WASHINGTON, Feb. 25, 2020 /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
fiscal year ended December 31,
2019.
Fourth Quarter 2019 Highlights
- Sequential net business volume growth of $185.6 million to total outstanding business
volume of $21.1 billion, primarily
driven by the Farm & Ranch line of business
- Net income attributable to common stockholders grew 49%
year-over-year to $29.1 million, or
$2.70 per diluted common share
- Core earnings, a non-GAAP measure, grew 20% year-over-year to
$24.5 million, or $2.27 per diluted common share
- Net interest income grew 17% year-over-year to $49.4 million
- Net effective spread, a non-GAAP measure, increased 18% from
the prior-year period to $46.0
million
- 90-day delinquencies were 0.78% of the $7.8 billion Farm & Ranch portfolio and 0.29%
of total outstanding business volume as of December 31, 2019
Full Year 2019 Highlights
- Net business volume growth year-over-year of $1.4 billion to total outstanding business volume
of $21.1 billion, primarily driven by
the Rural Utilities and Farm & Ranch lines of business
- Net income attributable to common stockholders of $93.7 million, or $8.69 per diluted common share
- Core earnings grew 12% year-over-year to $93.7 million, or $8.70 per diluted common share
- Net interest income of $173.1
million, compared to $174.4
million for the prior year
- Net effective spread increased 12% from the prior year to
$168.6 million
Subsequent to December 31,
2019
- On February 24, 2020, Farmer
Mac's board of directors declared a quarterly dividend of
$0.80 per common share for first
quarter 2020
-
- Reflects an increase of $0.10 per
common share, or 14%, over the quarterly dividend payout in
2019
"We had an excellent fourth quarter 2019 from both a volume
growth and core earnings standpoint, capping off a strong 2019 for
Farmer Mac," said President and Chief Executive Officer
Brad Nordholm. "Our growth and
strong financial performance in 2019 can largely be attributed to
closely aligning our business development efforts with our
multi-year strategic plan. Entering 2020, Farmer Mac
continues to be in excellent financial condition as we
strategically focus on the execution of our mission to increase
access of financing to rural America by more opportunistically
expanding our business volume and market share through utilizing
new, innovative solutions to acquire and retain customers. By
executing upon our strategic plan with an increased emphasis on
customer value and volume growth, we believe we will be
well-positioned to further expand our bottom line, and successfully
continue to execute upon our mission while delivering value for our
shareholders."
Fourth Quarter 2019 Results
Business Volume
During fourth quarter 2019, Farmer Mac added $185.6 million net business volume growth.
This increase was driven by net growth of $383.2 million in Farm & Ranch, $52.4 million in USDA Guarantees, and
$48.0 million in Rural Utilities. The
net growth in these lines of business were partially offset by a
net business volume decline in the Institutional Credit line of
business of $298.0 million.
The Farm & Ranch line of business experienced net growth of
$383.2 million during fourth quarter
2019 attributable to $602.8 million
of new loans purchased (including the purchase of a pool of 34
dairy loans in the aggregate amount of $98.1
million) and $65.6 million of
new LTSPCs, offset in part by loan repayments of $163.2 million and LTSPC repayments of
$122.0 million.
Net growth in Farm & Ranch loan purchases of $439.6 million increased 162% from fourth quarter
2018 primarily due to customer retention initiatives and an
increased focus on product innovation, structure, and
competitiveness.
Our USDA Guarantees line of business experienced net growth of
$52.4 million during fourth quarter
2019, as $143.6 million of new
business volume was offset in part by $91.2 million of maturities and
repayments.
Outstanding business volume in our Rural Utilities line of
business increased by $48.0 million
during fourth quarter 2019, primarily due to $58.5 million of new loans purchased, including a
$10.0 million participation interest
in a solar project financing. This increase was offset by a
$10.5 million net decrease in
LTSPCs.
Our Institutional Credit line of business decreased by
$298.0 million during fourth quarter
2019, due to the termination of a $300.0
million revolving floating rate AgVantage
facility.
Spreads
Net interest income for fourth quarter 2019 was $49.4 million, compared to $42.2 million in the prior year period. The
increase was primarily driven by net growth in outstanding business
volume. Net interest yield was 0.95% for fourth quarter 2019,
as compared to 0.93% in fourth quarter 2018.
Net effective spread, a non-GAAP measure, for fourth quarter
2019 was $46.0 million, a
$7.1 million increase from
$38.9 million in the prior year
period. This increase was primarily attributable to growth in
outstanding business volume, which increased net effective spread
by approximately $4.5 million. In
percentage terms, net effective spread was 0.95% for fourth quarter
2019 and 0.93% for fourth quarter 2018.
Earnings
Farmer Mac's net income attributable to common stockholders for
fourth quarter 2019 were $29.1
million ($2.70 per diluted
common share), a 49% increase from $19.6
million ($1.82 per diluted
common share) in fourth quarter 2018. The $9.5 million increase was driven by a
$5.7 million after-tax increase in
net interest income and a $5.6
million after-tax increase in the fair value of undesignated
financial derivatives due to fluctuations in long-term interest
rates. These were partially offset by a $2.1
million after-tax increase in the provision for loan
losses.
Farmer Mac's non-GAAP core earnings for fourth quarter 2019 was
$24.5 million ($2.27 per diluted common share), a 20% increase
from $20.5 million ($1.90 per diluted common share) in fourth quarter
2018. The $4.0 million
year-over-year increase in core earnings was primarily due to a
$5.6 million after-tax increase in
net effective spread primarily resulting from an increase in
outstanding business volume. The increase to core earnings
was partially offset by a $2.1
million after-tax increase in the provision for loan
losses.
Fiscal Year 2019 Results
Business Volume
Outstanding business volume was $21.1
billion as of December 31, 2019, which represents an
increase of $1.4 billion from December 31, 2018 after taking into account all
new business, maturities, and paydowns on existing assets.
This increase was driven by net growth of $688.5 million in Rural Utilities, $543.0 million in Farm & Ranch, $104.6 million in USDA Guarantees, and
$57.4 million in Institutional
Credit.
The $688.5 million net growth in
our Rural Utilities line of business during 2019 was primarily due
to the purchase of a portfolio of participations in seasoned Rural
Utilities loans in February of 2019 in the amount of $546.2 million.
