WASHINGTON, Feb. 25, 2021 /PRNewswire/ -- The Federal
Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and
AGM.A), the nation's secondary market provider that increases the
availability and affordability of credit for the benefit of rural
America, today announced its results for the fiscal quarter and
year ended December 31, 2020.
Fourth Quarter 2020 Highlights
- Provided $1.3 billion in
liquidity and lending capacity in fourth quarter 2020;
- Net income attributable to common stockholders was $29.4 million, or $2.73 per diluted common share;
- Core earnings, a non-GAAP measure, grew 8% from the prior-year
period to $26.4 million, or
$2.45 per diluted common share;
- Net interest income grew $6.9
million year-over-year to $56.3
million;
- Net effective spread, a non-GAAP measure, increased 18% from the prior-year period to
$54.5 million;
- 90-day delinquencies were 0.21% of total outstanding business
volume as of December 31, 2020;
- Continued strong liquidity position, as evidenced by year-end
cash position of $1.0 billion;
and
- Executed total COVID-19 payment deferments for $432.0 million of unpaid principal balance
related to Farm & Ranch loans, Farm & Ranch LTSPCs, and
USDA Securities to provide relief to borrowers from April 1, 2020 through December 31, 2020.
Full Year 2020 Highlights
- Net business volume growth year-over-year of $0.8 billion to total outstanding business volume
of $21.9 billion;
- Net income attributable to common stockholders was $89.2 million, or $8.27 per diluted common share;
- Core Earnings, a non-GAAP measure, increased 7% from the
prior-year period to $100.6
million;
- Net interest income increased 10% from the prior year period to
$190.6 million;
- Net effective spread, a non-GAAP measure, grew $28.3 million year-over-year to $197.0 million;
- Strengthened overall capital position through the issuances of
$79.5 million of 5.750% Series E
non-cumulative preferred stock and $120.0 million of 5.250% Series F
non-cumulative preferred stock; and
- Used the net proceeds from the Series F preferred stock
issuance to redeem all outstanding shares of the $60.0 million 5.875% Series A preferred
stock.
Subsequent to December 31,
2020
- On February 23, 2020, Farmer
Mac's board of directors declared a quarterly dividend of
$0.88 per common share for first
quarter 2021.
-
- Reflects an increase of $0.08 per
common share, or 10%, over the quarterly dividend payout in
2020
"I'm proud to report that Farmer Mac delivered record financial
results in 2020 by staying focused on its core mission of helping
agricultural and rural communities attain the low-cost financing
they need," said President & Chief Executive Officer
Brad Nordholm. "Farmer Mac's
business model inherently centers around the betterment of rural
America, and we continue to demonstrate the diversification and
stability we provide throughout the inevitable agricultural
economic cycles, as well as unprecedented operating environment of
2020. This is reflected in our consistent earnings results
and strong capital position which have once again allowed us to
increase our quarterly dividend to $0.88 per share, which represents a 10% increase
relative to last year. As we look ahead to 2021, we believe we are
well-positioned to successfully continue to execute upon our
mission while remaining diligent and prudent as we navigate our way
through these uncertain times."
Fourth Quarter 2020 Results
Business Volume
Our outstanding business volume was $21.9
billion as of December 31, 2020, a net decrease of
$65.2 million from September 30, 2020 after taking into account all
new business, maturities, and repayments on existing assets.
This net decrease was comprised of a $580.1
million net decrease in Institutional Credit, partially
offset by increases of $331.8 million
in Farm & Ranch, $131.5 million
in Rural Utilities and $51.6 million
in USDA Guarantees.
The Farm & Ranch line of business experienced net growth of
$331.8 million during fourth quarter
2020 attributable to net increases of $308.5
million in outstanding loan purchase volume, $10.6 million of loans held in consolidated
trusts, and $12.7 million in loans
underlying LTSPCs and off-balance sheet Farmer Mac Guaranteed
Securities. The net growth in fourth quarter 2020 reflected
our ability to retain borrowers in a competitive interest rate
environment as well as proactively engaging with lenders to focus
on customer acquisition and retention strategies in an increasingly
competitive environment.
Outstanding business volume in our Rural Utilities line of
business increased by $131.5 million
during fourth quarter 2020, primarily due to $151.1 million of new loans purchased, including
a $44.3 million solar project
financing as part of our renewable energy strategic
initiative. The increase was offset by a $19.5 million net decrease in LTSPCs.
Our USDA Guarantees line of business experienced net growth of
$51.6 million in fourth quarter
2020. This net increase reflected the continued growth in
customer relationships and the ability to more effectively meet
customer demands in an increasingly competitive interest rate
environment.
The $580.1 million net decrease in
the Institutional Credit line of business during fourth quarter
2020 was primarily due to two large counterparties who reduced
their amount of outstanding credit in connection with scheduled
maturities and payments on multiple AgVantage bonds. Changes
in quarterly AgVantage securities volume are primarily driven by
the generally larger transaction sizes for that product, scheduled
maturity amounts for a particular quarter, the liquidity needs of
Farmer Mac's AgVantage counterparties, and changes in the pricing
and availability of wholesale funding.
Spreads
Net interest income for fourth quarter 2020 was $56.3 million, a $6.9
million increase compared to $49.4
million in the prior-year period, primarily driven by net
growth across most lines of business. Net interest yield was
0.96% in fourth quarter 2020 compared to 0.95% in the year-ago
period.
Net effective spread, a non-GAAP measure, for fourth quarter
2020 was $54.5 million, an
$8.5 million increase from
$46.0 million in the prior year
period. This increase was primarily attributable to growth in
outstanding business volume, which increased net effective spread
by approximately $6.1 million
due to net business volume growth across most lines of business,
excluding Institutional Credit, and a $2.3
million decrease in non-GAAP funding costs. In percentage
terms, net effective spread was 0.98% for fourth quarter 2020, as
compared to 0.95% in fourth quarter 2019. The increase of
0.03% was primarily attributable to net volume growth and scheduled
maturities and payments on multiple AgVantage bonds earning a lower
spread.
Earnings
Farmer Mac's net income attributable to common stockholders for
fourth quarter 2020 were $29.4
million ($2.73 per diluted
common share), compared to $29.1
million ($2.70 per diluted
common share) in fourth quarter 2019. The $0.3 million year-over-year increase in net
income attributable to common stockholders was primarily due to a
$5.5 million after-tax increase in
net interest income, partially offset by a $2.6 million after-tax increase in operating
expenses, a $0.8 million after-tax
increase decrease in the fair value of undesignated financial
derivatives due to fluctuations in long-term interest rates, and a
$1.8 million increase in preferred
stock dividends.
Farmer Mac enters into financial derivatives transactions to
hedge interest rate risks inherent in its business and carries its
financial derivatives at fair value in its consolidated financial
statements. As these fluctuations are not expected to have a
cumulative impact on Farmer Mac's earnings, Farmer Mac uses
non-GAAP core earnings as a useful alternative measure to
understand the business.
Farmer Mac's non-GAAP core earnings for fourth quarter 2020 were
$26.4 million ($2.45 per diluted common share), compared to
$24.5 million ($2.27 per diluted common share) in fourth quarter
2019. The $1.9 million year-over-year
increase in core earnings was primarily due to a $6.7 million after-tax increase in net effective
spread, partially offset by a $2.6
million after-tax increase in operating expenses, and a
$1.8 million increase in preferred
stock dividends.
Fiscal Year 2020 Results
Our outstanding business volume was $21.9
billion as of December 31, 2020, a net increase of
$806.2 million from December 31, 2019 after taking into account all
new business, maturities, and repayments on existing assets.
This increase was driven by net growth of $804.2 million in Farm & Ranch, $536.3 million in Rural Utilities, and
$166.5 million in USDA Guarantees,
partially offset by a net decrease of $700.9 million in the
Institutional Credit line of business.
