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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 4, 2024
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
(Exact name of registrant as specified in its charter) | | | | | | | | | | | | | | |
Federally chartered instrumentality of the United States | | 001-14951 | | 52-1578738 |
(State or Other Jurisdiction of Incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
| | | | |
| 2100 Pennsylvania Avenue, N.W., Suite 450N, | | 20037 |
| Washington, | DC | | |
| (Address of Principal Executive Offices) | | (Zip Code) |
Registrant’s telephone number, including area code (202) 872-7700
No change
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act: | | | | | | | | | | | | | | |
| Title of each class | | Trading symbol | | Exchange on which registered |
| Class A voting common stock | | AGM.A | | New York Stock Exchange |
| Class C non-voting common stock | | AGM | | New York Stock Exchange |
| 5.700% Non-Cumulative Preferred Stock, Series D | | AGM.PRD | | New York Stock Exchange |
| 5.750% Non-Cumulative Preferred Stock, Series E | | AGM.PRE | | New York Stock Exchange |
| 5.250% Non-Cumulative Preferred Stock, Series F | | AGM.PRF | | New York Stock Exchange |
| 4.875% Non-Cumulative Preferred Stock, Series G | | AGM.PRG | | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 4, 2024, the Federal Agricultural Mortgage Corporation (“Farmer Mac”) issued a press release to announce (1) its financial results for the fiscal quarter ended September 30, 2024 and (2) a conference call to discuss those results and Farmer Mac’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024. A copy of the press release is attached as Exhibit 99.1 and is incorporated by reference into this report. All references to www.farmermac.com in Exhibit 99.1 are inactive textual references only, and the information contained on that website is not incorporated by reference into this report.
The information furnished in this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that Section, nor will any of such information or Exhibit be deemed incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended (“Securities Act”), except as shall be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure.
On November 4, 2024, Farmer Mac posted an investor slide presentation for equity investors to its website at www.farmermac.com under the tab “Investors — Events and Presentations.” Farmer Mac expects to use the slide presentation in connection with future investor presentations to analysts and investors. The slide presentation is attached as Exhibit 99.2 and is incorporated by reference into this report. All references to www.farmermac.com in Exhibit 99.2 are inactive textual references only, and the information contained on that website is not incorporated by reference into this report.
The information furnished in this Item 7.01, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section, nor will any of such information or Exhibit be deemed incorporated by reference into any filing under the Exchange Act or the Securities Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
104 Cover Page Inline Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document included as Exhibit 101
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
By: /s/ Stephen P. Mullery
Name: Stephen P. Mullery
Title: Executive Vice President – General Counsel
Dated: November 4, 2024
Farmer Mac Reports Third Quarter 2024 Results
- Outstanding Business Volume of $28.5 Billion -
WASHINGTON, D.C., November 4, 2024 — The Federal Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A), the nation's secondary market provider that increases the accessibility of financing for American agriculture and rural infrastructure, today announced its results for the fiscal quarter ended September 30, 2024.
“Farmer Mac delivered another solid quarter, demonstrating yet again the benefits of our successful efforts to continue to diversify our revenue streams, taking advantage of our strong capital base and uninterrupted access to low-cost capital,” said President and Chief Executive Officer, Brad Nordholm. “Growth across our loan portfolio into newer lines of business and higher spread businesses continues to pay dividends for us through changing market cycles. Proactive management of our balance sheet remains a core focus, enhancing our ability to accelerate opportunities to better serve American agriculture and rural infrastructure markets and deliver value to our stockholders.”
Third Quarter 2024 Highlights
•Provided $2.0 billion in liquidity and lending capacity to lenders serving rural America
•Net interest income was $86.8 million, compared to $87.6 million in third quarter 2023
•Net effective spread1 improved $2.0 million from the prior-year period to $85.4 million
•Net income attributable to common stockholders was $42.3 million
•Core earnings1 was $44.9 million, or $4.10 per diluted common share
•Maintained strong capital position with total core capital of $1.5 billion, exceeding statutory requirement by 66% and a Tier 1 Capital Ratio of 14.2% as of September 30, 2024
•As of September 30, 2024, Farmer Mac had 309 days of liquidity
| | | | | | | | | | | | | | | | | |
| $ in thousands, except per share amounts | Quarter Ended |
| September 30, 2024 | June 30, 2024 | September 30, 2023 | Sequential % Change | YOY % Change |
Net Change in
Business Volume | $(290,036) | $(88,891) | $914,959 | N/A | N/A |
| Net Interest Income (GAAP) | $86,791 | $87,340 | $87,643 | (1)% | (1)% |
Net Effective Spread
(Non-GAAP) | $85,396 | $83,596 | $83,424 | 2% | 2% |
| Diluted EPS (GAAP) | $3.86 | $3.68 | $4.69 | 5% | (18)% |
| Core EPS (Non-GAAP) | $4.10 | $3.63 | $4.13 | 13% | (1)% |
1 Non-GAAP Measure
Earnings Conference Call Information
The conference call to discuss Farmer Mac's third quarter 2024 financial results will be held beginning at 4:30 p.m. eastern time on Monday, November 4, 2024, and can be accessed by telephone or live webcast as follows:
Telephone (Domestic): (800) 836-8184
Telephone (International): (646) 357-8785
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 third quarter 2024 is in Farmer Mac's
Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, filed today with the SEC.
Use of Non-GAAP Measures
In the accompanying analysis of its financial information, Farmer Mac uses "non-GAAP measures," which are measures of financial performance that are not presented in accordance with GAAP. 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
The main difference between core earnings and core earnings per share (non-GAAP measures) and net income attributable to common stockholders and earnings per common share (GAAP measures) is that those non-GAAP measures exclude 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. Another difference is that these two non-GAAP measures exclude specified infrequent or unusual transactions that we believe 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, in third quarter 2024, we excluded the loss on the retirement of the Series C Preferred Stock from core earnings and core earnings per share.
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. As further explained below, net effective spread differs from net interest income and net interest yield by excluding certain items from net interest
income and net interest yield and including certain other items that net interest income and net interest yield do not contain.
Farmer Mac 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 in determining Farmer Mac's core earnings. Farmer Mac also excludes from net effective spread the fair value changes of financial derivatives and the corresponding assets or liabilities designated in fair value hedge accounting relationships because they are not expected to have an economic effect on Farmer Mac's financial performance, as we expect to hold the financial derivatives and corresponding hedged items to maturity.
Net effective spread also 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 "(Losses)/gains on financial derivatives" 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.
Net effective spread also differs from net interest income and net interest yield because it includes the net effects of terminations or net settlements on financial derivatives, which consist of: (1) the net effects of cash settlements on agency forward contracts on the debt of other GSEs and U.S. Treasury security futures that we use as short-term economic hedges on the issuance of debt; and (2) the net effects of initial cash payments that Farmer Mac receives upon the inception of certain swaps. The inclusion of these items in net effective spread is intended to reflect our view of the complete net spread between an asset and all of its related funding, including any associated derivatives, whether or not they are designated in a hedge accounting relationship.
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, 2023, filed February 23, 2024 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, estimates, and the evaluation of risks and uncertainties. Various factors or events, both known and unknown, could cause Farmer Mac's actual results to differ materially from the expectations as expressed or implied by the forward-looking statements in this release, including uncertainties about:
•the availability to Farmer Mac of debt and equity financing and, if available, the reasonableness of rates and terms;
•legislative or regulatory developments that could affect Farmer Mac, its sources of business, or agricultural or rural infrastructure 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 infrastructure indebtedness;
•the effect of economic conditions stemming from disruptive global events or otherwise on agricultural mortgage or rural infrastructure lending, borrower repayment capacity, or collateral values, including inflation, fluctuations in interest rates, changes in U.S. trade policies, fluctuations in export demand for U.S. agricultural products and foreign currency exchange rates, supply chain disruptions, increases in input costs, labor availability, 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 effects of the Federal Reserve’s efforts to achieve monetary policy normalization to respond to inflation and employment levels; and
•other factors that could hinder agricultural mortgage lending or borrower repayment capacity, including the effects of severe weather, flooding and drought, climate change, or 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, 2023, as filed with the SEC on February 23, 2024. 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 driven by its mission to increase the accessibility of financing for American agriculture and rural infrastructure. As the nation’s premier secondary market for agricultural credit, we provide financial solutions to a broad spectrum of customers supporting rural America, including agricultural lenders, agribusinesses, and rural electric cooperatives. We are uniquely positioned to facilitate competitive access to financing that fuels growth, innovation, and prosperity in America’s rural and agricultural communities. Additional information about Farmer Mac (including the Annual Report on Form 10-K referenced above) is available on our website at www.farmermac.com.
