FEDERAL AGRICULTURAL MORTGAGE CORP [AGM] Filings

10-Q 1 agm-20220331.htm 10-Q agm-20220331

As filed with the Securities and Exchange Commission on May 9, 2022

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 March 31, 2022


☐			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 May 2, 2022, the registrant had outstanding 1,030,780 shares of Class A voting common stock, 500,301 shares of Class B voting common stock, and 9,263,931 shares of Class C non-voting common stock.

Table of Contents



PART I		3
Item 1.	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	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	48
	Forward-Looking Statements	48
	Overview	50
	Use of Non-GAAP Measures	54
	Results of Operations	56
	Outlook	71
	Balance Sheet Review	77
	Risk Management	77
	Liquidity and Capital Resources	95
	Other Matters	96
	Supplemental Information	97
Item 3 .	Quantitative and Qualitative Disclosures About Market Risk	101
Item 4 .	Controls and Procedures	102
PART II		103
Item 1 .	Legal Proceedings	103
Item 1A.	Risk Factors	103
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	104
Item 3.	Defaults Upon Senior Securities	105
Item 4.	Mine Safety Disclosures	104
Item 5.	Other Information	104
Item 6.	Exhibits	106
Signatures		107

PART I

Item 1.Financial Statements

FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)


	As of
	March 31, 2022		December 31, 2021
	(in thousands)
Assets:
Cash and cash equivalents	$	890,046	$	908,785
Investment securities:
Available-for-sale, at fair value (amortized cost of $4,258,227 and $3,834,714, respectively)	4,195,314		3,836,391
Held-to-maturity, at amortized cost	44,970		44,970
Other investments	1,504		1,229
Total Investment Securities	4,241,788		3,882,590
Farmer Mac Guaranteed Securities:
Available-for-sale, at fair value (amortized cost of $6,672,894 and $6,135,807, respectively)	6,600,246		6,328,559
Held-to-maturity, at amortized cost	1,906,218		2,033,239
Total Farmer Mac Guaranteed Securities	8,506,464		8,361,798
USDA Securities:
Trading, at fair value	3,386		4,401
Held-to-maturity, at amortized cost	2,436,103		2,436,331
Total USDA Securities	2,439,489		2,440,732
Loans:
Loans held for sale, at lower of cost or fair value	9,000		—
Loans held for investment, at amortized cost	8,481,310		8,314,096
Loans held for investment in consolidated trusts, at amortized cost	888,200		948,623
Allowance for losses	(13,570)		(14,041)
Total loans, net of allowance	9,364,940		9,248,678

Financial derivatives, at fair value	26,329		19,139
Interest receivable (includes $5,679 and $10,418, respectively, related to consolidated trusts)	148,228		177,355
Guarantee and commitment fees receivable	45,021		45,538
Deferred tax asset, net	24,910		15,558
Prepaid expenses and other assets	102,199		45,318
Total Assets	$	25,789,414	$	25,145,491

Liabilities and Equity:
Liabilities:


Notes payable	$	23,039,967	$	22,716,156
Debt securities of consolidated trusts held by third parties	895,145		981,379
Financial derivatives, at fair value	105,574		34,248
Accrued interest payable (includes $4,724 and $9,619, respectively, related to consolidated trusts)	89,761		83,992
Guarantee and commitment obligation	43,285		43,926
Accounts payable and accrued expenses	420,998		79,427

Reserve for losses	1,840		1,950
Total Liabilities	24,596,570		23,941,078
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, 9,256,596 shares and 9,235,205 shares outstanding, respectively	9,257		9,235
Additional paid-in capital	127,103		125,993
Accumulated other comprehensive (loss)/income, net of tax	(39,665)		3,853
Retained earnings	610,087		579,270
Total Equity	1,192,844		1,204,413
Total Liabilities and Equity	$	25,789,414	$	25,145,491

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
	March 31, 2022		March 31, 2021
	(in thousands, except per share amounts)
Interest income:
Investments and cash equivalents	$	5,716	$	5,529
Farmer Mac Guaranteed Securities and USDA Securities	39,257		42,404
Loans	67,247		59,494
Total interest income	112,220		107,427
Total interest expense	50,345		54,176
Net interest income	61,875		53,251
Provision for losses	(56)		(913)
Net interest income after provision for losses	61,819		52,338
Non-interest income/(expense):
Guarantee and commitment fees	3,695		3,030
Gains on financial derivatives	16,074		4,293

Losses on trading securities	(63)		(13)


Release of reserve for losses	110		944
Other income	675		583
Non-interest income	20,491		8,837
Operating expenses:
Compensation and employee benefits	13,298		11,795
General and administrative	7,278		6,336
Regulatory fees	812		750

Operating expenses	21,388		18,881
Income before income taxes	60,922		42,294
Income tax expense	13,085		9,067


Net income	47,837		33,227
Preferred stock dividends	(6,791)		(5,269)

Net income attributable to common stockholders	$	41,046	$	27,958

Earnings per common share:
Basic earnings per common share	$	3.81	$	2.60
Diluted earnings per common share	$	3.77	$	2.58