The $804.2 million net increase in
our Farm & Ranch line of business was comprised of a
$1.2 billion net increase in
outstanding loan purchase volume that was partially offset by net
decreases of $313.9 million in loans
held in consolidated trusts and $95.7
million in loans underlying LTSPCs and off-balance sheet
Farmer Mac Guaranteed Securities. The net growth in 2020
reflected our ability to retain borrowers in a decreasing interest
rate environment by proactively engaging with borrowers and
adjusting their rates and loan sizes to reflect current market
conditions and their specific funding needs. We broadened and
deepened our market share as evidenced by gross new loan purchase
volume increasing 82%, or $1.1
billion, versus 2019. Of this gross new loan purchase
volume, 80% is attributable to active lenders (lenders selling
Farmer Mac volume in 2020 and 2019) and 20% is attributable to new
or previously inactive lenders.
Our USDA Guarantees line of business grew by $166.5 million in 2020. Our gross volume of
$777.9 million was the highest gross
volume that we have ever recorded in any calendar year. This growth
reflected the positive effect of adjustments that we made to our
product structure in the second half of 2019 to more effectively
meet customer demands in an increasingly competitive rate
environment and in response to increased loan limits permitted by
the 2018 Farm Bill,
The $536.3 million net growth in
our Rural Utilities line of business reflected a $589.1 million net increase in outstanding loan
purchase volume that was partially offset by a $52.9 net decrease in loans under LTSPCs. During
2020, we funded $64.3 million of
loans as part of our renewable energy strategic initiative, in
solar and wind projects.
The $700.9 million net decrease in
the Institutional Credit line of business during 2020 was due
primarily to three large counterparties who reduced their amount of
outstanding credit in connection with scheduled maturities and
payments on multiple AgVantage bonds. The year-over-year
changes in AgVantage securities volume are primarily driven by the
generally larger transaction sizes for that product, scheduled
maturity amounts, the liquidity needs of Farmer Mac's AgVantage
counterparties, and changes in the pricing and availability of
wholesale funding.
Spreads
Net interest income for 2020 was $190.6
million, a $17.5 million
increase compared to $173.1 million
in 2019, primarily driven by net growth across most lines of
business. Net interest yield was 0.85% in 2020 compared to 0.87% in
2019.
Net effective spread, a non-GAAP measure, increased 17% to
$197.0 million in 2020, compared to
$168.6 million in 2019. The increase
was primarily due to new business volume, which increased net
effective spread by approximately $23.2
million, and a $4.6 million
decrease in non-GAAP funding costs. In percentage terms, net
effective spread improved 0.02% to 0.93% in 2020, compared to 0.91%
in 2019 primarily due to new business volume.
Earnings
Farmer Mac's net income attributable to common stockholders for
2020 were $89.2 million ($8.27 per diluted common share), compared to
$93.7 million ($8.69 per diluted common share) in 2019. The
difference was primarily due to a $7.5
million after-tax increase in operating expenses, a
$4.4 million after-tax decrease in
the fair value of undesignated financial derivatives due to
fluctuations in long-term interest rates, a $3.9 million increase in preferred stock
dividends, and a $3.6 million
after-tax increase in the total provision for credit losses. These
decreases were partially offset by a $13.8
million after-tax increase in net interest income and a
$1.3 million after-tax increase in
other income.
Farmer Mac's non-GAAP core earnings for 2020 were $100.6 million ($9.33 per diluted common share), compared to
$93.7 million ($8.70 per diluted common share) in 2019. The
year-over-year increase in core earnings was primarily due to a
$22.4 million after-tax increase in
net effective spread. This increase was partially offset by a
$7.5 million after-tax increase in
operating expenses, a $3.9 million
increase in preferred stock dividends, and a $3.6 million after-tax increase in the total
provision for credit losses.
See "Use of Non-GAAP Measures" below for more information about
core earnings, core earnings per share, and net effective spread
and for reconciliations of the comparable GAAP measures to these
non-GAAP measures.
Credit
As of December 31, 2020, Farmer Mac's total allowance for
losses was $17.6 million, compared to
$12.6 million as of December 31, 2019. In fourth quarter 2020,
our forecasts continue to include the effects of the COVID-19
pandemic on economic factors such as land values, gross domestic
product, credit spreads, and unemployment. The total
provision for losses in fourth quarter 2020 was approximately
$3.0 million, primarily related to a
specialized poultry loan, partially offset by improvements in
credit quality. The provision was more than offset by the
charge-off of $5.4 million related to
that specialized poultry loan because a portion of the loan was
deemed to be uncollectible. Across all of Farmer Mac's lines
of business, Farmer Mac's allowance for losses represented 0.08% of
total outstanding business volume as of December 31, 2020,
compared to 0.06% as of December 31,
2019.
As of December 31, 2020, Farmer Mac's Farm & Ranch
substandard assets were $291.5
million, compared to $310.0
million as of December 31,
2019. The $18.5 million
decrease in substandard assets was primarily driven by credit
upgrades in our on-balance sheet portfolio, partially offset by
credit downgrades in our off-balance sheet portfolio during the
year.
As of December 31, 2020, Farmer Mac's 90-day delinquencies
were $46.2 million (0.54% of the
Farm & Ranch portfolio), compared to $61.0 million (0.78% of the Farm & Ranch
portfolio) as of December 31, 2019. The year-over-year
decrease in 90-day delinquencies is primarily driven by three
commodity groups – permanent plantings, livestock, and part-time
farms. The decreases in those commodity groups were partially
offset by increases related to the agricultural storage &
processing loan secured by a specialized poultry facility and
multiple crop loans. Across all of Farmer Mac's lines of
business, 90-day delinquencies represented 0.21% of total
outstanding business volume as of December 31, 2020, compared
to 0.29% as of December 31,
2019. Loans under COVID-19 deferment are not considered past
due and are not included in our delinquent loan statistics. Farmer
Mac believes that it remains adequately collateralized on its
delinquent loans.
Capital
As of December 31, 2020, Farmer Mac's core capital level
was $1.0 billion, which was
$325.5 million above the minimum
capital level required by our statutory charter. This
compares to $815.4 million as of
December 31, 2019, which was
$196.7 million above the minimum
capital requirement. Farmer Mac's Tier 1 capital ratio was
14.1% as of December 31, 2020. The increase in capital
in excess of the minimum capital level required was primarily due
to the issuance of the Series E Preferred Stock and Series F
Preferred Stock and the increase in retained earnings, partially
offset by growth in our outstanding business volume and the
redemption of the Series A Preferred Stock.
Dividends
On February 23, 2021, Farmer Mac's
board of directors declared a quarterly dividend of $0.88 per share on all three classes of common
stock - Class A voting common stock (NYSE: AGM.A), Class B voting
common stock (not listed on any exchange), and Class C non-voting
common stock (NYSE; AGM). This quarterly dividend will be
payable on March 31, 2021 to holders
of record of common stock as of March
16, 2021. This is the tenth consecutive year that
Farmer Mac has increased its quarterly common stock dividend, and
Farmer Mac believes that the most recent increase is supported by
Farmer Mac's earnings potential and overall capital position.
Farmer Mac's board of directors also declared a dividend on each
of Farmer Mac's four classes of preferred stock. The quarterly
dividend of $0.375 per share of
6.000% Fixed-to-Floating Rate Non-Cumulative referred Stock, Series
C (NYSE: AGM.PR.C), $0.35625 per
share of 5.700% Non-Cumulative Preferred Stock, Series D (NYSE:
AGM.PR.D), $0.359375 per share
of 5.750% Non-Cumulative Preferred Stock, Series E (NYSE:
AGM.PR.E), and $0.328125 per share of
5.250% Non-Cumulative Preferred Stock, Series F (NYSE: AGM.PR.F) is
for the period from but not including January 17, 2021 to and including April 17, 2021. The preferred dividends will be
payable on April 17, 2021 to holders
of record as of April 1, 2021.
Earnings Conference Call Information
The conference call to discuss Farmer Mac's 2020 financial
results will be held beginning at 5:00 p.m.
