WASHINGTON, March 10, 2016 /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, 2015, which included
$1.3 billion in net new business
volume growth in 2015 that brought total outstanding business
volume to a record $15.9 billion as
of December 31, 2015. Farmer
Mac's 2015 core earnings, a non-GAAP measure, were $47.0 million ($4.15 per diluted common share), compared to
$53.0 million ($4.67 per diluted common share) in 2014.
For fourth quarter 2015, core earnings were $13.1 million ($1.17 per diluted common share), compared to
$13.2 million ($1.17 per diluted common share) for third quarter
2015, and $9.5 million ($0.84 per diluted common share) for fourth
quarter 2014.
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Farmer Mac's board of directors also approved an increase in the
quarterly dividend on all classes of Farmer Mac's common stock to
$0.26 per share for first quarter
2016 and announced a new common stock dividend policy. This
quarter's dividend amount represents a 63 percent increase over the
$0.16 per share amount paid in each
quarter during 2015.
"Farmer Mac completed another successful year in 2015 and
positioned itself for continued success over the long-term," said
President and Chief Executive Officer Tim
Buzby. "Our expanding customer base and product
offerings have helped us grow by an average of approximately
$1 billion per year in outstanding
business volume over the last four years. Our financial
results continue to be strong, and our credit quality remains very
favorable. While certain segments of agriculture are facing
their challenges, Farmer Mac is executing well on the opportunities
within its markets and we believe the outlook for us is positive
for 2016. We also made some important decisions recently,
including the change to our dividend policy and the adoption of a
$25 million share repurchase program
in September 2015. With our capital restructuring initiative
behind us, we have reevaluated our common stock dividend policy and
decided to provide a greater payout of core earnings to our common
stockholders – one that is more aligned with other publicly-traded
financial companies. Given our existing strong capital
base, we expect to maintain a growing and sustainable common
dividend and to target a payout ratio of core earnings to common
stockholders that is anticipated to grow to approximately 30% over
time. Even with this higher target payout ratio, Farmer Mac
still expects to retain sufficient earnings each year to fund its
growth and to build equity capital over the long term."
Earnings
Farmer Mac's net income attributable to common stockholders for
2015 was $47.4 million
($4.19 per diluted common share),
compared to $38.3 million
($3.37 per diluted common share) for
2014. The increase in 2015 from 2014 was primarily
attributable to the effects of unrealized fair value changes on
financial derivatives and hedged assets, which was a $7.1 million after-tax gain in 2015, compared to
a $6.5 million after-tax loss in
2014.
Core earnings for 2015 were $47.0
million ($4.15 per diluted
common share), compared to $53.0
million ($4.67 per diluted
common share) in 2014. The decrease in core earnings in 2015
compared to 2014 was primarily attributable to the absence of the
$11.4 million net economic benefit of
the cash management and liquidity initiative, which was completed
in 2014, and the loss of $5.6 million
after-tax in preferred dividend income resulting from the fourth
quarter 2014 redemption of Farmer Mac's investment in $78.5 million of high-yielding preferred stock
previously held in Farmer Mac's investment portfolio. Also
contributing to the decrease was a $2.6
million after-tax increase in operating expenses primarily
due to higher compensation costs resulting from the consolidation
of Farmer Mac's appraisal subsidiary, Contour Valuation Services,
LLC, and higher legal fees, consulting fees, and information
services expenses related to corporate strategic initiatives.
The year-over-year decrease in core earnings was partially offset
by a $7.7 million after-tax increase
in net effective spread (excluding the effect of the fourth quarter
2014 redemption of high-yielding preferred stock), which was driven
by growth in outstanding business volume, and a $7.6 million after-tax decrease in preferred
dividend expense resulting from the redemption of all outstanding
shares of Farmer Mac II Preferred Stock in first quarter 2015.
Core earnings in fourth quarter 2015 were $13.1 million ($1.17 per diluted common share), compared to
$13.2 million ($1.17 per diluted common share) in third quarter
2015, and $9.5 million ($0.84 per diluted common share) in fourth quarter
2014. The increase in core earnings for fourth quarter 2015
compared to fourth quarter 2014 was attributable to a $1.0 million after-tax increase in net effective
spread and a $3.5 million after-tax
decrease in preferred dividend expense resulting from the
redemption of all outstanding shares of Farmer Mac II Preferred
Stock in first quarter 2015.
See "Non-GAAP Earnings Measures" below for more information
about core earnings and for a reconciliation of Farmer Mac's net
income attributable to common stockholders to core earnings.
Business Volume Highlights
Farmer Mac added $3.2 billion of
new business volume during 2015. Specifically, Farmer
Mac:
- purchased $748.4 million of newly
originated Farm & Ranch loans;
- purchased $743.2 million of
AgVantage securities;
- added $522.3 million of Rural
Utilities loans under LTSPCs;
- added $427.8 million of Farm
& Ranch loans under LTSPCs;
- purchased $363.6 million of USDA
Securities;
- added a $300.0 million revolving
floating rate AgVantage facility;
- purchased $108.3 million of Rural
Utilities loans; and
- purchased $13.3 million of Farmer
Mac Guaranteed USDA Securities.
During fourth quarter 2015, Farmer Mac added $564.1 million of new business volume, with
Farm & Ranch loan purchases and Farm & Ranch loans
under LTSPCs driving the volume growth. Specifically, Farmer
Mac:
- purchased $245.3 million of newly
originated Farm & Ranch loans;
- added $185.9 million of Farm
& Ranch loans under LTSPCs;
- purchased $72.4 million of USDA
Securities;
- purchased $46.1 million of Rural
Utilities loans; and
- purchased $14.4 million of
AgVantage securities.