CONTACT: Jalpa Nazareth, Investor Relations
Lisa Meyer, Media Inquiries
(202) 872-7700
* * * *
FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited) | | | | | | | | | | | |
| As of |
| | September 30, 2024 | | December 31, 2023 |
| | (in thousands) |
| Assets: | | | |
| Cash and cash equivalents | $ | 842,056 | | | $ | 888,707 | |
| Investment securities: | | | |
| Available-for-sale, at fair value (amortized cost of $5,941,321 and $5,060,135, respectively) | 5,877,936 | | | 4,918,931 | |
| Held-to-maturity, at amortized cost | 9,270 | | | 53,756 | |
| Other investments | 8,587 | | | 6,817 | |
| Total Investment Securities | 5,895,793 | | | 4,979,504 | |
| Farmer Mac Guaranteed Securities: | | | |
| Available-for-sale, at fair value (amortized cost of $5,939,268 and $5,825,433, respectively) | 5,761,691 | | | 5,532,479 | |
| Held-to-maturity, at amortized cost | 2,961,071 | | | 4,213,069 | |
| Total Farmer Mac Guaranteed Securities | 8,722,762 | | | 9,745,548 | |
| USDA Securities: | | | |
| Trading, at fair value | 842 | | | 1,241 | |
| Held-to-maturity, at amortized cost | 2,343,873 | | | 2,354,171 | |
| Total USDA Securities | 2,344,715 | | | 2,355,412 | |
| Loans: | | | |
| | | |
| Loans held for investment, at amortized cost | 10,668,844 | | | 9,623,119 | |
| Loans held for investment in consolidated trusts, at amortized cost | 1,718,440 | | | 1,432,261 | |
| Allowance for losses | (19,951) | | | (16,031) | |
| Total loans, net of allowance | 12,367,333 | | | 11,039,349 | |
| | | |
| Financial derivatives, at fair value | 49,197 | | | 37,478 | |
| Accrued interest receivable (includes $14,781 and $16,764, respectively, related to consolidated trusts) | 253,102 | | | 287,128 | |
| Guarantee and commitment fees receivable | 46,077 | | | 49,832 | |
| Deferred tax asset, net | — | | | 8,470 | |
| Prepaid expenses and other assets | 94,186 | | | 132,954 | |
| Total Assets | $ | 30,615,221 | | | $ | 29,524,382 | |
| | | |
| Liabilities and Equity: | | | |
| Liabilities: | | | |
| | | |
| | | |
| Notes payable | $ | 27,129,456 | | | $ | 26,336,542 | |
| Debt securities of consolidated trusts held by third parties | 1,616,513 | | | 1,351,069 | |
| Financial derivatives, at fair value | 64,351 | | | 117,131 | |
| Accrued interest payable (includes $8,236 and $9,407, respectively, related to consolidated trusts) | 214,644 | | | 181,841 | |
| Guarantee and commitment obligation | 43,939 | | | 47,563 | |
| Accounts payable and accrued expenses | 81,697 | | | 76,662 | |
| Deferred tax liability, net | 754 | | | — | |
| Reserve for losses | 1,523 | | | 1,711 | |
| Total Liabilities | 29,152,877 | | | 28,112,519 | |
| Commitments and Contingencies | | | |
| Equity: | | | |
| Preferred stock: | | | |
| Series C, par value $25 per share, 3,000,000 shares authorized, issued and outstanding as of December 31, 2023 (redemption value $75,000,000) | — | | | 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 | | | 77,003 | |
| Series F, par value $25 per share, 4,800,000 shares authorized, issued and outstanding | 116,160 | | | 116,160 | |
| Series G, par value $25 per share, 5,000,000 shares authorized, issued and outstanding | 121,327 | | | 121,327 | |
| 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, 9,354,301 shares and 9,310,872 shares outstanding, respectively | 9,354 | | | 9,311 | |
| Additional paid-in capital | 135,225 | | | 132,919 | |
| Accumulated other comprehensive loss, net of tax | (2,554) | | | (40,145) | |
| Retained earnings | 907,639 | | | 823,716 | |
| Total Equity | 1,462,344 | | | 1,411,863 | |
| Total Liabilities and Equity | $ | 30,615,221 | | | $ | 29,524,382 | |
FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended | | For the Nine Months Ended |
| | September 30, 2024 | | September 30, 2023 | | September 30, 2024 | | September 30, 2023 |
| | (in thousands, except per share amounts) |
| Interest income: | | | | | | | |
| Investments and cash equivalents | $ | 88,879 | | | $ | 79,947 | | | $ | 258,341 | | | $ | 209,429 | |
| Farmer Mac Guaranteed Securities and USDA Securities | 156,602 | | | 161,351 | | | 489,478 | | | 442,649 | |
| Loans | 162,247 | | | 140,513 | | | 459,932 | | | 388,837 | |
| Total interest income | 407,728 | | | 381,811 | | | 1,207,751 | | | 1,040,915 | |
| Total interest expense | 320,937 | | | 294,168 | | | 947,252 | | | 795,537 | |
| Net interest income | 86,791 | | | 87,643 | | | 260,499 | | | 245,378 | |
| (Provision for)/release of losses | (3,428) | | | 136 | | | (7,806) | | | (1,484) | |
| Net interest income after (provision for)/release of losses | 83,363 | | | 87,779 | | | 252,693 | | | 243,894 | |
| Non-interest income/(expense): | | | | | | | |
| Guarantee and commitment fees | 4,015 | | | 5,520 | | | 11,729 | | | 12,942 | |
| (Losses)/gains on financial derivatives | (1,934) | | | 2,671 | | | (1,654) | | | 4,763 | |
| Losses on sale of mortgage loans | — | | | — | | | (1,147) | | | — | |
| Gains on sale of available-for-sale investment securities | — | | | — | | | 1,052 | | | — | |
| Release of/(provision for) reserve for losses | 170 | | | 45 | | | 188 | | | (227) | |
| Other income | 1,418 | | | 1,269 | | | 3,341 | | | 3,253 | |
| Non-interest income | 3,669 | | | 9,505 | | | 13,509 | | | 20,731 | |
| Operating expenses: | | | | | | | |
| Compensation and employee benefits | 15,237 | | | 14,103 | | | 48,334 | | | 43,391 | |
| General and administrative | 8,625 | | | 9,100 | | | 25,784 | | | 26,047 | |
| Regulatory fees | 725 | | | 831 | | | 2,175 | | | 2,497 | |
| Real estate owned operating costs, net | 196 | | | — | | | 196 | | | — | |
| Operating expenses | 24,783 | | | 24,034 | | | 76,489 | | | 71,935 | |
| Income before income taxes | 62,249 | | | 73,250 | | | 189,713 | | | 192,690 | |
| Income tax expense | 12,421 | | | 15,113 | | | 39,034 | | | 40,306 | |
| | | | | | | |
| | | | | | | |
| Net income | 49,828 | | | 58,137 | | | 150,679 | | | 152,384 | |
| Preferred stock dividends | (5,897) | | | (6,792) | | | (19,480) | | | (20,374) | |
| Loss on retirement of preferred stock | (1,619) | | | — | | | (1,619) | | | — | |
| Net income attributable to common stockholders | $ | 42,312 | | | $ | 51,345 | | | $ | 129,580 | | | $ | 132,010 | |
| | | | | | | |
| Earnings per common share: | | | | | | | |
| Basic earnings per common share | $ | 3.89 | | | $ | 4.74 | | | $ | 11.93 | | | $ | 12.20 | |
| Diluted earnings per common share | $ | 3.86 | | | $ | 4.69 | | | $ | 11.82 | | | $ | 12.08 | |
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 |
| | September 30, 2024 | | June 30, 2024 | | September 30, 2023 |
| | (in thousands, except per share amounts) |
| Net income attributable to common stockholders | $ | 42,312 | | | $ | 40,313 | | | $ | 51,345 | |
| Less reconciling items: | | | | | |
| (Losses)/gains on undesignated financial derivatives due to fair value changes | (1,064) | | | (359) | | | 2,921 | |
| Gains on hedging activities due to fair value changes | 205 | | | 2,604 | | | 3,210 | |
| Unrealized gains/(losses) on trading assets | 99 | | | (87) | | | 1,714 | |
| Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value | 27 | | | 26 | | | 29 | |
| Net effects of terminations or net settlements on financial derivatives | (503) | | | (1,505) | | | (79) | |
| Issuance costs on the retirement of preferred stock | (1,619) | | | — | | | — | |