Eastern time on Thursday, February 25 and can be accessed by
telephone or live webcast as follows:
Telephone (Domestic): (888) 346-2616
Telephone (International): (412) 902-4254
Webcast:
https://www.farmermac.com/investors/events-presentations/
When dialing in to the call, please ask for the "Farmer Mac
Earnings Conference Call." The call can be heard live and will also
be available for replay on Farmer Mac's website for two weeks
following the conclusion of the call.
More complete information about Farmer Mac's performance for
2020 is in Farmer Mac's Annual Report on Form 10-K for the year
ended December 31, 2020 filed today
with the SEC.
Use of Non-GAAP Measures
In the accompanying analysis of its financial information,
Farmer Mac uses the following non-GAAP measures: "core earnings,"
"core earnings per share," and "net effective spread." Farmer Mac
uses these non-GAAP measures to measure corporate economic
performance and develop financial plans because, in management's
view, they are useful alternative measures in understanding Farmer
Mac's economic performance, transaction economics, and business
trends. The non-GAAP financial measures that Farmer Mac uses may
not be comparable to similarly labeled non-GAAP financial measures
disclosed by other companies. Farmer Mac's disclosure of these
non-GAAP measures is intended to be supplemental in nature and is
not meant to be considered in isolation from, as a substitute for,
or as more important than, the related financial information
prepared in accordance with GAAP.
Core earnings and core earnings per share principally differ
from net income attributable to common stockholders and earnings
per common share, respectively, by excluding the effects of fair
value fluctuations. These fluctuations are not expected to have a
cumulative net impact on Farmer Mac's financial condition or
results of operations reported in accordance with GAAP if the
related financial instruments are held to maturity, as is
expected.
Core earnings and core earnings per share also differ from net
income attributable to common stockholders and earnings per common
share, respectively, by excluding specified infrequent or unusual
transactions that Farmer Mac believes are not indicative of future
operating results and that may not reflect the trends and economic
financial performance of Farmer Mac's core business. For
example, we have excluded from core earnings losses on retirement
of preferred stock and the re-measurement of the deferred tax
asset.
Farmer Mac uses net effective spread to measure the net spread
Farmer Mac earns between its interest-earning assets and the
related net funding costs of these assets. Net effective spread
differs from net interest income and net interest yield because it
excludes: (1) the amortization of premiums and discounts on assets
consolidated at fair value that are amortized as adjustments to
yield in interest income over the contractual or estimated
remaining lives of the underlying assets; (2) interest income and
interest expense related to consolidated trusts with beneficial
interests owned by third parties, which are presented on Farmer
Mac's consolidated balance sheets as "Loans held for investment in
consolidated trusts, at amortized cost"; and (3) the fair
value changes of financial derivatives and the corresponding assets
or liabilities designated in a fair value hedge accounting
relationship.
Net effective spread also principally differs from net interest
income and net interest yield because it includes:
(1) the accrual of income and expense related to the
contractual amounts due on financial derivatives that are not
designated in hedge accounting relationships ("undesignated
financial derivatives"); and (2) the net effects of terminations or
net settlements on financial derivatives. More information
about Farmer Mac's use of non-GAAP measures is available in
"Management's Discussion and Analysis of Financial Condition and
Results of Operations—Results of Operations" in Farmer Mac's Annual
Report on Form 10-K for the year ended December 31, 2020 filed February 25, 2021 with the SEC.
For a reconciliation of Farmer Mac's net income attributable to
common stockholders to core earnings and of earnings per common
share to core earnings per share, and net interest income and net
interest yield to net effective spread, see "Reconciliations"
below.
Forward-Looking Statements
Management's expectations for Farmer Mac's future necessarily
involve assumptions and estimates and the evaluation of risks and
uncertainties. Various factors or events, both known and unknown,
could cause Farmer Mac's actual results to differ materially from
the expectations as expressed or implied by the forward-looking
statements in this release, including uncertainties about:
- the duration, spread, and severity of the COVID-19
pandemic;
- the actions taken to address the COVID-19 pandemic, including
government actions to mitigate the economic impact of the pandemic,
how quickly and to what extent normal economic and operating
conditions can resume, the possibility of future disruptions to
economic recovery caused by additional outbreaks, regulatory
measures or voluntary actions that may be put in place to limit the
spread of COVID-19, and the duration and efficacy of such
restrictions;
- the effects of the COVID-19 pandemic on the business operations
of agricultural and rural borrowers, the capital markets, and
Farmer Mac's business operations;
- the availability to Farmer Mac of debt and equity financing
and, if available, the reasonableness of rates and terms;
- legislative or regulatory developments that could affect Farmer
Mac, its sources of business, or the agricultural or rural
utilities industries;
- fluctuations in the fair value of assets held by Farmer Mac and
its subsidiaries;
- the level of lender interest in Farmer Mac's products and the
secondary market provided by Farmer Mac;
- the general rate of growth in agricultural mortgage and rural
utilities indebtedness;
- the effect of economic conditions and geopolitics on
agricultural mortgage or rural utilities lending, borrower
repayment capacity, or collateral values, including fluctuations in
interest rates, changes in U.S. trade policies, fluctuations in
export demand for U.S. agricultural products, and volatility in
commodity prices;
- the degree to which Farmer Mac is exposed to interest rate risk
resulting from fluctuations in Farmer Mac's borrowing costs
relative to market indexes;
- developments in the financial markets, including possible
investor, analyst, and rating agency reactions to events involving
government-sponsored enterprises, including Farmer Mac;
- the effect of any changes in Farmer Mac's executive leadership;
and
- other factors that could have a negative effect on agricultural
mortgage lending or borrower repayment capacity, including the
effects of weather and fluctuations in agricultural real estate
values.
Other risk factors are discussed in "Risk Factors" in Part I,
Item 1A in Farmer Mac's Annual Report on Form 10-K for the year
ended December 31, 2020, filed today
with the SEC. Considering these potential risks and uncertainties,
no undue reliance should be placed on any forward-looking
statements expressed in this release. The forward-looking
statements contained in this release represent management's
expectations as of the date of this release. Farmer Mac undertakes
no obligation to release publicly the results of revisions to any
forward-looking statements included in this release to reflect new
information or any future events or circumstances, except as
otherwise required by applicable law. The information in this
release is not necessarily indicative of future results.
About Farmer Mac
Farmer Mac is a vital part of the agricultural credit markets
and was created to increase access to and reduce the cost of credit
for the benefit of American agricultural and rural communities. As
the nation's secondary market for agricultural credit, we provide
financial solutions to a broad spectrum of the agricultural
community, including agricultural lenders, agribusinesses, and
other institutions that can benefit from access to flexible,
low-cost financing and risk management tools. Farmer Mac's
customers benefit from our low cost of funds, low overhead costs,
and high operational efficiency. More information about
Farmer Mac (including the Annual Report on Form 10-K referenced
above) is available on Farmer Mac's website at
www.farmermac.com.
