Federal Agricultural Mortgage Corporation · NYSE:AGM
Federal Agricultural Mortgage — ICBA Webinar August 2016
36 slides from Federal Agricultural Mortgage's conference presentation, Aug 11, 2016
Slide 1: Build Your Ag Portfolio with the Farmer Mac-ICBA Ag Lending Program
Independent Community Bankers of America Build Your Ag Portfolio with the Farmer Mac-ICBA Ag Lending Program August 11, 2016
Slide 2: Press Release – August 9, 2016 Financial Highlights
Press Release – August 9, 2016 • Financial Highlights: – Total portfolio stands at $17.1 billion – Core earnings of $13 million for 2Q 2016 – $1.3 billion of new business volume in 2Q 2016 • Purchased $241 million of newly originated Farm & Ranch (F&R) loans • Purchased $110 million of USDA guarante
Slide 3: Longstanding Partnership with ICBA
Longstanding Partnership with ICBA • Beginning in January 2009, ICBA bankers started receiving new benefits from Farmer Mac as part of a newly launched partnership between ICBA and Farmer Mac • These benefits include: – Preferred pricing on select loan products – ICBA member only communication link
Slide 4: Concerns of Ag Bankers
Concerns of Ag Bankers • Loans are getting so large, we can’t handle them in-house • Lenders are offering terms longer than our bank’s products • Farm Credit and other large ag lenders cherry pick my best customers • USDA guaranteed loan limits are too small
Slide 5: Barriers to the Secondary Market
Barriers to the Secondary Market • If we start to sell loans, soon our whole portfolio will be gone • Our loan-to-deposit ratio is too low to sell loans • Too busy, we don’t have the staff or time to dedicate to the process • My compensation is based on in-portfolio assets
Slide 6: Farmer Mac – Flexible Solutions for Your Bank
Farmer Mac – Flexible Solutions for Your Bank • Offer competitive loan products that attract new customers • Accommodate large loan requests that grow relationships • Add to your loan portfolio with cross sales • Earn origination fees and a continuing stream of fee income • Decrease credit risk • Re
Slide 7: Community Bank Case Study: Loans and Leases Total History
Community Bank Case Study Loans and Leases Total History 800 Millions $77 million Farmland Loans 700 600 500 400 300 200 100 0 Farmland Farm Production All Other
Slide 8: Community Bank Case Study: Farmer Mac Portfolio Growth
Community Bank Case Study Farmer Mac Portfolio Growth 90 Millions 80 $77 million Farmland In-Portfolio 70 60 50 $45 million Loans Sold 40 30 20 10 0 Farmland In-Portfolio Farm Production In-Portfolio Farmer Mac Loan Balance
Slide 9: Community Bank Case Study: Fee Income from Farmer Mac Loans
Quarterly Fee Income Thousands 10 15 20 25 30 40 35 0 5 03/01/2005 08/01/2005 01/01/2006 06/01/2006 11/01/2006 04/01/2007 09/01/2007 02/01/2008 07/01/2008 12/01/2008 05/01/2009 10/01/2009 Quarterly Fee Income 03/01/2010 08/01/2010 Quarter 01/01/2011 Community Bank Case Study 06/01/2011 11/01/2011 04
Slide 10: 2015 Lender Locations
2015 Lender Locations
Slide 11: Interest Rate & Product Review
Interest Rate & Product Review
Slide 12: Farm & Ranch Net Yields
Farm & Ranch Net Yields 2016 Net Yield Changes 6.00% 5.00% 4.00% 3.00% 2.00% 1/4/2016 8/10/2016 1.00% Delta 0.00% -1.00% -2.00% 1-Mo 1-Yr 3-Yr 5-Yr 10-Yr 15-Yr 20-Yr 25-Yr 30-Yr LIBOR ARM ARM ARM Fixed Fixed Fixed Fixed Fixed