The $543.0 million net increase in
our Farm & Ranch line of business was comprised of a
$688.2 million net increase in
outstanding loan purchase volume, partially offset by a
$145.3 million net decrease in loans
under LTSPCs. Net growth of 15.0% in Farm & Ranch loan
purchases over the twelve months ended December 31, 2019 compared favorably to the 2.3%
net growth of the overall agricultural mortgage loan market over
the twelve months ended September 30,
2019 (based on an analysis of bank and Farm Credit System
call report data).
Our USDA Guarantees line of business grew by $104.6 million in 2019. This net portfolio
growth was primarily due to product structure adjustments in the
second half of 2019 to more effectively meet customer demands in an
increasingly competitive environment and increased loan limits
mandated by the 2018 Farm Bill.
Our Institutional Credit line of business increased by
$57.4 million in 2019. This
increase was primarily driven by the purchase of a new $325.0 million AgVantage security in the rural
utilities industry in first quarter 2019, offset by the termination
of a $300.0 million revolving
floating rate AgVantage facility in fourth quarter 2019.
Spreads
Net interest income was $173.1
million for 2019, compared to $174.4
million for 2018. The overall net interest yield was
0.87% for 2019, compared to 0.96% for 2018. The $1.3 million decrease in net interest income in
2019 compared to 2018 was due to a $12.8
million decrease in net fair value changes from fair value
hedge accounting relationships and a $5.2
million increase in funding and liquidity costs. These
factors were partially offset by $15.1
million in net new business volume across all lines of
business and the composition of existing Institutional Credit
business volume and $1.6 million in
various interest income fluctuations primarily related to
prepayment activity. The 9 basis point decrease was primarily
attributable to a 6 basis point decrease in net fair value changes
from fair value hedge accounting relationships and a 5 basis point
increase in funding and liquidity costs, partially offset by a
1 basis point increase from business volume.
Net effective spread, a non-GAAP measure, increased 12% to
$168.6 million in 2019, compared to
$151.2 million in 2018. This
improvement was primarily due to a $14.2 million increase from net new business
volume across all lines of business and the composition of existing
Institutional Credit business volume, a $1.6
million increase in various interest income fluctuations
primarily related to prepayment activity, and a $1.6 million decrease in non-GAAP funding
costs. In percentage terms, net effective spread was 0.91%
for both 2019 and 2018 primarily because the narrower spreads on
our liquidity investment securities in 2019 were approximately
matched by the effect in 2018 of the prepayment and full
amortization of an interest-only strip from our liquidity
investment portfolio.
Earnings
Net income attributable to common stockholders for 2019 was
$93.7 million ($8.69 per diluted common share), compared to
$94.9 million ($8.83 per diluted common share) for 2018.
The difference was primarily due to a $2.5
million after-tax increase in the provision for loan losses,
a $1.6 million after-tax increase in
operating expenses, a $1.0 million
after-tax decrease in net interest income, and a $0.8 million increase in preferred stock
dividends. These factors were partially offset by a
$7.1 million after-tax increase in
the fair value of undesignated financial derivatives due to
fluctuations in long-term interest rates.
Non-GAAP core earnings for 2019 were $93.7 million ($8.70 per diluted common share), a 12% increase
from $84.0 million ($7.82 per diluted common share) in 2018.
The year-over-year increase in core earnings was primarily due to a
$13.8 million after-tax increase in
net effective spread driven by higher business volume, partially
offset by a $2.5 million after-tax
increase in the provision for loan losses and a $1.6 million after-tax increase in operating
expenses related to continued investments in technology and
business infrastructure as well as increases in compensation and
employee benefits expenses.
See "Use of Non-GAAP Measures" below for more information about
core earnings, core earnings per share, and net effective spread
and for reconciliations of the comparable GAAP measures to these
non-GAAP measures.
Credit
As of December 31, 2019, Farmer Mac's allowance for losses
was $12.6 million (0.16% of the Farm
& Ranch portfolio), compared to $9.2
million (0.13% of the Farm & Ranch portfolio) as of
December 31, 2018. The increase
was primarily due to a specific reserve on a single specialized
poultry loan, a decrease in overall credit quality, and net
portfolio growth.
As of December 31, 2019, Farmer Mac's substandard assets
were $310.0 million (4.0% of the
Farm & Ranch portfolio), compared to $232.7 million (3.2% of the Farm & Ranch
portfolio) as of December 31, 2018. The increase of
$77.3 million in substandard assets
during 2019 reflected an overall deterioration in the credit
quality of the portfolio with more loans migrating into the
substandard classification than migrating or paying off from the
substandard classification. The percentage of substandard assets
within the portfolio was at the historical average as of
December 31, 2019.
As of December 31, 2019, Farmer Mac's 90-day delinquencies
were $61.0 million (0.78% of the Farm
& Ranch portfolio), compared to $26.9
million (0.37% of the Farm & Ranch portfolio) as of
December 31, 2018. Across all of Farmer Mac's lines of
business, 90-day delinquencies represented 0.29% of total
outstanding business volume as of December 31, 2019, compared
to 0.14% as of December 31, 2018. Farmer Mac's 90-day
delinquency rate remained below its historical average of 1.0% of
the Farm & Ranch portfolio as of December 31, 2019.
Capital
As of December 31, 2019, Farmer Mac's core capital level
was $815.4 million, which was
$196.7 million above the minimum
capital level required by our statutory charter. This
compares to $727.6 million as of
December 31, 2018, which was
$182.6 million above the minimum
capital requirement. Farmer Mac's Tier 1 capital ratio was
12.9% as of December 31, 2019. The increase in capital
above the minimum capital level was due to the Board-authorized
issuance of the Series D Preferred Stock in May 2019 and the increase in retained earnings
partially offset by growth in our outstanding business volume and
the redemption of the Series B Preferred Stock in June 2019.
Dividends
On February 24, 2020, Farmer Mac's
board of directors declared a quarterly dividend of $0.80 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 will be
payable on March 31, 2020 to holders
of record of common stock as of March 16, 2020.
This is the eighth consecutive year that Farmer Mac has increased
its quarterly common stock dividend, 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), $0.375 per share of 6.000%
Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C
(NYSE: AGM.PR.C), and $0.35625 per
share of 5.700% Non-Cumulative Preferred Stock, Series D (NYSE:
AGM.PR.D) is for the period from but not including January 17, 2020 to and including April 17, 2020. The preferred dividends will
be payable on April 17, 2020 to
holders of record as of April 1,
2020.
Earnings Conference Call Information
The conference call to discuss Farmer Mac's 2019 financial
results will be held beginning at 5:00 p.m.
Eastern time on Tuesday, February 25, 2020 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
fourth quarter and full year 2019 is in Farmer Mac's Annual Report
on Form 10-K for the year ended December 31,
2019 filed today with the SEC.