After $1.9 billion of maturities
and principal paydowns on existing business during 2015, which
included $715.8 million in scheduled
maturities of AgVantage securities, Farmer Mac's outstanding
business volume increased by $1.3 billion from December 31, 2014 to $15.9 billion as of December 31, 2015. The increase in Farmer
Mac's outstanding business volume was driven by the addition of
$522.3 million of Rural Utilities
loans under LTSPCs, as well as broad-based portfolio growth across
most of Farmer Mac's other products, including AgVantage
securities, Farm & Ranch loans, and USDA Securities. The
large LTSPC transaction completed in 2015 was the first time Farmer
Mac has provided LTSPCs under its Rural Utilities line of
business. Of the new business volume in AgVantage securities
for 2015, a $300.0 million revolving
floating rate AgVantage facility with the National Rural Utilities
Cooperative Finance Corporation ("CFC") was added as an off-balance
sheet commitment because CFC had not drawn on the facility as of
December 31, 2015. If CFC draws
on this facility, the amounts drawn will be presented as on-balance
sheet AgVantage securities, and Farmer Mac will earn interest
income on the drawn balance.
Net Effective Spread
Farmer Mac's net effective spread was $119.4 million (87 basis points) for 2015,
compared to $113.7 million (91 basis
points) for 2014. The contraction in net effective
spread in percentage terms in 2015 compared to 2014 was primarily
attributable to the loss of $6.5
million in preferred dividend income (5 basis points) from
the fourth quarter 2014 redemption of the high-yielding preferred
stock previously held in Farmer Mac's investment portfolio and a
higher average balance in low-yielding cash and cash equivalents
intended to increase Farmer Mac's liquidity position, partially
offset by a shift towards products earning higher spreads.
The year-over-year increase in dollars was primarily attributable
to growth in outstanding business volume.
Net effective spread was $29.9
million (85 basis points) in fourth quarter 2015, compared
to $30.4 million (88 basis points) in
third quarter 2015, and $28.4 million
(91 basis points) in fourth quarter 2014. The decrease in net
effective spread in fourth quarter 2015 compared to third quarter
2015 was primarily attributable to a decline in cash interest
received on non-accrual Farm & Ranch loans. The decrease in net
effective spread in percentage terms in fourth quarter 2015
compared to fourth quarter 2014 was primarily attributable to a
higher average balance in Farmer Mac's low-yielding cash and cash
equivalents intended to increase Farmer Mac's liquidity
position. The increase in dollar terms in fourth quarter 2015
compared to fourth quarter 2014 was primarily attributable to
growth in outstanding business volume.
Credit Quality
Credit quality remains favorable across Farmer Mac's four lines
of business. In the Farm & Ranch portfolio, 90-day
delinquencies were $32.1 million
(0.56 percent of the Farm & Ranch portfolio) as of December 31, 2015, compared to $36.7 million (0.67 percent) as of September 30, 2015, and $18.9 million (0.35 percent) as of
December 31, 2014. The increase
in the 90-day delinquencies in 2015 compared to 2014 was related to
the delinquency of two Agricultural Storage and Processing loans
that financed one canola facility. Although these two loans
were outstanding and delinquent as of December 31, 2015, Farmer Mac collected funds in
the amount of $9.8 million to pay
them off in January 2016. Farmer Mac charged off the
$3.7 million specific allowance
related to these two loans in fourth quarter 2015. Farmer Mac
expects that over time its 90-day delinquency rate will eventually
revert closer to Farmer Mac's historical averages due to
macroeconomic and other potential factors, 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
0.20 percent of total business volume as of December 31, 2015, compared to 0.23 percent as of
September 30, 2015, and 0.13 percent
as of December 31, 2014.
The western part of the United
States, and in particular California, continues to experience drought
conditions, with the water level in many California reservoirs at or near historically
low levels. The persistence of extreme drought conditions in
the western states could have an adverse effect on Farmer Mac's
delinquency rates or loss experience in the future; however, Farmer
Mac has not observed any material effect on its portfolio from the
drought through 2015. Farmer Mac continues to remain informed
about the drought and its effects on the agricultural industries
located in the western states and on Farmer Mac's Farm & Ranch
portfolio through regular discussions with its loan servicers that
service loans in drought-stricken areas, as well as customers and
other lenders in the industry.
Lines of Business
Farmer Mac's operations consist of four lines of business – Farm
& Ranch, USDA Guarantees, Rural Utilities, and Institutional
Credit. Net effective spread by business segment for fourth
quarter 2015 was $9.4 million (172
basis points) for Farm & Ranch, $4.5 million (96 basis points) for USDA
Guarantees, $2.8 million (114 basis
points) for Rural Utilities, and $10.9
million (80 basis points) for Institutional Credit.
Liquidity and Capital
Farmer Mac's core capital totaled $564.5
million as of December 31,
2015, exceeding the statutory minimum capital requirement by
$102.4 million, or 22 percent,
compared to $766.3 million as of
December 31, 2014, which was
$345.0 million, or 82 percent, above
the statutory minimum capital requirement. The decrease in
core capital primarily resulted from the redemption of $250.0 million of Farmer Mac II LLC Preferred
Stock on March 30, 2015. Farmer
Mac issued an aggregate of $150.0
million of non-cumulative preferred stock during the first
half of 2014 and used the proceeds of these preferred stock
offerings and cash on hand to cause Farmer Mac II LLC to redeem all
of the outstanding shares of Farmer Mac II LLC Preferred
Stock. The preferred stock issued in 2014 qualifies as Tier 1
capital for Farmer Mac whereas the Farmer Mac II LLC Preferred
Stock that was redeemed did not qualify as Tier 1 capital.
As of December 31, 2015, Farmer
Mac's total stockholders' equity was $553.5
million, compared to $545.8
million as of December 31,
2014. The increase in total stockholders' equity was
primarily attributable to an increase in retained earnings,
offset in part by a decrease in accumulated other comprehensive
income due to decreases in fair value of available-for-sale
securities. The decrease in the fair value of available-for-sale
securities was driven primarily by higher market interest rates and
wider credit spreads on certain investment securities as of
December 31, 2015 compared to
December 31, 2014.
On September 8, 2015, Farmer Mac's
board of directors approved a share repurchase program, which
authorized Farmer Mac to repurchase up to $25 million of its outstanding Class C non-voting
common stock through September 2017. As of December 31, 2015, Farmer Mac had repurchased
approximately 362,000 shares at a cost of approximately
$10.5 million.
