FEDERAL AGRICULTURAL MORTGAGE CORP [AGM] Filings

10-Q 1 agm-20230930.htm 10-Q agm-20230930

As filed with the Securities and Exchange Commission on November 6, 2023

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____.

Commission File Number 001-14951


FEDERAL AGRICULTURAL MORTGAGE CORPORATION
(Exact name of registrant as specified in its charter)


Federally chartered instrumentality of the United States		52-1578738
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

1999 K Street, N.W., 4th Floor,
Washington,	DC	20006
(Address of principal executive offices)		(Zip code)


(202)			872-7700
(Registrant's telephone number, including area code)

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

6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C

AGM.PRC

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

Securities registered pursuant to Section 12(g) of the Act: Class B voting common stock

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of October 31, 2023, the registrant had outstanding 1,030,780 shares of Class A voting common stock, 500,301 shares of Class B voting common stock, and 9,309,771 shares of Class C non-voting common stock.

Table of Contents



PART I		3
	Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Equity	6
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	61
	Forward-Looking Statements	61
	Overview	63
	Use of Non-GAAP Measures	67
	Results of Operations	69
	Outlook	87
	Balance Sheet Review	93
	Risk Management	93
	Liquidity and Capital Resources	110
	Other Matters	112
	Supplemental Information	112
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	116
Item 4.	Controls and Procedures	117
PART II		118
Item 1.	Legal Proceedings	118
Item 1A.	Risk Factors	118
Item 2.	Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	118
Item 3.	Defaults Upon Senior Securities	118
Item 4.	Mine Safety Disclosures	119
Item 5.	Other Information	119
Item 6.	Exhibits	120
Signatures		121

PART I

Item 1.Financial Statements

FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)


	As of
	September 30, 2023		December 31, 2022
	(in thousands)
Assets:
Cash and cash equivalents	$	782,318	$	861,002
Investment securities:
Available-for-sale, at fair value (amortized cost of $5,114,476 and $4,769,426, respectively)	4,873,414		4,579,564
Held-to-maturity, at amortized cost	45,032		45,032
Other investments	5,807		3,672
Total Investment Securities	4,924,253		4,628,268
Farmer Mac Guaranteed Securities:
Available-for-sale, at fair value (amortized cost of $5,536,437 and $8,019,495, respectively)	5,058,697		7,607,226
Held-to-maturity, at amortized cost	4,157,414		1,021,154
Total Farmer Mac Guaranteed Securities	9,216,111		8,628,380
USDA Securities:
Trading, at fair value	1,302		1,767
Held-to-maturity, at amortized cost	2,322,355		2,409,834
Total USDA Securities	2,323,657		2,411,601
Loans:

Loans held for investment, at amortized cost	9,130,933		9,008,979
Loans held for investment in consolidated trusts, at amortized cost	1,422,854		1,211,576
Allowance for losses	(16,614)		(15,089)
Total loans, net of allowance	10,537,173		10,205,466

Financial derivatives, at fair value	28,855		37,409
Accrued interest receivable (includes $10,666 and $12,514, respectively, related to consolidated trusts)	230,523		229,061
Guarantee and commitment fees receivable	49,809		47,151
Deferred tax asset, net	4,711		18,004
Prepaid expenses and other assets	213,971		266,768
Total Assets	$	28,311,381	$	27,333,110

Liabilities and Equity:
Liabilities:


Notes payable	$	25,123,545	$	24,469,113
Debt securities of consolidated trusts held by third parties	1,334,014		1,181,948
Financial derivatives, at fair value	188,362		175,326
Accrued interest payable (includes $6,568 and $8,081, respectively, related to consolidated trusts)	172,150		117,887
Guarantee and commitment obligation	47,607		46,582
Accounts payable and accrued expenses	58,776		68,863

Reserve for losses	1,660		1,433
Total Liabilities	26,926,114		26,061,152
Commitments and Contingencies (Note 6)
Equity:
Preferred stock:
Series C, par value $25 per share, 3,000,000 shares authorized, issued and outstanding	73,382		73,382
Series D, par value $25 per share, 4,000,000 shares authorized, issued and outstanding	96,659		96,659
Series E, par value $25 per share, 3,180,000 shares authorized, issued and outstanding	77,003		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, 9,309,351 shares and 9,270,265 shares outstanding, respectively	9,309		9,270
Additional paid-in capital	130,921		128,939
Accumulated other comprehensive loss, net of tax	(35,839)		(50,843)
Retained earnings	794,814		698,530
Total Equity	1,385,267		1,271,958
Total Liabilities and Equity	$	28,311,381	$	27,333,110

The accompanying notes are an integral part of these consolidated financial statements.

FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	For the Three Months Ended				For the Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(in thousands, except per share amounts)
Interest income:
Investments and cash equivalents	$	79,947	$	21,581	$	209,429	$	38,497
Farmer Mac Guaranteed Securities and USDA Securities	161,351		74,695		442,649		169,231
Loans	140,513		97,514		388,837		241,393
Total interest income	381,811		193,790		1,040,915		449,121
Total interest expense	294,168		125,937		795,537		251,816
Net interest income	87,643		67,853		245,378		197,305
Release of/(provision for) losses	136		(617)		(1,484)		699
Net interest income after release of/(provision for) losses	87,779		67,236		243,894		198,004
Non-interest income/(expense):
Guarantee and commitment fees	5,520		2,643		12,942		9,551
Gains on financial derivatives	2,671		772		4,763		21,551

(Losses)/gains on trading securities	(2)		(41)		14		(75)


Release of/(provision for) reserve for losses	45		167		(227)		440
Other income	1,271		651		3,239		1,805
Non-interest income	9,505		4,192		20,731		33,272
Operating expenses:
Compensation and employee benefits	14,103		11,648		43,391		36,661
General and administrative	9,100		6,919		26,047		21,717
Regulatory fees	831		812		2,497		2,437

Operating expenses	24,034		19,379		71,935		60,815
Income before income taxes	73,250		52,049		192,690		170,461
Income tax expense	15,113		10,631		40,306		35,735


Net income	58,137		41,418		152,384		134,726
Preferred stock dividends	(6,792)		(6,791)		(20,374)		(20,374)

Net income attributable to common stockholders	$	51,345	$	34,627	$	132,010	$	114,352

Earnings per common share:
Basic earnings per common share	$	4.74	$	3.21	$	12.20	$	10.61
Diluted earnings per common share	$	4.69	$	3.18	$	12.08	$	10.51

The accompanying notes are an integral part of these consolidated financial statements.

FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


	For the Three Months Ended				For the Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(in thousands
Net income	$	58,137	$	41,418	$	152,384	$	134,726
Other comprehensive income/(loss):
Net unrealized gains/(losses) on available-for-sale securities	22,076		(41,827)		46,068		(158,273)
Net changes in held-to-maturity securities	(31,525)		(622)		(32,628)		220
Net unrealized gains on cash flow hedges	7,566		24,596		5,553		72,684
Other comprehensive (loss)/income before tax	(1,883)		(17,853)		18,993		(85,369)
Income tax benefit/(expense) related to other comprehensive (loss)/income	395		3,748		(3,989)		17,927
Other comprehensive (loss)/income net of tax	(1,488)		(14,105)		15,004		(67,442)


Comprehensive income	$	56,649	$	27,313	$	167,388	$	67,284

The accompanying notes are an integral part of these consolidated financial statements.

FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited)