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(unaudited)
|
|
|
As of
|
|
December 31,
2020
|
|
December 31,
2019
|
|
(in
thousands)
|
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
1,033,941
|
|
|
$
|
604,381
|
|
Investment
securities:
|
|
|
|
Available-for-sale, at
fair value (amortized cost of $3,843,666 and $2,961,430,
respectively)
|
3,853,692
|
|
|
2,959,843
|
|
Held-to-maturity, at
amortized cost
|
45,032
|
|
|
45,032
|
|
Total Investment
Securities
|
3,898,724
|
|
|
3,004,875
|
|
Farmer Mac Guaranteed
Securities:
|
|
|
|
Available-for-sale, at
fair value (amortized cost of $6,594,992 and $7,016,971,
respectively)
|
6,947,701
|
|
|
7,143,025
|
|
Held-to-maturity, at
amortized cost
|
1,175,792
|
|
|
1,447,451
|
|
Total Farmer Mac
Guaranteed Securities
|
8,123,493
|
|
|
8,590,476
|
|
USDA
Securities:
|
|
|
|
Trading, at fair
value
|
6,695
|
|
|
8,913
|
|
Held-to-maturity, at
amortized cost
|
2,473,626
|
|
|
2,232,160
|
|
Total USDA
Securities
|
2,480,321
|
|
|
2,241,073
|
|
Loans:
|
|
|
|
Loans held for
investment, at amortized cost
|
7,261,933
|
|
|
5,390,977
|
|
Loans held for
investment in consolidated trusts, at amortized cost
|
1,287,045
|
|
|
1,600,917
|
|
Allowance for
losses
|
(13,832)
|
|
|
(10,454)
|
|
Total loans, net of
allowance
|
8,535,146
|
|
|
6,981,440
|
|
Financial derivatives,
at fair value
|
17,468
|
|
|
10,519
|
|
Interest receivable
(includes $16,401 and $20,568, respectively, related to
consolidated trusts)
|
186,429
|
|
|
199,195
|
|
Guarantee and
commitment fees receivable
|
37,113
|
|
|
38,442
|
|
Deferred tax asset,
net
|
18,321
|
|
|
16,510
|
|
Prepaid expenses and
other assets
|
24,545
|
|
|
22,463
|
|
Total
Assets
|
$
|
24,355,501
|
|
|
$
|
21,709,374
|
|
|
|
|
|
Liabilities and
Equity:
|
|
|
|
Liabilities:
|
|
|
|
Notes
payable
|
21,848,917
|
|
|
19,098,648
|
|
Debt securities of
consolidated trusts held by third parties
|
1,323,786
|
|
|
1,616,504
|
|
Financial derivatives,
at fair value
|
29,892
|
|
|
27,042
|
|
Accrued interest
payable (includes $14,370 and $18,018, respectively, related to
consolidated trusts)
|
92,738
|
|
|
106,959
|
|
Guarantee and
commitment obligation
|
35,535
|
|
|
36,700
|
|
Accounts payable and
accrued expenses
|
28,879
|
|
|
22,081
|
|
Reserve for
losses
|
3,277
|
|
|
2,164
|
|
Total
Liabilities
|
23,363,024
|
|
|
20,910,098
|
|
Commitments and
Contingencies
|
|
|
|
Equity:
|
|
|
|
Preferred
stock:
|
|
|
|
Series A, par value
$25 per share, 2,400,000 shares authorized, issued and outstanding
as of
December 31, 2019 (redemption value $60,000,000)
|
—
|
|
|
58,333
|
|
Series C, par value
$25 per share, 3,000,000 shares authorized, issued and
outstanding
|
73,382
|
|
|
73,382
|
|
Series D, par value
$25 per share, 4,000,000 shares authorized, issued and
outstanding
|
96,659
|
|
|
96,659
|
|
Series E, par value
$25 per share, 3,180,000 shares authorized, issued and
outstanding
|
77,003
|
|
|
—
|
|
Series F, par value
$25 per share, 4,800,000 shares authorized, issued and
outstanding
|
116,160
|
|
|
—
|
|
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, 9,205,897 shares and 9,180,744
shares
outstanding, respectively
|
9,206
|
|
|
9,181
|
|
Additional paid-in
capital
|
122,899
|
|
|
119,304
|
|
Accumulated other
comprehensive loss, net of tax
|
(13,923)
|
|
|
(16,161)
|
|
Retained
earnings
|
509,560
|
|
|
457,047
|
|
Total
Equity
|
992,477
|
|
|
799,276
|
|
Total Liabilities and
Equity
|
$
|
24,355,501
|
|
|
$
|
21,709,374
|
|
|
|
|
FEDERAL
AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(unaudited)
|
|
|
For the Three Months
Ended
|
|
For the Year
Ended
|
|
December 31,
2020
|
|
December 31,
2019
|
|
December 31,
2020
|
|
December 31,
2019
|
|
(in thousands,
except per share amounts)
|
Interest
income:
|
|
|
|
|
|
|
|
Investments and cash
equivalents
|
$
|
6,908
|
|
|
$
|
19,804
|
|
|
$
|
42,144
|
|
|
$
|
81,522
|
|
Farmer Mac Guaranteed
Securities and USDA Securities
|
49,047
|
|
|
81,267
|
|
|
227,691
|
|
|
333,896
|
|
Loans
|
61,469
|
|
|
61,883
|
|
|
233,699
|
|
|
229,675
|
|
Total interest
income
|
117,424
|
|
|
162,954
|
|
|
503,534
|
|
|
645,093
|
|
Total interest
expense
|
61,157
|
|
|
113,584
|
|
|
312,946
|
|
|
471,958
|
|
Net interest
income
|
56,267
|
|
|
49,370
|
|
|
190,588
|
|
|
173,135
|
|
Provision for
losses
|
(3,263)
|
|
|
(2,430)
|
|
|
(7,805)
|
|
|
(3,504)
|
|
Net interest income
after provision for losses
|
53,004
|
|
|
46,940
|
|
|
182,783
|
|
|
169,631
|
|
Non-interest
income/(expense):
|
|
|
|
|
|
|
|
Guarantee and
commitment fees
|
3,054
|
|
|
3,401
|
|
|
12,549
|
|
|
13,666
|
|
Gains/(losses) on
financial derivatives
|
3,093
|
|
|
4,089
|
|
|
(246)
|
|
|
5,282
|
|
Gains on trading
securities
|
223
|
|
|
172
|
|
|
50
|
|
|
326
|
|
Losses on sale of
available-for-sale investment securities
|
—
|
|
|
(236)
|
|
|
—
|
|
|
(236)
|
|
(Losses)/gains on sale
of real estate owned
|
(22)
|
|
|
—
|
|
|
463
|
|
|
—
|
|
Release of/(provision
for) reserve for losses
|
290
|
|
|
(421)
|
|
|
(250)
|
|
|
3
|
|
Other
income
|
848
|
|
|
526
|
|
|
3,487
|
|
|
1,904
|
|
Non-interest
income/(expense)
|
7,486
|
|
|
7,531
|
|
|
16,053
|
|
|
20,945
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
9,497
|
|
|
6,732
|
|
|
36,502
|
|
|
28,762
|
|
General and
administrative
|
6,274
|
|
|
5,773
|
|
|
21,976
|
|
|
20,311
|
|
Regulatory
fees
|
750
|
|
|
725
|
|
|
2,925
|
|
|
2,788
|
|
Real estate owned
operating costs, net
|
—
|
|
|
—
|
|
|
—
|
|
|
64
|
|
Operating
expenses
|
16,521
|
|
|
13,230
|
|
|
61,403
|
|
|
51,925
|
|
Income before income
taxes
|
43,969
|
|
|
41,241
|
|
|
137,433
|
|
|
138,651
|
|
Income tax
expense
|
9,269
|
|
|
8,743
|
|
|
28,785
|
|
|
29,105
|
|
Net income
|
34,700
|
|
|
32,498
|
|
|
108,648
|
|
|
109,546
|
|
Preferred stock
dividends
|
(5,269)
|
|
|
(3,432)
|
|
|
(17,805)
|
|
|
(13,940)
|
|
Loss on retirement of
preferred stock
|
—
|
|
|
—
|
|
|
(1,667)
|
|
|
(1,956)
|
|
Net income
attributable to common stockholders
|
$
|
29,431
|
|
|
$
|
29,066
|
|
|
$
|
89,176
|
|
|
$
|
93,650
|
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic earnings per
common share
|
$
|
2.74
|
|
|
$
|
2.72
|
|
|
$
|
8.31
|
|
|
$
|
8.76
|
|
Diluted earnings per
common share
|
$
|
2.73
|
|
|
$
|
2.70
|
|
|
$
|
8.27
|
|
|
$
|
8.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations
Reconciliations of Farmer Mac's net income attributable to
