Exhibit 99
[FARMER MAC LOGO]
NEWS
FOR IMMEDIATE RELEASE CONTACT
April 28, 2005 Jerome Oslick
202-872-7700
Farmer Mac Reports First Quarter Results
Washington, D.C. -- The Federal Agricultural Mortgage Corporation (Farmer
Mac, NYSE: AGM and AGM.A) today reported U.S. GAAP net income for first quarter
2005 of $4.9 million or $0.42 per diluted share, compared to $9.8 million or
$0.82 per diluted share for fourth quarter 2004 and $7.8 million or $0.64 per
diluted share for first quarter 2004. Core earnings were $6.3 million or $0.53
per diluted share for first quarter 2005, compared to $9.9 million or $0.82 per
diluted share for fourth quarter 2004 and $5.9 million or $0.48 per diluted
share for first quarter 2004. Fourth quarter 2004 results included the release
of approximately $5.3 million from the allowance for losses, which increased
both GAAP net income and core earnings by $0.28 per diluted share in that
quarter.
Farmer Mac reports its "core earnings," a non-GAAP measure, in addition to
GAAP earnings. Farmer Mac uses the core earnings measure to present net income
available to common stockholders less the after-tax effects of unrealized gains
and losses on financial derivatives resulting from the application of the
derivative accounting standards.
Farmer Mac President and Chief Executive Officer Henry D. Edelman stated,
"Reflecting the effectiveness of Farmer Mac's ongoing credit risk management and
the strength of the U.S. agricultural economy, the portfolio of loans underlying
Farmer Mac's guarantees and LTSPCs continues to perform well. We are pleased
that, as of March 31, 2005, 90-day delinquencies in Farmer Mac's portfolio
remained at low levels, in terms of both dollars and percentages. Those
delinquencies, which were $45.8 million, represented 1.04 percent of the
portfolio, compared to $57.4 million and 1.17 percent as of March 31, 2004 and
$76.2 million and 1.58 percent as of March 31, 2003. Similarly, real estate
owned (REO) was reduced to $4.1 million as of March 31, 2005 from $12.3 million
as of March 31, 2004.
"Accordingly, Farmer Mac determined that the appropriate level of allowance
for losses as of March 31, 2005 was $16.3 million. This determination reflects
Farmer Mac's continuing evaluation of the overall credit quality of its
portfolio, the strong U.S. agricultural economy, the recent upward trends in
agricultural land values and the reduction in Farmer Mac's outstanding
guarantees and commitments. This resulted in the release of approximately $0.7
million from the allowance for losses in first quarter 2005. As of March 31,
2005, the allowance for losses of $16.3 million was 37 basis points relative to
the outstanding Farmer Mac I portfolio, compared to $17.1 million and 37 basis
points as of December 31, 2004 and $22.2 million and 45 basis points as of March
31, 2004.
"For first quarter 2005, new business volume was $95.5 million. As in
recent quarters, Farmer Mac's new business was slowed by the continuation of
previously mentioned factors, including the liquidity of agricultural borrowers,
the available capital and liquidity of agricultural lenders, and regulatory
conditions. Looking forward, Farmer Mac's Board and management are focused on
the long-term growth of the business and the development of innovative ways to
serve the financing needs of rural America, and remain confident of
opportunities for growth and increased business volume."
Non-GAAP Performance Measures
Farmer Mac reports its financial results in accordance with GAAP. In
addition to GAAP measures, Farmer Mac presents certain non-GAAP performance
measures. Farmer Mac uses the latter measures to develop financial plans, to
gauge corporate performance and to set incentive compensation because, in
management's view, the non-GAAP measures more accurately represent Farmer Mac's
economic performance, transaction economics and business trends. Investors and
the investment analyst community have previously relied upon similar measures to
evaluate Farmer Mac's historical and future performance. Farmer Mac's disclosure
of non-GAAP measures is not intended to replace GAAP information but, rather, to
supplement it.
Farmer Mac developed the non-GAAP measure "core earnings" to present net
income available to common stockholders less the after-tax effects of unrealized
gains and losses on financial derivatives resulting from Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities ("FAS 133"). The GAAP measure most comparable to core earnings is net
income available to common stockholders. Unlike core earnings, however, the GAAP
measure is heavily influenced by unrealized gains or losses in the value of
financial derivatives used to hedge interest rate risk in Farmer Mac's mortgage
portfolio. Because the effects of financial derivatives under FAS 133 included
in the GAAP measure are driven by fluctuations in interest rates that cannot
reliably be predicted, Farmer Mac does not project GAAP net income available to
common stockholders.
