Farmer Mac Reports First Quarter Results
12 May 2009 - 10:06PM
PR Newswire (US)
Earnings of $33 Million Bring Capital Surplus to $67 Million
WASHINGTON, May 12 /PRNewswire-FirstCall/ -- The Federal
Agricultural Mortgage Corporation (Farmer Mac; NYSE: AGM and AGM.A)
today reported first quarter net income of $33.5 million, or $3.31
per diluted common share. This compares to a net loss in fourth
quarter 2008 of $61.1 million, or $6.03 per diluted common share
and a net loss in first quarter 2008 of $8.3 million, or $0.84 per
diluted common share. First quarter 2009 net income was primarily
driven by gains on the values of financial derivatives and trading
assets, offset somewhat by further provisions for losses
principally related to credits in the ethanol sector. Farmer Mac's
core earnings were $4.8 million for first quarter 2009. This
compares to a core earnings loss of $8.8 million for fourth quarter
2008, and core earnings of $10.5 million for first quarter 2008.
Farmer Mac's core and GAAP earnings included provisions for losses
of $6.1 million in first quarter 2009 and $17.2 million in fourth
quarter 2008. There were no such provisions in first quarter 2008.
Farmer Mac President and Chief Executive Officer Michael Gerber
stated, "Farmer Mac's capital surplus now exceeds $67 million,
compared to $13 million at December 31, 2008. During first quarter
Farmer Mac improved its capital position by raising an additional
$10.8 million of capital in conjunction with new business and
selling $354.5 million of loans at a gain of $1.6 million. Both
GAAP and core earnings were positive for the quarter. As we look
ahead, we expect any credit losses to remain within manageable
levels. Lenders in both the agricultural and rural utilities
sectors continue to face both capital markets and economic
challenges. Farmer Mac continues to make progress in positioning
itself to help lenders meet the increasing borrowing needs of their
customers." Loans underlying the Corporation's guarantees and
commitments remained steady at just under $10.0 billion and, with
the exception of ethanol loans, continued to perform well.
Delinquencies on non-ethanol loans have remained near historically
low levels consistent with the strength of the U.S. agricultural
economy. Farmer Mac's 90day delinquencies, including ethanol loans,
were $86.2 million, representing 1.90 percent of the portfolio as
of March 31, 2009. Excluding the ethanol loans, 90-day
delinquencies were $27.7 million, or 0.61 percent of the portfolio.
The ethanol industry has suffered due to the volatility of
commodity prices and while those prices have stabilized, the
industry still faces significant challenges. Farmer Mac's effective
net interest spread was 101 basis points ($12.6 million) for first
quarter 2009 and 106 basis points ($14.5 million) for first quarter
2008. Farmer Mac's short-term borrowing costs continued at
historically low levels during first quarter 2009. Farmer Mac's
interest rate sensitivity remained low during first quarter 2009
despite the continued volatility in the financial markets. As of
March 31, 2009, Farmer Mac's effective duration gap was minus 0.7
months compared with minus 2.4 months as of December 31, 2008.