									Accumulated
							Additional		Other
	Preferred Stock			Common Stock			Paid-In		Comprehensive		Retained		Total
	Shares	Amount		Shares	Amount		Capital		Income/(Loss)		Earnings		Equity
	(in thousands)
Balance as of December 31, 2022	19,980	$	484,531	10,801	$	10,801	$	128,939	$	(50,843)	$	698,530	$	1,271,958
Net Income	—	—		—	—		—		—		47,035		47,035
Other comprehensive loss, net of tax	—	—		—	—		—		(9,019)		—		(9,019)
Cash dividends:
Preferred stock	—	—		—	—		—		—		(6,791)		(6,791)
Common stock (cash dividend of $1.10 per share)	—	—		—	—		—		—		(11,882)		(11,882)
Issuance of Class C Common Stock	—	—		19	19		51		—		—		70
Stock-based compensation cost	—	—		—	—		2,254		—		—		2,254
Other stock-based award activity	—	—		—	—		(1,240)		—		—		(1,240)
Balance as of March 31, 2023	19,980	$	484,531	10,820	$	10,820	$	130,004	$	(59,862)	$	726,892	$	1,292,385
Net Income	—	—		—	—		—		—		47,212		47,212
Other comprehensive income, net of tax	—	—		—	—		—		25,511		—		25,511
Cash dividends:
Preferred stock	—	—		—	—		—		—		(6,791)		(6,791)
Common stock (cash dividend of $1.10 per share)	—	—		—	—		—		—		(11,921)		(11,921)
Issuance of Class C Common Stock	—	—		16	16		54		—		—		70
Stock-based compensation cost	—	—		—	—		1,223		—		—		1,223
Other stock-based award activity	—	—		—	—		(1,134)		—		—		(1,134)
Balance as of June 30, 2023	19,980	$	484,531	10,836	$	10,836	$	130,147	$	(34,351)	$	755,392	$	1,346,555
Net Income	—	—		—	—		—		—		58,137		58,137
Other comprehensive loss, net of tax	—	—		—	—		—		(1,488)		—		(1,488)
Cash dividends:
Preferred stock	—	—		—	—		—		—		(6,792)		(6,792)
Common stock (cash dividend of $1.10 per share)	—	—		—	—		—		—		(11,923)		(11,923)
Issuance of Class C Common Stock	—	—		4	4		64		—		—		68
Stock-based compensation cost	—	—		—	—		1,221		—		—		1,221
Other stock-based award activity	—	—		—	—		(511)		—		—		(511)
Balance as of September 30, 2023	19,980	$	484,531	10,840	$	10,840	$	130,921	$	(35,839)	$	794,814	$	1,385,267


									Accumulated
							Additional		Other
	Preferred Stock			Common Stock			Paid-In		Comprehensive		Retained		Total
	Shares	Amount		Shares	Amount		Capital		Income/(Loss)		Earnings		Equity
	(in thousands)
Balance as of December 31, 2021	19,980	$	484,531	10,766	$	10,766	$	125,993	$	3,853	$	588,557	$	1,213,700
Net Income	—	—		—	—		—		—		51,453		51,453
Other comprehensive loss, net of tax	—	—		—	—		—		(43,518)		—		(43,518)
Cash dividends:
Preferred stock	—	—		—	—

FEDERAL AGRICULTURAL MORTGAGE CORP [AGM] Filings
FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-A] Filings
FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PC] Filings
FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PD] Filings
FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PE] Filings
FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PF] Filings
FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PG] Filings
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10-Q	[2020-08-10]
10-Q	[2020-05-11]
10-K	[2020-02-25]
10-Q	[2019-11-06]
10-Q	[2019-08-01]
10-Q	[2019-05-02]
10-K	[2019-02-21]
10-Q	[2018-11-08]
10-Q	[2018-08-09]
10-Q	[2018-05-10]
10-K	[2018-03-08]
10-Q	[2017-11-09]
10-Q	[2017-08-09]
10-Q	[2017-05-10]
10-K	[2017-03-09]
10-Q	[2016-11-09]
10-Q	[2016-08-09]
10-Q	[2016-05-10]
10-K	[2016-03-10]
10-Q	[2015-11-09]
10-Q	[2015-08-10]
10-Q	[2015-05-11]
10-K	[2015-03-16]
10-Q	[2014-11-10]
10-Q	[2014-08-11]
10-Q	[2014-05-12]
10-K	[2014-03-13]
10-Q	[2013-11-12]
10-Q	[2013-08-08]
10-Q	[2013-05-09]
10-K	[2013-03-18]
10-Q	[2012-11-08]
10-Q	[2012-08-09]
10-Q	[2012-05-10]
10-K	[2012-03-15]

FEDERAL AGRICULTURAL MORTGAGE CORP [AGM] Filings

FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-A] Filings

FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PC] Filings

FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PD] Filings

FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PE] Filings

FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PF] Filings

FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PG] Filings