Use of Non-GAAP Measures
In the accompanying analysis of its financial information,
Farmer Mac uses the following non-GAAP measures: "core earnings,"
"core earnings per share," and "net effective spread." Farmer Mac
uses these non-GAAP measures to measure corporate economic
performance and develop financial plans because, in management's
view, they are useful alternative measures in understanding Farmer
Mac's economic performance, transaction economics, and business
trends. The non-GAAP financial measures that Farmer Mac uses may
not be comparable to similarly labeled non-GAAP financial measures
disclosed by other companies. Farmer Mac's disclosure of these
non-GAAP measures is intended to be supplemental in nature and is
not meant to be considered in isolation from, as a substitute for,
or as more important than, the related financial information
prepared in accordance with GAAP.
Core earnings and core earnings per share principally differ
from net income attributable to common stockholders and earnings
per common share, respectively, by excluding the effects of fair
value fluctuations. These fluctuations are not expected to have a
cumulative net impact on Farmer Mac's financial condition or
results of operations reported in accordance with GAAP if the
related financial instruments are held to maturity, as is
expected.
Core earnings and core earnings per share also differ from net
income attributable to common stockholders and earnings per common
share, respectively, by excluding specified infrequent or unusual
transactions that Farmer Mac believes are not indicative of future
operating results and that may not reflect the trends and economic
financial performance of Farmer Mac's core business. For
example, we have excluded from core earnings the loss 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, 2019 filed today with the SEC.
For a reconciliation of Farmer Mac's net income attributable to
common stockholders to core earnings and of earnings per common
share to core earnings per share, and net interest income and net
interest yield to net effective spread, see "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 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 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, 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 have a negative effect on agricultural
mortgage lending or borrower repayment capacity, including the
effects of weather and 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, 2019. Considering
these potential risks and uncertainties, no undue reliance should
be placed on any forward-looking statements expressed in this
release. The forward-looking statements contained in this release
represent management's expectations as of the date of this release.
Farmer Mac undertakes no obligation to release publicly the results
of revisions to any forward-looking statements included in this
release to reflect new information or any future events or
circumstances, except as otherwise required by applicable law. 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. For more than thirty years, Farmer
Mac has been delivering the capital and commitment rural America
deserves. 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
|
|
As of
|
|
December 31,
2019
|
|
December 31,
2018
|
|
(in
thousands)
|
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
604,381
|
|
|
$
|
425,256
|
|
Investment
securities:
|
|
|
|
Available-for-sale, at
fair value
|
2,959,843
|
|
|
2,217,852
|
|
Held-to-maturity, at
amortized cost
|
45,032
|
|
|
45,032
|
|
Total Investment
Securities
|
3,004,875
|
|
|
2,262,884
|
|
Farmer Mac Guaranteed
Securities:
|
|
|
|
Available-for-sale, at
fair value
|
7,143,025
|
|
|
5,974,497
|
|
Held-to-maturity, at
amortized cost
|
1,447,451
|
|
|
2,096,618
|
|
Total Farmer Mac
Guaranteed Securities
|
8,590,476
|
|
|
8,071,115
|
|
USDA
Securities:
|
|
|
|
Trading, at fair
value
|
8,913
|
|
|
9,999
|
|
Held-to-maturity, at
amortized cost
|
2,232,160
|
|
|
2,166,174
|
|
Total USDA
Securities
|
2,241,073
|
|
|
2,176,173
|
|
Loans:
|
|
|
|
Loans held for
investment, at amortized cost
|
5,390,977
|
|
|
4,004,968
|
|
Loans held for
investment in consolidated trusts, at amortized cost
|
1,600,917
|
|
|
1,517,101
|
|
Allowance for loan
losses
|
(10,454)
|
|
|
(7,017)
|
|
Total loans, net of
allowance
|
6,981,440
|
|
|
5,515,052
|
|
Real estate owned, at
lower of cost or fair value
|
1,770
|
|
|
128
|
|
Financial derivatives,
at fair value
|
10,519
|
|
|
7,487
|
|
Interest receivable
(includes $20,568 and $19,783, respectively, related to
consolidated trusts)
|
199,195
|
|
|
180,080
|
|
Guarantee and
commitment fees receivable
|
38,442
|
|
|
40,366
|
|
Deferred tax asset,
net
|
16,510
|
|
|
6,369
|
|
Prepaid expenses and
other assets
|
20,693
|
|
|
9,418
|
|
Total
Assets
|
$
|
21,709,374
|
|
|
$
|
18,694,328
|
|
|
|
|
|
Liabilities and
Equity:
|
|
|
|
Liabilities:
|
|
|
|
Notes
payable:
|
|
|
|
Due within one
year
|
$
|
10,019,082
|
|
|
$
|
7,757,050
|
|
Due after one
year
|
9,079,566
|
|
|
8,486,647
|
|
Total notes
payable
|
19,098,648
|
|
|
16,243,697
|
|
Debt securities of
consolidated trusts held by third parties
|
1,616,504
|
|
|
1,528,957
|
|
Financial derivatives,
at fair value
|
27,042
|
|
|
19,633
|
|
Accrued interest