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 171 days of liquidity
during 2015 and had 166 days of liquidity as of
December 31, 2015.
Dividends
On March 2, 2016, Farmer Mac's
board of directors declared a quarterly dividend of $0.26 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, 2016 to holders of record of common stock as of
March 21, 2016. This represents
the fifth consecutive year that Farmer Mac has increased its
dividend from the prior year. Farmer Mac seeks to provide a
competitive return on its common stockholders' investment through
the payment of cash dividends while retaining sufficient capital to
support future growth in its business and to meet regulatory
requirements and metrics established by Farmer Mac's board of
directors.
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 17, 2016 to and including
April 17, 2016. The preferred
stock dividends will be payable on April 17,
2016 to holders of record as of April
4, 2016.
Non-GAAP Earnings Measure
Farmer Mac uses core earnings to measure corporate economic
performance and develop financial plans because, in management's
view, core earnings is a useful alternative measure in
understanding Farmer Mac's economic performance, transaction
economics, and business trends. Core earnings principally
differs from net income attributable to common stockholders by
excluding the effects of fair value fluctuations, which are not
expected to have a cumulative net impact on financial condition or
results of operations reported in accordance with GAAP if the
related financial instruments are held to maturity, as is generally
expected. Core earnings also differs from net income
attributable to common stockholders 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.
This non-GAAP financial measure may not be comparable to
similarly labeled non-GAAP financial measures disclosed by other
companies. Farmer Mac's disclosure of this non-GAAP measure
is 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.
A reconciliation of Farmer Mac's net income attributable to
common stockholders to core earnings is presented in the following
table 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,
2015
|
|
September 30,
2015
|
|
December 31,
2014
|
|
|
|
|
(in thousands,
except per share amounts)
|
Net income
attributable to common stockholders
|
|
$
|
15,032
|
|
|
$
|
8,359
|
|
|
$
|
5,647
|
|
Less the after-tax
effects of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains/(losses) on financial derivatives and hedging
activities
|
|
|
1,784
|
|
|
|
(4,489)
|
|
|
|
(3,717)
|
|
|
Unrealized
gains/(losses) on trading assets(1)
|
|
|
452
|
|
|
|
(5)
|
|
|
|
679
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated
at fair value
|
|
(171)
|
|
|
|
(76)
|
|
|
|
(811)
|
|
|
Net effects of
settlements on agency forward contracts
|
|
|
(106)
|
|
|
|
(253)
|
|
|
|
30
|
|
|
|
Sub-total
|
|
|
1,959
|
|
|
|
(4,823)
|
|
|
|
(3,879)
|
|
Core
earnings
|
|
$
|
13,073
|
|
|
$
|
13,182
|
|
|
$
|
9,526
|
|
|
|
|
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective
spread(2)
|
|
$
|
29,949
|
|
|
$
|
30,387
|
|
|
$
|
28,442
|
|
|
Guarantee and
commitment fees(3)
|
|
|
4,730
|
|
|
|
4,328
|
|
|
|
4,097
|
|
|
Other(4)
|
|
|
(284)
|
|
|
|
(93)
|
|
|
|
(1,285)
|
|
|
|
Total
revenues
|
|
|
34,395
|
|
|
|
34,622
|
|
|
|
31,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
(income)/expense (GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release of
losses
|
|
|
(49)
|
|
|
|
(303)
|
|
|
|
(479)
|
|
|
REO operating
expenses
|
|
|
44
|
|
|
|
48
|
|
|
|
48
|
|
|
Losses on sale of
REO
|
|
|
-
|
|
|
|
-
|
|
|
|
28
|
|
|
|
Total credit related
income
|
|
|
(5)
|
|
|
|
(255)
|
|
|
|
(403)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation &
employee benefits
|
|
|
5,385
|
|
|
|
5,236
|
|
|
|
4,971
|
|
|
General &
Administrative
|
|
|
3,238
|
|
|
|
3,676
|
|
|
|
2,992
|
|
|
Regulatory
fees
|
|
|
613
|
|
|
|
600
|
|
|
|
600
|
|
|
|
Total operating
expenses
|
|
|
9,236
|
|
|
|
9,512
|
|
|
|
8,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
25,164
|
|
|
|
25,365
|
|
|
|
23,094
|
|
|
Income tax
expense(5)
|
|
|
8,855
|
|
|
|
8,924
|
|
|
|
4,858
|
|
|
Net (loss)/income
attributable to non-controlling interest (GAAP)
|
|
|
(60)
|
|
|
|
(36)
|
|
|
|
5,414
|
|
|
Preferred stock
dividends (GAAP)
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
Core
earnings
|
|
$
|
13,073
|
|
|
$
|
13,182
|
|
|
$
|
9,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.21
|
|
|
$
|
1.20
|
|
|
$
|
0.87
|
|
|
Diluted
|
|
|
1.17
|
|
|
|
1.17
|
|
|
|
0.84
|
|
(1)
|
Excludes realized
gains related to securities sold, not yet purchased of $12.8
million during the three months ended December 31, 2014.
|
(2)
|
Includes reconciling
adjustments to exclude amortization of premiums and discounts on
assets consolidated at fair value to reflect core earnings amounts.
