The Federal Agricultural Mortgage Corporation (Farmer Mac) announced its results for the fiscal quarter and year ended December 31, 2015.
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Farmer Mac results include $1.3 billion in net new business volume growth in 2015 that brought total outstanding business volume to a record $15.9 billion as of December 31, 2015.
Farmer Mac's 2015 core earnings, a non-GAAP measure, were $47 million ($4.15 per diluted common share), compared to $53 million ($4.67 per diluted common share) in 2014.
For fourth quarter 2015, core earnings were $13.1 million ($1.17 per diluted common share), compared to $13.2 million ($1.17 per diluted common share) for third quarter 2015, and $9.5 million ($0.84 per diluted common share) for fourth quarter 2014.
Farmer Mac's net income attributable to common stockholders for 2015 was $47.4 million ($4.19 per diluted common share), compared to $38.3 million ($3.37 per diluted common share) for 2014.
The increase in 2015 from 2014 was primarily attributable to the effects of unrealized fair value changes on financial derivatives and hedged assets, which was a $7.1 million after-tax gain in 2015, compared to a $6.5 million after-tax loss in 2014.
Core earnings for 2015 were $47.0 million ($4.15 per diluted common share), compared to $53.0 million ($4.67 per diluted common share) in 2014.
The decrease in core earnings in 2015 compared to 2014 was primarily attributable to the absence of the $11.4 million net economic benefit of the cash management and liquidity initiative, which was completed in 2014, and the loss of $5.6 million after-tax in preferred dividend income resulting from the fourth quarter 2014 redemption of Farmer Mac's investment in $78.5 million of high-yielding preferred stock previously held in Farmer Mac's investment portfolio.
Also contributing to the decrease was a $2.6 million after-tax increase in operating expenses primarily due to higher compensation costs resulting from the consolidation of Farmer Mac's appraisal subsidiary, Contour Valuation Services, LLC, and higher legal fees, consulting fees, and information services expenses related to corporate strategic initiatives.
The year-over-year decrease in core earnings was partially offset by a $7.7 million after-tax increase in net effective spread (excluding the effect of the ourth quarter 2014 redemption of high-yielding preferred stock), which was driven by growth in outstanding business volume, and a $7.6 million after-tax decrease in preferred dividend expense resulting from the redemption of all outstanding shares of Farmer Mac II Preferred Stock in first quarter 2015.
Core earnings in fourth quarter 2015 were $13.1 million ($1.17 per diluted common share), compared to $13.2 million ($1.17 per diluted common share) in third quarter 2015, and $9.5 million ($0.84 per diluted common share) in fourth quarter 2014.
The increase in core earnings for fourth quarter 2015 compared to fourth quarter 2014 was attributable to a $1.0 million after-tax increase in net effective spread and a $3.5 million after-tax decrease in preferred dividend expense resulting from the redemption of all outstanding shares of Farmer Mac II Preferred Stock in first quarter 2015. ■