payable (includes $18,018 and $17,125, respectively, related to
consolidated trusts)
|
106,959
|
|
|
96,743
|
|
Guarantee and
commitment obligation
|
36,700
|
|
|
38,683
|
|
Accounts payable and
accrued expenses
|
22,081
|
|
|
11,891
|
|
Reserve for
losses
|
2,164
|
|
|
2,167
|
|
Total
Liabilities
|
20,910,098
|
|
|
17,941,771
|
|
Commitments and
Contingencies
|
|
|
|
Equity:
|
|
|
|
Preferred
stock:
|
|
|
|
Series A, par value
$25 per share, 2,400,000 shares authorized, issued and
outstanding
|
58,333
|
|
|
58,333
|
|
Series B, par value
$25 per share, 3,000,000 shares authorized, issued and outstanding
as of December 31, 2018 (redemption value $75,000,000)
|
—
|
|
|
73,044
|
|
Series C, par value
$25 per share, 3,000,000 shares authorized, issued and
outstanding
|
73,382
|
|
|
73,382
|
|
Series D, par value
$25 per share, 4,000,000 shares authorized, issued and
outstanding
|
96,659
|
|
|
—
|
|
Common
stock:
|
|
|
|
Class A Voting, $1 par
value, no maximum authorization, 1,030,780 shares
outstanding
|
1,031
|
|
|
1,031
|
|
Class B Voting, $1 par
value, no maximum authorization, 500,301 shares
outstanding
|
500
|
|
|
500
|
|
Class C Non-Voting, $1
par value, no maximum authorization, 9,180,744 shares and 9,137,550
shares outstanding, respectively
|
9,181
|
|
|
9,138
|
|
Additional paid-in
capital
|
119,304
|
|
|
118,822
|
|
Accumulated other
comprehensive (loss)/income, net of tax
|
(16,161)
|
|
|
24,956
|
|
Retained
earnings
|
457,047
|
|
|
393,351
|
|
Total
Equity
|
799,276
|
|
|
752,557
|
|
Total Liabilities and
Equity
|
$
|
21,709,374
|
|
|
$
|
18,694,328
|
|
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
For the Three Months
Ended
|
|
For the Year
Ended
|
|
December 31,
2019
|
|
December 31,
2018
|
|
December 31,
2019
|
|
December 31,
2018
|
|
(in thousands,
except per share amounts)
|
Interest
income:
|
|
|
|
|
|
|
|
Investments and cash
equivalents
|
$
|
19,804
|
|
|
$
|
16,498
|
|
|
$
|
81,522
|
|
|
$
|
55,179
|
|
Farmer Mac Guaranteed
Securities and USDA Securities
|
81,267
|
|
|
77,474
|
|
|
333,896
|
|
|
290,953
|
|
Loans
|
61,883
|
|
|
52,481
|
|
|
229,675
|
|
|
198,152
|
|
Total interest
income
|
162,954
|
|
|
146,453
|
|
|
645,093
|
|
|
544,284
|
|
Total interest
expense
|
113,584
|
|
|
104,237
|
|
|
471,958
|
|
|
369,848
|
|
Net interest
income
|
49,370
|
|
|
42,216
|
|
|
173,135
|
|
|
174,436
|
|
Provision for loan
losses
|
(2,430)
|
|
|
(146)
|
|
|
(3,504)
|
|
|
(238)
|
|
Net interest income
after provision for loan losses
|
46,940
|
|
|
42,070
|
|
|
169,631
|
|
|
174,198
|
|
Non-interest
income:
|
|
|
|
|
|
|
|
Guarantee and
commitment fees
|
3,401
|
|
|
3,506
|
|
|
13,666
|
|
|
13,976
|
|
Gains/(losses) on
financial derivatives
|
4,089
|
|
|
(2,999)
|
|
|
5,282
|
|
|
(3,687)
|
|
Gains on trading
securities
|
172
|
|
|
57
|
|
|
326
|
|
|
81
|
|
Losses on sale of
available-for-sale investment securities
|
(236)
|
|
|
—
|
|
|
(236)
|
|
|
—
|
|
Losses on sale of real
estate owned
|
—
|
|
|
—
|
|
|
—
|
|
|
(7)
|
|
Other
income
|
526
|
|
|
118
|
|
|
1,904
|
|
|
1,377
|
|
Non-interest
income
|
7,952
|
|
|
682
|
|
|
20,942
|
|
|
11,740
|
|
Non-interest
expense:
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
6,732
|
|
|
7,167
|
|
|
28,762
|
|
|
27,534
|
|
General and
administrative
|
5,773
|
|
|
5,829
|
|
|
20,311
|
|
|
19,707
|
|
Regulatory
fees
|
725
|
|
|
687
|
|
|
2,788
|
|
|
2,562
|
|
Real estate owned
operating costs, net
|
—
|
|
|
—
|
|
|
64
|
|
|
16
|
|
Provision for/(release
of) reserve for losses
|
421
|
|
|
20
|
|
|
(3)
|
|
|
97
|
|
Non-interest
expense
|
13,651
|
|
|
13,703
|
|
|
51,922
|
|
|
49,916
|
|
Income before income
taxes
|
41,241
|
|
|
29,049
|
|
|
138,651
|
|
|
136,022
|
|
Income tax
expense
|
8,743
|
|
|
6,193
|
|
|
29,105
|
|
|
27,942
|
|
Net income
attributable to Farmer Mac
|
32,498
|
|
|
22,856
|
|
|
109,546
|
|
|
108,080
|
|
Preferred stock
dividends
|
(3,432)
|
|
|
(3,296)
|
|
|
(13,940)
|
|
|
(13,182)
|
|
Loss on retirement of
preferred stock
|
—
|
|
|
—
|
|
|
(1,956)
|
|
|
—
|
|
Net income
attributable to common stockholders
|
$
|
29,066
|
|
|
$
|
19,560
|
|
|
$
|
93,650
|
|
|
$
|
94,898
|
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
|
2.72
|
|
|
$
|
1.84
|
|
|
$
|
8.76
|
|
|
$
|
8.91
|
|
Diluted earnings per
common share
|
$
|
2.70
|
|
|
$
|
1.82
|
|
|
$
|
8.69
|
|
|
$
|
8.83
|
|
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,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
|
(in thousands, except per share amounts)
|
Net income
attributable to common stockholders
|
$
|
29,066
|
|
|
$
|
14,406
|
|
|
$
|
19,560
|
|
Less reconciling
items:
|
|
|
|
|
|
Gains/(losses) on
undesignated financial derivatives due to fair value
changes
|
4,469
|
|
|
(7,117)
|
|
|
(96)
|
|
Losses on hedging
activities due to fair value changes
|
(220)
|
|
|
(4,535)
|
|
|
(853)
|
|
Unrealized gains on
trading securities
|
172
|
|
|
49
|
|
|
57
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
40
|
|
|
(7)
|
|
|
67
|
|
Net effects of
terminations or net settlements on financial derivatives
|
1,339
|
|
|
232
|
|
|
(312)
|
|
Issuance costs on the
retirement of preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
Income tax effect
related to reconciling items
|
(1,218)
|
|
|
2,389
|
|
|
238
|
|
Sub-total
|
4,582
|
|
|
(8,989)
|
|
|
(899)
|
|
Core
earnings
|
$
|
24,484
|
|
|
$
|