Also includes reconciling adjustments to include the
reclassification of expenses related to interest rate swaps not
designated as hedges and reclassifications of interest expense
related to securities purchased under agreements to resell and
securities sold, not yet purchased.
|
(3)
|
Includes interest
income and interest expense related to consolidated trusts owned by
third parties reclassified from interest income and interest
expense to guarantee and commitment fees to reflect 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. Fourth quarter 2014 includes $13.6
million of interest expense related to securities purchased under
agreements to resell and securities sold, not yet purchased and
$12.8 million of gains on securities sold, not yet
purchased.
|
(5)
|
Includes the tax
impact of non-GAAP reconciling items between net income
attributable to common stockholders and core earnings because those
non-GAAP reconciling items are presented after tax. Income tax
expense as reported in the consolidated statement of operations for
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.
|
Reconciliation of Net
Income Attributable to Common Stockholders to Core
Earnings
|
|
|
|
|
For the Year
Ended
|
|
|
|
|
December 31,
2015
|
|
December 31,
2014
|
|
|
|
|
(in thousands,
except per share amounts)
|
Net income
attributable to common stockholders
|
|
$
|
47,371
|
|
|
$
|
38,251
|
|
Less the after-tax
effects of:
|
|
|
|
|
|
|
|
|
|
Unrealized
gains/(losses) on financial derivatives and hedging
activities
|
|
|
7,101
|
|
|
|
(6,480)
|
|
|
Unrealized gains on
trading assets(1)
|
|
|
793
|
|
|
|
1,038
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value(2)
|
|
(857)
|
|
|
|
(9,457)
|
|
|
Net effects of
settlements on agency forward contracts
|
|
|
(395)
|
|
|
|
103
|
|
|
Loss on retirement of
Farmer Mac II LLC Preferred Stock(3)
|
|
|
(6,246)
|
|
|
|
-
|
|
|
|
Sub-total
|
|
|
(396)
|
|
|
|
(14,796)
|
|
Core
earnings
|
|
$
|
46,975
|
|
|
$
|
53,047
|
|
|
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Net effective
spread(4)
|
|
$
|
119,380
|
|
|
$
|
113,693
|
|
|
Guarantee and
commitment fees(5)
|
|
|
17,155
|
|
|
|
16,780
|
|
|
Other(6)
|
|
|
(806)
|
|
|
|
(4,216)
|
|
|
|
Total
revenues
|
|
|
135,729
|
|
|
|
126,257
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
expense/(income) (GAAP):
|
|
|
|
|
|
|
|
|
|
Provision
for/(release of) losses
|
|
|
208
|
|
|
|
(3,166)
|
|
|
REO operating
expenses
|
|
|
91
|
|
|
|
110
|
|
|
Losses/(gains) on
sale of REO
|
|
|
1
|
|
|
|
(137)
|
|
|
|
Total credit related
expense/(income)
|
|
|
300
|
|
|
|
(3,193)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(GAAP):
|
|
|
|
|
|
|
|
|
|
Compensation &
employee benefits
|
|
|
22,047
|
|
|
|
19,009
|
|
|
General &
Administrative
|
|
|
13,111
|
|
|
|
12,197
|
|
|
Regulatory
fees
|
|
|
2,413
|
|
|
|
2,381
|
|
|
|
Total operating
expenses
|
|
|
37,571
|
|
|
|
33,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
97,858
|
|
|
|
95,863
|
|
|
Income tax
expense(7)
|
|
|
32,562
|
|
|
|
10,785
|
|
|
Net income
attributable to non-controlling interest (GAAP)
|
|
|
5,139
|
|
|
|
22,192
|
|
|
Preferred stock
dividends (GAAP)
|
|
|
13,182
|
|
|
|
9,839
|
|
|
|
Core
earnings
|
|
$
|
46,975
|
|
|
$
|
53,047
|
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
4.29
|
|
|
$
|
4.86
|
|
|
Diluted
|
|
|
4.15
|
|
|
|
4.67
|
|
(1)
|
Excludes realized
gains related to securities sold, not yet purchased of $37.0
million during 2014.
|
(2)
|
Includes $7.5 million
related to the acceleration of premium amortization in 2014 due to
significant refinancing activity in the Rural Utilities line of
business.
|
(3)
|
Relates to the
write-off of deferred issuance costs as a result of the retirement
of Farmer Mac II LLC Preferred Stock.
|
(4)
|
Includes reconciling
adjustments to exclude amortization of premiums and discounts on
assets consolidated at fair value to reflect core earnings amounts.
Also includes reconciling adjustments to include the
reclassification of expenses related to interest rate swaps not
designated as hedges and reclassification of interest expense
related to securities purchased under agreements to resell and
securities sold, not yet purchased.
|
(5)
|
Includes interest
income and interest expense related to consolidated trusts owned by
third parties reclassified from interest income and interest
expense to guarantee and commitment fees to reflect that the net
interest income Farmer Mac earns is effectively a guarantee fee on
the consolidated Farmer Mac Guaranteed Securities.
|
(6)
|
Includes interest
income and interest expense related to securities purchased under
agreements to resell and securities sold, not yet purchased. Also
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. Includes
$39.4 million of interest expense related to securities purchased
under agreements to resell and securities sold, not yet purchased
and $37.0 million of realized gains on securities sold, not yet
purchased during 2014.
|
(7)
|
Includes the tax
impact of non-GAAP reconciling items between net income
attributable to common stockholders and core earnings because those
non-GAAP reconciling items are presented after tax. Income tax
expense as reported in the consolidated statements of operations
includes the reduction of $13.0 million tax valuation allowance
against capital loss carryforwards related to capital gains on
securities sold, not yet purchased during 2014, and a reduction in
tax valuation allowance of $0.9 million associated with certain
gains on investment portfolio assets during 2014.
|
More complete information about Farmer Mac's performance for
fourth quarter and full year 2015 is set forth in Farmer Mac's
Annual Report on Form 10-K for the period ended December 31, 2015 filed today with the U.S.
Securities and Exchange Commission ("SEC").
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 sector or the
rural utilities industry;
- 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 credit products and the secondary
market provided by Farmer Mac;
- the general rate of growth in agricultural mortgage and rural
utilities indebtedness;
- the impact 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, 2015 filed today
with the 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 2015 financial results and Annual Report on Form 10-K
will be held beginning at 11:00 a.m. eastern time on
Thursday, March 10, 2016 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/
If you are dialing in to the call, please ask for the conference
chairman Tim Buzby. You will
receive additional instructions when you join the call. The
call can be heard live and will also be available for replay on
Farmer Mac's website at the link provided above for two weeks
following the conclusion of the call.
