WASHINGTON, March 9, 2017 /PRNewswire/ -- The Federal
Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A) today announced its results for the fiscal quarter and year
ended December 31, 2016, which included $1.5 billion in net new
business volume growth in 2016 that brought total outstanding business volume to $17.4 billion as
of December 31, 2016. Farmer Mac's net income attributable to common stockholders for 2016
was $64.2 million ($5.97 per diluted common share), compared to
$47.4 million ($4.19 per diluted common share) in 2015. Farmer
Mac's 2016 core earnings, a non-GAAP measure, were $53.8 million ($5.01 per diluted common share), compared to $47.0 million ($4.15 per diluted common share) in 2015.
Farmer Mac's board of directors also approved an increase in the quarterly dividend on all classes of Farmer Mac's common
stock to $0.36 per share beginning in first quarter 2017. This quarter's dividend amount
represents a 38 percent increase over the $0.26 per share amount paid in each quarter during 2016
and is consistent with Farmer Mac's common stock dividend policy announced in March 2016, which has
a goal of increasing the common dividend payout ratio of core earnings to approximately 30 percent over time.
"Our 2016 results reflect another strong year for Farmer Mac," said President and Chief Executive Officer Tim Buzby. "We achieved record outstanding business volume of $17.4
billion and 14.5 percent core earnings growth. Our credit quality is showing signs of normalization in some metrics,
which we have been anticipating as part of the agricultural credit cycle, but is within our expectations and remains near
historically favorable levels. Last year we increased our common stock dividend 63 percent, and with our 38 percent
increase this year we believe we are on track to reach our targeted 30 percent core earnings payout for the 2018 year.
Farmer Mac has increased its quarterly common stock dividend each of the past six years, and we believe these increases are
supported by our earnings potential and overall capital position and are representative of Farmer Mac's commitment to enhancing
shareholder value over the long-term. We are also proud of the way we have positioned Farmer Mac for continued success in
the future, as over the past several years we have brought in new personnel to fill key positions, created new positions, and
significantly expanded our investment in the technology and capacity to better grow our business and more fully deliver upon our
mission."
Earnings
Farmer Mac's net income attributable to common stockholders for 2016 was $64.2 million
($5.97 per diluted common share), compared to $47.4 million
($4.19 per diluted common share) for 2015. The $16.8 million
increase in net income attributable to common stockholders from 2016 compared to 2015 was driven by an increase of $9.4 million after-tax in net interest income and the effects of unrealized fair value changes on financial
derivatives and hedged assets, which was a $8.9 million after-tax gain in 2016 compared to a
$7.1 million after-tax gain in 2015. Also contributing to the increase was the absence in
2016 of (1) an $8.1 million ($6.2 million after-tax) loss recorded in
first quarter 2015 resulting from the write-off of deferred issuance costs upon the redemption of the Farmer Mac II LLC Preferred
Stock on March 30, 2015; and (2) $3.5 million after-tax in dividend
expense recorded during first quarter 2015 on that preferred stock. The increase was offset in part by a $3.1 million after-tax increase in non-interest expense driven primarily by higher general and administrative
("G&A") expenses, higher compensation and employee benefits expenses, and a decrease in the release of reserve for
losses.
Core earnings in 2016 were $53.8 million ($5.01 per diluted common
share), compared to $47.0 million ($4.15 per diluted common share) in
2015. The $6.8 million increase in core earnings was primarily attributable to higher total
revenues, which included a $3.7 million after-tax increase in net effective spread, a non-GAAP
measure, a $1.3 million after-tax increase in guarantee and commitment fee income, and a
$0.4 million after-tax decrease in hedging costs. Also contributing to the increase was a
$3.5 million after-tax decrease in preferred dividend expense resulting from the redemption of all
outstanding shares of Farmer Mac II LLC Preferred Stock in first quarter 2015. The increase in core earnings in 2016 was
offset in part by several factors. Credit-related expenses increased $0.5 million after-tax
resulting from net provisions to the allowance for losses of $0.6 million after-tax in 2016
compared to net provisions of $0.1 million after-tax in 2015. Operating expenses also
increased by $1.8 million after-tax, driven by higher G&A expenses and higher compensation and
benefits expenses. The $1.3 million after-tax increase in G&A expenses was primarily
attributable to higher consulting fees and information services expenses related to corporate strategic initiatives, continued
technology and business infrastructure investments, and expenses related to business development efforts. The $0.5 million after-tax increase in compensation and benefits expenses was primarily due to an increase in
headcount and employee health insurance costs.
Farmer Mac's net income attributable to common stockholders for fourth quarter 2016 was $25.5
million ($2.38 per diluted common share), compared to $15.0
million ($1.35 per diluted common share) for fourth quarter 2015. The $10.5 million increase in net income attributable to common stockholders from fourth quarter 2016 compared to
fourth quarter 2015 was driven primarily by the effects of unrealized fair value changes on financial derivatives and hedged
assets, which was a $11.2 million after-tax gain in fourth quarter 2016 compared to a $1.8 million after-tax gain in fourth quarter 2015.
Core earnings in fourth quarter 2016 were $13.9 million ($1.30 per
diluted common share), compared to $13.1 million ($1.17 per diluted
common share) in fourth quarter 2015. The $0.8 million increase in core earnings was
primarily due to a $2.5 million after-tax increase in total revenues, which was led by a
$1.3 million after-tax increase in net effective spread. The increase was offset in part by a
$0.3 million after-tax increase in credit costs, a $0.7 million
after-tax increase in G&A expenses, and a $0.4 million after-tax increase in compensation and
benefits expenses. The increases in G&A expenses and compensation and benefits expenses for fourth quarter 2016 were
attributable to the same factors described above that affected full year 2016.
See "Use of Non-GAAP Measures" below for more information about core earnings, core earnings per share, and net effective
spread and for a reconciliation of the comparable GAAP measures to these non-GAAP measures.
Business Volume Highlights
During 2016, Farmer Mac added $4.4 billion of new business volume, with purchases of AgVantage
securities, Farm & Ranch loans, and Rural Utilities loans under long-term standby purchase commitments ("LTSPCs")
driving the volume growth. Specifically, Farmer Mac:
- purchased $2.1 billion of AgVantage securities, including $68.4
million in Farm Equity AgVantage securities;
- purchased $966.0 million of newly originated Farm & Ranch loans;
- added $441.4 million of Rural Utilities loans under LTSPCs;
- added $399.1 million of Farm & Ranch loans under LTSPCs;
- purchased $375.2 million of USDA Securities;
- issued $106.1 million of Farmer Mac Guaranteed USDA Securities; and
- purchased $50.5 million of Rural Utilities loans.
After $2.9 billion of maturities and principal paydowns on existing business during 2016, which
included over $1.5 billion in scheduled maturities of AgVantage securities, Farmer Mac's
outstanding business volume increased by $1.5 billion from December 31,
2015 to $17.4 billion as of December 31, 2016. The
increase in Farmer Mac's outstanding business volume was driven by broad-based net portfolio growth across most of Farmer Mac's
products and lines of business. The increase in AgVantage securities was primarily driven by net portfolio growth from two
long-standing issuers: (1) Rabo Agrifinance, Inc. and (2) National Rural Utilities Cooperative Finance Corporation ("CFC"), which
increased their outstanding AgVantage business volume with Farmer Mac by $300.0 million and
$210.1 million, respectively, in 2016. The new business volume in the Institutional Credit
line of business also included the purchase of two $500.0 million AgVantage securities from
Metropolitan Life Insurance Company ("MetLife"). MetLife used the proceeds from Farmer Mac's purchase of each of the $500.0 million AgVantage securities to refinance AgVantage securities of the same amount that matured in first
quarter 2016 and third quarter 2016, respectively. Farmer Mac also purchased AgVantage securities of $68.4 million in 2016 under Farm Equity AgVantage facilities with agricultural real estate investment funds,
compared to $99.1 million in 2015.
Spreads
Net interest income was $140.3 million in 2016, compared to $125.8
million in 2015. In percentage terms, net interest income for 2016 was 0.90 percent, compared to 0.88 percent in
2015. The $14.5 million year-over-year increase was due to several factors. One factor
was the impact of an increase in short-term interest rates on assets and liabilities indexed to LIBOR due to the Federal
Reserve's decision to raise the target range for the federal funds rate in fourth quarter 2015. This effect on net interest
income occurred because interest expense used to calculate net interest income does not include all the funding expenses related
to these assets, specifically the expense on financial derivatives not designated in hedge accounting relationships. This
increase in short-term rates on assets and liabilities indexed to LIBOR did not have a similar effect on net effective spread as
described below because net effective spread includes interest expense from all funding related to such assets, including
interest expense from financial derivatives not designated in hedge accounting relationships. Another factor contributing
to the year-over-year increase in net interest income was an increase in the average outstanding balance of Farm & Ranch
loans, USDA Securities, and AgVantage securities. Also contributing to the increase were (1) lower net yield adjustments related
to amortization of premiums and discounts on assets consolidated at fair value driven by slower prepayments on those assets and
(2) an increase in the net effect of consolidated trusts due to an increase in securitization activity of Farm & Ranch loans
during 2016. Farmer Mac earns the difference between the interest income recognized on loans in consolidated trusts and the
related interest expense recognized on debt securities of consolidated trusts held by third parties. The increase was offset in
part by (1) higher net yield adjustments from amortization of purchase premiums on certain Farm & Ranch loans and (2) a
tighter spread on a large AgVantage security that was refinanced in first quarter 2016 at a shorter maturity than the original
security.