The reconciliation of GAAP net income available to common stockholders to
core earnings is presented in the following table:
Reconciliation of GAAP Net Income Available to Common Stockholders to Core Earnings
- ----------------------------------------------------------------------------------------------------
Three Months Ended
------------------------------------------------------------------
March 31, December 31, March 31,
2005 2004 2004
--------------------- --------------------- ---------------------
(in thousands, except per share amounts)
Per Per Per
Diluted Diluted Diluted
Share Share Share
---------- ---------- ----------
GAAP net income available
to common stockholders $ 4,912 $ 0.42 $ 9,837 $ 0.82 $ 7,827 $ 0.64
Less the effects of FAS 133:
Unrealized gains/(losses)
on financial derivatives and
trading assets, net of tax (1,353) (0.11) (45) 0.00 1,825 0.15
Benefit from non-amortization
of premium payments
on financial derivatives,
net of tax - - - - 76 0.01
---------- ---------- ---------- ---------- ---------- ----------
Core earnings $ 6,265 $ 0.53 $ 9,882 $ 0.82 $ 5,926 $ 0.48
---------- ---------- ---------- ---------- ---------- ----------
Later in this release, Farmer Mac provides additional information about the
impact of FAS 133 on GAAP net income available to common stockholders.
Net Interest Income
Net interest income, which does not include guarantee fees from loans
purchased and retained prior to April 1, 2001 (the effective date of Statement
of Financial Accounting Standards No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities ("FAS 140")),
was $7.8 million for first quarter 2005, compared to $8.0 million for fourth
quarter 2004 and $9.5 million for first quarter 2004. The net interest yield was
85 basis points for first quarter 2005, compared to 88 basis points for fourth
quarter 2004 and 93 basis points for first quarter 2004. The effect of FAS 140
for first quarter 2005 was the reclassification of guarantee fee income as
interest income in the amount of $0.9 million (10 basis points), compared to
$1.0 million (11 basis points) in fourth quarter 2004 and $1.1 million (10 basis
points) in first quarter 2004.
Based on guidance provided by the SEC to all registrants, Farmer Mac
classifies the net interest income and expense realized on financial derivatives
that are not in fair value or cash flow hedge relationships as gains and losses
on financial derivatives and trading assets. This classification resulted in
reductions of the net interest yield of 4 basis points, 5 basis points and 4
basis points for first quarter 2005, fourth quarter 2004 and first quarter 2004,
respectively.
The net interest yields for first quarter 2005, fourth quarter 2004 and
first quarter 2004 included the benefits of yield maintenance payments of 17
basis points, 11 basis points and 11 basis points, respectively. Yield
maintenance payments represent the present value of expected future interest
income streams and accelerate the recognition of interest income from the
related loans. Because the timing and size of these payments vary greatly,
variations should not be considered indicative of positive or negative trends to
gauge future financial results. For first quarter 2005, yield maintenance
payments increased net income by $1.0 million or $0.08 per diluted share,
compared to $0.7 million or $0.05 per diluted share for fourth quarter 2004 and
$0.8 million or $0.06 per diluted share for first quarter 2004.
Guarantee and Commitment Fees
Guarantee and commitment fees, which compensate Farmer Mac for assuming the
credit risk on loans underlying Farmer Mac Guaranteed Securities and LTSPCs,
were $5.0 million for first quarter 2005, compared to $5.2 million for both
fourth and first quarter 2004. As discussed above, the effect of FAS 140
classified $0.9 million of guarantee fee income as interest income in first
quarter 2005, compared to $1.0 million in fourth quarter 2004, and $1.1 million
in first quarter 2004.
Representation and Warranty Claims Income
During first quarter 2005 and fourth quarter 2004, Farmer Mac recovered
$0.1 million and $1.0 million, respectively, from sellers for breaches of
representations and warranties associated with prior sales of agricultural
mortgage loans to Farmer Mac. Farmer Mac had previously charged off those
amounts as losses on the related loans. Farmer Mac had no representation and
warranty claims income in first quarter 2004.
Operating Expenses
Compensation and employee benefits for first quarter 2005, fourth quarter
2004 and first quarter 2004 were $1.8 million. General and administrative
expenses for first quarter 2005 were $2.0 million, compared to $2.9 million for
fourth quarter 2004 and $2.1 million for first quarter 2004. The decrease from
fourth quarter 2004 to first quarter 2005 was largely attributable to
professional fees incurred in the earlier quarter in connection with compliance
with the Sarbanes-Oxley Act of 2002 and FCA requirements. Regulatory fees for
first quarter 2005 were $0.6 million, compared to $0.6 million for fourth
quarter 2004 and $0.4 million for first quarter 2004. FCA has advised the
Corporation that its fees for the federal fiscal year ending September 30, 2005
are estimated to be $2.3 million. FCA's regulatory fees charged to Farmer Mac
for the federal fiscal year ended September 30, 2004 were $2.0 million, compared
to $1.8 million for 2003.