23,395
|
|
|
$
|
20,459
|
|
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
Net effective
spread(1)
|
$
|
45,991
|
|
|
$
|
42,461
|
|
|
$
|
38,855
|
|
Guarantee and
commitment fees(2)
|
5,432
|
|
|
5,208
|
|
|
5,309
|
|
Other(3)
|
100
|
|
|
389
|
|
|
(129)
|
|
Total
revenues
|
51,523
|
|
|
48,058
|
|
|
44,035
|
|
|
|
|
|
|
|
Credit related
expense/(income) (GAAP):
|
|
|
|
|
|
Provision for
losses
|
2,851
|
|
|
623
|
|
|
166
|
|
REO operating
expenses
|
—
|
|
|
—
|
|
|
—
|
|
Losses/(gains) on sale
of REO
|
—
|
|
|
—
|
|
|
—
|
|
Total credit related
expense/(income)
|
2,851
|
|
|
623
|
|
|
166
|
|
|
|
|
|
|
|
Operating expenses
(GAAP):
|
|
|
|
|
|
Compensation and
employee benefits
|
6,732
|
|
|
7,654
|
|
|
7,167
|
|
General and
administrative
|
5,773
|
|
|
5,253
|
|
|
5,829
|
|
Regulatory
fees
|
725
|
|
|
688
|
|
|
687
|
|
Total operating
expenses
|
13,230
|
|
|
13,595
|
|
|
13,683
|
|
|
|
|
|
|
|
Net
earnings
|
35,442
|
|
|
33,840
|
|
|
30,186
|
|
Income tax
expense(4)
|
7,526
|
|
|
7,018
|
|
|
6,431
|
|
Preferred stock
dividends (GAAP)
|
3,432
|
|
|
3,427
|
|
|
3,296
|
|
Core
earnings
|
$
|
24,484
|
|
|
$
|
23,395
|
|
|
$
|
20,459
|
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
|
Basic
|
$
|
2.29
|
|
|
$
|
2.19
|
|
|
$
|
1.92
|
|
Diluted
|
2.27
|
|
|
2.17
|
|
|
1.90
|
|
(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,
2019
|
|
December 31,
2018
|
|
(in thousands,
except per share amounts)
|
Net income
attributable to common stockholders
|
$
|
93,650
|
|
|
$
|
94,898
|
|
Less reconciling
items:
|
|
|
|
Gains on undesignated
financial derivatives due to fair value changes
|
10,077
|
|
|
7,959
|
|
(Losses)/gains on
hedging activities due to fair value changes
|
(9,010)
|
|
|
4,449
|
|
Unrealized
gains/(losses) on trading securities
|
326
|
|
|
81
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
(122)
|
|
|
(461)
|
|
Net effects of
terminations or net settlements on financial derivatives
|
1,089
|
|
|
1,708
|
|
Issuance costs on the
retirement of preferred stock
|
(1,956)
|
|
|
—
|
|
Income tax effect
related to reconciling items
|
(496)
|
|
|
(2,885)
|
|
Sub-total
|
(92)
|
|
|
10,851
|
|
Core
earnings
|
$
|
93,742
|
|
|
$
|
84,047
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
Revenues:
|
|
|
|
Net effective
spread(1)
|
$
|
168,608
|
|
|
$
|
151,195
|
|
Guarantee and
commitment fees(2)
|
21,335
|
|
|
20,733
|
|
Other(3)
|
1,775
|
|
|
520
|
|
Total
revenues
|
191,718
|
|
|
172,448
|
|
|
|
|
|
Credit related
expense (GAAP):
|
|
|
|
Provision for
losses
|
3,501
|
|
|
335
|
|
REO operating
expenses
|
64
|
|
|
16
|
|
Losses/(gains) on sale
of REO
|
—
|
|
|
7
|
|
Total credit related
expense
|
3,565
|
|
|
358
|
|
|
|
|
|
Operating expenses
(GAAP):
|
|
|
|
Compensation and
employee benefits
|
28,762
|
|
|
27,534
|
|
General and
administrative
|
20,311
|
|
|
19,707
|
|
Regulatory
fees
|
2,788
|
|
|
2,562
|
|
Total operating
expenses
|
51,861
|
|
|
49,803
|
|
|
|
|
|
Net
earnings
|
136,292
|
|
|
122,287
|
|
Income tax
expense(4)
|
28,610
|
|
|
25,058
|
|
Preferred stock
dividends (GAAP)
|
13,940
|
|
|
13,182
|
|
Core
earnings
|
$
|
93,742
|
|
|
$
|
84,047
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
Basic
|
$
|
8.76
|
|
|
$
|
7.89
|
|
Diluted
|
8.70
|
|
|
7.82
|
|
(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,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
|
December 31,
2019
|
|
December 31,
2018
|
|
(in thousands,
except per share amounts)
|
GAAP - Basic
EPS
|
$
|
2.72
|
|
|
$
|
1.34
|
|
|
$
|
1.84
|
|
|
$
|
8.76
|
|
|
$
|
8.91
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
Gains/(losses) on
undesignated financial derivatives due to fair value
changes
|
0.42
|
|
|
(0.66)
|
|
|
(0.01)
|
|
|
0.94
|
|
|
0.75
|
|
(Losses)/gains on
hedging activities due to fair value changes
|
(0.02)
|
|
|
(0.42)
|
|
|
(0.08)
|
|
|
(0.83)
|
|
|
0.41
|
|
Unrealized gains on
trading securities
|
0.02
|
|
|
—
|
|
|
0.01
|
|
|
0.03
|
|
|
0.01
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
—
|
|
|
—
|
|
|
0.01
|
|
|
(0.01)
|
|
|
(0.04)
|
|
Net effects of
terminations or net settlements on financial derivatives
|
0.13
|
|
|
0.02
|
|
|
(0.03)
|
|
|
0.10
|
|
|
0.16
|
|
Issuance costs on the
retirement of preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.18)
|
|
|
—
|
|
Income tax effect
related to reconciling items
|
(0.12)
|
|
|
0.21
|
|
|
0.02
|
|
|
(0.05)
|
|
|
(0.27)
|
|
Sub-total
|
0.43
|
|
|
(0.85)
|
|
|
(0.08)
|
|
|
—
|
|
|
1.02
|
|
Core Earnings - Basic
EPS
|
$
|
2.29
|
|
|
$
|
2.19
|
|
|
$
|
1.92
|
|
|
$
|
8.76
|
|
|
$
|
7.89
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculation (GAAP and Core Earnings)
|
10,711
|
|
|
10,706
|
|
|
10,669
|
|
|
10,696
|
|
|
10,654
|
|
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,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
|
December 31,
2019
|
|
December 31,
2018
|
|
(in thousands,
except per share amounts)
|
GAAP - Diluted
EPS
|
$
|
2.70
|
|
|
$
|
1.33
|
|
|
$
|
1.82
|
|
|
$
|
8.69
|
|
|
$
|
8.83
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
Gains/(losses) on
undesignated financial derivatives due to fair value
changes
|
0.42
|
|
|
(0.66)
|
|
|
(0.01)
|
|
|
0.93
|
|
|
0.74
|
|
(Losses)/gains on
hedging activities due to fair value changes
|
(0.02)
|
|
|
(0.42)
|
|
|
(0.08)
|
|
|
(0.83)
|
|
|
0.41
|
|