Farmer Mac's net effective spread, a non-GAAP measure, was $125.1 million in 2016, compared to
$119.4 million in 2015. In percentage terms, net effective spread for 2016 was 0.86 percent,
compared to 0.87 percent in 2015. Farmer Mac uses net effective spread as an alternative measure to net interest income because
management believes it is a useful metric that accurately reflects the economics of the net spread between all the assets owned
by Farmer Mac and all related funding, including any associated derivatives, some of which may not be reflected in net interest
income under GAAP.
For 2016 compared to 2015, the contraction in net effective spread in percentage terms was primarily due to (1) a higher
average balance in lower-earning investment securities in 2016 compared to 2015, (2) a tighter spread on a large AgVantage
security that was refinanced in first quarter 2016 at a shorter maturity than the original security, and (3) higher net yield
adjustments from amortization of purchase premiums on certain Farm & Ranch loans in 2016 compared to 2015. The
contraction was offset in part by a lower average balance in cash and cash equivalents primarily during the second half of
2016. The year-over-year increase in dollars was attributable to growth in outstanding business volume.
Net interest income was $36.7 million (0.95 percent) in fourth quarter 2016, compared to
$31.0 million (0.84 percent) in fourth quarter 2015. The $5.7
million year-over-year increase in fourth quarter 2016 net interest income was driven primarily by the same factors
described above that contributed to full year 2016 growth in net interest income as compared to full year 2015.
Net effective spread was $31.9 million (0.89 percent) in fourth quarter 2016, compared to
$29.9 million (0.85 percent) in fourth quarter 2015. The increase in percentage terms in
fourth quarter 2016 compared to fourth quarter 2015 was primarily attributable to a reduction in Farmer Mac's cash and cash
equivalents balances and improvements in LIBOR-based funding costs. The increase was offset in part by an increase in the
size of Farmer Mac's liquidity investment portfolio. The year-over-year increase in dollar terms in fourth quarter 2016 was
primarily attributable to growth in outstanding business volume and improvements in LIBOR-based funding costs.
Credit Quality
In the Farm & Ranch portfolio, 90-day delinquencies were $21.0 million (0.34 percent of the
Farm & Ranch portfolio) as of December 31, 2016, compared to $32.1
million (0.56 percent) as of December 31, 2015. The decrease in Farmer Mac's 90-day
delinquencies as a percentage of its Farm & Ranch portfolio during 2016 primarily related to (1) the workout in January 2016 of two Agricultural Storage and Processing loans that financed one canola facility and (2) Farmer
Mac's receipt of $6.0 million to pay off two long-standing delinquent timber loans with the
same borrower. Farmer Mac expects that over time its 90-day delinquency rate will eventually revert closer to Farmer Mac's
historical average due to macroeconomic factors and the cyclical nature of the agricultural economy, but Farmer Mac has not yet
seen an impact on its portfolio or a rise in delinquencies related to these factors. Farmer Mac's average 90-day
delinquency rate for the Farm & Ranch line of business over the last fifteen years is approximately one percent.
For Farmer Mac's other lines of business, there are currently no delinquent AgVantage securities or Rural Utilities loans held
or underlying LTSPCs, and USDA Securities are backed by the full faith and credit of the United States. As a result, across
all of Farmer Mac's lines of business, 90-day delinquencies represented 0.12 percent of total business volume as of December 31, 2016, compared to 0.20 percent as of December 31, 2015.
Another indicator that Farmer Mac considers in analyzing the credit quality of its Farm & Ranch portfolio is the level of
internally-rated "substandard" assets, both in dollars and as a percentage of the outstanding Farm & Ranch portfolio.
Assets categorized as "substandard" have a well-defined weakness or weaknesses, and there is a distinct possibility that some
loss will be sustained if deficiencies are not corrected. As of December 31, 2016, Farmer Mac's substandard assets
were $165.2 million (2.7 percent of the Farm & Ranch portfolio), compared to $104.5 million (1.8 percent of the Farm & Ranch portfolio) as of December 31, 2015. Those
substandard assets were comprised of 287 loans as of December 31, 2016, compared to 234 loans as of December 31, 2015. Of the $60.7 million year-over-year increase in
substandard assets in the Farm & Ranch portfolio, Farmer Mac believes that approximately two-thirds of the increase suggests
a modest deterioration in the agricultural credit environment likely resulting from lower farm incomes and declining land values
in some regions due to lower prices for certain commodities. Specifically, lower prices for feed grains and oilseeds in the
Midwest region were the primary drivers of the deterioration. Farmer Mac expects that over time its substandard asset rate
will eventually revert closer to Farmer Mac's historical average due to macroeconomic factors and the cyclical nature of the
agricultural economy. Although some credit losses are inherent to the business of agricultural lending, Farmer Mac believes
that any losses associated with the current agricultural credit cycle will be moderated by the strength and diversity of its
portfolio, which Farmer Mac believes is adequately collateralized. Farmer Mac's average substandard assets as a percent of
its Farm & Ranch portfolio over the last 15 years is approximately 4 percent.
Lines of Business
Farmer Mac's operations consist of four lines of business – Farm & Ranch, USDA Guarantees, Rural Utilities, and
Institutional Credit. Net interest income by business segment for fourth quarter 2016 was $12.4
million (147 basis points) for Farm & Ranch, $6.1 million (124 basis points) for USDA
Guarantees, $3.1 million (123 basis points) for Rural Utilities, and $12.7
million (85 basis points) for Institutional Credit. Net effective spread by business segment for fourth quarter 2016
was $10.3 million (178 basis points) for Farm & Ranch, $5.3
million (108 basis points) for USDA Guarantees, $2.6 million (105 basis points) for Rural
Utilities, and $11.6 million (78 basis points) for Institutional Credit.
Liquidity and Capital
Farmer Mac's core capital totaled $609.7 million as of December 31,
2016, exceeding the statutory minimum capital requirement by $143.2 million, or 31 percent,
compared to $564.5 million as of December 31, 2015, which was $102.4
million, or 22 percent, above the statutory minimum capital requirement. The increase in capital in excess of
the minimum capital level was due primarily to an increase in retained earnings and a decrease in the amount of cash and cash
equivalents needed to manage Farmer Mac's liquidity position in 2016.
As of December 31, 2016, Farmer Mac's total stockholders' equity was $643.4 million, compared to $553.5 million as of December
31, 2015. The increase in total stockholders' equity was a result of an increase in retained earnings and
accumulated other comprehensive income. The increase in accumulated other comprehensive income was due to increases in fair
value on certain fixed-rate USDA Securities. On October 1, 2016, Farmer Mac transferred
$2.0 billion of USDA Securities and $32.8 million of Farmer Mac
Guaranteed USDA Securities from available-for-sale to held-to-maturity to reflect Farmer Mac's affirmative intent and ability to
hold these securities until maturity or payoff. Farmer Mac transferred these securities at fair value as of the date of the
transfer, which included a cost basis adjustment of unrealized appreciation in the amount of $73.8
million. The accumulated unrealized appreciation was retained in accumulated other comprehensive income. Both the
cost basis adjustment and accumulated unrealized appreciation will be amortized as an adjustment to the yield on the
held-to-maturity USDA Securities over the remaining term of the transferred securities.
As prescribed by FCA regulations, Farmer Mac is required to maintain a minimum of 90 days of liquidity. In
accordance with the methodology prescribed by those regulations, Farmer Mac maintained an average of 158 days of liquidity
during 2016 and had 165 days of liquidity as of December 31, 2016.
Dividends
On March 1, 2017, Farmer Mac's board of directors declared a quarterly dividend of $0.36 per share for each of Farmer Mac's three classes of common stock – Class A voting common stock
(NYSE:AGM.A), Class B voting common stock (not listed on any exchange), and Class C non-voting common stock (NYSE: AGM). This
quarterly dividend will be payable on March 31, 2017 to holders of record of common stock as of
March 20, 2017. This represents the sixth consecutive year that Farmer Mac has increased its
quarterly common stock dividend from the prior year, and Farmer Mac believes that the most recent increase is supported by Farmer
Mac's earnings potential and overall capital position.
Farmer Mac's board of directors also declared a dividend on each of Farmer Mac's three classes of preferred stock. The
quarterly dividend of $0.3672 per share of 5.875% Non-Cumulative Preferred Stock, Series A (NYSE:
AGM.PR.A), $0.4297 per share of 6.875% Non-Cumulative Preferred Stock, Series B (NYSE: AGM.PR.B),
and $0.375 per share of 6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C
(NYSE: AGM.PR.C), is for the period from but not including January 18, 2017 to and including
April 17, 2017. The preferred stock dividends will be payable on April 17,
2017 to holders of record as of April 3, 2017.
Use of Non-GAAP Measures
In the analysis of its financial information, Farmer Mac sometimes uses measures of financial performance that are not
presented in accordance with generally accepted accounting principles in the United States
(GAAP), and these are considered "non-GAAP measures." Specifically, Farmer Mac uses the following non-GAAP measures: "core
earnings," "core earnings per share," and "net effective spread." Farmer Mac uses these non-GAAP measures to measure
corporate economic performance and develop financial plans because, in management's view, they are useful alternative measures in
understanding Farmer Mac's economic performance, transaction economics, and business trends. The non-GAAP financial
measures that Farmer Mac uses may not be comparable to similarly labeled non-GAAP financial measures disclosed by other
companies. Farmer Mac's disclosure of these non-GAAP measures is intended to be supplemental in nature, and is not meant to
be considered in isolation from, as a substitute for, or as more important than, the related financial information prepared in
accordance with GAAP.