About Farmer Mac
Farmer Mac is the stockholder-owned company created to deliver
capital and increase lender competition for the benefit of American
agriculture and rural communities. 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,
|
|
December
31,
|
|
|
|
|
|
2015
|
2014
|
|
|
|
|
|
|
(in
thousands)
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,210,084
|
|
|
$
|
1,363,387
|
|
|
Investment
securities
|
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
2,775,025
|
|
|
|
1,938,499
|
|
|
|
Trading, at fair
value
|
|
491
|
|
|
|
689
|
|
|
|
|
Total investment
securities
|
|
2,775,516
|
|
|
|
1,939,188
|
|
|
Farmer Mac Guaranteed
Securities
|
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
4,152,605
|
|
|
|
3,659,281
|
|
|
|
Held-to-maturity, at
amortized cost
|
|
1,274,016
|
|
|
|
1,794,620
|
|
|
|
|
Total Farmer Mac
Guaranteed Securities
|
|
5,426,621
|
|
|
|
5,453,901
|
|
|
USDA
Securities
|
|
|
|
|
|
|
|
|
|
Available-for-sale,
at fair value
|
|
1,888,344
|
|
|
|
1,731,222
|
|
|
|
Trading, at fair
value
|
|
28,975
|
|
|
|
40,310
|
|
|
|
|
Total USDA
Securities
|
|
1,917,319
|
|
|
|
1,771,532
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for
investment, at amortized cost
|
|
3,258,413
|
|
|
|
2,833,461
|
|
|
|
Loans held for
investment in consolidated trusts, at amortized cost
|
|
708,111
|
|
|
|
692,478
|
|
|
|
Allowance for loan
losses
|
|
(4,480)
|
|
|
|
(5,864)
|
|
|
|
|
Total loans, net of
allowance
|
|
3,962,044
|
|
|
|
3,520,075
|
|
|
Real estate owned, at
lower of cost or fair value
|
|
1,369
|
|
|
|
421
|
|
|
Financial
derivatives, at fair value
|
|
3,816
|
|
|
|
4,177
|
|
|
Interest receivable
(includes $7,938 and $9,509, respectively, related to consolidated
trusts)
|
|
112,700
|
|
|
|
106,874
|
|
|
Guarantee and
commitment fees receivable
|
|
40,189
|
|
|
|
39,462
|
|
|
Deferred tax asset,
net
|
|
42,916
|
|
|
|
33,391
|
|
|
Prepaid expenses and
other assets
|
|
47,780
|
|
|
|
55,413
|
|
|
|
|
|
Total
Assets
|
$
|
15,540,354
|
|
|
$
|
14,287,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity:
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Notes
Payable:
|
|
|
|
|
|
|
|
|
|
Due within one
year
|
$
|
9,111,461
|
|
|
$
|
7,353,953
|
|
|
|
Due after one
year
|
|
4,967,036
|
|
|
|
5,471,186
|
|
|
|
|
Total notes
payable
|
|
14,078,497
|
|
|
|
12,825,139
|
|
|
Debt securities of
consolidated trusts held by third parties
|
|
713,536
|
|
|
|
424,214
|
|
|
Financial
derivatives, at fair value
|
|
77,199
|
|
|
|
84,844
|
|
|
Accrued interest
payable (includes $6,705 and $5,145, respectively, related to
consolidated trusts)
|
|
47,621
|
|
|
|
48,355
|
|
|
Guarantee and
commitment obligation
|
|
38,609
|
|
|
|
37,925
|
|
|
Accounts payable and
accrued expenses
|
|
29,089
|
|
|
|
81,252
|
|
|
Reserve for
losses
|
|
2,083
|
|
|
|
4,263
|
|
|
|
|
|
Total
Liabilities
|
|
14,986,634
|
|
|
|
13,505,992
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock:
|
|
|
|
|
|
|
|
|
|
Series A, par value
$25 per share, 2,400,000 shares authorized, issued and
outstanding
|
|
58,333
|
|
|
|
58,333
|
|
|
|
Series B, par value
$25 per share, 3,000,000 shares authorized, issued and
outstanding
|
|
73,044
|
|
|
|
73,044
|
|
|
|
Series C, par value
$25 per share, 3,000,000 shares authorized, issued and
outstanding
|
|
73,382
|
|
|
|
73,382
|
|
|
Common
stock:
|
|
|
|
|
|
|
|
|
|
Class A Voting, $1
par value, no maximum authorization, 1,030,780 shares
outstanding
|
|
1,031
|
|
|
|
1,031
|
|
|
|
Class B Voting, $1
par value, no maximum authorization, 500,301 shares
outstanding
|
|
500
|
|
|
|
500
|
|
|
|
Class C Non-Voting,
$1 par value, no maximum authorization, 9,155,661 shares and
9,406,267 shares outstanding, respectively
|
|
9,156
|
|
|
|
9,406
|
|
|
Additional paid-in
capital
|
|
117,862
|
|
|
|
113,559
|
|
|
Accumulated other
comprehensive (loss)/ income, net of tax
|
|
(11,019)
|
|
|
|
15,533
|
|
|
Retained
earnings
|
|
231,228
|
|
|
|
201,013
|
|
|
|
|
|
Total Stockholders'
Equity
|
|
553,517
|
|
|
|
545,801
|
|
|
Non-controlling
interest
|
|
203
|
|
|
|
236,028
|
|
|
|
|
|
Total
Equity
|
|
553,720
|
|
|
|
781,829
|
|
|
|
|
|
|
Total Liabilities and
Equity
|
$
|
15,540,354
|
|
|
$
|
14,287,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
For the Three Months
Ended
|
|
For the Year
Ended
|
|
|
|
December 31,
2015
|
|
December 31,
2014
|
|
December 31,
2015
|
|
December 31,
2014
|
|
|
|
(in thousands, except per share amounts)
|
Interest
income:
|
|
|
|
|
|
|
|
|
Investments and cash
equivalents
|
$
|
4,194
|
|
|
$
|
2,424
|
|
|
$
|
13,338
|
|
|
$
|
17,269
|
|
|
Farmer Mac Guaranteed
Securities and USDA Securities
|
|
32,835
|
|
|
|
30,588
|
|
|
