WASHINGTON, March 9, 2017 /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, 2016, which included
$1.5 billion in net new business
volume growth in 2016 that brought total outstanding business
volume to $17.4 billion as of
December 31, 2016. Farmer Mac's
net income attributable to common stockholders for 2016 was
$64.2 million ($5.97 per diluted common share), compared to
$47.4 million ($4.19 per diluted common share) in 2015.
Farmer Mac's 2016 core earnings, a non-GAAP measure, were
$53.8 million ($5.01 per diluted common share), compared to
$47.0 million ($4.15 per diluted common share) in 2015.
Farmer Mac's board of directors also approved an increase in the
quarterly dividend on all classes of Farmer Mac's common stock to
$0.36 per share beginning in first
quarter 2017. This quarter's dividend amount represents a 38
percent increase over the $0.26 per
share amount paid in each quarter during 2016 and is consistent
with Farmer Mac's common stock dividend policy announced in
March 2016, which has a goal of
increasing the common dividend payout ratio of core earnings to
approximately 30 percent over time.
"Our 2016 results reflect another strong year for Farmer Mac,"
said President and Chief Executive Officer Tim Buzby. "We achieved record outstanding
business volume of $17.4 billion and
14.5 percent core earnings growth. Our credit quality is
showing signs of normalization in some metrics, which we have been
anticipating as part of the agricultural credit cycle, but is
within our expectations and remains near historically favorable
levels. Last year we increased our common stock dividend 63
percent, and with our 38 percent increase this year we believe
we are on track to reach our targeted 30 percent core earnings
payout for the 2018 year. Farmer Mac has increased its
quarterly common stock dividend each of the past six years, and we
believe these increases are supported by our earnings potential and
overall capital position and are representative of Farmer Mac's
commitment to enhancing shareholder value over the long-term.
We are also proud of the way we have positioned Farmer Mac for
continued success in the future, as over the past several years we
have brought in new personnel to fill key positions, created new
positions, and significantly expanded our investment in the
technology and capacity to better grow our business and more fully
deliver upon our mission."
Earnings
Farmer Mac's net income attributable to common stockholders for
2016 was $64.2 million
($5.97 per diluted common share),
compared to $47.4 million
($4.19 per diluted common share) for
2015. The $16.8 million
increase in net income attributable to common stockholders from
2016 compared to 2015 was driven by an increase of $9.4 million after-tax in net interest income and
the effects of unrealized fair value changes on financial
derivatives and hedged assets, which was a $8.9 million after-tax gain in 2016 compared to a
$7.1 million after-tax gain in
2015. Also contributing to the increase was the absence in
2016 of (1) an $8.1 million
($6.2 million after-tax) loss
recorded in first quarter 2015 resulting from the write-off of
deferred issuance costs upon the redemption of the Farmer Mac II
LLC Preferred Stock on March 30,
2015; and (2) $3.5 million
after-tax in dividend expense recorded during first quarter 2015 on
that preferred stock. The increase was offset in part by a
$3.1 million after-tax increase in
non-interest expense driven primarily by higher general and
administrative ("G&A") expenses, higher compensation and
employee benefits expenses, and a decrease in the release of
reserve for losses.
Core earnings in 2016 were $53.8
million ($5.01 per diluted
common share), compared to $47.0
million ($4.15 per diluted
common share) in 2015. The $6.8
million increase in core earnings was primarily attributable
to higher total revenues, which included a $3.7 million after-tax increase in net effective
spread, a non-GAAP measure, a $1.3
million after-tax increase in guarantee and commitment fee
income, and a $0.4 million after-tax
decrease in hedging costs. Also contributing to the increase
was a $3.5 million after-tax decrease
in preferred dividend expense resulting from the redemption of all
outstanding shares of Farmer Mac II LLC Preferred Stock in first
quarter 2015. The increase in core earnings in 2016 was
offset in part by several factors. Credit-related expenses
increased $0.5 million after-tax
resulting from net provisions to the allowance for losses of
$0.6 million after-tax in 2016
compared to net provisions of $0.1
million after-tax in 2015. Operating expenses also
increased by $1.8 million after-tax,
driven by higher G&A expenses and higher compensation and
benefits expenses. The $1.3
million after-tax increase in G&A expenses was primarily
attributable to higher consulting fees and information services
expenses related to corporate strategic initiatives, continued
technology and business infrastructure investments, and expenses
related to business development efforts. The $0.5 million after-tax increase in compensation
and benefits expenses was primarily due to an increase in headcount
and employee health insurance costs.
Farmer Mac's net income attributable to common stockholders for
fourth quarter 2016 was $25.5 million
($2.38 per diluted common share),
compared to $15.0 million
($1.35 per diluted common share) for
fourth quarter 2015. The $10.5
million increase in net income attributable to common
stockholders from fourth quarter 2016 compared to fourth quarter
2015 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 $1.8
million after-tax gain in fourth quarter 2015.
Core earnings in fourth quarter 2016 were $13.9 million ($1.30 per diluted common share), compared to
$13.1 million ($1.17 per diluted common share) in fourth quarter
2015. The $0.8 million increase
in core earnings was primarily due to a $2.5
million after-tax increase in total revenues, which was led
by a $1.3 million after-tax increase
in net effective spread. The increase was offset in part by a
$0.3 million after-tax increase in
credit costs, a $0.7 million
after-tax increase in G&A expenses, and a $0.4 million after-tax increase in compensation
and benefits expenses. The increases in G&A expenses and
compensation and benefits expenses for fourth quarter 2016 were
attributable to the same factors described above that affected full
year 2016.
See "Use of Non-GAAP Measures" below for more information about
core earnings, core earnings per share, and net effective spread
and for a reconciliation of the comparable GAAP measures to these
non-GAAP measures.
Business Volume Highlights
During 2016, Farmer Mac added $4.4
billion of new business volume, with purchases of AgVantage
securities, Farm & Ranch loans, and Rural Utilities loans
under long-term standby purchase commitments ("LTSPCs") driving the
volume growth. Specifically, Farmer Mac:
- purchased $2.1 billion of
AgVantage securities, including $68.4
million in Farm Equity AgVantage securities;
- purchased $966.0 million of newly
originated Farm & Ranch loans;
- added $441.4 million of Rural
Utilities loans under LTSPCs;
- added $399.1 million of Farm
& Ranch loans under LTSPCs;
- purchased $375.2 million of USDA
Securities;
- issued $106.1 million of Farmer
Mac Guaranteed USDA Securities; and
- purchased $50.5 million of Rural
Utilities loans.
After $2.9 billion of maturities
and principal paydowns on existing business during 2016, which
included over $1.5 billion in
scheduled maturities of AgVantage securities, Farmer Mac's
outstanding business volume increased by $1.5 billion from December 31, 2015 to $17.4 billion as of December 31, 2016. The increase in Farmer
Mac's outstanding business volume was driven by broad-based net
portfolio growth across most of Farmer Mac's products and lines of
business. The increase in AgVantage securities was primarily
driven by net portfolio growth from two long-standing issuers: (1)
Rabo Agrifinance, Inc. and (2) National Rural Utilities Cooperative
Finance Corporation ("CFC"), which increased their outstanding
AgVantage business volume with Farmer Mac by $300.0 million and $210.1
million, respectively, in 2016. The new business
volume in the Institutional Credit line of business also included
the purchase of two $500.0 million
AgVantage securities from Metropolitan Life Insurance Company
("MetLife"). MetLife used the proceeds from Farmer Mac's purchase
of each of the $500.0 million
AgVantage securities to refinance AgVantage securities of the same
amount that matured in first quarter 2016 and third quarter 2016,
respectively. Farmer Mac also purchased AgVantage securities
of $68.4 million in 2016 under Farm
Equity AgVantage facilities with agricultural real estate
investment funds, compared to $99.1
million in 2015.