Core Earnings and Core Earnings per Share
Core earnings and core earnings per share principally differ from net income attributable to common stockholders and earnings
per common share, respectively, by excluding the effects of fair value fluctuations. These fluctuations are not expected to have
a cumulative net impact on Farmer Mac's financial condition or results of operations reported in accordance with GAAP if the
related financial instruments are held to maturity, as is expected. Among other items, these fair value fluctuations have
included unrealized gains or losses on financial derivatives and hedging activities related to the exchange of variation margin
between Farmer Mac and its counterparties on both its cleared and non-cleared derivatives portfolios. However, beginning in
first quarter 2017, the variation margin amounts exchanged between Farmer Mac and its counterparties on cleared derivatives will
be considered as settlement rather than collateral as a result of a change in variation margin rules implemented by the Chicago
Mercantile Exchange ("CME"), the central clearinghouse used by Farmer Mac. Specifically, effective January 3, 2017, CME began to deem the exchange of variation margin between derivatives counterparties as a
partial settlement of each respective derivative contract rather than as collateral pledged by a counterparty. Accordingly,
beginning in first quarter 2017, Farmer Mac will present its cleared derivatives portfolio net of variation margin payments on
its consolidated balance sheets and will recognize realized gains or losses as a result of these payments on its consolidated
statements of operations. However, Farmer Mac believes that even though these variation margin amounts will be accounted
for as realized gains or losses on financial derivatives and hedging activities as a result of the CME rule change, the economic
character of these transactions will remain the same as they were before the change. The fair value fluctuations related to
the exchange of variation margin, whether considered a partial settlement of or the pledge of collateral under a derivatives
contract, are not expected to have a cumulative net impact on Farmer Mac's financial condition or results of operations reported
in accordance with GAAP because the related financial instruments are expected to be held to maturity. Therefore, beginning
in first quarter 2017, Farmer Mac will exclude the effects of realized gains or losses resulting from the exchange of variation
margin on its cleared derivatives portfolio in its calculations of core earnings and core earnings per share to present them on a
consistent basis with quarters prior to 2017.
Core earnings and core earnings per share also differ from net income attributable to common stockholders and earnings per
common share, respectively, by excluding specified infrequent or unusual transactions that Farmer Mac believes are not indicative
of future operating results and that may not reflect the trends and economic financial performance of Farmer Mac's core
business. For example, the loss from retirement of the Farmer Mac II LLC Preferred Stock in first quarter 2015 has been
excluded from core earnings and core earnings per share because it is not a frequently occurring transaction and not indicative
of future operating results. This is also consistent with Farmer Mac's previous treatment of these types of origination
costs associated with securities underwriting that are capitalized and deferred during the life of the security. For a
reconciliation of Farmer Mac's net income attributable to common stockholders to core earnings and of earnings per common share
to core earnings per share, see the "Reconciliations" section below.
Net Effective Spread
Farmer Mac uses net effective spread to measure the net spread Farmer Mac earns between its interest-earning assets and the
related net funding costs of these assets. Net effective spread differs from net interest income and net interest yield
because it excludes (1) the amortization of premiums and discounts on assets consolidated at fair value that are amortized as
adjustments to yield in interest income over the contractual or estimated remaining lives of the underlying assets, and (2)
interest income and interest expense related to consolidated trusts with beneficial interests owned by third parties, which are
presented on Farmer Mac's consolidated balance sheets as "Loans held for investment in consolidated trusts, at amortized
cost." Farmer Mac excludes from net effective spread premiums and discounts on assets consolidated at fair value because
they either do not reflect actual cash premiums paid for the assets at acquisition or are not expected to have an economic effect
on Farmer Mac's financial performance if the assets are held to maturity, as is expected. Farmer Mac also excludes from net
effective spread the interest income and interest expense associated with the consolidated trusts and the average balance of the
loans underlying these trusts to reflect management's view that the net interest income Farmer Mac earns on the related Farmer
Mac Guaranteed Securities owned by third parties is effectively a guarantee fee. Accordingly, the excluded interest income
and interest expense associated with consolidated trusts is reclassified to guarantee and commitment fees for purposes of
determining Farmer Mac's core earnings.
Net effective spread also principally differs from net interest income and net interest yield because it includes the accrual
of income and expense related to the contractual amounts due on financial derivatives that are not designated in hedge accounting
relationships ("undesignated financial derivatives"). Farmer Mac uses interest rate swaps to manage its interest rate risk
exposure by synthetically modifying the interest rate reset or maturity characteristics of certain assets and
liabilities. The accrual of the contractual amounts due on interest rate swaps designated in hedge accounting
relationships is included as an adjustment to the yield or cost of the hedged item and is included in net interest income.
For undesignated financial derivatives, Farmer Mac records the income or expense related to the accrual of the contractual
amounts due in "Gains/(losses) on financial derivatives and hedging activities" on the consolidated statements of
operations. However, the accrual of the contractual amounts due for undesignated financial derivatives are included in
Farmer Mac's calculation of net effective spread, which is intended to reflect management's view of the net spread between an
asset and all of its related funding, including any associated derivatives, whether or not they are in a hedge accounting
relationship. For a reconciliation of net interest income and net interest yield to net effective spread, see the
"Reconciliations" section below.
Forward-Looking Statements
Management's expectations for Farmer Mac's future necessarily involve a number of assumptions and estimates and the evaluation
of risks and uncertainties. Various factors or events, both known and unknown, could cause Farmer Mac's actual results
to differ materially from the expectations as expressed or implied by the forward-looking statements herein, including
uncertainties regarding:
- the availability to Farmer Mac of debt and equity financing and, if available, the reasonableness of rates and terms;
- legislative or regulatory developments that could affect Farmer Mac, its sources of business, or the agricultural or rural
utilities industries;
- fluctuations in the fair value of assets held by Farmer Mac and its subsidiaries;
- the rate and direction of development of the secondary market for agricultural mortgage and rural utilities loans,
including lender interest in Farmer Mac's products and the secondary market provided by Farmer Mac;
- the general rate of growth in agricultural mortgage and rural utilities indebtedness;
- the effect of economic conditions, including the effects of drought and other weather-related conditions and fluctuations
in agricultural real estate values, on agricultural mortgage lending and borrower repayment capacity;
- developments in the financial markets, including possible investor, analyst, and rating agency reactions to events
involving government-sponsored enterprises, including Farmer Mac;
- changes in the level and direction of interest rates, which could, among other things, affect the value of collateral
securing Farmer Mac's agricultural mortgage loan assets;
- the degree to which Farmer Mac is exposed to basis risk, which results from fluctuations in Farmer Mac's borrowing costs
relative to market indexes such as LIBOR; and
- volatility in commodity prices relative to costs of production and/or export demand for U.S. agricultural products.
Other risk factors are discussed in "Risk Factors" in Part I, Item 1A in Farmer Mac's Annual Report on Form 10-K for the year
ended December 31, 2016 filed today with the U.S. Securities and Exchange Commission ("SEC").
In light of these potential risks and uncertainties, no undue reliance should be placed on any forward-looking statements
expressed in this release. The forward-looking statements contained in this release represent management's
expectations as of the date of this release. Farmer Mac undertakes no obligation to release publicly the results of
revisions to any forward-looking statements included in this release to reflect new information or any future events or
circumstances, except as otherwise mandated by the SEC. The information contained in this release is not necessarily
indicative of future results.
Earnings Conference Call Information
The conference call to discuss Farmer Mac's fourth quarter and full year 2016 financial results will be held beginning at
11:00 a.m. eastern time on Thursday, March 9, 2017 and can be accessed by telephone or live
webcast as follows:
Telephone (Domestic): (888) 346-2616
Telephone (International): (412) 902-4254
Webcast: https://www.farmermac.com/investors/events-presentations/
Presentation materials to be referenced during the call will be posted on the webpage that can be accessed by clicking on the
link noted above. When dialing in to the call, please ask for the conference chairman Tim
Buzby. The call can be heard live and will also be available for replay on Farmer Mac's website for two weeks
following the conclusion of the call.
More complete information about Farmer Mac's performance for fourth quarter and full year 2016 is set forth in Farmer Mac's
Annual Report on Form 10-K for the period ended December 31, 2016 filed today with the SEC.
About Farmer Mac
Farmer Mac is a vital part of the agricultural credit markets and was created to increase access to and reduce the cost of
capital for the benefit of American agricultural and rural communities. As the nation's premier secondary market for agricultural
credit, we provide financial solutions to a broad spectrum of the agricultural community, including agricultural lenders,
agribusinesses, and other institutions that can benefit from access to flexible, low-cost financing and risk management tools.
Farmer Mac's customers benefit from our low cost of funds, low overhead costs, and high operational efficiency. In fact, we are
often able to provide the lowest cost of borrowing to agricultural and rural borrowers. For more than a quarter-century, Farmer
Mac has been delivering the capital and commitment rural America deserves. Additional information about Farmer Mac
(including the Annual Report on Form 10-K referenced above) is available on Farmer Mac's website at www.farmermac.com.