common stockholders to core earnings and core earnings per share
are presented in the following tables along with information about
the composition of core earnings for the periods
indicated:
Reconciliation of Net
Income Attributable to Common Stockholders to Core
Earnings
|
|
For the Three Months
Ended
|
|
December 31,
2020
|
|
September 30,
2020
|
|
December 31,
2019
|
|
(in thousands, except per share amounts)
|
Net income
attributable to common stockholders
|
$
|
29,431
|
|
|
$
|
18,659
|
|
|
$
|
29,066
|
|
Less reconciling
items:
|
|
|
|
|
|
(Losses)/gains on
undesignated financial derivatives due to fair value
changes
|
(1,758)
|
|
|
(4,149)
|
|
|
4,469
|
|
Gains/(losses) on
hedging activities due to fair value changes
|
3,827
|
|
|
(5,245)
|
|
|
(220)
|
|
Unrealized
gains/(losses) on trading assets
|
223
|
|
|
(258)
|
|
|
172
|
|
Net effects of
amortization of premiums/discounts and deferred gains
on assets consolidated
at fair value
|
(77)
|
|
|
97
|
|
|
40
|
|
Net effects of
terminations or net settlements on financial derivatives
|
1,583
|
|
|
233
|
|
|
1,339
|
|
Issuance costs on the
retirement of preferred stock
|
—
|
|
|
(1,667)
|
|
|
—
|
|
Income tax effect
related to reconciling items
|
(798)
|
|
|
1,957
|
|
|
(1,218)
|
|
Sub-total
|
3,000
|
|
|
(9,032)
|
|
|
4,582
|
|
Core
earnings
|
$
|
26,431
|
|
|
$
|
27,691
|
|
|
$
|
24,484
|
|
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
Net effective
spread(1)
|
$
|
54,522
|
|
|
$
|
51,802
|
|
|
$
|
45,991
|
|
Guarantee and
commitment fees(2)
|
4,652
|
|
|
4,659
|
|
|
5,432
|
|
Other(3)
|
512
|
|
|
453
|
|
|
100
|
|
Total
revenues
|
59,686
|
|
|
56,914
|
|
|
51,523
|
|
|
|
|
|
|
|
Credit related
expense (GAAP):
|
|
|
|
|
|
Provision for
losses
|
2,973
|
|
|
1,200
|
|
|
2,851
|
|
Losses on sale of
REO
|
22
|
|
|
—
|
|
|
—
|
|
Total credit related
expense
|
2,995
|
|
|
1,200
|
|
|
2,851
|
|
|
|
|
|
|
|
Operating expenses
(GAAP):
|
|
|
|
|
|
Compensation and
employee benefits
|
9,497
|
|
|
8,791
|
|
|
6,732
|
|
General and
administrative
|
6,274
|
|
|
5,044
|
|
|
5,773
|
|
Regulatory
fees
|
750
|
|
|
725
|
|
|
725
|
|
Total operating
expenses
|
16,521
|
|
|
14,560
|
|
|
13,230
|
|
|
|
|
|
|
|
Net
earnings
|
40,170
|
|
|
41,154
|
|
|
35,442
|
|
Income tax
expense(4)
|
8,470
|
|
|
8,297
|
|
|
7,526
|
|
Preferred stock
dividends (GAAP)
|
5,269
|
|
|
5,166
|
|
|
3,432
|
|
Core
earnings
|
$
|
26,431
|
|
|
$
|
27,691
|
|
|
$
|
24,484
|
|
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
|
|
Basic
|
$
|
2.46
|
|
|
$
|
2.58
|
|
|
$
|
2.29
|
|
Diluted
|
2.45
|
|
|
2.57
|
|
|
2.27
|
|
|
|
(1)
|
Net effective spread
is a non-GAAP measure. See "Use of Non-GAAP Measures" above
for an explanation of net effective spread. See below for a
reconciliation of net interest income to net effective
spread.
|
(2)
|
Includes interest
income and interest expense related to consolidated trusts owned by
third parties reclassified from net interest income to guarantee
and commitment fees to reflect management's view that the net
interest income Farmer Mac earns is effectively a guarantee fee on
the consolidated Farmer Mac Guaranteed Securities.
|
(3)
|
Reflects reconciling
adjustments for the reclassification to exclude expenses related to
interest rate swaps not designated as hedges and terminations or
net settlements on financial derivatives, and reconciling
adjustments to exclude fair value adjustments on financial
derivatives and trading assets and the recognition of deferred
gains over the estimated lives of certain Farmer Mac Guaranteed
Securities and USDA Securities.
|
(4)
|
Includes the tax
impact of non-GAAP reconciling items between net income
attributable to common stockholders and core earnings.
|
|
|
|
|
Reconciliation of Net
Income Attributable to Common Stockholders to Core
Earnings
|
|
For the Year
Ended
|
|
December 31,
2020
|
|
December 31,
2019
|
|
(in thousands, except per share amounts)
|
Net income
attributable to common stockholders
|
$
|
89,176
|
|
|
$
|
93,650
|
|
Less reconciling
items:
|
|
|
|
(Losses)/gains on
undesignated financial derivatives due to fair value
changes
|
(3,691)
|
|
|
10,077
|
|
Losses on hedging
activities due to fair value changes
|
(10,019)
|
|
|
(9,010)
|
|
Unrealized gains on
trading securities
|
51
|
|
|
326
|
|
Net effects of
amortization of premiums/discounts and deferred gains on assets
consolidated at fair value
|
58
|
|
|
(122)
|
|
Net effects of
terminations or net settlements on financial derivatives
|
1,236
|
|
|
1,089
|
|
Issuance costs on the
retirement of preferred stock
|
(1,667)
|
|
|
(1,956)
|
|
Income tax effect
related to reconciling items
|
2,596
|
|
|
(496)
|
|
Sub-total
|
(11,436)
|
|
|
(92)
|
|
Core
earnings
|
$
|
100,612
|
|
|
$
|
93,742
|
|
|
|
|
|
Composition of Core
Earnings:
|
|
|
|
Revenues:
|
|
|
|
Net effective
spread(1)
|
$
|
196,956
|
|
|
$
|
168,608
|
|
Guarantee and
commitment fees(2)
|
19,150
|
|
|
21,335
|
|
Other(3)
|
2,687
|
|
|
1,775
|
|
Total
revenues
|
218,793
|
|
|
191,718
|
|
|
|
|
|
Credit related
expense (GAAP):
|
|
|
|
Provision for
losses
|
8,055
|
|
|
3,501
|
|
REO operating
expenses
|
—
|
|
|
64
|
|
Gains on sale of
REO
|
(463)
|
|
|
—
|
|
Total credit related
expense
|
7,592
|
|
|
3,565
|
|
|
|
|
|
Operating expenses
(GAAP):
|
|
|
|
Compensation and
employee benefits
|
36,502
|
|
|
28,762
|
|
General and
administrative
|
21,976
|
|
|
20,311
|
|
Regulatory
fees
|
2,925
|
|
|
2,788
|
|
Total operating
expenses
|
61,403
|
|
|
51,861
|
|
|
|
|
|
Net
earnings
|
149,798
|
|
|
136,292
|
|
Income tax
expense(4)
|
31,381
|
|
|
28,610
|
|
Preferred stock
dividends (GAAP)
|
17,805
|
|
|
13,940
|
|
Core
earnings
|
$
|
100,612
|
|
|
$
|
93,742
|
|
|
|
|
|
Core earnings per
share:
|
|
|
|
Basic
|
$
|
9.38
|
|
|
$
|
8.76
|
|
Diluted
|
9.33
|
|
|
8.70
|
|
|
|
(1)
|
Net effective spread
is a non-GAAP measure. See "Use of Non-GAAP Measures" above
for an explanation of net effective spread. See below for a
reconciliation of net interest income to net effective
spread.
|
(2)
|
Includes interest
income and interest expense related to consolidated trusts owned by
third parties reclassified from net interest income to guarantee
and commitment fees to reflect management's view that the net
interest income Farmer Mac earns is effectively a guarantee fee on
the consolidated Farmer Mac Guaranteed Securities.