Unrealized gains on
trading securities
|
0.02
|
|
|
—
|
|
|
0.01
|
|
|
0.03
|
|
|
0.01
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
—
|
|
|
—
|
|
|
0.01
|
|
|
(0.01)
|
|
|
(0.04)
|
|
Net effects of
terminations or net settlements on financial derivatives
|
0.12
|
|
|
0.02
|
|
|
(0.03)
|
|
|
0.10
|
|
|
0.16
|
|
Issuance costs on the
retirement of preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.18)
|
|
|
—
|
|
Income tax effect
related to reconciling items
|
(0.11)
|
|
|
0.22
|
|
|
0.02
|
|
|
(0.05)
|
|
|
(0.27)
|
|
Sub-total
|
0.43
|
|
|
(0.84)
|
|
|
(0.08)
|
|
|
(0.01)
|
|
|
1.01
|
|
Core Earnings -
Diluted EPS
|
$
|
2.27
|
|
|
$
|
2.17
|
|
|
$
|
1.90
|
|
|
$
|
8.70
|
|
|
$
|
7.82
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculation (GAAP and Core Earnings)
|
10,784
|
|
|
10,776
|
|
|
10,745
|
|
|
10,778
|
|
|
10,746
|
|
The following table
presents a reconciliation of net interest income and net yield to
net effective spread for the periods indicated:
|
Reconciliation of
GAAP Net Interest Income/Yield to Net Effective Spread
|
|
For the Three Months
Ended
|
|
For the Year
Ended
|
|
December 31,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
|
December 31,
2019
|
|
December 31,
2018
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
(dollars in
thousands)
|
Net interest
income/yield
|
$
|
49,370
|
|
|
0.95
|
%
|
|
$
|
40,112
|
|
|
0.78
|
%
|
|
$
|
42,216
|
|
|
0.93
|
%
|
|
$
|
173,135
|
|
|
0.87
|
%
|
|
$
|
174,436
|
|
|
0.96
|
%
|
Net effects of
consolidated trusts
|
(2,031)
|
|
|
0.03
|
%
|
|
(1,859)
|
|
|
0.02
|
%
|
|
(1,804)
|
|
|
0.04
|
%
|
|
(7,669)
|
|
|
0.03
|
%
|
|
(6,757)
|
|
|
0.04
|
%
|
Expense related to
undesignated financial derivatives
|
(725)
|
|
|
(0.02)
|
%
|
|
(268)
|
|
|
—
|
%
|
|
(2,161)
|
|
|
(0.06)
|
%
|
|
(5,095)
|
|
|
(0.03)
|
%
|
|
(11,685)
|
|
|
(0.07)
|
%
|
Amortization of
premiums/discounts on assets consolidated at fair value
|
58
|
|
|
—
|
%
|
|
28
|
|
|
—
|
%
|
|
(138)
|
|
|
—
|
%
|
|
398
|
|
|
—
|
%
|
|
417
|
|
|
0.01
|
%
|
Amortization of
losses due to terminations or net settlements on financial
derivatives
|
30
|
|
|
—
|
%
|
|
(42)
|
|
|
—
|
%
|
|
(69)
|
|
|
—
|
%
|
|
(68)
|
|
|
—
|
%
|
|
(275)
|
|
|
—
|
%
|
Fair value changes on
fair value hedge relationships
|
(711)
|
|
|
(0.01)
|
%
|
|
4,490
|
|
|
0.10
|
%
|
|
811
|
|
|
0.02
|
%
|
|
7,907
|
|
|
0.04
|
%
|
|
(4,941)
|
|
|
(0.03)
|
%
|
Net effective
spread
|
$
|
45,991
|
|
|
0.95
|
%
|
|
$
|
42,461
|
|
|
0.90
|
%
|
|
$
|
38,855
|
|
|
0.93
|
%
|
|
$
|
168,608
|
|
|
0.91
|
%
|
|
$
|
151,195
|
|
|
0.91
|
%
|
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, 2019:
|
Core Earnings by
Business Segment
|
For the Three Months
Ended December 31, 2019
|
|
Farm &
Ranch
|
|
USDA
Guarantees
|
|
Rural
Utilities
|
|
Institutional
Credit
|
|
Corporate
|
|
Reconciling
Adjustments
|
|
Consolidated
Net Income
|
|
(in
thousands)
|
Net interest
income
|
$
|
18,674
|
|
|
$
|
4,425
|
|
|
$
|
4,195
|
|
|
$
|
19,614
|
|
|
$
|
2,462
|
|
|
$
|
—
|
|
|
$
|
49,370
|
|
Less: reconciling
adjustments(1)(2)(3)
|
(2,300)
|
|
|
(62)
|
|
|
676
|
|
|
(1,606)
|
|
|
(87)
|
|
|
3,379
|
|
|
—
|
|
Net effective
spread
|
16,374
|
|
|
4,363
|
|
|
4,871
|
|
|
18,008
|
|
|
2,375
|
|
|
3,379
|
|
|
|
Guarantee and
commitment fees(2)
|
4,732
|
|
|
246
|
|
|
343
|
|
|
111
|
|
|
—
|
|
|
(2,031)
|
|
|
3,401
|
|
Other
income/(expense)(3)
|
339
|
|
|
82
|
|
|
7
|
|
|
—
|
|
|
(328)
|
|
|
4,451
|
|
|
4,551
|
|
Non-interest
income/(loss)
|
5,071
|
|
|
328
|
|
|
350
|
|
|
111
|
|
|
(328)
|
|
|
2,420
|
|
|
7,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan
losses
|
(2,430)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,430)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release of reserve
for losses
|
(421)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(421)
|
|
Other non-interest
expense
|
(4,927)
|
|
|
(1,478)
|
|
|
(1,303)
|
|
|
(1,920)
|
|
|
(3,602)
|
|
|
—
|
|
|
(13,230)
|
|
Non-interest
expense(4)
|
(5,348)
|
|
|
(1,478)
|
|
|
(1,303)
|
|
|
(1,920)
|
|
|
(3,602)
|
|
|
—
|
|
|
(16,081)
|
|
Core earnings before
income taxes
|
13,667
|
|
|
3,213
|
|
|
3,918
|
|
|
16,199
|
|
|
(1,555)
|
|
|
5,799
|
|
(5)
|
41,241
|
|
Income tax
(expense)/benefit
|
(2,870)
|
|
|
(675)
|
|
|
(823)
|
|
|
(3,402)
|
|
|
244
|
|
|
(1,217)
|
|
|
(8,743)
|
|
Core earnings before
preferred stock dividends
|
10,797
|
|
|
2,538
|
|
|
3,095
|
|
|
12,797
|
|
|
(1,311)
|
|
|
4,582
|
|
(5)
|
32,498
|
|
Preferred stock
dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,432)
|
|
|
—
|
|
|
(3,432)
|
|
Segment core
earnings/(losses)
|
$
|
10,797
|
|
|
$
|
2,538
|
|
|
$
|
3,095
|
|
|
$
|
12,797
|
|
|
$
|
(4,743)
|
|
|
$
|
4,582
|
|
(5)
|
$
|
29,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at
carrying value
|
$
|
5,408,302
|
|
|
$
|
2,311,932
|
|
|
$
|
1,717,405
|
|
|
$
|
8,606,912
|
|
|
$
|
3,664,823
|
|
|
$
|
—
|
|
|
$
|
21,709,374
|
|
Total on- and
off-balance sheet program assets at principal balance
|
$
|
7,776,950
|
|
|
$
|
2,620,175
|
|
|
$
|
2,280,571
|
|
|
$
|
8,440,246
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,117,942
|
|
(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
"(Losses)/gains on financial derivatives" on the consolidated
financial statements, to determine the effective funding cost for
each operating segment.
