The Federal Agricultural Mortgage Corp. reported declining profits in the third quarter, citing unrealized fair value changes in leveraged assets.
The Washington, D.C.-based rural mortgage lender, which is more commonly known as Farmer Mac, posted a net income drop of 27.9%, to $8.4 million, despite interest expense cuts.
Noninterest income turned negative, to a nearly $5 million loss because of disappointing activity from financial derivatives and hedged assets.
Those instruments yielded losses of $9.6 million in the third quarter, compared to gains of $808,000 in the same period last year.
Interest expenses were trimmed down nearly 29%, to $34.7 million, in part because of a decrease in preferred stock dividend expense, the company said. But operating costs grew 13.1%, to $9.5 million, due to rising general and administrative costs, as well as compensation and employee benefits.