Spreads
Net interest income was $140.3
million in 2016, compared to $125.8
million in 2015. In percentage terms, net interest
income for 2016 was 0.90 percent, compared to 0.88 percent in
2015. The $14.5 million
year-over-year increase was due to several factors. One
factor was the impact 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 in fourth quarter 2015. 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 as
described below because net effective spread includes interest
expense from all funding related to such assets, including interest
expense from financial derivatives not designated in hedge
accounting relationships. Another factor contributing to the
year-over-year increase in net interest income was an increase in
the average outstanding balance of Farm & Ranch loans, USDA
Securities, and AgVantage securities. Also contributing to the
increase were (1) lower net yield adjustments related to
amortization of premiums and discounts on assets consolidated at
fair value driven by slower prepayments on those assets and (2) an
increase in the net effect of consolidated trusts due to an
increase in securitization activity of Farm & Ranch loans
during 2016. 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 was offset in part by
(1) higher net yield adjustments from amortization of purchase
premiums on certain Farm & Ranch loans and (2) a tighter spread
on a large AgVantage security that was refinanced in first quarter
2016 at a shorter maturity than the original security.
Farmer Mac's net effective spread, a non-GAAP measure, was
$125.1 million in 2016, compared to
$119.4 million in 2015. In
percentage terms, net effective spread for 2016 was 0.86 percent,
compared to 0.87 percent in 2015. Farmer Mac uses net effective
spread as an alternative measure to net interest income because
management believes it is a useful metric that accurately 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 reflected in net interest
income under GAAP.
For 2016 compared to 2015, the contraction in net effective
spread in percentage terms was primarily due to (1) a higher
average balance in lower-earning investment securities in 2016
compared to 2015, (2) a tighter spread on a large AgVantage
security that was refinanced in first quarter 2016 at a shorter
maturity than the original security, and (3) higher net yield
adjustments from amortization of purchase premiums on certain Farm
& Ranch loans in 2016 compared to 2015. The contraction
was offset in part by a lower average balance in cash and cash
equivalents primarily during the second half of 2016. The
year-over-year increase in dollars was attributable to growth in
outstanding business volume.
Net interest income was $36.7
million (0.95 percent) in fourth quarter 2016, compared to
$31.0 million (0.84 percent) in
fourth quarter 2015. The $5.7
million year-over-year increase in fourth quarter 2016 net
interest income was driven primarily by the same factors described
above that contributed to full year 2016 growth in net interest
income as compared to full year 2015.
Net effective spread was $31.9
million (0.89 percent) in fourth quarter 2016, compared to
$29.9 million (0.85 percent) in
fourth quarter 2015. The increase in percentage terms in
fourth quarter 2016 compared to fourth quarter 2015 was primarily
attributable to a reduction in Farmer Mac's cash and cash
equivalents balances and improvements in LIBOR-based funding
costs. The increase was offset in part by an increase in the
size of Farmer Mac's liquidity investment portfolio. The
year-over-year increase in dollar terms in fourth quarter 2016 was
primarily attributable to growth in outstanding business volume and
improvements in LIBOR-based funding costs.
Credit Quality
In the Farm & Ranch portfolio, 90-day delinquencies were
$21.0 million (0.34 percent of the
Farm & Ranch portfolio) as of December
31, 2016, compared to $32.1
million (0.56 percent) as of December
31, 2015. The decrease in Farmer Mac's 90-day
delinquencies as a percentage of its Farm & Ranch portfolio
during 2016 primarily related to (1) the workout in January 2016 of two Agricultural Storage and
Processing loans that financed one canola facility and (2) Farmer
Mac's receipt of $6.0 million to
pay off two long-standing delinquent timber loans with the same
borrower. Farmer Mac expects that over time its 90-day
delinquency rate will eventually revert closer to Farmer Mac's
historical average due to macroeconomic factors and the cyclical
nature of the agricultural economy, but Farmer Mac has not yet seen
an impact on its portfolio or a rise in delinquencies related to
these factors. Farmer Mac's average 90-day delinquency rate
for the Farm & Ranch line of business over the last fifteen
years is approximately one percent.
For Farmer Mac's other lines of business, there are currently no
delinquent AgVantage securities or Rural Utilities loans held or
underlying LTSPCs, and USDA Securities are backed by the full faith
and credit of the United States. As a result, across all of
Farmer Mac's lines of business, 90-day delinquencies represented
0.12 percent of total business volume as of December 31, 2016, compared to 0.20 percent as of
December 31, 2015.
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, 2016, Farmer Mac's substandard assets were
$165.2 million (2.7 percent of the
Farm & Ranch portfolio), compared to $104.5 million (1.8 percent of the
Farm & Ranch portfolio) as of December 31,
2015. Those substandard assets were comprised of 287 loans as
of December 31, 2016, compared to 234 loans as of December 31, 2015. Of the $60.7 million year-over-year increase in
substandard assets in the Farm & Ranch portfolio, Farmer Mac
believes that approximately two-thirds of the increase suggests a
modest deterioration in the agricultural credit environment likely
resulting from lower farm incomes and declining land values in some
regions due to lower prices for certain commodities. Specifically,
lower prices for feed grains and oilseeds in the Midwest region
were the primary drivers of the deterioration. Farmer Mac
expects that over time its substandard asset rate will eventually
revert closer to Farmer Mac's historical average due to
macroeconomic factors and the cyclical nature of the agricultural
economy. 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. Farmer
Mac's average substandard assets as a percent of its Farm &
Ranch portfolio over the last 15 years is approximately 4
percent.
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 business segment for fourth
quarter 2016 was $12.4 million (147
basis points) for Farm & Ranch, $6.1
million (124 basis points) for USDA Guarantees, $3.1 million (123 basis points) for Rural
Utilities, and $12.7 million (85
basis points) for Institutional Credit. Net effective spread
by business segment for fourth quarter 2016 was $10.3 million (178 basis points) for
Farm & Ranch, $5.3 million
(108 basis points) for USDA Guarantees, $2.6
million (105 basis points) for Rural Utilities, and
$11.6 million (78 basis points) for
Institutional Credit.
Liquidity and Capital
Farmer Mac's core capital totaled $609.7
million as of December 31,
2016, exceeding the statutory minimum capital requirement by
$143.2 million, or 31 percent,
compared to $564.5 million as of
December 31, 2015, which was $102.4
million, or 22 percent, above the statutory minimum capital
requirement. The increase in capital in excess of the
minimum capital level was due primarily to an increase in retained
earnings and a decrease in the amount of cash and cash equivalents
needed to manage Farmer Mac's liquidity position in 2016.
As of December 31, 2016, Farmer
Mac's total stockholders' equity was $643.4
million, compared to $553.5
million as of December 31,
2015. The increase in total stockholders' equity was a result
of an increase in retained earnings and accumulated other
comprehensive income. The increase in accumulated other
comprehensive income was due to increases in fair value on certain
fixed-rate USDA Securities. On October
1, 2016, Farmer Mac transferred $2.0
billion of USDA Securities and $32.8
million of Farmer Mac Guaranteed USDA Securities from
available-for-sale to held-to-maturity to reflect Farmer Mac's
affirmative intent and ability to hold these securities until
maturity or payoff. Farmer Mac transferred these securities
at fair value as of the date of the transfer, which included a cost
basis adjustment of unrealized appreciation in the amount of
$73.8 million. The accumulated
unrealized appreciation was retained in accumulated other
comprehensive income. Both the cost basis adjustment and
accumulated unrealized appreciation will be amortized as an
adjustment to the yield on the held-to-maturity USDA Securities
over the remaining term of the transferred securities.
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 158 days of liquidity
during 2016 and had 165 days of liquidity as of
December 31, 2016.