| Income tax effect related to reconciling items | 260 | | | (143) | | | (1,638) | |
| Sub-total | (2,595) | | | 536 | | | 6,157 | |
| Core earnings | $ | 44,907 | | | $ | 39,777 | | | $ | 45,188 | |
| | | | | |
| Composition of Core Earnings: | | | | | |
| Revenues: | | | | | |
Net effective spread(1) | $ | 85,396 | | | $ | 83,596 | | | $ | 83,424 | |
Guarantee and commitment fees(2) | 4,997 | | | 5,256 | | | 4,828 | |
| Gain on sale of investment securities (GAAP) | — | | | 1,052 | | | — | |
| Loss on sale of mortgage loan (GAAP) | — | | | (1,147) | | | — | |
Other(3) | 1,133 | | | 481 | | | 1,056 | |
| Total revenues | 91,526 | | | 89,238 | | | 89,308 | |
| | | | | |
| Credit related expense (GAAP): | | | | | |
| Provision for/(release of) losses | 3,258 | | | 6,230 | | | (181) | |
| REO operating expenses | 196 | | | — | | | — | |
| | | | | |
| Total credit related expense | 3,454 | | | 6,230 | | | (181) | |
| | | | | |
| Operating expenses (GAAP): | | | | | |
| Compensation and employee benefits | 15,237 | | | 14,840 | | | 14,103 | |
| General and administrative | 8,625 | | | 8,904 | | | 9,100 | |
| Regulatory fees | 725 | | | 725 | | | 831 | |
| Total operating expenses | 24,587 | | | 24,469 | | | 24,034 | |
| | | | | |
| Net earnings | 63,485 | | | 58,539 | | | 65,455 | |
Income tax expense(4) | 12,681 | | | 11,970 | | | 13,475 | |
| Preferred stock dividends (GAAP) | 5,897 | | | 6,792 | | | 6,792 | |
| Core earnings | $ | 44,907 | | | $ | 39,777 | | | $ | 45,188 | |
| | | | | |
| Core earnings per share: | | | | | |
| Basic | $ | 4.13 | | | $ | 3.66 | | | $ | 4.17 | |
| Diluted | $ | 4.10 | | | $ | 3.63 | | | $ | 4.13 | |
(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 Nine Months Ended |
| | September 30, 2024 | | September 30, 2023 |
| | (in thousands, except per share amounts) |
| Net income attributable to common stockholders | $ | 129,580 | | | $ | 132,010 | |
| Less reconciling items: | | | |
| Gains on undesignated financial derivatives due to fair value changes | 260 | | | 5,978 | |
| Gains/(losses) on hedging activities due to fair value changes | 5,811 | | | (1,796) | |
| Unrealized (losses)/gains on trading assets | (2) | | | 2,016 | |
| Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value | 84 | | | 87 | |
| Net effects of terminations or net settlements on financial derivatives | (2,200) | | | 1,027 | |
| Issuance costs on the retirement of preferred stock | (1,619) | | | — | |
| Income tax effect related to reconciling items | (830) | | | (1,536) | |
| Sub-total | 1,504 | | | 5,776 | |
| Core earnings | $ | 128,076 | | | $ | 126,234 | |
| | | |
| Composition of Core Earnings: | | | |
| Revenues: | | | |
Net effective spread(1) | $ | 252,036 | | | $ | 242,429 | |
Guarantee and commitment fees(2) | 15,235 | | | 14,063 | |
| Gain on sale of investment securities (GAAP) | 1,052 | | | — | |
| Loss on sale of mortgage loan (GAAP) | (1,147) | | | — | |
Other(3) | 2,691 | | | 2,532 | |
| Total revenues | 269,867 | | | 259,024 | |
| | | |
| Credit related expense (GAAP): | | | |
| Provision for losses | 7,618 | | | 1,711 | |
| REO operating expenses | 196 | | | — | |
| | | |
| Total credit related expense | 7,814 | | | 1,711 | |
| | | |
| Operating expenses (GAAP): | | | |
| Compensation and employee benefits | 48,334 | | | 43,391 | |
| General and administrative | 25,784 | | | 26,047 | |
| Regulatory fees | 2,175 | | | 2,497 | |
| Total operating expenses | 76,293 | | | 71,935 | |
| | | |
| Net earnings | 185,760 | | | 185,378 | |
Income tax expense(4) | 38,204 | | | 38,770 | |
| Preferred stock dividends (GAAP) | 19,480 | | | 20,374 | |
| Core earnings | $ | 128,076 | | | $ | 126,234 | |
| | | |
| Core earnings per share: | | | |
| Basic | $ | 11.79 | | | $ | 11.66 | |
| Diluted | $ | 11.69 | | | $ | 11.56 | |
(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 Nine Months Ended |
| | September 30, 2024 | | June 30,
2024 | | September 30, 2023 | | September 30, 2024 | | September 30, 2023 |
| (in thousands, except per share amounts) |
| GAAP - Basic EPS | $ | 3.89 | | | $ | 3.71 | | | $ | 4.74 | | | $ | 11.93 | | | $ | 12.20 | |
| Less reconciling items: | | | | | | | | | |
| (Losses)/gains on undesignated financial derivatives due to fair value changes | (0.09) | | | (0.03) | | | 0.27 | | | 0.02 | | | 0.55 | |
| Gains/(losses) on hedging activities due to fair value changes | 0.02 | | | 0.24 | | | 0.30 | | | 0.54 | | | (0.17) | |
| Unrealized gains/(losses) on trading securities | 0.01 | | | (0.01) | | | 0.16 | | | — | | | 0.19 | |
| Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value | — | | | — | | | — | | | 0.01 | | | 0.01 | |
| Net effects of terminations or net settlements on financial derivatives | (0.05) | | | (0.14) | | | (0.01) | | | (0.20) | | | 0.10 | |
| Issuance costs on the retirement of preferred stock | (0.15) | | | — | | | — | | | (0.15) | | | — | |
| Income tax effect related to reconciling items | 0.02 | | | (0.01) | | | (0.15) | | | (0.08) | | | (0.14) | |
| Sub-total | (0.24) | | | 0.05 | | | 0.57 | | | 0.14 | | | 0.54 | |
| Core Earnings - Basic EPS | $ | 4.13 | | | $ | 3.66 | | | $ | 4.17 | | | $ | 11.79 | | | $ | 11.66 | |
| | | | | | | | | |
| Shares used in per share calculation (GAAP and Core Earnings) | 10,883 | | | 10,879 | | | 10,839 | | | 10,869 | | | 10,825 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of GAAP Diluted Earnings Per Share to Core Earnings Diluted Earnings Per Share |
| | For the Three Months Ended | | For the Nine Months Ended |
| | September 30, 2024 | | June 30,
2024 | | September 30, 2023 | | September 30, 2024 | | September 30, 2023 |
| (in thousands, except per share amounts) |
| GAAP - Diluted EPS | $ | 3.86 | | | $ | 3.68 | | | $ | 4.69 | | | $ | 11.82 | | | $ | 12.08 | |
| Less reconciling items: | | | | | | | | | |
| (Losses)/gains on undesignated financial derivatives due to fair value changes | (0.09) | | | (0.03) | | | 0.27 | | | 0.02 | | | 0.54 | |
| Gains/(losses) on hedging activities due to fair value changes | 0.02 | | | 0.24 | | | 0.29 | | | 0.53 | | | (0.16) | |
| Unrealized gains/(losses) on trading securities | 0.01 | | | (0.01) | | | 0.16 | | | — | | | 0.18 | |
| Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value | — | | | — | | | — | | | 0.01 | | | 0.01 | |
| Net effects of terminations or net settlements on financial derivatives | (0.05) | | | (0.14) | | | (0.01) | | | (0.20) | | | 0.09 | |
| Issuance costs on the retirement of preferred stock | (0.15) | | | — | | | — | | | (0.15) | | | — | |
| Income tax effect related to reconciling items | 0.02 | | | (0.01) | | | (0.15) | | | (0.08) | | | (0.14) | |
| Sub-total | (0.24) | | | 0.05 | | | 0.56 | | | 0.13 | | | 0.52 | |
| Core Earnings - Diluted EPS | $ | 4.10 | | | $ | 3.63 | | | $ | 4.13 | | | $ | 11.69 | | | $ | 11.56 | |
| | | | | | | | | |
| Shares used in per share calculation (GAAP and Core Earnings) | 10,966 | | | 10,956 | | | 10,938 | | | 10,968 | | | 10,924 | |
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 Nine Months Ended |
| | September 30, 2024 | | June 30,
2024 | | September 30, 2023 | | September 30, 2024 | | September 30, 2023 |
| | Dollars | | Yield | | Dollars | | Yield | | Dollars | | Yield | | Dollars | | Yield | | Dollars | | Yield |
| | (dollars in thousands) |