* * * *
FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
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As of
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
|
|
|
|
|
|
|
|
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(in thousands)
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Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
265,229
|
|
|
$
|
1,210,084
|
|
|
Investment securities
|
|
|
|
|
|
|
|
|
|
Available-for-sale, at fair value
|
|
2,515,851
|
|
|
|
2,775,025
|
|
|
|
Trading, at fair value
|
|
-
|
|
|
|
491
|
|
|
|
|
Total investment securities
|
|
2,515,851
|
|
|
|
2,775,516
|
|
|
Farmer Mac Guaranteed Securities
|
|
|
|
|
|
|
|
|
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Available-for-sale, at fair value
|
|
4,853,685
|
|
|
|
4,152,605
|
|
|
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Held-to-maturity, at amortized cost
|
|
1,149,231
|
|
|
|
1,274,016
|
|
|
|
|
Total Farmer Mac Guaranteed Securities
|
|
6,002,916
|
|
|
|
5,426,621
|
|
|
USDA Securities
|
|
|
|
|
|
|
|
|
|
Available-for-sale, at fair value
|
|
-
|
|
|
|
1,888,344
|
|
|
|
Trading, at fair value
|
|
20,388
|
|
|
|
28,975
|
|
|
|
Held-to-maturity, at amortized cost
|
|
2,009,225
|
|
|
|
-
|
|
|
|
|
Total USDA Securities
|
|
2,029,613
|
|
|
|
1,917,319
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for investment, at amortized cost
|
|
3,379,884
|
|
|
|
3,258,413
|
|
|
|
Loans held for investment in consolidated trusts, at amortized
cost
|
|
1,132,966
|
|
|
|
708,111
|
|
|
|
Allowance for loan losses
|
|
(5,415)
|
|
|
|
(4,480)
|
|
|
|
|
Total loans, net of allowance
|
|
4,507,435
|
|
|
|
3,962,044
|
|
|
Real estate owned, at lower of cost or fair value
|
|
1,528
|
|
|
|
1,369
|
|
|
Financial derivatives, at fair value
|
|
23,182
|
|
|
|
3,816
|
|
|
Interest receivable (includes $12,584 and $7,938, respectively, related to
consolidated trusts)
|
|
122,782
|
|
|
|
112,700
|
|
|
Guarantee and commitment fees receivable
|
|
38,871
|
|
|
|
40,189
|
|
|
Deferred tax asset, net
|
|
12,291
|
|
|
|
42,916
|
|
|
Prepaid expenses and other assets
|
|
86,322
|
|
|
|
47,780
|
|
|
|
|
|
Total Assets
|
$
|
15,606,020
|
|
|
$
|
15,540,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity:
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Notes Payable:
|
|
|
|
|
|
|
|
|
|
Due within one year
|
$
|
8,440,123
|
|
|
$
|
9,111,461
|
|
|
|
Due after one year
|
|
5,222,977
|
|
|
|
4,967,036
|
|
|
|
|
Total notes payable
|
|
13,663,100
|
|
|
|
14,078,497
|
|
|
Debt securities of consolidated trusts held by third parties
|
|
1,142,704
|
|
|
|
713,536
|
|
|
Financial derivatives, at fair value
|
|
58,152
|
|
|
|
77,199
|
|
|
Accrued interest payable (includes $10,881 and $6,705, respectively,
related to consolidated trusts)
|
|
49,700
|
|
|
|
47,621
|
|
|
Guarantee and commitment obligation
|
|
37,282
|
|
|
|
38,609
|
|
|
Accounts payable and accrued expenses
|
|
9,415
|
|
|
|
29,089
|
|
|
Reserve for losses
|
|
2,020
|
|
|
|
2,083
|
|
|
|
|
|
Total Liabilities
|
|
14,962,373
|
|
|
|
14,986,634
|
|
Commitments and Contingencies (Note 12)
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock:
|
|
|
|
|
|
|
|
|
|
Series A, par value $25 per share, 2,400,000 shares authorized, issued and
outstanding
|
|
58,333
|
|
|
|
58,333
|
|
|
|
Series B, par value $25 per share, 3,000,000 shares authorized, issued and
outstanding
|
|
73,044
|
|
|
|
73,044
|
|
|
|
Series C, par value $25 per share, 3,000,000 shares authorized, issued and
outstanding
|
|
73,382
|
|
|
|
73,382
|
|
|
Common stock:
|
|
|
|
|
|
|
|
|
|
Class A Voting, $1 par value, no maximum authorization, 1,030,780 shares
outstanding
|
|
1,031
|
|
|
|
1,031
|
|
|
|
Class B Voting, $1 par value, no maximum authorization, 500,301 shares
outstanding
|
|
500
|
|
|
|
500
|
|
|
|
Class C Non-Voting, $1 par value, no maximum authorization, 9,007,481
shares and 9,155,661 shares
outstanding, respectively
|
|
9,008
|
|
|
|
9,156
|
|
|
Additional paid-in capital
|
|
118,655
|
|
|
|
117,862
|
|
|
Accumulated other comprehensive income/(loss), net of tax
|
|
33,758
|
|
|
|
(11,019)
|
|
|
Retained earnings
|
|
275,714
|
|
|
|
231,228
|
|
|
|
|
|
Total Stockholders' Equity
|
|
643,425
|
|
|
|
553,517
|
|
|
Non-controlling interest
|
|
222
|
|
|
|
203
|
|
|
|
|
|
Total Equity
|
|
643,647
|
|
|
|
553,720
|
|
|
|
|
|
|
Total Liabilities and Equity
|
$
|
15,606,020
|
|
|
$
|
15,540,354
|
|
FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
For the Three Months Ended
|
|
For the Year Ended
|
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
|
|
|
(in thousands, except per share amounts)
|
Interest income:
|
|
|
|
|
|
|
|
|
Investments and cash equivalents
|
$
|
6,807
|
|
|
$
|
4,194
|
|
|
$
|
27,042
|
|
|
$
|
13,338
|
|
|
Farmer Mac Guaranteed Securities and USDA Securities
|
|
39,343
|
|
|
|
32,835
|
|
|
|
150,281
|
|
|
|
134,443
|
|
|
Loans
|
|
35,091
|
|
|
|
30,533
|
|
|
|
134,577
|
|
|
|
117,042
|
|
|
|
Total interest income
|
|
81,241
|
|
|
|
67,562
|
|
|
|
311,900
|
|
|
|
264,823
|
|
|
Total interest expense
|
|
44,528
|
|
|
|
36,591
|
|
|
|
171,626
|
|
|
|
139,016
|
|
|
|
Net interest income
|
|
36,713
|
|
|
|
30,971
|
|
|
|
140,274
|
|
|
|
125,807
|
|
|
Provision for loan losses
|
|
(461)
|
|
|
|
(3,366)
|
|
|
|
(1,065)
|
|
|
|
(2,388)
|
|
|
|
Net interest income after provision for loan losses
|
|
36,252
|
|
|
|
27,605
|
|
|
|
139,209
|
|
|
|
123,419
|
|
Non-interest income:
|
|
|
|
|
|
|
|
|
Guarantee and commitment fees
|
|
3,789
|
|
|
|
3,780
|
|
|
|
14,868
|
|
|
|
14,077
|
|
|
Gains on financial derivatives and hedging activities
|
|
15,390
|
|
|
|
1,592
|
|
|
|
2,311
|
|
|
|
2,531
|
|
|
(Losses)/gains on trading securities
|
|
(474)
|
|
|
|
696
|
|
|
|
1,460
|
|
|
|
1,220
|
|
|
(Losses)/gains on sale of available-for-sale investment
securities
|
|
-
|
|
|
|
-
|
|
|
|
(9)
|
|
|
|
9
|
|
|
Gains/(losses) on sale of real estate owned
|
|
-
|
|
|
|
-
|
|
|
|
15
|
|
|
|
(1)
|
|
|
Other income
|
|
602
|
|
|
|
372
|
|
|
|
1,823
|
|
|
|
2,305
|
|
|
|
Non-interest income
|
|
19,307
|
|
|
|
6,440
|
|
|
|
20,468
|
|
|
|
20,141
|
|
Non-interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and employee benefits
|
|
5,949
|
|
|
|
5,385
|
|
|
|
22,772
|
|
|
|
22,047
|
|
|
General and administrative
|
|
4,352
|
|
|
|
3,238
|
|
|
|
15,109
|
|
|
|
13,111
|
|
|
Regulatory fees
|
|
625
|
|
|
|
613
|
|
|
|
2,463
|
|
|
|
2,413
|
|
|
Real estate owned operating costs, net
|
|
-
|
|
|
|
44
|
|
|
|
39
|
|
|
|
91
|
|
|
Provision for/(release of) reserve for losses
|
|
51
|
|
|
|
(3,415)
|
|
|
|
(63)
|
|
|
|
(2,180)
|
|
|
|
Non-interest expense
|
|
10,977
|
|
|
|
5,865
|
|
|
|
40,320
|
|
|
|
35,482
|
|
|
|
Income before income taxes
|
|
44,582
|
|
|
|
28,180
|
|
|
|
119,357
|
|
|
|
108,078
|
|
Income tax expense
|
|
15,793
|
|
|
|
9,912
|
|
|
|
42,057
|
|
|
|
34,239
|
|
|
|
Net income
|
|
28,789
|
|
|
|
18,268
|
|
|
|
77,300
|
|
|
|
73,839
|
|
Less: Net (income)/loss attributable to non-controlling interest
|
|
(28)
|
|
|
|
60
|
|
|
|
34
|
|
|
|
(5,139)
|
|
|
|
Net income attributable to Farmer Mac
|
|
28,761
|
|
|
|
18,328
|
|
|
|
77,334
|
|
|
|
68,700
|
|
Preferred stock dividends
|
|
(3,296)
|
|
|
|
(3,296)
|
|
|
|
(13,182)
|
|
|
|
(13,182)
|
|
Loss on retirement of preferred stock
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8,147)
|
|
|
|
Net income attributable to common stockholders
|
$
|
25,465
|
|
|
$
|
15,032
|
|
|
$
|
64,152
|
|
|
$
|
47,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share and dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share
|
$
|
2.42
|
|
|
$
|
1.39
|
|
|
$
|
6.12
|
|
|
$
|
4.33
|
|
|
|
Diluted earnings per common share
|
$
|
2.38
|
|
|
