FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-A] Filings

10-Q 1 agm-20230331.htm 10-Q agm-20230331

As filed with the Securities and Exchange Commission on May 9, 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 March 31, 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 May 2, 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 9,301,329 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	7
	Notes to Consolidated Financial Statements	8
Item 2 .	Management's Discussion and Analysis of Financial Condition and Results of Operations	51
	Forward-Looking Statements	51
	Overview	53
	Use of Non-GAAP Measures	57
	Results of Operations	59
	Outlook	73
	Balance Sheet Review	78
	Risk Management	79
	Liquidity and Capital Resources	96
	Other Matters	97
	Supplemental Information	98
Item 3 .	Quantitative and Qualitative Disclosures About Market Risk	102
Item 4 .	Controls and Procedures	103
PART II		104
Item 1 .	Legal Proceedings	104
Item 1A.	Risk Factors	104
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	104
Item 3 .	Defaults Upon Senior Securities	105
Item 4.	Mine Safety Disclosures	105
Item 5 .	Other Information	105
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, 2023		December 31, 2022
	(in thousands)
Assets:
Cash and cash equivalents	$	864,594	$	861,002
Investment securities:
Available-for-sale, at fair value (amortized cost of $4,788,254 and $4,769,426, respectively)	4,647,464		4,579,564
Held-to-maturity, at amortized cost	45,032		45,032
Other investments	3,672		3,672
Total Investment Securities	4,696,168		4,628,268
Farmer Mac Guaranteed Securities:
Available-for-sale, at fair value (amortized cost of $8,565,328 and $8,019,495, respectively)	8,225,454		7,607,226
Held-to-maturity, at amortized cost	993,966		1,021,154
Total Farmer Mac Guaranteed Securities	9,219,420		8,628,380
USDA Securities:
Trading, at fair value	1,405		1,767
Held-to-maturity, at amortized cost	2,358,928		2,409,834
Total USDA Securities	2,360,333		2,411,601
Loans:

Loans held for investment, at amortized cost	8,915,656		9,008,979
Loans held for investment in consolidated trusts, at amortized cost	1,468,357		1,211,576
Allowance for losses	(15,673)		(15,089)
Total loans, net of allowance	10,368,340		10,205,466

Financial derivatives, at fair value	25,099		37,409
Accrued interest receivable (includes $9,885 and $12,514, respectively, related to consolidated trusts)	196,368		229,061
Guarantee and commitment fees receivable	46,670		47,151
Deferred tax asset, net	7,961		18,004
Prepaid expenses and other assets	154,994		266,768
Total Assets	$	27,939,947	$	27,333,110

Liabilities and Equity:
Liabilities:


Notes payable	$	24,837,391	$	24,469,113
Debt securities of consolidated trusts held by third parties	1,374,332		1,181,948
Financial derivatives, at fair value	166,963		175,326
Accrued interest payable (includes $6,170 and $8,081, respectively, related to consolidated trusts)	141,938		117,887
Guarantee and commitment obligation	46,114		46,582
Accounts payable and accrued expenses	79,188		68,863

Reserve for losses	1,636		1,433
Total Liabilities	26,647,562		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, 9,288,482 shares and 9,270,265 shares outstanding, respectively	9,289		9,270
Additional paid-in capital	130,004		128,939
Accumulated other comprehensive loss, net of tax	(59,862)		(50,843)
Retained earnings	726,892		698,530
Total Equity	1,292,385		1,271,958
Total Liabilities and Equity	$	27,939,947	$	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
	March 31, 2023		March 31, 2022
	(in thousands, except per share amounts)
Interest income:
Investments and cash equivalents	$	59,703	$	5,716
Farmer Mac Guaranteed Securities and USDA Securities	136,537		42,920
Loans	119,032		67,247
Total interest income	315,272		115,883
Total interest expense	236,214		50,345
Net interest income	79,058		65,538
Provision for losses	(547)		(56)
Net interest income after provision for losses	78,511		65,482
Non-interest income/(expense):
Guarantee and commitment fees	3,933		3,695
Gains on financial derivatives	399		16,988

Gains/(losses) on trading securities	25		(63)


(Provision for)/release of reserve for losses	(203)		110
Other income	1,201		675
Non-interest income	5,355		21,405
Operating expenses:
Compensation and employee benefits	15,351		13,298
General and administrative	7,527		7,278
Regulatory fees	835		812

Operating expenses	23,713		21,388
Income before income taxes	60,153		65,499
Income tax expense	13,118		14,046


Net income	47,035		51,453
Preferred stock dividends	(6,791)		(6,791)

Net income attributable to common stockholders	$	40,244	$	44,662

Earnings per common share:
Basic earnings per common share	$	3.73	$	4.15
Diluted earnings per common share	$	3.69	$	4.10

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, 2023		March 31, 2022
	(in thousands
Net income	$	47,035	$	51,453
Other comprehensive (loss)/income:
Net unrealized gains/(losses) on available-for-sale securities	658		(86,267)
Net changes in held-to-maturity securities	(782)		(23)
Net unrealized (losses)/gains on cash flow hedges	(11,292)		31,204
Other comprehensive loss before tax	(11,416)		(55,086)
Income tax benefit related to other comprehensive loss	2,397		11,568
Other comprehensive loss net of tax	(9,019)		(43,518)


Comprehensive income	$	38,016	$	7,935

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

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	—	—		—	—		—		—		(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)	$	622,990	$	1,205,747

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

FEDERAL AGRICULTURAL MORTGAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	For the Three Months Ended
	March 31, 2023		March 31, 2022
	(in thousands)
Cash flows from operating activities:
Net income	$	47,035	$	51,453
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	(2,337)		1,913
Amortization of debt premiums, discounts, and issuance costs	10,217		2,018
Net change in fair value of trading securities, hedged assets, and financial derivatives	(62,398)		235,964



Total provision for/(release of) allowance for losses	750		(54)
Excess tax benefits related to stock-based awards	(201)		(137)
Deferred income taxes	12,440		2,794

Stock-based compensation expense	2,255		2,113


Proceeds from repayment of loans purchased as held for sale	17,360		15,028
Net change in:
Interest receivable	29,510		32,277
Guarantee and commitment fees receivable	13		(124)
Other assets	22,195		(64,176)
Accrued interest payable	24,051		1,072
Custodial deposit liability	(32,102)		(17,027)
Other liabilities	(8,227)		6,191
Net cash provided by/(used in) operating activities	60,561		269,305
Cash flows from investing activities:
Purchases of available-for-sale investment securities	(375,153)		(845,114)
Purchases of other investment securities	—		(275)
Purchases of Farmer Mac Guaranteed Securities and USDA Securities	(716,412)		(1,720,619)
Purchases of loans held for investment	(554,787)		(

FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-A] Filings
FEDERAL AGRICULTURAL MORTGAGE CORP [AGM] Filings
FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PC] Filings
FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PD] Filings
FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PF] Filings
FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PE] Filings
FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PG] Filings
10-Q	[2023-05-09]
10-K	[2023-02-24]
10-Q	[2022-11-07]
10-Q	[2022-08-08]
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-A] Filings

FEDERAL AGRICULTURAL MORTGAGE CORP [AGM] Filings

FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PC] Filings

FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PD] Filings

FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PF] Filings

FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PE] Filings

FEDERAL AGRICULTURAL MORTGAGE CORP [AGM-PG] Filings