|
134,443
|
|
|
|
128,923
|
|
|
Loans
|
|
30,533
|
|
|
|
27,718
|
|
|
|
117,042
|
|
|
|
94,875
|
|
|
|
Total interest
income
|
|
67,562
|
|
|
|
60,730
|
|
|
|
264,823
|
|
|
|
241,067
|
|
|
Total interest
expense
|
|
36,591
|
|
|
|
44,606
|
|
|
|
139,016
|
|
|
|
170,720
|
|
|
|
Net interest
income
|
|
30,971
|
|
|
|
16,124
|
|
|
|
125,807
|
|
|
|
70,347
|
|
|
(Provision
for)/release of allowance for loan losses
|
|
(3,366)
|
|
|
|
462
|
|
|
|
(2,338)
|
|
|
|
961
|
|
|
|
Net interest income
after (provision for)/release of allowance for loan
losses
|
|
27,605
|
|
|
|
16,586
|
|
|
|
123,419
|
|
|
|
71,308
|
|
Non-interest
income:
|
|
|
|
|
|
|
|
|
Guarantee and
commitment fees
|
|
3,780
|
|
|
|
3,563
|
|
|
|
14,077
|
|
|
|
14,694
|
|
|
(Losses)/gains on
financial derivatives and hedging activities
|
|
(1,592)
|
|
|
|
(9,178)
|
|
|
|
2,531
|
|
|
|
(21,646)
|
|
|
Gains on trading
securities
|
|
696
|
|
|
|
13,857
|
|
|
|
1,220
|
|
|
|
38,629
|
|
|
Gains/(losses) on
sale of available-for-sale investment securities
|
|
-
|
|
|
|
-
|
|
|
|
9
|
|
|
|
(238)
|
|
|
(Losses)/gains on
sale of real estate owned
|
|
-
|
|
|
|
(28)
|
|
|
|
(1)
|
|
|
|
137
|
|
|
Other
income
|
|
372
|
|
|
|
920
|
|
|
|
2,305
|
|
|
|
1,714
|
|
|
|
Non-interest
income
|
|
6,440
|
|
|
|
9,134
|
|
|
|
20,141
|
|
|
|
33,290
|
|
Non-interest
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
5,385
|
|
|
|
4,971
|
|
|
|
22,047
|
|
|
|
19,009
|
|
|
General and
administrative
|
|
3,238
|
|
|
|
2,992
|
|
|
|
13,111
|
|
|
|
12,197
|
|
|
Regulatory
fees
|
|
613
|
|
|
|
600
|
|
|
|
2,413
|
|
|
|
2,381
|
|
|
Real estate owned
operating costs, net
|
|
44
|
|
|
|
48
|
|
|
|
91
|
|
|
|
110
|
|
|
Release of reserve
for losses
|
|
(3,415)
|
|
|
|
(17)
|
|
|
|
(2,180)
|
|
|
|
(2,205)
|
|
|
|
Non-interest
expense
|
|
5,865
|
|
|
|
8,594
|
|
|
|
35,482
|
|
|
|
31,492
|
|
|
|
Income before income
taxes
|
|
28,180
|
|
|
|
17,126
|
|
|
|
108,078
|
|
|
|
73,106
|
|
Income tax
expense
|
|
9,912
|
|
|
|
2,769
|
|
|
|
34,239
|
|
|
|
2,824
|
|
|
|
Net income
|
|
18,268
|
|
|
|
14,357
|
|
|
|
73,839
|
|
|
|
70,282
|
|
Less: Net
loss/(income) attributable to non-controlling interest
|
|
60
|
|
|
|
(5,414)
|
|
|
|
(5,139)
|
|
|
|
(22,192)
|
|
|
Net income
attributable to Farmer Mac
|
|
18,328
|
|
|
|
8,943
|
|
|
|
68,700
|
|
|
|
48,090
|
|
Preferred stock
dividends
|
|
(3,296)
|
|
|
|
(3,296)
|
|
|
|
(13,182)
|
|
|
|
(9,839)
|
|
Loss on retirement of
preferred stock
|
|
-
|
|
|
|
-
|
|
|
|
(8,147)
|
|
|
|
-
|
|
|
|
Net income
attributable to common stockholders
|
$
|
15,032
|
|
|
$
|
5,647
|
|
|
$
|
47,371
|
|
|
$
|
38,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share and dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
|
1.39
|
|
|
$
|
0.52
|
|
|
$
|
4.33
|
|
|
$
|
3.50
|
|
|
|
Diluted earnings per
common share
|
$
|
1.35
|
|
|
$
|
0.50
|
|
|
$
|
4.19
|
|
|
$
|
3.37
|
|
|
|
Common stock
dividends per common share
|
$
|
0.16
|
|
|
$
|
0.14
|
|
|
$
|
0.64
|
|
|
$
|
0.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
2015
|
|
As of December 31,
2014
|
|
|
|
|
|
(in thousands)
|
On-balance
sheet:
|
|
|
|
|
Farm &
Ranch:
|
|
|
|
|
|
Loans
|
$
|
2,249,864
|
|
|
$
|
2,118,867
|
|
|
|
Loans held in
trusts:
|
|
|
|
|
|
|
|
|
|
|
Beneficial interests
owned by third party investors
|
|
708,111
|
|
|
|
421,355
|
|
|
USDA
Guarantees:
|
|
|
|
|
|
|
|
|
|
USDA
Securities
|
|
1,876,451
|
|
|
|
1,756,224
|
|
|
|
Farmer Mac Guaranteed
USDA Securities
|
|
31,554
|
|
|
|
27,832
|
|
|
Rural
Utilities:
|
|
|
|
|
|
|
|
|
|
Loans(1)
|
|
1,008,126
|
|
|
|
718,213
|
|
|
|
Loans held in
trusts:
|
|
|
|
|
|
|
|
|
|
|
Beneficial interests
owned by Farmer Mac(1)
|
|
-
|
|
|
|
267,396
|
|
|
Institutional
Credit:
|
|
|
|
|
|
|
|
|
|
AgVantage
Securities
|
|
5,439,383
|
|
|
|
5,410,413
|
|
|
|
|
Total on-balance
sheet
|
$
|
11,313,489
|
|
|
$
|
10,720,300
|
|
Off-balance
sheet:
|
|
|
|
|
Farm &
Ranch:
|
|
|
|
|
|
LTSPCs
|
$
|
2,253,273
|
|
|
$
|
2,240,866
|
|
|
|
Guaranteed
Securities
|
|
514,051
|
|
|
|
636,086
|
|
|
USDA
Guarantees:
|
|
|
|
|
|
|
|
|
|
Farmer Mac Guaranteed
USDA Securities
|
|
10,272
|
|
|
|
13,978
|
|
|
Rural
Utilities:
|
|
|
|
|
|
|
|
|
LTSPCs(2)
|
|
522,864
|
|
|
|
-
|
|
|
Institutional
Credit:
|
|
|
|
|
|
|
|
|
|
AgVantage
Securities
|
|
984,871
|
|
|
|
986,528
|
|
|
|
Revolving floating
rate AgVantage facility(3)
|
|
300,000
|
|
|
|
-
|
|
|
|
|
Total off-balance
sheet
|
$
|
4,585,331
|
|
|
$
|
3,877,458
|
|
|
|
|
|
Total
|
$
|
15,898,820
|
|
|
$
|
14,597,758
|
|
(1)
|
Reflects the
dissolution of certain consolidated trusts that caused loans that
were previously consolidated as "Loans held in trusts" to be
included within "Loans."
