
September
2020
|
|
June 2020
|
|
March 2020
|
|
December
2019
|
|
(in
thousands)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective
spread
|
$
54,333
|
|
$
55,925
|
|
$
56,551
|
|
$
53,859
|
|
$
54,522
|
|
$
51,802
|
|
$
46,469
|
|
$
44,163
|
|
$
45,991
|
Guarantee and
commitment fees
|
4,637
|
|
4,322
|
|
4,334
|
|
4,240
|
|
4,652
|
|
4,659
|
|
4,943
|
|
4,896
|
|
5,432
|
Gain on sale of
mortgage loans
|
6,539
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Other
|
241
|
|
687
|
|
301
|
|
451
|
|
512
|
|
453
|
|
1,048
|
|
674
|
|
100
|
Total
revenues
|
65,750
|
|
60,934
|
|
61,186
|
|
58,550
|
|
59,686
|
|
56,914
|
|
52,460
|
|
49,733
|
|
51,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
expense/(income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Release of)/provision
for losses
|
(1,428)
|
|
255
|
|
(983)
|
|
(31)
|
|
2,973
|
|
1,200
|
|
51
|
|
3,831
|
|
2,851
|
REO operating
expenses
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Losses/(gains) on sale
of REO
|
—
|
|
—
|
|
—
|
|
—
|
|
22
|
|
—
|
|
—
|
|
(485)
|
|
—
|
Total credit related
expense/(income)
|
(1,428)
|
|
255
|
|
(983)
|
|
(31)
|
|
2,995
|
|
1,200
|
|
51
|
|
3,346
|
|
2,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
11,246
|
|
10,027
|
|
9,779
|
|
11,795
|
|
9,497
|
|
8,791
|
|
8,087
|
|
10,127
|
|
6,732
|
General and
administrative
|
8,492
|
|
6,330
|
|
6,349
|
|
6,336
|
|
6,274
|
|
5,044
|
|
5,295
|
|
5,363
|
|
5,773
|
Regulatory
fees
|
812
|
|
750
|
|
750
|
|
750
|
|
750
|
|
725
|
|
725
|
|
725
|
|
725
|
Total operating
expenses
|
20,550
|
|
17,107
|
|
16,878
|
|
18,881
|
|
16,521
|
|
14,560
|
|
14,107
|
|
16,215
|
|
13,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
46,628
|
|
43,572
|
|
45,291
|
|
39,700
|
|
40,170
|
|
41,154
|
|
38,302
|
|
30,172
|
|
35,442
|
Income tax
expense
|
9,809
|
|
9,152
|
|
9,463
|
|
8,520
|
|
8,470
|
|
8,297
|
|
8,016
|
|
6,598
|
|
7,526
|
Preferred stock
dividends
|
6,792
|
|
6,774
|
|
5,842
|
|
5,269
|
|
5,269
|
|
5,166
|
|
3,939
|
|
3,431
|
|
3,432
|
Core
earnings
|
$
30,027
|
|
$
27,646
|
|
$
29,986
|
|
$
25,911
|
|
$
26,431
|
|
$
27,691
|
|
$
26,347
|
|
$
20,143
|
|
$
24,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Losses)/gains on
undesignated financial derivatives due to fair value
changes
|
$
(1,213)
|
|
$
(1,864)
|
|
$
(3,721)
|
|
$
1,695
|
|
$
(1,758)
|
|
$
(4,149)
|
|
$
8,700
|
|
$
(6,484)
|
|
$
4,469
|
Gains/(losses) on
hedging activities due to fair value changes
|
1,476
|
|
(2,093)
|
|
(2,097)
|
|
(271)
|
|
3,827
|
|
(5,245)
|
|
(2,676)
|
|
(5,925)
|
|
(220)
|
Unrealized
(losses)/gains on trading assets
|
(76)
|
|
36
|
|
(61)
|
|
(14)
|
|
223
|
|
(258)
|
|
(20)
|
|
106
|
|
172
|
Net effects of
amortization of premiums/discounts and deferred gains on assets
consolidated at fair value
|
71
|
|
23
|
|
20
|
|
16
|
|
(77)
|
|
97
|
|
35
|
|
3
|
|
40
|
Net effects of
terminations or net settlements on financial derivatives
|
(429)
|
|
(351)
|
|
109
|
|
1,165
|
|
1,583
|
|
233
|
|
720
|
|
(1,300)
|
|
1,339
|
Issuance costs on the
retirement of preferred stock
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,667)
|
|
—
|
|
—
|
|
—
|
Income tax effect
related to reconciling items
|
36
|
|
892
|
|
1,208
|
|
(544)
|
|
(798)
|
|
1,957
|
|
(1,419)
|
|
2,856
|
|
(1,218)
|
Net income
attributable to common stockholders
|
$
29,892
|
|
$
24,289
|
|
$
25,444
|
|
$
27,958
|
|
$
29,431
|
|
$
18,659
|
|
$
31,687
|
|
$
9,399
|
|
$
29,066
|
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SOURCE Farmer Mac