| Net interest income/yield | $ | 86,791 | | | 1.15 | % | | $ | 87,340 | | | 1.15 | % | | $ | 87,643 | | | 1.22 | % | | $ | 260,499 | | | 1.15 | % | | $ | 245,378 | | | 1.16 | % |
| Net effects of consolidated trusts | (1,065) | | | 0.02 | % | | (1,371) | | | 0.02 | % | | (1,024) | | | 0.02 | % | | (3,488) | | | 0.02 | % | | (3,123) | | | 0.02 | % |
| Expense related to undesignated financial derivatives | (858) | | | (0.01) | % | | (486) | | | (0.01) | % | | (805) | | | (0.01) | % | | (1,379) | | | (0.01) | % | | (3,999) | | | (0.02) | % |
| Amortization of premiums/discounts on assets consolidated at fair value | (24) | | | — | % | | (21) | | | — | % | | (24) | | | — | % | | (72) | | | — | % | | (71) | | | — | % |
| Amortization of losses due to terminations or net settlements on financial derivatives | 757 | | | 0.01 | % | | 738 | | | 0.01 | % | | 844 | | | 0.01 | % | | 2,287 | | | 0.01 | % | | 2,448 | | | 0.01 | % |
| Fair value changes on fair value hedge relationships | (205) | | | (0.01) | % | | (2,604) | | | (0.03) | % | | (3,210) | | | (0.04) | % | | (5,811) | | | (0.02) | % | | 1,796 | | | 0.01 | % |
| Net effective spread | $ | 85,396 | | | 1.16 | % | | $ | 83,596 | | | 1.14 | % | | $ | 83,424 | | | 1.20 | % | | $ | 252,036 | | | 1.15 | % | | $ | 242,429 | | | 1.18 | % |
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 September 30, 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Core Earnings by Business Segment |
For the Three Months Ended September 30, 2024 |
| Agricultural Finance | | Rural Infrastructure | | Treasury | | Corporate | | | | |
| Farm & Ranch | | Corporate AgFinance | | Rural Utilities | | Renewable Energy | | Funding | | Investments | | | Reconciling
Adjustments | | Consolidated Net Income |
| | (in thousands) |
| Net interest income | $ | 36,816 | | | $ | 6,397 | | | $ | 7,608 | | | $ | 3,810 | | | $ | 31,217 | | | $ | 943 | | | $ | — | | | $ | — | | | $ | 86,791 | |
Less: reconciling adjustments(1)(2)(3) | (1,061) | | | — | | | (29) | | | — | | | (305) | | | — | | | — | | | 1,395 | | | — | |
| Net effective spread | 35,755 | | | 6,397 | | | 7,579 | | | 3,810 | | | 30,912 | | | 943 | | | — | | | 1,395 | | | — | |
| Guarantee and commitment fees | 4,304 | | | 168 | | | 338 | | | 187 | | | — | | | — | | | — | | | (982) | | | 4,015 | |
| Gain on sale of investment securities | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Loss on sale of mortgage loans | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Other income/(expense)(3) | 1,091 | | | 40 | | | — | | | — | | | — | | | 10 | | | (8) | | | (1,649) | | | (516) | |
| Total revenues | 41,150 | | | 6,605 | | | 7,917 | | | 3,997 | | | 30,912 | | | 953 | | | (8) | | | (1,236) | | | 90,290 | |
| | | | | | | | | | | | | | | | | |
| Provision for losses | (116) | | | (1,779) | | | (1,195) | | | (337) | | | — | | | (1) | | | — | | | — | | | (3,428) | |
| | | | | | | | | | | | | | | | | |
| Release of reserve for losses | 126 | | | — | | | 44 | | | — | | | — | | | — | | | — | | | — | | | 170 | |
| Operating expenses | (196) | | | — | | | — | | | — | | | — | | | — | | | (24,587) | | | — | | | (24,783) | |
| Total non-interest expense | (70) | | | — | | | 44 | | | — | | | — | | | — | | | (24,587) | | | — | | | (24,613) | |
| Core earnings before income taxes | 40,964 | | | 4,826 | | | 6,766 | | | 3,660 | | | 30,912 | | | 952 | | | (24,595) | | | (1,236) | | (4) | 62,249 | |
| Income tax (expense)/benefit | (8,602) | | | (1,013) | | | (1,421) | | | (768) | | | (6,492) | | | (201) | | | 5,816 | | | 260 | | | (12,421) | |
| Core earnings before preferred stock dividends | 32,362 | | | 3,813 | | | 5,345 | | | 2,892 | | | 24,420 | | | 751 | | | (18,779) | | | (976) | | (4) | 49,828 | |
| Preferred stock dividends | — | | | — | | | — | | | — | | | — | | | — | | | (5,897) | | | — | | | (5,897) | |
| Loss on retirement of preferred stock | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (1,619) | | | (1,619) | |
| Segment core earnings/(losses) | $ | 32,362 | | | $ | 3,813 | | | $ | 5,345 | | | $ | 2,892 | | | $ | 24,420 | | | $ | 751 | | | $ | (24,676) | | | $ | (2,595) | | (4) | $ | 42,312 | |
| | | | | | | | | | | | | | | | | |
| Total Assets | $ | 14,562,142 | | | $ | 1,662,687 | | | $ | 6,952,605 | | | $ | 985,435 | | | $ | — | | | $ | 6,389,160 | | | $ | 63,192 | | | $ | — | | | $ | 30,615,221 | |
| Total on- and off-balance sheet program assets at principal balance | $ | 18,090,374 | | | $ | 1,842,780 | | | $ | 7,440,141 | | | $ | 1,095,008 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 28,468,303 | |
(1)Includes 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)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 lines of business as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | |
| Outstanding Business Volume | | |
| | | | | | |
| | On or Off
Balance Sheet | | As of September 30, 2024 | | As of December 31, 2023 | | |
| | | | (in thousands) | | |
| Agricultural Finance: | | | | | | | | |
| Farm & Ranch: | | | | | | | | |
| Loans | | On-balance sheet | | $ | 5,253,260 | | | $ | 5,133,450 | | | |
| Loans held in consolidated trusts: | | | | | | | | |
Beneficial interests owned by third-party investors (single-class)(1) | | On-balance sheet | | 879,727 | | | 870,912 | | | |
Beneficial interests owned by third-party investors (structured)(1) | | On-balance sheet | | 838,713 | | | 561,349 | | | |
IO-FMGS(2) | | On-balance sheet | | 8,886 | | | 9,409 | | | |
| USDA Securities | | On-balance sheet | | 2,373,473 | | | 2,368,872 | | | |
AgVantage Securities(1) | | On-balance sheet | | 4,975,000 | | | 5,835,000 | | | |
| LTSPCs and unfunded loan commitments | | Off-balance sheet | | 2,767,320 | | | 2,999,943 | | | |
Other Farmer Mac Guaranteed Securities(3) | | Off-balance sheet | | 430,628 | | | 452,602 | | | |
| Loans serviced for others | | Off-balance sheet | | 563,367 | | | 577,264 | | | |
| Total Farm & Ranch | | | | $ | 18,090,374 | | | $ | 18,808,801 | | | |
| Corporate AgFinance: | | | | | | | | |
| Loans | | On-balance sheet | | $ | 1,297,563 | | | $ | 1,259,723 | | | |
AgVantage Securities(1) | | On-balance sheet | | 354,876 | | | 288,879 | | | |
| Unfunded loan commitments | | Off-balance sheet | | 190,341 | | | 145,377 | | | |
| Total Corporate AgFinance | | | | $ | 1,842,780 | | | $ | 1,693,979 | | | |
| Total Agricultural Finance | | | | $ | 19,933,154 | | | $ | 20,502,780 | | | |
| Rural Infrastructure Finance: | | | | | | | | |
| Rural Utilities: | | | | | | | | |
| Loans | | On-balance sheet | | $ | 3,395,123 | | | $ | 3,094,477 | | | |
AgVantage Securities(1) | | On-balance sheet | | 3,540,631 | | | 3,898,468 | | | |
| LTSPCs and unfunded loan commitments | | Off-balance sheet | | 504,387 | | | 487,778 | | | |
| | | | | | | | |
| Total Rural Utilities | | | | $ | 7,440,141 | | | $ | 7,480,723 | | | |
| Renewable Energy: | | | | | | | | |
| Loans | | On-balance sheet | | $ | 988,232 | | | $ | 440,286 | | | |
| Unfunded loan commitments | | Off-balance sheet | | 106,776 | | | 47,235 | | | |
| Total Renewable Energy | | | | $ | 1,095,008 | | | $ | 487,521 | | | |
| Total Rural Infrastructure Finance | | | | $ | 8,535,149 | | | $ | 7,968,244 | | | |
| Total | | | | $ | 28,468,303 | | | $ | 28,471,024 | | | |
(1)A type of Farmer Mac Guaranteed Security.
(2)An interest-only Farmer Mac Guaranteed Security retained as part of a structured securitization.