(4) Includes
directly attributable costs and an allocation of indirectly
attributable costs based on employee headcount.
(5)
Net adjustments to reconcile to the corresponding income
measures: core earnings before income taxes reconciled to income
before income taxes; core earnings before preferred stock dividends
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 four lines of business as of the dates indicated:
|
Lines of Business -
Outstanding Business Volume
|
|
As of December 31,
2019
|
|
As of December 31,
2018
|
|
(in thousands)
|
Farm &
Ranch:
|
|
|
|
Loans
|
$
|
3,675,640
|
|
|
$
|
3,071,222
|
|
Loans held in
trusts:
|
|
|
|
Beneficial interests
owned by third party investors
|
1,600,917
|
|
|
1,517,101
|
|
LTSPCs
|
2,393,071
|
|
|
2,509,787
|
|
Guaranteed
Securities
|
107,322
|
|
|
135,862
|
|
USDA
Guarantees:
|
|
|
|
USDA
Securities
|
2,199,072
|
|
|
2,120,553
|
|
Farmer Mac Guaranteed
USDA Securities
|
421,103
|
|
|
395,067
|
|
Rural
Utilities:
|
|
|
|
Loans
|
1,671,293
|
|
|
938,843
|
|
LTSPCs(1)
|
609,278
|
|
|
653,272
|
|
Institutional
Credit
|
|
|
|
AgVantage
Securities
|
8,440,246
|
|
|
8,082,817
|
|
Revolving floating
rate AgVantage facility(2)
|
—
|
|
|
300,000
|
|
Total
|
$
|
21,117,942
|
|
|
$
|
19,724,524
|
|
(1) Includes
$20.0 million and $17.0 million related to one-year loan purchase
commitments on which Farmer Mac receives a nominal unused
commitment fee as of December 31, 2019 and 2018,
respectively.
(2) During
2019, the facility was drawn on two separate occurrences for $100.0
million and $150.0 million and later repaid. During 2018,
$100.0 million of this facility was drawn and later repaid.
The facility was terminated during fourth quarter 2019.
|
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,
2019(1)
|
$
|
16,374
|
|
|
1.90
|
%
|
|
$
|
4,363
|
|
|
0.78
|
%
|
|
$
|
4,871
|
|
|
1.17
|
%
|
|
$
|
18,008
|
|
|
0.85
|
%
|
|
$
|
2,375
|
|
|
0.27
|
%
|
|
$
|
45,991
|
|
|
0.95
|
%
|
September 30,
2019
|
13,181
|
|
|
1.66
|
%
|
|
4,314
|
|
|
0.79
|
%
|
|
4,502
|
|
|
1.16
|
%
|
|
17,807
|
|
|
0.84
|
%
|
|
2,657
|
|
|
0.30
|
%
|
|
42,461
|
|
|
0.90
|
%
|
June 30,
2019
|
13,335
|
|
|
1.72
|
%
|
|
4,097
|
|
|
0.76
|
%
|
|
3,996
|
|
|
1.10
|
%
|
|
17,371
|
|
|
0.82
|
%
|
|
2,556
|
|
|
0.34
|
%
|
|
41,355
|
|
|
0.91
|
%
|
March 31,
2019
|
12,737
|
|
|
1.70
|
%
|
|
3,964
|
|
|
0.74
|
%
|
|
3,233
|
|
|
1.12
|
%
|
|
16,373
|
|
|
0.79
|
%
|
|
2,494
|
|
|
0.35
|
%
|
|
38,801
|
|
|
0.89
|
%
|
December 31,
2018
|
13,288
|
|
|
1.79
|
%
|
|
4,630
|
|
|
0.85
|
%
|
|
2,833
|
|
|
1.19
|
%
|
|
15,751
|
|
|
0.80
|
%
|
|
2,353
|
|
|
0.36
|
%
|
|
38,855
|
|
|
0.93
|
%
|
September 30,
2018
|
13,887
|
|
|
1.91
|
%
|
|
4,627
|
|
|
0.86
|
%
|
|
2,877
|
|
|
1.18
|
%
|
|
15,642
|
|
|
0.78
|
%
|
|
2,044
|
|
|
0.30
|
%
|
|
39,077
|
|
|
0.93
|
%
|
June 30,
2018
|
13,347
|
|
|
1.86
|
%
|
|
4,398
|
|
|
0.83
|
%
|
|
2,923
|
|
|
1.15
|
%
|
|
15,220
|
|
|
0.76
|
%
|
|
274
|
|
|
0.04
|
%
|
|
36,162
|
|
|
0.86
|
%
|
March 31,
2018
|
12,540
|
|
|
1.80
|
%
|
|
4,400
|
|
|
0.82
|
%
|
|
2,950
|
|
|
1.12
|
%
|
|
14,824
|
|
|
0.78
|
%
|
|
2,387
|
|
|
0.36
|
%
|
|
37,101
|
|
|
0.91
|
%
|
December 31,
2017
|
12,396
|
|
|
1.80
|
%
|
|
4,979
|
|
|
0.93
|
%
|
|
3,057
|
|
|
1.14
|
%
|
|
14,800
|
|
|
0.78
|
%
|
|
2,235
|
|
|
0.35
|
%
|
|
37,467
|
|
|
0.93
|
%
|
(1) See above
for a reconciliation of GAAP net interest income by line of
business to net effective spread by line of business for the three
months ended December 31, 2019.