$
|
1.35
|
|
|
$
|
5.97
|
|
|
$
|
4.19
|
|
|
|
Common stock dividends per common share
|
$
|
0.26
|
|
|
$
|
0.16
|
|
|
$
|
1.04
|
|
|
$
|
0.64
|
|
Reconciliations
A reconciliation of Farmer Mac's net income attributable to common stockholders to core earnings and core earnings per share
are presented in the following tables along with a breakdown of the composition of core earnings:
Reconciliation of Net Income Attributable to Common Stockholders to Core
Earnings
|
|
|
|
|
For the Three Months Ended
|
|
|
|
|
December 31, 2016
|
|
September 30, 2016
|
|
December 31, 2015
|
|
|
|
|
(in thousands, except per share amounts)
|
Net income attributable to common stockholders
|
|
$
|
25,465
|
|
|
$
|
16,364
|
|
|
$
|
15,032
|
|
Less reconciling items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains on financial derivatives and hedging activities
|
|
|
17,233
|
|
|
|
1,460
|
|
|
|
2,743
|
|
|
Unrealized (losses)/gains on trading securities
|
|
|
(474)
|
|
|
|
1,182
|
|
|
|
696
|
|
|
Amortization of premiums/discounts and deferred gains on assets
consolidated at fair value
|
|
(40)
|
|
|
|
(157)
|
|
|
|
(263)
|
|
|
Net effects of settlements on agency forward contracts
|
|
|
1,024
|
|
|
|
464
|
|
|
|
(162)
|
|
|
Income tax effect related to reconciling items
|
|
|
(6,210)
|
|
|
|
(1,032)
|
|
|
|
(1,055)
|
|
|
|
Sub-total
|
|
|
11,533
|
|
|
|
1,917
|
|
|
|
1,959
|
|
Core earnings
|
|
$
|
13,932
|
|
|
$
|
14,447
|
|
|
$
|
13,073
|
|
|
|
|
|
|
|
|
|
|
Composition of Core Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective spread(1)
|
|
$
|
31,928
|
|
|
$
|
32,199
|
|
|
$
|
29,949
|
|
|
Guarantee and commitment fees(2)
|
|
|
5,158
|
|
|
|
4,533
|
|
|
|
4,730
|
|
|
Other(3)
|
|
|
1,189
|
|
|
|
(32)
|
|
|
|
(284)
|
|
|
|
Total revenues
|
|
|
38,275
|
|
|
|
36,700
|
|
|
|
34,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related expense/(income) (GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for/(release of) losses
|
|
|
512
|
|
|
|
(31)
|
|
|
|
(49)
|
|
|
REO operating expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
44
|
|
|
Gains on sale of REO
|
|
|
-
|
|
|
|
(15)
|
|
|
|
-
|
|
|
|
Total credit related expense/(income)
|
|
|
512
|
|
|
|
(46)
|
|
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (GAAP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation & employee benefits
|
|
|
5,949
|
|
|
|
5,438
|
|
|
|
5,385
|
|
|
General & Administrative
|
|
|
4,352
|
|
|
|
3,474
|
|
|
|
3,238
|
|
|
Regulatory fees
|
|
|
625
|
|
|
|
613
|
|
|
|
613
|
|
|
|
Total operating expenses
|
|
|
10,926
|
|
|
|
9,525
|
|
|
|
9,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
26,837
|
|
|
|
27,221
|
|
|
|
25,164
|
|
|
Income tax expense(4)
|
|
|
9,581
|
|
|
|
9,497
|
|
|
|
8,855
|
|
|
Net income/(loss) attributable to non-controlling interest
(GAAP)
|
|
|
28
|
|
|
|
(18)
|
|
|
|
(60)
|
|
|
Preferred stock dividends (GAAP)
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
Core earnings
|
|
$
|
13,932
|
|
|
$
|
14,447
|
|
|
$
|
13,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.33
|
|
|
$
|
1.38
|
|
|
$
|
1.21
|
|
|
Diluted
|
|
|
1.30
|
|
|
|
1.36
|
|
|
|
1.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net effective spread is a non-GAAP measure. See below for a
reconciliation of net interest income to net effective spread.
|
(2)
|
Includes interest income and interest expense related to consolidated
trusts owned by third parties reclassified from net interest income to guarantee and commitment fees to reflect
management's view that the net interest income Farmer Mac earns is effectively a guarantee fee on the consolidated Farmer
Mac Guaranteed Securities.
|
(3)
|
Reflects reconciling adjustments for the reclassification to exclude
expenses related to interest rate swaps not designated as hedges and fair value adjustments on financial derivatives and
trading assets and a reconciling adjustment to exclude the recognition of deferred gains over the estimated lives of
certain Farmer Mac Guaranteed Securities and USDA Securities.
|
(4)
|
Includes the tax impact of non-GAAP reconciling items between net income
attributable to common stockholders and core earnings.
|
Reconciliation of Net Income Attributable to Common Stockholders to Core
Earnings
|
|
|
|
|
For the Year Ended
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
|
|
|
(in thousands, except per share amounts)
|
Net income attributable to common stockholders
|
|
$
|
64,152
|
|
|
$
|
47,371
|
|
Less reconciling items:
|
|
|
|
|
|
|
|
|
|
Unrealized gains on financial derivatives and hedging activities
|
|
|
13,628
|
|
|
|
10,924
|
|
|
Unrealized gains on trading assets
|
|
|
1,460
|
|
|
|
1,220
|
|
|
Amortization of premiums/discounts and deferred gains on assets
consolidated at fair value
|
|
(849)
|
|
|
|
(1,319)
|
|
|
Net effects of settlements on agency forward contracts
|
|
|
1,699
|
|
|
|
(607)
|
|
|
Loss on retirement of Farmer Mac II LLC Preferred
Stock(1)
|
|
|
-
|
|
|
|
(8,147)
|
|
|
Income tax effect related to reconciling items
|
|
|
(5,577)
|
|
|
|
(1,675)
|
|
|
|
Sub-total
|
|
|
10,361
|
|
|
|
396
|
|
Core earnings
|
|
$
|
53,791
|
|
|
$
|
46,975
|
|
|
|
|
|
|
|
|
Composition of Core Earnings:
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Net effective spread(2)
|
|
$
|
125,102
|
|
|
$
|
119,380
|
|
|
Guarantee and commitment fees(3)
|
|
|
19,170
|
|
|
|
17,155
|
|
|
Other(4)
|
|
|
515
|
|
|
|
(806)
|
|
|
|
Total revenues
|
|
|
144,787
|
|
|
|
135,729
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related expense (GAAP):
|
|
|
|
|
|
|
|
|
|
Provision for losses
|
|
|
1,002
|
|
|
|
208
|
|
|
REO operating expenses
|
|
|
39
|
|
|
|
91
|
|
|
(Gains)/losses on sale of REO
|
|
|
(15)
|
|
|
|
1
|
|
|
|
Total credit related expense
|
|
|
1,026
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (GAAP):
|
|
|
|
|
|
|
|
|
|
Compensation & employee benefits
|
|
|
22,772
|
|
|
|
22,047
|
|
|
General & Administrative
|
|
|
15,109
|
|
|
|
13,111
|
|
|
Regulatory fees
|
|
|
2,463
|
|
|
|
2,413
|
|
|
|
Total operating expenses
|
|
|
40,344
|
|
|
|
37,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
103,417
|
|
|
|
97,858
|
|
|
Income tax expense(5)
|
|
|
36,478
|
|
|
|
32,562
|
|
|
Net (loss)/income attributable to non-controlling interest
(GAAP)
|
|
|
(34)
|
|
|
|
5,139
|
|
|
Preferred stock dividends (GAAP)
|
|
|
13,182
|
|
|
|
13,182
|
|
|
|
Core earnings
|
|
$
|
53,791
|
|
|
$
|
46,975
|
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
5.13
|
|
|
$
|
4.29
|
|
|
Diluted
|
|
|
5.01
|
|
|
|
4.15
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Relates to the write-off of deferred issuance costs as a result of the
retirement of Farmer II LLC Preferred Stock.
|
(2)
|
Net effective spread is a non-GAAP measure. See below for a
reconciliation of net interest income to net effective spread.
|
(3)
|
Includes interest income and interest expense related to consolidated
trusts owned by third parties reclassified from net interest income to guarantee and commitment fees to reflect
management's view that the net interest income Farmer Mac earns is effectively a guarantee fee on the consolidated Farmer
Mac Guaranteed Securities.
|
(4)
|
Reflects reconciling adjustments for the reclassification to exclude
expenses related to interest rate swaps not designated as hedges and fair value adjustments on financial derivatives and
trading assets and a reconciling adjustment to exclude the recognition of deferred gains over the estimated lives of
certain Farmer Mac Guaranteed Securities and USDA Securities.
|
(5)
|
Includes the tax impact of non-GAAP reconciling items between net income
attributable to common stockholders and core earnings.