Farmer Mac uses core earnings, a non-GAAP disclosure, to measure
corporate economic performance and develop financial plans because,
in management's view, core earnings more accurately represent
Farmer Mac's economic performance, transaction economics and
business trends before the effects on earnings of changes in the
fair values of financial derivatives and trading assets. Those
changes reflect the application of Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities ("SFAS 133") and Statement of Financial
Accounting Standards No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities - Including an amendment of FASB
Statement No. 115 ("SFAS 159"). Farmer Mac's disclosure of this
non-GAAP measure is not intended to replace GAAP information but,
rather, to supplement it. A reconciliation of Farmer Mac's GAAP net
income/(loss) available to common stockholders to core earnings is
presented in the following table; that reconciliation is
supplemented by a further adjustment related to the impairment
losses on investments to assist in the comparison of results to
prior periods. Reconciliation of GAAP Net Income/(Loss) Available
to Common Stockholders to Core Earnings ----------------- Three
Months Ended
------------------------------------------------------- March 31,
2009 December 31, 2008 March 31, 2008 --------------
----------------- -------------- (in thousands, except per share
amounts) Per Per Per Diluted Diluted Diluted Share Share Share
------- ------- ------- GAAP net income/ (loss) available to common
stockholders $33,518 $3.31 $(61,118) $(6.03) $(8,257) $(0.84) Less
the effects of SFAS 133 and SFAS 159: Unrealized gains/(losses) on
financial derivatives, net of tax 9,728 0.96 (59,537) (5.88)
(25,413) (2.56) Unrealized gains on trading assets, net of tax
20,557 2.03 7,166 0.71 6,572 0.66 Net effects of settlements on
agency forward contracts, net of tax (1,560) (0.15) 25 - 46 -
------ ----- ------- ------ ------- ----- Core earnings $4,793
$0.47 $(8,772) $(0.86) $10,538 $1.06 ====== ===== ======= ======
======= ===== Impairment losses on investments (81) (0.01) (3,788)
(0.37) - - ------ ----- ------- ------ ------- ----- Total $4,874
$0.48 $(4,984) $(0.49) $10,538 $1.06 ------ ----- ------- ------
------- ----- More complete information on Farmer Mac's performance
for the quarter ended March 31, 2009 is set forth in the Form 10-Q
filed by Farmer Mac with the Securities and Exchange Commission
(SEC). Forward-Looking Statements In addition to historical
information, this release includes forward-looking statements that
reflect management's current expectations for Farmer Mac's future
financial results, business prospects and business developments.
Management's expectations for Farmer Mac's future necessarily
involve a number of assumptions and estimates and the evaluation of
risks and uncertainties. Various factors or events could cause
Farmer Mac's actual results to differ materially from the
expectations as expressed or implied by the forward-looking
statements, including uncertainties regarding: (1) the ability of
Farmer Mac to increase its capital in an amount sufficient to
enable it to continue to operate profitably and provide a secondary
market for agricultural mortgage and rural utilities loans; (2) the
availability of reasonable rates and terms of debt financing to
Farmer Mac; (3) fluctuations in the fair value of assets held by
Farmer Mac, particularly in volatile markets; (4) the rate and
direction of development of the secondary market for agricultural
mortgage and rural utilities loans, including lender interest in
Farmer Mac credit products and the Farmer Mac secondary market; (5)
the general rate of growth in agricultural mortgage and rural
utilities indebtedness; (6) borrower preferences for fixed rate
agricultural mortgage indebtedness; (7) legislative or regulatory
developments that could affect Farmer Mac; (8) increases in general
and administrative expenses attributable to changes in the business
and regulatory environment, including the hiring of additional
personnel with expertise in key functional areas; (9) the
willingness of investors to invest in Farmer Mac Guaranteed
Securities; (10) the severity and duration of current economic and
financial conditions; and (11) developments in the financial
markets, including possible investor, analyst and rating agency
reactions to events involving GSEs, including Farmer Mac. Other
risk factors are discussed in Farmer Mac's Annual Report on Form
10K for the year ended December 31, 2008, as filed with the SEC on
March 16, 2009 and in Farmer Mac's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2009, as filed with the SEC. The
forward-looking statements contained in this release represent
management's expectations as of the date of this release. Farmer
Mac undertakes no obligation to release publicly the results of
revisions to any forward-looking statements included in this
release to reflect new information or any future events or
circumstances, except as otherwise mandated by the SEC. Farmer Mac
is a stockholder-owned instrumentality of the United States
chartered by Congress to establish a secondary market for
agricultural real estate and rural housing mortgage loans and rural
utilities loans and to facilitate capital market funding for
USDA-guaranteed farm program and rural development loans. Farmer
Mac's Class C non-voting and Class A voting common stocks are
listed on the New York Stock Exchange under the symbols AGM and
AGM.A, respectively. Additional information about Farmer Mac (as
well as the Annual Report on Form 10-K and Quarterly Report on Form
10-Q referenced above) is available on Farmer Mac's website at
http://www.farmermac.com/. The conference call to discuss Farmer
Mac's first quarter 2009 financial results and the Corporation's
Form 10-Q for first quarter 2009 will be webcast on Farmer Mac's
website beginning at 11:00 a.m. eastern time, Tuesday, May 12,
2009, and an audio recording of that call will be available on
Farmer Mac's website for two weeks after the call is concluded.
DATASOURCE: Farmer Mac CONTACT: Mary Waters of Farmer Mac,
+1-202-872-7700 Web Site: http://www.farmermac.com/
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