Dividends
On March 1, 2017, Farmer Mac's
board of directors declared a quarterly dividend of $0.36 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 31, 2017 to
holders of record of common stock as of March 20, 2017. This represents the sixth
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, 2017 to and including
April 17, 2017. The preferred stock
dividends will be payable on April 17,
2017 to holders of record as of April
3, 2017.
Use of Non-GAAP Measures
In the analysis of its financial information, Farmer Mac
sometimes uses measures of financial performance that are not
presented in accordance with generally accepted accounting
principles in the United States
(GAAP), and these are considered "non-GAAP measures."
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 related to the exchange of variation margin
between Farmer Mac and its counterparties on both its cleared and
non-cleared derivatives portfolios. However, beginning in
first quarter 2017, the variation margin amounts exchanged between
Farmer Mac and its counterparties on cleared derivatives will be
considered as settlement rather than collateral as a result of a
change in variation margin rules implemented by the Chicago
Mercantile Exchange ("CME"), the central clearinghouse used by
Farmer Mac. Specifically, effective January 3, 2017, CME began to deem the exchange
of variation margin between derivatives counterparties as a partial
settlement of each respective derivative contract rather than as
collateral pledged by a counterparty. Accordingly, beginning
in first quarter 2017, Farmer Mac will present its cleared
derivatives portfolio net of variation margin payments on its
consolidated balance sheets and will recognize realized gains or
losses as a result of these payments on its consolidated statements
of operations. However, Farmer Mac believes that even though
these variation margin amounts will be accounted for as realized
gains or losses on financial derivatives and hedging activities as
a result of the CME rule change, the economic character of these
transactions will remain the same as they were before the
change. The fair value fluctuations related to the exchange
of variation margin, whether considered a partial settlement of or
the pledge of collateral under a derivatives contract, are 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 first quarter 2017,
Farmer Mac will exclude 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.
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, the loss from retirement of the Farmer Mac II LLC
Preferred Stock in first quarter 2015 has been excluded from core
earnings and core earnings per share because it is not a frequently
occurring transaction and not indicative of future operating
results. This is also consistent with Farmer Mac's previous
treatment of these types of origination costs associated with
securities underwriting that are capitalized and deferred during
the life of the security. 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/(losses) 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, which is intended to reflect management's view of
the 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. 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;
- 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, 2016 filed today
with the U.S. Securities and Exchange Commission ("SEC"). 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 2016 financial results will be held beginning at
11:00 a.m. eastern time on Thursday,
March 9, 2017 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
conference chairman Tim Buzby.
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 2016 is set forth in Farmer Mac's
Annual Report on Form 10-K for the period ended December 31, 2016 filed today with the SEC.
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
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 a quarter-century,
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
|
|
|
As of
|
|
|
|
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
265,229
|
|
|
$
|
1,210,084
|
|
|
Investment
securities
|
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
2,515,851
|
|
|
|
2,775,025
|
|
|
|
Trading, at fair
value
|
|
-
|
|
|
|
491
|
|
|
|
|
Total investment
securities
|
|
2,515,851
|
|
|
|
2,775,516
|
|
|
Farmer Mac Guaranteed
Securities
|
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
4,853,685
|
|
|
|
4,152,605
|
|
|
|
Held-to-maturity, at
amortized cost
|
|
1,149,231
|
|
|
|
1,274,016
|
|
|
|
|
Total Farmer Mac
Guaranteed Securities
|
|
6,002,916
|
|
|
|
5,426,621
|
|
|
USDA
Securities
|
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
-
|
|
|
|
1,888,344
|
|
|
|
Trading, at fair
value
|
|
20,388
|
|
|
|
28,975
|
|
|
|
Held-to-maturity, at
amortized cost
|
|
2,009,225
|
|
|
|
-
|
|
|
|
|
Total USDA
Securities
|
|
2,029,613
|
|
|
|
1,917,319
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for
investment, at amortized cost
|
|
3,379,884
|
|
|
|
3,258,413
|
|
|
|
Loans held for
investment in consolidated trusts, at amortized cost
|
|
1,132,966
|
|
|
|
708,111
|
|
|
|
Allowance for loan
losses
|
|
(5,415)
|
|
|
|
(4,480)
|
|
|
|
|
Total loans, net of
allowance
|
|
4,507,435
|
|
|
|
3,962,044
|
|
|
Real estate owned, at
lower of cost or fair value
|
|
1,528
|
|
|
|
1,369
|
|
|
Financial
derivatives, at fair value
|
|
23,182
|
|
|
|
3,816
|
|
|
Interest receivable
(includes $12,584 and $7,938, respectively, related to consolidated
trusts)
|
|
122,782
|
|
|
|
112,700
|
|
|
Guarantee and
commitment fees receivable
|
|
38,871
|
|
|
|
40,189
|
|
|
Deferred tax asset,
net
|
|
12,291
|
|
|
|
42,916
|
|
|
Prepaid expenses and
other assets
|
|
86,322
|
|
|
|
47,780
|
|
|
|
|
|
Total
Assets
|
$
|
15,606,020
|
|
|
$
|
15,540,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity:
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Notes
Payable:
|
|
|
|
|
|
|
|
|
|
Due within one
year
|
$
|
8,440,123
|
|
|
$
|
9,111,461
|
|
|
|
Due after one
year
|
|
5,222,977
|
|
|
|
4,967,036
|
|
|
|
|
Total notes
payable
|
|
13,663,100
|
|
|
|
14,078,497
|
|
|
Debt securities of
consolidated trusts held by third parties
|
|
1,142,704
|
|
|
|
713,536
|
|
|
Financial
derivatives, at fair value
|
|
58,152
|
|
|
|
77,199
|
|
|
Accrued interest
payable (includes $10,881 and $6,705, respectively, related to
consolidated trusts)
|
|
49,700
|
|
|
|
47,621
|
|
|
Guarantee and
commitment obligation
|
|
37,282
|
|
|
|
38,609
|
|
|
Accounts payable and
accrued expenses
|
|
9,415
|
|
|
|
29,089
|
|
|
Reserve for
losses
|
|
2,020
|
|
|
|
2,083
|
|
|
|
|
|
Total
Liabilities
|
|
14,962,373
|
|
|
|
14,986,634
|
|
Commitments and
Contingencies (Note 12)
|
|
|
|
|
|
|
|
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, 9,007,481 shares and
9,155,661 shares
outstanding,
respectively
|
|
9,008
|
|
|
|
9,156
|
|
|
Additional paid-in