|
(3)
|
Reflects reconciling
adjustments for the reclassification to exclude expenses related to
interest rate swaps not designated as hedges and terminations or
net settlements on financial derivatives, and reconciling
adjustments to exclude fair value adjustments on financial
derivatives and trading assets and the recognition of deferred
gains over the estimated lives of certain Farmer Mac Guaranteed
Securities and USDA Securities.
|
(4)
|
Includes the tax
impact of non-GAAP reconciling items between net income
attributable to common stockholders and core earnings.
|
|
|
|
|
Reconciliation of
GAAP Basic Earnings Per Share to Core Earnings Basic Earnings Per
Share
|
|
For the Three Months
Ended
|
|
For the Year
Ended
|
|
December 31,
2020
|
|
September 30,
2020
|
|
December 31,
2019
|
|
December 31,
2020
|
|
December 31,
2019
|
|
(in thousands,
except per share amounts)
|
GAAP - Basic
EPS
|
$
|
2.74
|
|
|
$
|
1.74
|
|
|
$
|
2.72
|
|
|
$
|
8.31
|
|
|
$
|
8.76
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
(Losses)/gains on
undesignated financial derivatives due
to fair value changes
|
(0.17)
|
|
|
(0.39)
|
|
|
0.42
|
|
|
(0.34)
|
|
|
0.94
|
|
Gains/(losses) on
hedging activities due to fair value
changes
|
0.36
|
|
|
(0.49)
|
|
|
(0.02)
|
|
|
(0.94)
|
|
|
(0.83)
|
|
Unrealized
gains/(losses) on trading securities
|
0.02
|
|
|
(0.02)
|
|
|
0.02
|
|
|
—
|
|
|
0.03
|
|
Net effects of
amortization of premiums/discounts and
deferred gains on assets consolidated at fair value
|
(0.01)
|
|
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
(0.01)
|
|
Net effects of
terminations or net settlements on financial
derivatives
|
0.15
|
|
|
0.02
|
|
|
0.13
|
|
|
0.12
|
|
|
0.10
|
|
Issuance costs on the
retirement of preferred stock
|
—
|
|
|
(0.15)
|
|
|
—
|
|
|
(0.16)
|
|
|
(0.18)
|
|
Income tax effect
related to reconciling items
|
(0.07)
|
|
|
0.18
|
|
|
(0.12)
|
|
|
0.24
|
|
|
(0.05)
|
|
Sub-total
|
0.28
|
|
|
(0.84)
|
|
|
0.43
|
|
|
(1.07)
|
|
|
—
|
|
Core Earnings - Basic
EPS
|
$
|
2.46
|
|
|
$
|
2.58
|
|
|
$
|
2.29
|
|
|
$
|
9.38
|
|
|
$
|
8.76
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculation (GAAP and Core
Earnings)
|
10,736
|
|
|
10,734
|
|
|
10,711
|
|
|
10,728
|
|
|
10,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
2020
|
|
September 30,
2020
|
|
December 31,
2019
|
|
December 31,
2020
|
|
December 31,
2019
|
|
(in thousands,
except per share amounts)
|
GAAP - Diluted
EPS
|
$
|
2.73
|
|
|
$
|
1.73
|
|
|
$
|
2.70
|
|
|
$
|
8.27
|
|
|
$
|
8.69
|
|
Less reconciling
items:
|
|
|
|
|
|
|
|
|
|
(Losses)/gains on
undesignated financial derivatives due
to fair value changes
|
(0.16)
|
|
|
(0.39)
|
|
|
0.42
|
|
|
(0.34)
|
|
|
0.93
|
|
Gains/(losses) on
hedging activities due to fair value
changes
|
0.35
|
|
|
(0.49)
|
|
|
(0.02)
|
|
|
(0.93)
|
|
|
(0.83)
|
|
Unrealized
gains/(losses) on trading securities
|
0.02
|
|
|
(0.02)
|
|
|
0.02
|
|
|
—
|
|
|
0.03
|
|
Net effects of
amortization of premiums/discounts and
deferred gains on assets consolidated at fair value
|
(0.01)
|
|
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
(0.01)
|
|
Net effects of
terminations or net settlements on financial
derivatives
|
0.15
|
|
|
0.02
|
|
|
0.12
|
|
|
0.11
|
|
|
0.10
|
|
Issuance costs on the
retirement of preferred stock
|
—
|
|
|
(0.15)
|
|
|
—
|
|
|
(0.15)
|
|
|
(0.18)
|
|
Income tax effect
related to reconciling items
|
(0.07)
|
|
|
0.18
|
|
|
(0.11)
|
|
|
0.24
|
|
|
(0.05)
|
|
Sub-total
|
0.28
|
|
|
(0.84)
|
|
|
0.43
|
|
|
(1.06)
|
|
|
(0.01)
|
|
Core Earnings -
Diluted EPS
|
$
|
2.45
|
|
|
$
|
2.57
|
|
|
$
|
2.27
|
|
|
$
|
9.33
|
|
|
$
|
8.70
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculation (GAAP and Core
Earnings)
|
10,799
|
|
|
10,785
|
|
|
10,784
|
|
|
10,786
|
|
|
10,778
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents a reconciliation of net interest
income and net yield to net effective spread for the periods
indicated:
Reconciliation of
GAAP Net Interest Income/Yield to Net Effective Spread
|
|
For the Three Months
Ended
|
|
For the Year
Ended
|
|
December 31,
2020
|
|
September 30,
2020
|
|
December 31,
2019
|
|
December 31,
2020
|
|
December 31,
2019
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
Dollars
|
|
Yield
|
|
(dollars in
thousands)
|
Net interest
income/yield
|
$
|
56,267
|
|
|
0.96
|
%
|
|
$
|
44,661
|
|
|
0.78
|
%
|
|
$
|
49,370
|
|
|
0.95
|
%
|
|
$
|
190,588
|
|
|
0.85
|
%
|
|
$
|
173,135
|
|
|
0.87
|
%
|
Net effects of
consolidated trusts
|
(1,598)
|
|
|
0.03
|
%
|
|
(1,500)
|
|
|
0.02
|
%
|
|
(2,031)
|
|
|
0.03
|
%
|
|
(6,601)
|
|
|
0.02
|
%
|
|
(7,669)
|
|
|
0.03
|
%
|
Expense related to
undesignated financial derivatives
|
3,459
|
|
|
0.06
|
%
|
|
3,613
|
|
|
0.07
|
%
|
|
(725)
|
|
|
(0.02)
|
%
|
|
3,468
|
|
|
0.02
|
%
|
|
(5,095)
|
|
|
(0.03)
|
%
|
Amortization of
premiums/discounts on assets consolidated at fair value
|
290
|
|
|
—
|
%
|
|
(81)
|
|
|
—
|
%
|
|
58
|
|
|
—
|
%
|
|
197
|
|
|
—
|
%
|
|
398
|
|
|
—
|
%
|
Amortization of
losses due to terminations or net settlements on financial
derivatives
|
30
|
|
|
—
|
%
|
|
62
|
|
|
—
|
%
|
|
30
|
|
|
—
|
%
|
|
120
|
|
|
—
|
%
|
|
(68)
|
|
|
—
|
%
|
Fair value changes on
fair value hedge relationships
|
(3,925)
|
|
|
(0.07)
|
%
|
|
5,047
|
|
|
0.09
|
%
|
|
(711)
|
|
|
(0.01)
|
%
|
|
9,184
|
|
|
0.04
|
%
|
|
7,907
|
|
|
0.04
|
%
|
Net effective
spread
|
$
|
54,523
|
|
|
0.98
|
%
|
|
$
|
51,802
|
|
|
0.96
|
%
|
|
$
|
45,991
|
|
|
0.95
|
%
|
|
$
|
196,956
|
|
|
0.93
|
%
|
|
$
|
168,608
|
|
|
0.91
|
%
|
|
|
The following table presents core earnings for Farmer Mac's
reportable operating segments and a reconciliation to consolidated
net income for the three months ended December 31, 2020:
Core Earnings by
Business Segment
|
For the Three Months
Ended December 31, 2020
|
|
Farm &
Ranch
|
|
USDA
Guarantees
|
|
Rural
Utilities
|
|
Institutional
Credit
|
|
Corporate
|
|
Reconciling
Adjustments
|
|
Consolidated
Net Income
|
|
(in
thousands)
|
Net interest
income
|
$
|
20,133
|
|
|
$
|
4,879
|
|
|
$
|
9,185
|
|
|
$
|
19,894
|
|
|
$
|
2,176
|
|
|
$
|
—
|
|
|
$
|
56,267
