WASHINGTON, Aug. 11, 2014 – The Federal Agricultural Mortgage Corp., or Farmer Mac, reported core earnings of $23.2 million, or $2.05 per diluted common share, for the second quarter, compared to $16.5 million, or $1.48 per diluted common share a year earlier. Core earnings are considered a non-GAAP measure.
Results included strong portfolio credit quality and recognition of an $11.6 million tax benefit related to a cash management initiative. Other key factors in the earnings increase included releases of allowance for losses primarily related to a reduction in exposure to ethanol loans, and net growth in farm and ranch loans.
In a news release, Farmer Mac said it continued to strengthen its capital position during the quarter through the issuance of $75 million of fixed-to-floating rate perpetual preferred stock, bringing the company’s total preferred stock issuances for 2014 to $150 million.
“Farmer Mac had a very strong second quarter on a number of fronts, including credit quality, net effective spread, core earnings and capital,” President and Chief Executive Officer Tim Buzby said. “Farmer Mac remains committed to fulfilling its mission of increasing the availability of credit to maintain a strong and vibrant rural America and continues to focus on the fundamentals that will build long-term value for our stockholders.”
The company said it added $590.2 million of new business in the second quarter, with Farm & Ranch loan purchases and Institutional Credit AgVantage securities purchases driving the volume.
“Demand is still strong for Farmer Mac’s loans in the Farm & Ranch line of business,” it said.
The company noted that it has not observed any material effect on its portfolio due to the drought conditions that are persisting this year in the western U.S., including California. However, “continuation of extreme or exceptional drought conditions beyond the 2014 water year could have an adverse effect on Farmer Mac’s delinquency rate and ultimately its loss experience,” it warned.
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