capital
|
|
118,655
|
|
|
|
117,862
|
|
|
Accumulated other
comprehensive income/(loss), net of tax
|
|
33,758
|
|
|
|
(11,019)
|
|
|
Retained
earnings
|
|
275,714
|
|
|
|
231,228
|
|
|
|
|
|
Total Stockholders'
Equity
|
|
643,425
|
|
|
|
553,517
|
|
|
Non-controlling
interest
|
|
222
|
|
|
|
203
|
|
|
|
|
|
Total
Equity
|
|
643,647
|
|
|
|
553,720
|
|
|
|
|
|
|
Total Liabilities and
Equity
|
$
|
15,606,020
|
|
|
$
|
15,540,354
|
|
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
|
|
|
For the Three Months
Ended
|
|
For the Year
Ended
|
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
|
|
|
(in thousands, except per share amounts)
|
Interest
income:
|
|
|
|
|
|
|
|
|
Investments and cash
equivalents
|
$
|
6,807
|
|
|
$
|
4,194
|
|
|
$
|
27,042
|
|
|
$
|
13,338
|
|
|
Farmer Mac Guaranteed
Securities and USDA Securities
|
|
39,343
|
|
|
|
32,835
|
|
|
|
150,281
|
|
|
|
134,443
|
|
|
Loans
|
|
35,091
|
|
|
|
30,533
|
|
|
|
134,577
|
|
|
|
117,042
|
|
|
|
Total interest
income
|
|
81,241
|
|
|
|
67,562
|
|
|
|
311,900
|
|
|
|
264,823
|
|
|
Total interest
expense
|
|
44,528
|
|
|
|
36,591
|
|
|
|
171,626
|
|
|
|
139,016
|
|
|
|
Net interest
income
|
|
36,713
|
|
|
|
30,971
|
|
|
|
140,274
|
|
|
|
125,807
|
|
|
Provision for loan
losses
|
|
(461)
|
|
|
|
(3,366)
|
|
|
|
(1,065)
|
|
|
|
(2,388)
|
|
|
|
Net interest income
after provision for loan losses
|
|
36,252
|
|
|
|
27,605
|
|
|
|
139,209
|
|
|
|
123,419
|
|
Non-interest
income:
|
|
|
|
|
|
|
|
|
Guarantee and
commitment fees
|
|
3,789
|
|
|
|
3,780
|
|
|
|
14,868
|
|
|
|
14,077
|
|
|
Gains on financial
derivatives and hedging activities
|
|
15,390
|
|
|
|
1,592
|
|
|
|
2,311
|
|
|
|
2,531
|
|
|
(Losses)/gains on
trading securities
|
|
(474)
|
|
|
|
696
|
|
|
|
1,460
|
|
|
|
1,220
|
|
|
(Losses)/gains on
sale of available-for-sale investment securities
|
|
-
|
|
|
|
-
|
|
|
|
(9)
|
|
|
|
9
|
|
|
Gains/(losses) on
sale of real estate owned
|
|
-
|
|
|
|
-
|
|
|
|
15
|
|
|
|
(1)
|
|
|
Other
income
|
|
602
|
|
|
|
372
|
|
|
|
1,823
|
|
|
|
2,305
|
|
|
|
Non-interest
income
|
|
19,307
|
|
|
|
6,440
|
|
|
|
20,468
|
|
|
|
20,141
|
|
Non-interest
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
5,949
|
|
|
|
5,385
|
|
|
|
22,772
|
|
|
|
22,047
|
|
|
General and
administrative
|
|
4,352
|
|
|
|
3,238
|
|
|
|
15,109
|
|
|
|
13,111
|
|
|
Regulatory
fees
|
|
625
|
|
|
|
613
|
|
|
|
2,463
|
|
|
|
2,413
|
|
|
Real estate owned
operating costs, net
|
|
-
|
|
|
|
44
|
|
|
|
39
|
|
|
|
91
|
|
|
Provision
for/(release of) reserve for losses
|
|
51
|
|
|
|
(3,415)
|
|
|
|
(63)
|
|
|
|
(2,180)
|
|
|
|
Non-interest
expense
|
|
10,977
|
|
|
|
5,865
|
|
|
|
40,320
|
|
|
|
35,482
|
|
|
|
Income before income
taxes
|
|
44,582
|
|
|
|
28,180
|
|
|
|
119,357
|
|
|
|
108,078
|
|
Income tax
expense
|
|
15,793
|
|
|
|
9,912
|
|
|
|
42,057
|
|
|
|
34,239
|
|
|
|
Net income
|
|
28,789
|
|
|
|
18,268
|
|
|
|
77,300
|
|
|
|
73,839
|
|
Less: Net
(income)/loss attributable to non-controlling interest
|
|
(28)
|
|
|
|
60
|
|
|
|
34
|
|
|
|
(5,139)
|
|
|
|
Net income
attributable to Farmer Mac
|
|
28,761
|
|
|
|
18,328
|
|
|
|
77,334
|
|
|
|
68,700
|
|
Preferred stock
dividends
|
|
(3,296)
|
|
|
|
(3,296)
|
|
|
|
(13,182)
|
|
|
|
(13,182)
|
|
Loss on retirement of
preferred stock
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8,147)
|
|
|
|
Net income
attributable to common stockholders
|
$
|
25,465
|
|
|
$
|
15,032
|
|
|
$
|
64,152
|
|
|
$
|
47,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share and dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
|
2.42
|
|
|
$
|
1.39
|
|
|
$
|
6.12
|
|
|
$
|
4.33
|
|
|
|
Diluted earnings per
common share
|
$
|
2.38
|
|
|
$
|
1.35
|
|
|
$
|
5.97
|
|
|
$
|
4.19
|
|
|
|
Common stock
dividends per common share
|
$
|
0.26
|
|
|
$
|
0.16
|
|
|
$
|
1.04
|
|
|
$
|
0.64
|
|
Reconciliations
A reconciliation 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:
Reconciliation of Net
Income Attributable to Common Stockholders to Core
Earnings
|
|
|
|
|
For the Three Months
Ended
|
|
|
|
|
December 31,
2016
|
|
September 30,
2016
|
|
December 31,
2015
|
|
|
|
|
(in thousands,
except per share amounts)
|
Net income
attributable to common stockholders
|
|
$
|
25,465
|
|
|
$
|
16,364
|
|
|
$
|
15,032
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains on
financial derivatives and hedging activities
|
|
|
17,233
|
|
|
|
1,460
|
|
|
|
2,743
|
|
|
Unrealized
(losses)/gains on trading securities
|
|
|
(474)
|
|
|
|
1,182
|
|
|
|
696
|
|
|
Amortization of
premiums/discounts and deferred gains on assets
consolidated at fair
value
|
|
(40)
|
|
|
|
(157)
|
|
|
|
(263)
|
|
|
Net effects of
settlements on agency forward contracts
|
|
|
1,024
|
|
|
|
464
|
|
|
|
(162)
|
|
|
Income tax effect
related to reconciling items
|
|
|
(6,210)
|
|
|
|
(1,032)
|
|
|
|
(1,055)
|
|
|
|
Sub-total
|
|
|
11,533
|
|
|
|
1,917
|
|
|
|
1,959
|
|
Core
earnings
|
|
$
|
13,932
|
|
|
$
|
14,447
|
|
|
$
|
13,073
|
|
|
|
|
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective
spread(1)
|
|
$
|
31,928
|
|
|
$
|
32,199
|
|
|
$
|
29,949
|
|
|
Guarantee and
commitment fees(2)
|
|
|
5,158
|
|
|
|
4,533
|
|
|
|
4,730
|
|
|
Other(3)
|
|
|
1,189
|
|
|
|
(32)
|
|
|
|
(284)
|
|
|
|
Total
revenues
|
|
|
38,275
|
|
|
|
36,700
|
|
|
|
34,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
expense/(income) (GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for/(release of) losses
|
|
|
512
|
|
|
|
(31)
|
|
|
|
(49)
|
|
|
REO operating
expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
44
|
|
|
Gains on sale of
REO
|
|
|
-
|
|
|
|
(15)
|
|
|
|
-
|
|
|
|
Total credit related
expense/(income)
|
|
|
512
|
|
|
|
(46)
|
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation &
employee benefits
|
|
|
5,949
|
|
|
|
5,438
|
|
|
|
5,385
|
|
|
General &
Administrative
|
|
|
4,352
|
|
|
|
3,474
|
|
|
|
3,238
|
|
|
Regulatory
fees
|
|
|
625
|
|
|
|
613
|
|
|
|
613
|
|
|
|
Total operating
expenses
|
|
|
10,926
|
|
|
|
9,525
|
|
|
|
9,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
26,837
|
|
|
|
27,221
|
|
|
|
25,164
|
|
|
Income tax
expense(4)
|
|
|
9,581
|
|
|
|
9,497
|
|
|
|
8,855
|
|
|
Net income/(loss)
attributable to non-controlling interest (GAAP)
|
|
|
28
|
|
|
|
(18)
|
|
|
|
(60)
|
|
|
Preferred stock
dividends (GAAP)
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
Core
earnings
|
|
$
|
13,932
|
|
|
$
|
14,447
|
|
|
$
|
13,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.33
|
|
|
$
|
1.38
|
|
|
$
|
1.21
|
|
|
Diluted
|
|
|
1.30
|
|
|
|
1.36
|
|
|
|
1.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
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 fair value
adjustments on financial derivatives and trading assets and a
reconciling adjustment to exclude the recognition of deferred gains
over the estimated lives of certain Farmer Mac Guaranteed
Securities and USDA Securities.