|
Reconciliation of GAAP Basic Earnings Per Share to Core Earnings Basic
Earnings Per Share
|
|
|
|
For the Three Months Ended
|
|
For the Year Ended
|
|
|
|
December 31,
2016
|
|
September 30,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
|
|
|
(in thousands, except per share amounts)
|
GAAP - Basic EPS
|
$
|
2.42
|
|
|
$
|
1.56
|
|
|
$
|
1.39
|
|
|
$
|
6.12
|
|
|
$
|
4.33
|
|
Less reconciling items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains on financial derivatives and hedging
activities
|
|
1.63
|
|
|
|
0.14
|
|
|
|
0.25
|
|
|
|
1.30
|
|
|
|
1.00
|
|
|
Unrealized (losses)/gains on trading securities
|
|
(0.05)
|
|
|
|
0.11
|
|
|
|
0.06
|
|
|
|
0.14
|
|
|
|
0.11
|
|
|
Amortization of premiums/discounts and deferred
gains on assets consolidated at fair value
|
|
-
|
|
|
|
(0.01)
|
|
|
|
(0.02)
|
|
|
|
(0.08)
|
|
|
|
(0.12)
|
|
|
Net effects of settlements on agency forward contracts
|
|
0.10
|
|
|
|
0.04
|
|
|
|
(0.01)
|
|
|
|
0.16
|
|
|
|
(0.06)
|
|
|
Loss on retirement of Farmer Mac II LLC Preferred
Stock
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.74)
|
|
|
Income tax effect related to reconciling items
|
|
(0.59)
|
|
|
|
(0.10)
|
|
|
|
(0.10)
|
|
|
|
(0.53)
|
|
|
|
(0.15)
|
|
|
|
Sub-total
|
|
1.09
|
|
|
|
0.18
|
|
|
|
0.18
|
|
|
|
0.99)
|
|
|
|
0.04
|
|
Core Earnings - Basic EPS
|
$
|
1.33
|
|
|
$
|
1.38
|
|
|
$
|
1.21
|
|
|
$
|
5.13
|
|
|
$
|
4.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per share calculation (GAAP and Core Earnings)
|
|
10,512
|
|
|
|
10,473
|
|
|
|
10,822
|
|
|
|
10,477
|
|
|
|
10,949
|
|
Reconciliation of GAAP Diluted Earnings Per Share to Core Earnings Diluted
Earnings Per Share
|
|
|
|
For the Three Months Ended
|
|
For the Year Ended
|
|
|
|
December 31,
2016
|
|
September 30,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
|
|
|
(in thousands, except per share amounts)
|
GAAP - Diluted EPS
|
$
|
2.38
|
|
|
$
|
1.54
|
|
|
$
|
1.35
|
|
|
$
|
5.97
|
|
|
$
|
4.19
|
|
Less reconciling items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains on financial derivatives and hedging
activities
|
|
1.60
|
|
|
|
0.14
|
|
|
|
0.24
|
|
|
|
1.26
|
|
|
|
0.97
|
|
|
Unrealized (losses)/gains on trading securities
|
|
(0.04)
|
|
|
|
0.11
|
|
|
|
0.06
|
|
|
|
0.14
|
|
|
|
0.11
|
|
|
Amortization of premiums/discounts and deferred
gains on assets consolidated at fair value
|
|
-
|
|
|
|
(0.01)
|
|
|
|
(0.02)
|
|
|
|
(0.08)
|
|
|
|
(0.12)
|
|
|
Net effects of settlements on agency forward contracts
|
|
0.10
|
|
|
|
0.04
|
|
|
|
(0.01)
|
|
|
|
0.16
|
|
|
|
(0.05)
|
|
|
Loss on retirement of Farmer Mac II LLC Preferred
Stock
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.72)
|
|
|
Income tax effect related to reconciling items
|
|
(0.58)
|
|
|
|
(0.10)
|
|
|
|
(0.09)
|
|
|
|
(0.52)
|
|
|
|
(0.15)
|
|
|
|
Sub-total
|
|
1.08
|
|
|
|
0.18
|
|
|
|
0.18
|
|
|
|
0.96
|
|
|
|
0.04
|
|
Core Earnings - Diluted EPS
|
$
|
1.30
|
|
|
$
|
1.36
|
|
|
$
|
1.17
|
|
|
$
|
5.01
|
|
|
$
|
4.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per share calculation (GAAP and Core Earnings)
|
|
10,700
|
|
|
|
10,649
|
|
|
|
11,167
|
|
|
|
10,745
|
|
|
|
11,309
|
|
The following table presents a reconciliation of net interest income and net yield to net effective spread:
Reconciliation of GAAP Net Interest Income/Yield to Net Effective
Spread
|
|
|
|
For the Three Months Ended
|
|
For the Year Ended
|
|
|
|
December 31, 2016
|
|
September 30, 2016
|
|
December 31, 2015
|
|
December 31, 2016
|
|
December 31, 2015
|
|
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
|
|
(dollars in thousands)
|
Net interest income/yield
|
$
|
36,713
|
|
|
0.95
|
|
%
|
|
$
|
35,563
|
|
|
0.89
|
|
%
|
|
$
|
30,971
|
|
|
0.84
|
|
%
|
|
$
|
140,274
|
|
|
0.90
|
|
%
|
|
$
|
125,807
|
|
|
0.88
|
|
%
|
Net effects of consolidated
trusts
|
|
(1,369)
|
|
|
0.04
|
|
%
|
|
|
(735)
|
|
|
0.04
|
|
%
|
|
|
(950)
|
|
|
0.01
|
|
%
|
|
|
(4,302)
|
|
|
0.03
|
|
%
|
|
|
(3,078)
|
|
|
0.01
|
|
%
|
Expense related to
undesignated financial
derivatives
|
|
(3,495)
|
|
|
(0.10)
|
|
%
|
|
|
(2,807)
|
|
|
(0.08)
|
|
%
|
|
|
(410)
|
|
|
(0.01)
|
|
%
|
|
|
(11,480)
|
|
|
(0.08)
|
|
%
|
|
|
(5,649)
|
|
|
(0.04)
|
|
%
|
Amortization of
premiums/discounts and deferred gains on
assets consolidated at fair
value
|
|
79
|
|
|
-
|
|
|
|
|
178
|
|
|
0.01
|
|
%
|
|
|
338
|
|
|
0.01
|
|
%
|
|
|
610
|
|
|
0.01
|
|
%
|
|
|
2,300
|
|
|
0.02
|
|
%
|
|
Net effective spread
|
$
|
31,928
|
|
|
0.89
|
|
%
|
|
$
|
32,199
|
|
|
0.86
|
|
%
|
|
$
|
29,949
|
|
|
0.85
|
|
%
|
|
$
|
125,102
|
|
|
0.86
|
|
%
|
|
$
|
119,380
|
|
|
0.87
|
|
%
|
The following table presents core earnings for Farmer Mac's reportable operating segments and a reconciliation to consolidated
net income for the three months ended December 31, 2016:
Core Earnings by Business Segment
|
For the Three Months Ended December 31, 2016
|
|
|
|
Farm &
Ranch
|
|
USDA
Guarantees
|
|
Rural
Utilities
|
|
Institutional
Credit
|
|
Corporate
|
|
Reconciling Adjustments
|
|
Consolidated Net Income
|
|
|
|
(in thousands)
|
Net interest income
|
$
|
12,447
|
|
|
$
|
6,122
|
|
|
$
|
3,057
|
|
|
$
|
12,672
|
|
|
$
|
2,415
|
|
|
$
|
-
|
|
|
$
|
36,713
|
|
|
Less: reconciling adjustments(1)(2)(3)
|
|
(2,098)
|
|
|
|
(788)
|
|
|
|
(434)
|
|
|
|
(1,045)
|
|
|
|
(420)
|
|
|
|
4,785
|
|
|
|
-
|
|
Net effective spread
|
|
10,349
|
|
|
|
5,334
|
|
|
|
2,623
|
|
|
|
11,627
|
|
|
|
1,995
|
|
|
|
4,785
|
|
|
|
-
|
|
Guarantee and commitment fees(2)
|
|
4,152
|
|
|
|
51
|
|
|
|
497
|
|
|
|
458
|
|
|
|
-
|
|
|
|
(1,369)
|
|
|
|
3,789
|
|
Other income(3)(4)
|
|
88
|
|
|
|
44
|
|
|
|
2
|
|
|
|
-
|
|
|
|
1,057
|
|
|
|
14,327
|
|
|
|
15,518
|
|
|
Non-interest income/(loss)
|
|
4,240
|
|
|
|
95
|
|
|
|
499
|
|
|
|
458
|
|
|
|
1,057
|
|
|
|
12,958
|
|
|
|
19,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan losses
|
|
(461)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(461)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for reserve for losses
|
|
(51)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(51)
|
|
Other non-interest expense
|
|
(4,260)
|
|
|
|
(1,082)
|
|
|
|
(642)
|
|
|
|
(1,456)
|
|
|
|
(3,486)
|
|
|
|
-
|
|
|
|
(10,926)
|
|
|
Non-interest expense(5)
|
|
(4,311)
|
|
|
|
(1,082)
|
|
|
|
(642)
|
|
|
|
(1,456)
|
|
|
|
(3,486)
|
|
|
|
-
|
|
|
|
(10,977)
|
|
Core earnings before income taxes
|
|
9,817
|
|
|
|
4,347
|
|
|
|
2,480
|
|
|
|
10,629
|
|
|
|
(434)
|
|
|
|
17,743
|
|
(6)
|
|
44,582
|
|
Income tax (expense)/benefit
|
|
(3,436)
|
|
|
|
(1,521)
|
|
|
|
(868)
|
|
|
|
(3,720)
|
|
|
|
(38)
|
|
|
|
(6,210)
|
|
|
|
(15,793)
|
|
|
Core earnings before preferred
stock dividends and attribution of
income to non-controlling interest -
preferred stock dividends
|
|
6,381
|
|
|
|
2,826
|
|
|
|
1,612
|
|
|
|
6,909
|
|
|
|
(472)
|
|
|
|
11,533
|
|
(6)
|
|
28,789
|
|
Preferred stock dividends
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,296)
|
|
|
|
-
|
|
|
|
(3,296)
|
|
Non-controlling interest - preferred
stock dividends
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(28)
|
|
|
|
-
|
|
|
|
(28)
|
|
|
Segment core earnings/(losses)
|
$
|
6,381
|
|
|
$
|
2,826
|
|
|
$
|
1,612
|
|
|
$
|
6,909
|
|
|
$
|
(3,796)
|
|
|
$
|
11,533
|
|
(6)
|
$
|
25,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at carrying value
|
$
|
3,582,098
|
|
|
$
|
2,096,503
|
|
|
$
|
1,012,014
|
|
|
$
|
6,008,574
|
|
|
$
|
2,906,831
|
|
|
$
|
-
|
|
|
$
|
15,606,020
|
|
Total on-and off-balance sheet program assets at principal
balance
|
$
|
6,139,304
|
|
|
$
|
2,094,375
|
|
|
$
|
1,878,110
|
|
|
$
|
7,287,686
|
|
|
|
|
|
|
$
|
-
|
|
|
$
|
17,399,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Excludes the amortization of premiums and discounts on assets consolidated
at fair value, originally included in interest income, to reflect core earnings amounts.