(3)Other categories of Farmer Mac Guaranteed Securities that were sold by Farmer Mac to third parties
The following table presents the quarterly net effective spread (a non-GAAP measure) by segment:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Effective Spread(1) |
| Agricultural Finance | | Rural Infrastructure Finance | | Treasury | | | | |
| Farm & Ranch | | Corporate AgFinance | | Rural Utilities | | Renewable Energy | | Funding | | Investments | | Net Effective Spread |
| Dollars | | Yield | | Dollars | | Yield | | Dollars | | Yield | | Dollars | | Yield | | Dollars | | Yield | | Dollars | | Yield | | Dollars | | Yield |
| (dollars in thousands) |
| For the quarter ended: | | | | | | | | | | | | | | | | | | | | | | | | | | | |
September 30, 2024(2) | $ | 35,755 | | | 1.05 | % | | $ | 6,397 | | | 1.56 | % | | $ | 7,579 | | | 0.44 | % | | $ | 3,810 | | | 1.78 | % | | $ | 30,912 | | | 0.42 | % | | $ | 943 | | | 0.05 | % | | $ | 85,396 | | | 1.16 | % |
| June 30, 2024 | 34,156 | | | 0.98 | % | | 7,866 | | | 1.91 | % | | 7,646 | | | 0.44 | % | | 2,999 | | | 1.86 | % | | 30,268 | | | 0.41 | % | | 661 | | | 0.04 | % | | 83,596 | | | 1.14 | % |
| March 31, 2024 | 32,843 | | | 0.95 | % | | 7,971 | | | 2.05 | % | | 7,232 | | | 0.42 | % | | 2,049 | | | 1.75 | % | | 32,474 | | | 0.45 | % | | 475 | | | 0.03 | % | | 83,044 | | | 1.14 | % |
| December 31, 2023 | 33,329 | | | 0.98 | % | | 8,382 | | | 2.06 | % | | 7,342 | | | 0.43 | % | | 1,540 | | | 1.69 | % | | 33,361 | | | 0.47 | % | | 597 | | | 0.04 | % | | 84,551 | | | 1.19 | % |
| September 30, 2023 | 32,718 | | | 0.97 | % | | 8,250 | | | 2.05 | % | | 6,362 | | | 0.39 | % | | 1,150 | | | 1.46 | % | | 34,412 | | | 0.49 | % | | 532 | | | 0.04 | % | | 83,424 | | | 1.20 | % |
| June 30, 2023 | 34,388 | | | 1.03 | % | | 7,444 | | | 1.92 | % | | 5,808 | | | 0.38 | % | | 1,100 | | | 1.47 | % | | 32,498 | | | 0.48 | % | | 594 | | | 0.04 | % | | 81,832 | | | 1.20 | % |
| March 31, 2023 | 32,465 | | | 0.97 | % | | 7,148 | | | 1.94 | % | | 5,507 | | | 0.36 | % | | 858 | | | 1.53 | % | | 31,738 | | | 0.47 | % | | (543) | | | (0.04) | % | | 77,173 | | | 1.15 | % |
| December 31, 2022 | 32,770 | | | 0.98 | % | | 7,471 | | | 1.94 | % | | 4,960 | | | 0.34 | % | | 935 | | | 1.76 | % | | 27,656 | | | 0.42 | % | | (2,689) | | | (0.19) | % | | 71,103 | | | 1.07 | % |
| September 30, 2022 | 33,343 | | | 1.04 | % | | 7,600 | | | 1.99 | % | | 4,220 | | | 0.30 | % | | 705 | | | 1.97 | % | | 22,564 | | | 0.36 | % | | (2,791) | | | (0.21) | % | | 65,641 | | | 1.03 | % |
(1)Farmer Mac excludes the Corporate segment in the presentation above because the segment does not have any interest-earning assets.
(2)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 September 30, 2024.
The following table presents quarterly core earnings reconciled to net income attributable to common stockholders:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Core Earnings by Quarter Ended |
| September 2024 | | June 2024 | | March 2024 | | December 2023 | | September 2023 | | June 2023 | | March 2023 | | December 2022 | | September 2022 |
| (in thousands) |
| Revenues: | | | | | | | | | | | | | | | | | |
| Net effective spread | $ | 85,396 | | | $ | 83,596 | | | $ | 83,044 | | | $ | 84,551 | | | $ | 83,424 | | | $ | 81,832 | | | $ | 77,173 | | | $ | 71,103 | | | $ | 65,641 | |
| Guarantee and commitment fees | 4,997 | | | 5,256 | | | 4,982 | | | 4,865 | | | 4,828 | | | 4,581 | | | 4,654 | | | 4,677 | | | 4,201 | |
| Gain on sale of investment securities | — | | | 1,052 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Loss on sale of mortgage loan | — | | | (1,147) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Other | 1,133 | | | 481 | | | 1,077 | | | 767 | | | 1,056 | | | 409 | | | 1,067 | | | 390 | | | 473 | |
| Total revenues | 91,526 | | | 89,238 | | | 89,103 | | | 90,183 | | | 89,308 | | | 86,822 | | | 82,894 | | | 76,170 | | | 70,315 | |
| | | | | | | | | | | | | | | | | |
| Credit related expense/(income): | | | | | | | | | | | | | | | | | |
| Provision for/(release of) losses | 3,258 | | | 6,230 | | | (1,870) | | | (575) | | | (181) | | | 1,142 | | | 750 | | | 1,945 | | | 450 | |
| REO operating expenses | 196 | | | — | | | — | | | — | | | — | | | — | | | — | | | 819 | | | — | |
| | | | | | | | | | | | | | | | | |
| Total credit related expense/(income) | 3,454 | | | 6,230 | | | (1,870) | | | (575) | | | (181) | | | 1,142 | | | 750 | | | 2,764 | | | 450 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | | | | | |
| Compensation and employee benefits | 15,237 | | | 14,840 | | | 18,257 | | | 15,523 | | | 14,103 | | | 13,937 | | | 15,351 | | | 12,105 | | | 11,648 | |
| General and administrative | 8,625 | | | 8,904 | | | 8,255 | | | 8,916 | | | 9,100 | | | 9,420 | | | 7,527 | | | 8,055 | | | 6,919 | |
| Regulatory fees | 725 | | | 725 | | | 725 | | | 725 | | | 831 | | | 831 | | | 835 | | | 832 | | | 812 | |
| Total operating expenses | 24,587 | | | 24,469 | | | 27,237 | | | 25,164 | | | 24,034 | | | 24,188 | | | 23,713 | | | 20,992 | | | 19,379 | |
| | | | | | | | | | | | | | | | | |
| Net earnings | 63,485 | | | 58,539 | | | 63,736 | | | 65,594 | | | 65,455 | | | 61,492 | | | 58,431 | | | 52,414 | | | 50,486 | |
| Income tax expense | 12,681 | | | 11,970 | | | 13,553 | | | 13,881 | | | 13,475 | | | 12,539 | | | 12,756 | | | 11,210 | | | 10,303 | |
| | | | | | | | | | | | | | | | | |
| Preferred stock dividends | 5,897 | | | 6,792 | | | 6,791 | | | 6,791 | | | 6,792 | | | 6,791 | | | 6,791 | | | 6,791 | | | 6,791 | |
| Core earnings | $ | 44,907 | | | $ | 39,777 | | | $ | 43,392 | | | $ | 44,922 | | | $ | 45,188 | | | $ | 42,162 | | | $ | 38,884 | | | $ | 34,413 | | | $ | 33,392 | |
| | | | | | | | | | | | | | | | | |
| Reconciling items: | | | | | | | | | | | | | | | | | |
| (Losses)/gains on undesignated financial derivatives due to fair value changes | $ | (1,064) | | | $ | (359) | | | $ | 1,683 | | | $ | (836) | | | $ | 2,921 | | | $ | 2,141 | | | $ | 916 | | | $ | 1,596 | | | $ | 6,441 | |
| Gains/(losses) on hedging activities due to fair value changes | 205 | | | 2,604 | | | 3,002 | | | (3,598) | | | 3,210 | | | (4,901) | | | (105) | | | (148) | | | (624) | |
| Unrealized gains/(losses) on trading assets | 99 | | | (87) | | | (14) | | | (37) | | | 1,714 | | | (57) | | | 359 | | | 31 | | | (757) | |
| Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value | 27 | | | 26 | | | 31 | | | 88 | | | 29 | | | 29 | | | 29 | | | 57 | | | 24 | |
| Net effects of terminations or net settlements on financial derivatives | (503) | | | (1,505) | | | (192) | | | (800) | | | (79) | | | 583 | | | 523 | | | 1,268 | | | (3,522) | |
| Issuance costs on the retirement of preferred stock | (1,619) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | | | | | | |
| Income tax effect related to reconciling items | 260 | | | (143) | | | (947) | | | 1,089 | | | (1,638) | | | 464 | | | (362) | | | (590) | | | (327) | |
| Net income attributable to common stockholders | $ | 42,312 | | | $ | 40,313 | | | $ | 46,955 | | | $ | 40,828 | | | $ | 51,345 | | | $ | 40,421 | | | $ | 40,244 | | | $ | 36,627 | | | $ | 34,627 | |
Equity Investor Presentation Third Quarter 2024
Forward-Looking Statements 2 In addition to historical information, this presentation includes forward-looking statements that reflect management’s current expectations for Farmer Mac’s future financial results, business prospects, and business developments. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements. Management’s expectations for Farmer Mac’s future necessarily involve assumptions, 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. Some of these factors are identified and discussed in Farmer Mac’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, filed with the SEC on November 4, 2024. These reports are also available on Farmer Mac’s website (www.farmermac.com). Considering these potential risks and uncertainties, no undue reliance should be placed on any forward-looking statements expressed in this presentation. Any forward-looking statements made in this presentation are current only as of September 30, 2024, except as otherwise indicated. Farmer Mac undertakes no obligation to release publicly the results of revisions to any such forward- looking statements that may be made to reflect new information or any future events or circumstances, except as otherwise required by applicable law. The information in this presentation is not necessarily indicative of future results. NO OFFER OR SOLICITATION OF SECURITIES This presentation does not constitute an offer to sell or a solicitation of an offer to buy any Farmer Mac security. Farmer Mac securities are offered only in jurisdictions where permissible by offering documents available through qualified securities dealers. Any investor who is considering purchasing a Farmer Mac security should consult the applicable offering documents for the security and their own financial and legal advisors for information about and analysis of the security, the risks associated with the security, and the suitability of the investment for the investor’s particular circumstances. Copyright © 2024 by Farmer Mac. No part of this document may be duplicated, reproduced, distributed, or displayed in public in any manner or by any means without the written permission of Farmer Mac.