|
(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,
2016
|
|
December 31,
2015
|
|
|
|
|
(in thousands,
except per share amounts)
|
Net income
attributable to common stockholders
|
|
$
|
64,152
|
|
|
$
|
47,371
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
Unrealized gains on
financial derivatives and hedging activities
|
|
|
13,628
|
|
|
|
10,924
|
|
|
Unrealized gains on
trading assets
|
|
|
1,460
|
|
|
|
1,220
|
|
|
Amortization of
premiums/discounts and deferred gains on assets
consolidated at fair
value
|
|
(849)
|
|
|
|
(1,319)
|
|
|
Net effects of
settlements on agency forward contracts
|
|
|
1,699
|
|
|
|
(607)
|
|
|
Loss on retirement of
Farmer Mac II LLC Preferred Stock(1)
|
|
|
-
|
|
|
|
(8,147)
|
|
|
Income tax effect
related to reconciling items
|
|
|
(5,577)
|
|
|
|
(1,675)
|
|
|
|
Sub-total
|
|
|
10,361
|
|
|
|
396
|
|
Core
earnings
|
|
$
|
53,791
|
|
|
$
|
46,975
|
|
|
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Net effective
spread(2)
|
|
$
|
125,102
|
|
|
$
|
119,380
|
|
|
Guarantee and
commitment fees(3)
|
|
|
19,170
|
|
|
|
17,155
|
|
|
Other(4)
|
|
|
515
|
|
|
|
(806)
|
|
|
|
Total
revenues
|
|
|
144,787
|
|
|
|
135,729
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
expense (GAAP):
|
|
|
|
|
|
|
|
|
|
Provision for
losses
|
|
|
1,002
|
|
|
|
208
|
|
|
REO operating
expenses
|
|
|
39
|
|
|
|
91
|
|
|
(Gains)/losses on
sale of REO
|
|
|
(15)
|
|
|
|
1
|
|
|
|
Total credit related
expense
|
|
|
1,026
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(GAAP):
|
|
|
|
|
|
|
|
|
|
Compensation &
employee benefits
|
|
|
22,772
|
|
|
|
22,047
|
|
|
General &
Administrative
|
|
|
15,109
|
|
|
|
13,111
|
|
|
Regulatory
fees
|
|
|
2,463
|
|
|
|
2,413
|
|
|
|
Total operating
expenses
|
|
|
40,344
|
|
|
|
37,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
103,417
|
|
|
|
97,858
|
|
|
Income tax
expense(5)
|
|
|
36,478
|
|
|
|
32,562
|
|
|
Net (loss)/income
attributable to non-controlling interest (GAAP)
|
|
|
(34)
|
|
|
|
5,139
|
|
|
Preferred stock
dividends (GAAP)
|
|
|
13,182
|
|
|
|
13,182
|
|
|
|
Core
earnings
|
|
$
|
53,791
|
|
|
$
|
46,975
|
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
5.13
|
|
|
$
|
4.29
|
|
|
Diluted
|
|
|
5.01
|
|
|
|
4.15
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Relates to the
write-off of deferred issuance costs as a result of the retirement
of Farmer II LLC Preferred Stock.
|
(2)
|
Net effective spread
is a non-GAAP measure. See below for a reconciliation of net
interest income to net effective spread.
|
(3)
|
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.
|
(4)
|
Reflects reconciling
adjustments for the reclassification to exclude expenses related to
interest rate swaps not designated as hedges and fair value
adjustments on financial derivatives and trading assets and a
reconciling adjustment to exclude the recognition of deferred gains
over the estimated lives of certain Farmer Mac Guaranteed
Securities and USDA Securities.
|
(5)
|
Includes the tax
impact of non-GAAP reconciling items between net income
attributable to common stockholders and core earnings.
|
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,
2016
|
|
September 30,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
|
|
|
(in thousands, except per share amounts)
|
GAAP - Basic
EPS
|
$
|
2.42
|
|
|
$
|
1.56
|
|
|
$
|
1.39
|
|
|
$
|
6.12
|
|
|
$
|
4.33
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains on
financial derivatives and hedging
activities
|
|
1.63
|
|
|
|
0.14
|
|
|
|
0.25
|
|
|
|
1.30
|
|
|
|
1.00
|
|
|
Unrealized
(losses)/gains on trading securities
|
|
(0.05)
|
|
|
|
0.11
|
|
|
|
0.06
|
|
|
|
0.14
|
|
|
|
0.11
|
|
|
Amortization of
premiums/discounts and deferred
gains on assets
consolidated at fair value
|
|
-
|
|
|
|
(0.01)
|
|
|
|
(0.02)
|
|
|
|
(0.08)
|
|
|
|
(0.12)
|
|
|
Net effects of
settlements on agency forward contracts
|
|
0.10
|
|
|
|
0.04
|
|
|
|
(0.01)
|
|
|
|
0.16
|
|
|
|
(0.06)
|
|
|
Loss on retirement of
Farmer Mac II LLC Preferred
Stock
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.74)
|
|
|
Income tax effect
related to reconciling items
|
|
(0.59)
|
|
|
|
(0.10)
|
|
|
|
(0.10)
|
|
|
|
(0.53)
|
|
|
|
(0.15)
|
|
|
|
Sub-total
|
|
1.09
|
|
|
|
0.18
|
|
|
|
0.18
|
|
|
|
0.99)
|
|
|
|
0.04
|
|
Core Earnings - Basic
EPS
|
$
|
1.33
|
|
|
$
|
1.38
|
|
|
$
|
1.21
|
|
|
$
|
5.13
|
|
|
$
|
4.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculation (GAAP and Core Earnings)
|
|
10,512
|
|
|
|
10,473
|
|
|
|
10,822
|
|
|
|
10,477
|
|
|
|
10,949
|
|
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,
2016
|
|
September 30,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
|
|
|
(in thousands, except per share amounts)
|
GAAP - Diluted
EPS
|
$
|
2.38
|
|
|
$
|
1.54
|
|
|
$
|
1.35
|
|
|
$
|
5.97
|
|
|
$
|
4.19
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains on
financial derivatives and hedging
activities
|
|
1.60
|
|
|
|
0.14
|
|
|
|
0.24
|
|
|
|
1.26
|
|
|
|
0.97
|
|
|
Unrealized
(losses)/gains on trading securities
|
|
(0.04)
|
|
|
|
0.11
|
|
|
|
0.06
|
|
|
|
0.14
|
|
|
|
0.11
|
|
|
Amortization of
premiums/discounts and deferred
gains on assets
consolidated at fair value
|
|
-
|
|
|
|
(0.01)
|
|
|
|
(0.02)
|
|
|
|
(0.08)
|
|
|
|
(0.12)
|
|
|
Net effects of
settlements on agency forward contracts
|
|
0.10
|
|
|
|
0.04
|
|
|
|
(0.01)
|
|
|
|
0.16
|
|
|
|
(0.05)
|
|
|
Loss on retirement of
Farmer Mac II LLC Preferred
Stock
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.72)
|
|
|
Income tax effect
related to reconciling items
|
|
(0.58)
|
|
|
|
(0.10)
|
|
|
|
(0.09)
|
|
|
|
(0.52)
|
|
|
|
(0.15)
|
|
|
|
Sub-total
|
|
1.08
|
|
|
|
0.18
|
|
|
|
0.18
|
|
|
|
0.96
|
|
|
|
0.04
|
|
Core Earnings -
Diluted EPS
|
$
|
1.30
|
|
|
$
|
1.36
|
|
|
$
|
1.17
|
|
|
$
|
5.01
|
|
|
$
|
4.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculation (GAAP and Core Earnings)