|
(2)
|
Includes the reclassification of interest income and interest expense from
consolidated trusts owned by third parties to guarantee and commitment fees, to reflect management's view that the net
interest income Farmer Mac earns is effectively a guarantee fee.
|
(3)
|
Includes the reclassification of interest expense related to interest rate
swaps not designated as hedges, which are included in "Gains/(losses) on financial derivatives and hedging activities" on
the consolidated financial statements, to determine the effective funding cost for each operating segment.
|
(4)
|
Includes reconciling adjustments for fair value adjustments on financial
derivatives and trading assets. Also includes a reconciling adjustment related to the recognition of deferred gains over
the estimated lives of certain Farmer Mac Guaranteed Securities and USDA Securities. In 2016 and prior periods, fair
value adjustments on financial derivatives included variation margin payment amounts because those amounts were
considered to be collateral of the related exposure and were accounted for as unrealized gains or losses. However,
effective first quarter 2017, CME implemented a change in its rules related to the exchange of variation margin, whereby
variation margin payments will be considered a partial settlement of the respective derivatives contracts rather than as
pledged collateral, and accounted for as realized gains and losses. See Note 6 for more information about this rule
change. Farmer Mac believes that even though these variation margin amounts will be accounted for as realized gains
or losses on financial derivatives and hedging activities as a result of the CME rule change, their economic character
will remain the same as they were before the change. The fair value fluctuations related to the exchange of
variation margin, whether considered a partial settlement of or the pledge of collateral under a derivatives contract,
are not expected to have a cumulative net impact on Farmer Mac's financial condition or results of operations reported in
accordance with GAAP because the related financial instruments are expected to be held to maturity. Therefore, beginning
in 2017, this reconciling adjustment will include realized gains and losses on financial derivatives centrally cleared
through CME resulting from the exchange of variation margin. As a result, core earnings subsequent to 2016 will be
presented on a consistent basis with core earnings in 2016 and prior periods.
|
(5)
|
Includes directly attributable costs and an allocation of indirectly
attributable costs based on headcount.
|
(6)
|
Net adjustments to reconcile to the corresponding income measures;
core earnings before income taxes reconciled to income before income taxes; core earnings before preferred stock
dividends and attribution of income to non-controlling interest reconciled to net income; and segment core earnings
reconciled to net income attributable to common stockholders.
|
Supplemental Information
The following table sets forth information regarding outstanding volume in each of Farmer Mac's four lines of business as of
the dates indicated:
Lines of Business - Outstanding Business Volume
|
|
|
|
|
|
As of December 31, 2016
|
|
As of December 31, 2015
|
|
|
|
|
|
(in thousands)
|
On-balance sheet:
|
|
|
|
|
Farm & Ranch:
|
|
|
|
|
|
Loans
|
$
|
2,381,488
|
|
|
$
|
2,249,864
|
|
|
|
Loans held in trusts:
|
|
|
|
|
|
|
|
|
|
|
Beneficial interests owned by third party investors
|
|
1,132,966
|
|
|
|
708,111
|
|
|
USDA Guarantees:
|
|
|
|
|
|
|
|
|
|
USDA Securities
|
|
1,954,800
|
|
|
|
1,876,451
|
|
|
|
Farmer Mac Guaranteed USDA Securities
|
|
35,599
|
|
|
|
31,554
|
|
|
Rural Utilities:
|
|
|
|
|
|
|
|
|
|
Loans
|
|
999,512
|
|
|
|
1,008,126
|
|
|
Institutional Credit:
|
|
|
|
|
|
|
|
|
|
AgVantage Securities
|
|
6,004,472
|
|
|
|
5,439,383
|
|
|
|
|
Total on-balance sheet
|
$
|
12,508,837
|
|
|
$
|
11,313,489
|
|
Off-balance sheet:
|
|
|
|
|
Farm & Ranch:
|
|
|
|
|
|
LTSPCs
|
$
|
2,209,409
|
|
|
$
|
2,253,273
|
|
|
|
Guaranteed Securities
|
|
415,441
|
|
|
|
514,051
|
|
|
USDA Guarantees:
|
|
|
|
|
|
|
|
|
|
Farmer Mac Guaranteed USDA Securities
|
|
103,976
|
|
|
|
10,272
|
|
|
Rural Utilities:
|
|
|
|
|
|
|
|
|
LTSPCs(1)
|
|
878,598
|
|
|
|
522,864
|
|
|
Institutional Credit:
|
|
|
|
|
|
|
|
|
|
AgVantage Securities
|
|
983,214
|
|
|
|
984,871
|
|
|
|
AgVantage Revolving Line of Credit Facility(2)
|
|
300,000
|
|
|
|
300,000
|
|
|
|
|
Total off-balance sheet
|
$
|
4,890,638
|
|
|
$
|
4,585,331
|
|
|
|
|
|
Total
|
$
|
17,399,475
|
|
|
$
|
15,898,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes $20.0 million and $8.8 million related to one-year loan purchase
commitments on which Farmer Mac receives a nominal unused commitment fee as of December 31, 2016 and 2015,
respectively.
|
(2)
|
As of both December 31, 2016 and 2015, this facility had not been
utilized. Farmer Mac receives a fixed fee based on the full dollar amount of the facility. If the
counterparty draws on the facility, the amounts drawn will be presented as AgVantage Securities, and Farmer Mac will earn
interest income on those securities.
|
The following table presents the quarterly net effective spread by segment:
|
|
Net Effective Spread by Line of Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Farm & Ranch
|
|
USDA Guarantees
|
|
Rural Utilities
|
|
Institutional Credit
|
|
Corporate
|
|
Net Effective Spread
|
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
|
(dollars in thousands)
|
For the quarter ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016(1)
|
$
|
10,349
|
|
|
1.78
|
%
|
|
$
|
5,334
|
|
|
1.08
|
%
|
|
$
|
2,623
|
|
|
1.05
|
%
|
|
$
|
11,627
|
|
|
0.78
|
%
|
|
$
|
1,995
|
|
|
0.26
|
%
|
|
$
|
31,928
|
|
|
0.89
|
%
|
|
September 30, 2016
|
|
10,703
|
|
|
1.90
|
%
|
|
|
5,189
|
|
|
1.07
|
%
|
|
|
2,643
|
|
|
1.05
|
%
|
|
|
11,427
|
|
|
0.75
|
%
|
|
|
2,237
|
|
|
0.24
|
%
|
|
|
32,199
|
|
|
0.86
|
%
|
|
June 30, 2016
|
|
9,875
|
|
|
1.78
|
%
|
|
|
4,588
|
|
|
0.96
|
%
|
|
|
2,562
|
|
|
1.03
|
%
|
|
|
11,407
|
|
|
0.77
|
%
|
|
|
2,594
|
|
|
0.29
|
%
|
|
|
31,026
|
|
|
0.84
|
%
|
|
March 31, 2016
|
|
9,461
|
|
|
1.71
|
%
|
|
|
4,308
|
|
|
0.91
|
%
|
|
|
2,538
|
|
|
1.02
|
%
|
|
|
11,090
|
|
|
0.80
|
%
|
|
|
2,552
|
|
|
0.26
|
%
|
|
|
29,949
|
|
|
0.82
|
%
|
|
December 31, 2015
|
|
9,381
|
|
|
1.72
|
%
|
|
|
4,518
|
|
|
0.96
|
%
|
|
|
2,845
|
|
|
1.14
|
%
|
|
|
10,899
|
|
|
0.80
|
%
|
|
|
2,306
|
|
|
0.26
|
%
|
|
|
29,949
|
|
|
0.85
|
%
|
|
September 30, 2015
|
|
9,628
|
|
|
1.80
|
%
|
|
|
4,630
|
|
|
0.99
|
%
|
|
|
2,907
|
|
|
1.18
|
%
|
|
|
11,271
|
|
|
0.81
|
%
|
|
|
1,951
|
|
|
0.25
|
%
|
|
|
30,387
|
|
|
0.88
|
%
|
|
June 30, 2015
|
|
9,681
|
|
|
1.82
|
%
|
|
|
4,466
|
|
|
0.98
|
%
|
|
|
2,838
|
|
|
1.18
|
%
|
|
|
10,860
|
|
|
0.78
|
%
|
|
|
1,942
|
|
|
0.25
|
%
|
|
|
29,787
|
|
|
0.88
|
%
|
|
March 31, 2015(2)
|
|
10,114
|
|
|
1.97
|
%
|
|
|
4,225
|
|
|
0.95
|
%
|
|
|
2,804
|
|
|
1.15
|
%
|
|
|
10,425
|
|
|
0.77
|
%
|
|
|
1,689
|
|
|
0.20
|
%
|
|
|
29,257
|
|
|
0.86
|
%
|
|
December 31, 2014
|
|
8,682
|
|
|
1.71
|
%
|
|
|
5,250
|
|
|
1.19
|
%
|
|
|
2,908
|
|
|
1.18
|
%
|
|
|
9,870
|
|
|
0.78
|
%
|
|
|
1,732
|
|
|
0.26
|
%
|
|
|
28,442
|
|
|
0.91
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net effective spread is a non-GAAP measure. See "Use of Non-GAAP
Measures" for a reconciliation of GAAP net interest income by line of business to net effective spread by line of
business.