Use of Non-GAAP Financial Measures 3 This presentation is for general informational purposes only, is current only as of September 30, 2024 and should be read in conjunction with Farmer Mac’s Quarterly Report on Form 10-Q filed with the SEC on November 4, 2024. In the accompanying analysis of its financial information, Farmer Mac uses the following non-GAAP financial 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 financial 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. 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 interest income and interest expense associated with the consolidated trusts and the average balance of the loans underlying these trusts; and (2) the fair value changes of financial derivatives and the corresponding assets or liabilities designated in fair value hedge accounting relationships. 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") and the net effects of terminations or net settlements on financial derivatives, which consist of: (1) the net effects of cash settlements on agency forward contracts on the debt of other GSEs and U.S. Treasury security futures that we use as short-term economic hedges on the issuance of debt; and (2) the net effects of initial cash payments that Farmer Mac receives upon the inception of certain swaps.
WHY INVEST IN FARMER MAC? 4 Uniquely Positioned Focused on Growth Value Creation Consistent performance with a dedication to strategic initiatives and organizational alignment. Well-positioned to benefit from the growing agricultural mortgage market, strong demand for renewable energy projects, and agricultural mortgage-backed securities. A New York Stock Exchange Listed Government Sponsored Enterprise (GSE) that provides investors the unique opportunity to invest in American agriculture and rural infrastructure.
5 MISSION FOCUSED Strengthen Rural America Lower Financing Costs Increase Access to Credit Our Corporate Culture is Rooted in Our Values • Farmer Mac is a publicly traded company driven by our mission to increase the accessibility of credit for American agriculture and rural infrastructure. • NYSE: AGM & AGM.A • Farmer Mac increases the accessibility of financing and lowers financing costs for American agriculture and rural infrastructure. • GSE funding advantage: 10-year Treasury +0.37% as of September 30, 2024 • Farmer Mac provides a secondary market to a diverse customer set, offering a wide range of products and innovative solutions. • Successfully issued 4 large, structured FARM Series Agricultural Mortgage- Backed Securities (AMBS) • Innovation • Passion for our Mission • Integrity • Excellence • Relationships
A MISSION-DRIVEN, FOR-PROFIT COMPANY 6 TODAY1999 Listed on NYSE (Ticker: AGM) 1990 First expansion of authority: USDA guaranteed securities 1988 Farmer Mac initially chartered as an instrumentality of the United States 1996 Second expansion of authority: direct loan purchases 2008 Third expansion of authority: rural utilities loans With outstanding business volume of nearly $30 billion, Farmer Mac remains resolute in its commitment to growth, innovation, and mission fulfillment
CENTRAL TO A LARGE AGRICULTURAL MORTGAGE MARKET 7 Investments, $121,915 Inventories, $214,228 Real Estate $3,338,849 Machinery & Vehicles, $339,346 $4,014,338 Real Estate, $344,556 Nonreal Estate, $174,394 $518,951 $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 Farm Sector Assets 2023 Farm Sector Debt 2023 $ I N T H O U S A N D S Ag Real Estate Debt-to-Asset Ratio: 10.3% (1)
8 COMPETITIVE LANDSCAPE Farm Credit System (FCS) (Cooperative GSE) • Four FCS Banks • 56 Retail Agricultural Credit Associations Agricultural Mortgage Market (Farmers & Ranchers) (FCS Secondary Market GSE) Agricultural Finance Line of Business (Farm & Ranch and Corporate AgFinance) $345 BILLION Non-FCS Ag Lenders • Insurance Companies • Ag Banks • Non-Bank Lenders Mortgage FinancingMortgage Financing
9 FARMER MAC’S OPERATING MODEL Operating model excludes issued agricultural mortgage-backed securities and long-term standby purchase commitment credit protection components of our business. Farmer Mac’s Regulatory/Congressional Oversight • Regulated by the Farm Credit Administration (FCA) through its Office of Secondary Market Oversight (OSMO) • Congressional oversight through Senate and House Agricultural Committees
Each operating segment is comprised of both spread-based and fee-income products • Loan purchases (spread) • Wholesale Funding (spread) • Purchase Commitments (fee) • Loans Serviced for Others (fee) Net effective spread and fees determined by a variety of factors, including: • Funding execution • Credit profile • Economic factors 10 SEGMENT PROFITABILITY Line of Business Segment Volume ($ IN BILLIONS AS OF 9/30/2024) 3Q24 Net Effective Spread (%) Risk-Adjusted Gross Return on Allocated Capital (%) Agricultural Finance Farm & Ranch $18.1 1.05% 30% Corporate AgFinance $1.8 1.56% 19% Rural Infrastructure Finance Rural Utilities $7.4 0.44% 18% Renewable Energy $1.1 1.78% 27% Treasury Funding – 0.42% – Investments – 0.05% – $28.5 1.16% –
11 ALLOWANCE FOR LOSSES —QUARTERLY The total allowance for losses increased $3.3 million to $21.9 million in third quarter 2024. • The $1.5 million net provision to the allowance for the Rural Infrastructure Finance portfolio during the quarter ended September 30, 2024 was primarily attributable to volume growth in telecommunications, project finance, and renewable energy. • $1.8 million provision to the allowance for the Agricultural Finance portfolio was primarily attributable to risk rating downgrades and a permanent planting loan that is currently delinquent. n ra n rastr ct re gric t ra inance nvestments t er e $ I N M IL L IO N S June 30, 2024 to September 30, 2024 Allowance Fluctuation ncrease ecrease ota
12 AGRICULTURAL FINANCE LOAN PORTFOLIO DIVERSIFICATION Northwest 12% Southwest 30% Mid-North 27% Mid-South 17% Northeast 4% Southeast 10% By Geographic Region Crops 49% Permanent Plantings 22% Livestock 19% Part-time Farm 4% Ag. Storage and Processing 6% By Commodity Type Agricultural Update(2) • U ’s Economic esearc ervice re orted 66 bi ion in net cas incomes in , com ared to bi ion in 2022 and $155.2 billion in 2021. • Net cash income in 2024 is forecast to fall by 7% due to elevated input costs and moderating commodity prices. As of September 30, 2024
13 TREASURY/INVESTMENTS SEGMENT As of September 30, 2024 Includes the financial results of the company’s funding, liquidity, and capital allocation strategies and operations Liquidity & Investment Portfolio • Maintain investment portfolio to provide back-up source of liquidity in excess of regulatory requirements • $6.7 billion as of September 30, 2024 • Investments net effective spread of 0.05% in third quarter 2024 Benefits from Asset-Liability Management Strategies • Leverage a funds transfer pricing process to allocate interest expense to each segment, and allocate the costs and benefits of hedging strategies to the Treasury segment Cash & Equiv. 12.5% Guaranteed By GSEs and U.S. Gov't Agencies 87.2% Asset-Backed Securities 0.3% Liquidity Portfolio
