The Federal Agricultural Mortgage Corp. (AGM) reported a decline in first-quarter profits driven largely by the early refinancing of agricultural securities.

Core earnings for the $13.6 billion-asset company known as Farmer Mac fell to $11 million, compared to $11.3 million during the same period the previous year. Farmer Mac attributes the contraction in part to its refinancing of $414.9 million in AgVantage securities. The company also modified $241.7 million of rural utilities loans into longer-term loans.

The rationale for both of those transactions was to work with its customers to extend the relationships into the future, but the moves hurt Farmer Mac in the short-term, the company says.

Farmer Mac's net interest income fell 47%, to $15 million. American Banker reported a slowdown in agricultural lending earlier this year.

The company reported a noninterest loss of $301,000, compared to noninterest earnings of $12.4 million during the same period a year ago. The decline is primarily attributable to a $7.6 million loss on financial derivatives and hedging activities. Farmer Mac's GAAP net income for the quarter, which includes accounting for the fair market value of those investments, is $800,000, down from $16.2 million one year prior.

Its noninterest expenses fell 12%, to $7.9 million. Farmer Mac's slashed its loan-loss provision by 42%, to $700,000. Chargeoffs fell 92%, to $29,000.

Farmer Mac is a government-sponsored enterprise, established by Congress to create a secondary market for agricultural and rural utility loans.

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