|
The following table
presents quarterly core earnings reconciled to net income
attributable to common stockholders:
|
Core Earnings by
Quarter Ended
|
|
December
2019
|
|
September
2019
|
|
June
2019
|
|
March
2019
|
|
December
2018
|
|
September
2018
|
|
June
2018
|
|
March
2018
|
|
December
2017
|
|
(in
thousands)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective
spread
|
$
|
45,991
|
|
|
$
|
42,461
|
|
|
$
|
41,355
|
|
|
$
|
38,801
|
|
|
$
|
38,855
|
|
|
$
|
39,077
|
|
|
$
|
36,162
|
|
|
$
|
37,101
|
|
|
$
|
37,467
|
|
Guarantee and
commitment fees
|
5,432
|
|
|
5,208
|
|
|
5,276
|
|
|
5,419
|
|
|
5,309
|
|
|
5,170
|
|
|
5,171
|
|
|
5,083
|
|
|
5,157
|
|
Other
|
100
|
|
|
389
|
|
|
777
|
|
|
509
|
|
|
(129)
|
|
|
110
|
|
|
111
|
|
|
428
|
|
|
69
|
|
Total
revenues
|
51,523
|
|
|
48,058
|
|
|
47,408
|
|
|
44,729
|
|
|
44,035
|
|
|
44,357
|
|
|
41,444
|
|
|
42,612
|
|
|
42,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
expense/(income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for/(release
of) losses
|
2,851
|
|
|
623
|
|
|
420
|
|
|
(393)
|
|
|
166
|
|
|
(3)
|
|
|
582
|
|
|
(410)
|
|
|
464
|
|
REO operating
expenses
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
Losses/(gains) on sale
of REO
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
(34)
|
|
|
—
|
|
|
(964)
|
|
Total credit related
expense/(income)
|
2,851
|
|
|
623
|
|
|
484
|
|
|
(393)
|
|
|
166
|
|
|
38
|
|
|
548
|
|
|
(394)
|
|
|
(500)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
6,732
|
|
|
7,654
|
|
|
6,770
|
|
|
7,606
|
|
|
7,167
|
|
|
6,777
|
|
|
6,936
|
|
|
6,654
|
|
|
5,247
|
|
General and
administrative
|
5,773
|
|
|
5,253
|
|
|
4,689
|
|
|
4,596
|
|
|
5,829
|
|
|
4,350
|
|
|
5,202
|
|
|
4,326
|
|
|
4,348
|
|
Regulatory
fees
|
725
|
|
|
688
|
|
|
687
|
|
|
688
|
|
|
687
|
|
|
625
|
|
|
625
|
|
|
625
|
|
|
625
|
|
Total operating
expenses
|
13,230
|
|
|
13,595
|
|
|
12,146
|
|
|
12,890
|
|
|
13,683
|
|
|
11,752
|
|
|
12,763
|
|
|
11,605
|
|
|
10,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
35,442
|
|
|
33,840
|
|
|
34,778
|
|
|
32,232
|
|
|
30,186
|
|
|
32,567
|
|
|
28,133
|
|
|
31,401
|
|
|
32,973
|
|
Income tax
expense
|
7,526
|
|
|
7,018
|
|
|
7,351
|
|
|
6,715
|
|
|
6,431
|
|
|
6,891
|
|
|
5,477
|
|
|
6,259
|
|
|
11,796
|
|
Preferred stock
dividends
|
3,432
|
|
|
3,427
|
|
|
3,785
|
|
|
3,296
|
|
|
3,296
|
|
|
3,295
|
|
|
3,296
|
|
|
3,295
|
|
|
3,296
|
|
Core
earnings
|
$
|
24,484
|
|
|
$
|
23,395
|
|
|
$
|
23,642
|
|
|
$
|
22,221
|
|
|
$
|
20,459
|
|
|
$
|
22,381
|
|
|
$
|
19,360
|
|
|
$
|
21,847
|
|
|
$
|
17,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains/(losses) on
undesignated financial derivatives due to fair value
changes
|
4,469
|
|
|
(7,117)
|
|
|
10,485
|
|
|
2,240
|
|
|
(96)
|
|
|
3,625
|
|
|
6,709
|
|
|
(2,279)
|
|
|
(261)
|
|
(Losses)/gains on
hedging activities due to fair value changes
|
(220)
|
|
|
(4,535)
|
|
|
(1,438)
|
|
|
(2,817)
|
|
|
(853)
|
|
|
1,051
|
|
|
1,687
|
|
|
2,564
|
|
|
(3)
|
|
Unrealized
gains/(losses) on trading assets
|
172
|
|
|
49
|
|
|
61
|
|
|
44
|
|
|
57
|
|
|
(3)
|
|
|
11
|
|
|
16
|
|
|
60
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
40
|
|
|
(7)
|
|
|
(139)
|
|
|
(16)
|
|
|
67
|
|
|
(38)
|
|
|
196
|
|
|
(686)
|
|
|
(129)
|
|
Net effects of
terminations or net settlements on financial derivatives
|
1,339
|
|
|
232
|
|
|
(592)
|
|
|
110
|
|
|
(312)
|
|
|
546
|
|
|
232
|
|
|
1,242
|
|
|
632
|
|
Issuance costs on the
retirement of preferred stock
|
—
|
|
|
—
|
|
|
(1,956)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Re-measurement of net
deferred tax asset due to enactment of new tax
legislation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,365)
|
|
Income tax effect
related to reconciling items
|
(1,218)
|
|
|
2,389
|
|
|
(1,759)
|
|
|
92
|
|
|
238
|
|
|
(1,088)
|
|
|
(1,855)
|
|
|
(180)
|
|
|
(105)
|
|
Net income
attributable to common stockholders
|
$
|
29,066
|
|
|
$
|
14,406
|
|
|
$
|
28,304
|
|
|
$
|
21,874
|
|
|
$
|
19,560
|
|
|
$
|
26,474
|
|
|
$
|
26,340
|
|
|
$
|
22,524
|
|
|
$
|
16,710
|
|
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SOURCE Farmer Mac