|
(2)
|
Beginning in first quarter 2015, Farmer Mac revised its methodology for
interest expense allocation among the Farm & Ranch, USDA Guarantees, and Rural Utilities lines of business. As
a result of this revision, a greater percentage of interest expense has been allocated to the longer-term assets included
within the USDA Guarantees and Rural Utilities lines of business. Net effective spread for periods prior to the
quarter ended March 31, 2015 does not reflect this revision.
|
The following table presents quarterly core earnings reconciled to net income attributable to common stockholders:
Core Earnings by Quarter Ended
|
|
|
|
|
December
2016
|
|
September
2016
|
|
June
2016
|
|
March
2016
|
|
December
2015
|
|
September
2015
|
|
June
2015
|
|
March
2015
|
|
December
2014
|
|
|
|
|
(in thousands)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective spread
|
$
|
31,928
|
|
|
$
|
32,199
|
|
|
$
|
31,026
|
|
|
$
|
29,949
|
|
|
$
|
29,949
|
|
|
$
|
30,387
|
|
|
$
|
29,787
|
|
|
$
|
29,257
|
|
|
$
|
28,442
|
|
|
Guarantee and commitment fees
|
|
5,158
|
|
|
|
4,533
|
|
|
|
4,810
|
|
|
|
4,669
|
|
|
|
4,730
|
|
|
|
4,328
|
|
|
|
4,085
|
|
|
|
4,012
|
|
|
|
4,097
|
|
|
Other(1)
|
|
1,189
|
|
|
|
(32)
|
|
|
|
(125)
|
|
|
|
(517)
|
|
|
|
(284)
|
|
|
|
(93)
|
|
|
|
(24)
|
|
|
|
(405)
|
|
|
|
(1,285)
|
|
|
|
Total revenues
|
|
38,275
|
|
|
|
36,700
|
|
|
|
35,711
|
|
|
|
34,101
|
|
|
|
34,395
|
|
|
|
34,622
|
|
|
|
33,848
|
|
|
|
32,864
|
|
|
|
31,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related (income)/expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for/(release of) losses
|
|
512
|
|
|
|
(31)
|
|
|
|
458
|
|
|
|
63
|
|
|
|
(49)
|
|
|
|
(303)
|
|
|
|
1,256
|
|
|
|
(696)
|
|
|
|
(479)
|
|
|
REO operating expenses
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
39
|
|
|
|
44
|
|
|
|
48
|
|
|
|
-
|
|
|
|
(1)
|
|
|
|
48
|
|
|
(Gains)/losses on sale of REO
|
|
-
|
|
|
|
(15)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
28
|
|
|
|
Total credit related
(income)/expense
|
|
512
|
|
|
|
(46)
|
|
|
|
458
|
|
|
|
102
|
|
|
|
(5)
|
|
|
|
(255)
|
|
|
|
1,256
|
|
|
|
(696)
|
|
|
|
(403)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and employee
benefits
|
|
5,949
|
|
|
|
5,438
|
|
|
|
5,611
|
|
|
|
5,774
|
|
|
|
5,385
|
|
|
|
5,236
|
|
|
|
5,733
|
|
|
|
5,693
|
|
|
|
4,971
|
|
|
General and administrative
|
|
4,352
|
|
|
|
3,474
|
|
|
|
3,757
|
|
|
|
3,526
|
|
|
|
3,238
|
|
|
|
3,676
|
|
|
|
3,374
|
|
|
|
2,823
|
|
|
|
2,992
|
|
|
Regulatory fees
|
|
625
|
|
|
|
613
|
|
|
|
612
|
|
|
|
613
|
|
|
|
613
|
|
|
|
600
|
|
|
|
600
|
|
|
|
600
|
|
|
|
600
|
|
|
|
Total operating expenses
|
|
10,926
|
|
|
|
9,525
|
|
|
|
9,980
|
|
|
|
9,913
|
|
|
|
9,236
|
|
|
|
9,512
|
|
|
|
9,707
|
|
|
|
9,116
|
|
|
|
8,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
26,837
|
|
|
|
27,221
|
|
|
|
25,273
|
|
|
|
24,086
|
|
|
|
25,164
|
|
|
|
25,365
|
|
|
|
22,885
|
|
|
|
24,444
|
|
|
|
23,094
|
|
Income tax expense(2)
|
|
9,581
|
|
|
|
9,497
|
|
|
|
8,956
|
|
|
|
8,444
|
|
|
|
8,855
|
|
|
|
8,924
|
|
|
|
8,091
|
|
|
|
6,692
|
|
|
|
4,858
|
|
Net income/(loss) attributable to non-
controlling interest
|
|
28
|
|
|
|
(18)
|
|
|
|
(16)
|
|
|
|
(28)
|
|
|
|
(60)
|
|
|
|
(36)
|
|
|
|
(119)
|
|
|
|
5,354
|
|
|
|
5,414
|
|
Preferred stock dividends
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
3,295
|
|
|
|
3,296
|
|
|
|
Core earnings
|
$
|
13,932
|
|
|
$
|
14,447
|
|
|
$
|
13,037
|
|
|
$
|
12,375
|
|
|
$
|
13,073
|
|
|
$
|
13,182
|
|
|
$
|
11,617
|
|
|
$
|
9,103
|
|
|
$
|
9,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains/(losses) on
financial derivatives and hedging
activities
|
|
17,233
|
|
|
|
1,460
|
|
|
|
(2,076)
|
|
|
|
(2,989)
|
|
|
|
2,743
|
|
|
|
(6,906)
|
|
|
|
15,982
|
|
|
|
(895)
|
|
|
|
(5,719)
|
|
|
|
Unrealized (losses)/gains on
trading assets
|
|
(474)
|
|
|
|
1,182
|
|
|
|
394
|
|
|
|
358
|
|
|
|
696
|
|
|
|
(8)
|
|
|
|
170
|
|
|
|
362
|
|
|
|
1,044
|
|
|
|
Amortization of
premiums/discounts and deferred
gains on assets consolidated at fair value
|
|
(40)
|
|
|
|
(157)
|
|
|
|
(371)
|
|
|
|
(281)
|
|
|
|
(263)
|
|
|
|
(117)
|
|
|
|
(125)
|
|
|
|
(814)
|
|
|
|
(1,247)
|
|
|
|
Net effects of settlements on
agency forwards
|
|
1,024
|
|
|
|
464
|
|
|
|
466
|
|
|
|
(255)
|
|
|
|
(162)
|
|
|
|
(390)
|
|
|
|
197
|
|
|
|
(252)
|
|
|
|
(46)
|
|
|
|
Loss on retirement of Farmer Mac
II LLC Preferred Stock
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8,147)
|
|
|
|
-
|
|
|
|
Income tax effect related to
reconciling items
|
|
(6,210)
|
|
|
|
(1,032)
|
|
|
|
556
|
|
|
|
1,109
|
|
|
|
(1,055)
|
|
|
|
2,598
|
|
|
|
(5,679)
|
|
|
|
2,461
|
|
|
|
2,089
|
|
|
|
|
Net income attributable to
common stockholders
|
$
|
25,465
|
|
|
$
|
16,364
|
|
|
$
|
12,006
|
|
|
$
|
10,317
|
|
|
$
|
15,032
|
|
|
$
|
8,359
|
|
|
$
|
22,162
|
|
|
$
|
1,818
|
|
|
$
|
5,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Fourth quarter 2014 and third quarter 2014 include $13.6 million and $17.9
million, respectively, of interest expense related to securities purchased under agreements to resell and securities
sold, not yet purchased and $12.8 million and $16.4 million, respectively of gains on securities sold, not yet
purchased.
|
(2)
|
Fourth quarter 2014 reflects a reduction of $1.4 million in the tax
valuation allowance against capital loss carryforwards related to capital gains on securities sold, not yet
purchased.
|
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/farmer-mac-reports-2016-results-and-announces-dividend-increase-300420525.html
SOURCE Farmer Mac