|
(2)
|
Includes $8.8 million
related to a one-year loan purchase commitment on which Farmer Mac
receives a nominal unused commitment fee.
|
(3)
|
As of December 31,
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,
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(1)
|
|
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(2)
|
|
8,682
|
|
|
1.71
|
%
|
|
|
5,250
|
|
|
1.19
|
%
|
|
|
2,908
|
|
|
1.18
|
%
|
|
|
9,870
|
|
|
0.78
|
%
|
|
|
1,732
|
|
|
0.26
|
%
|
|
|
28,442
|
|
|
0.91
|
%
|
|
September 30,
2014
|
|
8,207
|
|
|
1.68
|
%
|
|
|
5,073
|
|
|
1.18
|
%
|
|
|
2,890
|
|
|
1.16
|
%
|
|
|
9,823
|
|
|
0.78
|
%
|
|
|
3,773
|
|
|
0.59
|
%
|
|
|
29,766
|
|
|
0.97
|
%
|
|
June 30,
2014
|
|
7,820
|
|
|
1.64
|
%
|
|
|
4,159
|
|
|
0.99
|
%
|
|
|
2,953
|
|
|
1.16
|
%
|
|
|
9,957
|
|
|
0.78
|
%
|
|
|
4,160
|
|
|
0.57
|
%
|
|
|
29,049
|
|
|
0.92
|
%
|
|
March 31,
2014(3)
|
|
7,114
|
|
|
1.53
|
%
|
|
|
3,784
|
|
|
0.91
|
%
|
|
|
1,990
|
|
|
0.73
|
%
|
|
|
9,406
|
|
|
0.74
|
%
|
|
|
4,142
|
|
|
0.56
|
%
|
|
|
26,436
|
|
|
0.84
|
%
|
|
December 31,
2013(3)
|
|
10,113
|
|
|
2.20
|
%
|
|
|
4,022
|
|
|
0.97
|
%
|
|
|
2,379
|
|
|
0.89
|
%
|
|
|
9,088
|
|
|
0.72
|
%
|
|
|
4,420
|
|
|
0.58
|
%
|
|
|
30,022
|
|
|
0.94
|
%
|
(1)
|
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.
|
(2)
|
On October 1, 2014,
$78.5 million of preferred stock issued by CoBank was called,
resulting in a loss of net effective spread of $2.1 million or 30
basis points in the corporate segment. The impact on
consolidated net effective spread was 7 basis points.
|
(3)
|
First quarter 2014
includes the impact of spread compression in the Rural Utilities
line of business from the early refinancing of loans (41 basis
points). Fourth quarter 2013 includes the impact in net
effective spread in the Farm & Ranch line of business of
one-time adjustments for recovered buyout interest and yield
maintenance (40 basis points in aggregate) and the impact of spread
compression in the Rural Utilities line of business from the early
refinancing of loans (26 basis points).
|
The following table
presents quarterly core earnings reconciled to net income
attributable to common stockholders:
|
|
Core Earnings by
Quarter Ended
|
|
|
|
|
December
2015
|
|
September
2015
|
|
June
2015
|
|
March
2015
|
|
December
2014
|
|
September
2014
|
|
June
2014
|
|
March
2014
|
|
December
2013
|
|
|
|
|
(in
thousands)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective
spread(1)
|
$
|
29,949
|
|
|
$
|
30,387
|
|
|
$
|
29,787
|
|
|
$
|
29,257
|
|
|
$
|
28,442
|
|
|
$
|
29,766
|
|
|
$
|
29,049
|
|
|
$
|
26,436
|
|
|
$
|
30,022
|
|
|
Guarantee and
commitment fees
|
|
4,730
|
|
|
|
4,328
|
|
|
|
4,085
|
|
|
|
4,012
|
|
|
|
4,097
|
|
|
|
4,152
|
|
|
|
4,216
|
|
|
|
4,315
|
|
|
|
4,252
|
|
|
Other(2)
|
|
(284)
|
|
|
|
(93)
|
|
|
|
(24)
|
|
|
|
(405)
|
|
|
|
(1,285)
|
|
|
|
(2,001)
|
|
|
|
(520)
|
|
|
|
(410)
|
|
|
|
427
|
|
|
|
Total
revenues
|
|
34,395
|
|
|
|
34,622
|
|
|
|
33,848
|
|
|
|
32,864
|
|
|
|
31,254
|
|
|
|
31,917
|
|
|
|
32,745
|
|
|
|
30,341
|
|
|
|
34,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
(income)/expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Release
of)/provision for losses
|
|
(49)
|
|
|
|
(303)
|
|
|
|
1,256
|
|
|
|
(696)
|
|
|
|
(479)
|
|
|
|
(804)
|
|
|
|
(2,557)
|
|
|
|
674
|
|
|
|
12
|
|
|
REO operating
expenses
|
|
44
|
|
|
|
48
|
|
|
|
-
|
|
|
|
(1)
|
|
|
|
48
|
|
|
|
1
|
|
|
|
59
|
|
|
|
2
|
|
|
|
3
|
|
|
Losses/(gains) on
sale of REO
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
28
|
|
|
|
-
|
|
|
|
(168)
|
|
|
|
3
|
|
|
|
(26)
|
|
|
|
Total credit related
(income)/expense
|
|
(5)
|
|
|
|
(255)
|
|
|
|
1,256
|
|
|
|
(696)
|
|
|
|
(403)
|
|
|
|
(803)
|
|
|
|
(2,666)
|
|
|
|
679
|
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
|
5,385
|
|
|
|
5,236
|
|
|
|
5,733
|
|
|
|
5,693
|
|
|
|
4,971
|