|
|
10,700
|
|
|
|
10,649
|
|
|
|
11,167
|
|
|
|
10,745
|
|
|
|
11,309
|
|
The following table presents a reconciliation of net interest
income and net yield to net effective spread:
Reconciliation of
GAAP Net Interest Income/Yield to Net Effective Spread
|
|
|
|
For the Three Months
Ended
|
|
For the Year
Ended
|
|
|
|
December 31,
2016
|
|
September 30,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
|
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
|
|
(dollars
in thousands)
|
Net interest
income/yield
|
$
|
36,713
|
|
|
0.95
|
|
%
|
|
$
|
35,563
|
|
|
0.89
|
|
%
|
|
$
|
30,971
|
|
|
0.84
|
|
%
|
|
$
|
140,274
|
|
|
0.90
|
|
%
|
|
$
|
125,807
|
|
|
0.88
|
|
%
|
Net effects of
consolidated trusts
|
|
(1,369)
|
|
|
0.04
|
|
%
|
|
|
(735)
|
|
|
0.04
|
|
%
|
|
|
(950)
|
|
|
0.01
|
|
%
|
|
|
(4,302)
|
|
|
0.03
|
|
%
|
|
|
(3,078)
|
|
|
0.01
|
|
%
|
Expense related
to
undesignated
financial
derivatives
|
|
(3,495)
|
|
|
(0.10)
|
|
%
|
|
|
(2,807)
|
|
|
(0.08)
|
|
%
|
|
|
(410)
|
|
|
(0.01)
|
|
%
|
|
|
(11,480)
|
|
|
(0.08)
|
|
%
|
|
|
(5,649)
|
|
|
(0.04)
|
|
%
|
Amortization
of
premiums/discounts
and deferred gains on
assets consolidated
at fair
value
|
|
79
|
|
|
-
|
|
|
|
|
178
|
|
|
0.01
|
|
%
|
|
|
338
|
|
|
0.01
|
|
%
|
|
|
610
|
|
|
0.01
|
|
%
|
|
|
2,300
|
|
|
0.02
|
|
%
|
|
Net effective
spread
|
$
|
31,928
|
|
|
0.89
|
|
%
|
|
$
|
32,199
|
|
|
0.86
|
|
%
|
|
$
|
29,949
|
|
|
0.85
|
|
%
|
|
$
|
125,102
|
|
|
0.86
|
|
%
|
|
$
|
119,380
|
|
|
0.87
|
|
%
|
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, 2016:
Core Earnings by
Business Segment
|
For the Three Months
Ended December 31, 2016
|
|
|
|
Farm &
Ranch
|
|
USDA
Guarantees
|
|
Rural
Utilities
|
|
Institutional
Credit
|
|
Corporate
|
|
Reconciling
Adjustments
|
|
Consolidated Net
Income
|
|
|
|
(in thousands)
|
Net interest
income
|
$
|
12,447
|
|
|
$
|
6,122
|
|
|
$
|
3,057
|
|
|
$
|
12,672
|
|
|
$
|
2,415
|
|
|
$
|
-
|
|
|
$
|
36,713
|
|
|
Less: reconciling
adjustments(1)(2)(3)
|
|
(2,098)
|
|
|
|
(788)
|
|
|
|
(434)
|
|
|
|
(1,045)
|
|
|
|
(420)
|
|
|
|
4,785
|
|
|
|
-
|
|
Net effective
spread
|
|
10,349
|
|
|
|
5,334
|
|
|
|
2,623
|
|
|
|
11,627
|
|
|
|
1,995
|
|
|
|
4,785
|
|
|
|
-
|
|
Guarantee and
commitment fees(2)
|
|
4,152
|
|
|
|
51
|
|
|
|
497
|
|
|
|
458
|
|
|
|
-
|
|
|
|
(1,369)
|
|
|
|
3,789
|
|
Other
income(3)(4)
|
|
88
|
|
|
|
44
|
|
|
|
2
|
|
|
|
-
|
|
|
|
1,057
|
|
|
|
14,327
|
|
|
|
15,518
|
|
|
Non-interest
income/(loss)
|
|
4,240
|
|
|
|
95
|
|
|
|
499
|
|
|
|
458
|
|
|
|
1,057
|
|
|
|
12,958
|
|
|
|
19,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan
losses
|
|
(461)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(461)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for reserve
for losses
|
|
(51)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(51)
|
|
Other non-interest
expense
|
|
(4,260)
|
|
|
|
(1,082)
|
|
|
|
(642)
|
|
|
|
(1,456)
|
|
|
|
(3,486)
|
|
|
|
-
|
|
|
|
(10,926)
|
|
|
Non-interest
expense(5)
|
|
(4,311)
|
|
|
|
(1,082)
|
|
|
|
(642)
|
|
|
|
(1,456)
|
|
|
|
(3,486)
|
|
|
|
-
|
|
|
|
(10,977)
|
|
Core earnings before
income taxes
|
|
9,817
|
|
|
|
4,347
|
|
|
|
2,480
|
|
|
|
10,629
|
|
|
|
(434)
|
|
|
|
17,743
|
|
(6)
|
|
44,582
|
|
Income tax
(expense)/benefit
|
|
(3,436)
|
|
|
|
(1,521)
|
|
|
|
(868)
|
|
|
|
(3,720)
|
|
|
|
(38)
|
|
|
|
(6,210)
|
|
|
|
(15,793)
|
|
|
Core earnings before
preferred
stock dividends and
attribution of
income to
non-controlling interest -
preferred stock
dividends
|
|
6,381
|
|
|
|
2,826
|
|
|
|
1,612
|
|
|
|
6,909
|
|
|
|
(472)
|
|
|
|
11,533
|
|
(6)
|
|
28,789
|
|
Preferred stock
dividends
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,296)
|
|
|
|
-
|
|
|
|
(3,296)
|
|
Non-controlling
interest - preferred
stock
dividends
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(28)
|
|
|
|
-
|
|
|
|
(28)
|
|
|
Segment core
earnings/(losses)
|
$
|
6,381
|
|
|
$
|
2,826
|
|
|
$
|
1,612
|
|
|
$
|
6,909
|
|
|
$
|
(3,796)
|
|
|
$
|
11,533
|
|
(6)
|
$
|
25,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at
carrying value
|
$
|
3,582,098
|
|
|
$
|
2,096,503
|
|
|
$
|
1,012,014
|
|
|
$
|
6,008,574
|
|
|
$
|
2,906,831
|
|
|
$
|
-
|
|
|
$
|
15,606,020
|
|
Total on-and
off-balance sheet program assets at principal balance
|
$
|
6,139,304
|
|
|
$
|
2,094,375
|
|
|
$
|
1,878,110
|
|
|
$
|
7,287,686
|
|
|
|
|
|
|
$
|
-
|
|
|
$
|
17,399,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Excludes the
amortization of premiums and discounts on assets consolidated at
fair value, originally included in interest income, to reflect core
earnings amounts.
|
(2)
|
Includes the
reclassification of interest income and interest expense from
consolidated trusts owned by third parties to guarantee and
commitment fees, to reflect management's view that the net interest
income Farmer Mac earns is effectively a guarantee
fee.
|
(3)
|
Includes the
reclassification of interest expense related to interest rate swaps
not designated as hedges, which are included in "Gains/(losses) on
financial derivatives and hedging activities" on the consolidated
financial statements, to determine the effective funding cost for
each operating segment.
|
(4)
|
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 will be considered a partial settlement of the
respective derivatives contracts rather than as pledged collateral,
and accounted for as realized gains and losses. See Note 6 for more
information about this rule change. Farmer Mac believes that
even though these variation margin amounts will be 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. The fair value fluctuations related to the exchange
of variation margin, whether considered a partial settlement of or
the pledge of collateral under a derivatives contract, are 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 will include 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.
