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Farmer Mac Reports Third Quarter 2024 Results

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Farmer Mac (NYSE: AGM) reported its Q3 2024 results with net income of $42.3 million and core earnings of $44.9 million ($4.10 per diluted share). The company maintained a strong capital position with total core capital of $1.5 billion, exceeding statutory requirements by 66%. Net interest income was $86.8 million, slightly down from $87.6 million in Q3 2023, while net effective spread improved by $2.0 million to $85.4 million. The company provided $2.0 billion in liquidity and lending capacity to rural American lenders, with outstanding business volume reaching $28.5 billion.

Farmer Mac (NYSE: AGM) ha riportato i risultati del terzo trimestre 2024 con un reddito netto di 42,3 milioni di dollari e guadagni core di 44,9 milioni di dollari (4,10 dollari per azione diluita). L'azienda ha mantenuto una solida posizione patrimoniale con un capitale core totale di 1,5 miliardi di dollari, superando i requisiti di legge del 66%. Il reddito netto da interessi è stato di 86,8 milioni di dollari, leggermente in calo rispetto ai 87,6 milioni di dollari nel terzo trimestre 2023, mentre il margine netto effettivo è migliorato di 2,0 milioni di dollari, raggiungendo 85,4 milioni di dollari. L'azienda ha fornito 2,0 miliardi di dollari in liquidità e capacità di prestito ai finanziatori rurali americani, con un volume commerciale complessivo che ha raggiunto 28,5 miliardi di dollari.

Farmer Mac (NYSE: AGM) informó sus resultados del tercer trimestre de 2024 con un ingreso neto de 42,3 millones de dólares y ganancias centrales de 44,9 millones de dólares (4,10 dólares por acción diluida). La compañía mantuvo una sólida posición de capital con un capital central total de 1,5 mil millones de dólares, superando los requisitos legales en un 66%. El ingreso neto por intereses fue de 86,8 millones de dólares, ligeramente por debajo de los 87,6 millones de dólares en el tercer trimestre de 2023, mientras que el margen efectivo neto mejoró en 2,0 millones de dólares, alcanzando los 85,4 millones de dólares. La compañía ofreció 2,0 mil millones de dólares en liquidez y capacidad de préstamo a prestamistas rurales estadounidenses, con un volumen comercial pendiente que alcanzó los 28,5 mil millones de dólares.

파머 맥 (NYSE: AGM)은 2024년 3분기 실적을 발표했으며, 순이익이 4,230만 달러, 핵심 수익이 4,490만 달러(희석주당 4.10달러)로 보고했습니다. 회사는 총 핵심 자본이 15억 달러로 법적 요건을 66% 초과하며 강력한 자본 위치를 유지했습니다. 순이자 수익은 8,680만 달러로 2023년 3분기의 8,760만 달러보다 약간 감소했으며, 순효과 마진은 200만 달러 개선되어 8,540만 달러가 되었습니다. 회사는 미국의 농촌 대출자에게 20억 달러의 유동성과 대출 가능성을 제공하였으며, 미결제 거래 금액은 285억 달러에 달했습니다.

Farmer Mac (NYSE: AGM) a publié ses résultats du troisième trimestre 2024 avec un revenu net de 42,3 millions de dollars et un bénéfice nucléaire de 44,9 millions de dollars (4,10 dollars par action diluée). L'entreprise a maintenu une solide position de capital avec un capital total de base de 1,5 milliard de dollars, dépassant les exigences statutaires de 66 %. Le revenu net d'intérêts s'élevait à 86,8 millions de dollars, légèrement en baisse par rapport à 87,6 millions de dollars au troisième trimestre 2023, tandis que le taux d'intérêt net effectif s'est amélioré de 2,0 millions de dollars pour atteindre 85,4 millions de dollars. L'entreprise a fourni 2,0 milliards de dollars de liquidités et de capacité de prêt aux prêteurs ruraux américains, le volume commercial restant atteignant 28,5 milliards de dollars.

Farmer Mac (NYSE: AGM) hat seine Ergebnisse für das 3. Quartal 2024 mit einem Nettoeinkommen von 42,3 Millionen Dollar und Kerngewinnen von 44,9 Millionen Dollar (4,10 Dollar pro verwässerter Aktie) veröffentlicht. Das Unternehmen hielt eine starke Kapitalposition mit einem gesamten Kernkapital von 1,5 Milliarden Dollar aufrecht, was die gesetzlichen Anforderungen um 66% übersteigt. Die Nettozinsmargen betrugen 86,8 Millionen Dollar, leicht rückläufig im Vergleich zu 87,6 Millionen Dollar im dritten Quartal 2023, während sich die effektive Nettomarge um 2,0 Millionen Dollar auf 85,4 Millionen Dollar verbesserte. Das Unternehmen stellte ländlichen amerikanischen Kreditgebern 2,0 Milliarden Dollar an Liquidität und Kreditmöglichkeiten zur Verfügung, wobei das ausstehende Geschäftsvolumen 28,5 Milliarden Dollar erreichte.

Positive
  • Core earnings per share increased 13% sequentially to $4.10
  • Net effective spread improved by $2.0 million year-over-year
  • Strong capital position with core capital exceeding statutory requirement by 66%
  • Tier 1 Capital Ratio of 14.2%
Negative
  • Net income declined 18% year-over-year
  • Net interest income decreased 1% year-over-year to $86.8 million
  • Negative change in business volume of $290 million compared to positive $915 million in Q3 2023

Insights

The Q3 2024 results reveal mixed performance for Farmer Mac. $86.8 million net interest income shows a slight 1% decline year-over-year, while core earnings of $44.9 million ($4.10 per diluted share) remained relatively stable with only a 1% decrease. The company maintains a robust capital position with $1.5 billion in total core capital, exceeding statutory requirements by 66%.

Notable concerns include a negative net change in business volume of $290 million, contrasting sharply with the positive $915 million growth in Q3 2023. However, the 2% improvement in net effective spread to $85.4 million and strong liquidity position (309 days) indicate operational resilience. The Tier 1 Capital Ratio of 14.2% demonstrates solid financial stability despite market challenges.

- Outstanding Business Volume of $28.5 Billion -

WASHINGTON, Nov. 4, 2024 /PRNewswire/ -- 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

 

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

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/farmer-mac-reports-third-quarter-2024-results-302295812.html

SOURCE Farmer Mac

FAQ

What was Farmer Mac's (AGM) net income for Q3 2024?

Farmer Mac (AGM) reported net income attributable to common stockholders of $42.3 million for Q3 2024.

What was Farmer Mac's (AGM) core earnings per share in Q3 2024?

Farmer Mac's (AGM) core earnings per share was $4.10 per diluted common share in Q3 2024.

How much did Farmer Mac (AGM) provide in lending capacity in Q3 2024?

Farmer Mac (AGM) provided $2.0 billion in liquidity and lending capacity to lenders serving rural America in Q3 2024.

What was Farmer Mac's (AGM) total core capital as of September 30, 2024?

Farmer Mac's (AGM) total core capital was $1.5 billion as of September 30, 2024, exceeding statutory requirement by 66%.

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