|
|
Less: reconciling
adjustments(1)(2)(3)
|
180
|
|
|
1,907
|
|
|
(1,863)
|
|
|
(2,493)
|
|
|
524
|
|
|
1,745
|
|
|
—
|
|
Net effective
spread
|
20,313
|
|
|
6,786
|
|
|
7,322
|
|
|
17,401
|
|
|
2,700
|
|
|
1,745
|
|
|
|
Guarantee and
commitment fees(2)
|
4,135
|
|
|
192
|
|
|
319
|
|
|
6
|
|
|
—
|
|
|
(1,598)
|
|
|
3,054
|
|
Other
income/(expense)(3)
|
359
|
|
|
234
|
|
|
20
|
|
|
—
|
|
|
(123)
|
|
|
3,652
|
|
|
4,142
|
|
Non-interest
income/(loss)
|
4,494
|
|
|
426
|
|
|
339
|
|
|
6
|
|
|
(123)
|
|
|
2,054
|
|
|
7,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Provision
for)/(release of) loan losses
|
(3,371)
|
|
|
—
|
|
|
(5)
|
|
|
112
|
|
|
1
|
|
|
—
|
|
|
(3,263)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release of
reserve for losses
|
181
|
|
|
—
|
|
|
109
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
290
|
|
Other non-interest
expense
|
(5,782)
|
|
|
(2,225)
|
|
|
(1,796)
|
|
|
(2,178)
|
|
|
(4,540)
|
|
|
—
|
|
|
(16,521)
|
|
Non-interest
expense(4)
|
(5,601)
|
|
|
(2,225)
|
|
|
(1,687)
|
|
|
(2,178)
|
|
|
(4,540)
|
|
|
—
|
|
|
(16,231)
|
|
Core earnings before
income taxes
|
15,835
|
|
|
4,987
|
|
|
5,969
|
|
|
15,341
|
|
|
(1,962)
|
|
|
3,799
|
|
(5)
|
43,969
|
|
Income tax
(expense)/benefit
|
(3,325)
|
|
|
(1,047)
|
|
|
(1,253)
|
|
|
(3,222)
|
|
|
377
|
|
|
(799)
|
|
|
(9,269)
|
|
Core earnings before
preferred stock
dividends
|
12,510
|
|
|
3,940
|
|
|
4,716
|
|
|
12,119
|
|
|
(1,585)
|
|
|
3,000
|
|
(5)
|
34,700
|
|
Preferred stock
dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,269)
|
|
|
—
|
|
|
(5,269)
|
|
Loss on retirement of
preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Segment core
earnings/(losses)
|
$
|
12,510
|
|
|
$
|
3,940
|
|
|
$
|
4,716
|
|
|
$
|
12,119
|
|
|
$
|
(6,854)
|
|
|
$
|
3,000
|
|
(5)
|
$
|
29,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at
carrying value
|
$
|
6,305,975
|
|
|
$
|
2,553,176
|
|
|
$
|
2,365,996
|
|
|
$
|
8,128,489
|
|
|
$
|
5,001,865
|
|
|
$
|
—
|
|
|
$
|
24,355,501
|
|
Total on- and
off-balance sheet program
assets at principal balance
|
$
|
8,581,181
|
|
|
$
|
2,786,718
|
|
|
$
|
2,816,837
|
|
|
$
|
7,739,359
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,924,095
|
|
|
|
(1)
|
Excludes the
amortization of premiums and discounts on assets consolidated at
fair value, originally included in interest income, to reflect core
earnings amounts.
|
(2)
|
Includes the
reclassification of interest income and interest expense from
consolidated trusts owned by third parties to guarantee and
commitment fees, to reflect management's view that the net interest
income Farmer Mac earns is effectively a guarantee
fee.
|
(3)
|
Includes the
reclassification of interest expense related to interest rate swaps
not designated as hedges, which are included in "(Losses)/gains on
financial derivatives" on the consolidated financial statements, to
determine the effective funding cost for each operating
segment.
|
(4)
|
Includes directly
attributable costs and an allocation of indirectly attributable
costs based on employee headcount.
|
(5)
|
Net adjustments
to reconcile to the corresponding income measures: core earnings
before income taxes reconciled to income before income taxes; core
earnings before preferred stock dividends reconciled to net income;
and segment core earnings reconciled to net income attributable to
common stockholders.
|
Supplemental Information
The following table sets forth information about outstanding
volume in each of Farmer Mac's four lines of business as of the
dates indicated:
Lines of Business -
Outstanding Business Volume
|
|
As of December 31,
2020
|
|
As of December 31,
2019
|
|
(in thousands)
|
Farm &
Ranch:
|
|
|
|
Loans
|
$
|
4,889,393
|
|
|
$
|
3,675,640
|
|
Loans held in
trusts:
|
|
|
|
Beneficial interests
owned by third party investors
|
1,287,045
|
|
|
1,600,917
|
|
LTSPCs
|
2,325,431
|
|
|
2,393,071
|
|
Guaranteed
Securities
|
79,312
|
|
|
107,322
|
|
USDA
Guarantees:
|
|
|
|
USDA
Securities
|
2,452,964
|
|
|
2,199,072
|
|
Farmer Mac Guaranteed
USDA Securities
|
333,754
|
|
|
421,103
|
|
Rural
Utilities:
|
|
|
|
Loans
|
2,260,412
|
|
|
1,671,293
|
|
LTSPCs
|
556,425
|
|
|
609,278
|
|
Institutional
Credit
|
|
|
|
AgVantage
Securities
|
7,739,359
|
|
|
8,440,246
|
|
Total
|
$
|
21,924,095
|
|
|
$
|
21,117,942
|
|
|
|
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,
2020(1)
|
$
|
20,313
|
|
|
1.75
|
%
|
|
$
|
6,786
|
|
|
1.10
|
%
|
|
$
|
7,322
|
|
|
1.35
|
%
|
|
$
|
17,401
|
|
|
0.85
|
%
|
|
$
|
2,700
|
|
|
0.22
|
%
|
|
$
|
54,522
|
|
|
0.98
|
%
|
September 30,
2020
|
18,025
|
|
|
1.67
|
%
|
|
5,865
|
|
|
0.97
|
%
|
|
6,939
|
|
|
1.32
|
%
|
|
18,601
|
|
|
0.87
|
%
|
|
2,372
|
|
|
0.23
|
%
|
|
51,802
|
|
|
0.96
|
%
|
June 30,
2020
|
16,733
|
|
|
1.71
|
%
|
|
4,689
|
|
|
0.81
|
%
|
|
5,516
|
|
|
1.15
|
%
|
|
18,782
|
|
|
0.86
|
%
|
|
749
|
|
|
0.08
|
%
|
|
46,469
|
|
|
0.89
|
%
|
March 31,
2020
|
14,938
|
|
|
1.64
|
%
|
|
4,625
|
|
|
0.81
|
%
|
|
4,920
|
|
|
1.14
|
%
|
|
17,702
|
|
|
0.84
|
%
|
|
1,978
|
|
|
0.21
|
%
|
|
44,163
|
|
|
0.89
|
%
|
December 31,
2019
|
16,374
|
|
|
1.90
|
%
|
|
4,363
|
|
|
0.78
|
%
|
|
4,871
|
|
|
1.17
|
%
|
|
18,008
|
|
|
0.85
|
%
|
|
2,375
|
|
|
0.27
|
%
|
|
45,991
|
|
|
0.95
|
%
|
September 30,
2019
|
13,181
|
|
|
1.66
|
%
|
|
4,314
|
|
|
0.79
|
%
|
|
4,502
|
|
|
1.16
|
%
|
|
17,807
|
|
|
0.84
|
%
|
|
2,657
|
|
|
0.30
|
%
|
|
42,461
|
|
|
0.90
|
%
|
June 30,
2019
|
13,335
|
|
|
1.72
|
%
|
|
4,097
|
|
|
0.76
|
%
|
|
3,996
|
|
|
1.10
|
%
|
|
17,371
|
|
|
0.82
|
%
|
|
2,556
|
|
|
0.34
|
%
|
|
41,355
|
|
|
0.91
|
%
|
March 31,
2019
|
12,737
|
|
|
1.70
|
%
|
|
3,964
|
|
|
0.74
|
%
|
|
3,233
|
|
|
1.12
|
%
|
|
16,373
|
|
|
0.79
|
%
|
|
2,494
|
|
|
0.35
|
%
|
|
38,801
|
|
|
0.89
|
%
|
December 31,
2018
|
13,288
|
|
|
1.79
|
%
|
|
4,630
|
|
|
0.85
|
%
|
|
2,833
|
|
|
1.19
|
%
|
|
15,751
|
|
|
0.80
|
%
|
|
2,353
|
|
|
0.36
|
%
|
|
38,855
|
|
|
0.93
|
%
|
|
|
(1)
|
See above for a
reconciliation of GAAP net interest income by line of business to
net effective spread by line of business for the three months ended
December 31, 2020.