$197 $221 $256 $327 $252$101 $114 $124 $171 $128 $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0 $180.0 $200.0 $0.0 $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 2020 2021 2022 2023 YTD 2024 C O R E E A R N IN G S $ IN M IL L IO N S N E T E F F E C T IV E S P R E A D $ I N M IL L IO N S Net Effective Spread & Core Earnings Net Effective Spread Core Earnings Consistent historical financial performance highlights the diversification and resiliency of Farmer Mac’s business model Disciplined asset liability management and uninterrupted access to the capital markets have provided buffer against market volatility and changing credit market conditions 14 GROWING, RECURRING, HIGH-QUALITY EARNINGS CAGR is defined as Compound Annual Growth Rate. Core earnings and net effective spread are non-GAAP measures. For a reconciliation of core earnings to GAAP net income attributable to common stockholders and a reconciliation of net effective spread to GAAP net interest income, please refer to pages 27-28 of the Appendix. 18% NES CAGR (2019-2023) 16% Core CAGR (2019-2023)
GROWTH OPPORTUNITIES TO INCREASE ASSETS UNDER MANAGEMENT 15Farm & Ranch Corporate AgFinance Core Farm & Ranch business provides consistent growth opportunities throughout market cycles. Rural Utilities Well positioned to benefit from the growing demand for renewable power and generation Agricultural Finance Rural Infrastructure Finance Renewable Energy Relative Size of Volume Opportunity Securitization Pool Purchases Syndications Wholesale Funding Loan Servicing Collateral Value Efficiencies Renewable Energy & Project Finance Rural Broadband Growing Electricity Demand
FARM securitization program exemplifies Farmer Mac’s core mission to lower costs for the end borrower and improve credit availability in rural America, while transforming the agricultural mortgage market industry with new efficiencies Building upon the existing FARM Securitization Program by creating a securitization product for our customers • Utilize the current capability to originate new types of eligible loans into a conduit that de-risks the sector • Creates new financing for borrowers and expands sources of revenue for Farmer Mac 16 AGRICULTURAL MORTGAGE-BACKED SECURITIES OPPORTUNITY Farmers & Ranchers Originators Farmer Mac (Mortgage Loan Seller & Guarantor) FARM Program Mortgage Trust (Securitization Issuing Entity) Senior Guaranteed (A) Tranche Subordinated Unguaranteed (B) Tranche
17 FARMER MAC USES PROVEN, RIGOROUS UNDERWRITING Industry-leading credit requirements • Total debt coverage ratio of at least 1.25x • LTVs average 40% to 45% on mortgages purchased • Minimum borrower net equity of 50% Credits are less likely to default • Focus on repayment capacity through stressed inputs • Not a “ ender o ast resort” • Farm Credit Administration is our safety and soundness regulator Losses less likely even in default • Average portfolio LTV of 45% as of September 30, 2024 • Land values need to decline >55% to generate material losses across Agricultural Finance mortgage loans portfolio • “ tress scenario” osses of 17% to 48% • 1980s crisis saw land value declines of ~23%(3)
-0.10% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 C H A R G E -O F F S A S % O F A S S E T S Agricultural Lender Charge-off Rates Banks Farm Credit System Farmer Mac 18 CREDIT CONSISTENTLY OUTPERFORMS 0.58% 1.26% 0.51% 0.00% 1.00% 2.00% 3.00% FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 3Q24 90-Day Delinquencies Industry 90-Day Delinquencies Farmer Mac 90-Day Delinquencies (Agricultural Finance Mortgage Loans Portfolio Only) Farmer Mac 90-Day Delinquences (Total Portfolio) All Commercial Banks Loans and Leases Average 0.87%(8) Banks Average: 0.16% Farm Credit System Average: 0.09% Farmer Mac Average: 0.02% (4) (5) (6)(7) (8) (9)
Consistent, strong earnings growth has supported capital base and allowed for consistent returns to shareholders Opportunistically issued Preferred Stock during low-rate environment, further bolstering capital • $100M Preferred Series D in May 2019 @ 5.700% • $79.5M Preferred Series E in May 2020 @ 5.750% • $120M Preferred Series F in August 2020 @ 5.250% • $125M Preferred Series G in May 2021 @ 4.875% Securitization provides capital relief through the transfer of credit risk to capital markets 19 STRONG, GROWING CAPITAL BASE tat tory Minim m Core Ca ita de ined as tota stock o ders’ eq ity ess acc m ated ot er com re ensive income $681 $713 $806 $863 $885 $331 $497 $517 $589 $580 $1,012 $1,210 $1,323 $1,452 $1,465 14.2% 14.8% 14.9% 15.4% 14.2% -2.0% 3.0% 8.0% 13.0% 18.0% 23.0% 28.0% 33.0% $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2020 2021 2022 2023 Q3 2024 T IE R 1 C A P IT A L R A T IO ( % ) C O R E C A P IT A L $ I N M IL L IO N S Core Capital Amount Above Statutory Minimum Capital Statutory Minimum Core Capital Tier 1 Capital Ratio
KEY METRICS 20 26% 27% 29% 29% 27% 23% 24% 25% 26% 27% 28% 29% 30% 31% 2019 2020 2021 2022 2023 Operating Efficiency Maintain Efficiency Ratio Below 30% 17% 16% 16% 16% 19% 0% 5% 10% 15% 20% 25% 2019 2020 2021 2022 2023 Return on Common Equity Return on Common Equity greater than 14% • 185 employees managing nearly $30 billion in assets, as of 2023 year-end • Earnings greater than $900,000 per employee, as of 2023 year-end • Greater than 90% of total revenues are recurring net effective spread and fees • Strong returns enable consistent dividend growth
21 QUALITY EARNINGS DRIVE STRONG DIVIDENDS Strong earnings and consistent capital position support continued dividend growth for Farmer Mac. • armer Mac’s dividend growt rate over t e ast years is substantially greater than those seen from the two major market indices. • 2024 marks the 13th consecutive year of higher annual dividends for Farmer Mac. • Farmer Mac is committed to strong returns and responsible growth. Dividend Yield1 13 Yr. Dividend CAGR Farmer Mac 2.83% 29.21% S&P 500 1.28% 8.98% Russell 2000 1.41% 10.13% $0.05 $0.10 $0.12 $0.14 $0.16 $0.26 $0.36 $0.58 $0.70 $0.80 $0.88 $0.95 $1.10 $1.40 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 $ P E R S H A R E Quarterly Dividend per Common Share 27% year-over-year increase in 2024 Increased quarterly dividend payments for 13 consecutive years 1. Dividend yield data as of 9/30/2024
WHY INVEST IN FARMER MAC? 22 Uniquely Positioned Focused on Growth Value Creation Consistent performance with a dedication to strategic initiatives and organizational alignment. Well-positioned to benefit from the growing agricultural mortgage market, strong demand for renewable energy projects, and agricultural mortgage-backed securities. A New York Stock Exchange Listed Government Sponsored Enterprise (GSE) that provides investors the unique opportunity to invest in American agriculture and rural infrastructure.
APPENDIX
24 KEY COMPANY METRICS ($ in thousands, except per share amounts) 2024 YTD 2023 2022 2021 2020 Core Earnings $128,076 $171,156 $124,314 $113,570 $100,612 Core Earnings per Diluted Share $11.69 $15.65 $11.42 $10.47 $9.33 Net Effective Spread ($) $252,036 $326,980 $255,529 $220,668 $196,956 Net Effective Spread (%) 1.15% 1.18% 1.02% 0.98% 0.93% Guarantee & Commitment Fees $15,235 $18,928 $18,144 $17,533 $19,150 Core Capital Above Statutory Minimum $579,900 $589,400 $516,900 $496,800 $331,400 Common Stock Dividends per Share $4.20 $4.40 $3.80 $3.52 $3.20 Outstanding Business Volume $28,468,303 $28,471,024 $25,922,082 $23,614,463 $21,929,095 90-Day Delinquencies 0.51% 0.12% 0.17% 0.20% 0.21% Recovery/(Credit Losses) ($4,239) $0 ($903) $1,054 ($5,759) Book Value per Share $96.81 $89.24 $77.61 $67.37 $60.41 Core Earnings Return on Equity 17% 19% 16% 16% 16% • Core earnings, core earnings per share, and net effective spread are non-GAAP measures. For more information on the use of these non-GAAP measures, please see page 3. For a reconciliation of core earnings to GAAP net income attributable to common stockholders and core earnings per share to earnings per common share, and a reconciliation of net effective spread to GAAP net interest income, please refer to pages 27-28 of the Appendix. • Book Value per Share excludes accumulated other comprehensive income.