Slide 13: Farm & Ranch Popular Products 8/10/2016
Farm & Ranch Popular Products 8/10/2016 Reset Standard Choice Product Term Amort. Margin Rate Rate Ag Equity LIBOR 20/25/30 varies 2.00% 2.52% 2.52% *ICBA Discount 1-Mo ARM LIBOR* 15 15/25 1.60% 2.41% 2.21% Available 5-Yr ARM 15 15/25 2.30% 3.21% 3.01% 10-Yr VRM* 15/20 15/20 - 3.69% 3.49% 10-Yr VRM*
Slide 14: Quoting the Note Rate
Quoting the Note Rate Farmer Mac’s Net Yield (Posted Rate) Field Standard Servicing or Fee Choice Pricing Note Rate Rate ICBA Lock Member Period Products Payment Schedule Options
Slide 15: Compete with Blended Rates
Compete with Blended Rates Scenario 1 Loan 1 Loan 2 Total Amount: 750,000 250,000 1,000,000 Product: 15-Yr VRM (30-Yr Am) 1-Mo LIBOR ARM (25-Yr Am) Open Prepay Open Prepay & Convertible Blended Rates Net Yield: 3.96% 2.41% 3.57% Lender's S. Fee 0.50% 0.50% 0.50% Borrower's Rate: 4.46% 2.91% 4.07% Sc
Slide 16: Recent Transactions
\V/ NV, Recent Transactions
Slide 17: Recent Transactions - Iowa (July 2016)
Recent Transactions- Iowa (July 2016) Transaction Details Farm Data • Fast Track • Commodity: • Loan Amount: $685,000 – Corn • 15-Yr VRM (20-Yr Am) • Region: • Maturity Date: 7/1/2036 – Mid-North • Payments: Semi-Annual • LTV: 36% on 241 acres • Choice Pricing • Note Rate: 4.40% • Field Servicing Fe
Slide 18: Recent Transactions - Minnesota (July 2016)
Recent Transactions- Minnesota (July 2016) Transaction Details Farm Data • Full Underwrite • Commodity: • Loan Amount: $1,030,000 – Corn • 15-Yr Fixed (25-Yr Am) • Region: • Maturity Date: 7/1/2031 – Mid-North • Payments: Semi-Annual • LTV: 47% on 503 acres • Standard Pricing • Note Rate: 4.65% • Fi
Slide 19: Recent Transactions - Illinois (August 2016)
Recent Transactions- Illinois (August 2016) Transaction Details Farm Data • Full Underwrite • Commodity: • Loan Amount: $745,000 – Corn • 5-Yr ARM (25-Yr Am) • Region: • Maturity Date: 1/1/2032 – Mid-North • Payments: Semi-Annual • LTV: 58% on 240 acres • Standard Pricing • Note Rate: 3.66% • Field
Slide 20: Recent Transactions - Nebraska (July 2016)
Recent Transactions- Nebraska (July 2016) Transaction Details Farm Data • Fast Track • Commodity: • Loan Amount: $500,000 – Corn • 10/1 ARM (25-Yr Am) • Region: • Maturity Date: 1/1/2032 – Mid-North • Payments: Semi-Annual • LTV: 48% on 160 acres • Choice Pricing • Note Rate: 4.05% • Field Servicing
Slide 21: Eligible Properties & Underwriting Standards
Eligible Properties & Underwriting Standards
Slide 22: Loan Approval Steps
Loan Approval Steps • Meet with your customer; explain product options • Package credit using Farmer Mac’s AgPower (Loan Origination System) • Once submitted, Farmer Mac reviews loan package • Responds to Seller within two business days • Issues preliminary loan approval letter
Slide 23: Eligible Borrowers and Properties
Eligible Borrowers and Properties • Eligible Farm & Ranch Loans – Types of loans • Must be first mortgage farm or ranch real estate loans • Revolving lines of credit are available if first mortgage secured – Properties • Parcels of land capable of producing ag commodities or products including agrib
Slide 24: Underwriting Grid
Underwriting Grid Fast Track Full UW Full UW Choice Standard Pricing Max Loan Size $1,000,000 $12.6/$50m $12.6/$50m Loan-to-Value Ratio 55% 70% 60% Debt to Asset Ratio 40% 50% 40% Current Ratio 1:1 1.25:1 1.50:1 Debt Service Coverage 1:1 1.25:1 1.50:1 Credit Scores 720 680 680 Tax Return 2-Yrs 3-Yrs