|
|
|
4,693
|
|
|
|
4,889
|
|
|
|
4,456
|
|
|
|
4,025
|
|
|
General and
administrative
|
|
3,238
|
|
|
|
3,676
|
|
|
|
3,374
|
|
|
|
2,823
|
|
|
|
2,992
|
|
|
|
3,123
|
|
|
|
3,288
|
|
|
|
2,794
|
|
|
|
3,104
|
|
|
Regulatory
fees
|
|
613
|
|
|
|
600
|
|
|
|
600
|
|
|
|
600
|
|
|
|
600
|
|
|
|
593
|
|
|
|
594
|
|
|
|
594
|
|
|
|
594
|
|
|
|
Total operating
expenses
|
|
9,236
|
|
|
|
9,512
|
|
|
|
9,707
|
|
|
|
9,116
|
|
|
|
8,563
|
|
|
|
8,409
|
|
|
|
8,771
|
|
|
|
7,844
|
|
|
|
7,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
25,164
|
|
|
|
25,365
|
|
|
|
22,885
|
|
|
|
24,444
|
|
|
|
23,094
|
|
|
|
24,311
|
|
|
|
26,640
|
|
|
|
21,818
|
|
|
|
26,989
|
|
Income tax
expense/(benefit)(3)
|
|
8,855
|
|
|
|
8,924
|
|
|
|
8,091
|
|
|
|
6,692
|
|
|
|
4,858
|
|
|
|
6,327
|
|
|
|
(4,734)
|
|
|
|
4,334
|
|
|
|
5,279
|
|
Net (loss)/income
attributable to non-controlling interest
|
|
(60)
|
|
|
|
(36)
|
|
|
|
(119)
|
|
|
|
5,354
|
|
|
|
5,414
|
|
|
|
5,412
|
|
|
|
5,819
|
|
|
|
5,547
|
|
|
|
5,546
|
|
Preferred stock
dividends
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,283
|
|
|
|
2,308
|
|
|
|
952
|
|
|
|
882
|
|
|
|
Core
earnings
|
$
|
13,073
|
|
|
$
|
13,182
|
|
|
$
|
11,617
|
|
|
$
|
9,103
|
|
|
$
|
9,526
|
|
|
$
|
9,289
|
|
|
$
|
23,247
|
|
|
$
|
10,985
|
|
|
$
|
15,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items
(after-tax effects):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains/(losses) on financial derivatives and hedging
activities
|
|
1,784
|
|
|
|
(4,489)
|
|
|
|
10,388
|
|
|
|
(582)
|
|
|
|
(3,717)
|
|
|
|
2,685
|
|
|
|
(3,053)
|
|
|
|
(2,395)
|
|
|
|
8,003
|
|
|
|
Unrealized
gains/(losses) on trading assets
|
|
452
|
|
|
|
(5)
|
|
|
|
110
|
|
|
|
236
|
|
|
|
679
|
|
|
|
(21)
|
|
|
|
(46)
|
|
|
|
426
|
|
|
|
(50)
|
|
|
|
Amortization of
premiums/discounts and deferred gains on assets consolidated at
fair value
|
|
(171)
|
|
|
|
(76)
|
|
|
|
(81)
|
|
|
|
(529)
|
|
|
|
(811)
|
|
|
|
(440)
|
|
|
|
(179)
|
|
|
|
(8,027)
|
|
|
|
(10,864)
|
|
|
|
Net effects of
settlements on agency forwards
|
|
(106)
|
|
|
|
(253)
|
|
|
|
128
|
|
|
|
(164)
|
|
|
|
(30)
|
|
|
|
73
|
|
|
|
236
|
|
|
|
(176)
|
|
|
|
114
|
|
|
|
Loss on retirement of
Farmer Mac II LLC Preferred Stock
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,246)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
Net income
attributable to common stockholders
|
$
|
15,032
|
|
|
$
|
8,359
|
|
|
$
|
22,162
|
|
|
$
|
1,818
|
|
|
$
|
5,647
|
|
|
$
|
11,586
|
|
|
$
|
20,205
|
|
|
$
|
813
|
|
|
$
|
12,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The difference
between first quarter 2014 and fourth quarter 2013 net effective
spread was due to the impact of one-time adjustments for recovered
buyout interest and yield maintenance of $1.8 million in fourth
quarter 2013, $0.6 million associated with the early refinancing of
AgVantage securities and the recasting of certain Rural Utilities
loans, and a lower day count in first quarter 2014.
|
(2)
|
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. First quarter 2014
includes additional hedging costs of $0.6 million. Fourth
quarter 2013 includes gains on the repurchase of debt of $1.5
million, partially offset by realized losses on the sale of
available-for-sale securities of $0.9 million and additional
hedging costs of $0.2 million.
|
(3)
|
Fourth quarter 2014
and second quarter 2014 reflect a reduction of $1.4 million and
$11.6 million, respectively, in the tax valuation allowance against
capital loss carryforwards related to capital gains on securities
sold, not yet purchased. First quarter 2014 and fourth
quarter 2013 reflect a reduction in tax valuation allowance of $0.8
million and $2.1 million, respectively, associated with certain
gains on investment portfolio assets.
|
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SOURCE Farmer Mac