|
|
|
|
|
The following table presents quarterly core earnings reconciled
to net income attributable to common stockholders:
Core Earnings by
Quarter Ended
|
|
December
2020
|
|
September
2020
|
|
June
2020
|
|
March
2020
|
|
December
2019
|
|
September
2019
|
|
June
2019
|
|
March
2019
|
|
December
2018
|
|
(in
thousands)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effective
spread
|
$
|
54,522
|
|
|
$
|
51,802
|
|
|
$
|
46,469
|
|
|
$
|
44,163
|
|
|
$
|
45,991
|
|
|
$
|
42,461
|
|
|
$
|
41,355
|
|
|
$
|
38,801
|
|
|
$
|
38,855
|
|
Guarantee and
commitment fees
|
4,652
|
|
|
4,659
|
|
|
4,943
|
|
|
4,896
|
|
|
5,432
|
|
|
5,208
|
|
|
5,276
|
|
|
5,419
|
|
|
5,309
|
|
Other
|
512
|
|
|
453
|
|
|
1,048
|
|
|
674
|
|
|
100
|
|
|
389
|
|
|
777
|
|
|
509
|
|
|
(129)
|
|
Total
revenues
|
59,686
|
|
|
56,914
|
|
|
52,460
|
|
|
49,733
|
|
|
51,523
|
|
|
48,058
|
|
|
47,408
|
|
|
44,729
|
|
|
44,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit related
expense/(income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for/(release
of) losses
|
2,973
|
|
|
1,200
|
|
|
51
|
|
|
3,831
|
|
|
2,851
|
|
|
623
|
|
|
420
|
|
|
(393)
|
|
|
166
|
|
REO operating
expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
—
|
|
Losses/(gains) on sale
of REO
|
22
|
|
|
—
|
|
|
—
|
|
|
(485)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total credit related
expense/(income)
|
2,995
|
|
|
1,200
|
|
|
51
|
|
|
3,346
|
|
|
2,851
|
|
|
623
|
|
|
484
|
|
|
(393)
|
|
|
166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
employee benefits
|
9,497
|
|
|
8,791
|
|
|
8,087
|
|
|
10,127
|
|
|
6,732
|
|
|
7,654
|
|
|
6,770
|
|
|
7,606
|
|
|
7,167
|
|
General and
administrative
|
6,274
|
|
|
5,044
|
|
|
5,295
|
|
|
5,363
|
|
|
5,773
|
|
|
5,253
|
|
|
4,689
|
|
|
4,596
|
|
|
5,829
|
|
Regulatory
fees
|
750
|
|
|
725
|
|
|
725
|
|
|
725
|
|
|
725
|
|
|
688
|
|
|
687
|
|
|
688
|
|
|
687
|
|
Total operating
expenses
|
16,521
|
|
|
14,560
|
|
|
14,107
|
|
|
16,215
|
|
|
13,230
|
|
|
13,595
|
|
|
12,146
|
|
|
12,890
|
|
|
13,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
40,170
|
|
|
41,154
|
|
|
38,302
|
|
|
30,172
|
|
|
35,442
|
|
|
33,840
|
|
|
34,778
|
|
|
32,232
|
|
|
30,186
|
|
Income tax
expense
|
8,470
|
|
|
8,297
|
|
|
8,016
|
|
|
6,598
|
|
|
7,526
|
|
|
7,018
|
|
|
7,351
|
|
|
6,715
|
|
|
6,431
|
|
Preferred stock
dividends
|
5,269
|
|
|
5,166
|
|
|
3,939
|
|
|
3,431
|
|
|
3,432
|
|
|
3,427
|
|
|
3,785
|
|
|
3,296
|
|
|
3,296
|
|
Core
earnings
|
$
|
26,431
|
|
|
$
|
27,691
|
|
|
$
|
26,347
|
|
|
$
|
20,143
|
|
|
$
|
24,484
|
|
|
$
|
23,395
|
|
|
$
|
23,642
|
|
|
$
|
22,221
|
|
|
$
|
20,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Losses)/gains on
undesignated financial derivatives due to fair value
changes
|
(1,758)
|
|
|
(4,149)
|
|
|
8,700
|
|
|
(6,484)
|
|
|
4,469
|
|
|
(7,117)
|
|
|
10,485
|
|
|
2,240
|
|
|
(96)
|
|
Gains/(losses) on
hedging activities due to fair value changes
|
3,827
|
|
|
(5,245)
|
|
|
(2,676)
|
|
|
(5,925)
|
|
|
(220)
|
|
|
(4,535)
|
|
|
(1,438)
|
|
|
(2,817)
|
|
|
(853)
|
|
Unrealized
gains/(losses) on trading assets
|
223
|
|
|
(258)
|
|
|
(20)
|
|
|
106
|
|
|
172
|
|
|
49
|
|
|
61
|
|
|
44
|
|
|
57
|
|
Net effects of
amortization of premiums/discounts and deferred gains on assets
consolidated at fair value
|
(77)
|
|
|
97
|
|
|
35
|
|
|
3
|
|
|
40
|
|
|
(7)
|
|
|
(139)
|
|
|
(16)
|
|
|
67
|
|
Net effects of
terminations or net settlements on financial derivatives
|
1,583
|
|
|
233
|
|
|
720
|
|
|
(1,300)
|
|
|
1,339
|
|
|
232
|
|
|
(592)
|
|
|
110
|
|
|
(312)
|
|
Issuance costs on the
retirement of preferred stock
|
—
|
|
|
(1,667)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,956)
|
|
|
—
|
|
|
—
|
|
Income tax effect
related to reconciling items
|
(798)
|
|
|
1,957
|
|
|
(1,419)
|
|
|
2,856
|
|
|
(1,218)
|
|
|
2,389
|
|
|
(1,759)
|
|
|
92
|
|
|
238
|
|
Net income
attributable to common stockholders
|
$
|
29,431
|
|
|
$
|
18,659
|
|
|
$
|
31,687
|
|
|
$
|
9,399
|
|
|
$
|
29,066
|
|
|
$
|
14,406
|
|
|
$
|
28,304
|
|
|
$
|
21,874
|
|
|
$
|
19,560
|
|
View original content to download
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SOURCE Farmer Mac