Slide 25: Fast Track
Fast Track Total Debt to Underwriting Debt Current Credit Asset Maximum Loan Amount Loan to Value Option Coverage Ratio Score Ratio Ratio Fast 1.00 1.00 40% 55% 720 $1 Million Track • No cash-out restrictions • Agricultural improvements cannot exceed 40% of the appraised value • Automatically
Slide 26: Full Underwrite - Standard Pricing
Full Underwrite - Standard Pricing Total Debt to Underwriting Debt Current Credit Asset Maximum Loan Amount Loan to Value Option Coverage Ratio Score Ratio Ratio Full $5M; 70% 1000 acres; $50M Underwrite 1.25 1.25 50% $5M; 60% 680 1000 acres; $12.6M * Geographical Standard restrictions a
Slide 27: Full Underwrite - Choice Pricing
Full Underwrite - Choice Pricing Total Debt to Underwriting Debt Current Credit Asset Maximum Loan Amount Loan to Value Option Coverage Ratio Score Ratio Ratio Full 1000 acres; $50M Underwrite 1.50 1.50 40% 60% 680 1000 acres; $12.6M Choice • Loans where cash-out request exceeds 25% of the
Slide 28: AgEquity LOC
AgEquity LOC Total Debt to Underwriting Debt Current Credit Asset Maximum Loan Amount Loan to Value Option Coverage Ratio Score Ratio Ratio AgEquity 1000 acres; $50M 50% bare 1.35 1.25 50% 680 LOC 1000 acres; $12.6M land value • Funds are used for agriculture or business purposes • Custome
Slide 29: AgAssist – New Option
AgAssist – New Option Total Debt to Underwriting Debt Current Credit Asset Maximum Loan Amount Loan to Value Option Coverage Ratio Score Ratio Ratio 1.10 1.00 60% 1000 acres; $50.0M 45% FAMC AgAssist 1000 acres; $12.6M 85% CLTV 680 • Standard pricing • Facility loans eligible on a case
Slide 30: Summary
Summary
Slide 31: Heading into 2017
Heading into 2017 • Several sectors of ag will continue to be challenged and Farmer Mac’s products are well-positioned to assist ag lenders with these challenges. F&R Loan Sales Purchase Commit USDA Liquidity X X Capital Relief X X X Competitive Loan Products X X Accommodate Large Loans X X Commodit
Slide 32: Becoming a Farmer Mac Seller
Becoming a Farmer Mac Seller • Farmer Mac Seller requirements – Seller application – Seller/Servicer agreement – Officers’ Certificate – Stock ownership Consolidated Assets Stock Ownership Requirements • Up to $50 Million 100 shares of Class A or Class C • $50- $100 Million 200 shares of Class A or
Slide 33: New Marketing Logo
New Marketing Logo VY, Farmer Mac WW) Approved Lender
Slide 34: New Borrower Brochure
New Borrower Brochure Lock your interest rate and take the guesswork out of future loan payments. How Farmer Mac works for you Farmer Mac has a wide range of loan products, and we help you select the rate and terms that best match your financial needs. We complete the Farmer Mac application and appr
Slide 35: Conclusion
Conclusion • Farmer Mac is a dependable partner for your bank • One on one training is available and recommended for all lenders • Visit our Resource Library at www.efarmermac.com • For more information, contact: – Patrick Kerrigan, Director of Business Development – [email protected]
Slide 36: Stay in Touch with Farmer Mac & the Ag Economy
Stay in Touch with Farmer Mac & the Ag Economy • Register now for the August 18th Refresh Webinar
Federal Agricultural Mortgage Corporation (Farmer Mac) — ICBA Webinar August 2016 on 6ix