25 EQUITY CAPITAL STRUCTURE • Common stock dividend annualized divided by quarter-end closing price. • Par value of annual dividend for preferred stock. Summary Stratifications NYSE Ticker Dividend Yield Shares Outstanding COMMON STOCK CLASS A VOTING COMMON STOCK • wners i restricted to non-Farm Credit System financial institutions AGM.A 3.91% 1.0 million CLASS B VOTING COMMON STOCK • wners i restricted to arm Credit ystem instit tions – – 0.5 million CLASS C NON-VOTING COMMON STOCK • No owners i restrictions AGM 2.99% 9.4 million PREFERRED STOCK SERIES D NON-CUMULATIVE PREFERRED STOCK • tion to redeem on any ayment date on or a ter y 7, 4 • edem tion Va e: er s are AGM.PR.D 5.700% 4.0 million SERIES E NON-CUMULATIVE PREFERRED STOCK • tion to redeem on any ayment date on or a ter y 7, • edem tion Va e: er s are AGM.PR.E 5.750% 3.2 million SERIES F NON-CUMULATIVE PREFERRED STOCK • tion to redeem on any ayment date on or a ter ctober 8, • edem tion Va e: er s are AGM.PR.F 5.250% 4.8 million SERIES G NON-CUMULATIVE PREFERRED STOCK • tion to redeem on any ayment date on or a ter y 7, 6 • edem tion Va e: er s are AGM.PR.G 4.875% 5.0 million
26 FUNDING Finance asset purchases with proceeds of debt issuances: • 30 dealers • Match-funding provides for stable net effective spread and immaterial interest rate risk Farmer Mac’s debt securities carry privileges for certain holders: • 20% capital risk weighting • Eligible collateral for Fed advances • Legal investments for many federally supervised financial institutions (banks, etc.) Debt Securities Trade at Narrow Spreads to Comparable Maturity Treasuries Maturity (Years) 3 5 7 10 Spread to Treasury As of September 30, 2024 7 bps 7 bps 27 bps 37 bps
27 RECONCILIATION OF NET INCOME TO CORE EARNINGS (in thousands) 2024 YTD 2023 2022 2021 2020 Net income attributable to common stockholders 129,580$ 172,838$ 150,979$ 111,413$ 94,904$ Less reconciling items: Gains/(Losses) on undesignated financial derivatives due to fair value changes 260 5,142 13,495 (1,430) (1,701) Gains/(Losses) on hedging activities due to fair value changes 5,811 (5,394) 5,343 (1,809) (4,759) (Losses)/gains on trading assets (2) 1,979 (917) (115) 51 Net effects of amortization of premiums/discounts and deferred gains on assets consolidated at fair value 84 175 39 130 58 Net effects of terminations or net settlements on financial derivatives (2,200) 227 15,794 494 1,236 Issuance costs on retirement of preferred stock (1,619) - - - (1,667) Income tax effect related to reconciling items (830) (447) (7,089) 573 1,074 Sub-total 1,504 1,682 26,665 (2,157) (5,708) Core earnings 128,076$ 171,156$ 124,314$ 113,570$ 100,612$ Core Earnings by Period Ended
28 RECONCILIATION OF NET INTEREST INCOME TO NET EFFECTIVE SPREAD 2022 2021 2020 $ in thousands Dollars Yield Dollars Yield Dollars Yield Dollars Yield Dollars Yield Net interest income/yield 260,499$ 1.15% 327,547$ 1.15% 270,940$ 1.04% 221,951$ 0.94% 195,848$ 0.87% Net effects of consolidated trusts (3,488) 0.02% (4,171) 0.02% (4,239) 0.02% (4,864) 0.02% (6,601) 0.02% Expense related to undesignated financial derivatives (1,379) -0.01% (4,845) -0.02% (7,756) -0.03% 2,841 0.02% 3,468 0.02% Amortization of premiums/discounts on assets consolidated at fair value (72) 0.00% (175) 0.00% (24) 0.00% (45) 0.00% 197 0.00% Amortization of losses due to terminations or net settlements on financial derivatives 2,287 0.01% 3,230 0.01% 2,413 0.01% 446 0.00% 120 0.00% Fair Value Changes on fair value hedge relationships (5,811) -0.02% 5,394 0.02% (5,805) -0.02% 339 0.00% 3,924 0.02% Net Effective Spread 252,036$ 1.15% 326,980$ 1.18% 255,529$ 1.02% 220,668$ 0.98% 196,956$ 0.93% 2024 YTD Net Effective Spread By Period Ended 2023
29 RESOURCES Footnote 1: USDA Economic Research Service year end 2023 balance sheet (https://data.ers.usda.gov/reports.aspx?ID=17835). Far m Sector Assets and Farm Sector Debt values are values for 2023 from USDA Economic Research Service. Footnote 2: USDA, Economic Research Service U.S. and State-Level Farm Income and Wealth Statistic (https://www.ers.usda.gov/data-products/farm-income-and- wealth-statistics/data-files-us-and-state-level-farm-income-and-wealth-statistics/). Footnote 3: USDA, National Agricultural Statistics Service (as of August 2015). Historic values are not necessarily predictive of future results or outcomes. Footnote 4: FDIC Call Report Data & Farm Credit Funding Corp Annual Information Statements – Non-accrual real estate loans and accruing loans that are 90 days or more past due made by commercial and Farm Credit System banks (as of December 2022). ootnote : e inq encies re ect armer Mac’s gric t ra inance mortgage oan ort o io t at are 9 days or more ast d e , in foreclosure, or in bankruptcy with at least one missed payment, excluding loans performing under either their original loan terms or a court -approved bankruptcy plan. Footnote 6: Kansas City Federal Reserve Agriculture Finance Databook (https://www.kansascityfed.org/agriculture/agfinance -updates/). ootnote 7: Banks’ c arge-off rate is a percentage of agricultural loan assets. ootnote 8: arm Credit Banks nding Cor oration nn a n ormation tatements; arm Credit ystem’s c arge-off rate is the percentage of total loans and guarantees. ootnote 9: armer Mac’s c arge-off rate is the percentage of total loans and guarantees.
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v3.24.3
Cover Page
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Nov. 04, 2024 |
| Entity Information [Line Items] |
|
| Document Type |
8-K
|
| Document Period End Date |
Nov. 04, 2024
|
| Entity Registrant Name |
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
|
| City Area Code |
202
|
| Local Phone Number |
872-7700
|
| Written Communications |
false
|
| Soliciting Material |
false
|
| Pre-commencement Tender Offer |
false
|
| Pre-commencement Issuer Tender Offer |
false
|
| Entity File Number |
001-14951
|
| Entity Central Index Key |
0000845877
|
| Entity Tax Identification Number |
52-1578738
|
| Entity Address, Address Line One |
2100 Pennsylvania Avenue, N.W., Suite 450N,
|
| Entity Address, Postal Zip Code |
20037
|
| Amendment Flag |
false
|
| Entity Incorporation, State or Country Code |
X1
|
| Entity Address, City or Town |
Washington,
|
| Entity Address, State or Province |
DC
|
| Entity Emerging Growth Company |
false
|
| Common Class A [Member] |
|
| Entity Information [Line Items] |
|
| Title of 12(b) Security |
Class A voting common stock
|
| Trading Symbol |
AGM.A
|
| Security Exchange Name |
NYSE
|
| Common Class C [Member] |
|
| Entity Information [Line Items] |
|
| Title of 12(b) Security |
Class C non-voting common stock
|
| Trading Symbol |
AGM
|
| Security Exchange Name |
NYSE
|
| Series D Preferred Stock [Member] |
|
| Entity Information [Line Items] |
|
| Title of 12(b) Security |
5.700% Non-Cumulative Preferred Stock, Series D
|
| Trading Symbol |
AGM.PRD
|
| Security Exchange Name |
NYSE
|
| Series E Preferred Stock |
|
| Entity Information [Line Items] |
|
| Title of 12(b) Security |
5.750% Non-Cumulative Preferred Stock, Series E
|
| Trading Symbol |
AGM.PRE
|
| Security Exchange Name |
NYSE
|
| Series F Preferred Stock |
|
| Entity Information [Line Items] |
|
| Title of 12(b) Security |
5.250% Non-Cumulative Preferred Stock, Series F
|
| Trading Symbol |
AGM.PRF
|
| Security Exchange Name |
NYSE
|
| Series G Preferred Stock |
|
| Entity Information [Line Items] |
|
| Title of 12(b) Security |
4.875% Non-Cumulative Preferred Stock, Series G
|
| Trading Symbol |
AGM.PRG
|
| Security Exchange Name |
NYSE
|
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-Publisher SEC
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