|
(5)
|
Includes directly
attributable costs and an allocation of indirectly attributable
costs based on headcount.
|
(6)
|
Net adjustments
to reconcile to the corresponding income measures; core earnings
before income taxes reconciled to income before income taxes; core
earnings before preferred stock dividends and attribution of income
to non-controlling interest reconciled to net income; and segment
core earnings reconciled to net income attributable to common
stockholders.
|
Supplemental Information
The following table sets forth information regarding outstanding
volume in each of Farmer Mac's four lines of business as of the
dates indicated:
Lines of Business -
Outstanding Business Volume
|
|
|
|
|
|
As of December 31,
2016
|
|
As of December 31,
2015
|
|
|
|
|
|
(in thousands)
|
On-balance
sheet:
|
|
|
|
|
Farm &
Ranch:
|
|
|
|
|
|
Loans
|
$
|
2,381,488
|
|
|
$
|
2,249,864
|
|
|
|
Loans held in
trusts:
|
|
|
|
|
|
|
|
|
|
|
Beneficial interests
owned by third party investors
|
|
1,132,966
|
|
|
|
708,111
|
|
|
USDA
Guarantees:
|
|
|
|
|
|
|
|
|
|
USDA
Securities
|
|
1,954,800
|
|
|
|
1,876,451
|
|
|
|
Farmer Mac Guaranteed
USDA Securities
|
|
35,599
|
|
|
|
31,554
|
|
|
Rural
Utilities:
|
|
|
|
|
|
|
|
|
|
Loans
|
|
999,512
|
|
|
|
1,008,126
|
|
|
Institutional
Credit:
|
|
|
|
|
|
|
|
|
|
AgVantage
Securities
|
|
6,004,472
|
|
|
|
5,439,383
|
|
|
|
|
Total on-balance
sheet
|
$
|
12,508,837
|
|
|
$
|
11,313,489
|
|
Off-balance
sheet:
|
|
|
|
|
Farm &
Ranch:
|
|
|
|
|
|
LTSPCs
|
$
|
2,209,409
|
|
|
$
|
2,253,273
|
|
|
|
Guaranteed
Securities
|
|
415,441
|
|
|
|
514,051
|
|
|
USDA
Guarantees:
|
|
|
|
|
|
|
|
|
|
Farmer Mac Guaranteed
USDA Securities
|
|
103,976
|
|
|
|
10,272
|
|
|
Rural
Utilities:
|
|
|
|
|
|
|
|
|
LTSPCs(1)
|
|
878,598
|
|
|
|
522,864
|
|
|
Institutional
Credit:
|
|
|
|
|
|
|
|
|
|
AgVantage
Securities
|
|
983,214
|
|
|
|
984,871
|
|
|
|
AgVantage Revolving
Line of Credit Facility(2)
|
|
300,000
|
|
|
|
300,000
|
|
|
|
|
Total off-balance
sheet
|
$
|
4,890,638
|
|
|
$
|
4,585,331
|
|
|
|
|
|
Total
|
$
|
17,399,475
|
|
|
$
|
15,898,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes $20.0
million and $8.8 million related to one-year loan purchase
commitments on which Farmer Mac receives a nominal unused
commitment fee as of December 31, 2016 and 2015,
respectively.
|
(2)
|
As of both
December 31, 2016 and 2015, this facility had not been
utilized. Farmer Mac receives a fixed fee based on the full
dollar amount of the facility. If the counterparty draws on
the facility, the amounts drawn will be presented as AgVantage
Securities, and Farmer Mac will earn interest income on those
securities.
|
The following table presents the quarterly net effective spread
by segment:
|
|
Net Effective Spread
by Line of Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Farm &
Ranch
|
|
USDA
Guarantees
|
|
Rural
Utilities
|
|
Institutional
Credit
|
|
Corporate
|
|
Net Effective
Spread
|
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
|
(dollars in
thousands)
|
For the quarter
ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016(1)
|
$
|
10,349
|
|
|
1.78
|
%
|
|
$
|
5,334
|
|
|
1.08
|
%
|
|
$
|
2,623
|
|
|
1.05
|
%
|
|
$
|
11,627
|
|
|
0.78
|
%
|
|
$
|
1,995
|
|
|
0.26
|
%
|
|
$
|
31,928
|
|
|
0.89
|
%
|
|
September 30,
2016
|
|
10,703
|
|
|
1.90
|
%
|
|
|
5,189
|
|
|
1.07
|
%
|
|
|
2,643
|
|
|
1.05
|
%
|
|
|
11,427
|
|
|
0.75
|
%
|
|
|
2,237
|
|
|
0.24
|
%
|
|
|
32,199
|
|
|
0.86
|
%
|
|
June 30,
2016
|
|
9,875
|
|
|
1.78
|
%
|
|
|
4,588
|
|
|
0.96
|
%
|
|
|
2,562
|
|
|
1.03
|
%
|
|
|
11,407
|
|
|
0.77
|
%
|
|
|
2,594
|
|
|
0.29
|
%
|
|
|
31,026
|
|
|
0.84
|
%
|
|
March 31,
2016
|
|
9,461
|
|
|
1.71
|
%
|
|
|
4,308
|
|
|
0.91
|
%
|
|
|
2,538
|
|
|
1.02
|
%
|
|
|
11,090
|
|
|
0.80
|
%
|
|
|
2,552
|
|
|
0.26
|
%
|
|
|
29,949
|
|
|
0.82
|
%
|
|
December 31,
2015
|
|
9,381
|
|
|
1.72
|
%
|
|
|
4,518
|
|
|
0.96
|
%
|
|
|
2,845
|
|
|
1.14
|
%
|
|
|
10,899
|
|
|
0.80
|
%
|
|
|
2,306
|
|
|
0.26
|
%
|
|
|
29,949
|
|
|
0.85
|
%
|
|
September 30,
2015
|
|
9,628
|
|
|
1.80
|
%
|
|
|
4,630
|
|
|
0.99
|
%
|
|
|
2,907
|
|
|
1.18
|
%
|
|
|
11,271
|
|
|
0.81
|
%
|
|
|
1,951
|
|
|
0.25
|
%
|
|
|
30,387
|
|
|
0.88
|
%
|
|
June 30,
2015
|
|
9,681
|
|
|
1.82
|
%
|
|
|
4,466
|
|
|
0.98
|
%
|
|
|
2,838
|
|
|
1.18
|
%
|
|
|
10,860
|
|
|
0.78
|
%
|
|
|
1,942
|
|
|
0.25
|
%
|
|
|
29,787
|
|
|
0.88
|
%
|
|
March 31,
2015(2)
|
|
10,114
|
|
|
1.97
|
%
|
|
|
4,225
|
|
|
0.95
|
%
|
|
|
2,804
|
|
|
1.15
|
%
|
|
|
10,425
|
|
|
0.77
|
%
|
|
|
1,689
|
|
|
0.20
|
%
|
|
|
29,257
|
|
|
0.86
|
%
|
|
December 31,
2014
|
|
8,682
|
|
|
1.71
|
%
|
|
|
5,250
|
|
|
1.19
|
%
|
|
|
2,908
|
|
|
1.18
|
%
|
|
|
9,870
|
|
|
0.78
|
%
|
|
|
1,732
|
|
|
0.26
|
%
|
|
|
28,442
|
|
|
0.91
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net effective spread
is a non-GAAP measure. See "Use of Non-GAAP Measures" for a
reconciliation of GAAP net interest income by line of business to
net effective spread by line of business.