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
	March 31, 2022		March 31, 2021
	(in thousands
Net income	$	47,837	$	33,227
Other comprehensive (loss)/incomes:
Net unrealized (losses)/gains on available-for-sale securities	(86,267)		66,364
Net changes in held-to-maturity securities	(23)		(2,157)
Net unrealized gains on cash flow hedges	31,204		18,916
Other comprehensive (loss)/income before tax	(55,086)		83,123
Income tax benefit/(expense) related to other comprehensive (loss)/income	11,568		(17,456)
Other comprehensive (loss)/income net of tax	(43,518)		65,667


Comprehensive income	$	4,319	$	98,894

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, 2021	19,980	$	484,531	10,766	$	10,766	$	125,993	$	3,853	$	579,270	$	1,204,413
Net Income	—	—		—	—		—		—		47,837		47,837
Other comprehensive loss, net of tax	—	—		—	—		—		(43,518)		—		(43,518)
Cash dividends:
Preferred stock	—	—		—	—		—		—		(6,791)		(6,791)
Common stock (cash dividend of $0.95 per share)	—	—		—	—		—		—		(10,229)		(10,229)
Issuance of Class C Common Stock	—	—		22	22		46		—		—		68
Stock-based compensation cost	—	—		—	—		2,113						2,113
Other stock-based award activity	—	—		—	—		(1,049)		—		—		(1,049)
Balance as of March 31, 2022	19,980	$	484,531	10,788	$	10,788	$	127,103	$	(39,665)	$	610,087	$	1,192,844







Balance as of December 31, 2020	14,980	$	363,204	10,737	$	10,737	$	122,899	$	(13,923)	$	509,560	$	992,477
Net Income	—	—		—	—		—		—		33,227		33,227
Other comprehensive income, net of tax	—	—		—	—		—		65,667		—		65,667
Cash dividends:
Preferred stock	—	—		—	—		—		—		(5,269)		(5,269)
Common stock (cash dividend of $0.88 per share)	—	—		—	—		—		—		(9,450)		(9,450)
Issuance of Class C Common Stock	—	—		21	21		12		—		—		33
Stock-based compensation cost	—	—		—	—		1,665						1,665
Other stock-based award activity	—	—		—	—		(858)		—		—		(858)
Balance as of March 31, 2021	14,980	$	363,204	10,758	$	10,758	$	123,718	$	51,744	$	528,068	$	1,077,492

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

FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

(unaudited)


	For the Three Months Ended
	March 31, 2022		March 31, 2021
	(in thousands)
Cash flows from operating activities:
Net income	$	47,837	$	33,227
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of deferred gains, premiums, and discounts on loans, investments, Farmer Mac Guaranteed Securities, and USDA Securities	1,913		4,933
Amortization of debt premiums, discounts, and issuance costs	2,018		1,994
Net change in fair value of trading securities, hedged assets, and financial derivatives	231,470		300,424



Total (release of)/provision for allowance for losses	(54)		(31)
Excess tax benefits related to stock-based awards	(137)		190
Deferred income taxes	2,216		1,387

Stock-based compensation expense	2,113		1,665


Proceeds from repayment of loans purchased as held for sale	15,028		25,374
Net change in:
Interest receivable	29,408		43,601
Guarantee and commitment fees receivable	(124)		103
Other assets	(61,087)		(7,227)
Accrued interest payable	5,769		(7,522)
Custodial deposit liability	(17,027)		—
Other liabilities	9,962		(322)
Net cash provided by operating activities	269,305		397,796
Cash flows from investing activities:
Purchases of available-for-sale investment securities	(845,114)		(400,701)
Purchases of other investment securities	(275)		(403)
Purchases of Farmer Mac Guaranteed Securities and USDA Securities	(1,720,619)		(599,833)
Purchases of loans held for investment	(718,008)		(728,748)
Purchases of defaulted loans	—		(8,713)
Proceeds from repayment of available-for-sale investment securities	418,414		446,325
Proceeds from repayment of Farmer Mac Guaranteed Securities and USDA Securities	1,659,253		683,090
Proceeds from repayment of loans purchased as held for investment	463,602		624,448


Proceeds from sale of Farmer Mac Guaranteed Securities	25,928		49,133

Net cash (used in)/provided by investing activities	(716,819)		64,598
Cash flows from financing activities:
Proceeds from issuance of discount notes	13,577,266		16,077,510
Proceeds from issuance of medium-term notes	2,626,165		3,498,544
Payments to redeem discount notes	(13,854,017)		(16,199,154)
Payments to redeem medium-term notes	(1,790,815)		(3,638,000)

Payments to third parties on debt securities of consolidated trusts	(112,731)		(207,861)
Proceeds from common stock issuance	46		12



Tax payments related to share-based awards	(119)		(126)

Dividends paid on common and preferred stock	(17,020)		(14,719)

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
10-Q	[2022-05-09]
10-K	[2022-02-28]
10-Q	[2021-11-08]
10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-02-25]
10-Q	[2020-11-09]
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