|
(2)
|
Beginning in first
quarter 2015, Farmer Mac revised its methodology for interest
expense allocation among the Farm & Ranch, USDA Guarantees, and
Rural Utilities lines of business. As a result of this
revision, a greater percentage of interest expense has been
allocated to the longer-term assets included within the USDA
Guarantees and Rural Utilities lines of business. Net
effective spread for periods prior to the quarter ended March 31,
2015 does not reflect this revision.
|
The following table presents quarterly core earnings reconciled
to net income attributable to common stockholders:
Core Earnings by
Quarter Ended
|
|
|
|
|
December
2016
|
|
September
2016
|
|
June
2016
|
|
March
2016
|
|
December
2015
|
|
September
2015
|
|
June
2015
|
|
March
2015
|
|
December
2014
|
|
|
|
|
(in
thousands)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective
spread
|
$
|
31,928
|
|
|
$
|
32,199
|
|
|
$
|
31,026
|
|
|
$
|
29,949
|
|
|
$
|
29,949
|
|
|
$
|
30,387
|
|
|
$
|
29,787
|
|
|
$
|
29,257
|
|
|
$
|
28,442
|
|
|
Guarantee and
commitment fees
|
|
5,158
|
|
|
|
4,533
|
|
|
|
4,810
|
|
|
|
4,669
|
|
|
|
4,730
|
|
|
|
4,328
|
|
|
|
4,085
|
|
|
|
4,012
|
|
|
|
4,097
|
|
|
Other(1)
|
|
1,189
|
|
|
|
(32)
|
|
|
|
(125)
|
|
|
|
(517)
|
|
|
|
(284)
|
|
|
|
(93)
|
|
|
|
(24)
|
|
|
|
(405)
|
|
|
|
(1,285)
|
|
|
|
Total
revenues
|
|
38,275
|
|
|
|
36,700
|
|
|
|
35,711
|
|
|
|
34,101
|
|
|
|
34,395
|
|
|
|
34,622
|
|
|
|
33,848
|
|
|
|
32,864
|
|
|
|
31,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
(income)/expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for/(release of) losses
|
|
512
|
|
|
|
(31)
|
|
|
|
458
|
|
|
|
63
|
|
|
|
(49)
|
|
|
|
(303)
|
|
|
|
1,256
|
|
|
|
(696)
|
|
|
|
(479)
|
|
|
REO operating
expenses
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
39
|
|
|
|
44
|
|
|
|
48
|
|
|
|
-
|
|
|
|
(1)
|
|
|
|
48
|
|
|
(Gains)/losses on
sale of REO
|
|
-
|
|
|
|
(15)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
28
|
|
|
|
Total credit
related
(income)/expense
|
|
512
|
|
|
|
(46)
|
|
|
|
458
|
|
|
|
102
|
|
|
|
(5)
|
|
|
|
(255)
|
|
|
|
1,256
|
|
|
|
(696)
|
|
|
|
(403)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee
benefits
|
|
5,949
|
|
|
|
5,438
|
|
|
|
5,611
|
|
|
|
5,774
|
|
|
|
5,385
|
|
|
|
5,236
|
|
|
|
5,733
|
|
|
|
5,693
|
|
|
|
4,971
|
|
|
General and
administrative
|
|
4,352
|
|
|
|
3,474
|
|
|
|
3,757
|
|
|
|
3,526
|
|
|
|
3,238
|
|
|
|
3,676
|
|
|
|
3,374
|
|
|
|
2,823
|
|
|
|
2,992
|
|
|
Regulatory
fees
|
|
625
|
|
|
|
613
|
|
|
|
612
|
|
|
|
613
|
|
|
|
613
|
|
|
|
600
|
|
|
|
600
|
|
|
|
600
|
|
|
|
600
|
|
|
|
Total operating
expenses
|
|
10,926
|
|
|
|
9,525
|
|
|
|
9,980
|
|
|
|
9,913
|
|
|
|
9,236
|
|
|
|
9,512
|
|
|
|
9,707
|
|
|
|
9,116
|
|
|
|
8,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
26,837
|
|
|
|
27,221
|
|
|
|
25,273
|
|
|
|
24,086
|
|
|
|
25,164
|
|
|
|
25,365
|
|
|
|
22,885
|
|
|
|
24,444
|
|
|
|
23,094
|
|
Income tax
expense(2)
|
|
9,581
|
|
|
|
9,497
|
|
|
|
8,956
|
|
|
|
8,444
|
|
|
|
8,855
|
|
|
|
8,924
|
|
|
|
8,091
|
|
|
|
6,692
|
|
|
|
4,858
|
|
Net income/(loss)
attributable to non-
controlling
interest
|
|
28
|
|
|
|
(18)
|
|
|
|
(16)
|
|
|
|
(28)
|
|
|
|
(60)
|
|
|
|
(36)
|
|
|
|
(119)
|
|
|
|
5,354
|
|
|
|
5,414
|
|
Preferred stock
dividends
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
Core
earnings
|
$
|
13,932
|
|
|
$
|
14,447
|
|
|
$
|
13,037
|
|
|
$
|
12,375
|
|
|
$
|
13,073
|
|
|
$
|
13,182
|
|
|
$
|
11,617
|
|
|
$
|
9,103
|
|
|
$
|
9,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains/(losses) on
financial derivatives
and hedging
activities
|
|
17,233
|
|
|
|
1,460
|
|
|
|
(2,076)
|
|
|
|
(2,989)
|
|
|
|
2,743
|
|
|
|
(6,906)
|
|
|
|
15,982
|
|
|
|
(895)
|
|
|
|
(5,719)
|
|
|
|
Unrealized
(losses)/gains on
trading
assets
|
|
(474)
|
|
|
|
1,182
|
|
|
|
394
|
|
|
|
358
|
|
|
|
696
|
|
|
|
(8)
|
|
|
|
170
|
|
|
|
362
|
|
|
|
1,044
|
|
|
|
Amortization
of
premiums/discounts
and deferred
gains on assets
consolidated at fair value
|
|
(40)
|
|
|
|
(157)
|
|
|
|
(371)
|
|
|
|
(281)
|
|
|
|
(263)
|
|
|
|
(117)
|
|
|
|
(125)
|
|
|
|
(814)
|
|
|
|
(1,247)
|
|
|
|
Net effects of
settlements on
agency
forwards
|
|
1,024
|
|
|
|
464
|
|
|
|
466
|
|
|
|
(255)
|
|
|
|
(162)
|
|
|
|
(390)
|
|
|
|
197
|
|
|
|
(252)
|
|
|
|
(46)
|
|
|
|
Loss on retirement of
Farmer Mac
II LLC Preferred
Stock
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8,147)
|
|
|
|
-
|
|
|
|
Income tax effect
related to
reconciling
items
|
|
(6,210)
|
|
|
|
(1,032)
|
|
|
|
556
|
|
|
|
1,109
|
|
|
|
(1,055)
|
|
|
|
2,598
|
|
|
|
(5,679)
|
|
|
|
2,461
|
|
|
|
2,089
|
|
|
|
|
Net income
attributable to
common
stockholders
|
$
|
25,465
|
|
|
$
|
16,364
|
|
|
$
|
12,006
|
|
|
$
|
10,317
|
|
|
$
|
15,032
|
|
|
$
|
8,359
|
|
|
$
|
22,162
|
|
|
$
|
1,818
|
|
|
$
|
5,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Fourth quarter 2014
and third quarter 2014 include $13.6 million and $17.9 million,
respectively, of interest expense related to securities purchased
under agreements to resell and securities sold, not yet purchased
and $12.8 million and $16.4 million, respectively of gains on
securities sold, not yet purchased.
|
(2)
|
Fourth quarter 2014
reflects a reduction of $1.4 million in the tax valuation allowance
against capital loss carryforwards related to capital gains on
securities sold, not yet purchased.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/farmer-mac-reports-2016-results-and-announces-dividend-increase-300420525.html
SOURCE Farmer Mac