Capital
Farmer Mac's core capital totaled $235.6 million as of March 31, 2005,
compared to $237.7 million as of December 31, 2004 and $223.7 million as of
March 31, 2004. The regulatory methodology for calculating core capital excludes
the effects on capital of Statement of Financial Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities ("FAS 115") and
FAS 133, which are reported on Farmer Mac's balance sheet as accumulated other
comprehensive income/(loss). Farmer Mac's core capital as of March 31, 2005
exceeded the statutory minimum capital requirement of $127.9 million by $107.7
million.
Farmer Mac is required to meet the capital standards of a risk-based
capital stress test promulgated by FCA ("RBC test") pursuant to federal statute.
The RBC test determines the amount of regulatory capital (core capital plus the
allowance for losses excluding the REO valuation allowance) Farmer Mac would
need to maintain positive capital during a ten-year stress period while
incurring credit losses equivalent to the highest historical two-year
agricultural mortgage loss rates and an interest rate shock equal to the lesser
of 600 basis points or 50 percent of the ten-year U.S. Treasury note rate. The
RBC test then adds to the resulting capital requirement an additional 30 percent
for management and operational risk.
As of March 31, 2005, the RBC test generated an estimated risk-based
capital requirement of $58.9 million, compared to the risk-based capital
requirement of $37.1 million as of December 31, 2004 and $42.1 million as of
March 31, 2004. The increase in this requirement is predominantly associated
with the increase in interest rates that occurred during first quarter 2005.
Farmer Mac's regulatory capital of $251.9 million as of March 31, 2005 exceeded
the RBC requirement by approximately $193.0 million. Farmer Mac is required to
hold capital at the higher of the statutory minimum capital requirement or the
amount required by the RBC test.
During first quarter 2005, Farmer Mac repurchased 291,454 shares of its
Class C Non-Voting Common Stock, at an average price of $20.35 per share,
pursuant to the Corporation's previously announced stock repurchase program.
These repurchases reduced the Corporation's capital by approximately $5.9
million. During fourth quarter 2004, Farmer Mac repurchased 228,297 shares of
its Class C Non-Voting Common Stock, at an average price of $21.10 per share,
reducing the Corporation's capital by approximately $4.8 million.
Credit
From quarter to quarter, Farmer Mac anticipates that 90-day delinquencies
and non-performing assets will fluctuate, both in dollars and as a percentage of
the outstanding portfolio, with higher levels likely at the end of the first and
third quarters of each year corresponding to the semi-annual (January 1st and
July 1st) payment characteristics of many Farmer Mac I loans. Analysis of the
portfolio by geographic and commodity distribution indicates that 90-day
delinquencies and other non-performing assets have been and are expected to be
most prevalent in the geographic areas and in agricultural commodities that do
not receive significant government support.
As of March 31, 2005, Farmer Mac's 90-day delinquencies totaled $45.8
million, representing 1.04 percent of the principal balance of all loans held
and loans underlying post-Farm Credit System Reform Act ("1996 Act") Farmer Mac
I Guaranteed Securities and LTSPCs, compared to $57.4 million (1.17 percent) as
of March 31, 2004. The 90-day delinquencies are loans 90 days or more past due,
in foreclosure, restructured after delinquency, or in bankruptcy, excluding
loans performing under either their original loan terms or a court-approved
bankruptcy plan.
As of March 31, 2005, non-performing assets totaled $70.3 million,
representing 1.59 percent of the principal balance of all loans held and loans
underlying post-1996 Act Farmer Mac I Guaranteed Securities and LTSPCs, compared
to $91.3 million (1.86 percent) as of March 31, 2004. Non-performing assets are
loans 90 days or more past due, in foreclosure, restructured after delinquency,
in bankruptcy (including loans performing under either their original loan terms
or a court-approved bankruptcy plan), or REO. As of March 31, 2005, Farmer Mac
had $4.1 million of REO, compared to $3.8 million as of December 31, 2004 and
$12.3 million as of March 31, 2004. Prior to acquisition of property securing a
loan, Farmer Mac develops a liquidation strategy that results in either an
immediate sale or retention pending later sale. Farmer Mac evaluates these and
other alternatives based upon the economics of the transactions and the
requirements of local law.
As part of Farmer Mac's continuing evaluation of the overall credit quality
of its portfolio, the strong U.S. agricultural economy, the recent upward trends
in agricultural land values and the reduction in Farmer Mac's outstanding
guarantees and commitments, Farmer Mac determined that the appropriate level of
allowance for losses as of March 31, 2005 was $16.3 million. This resulted in
the release of approximately $0.7 million from the allowance for losses in first
quarter 2005. As of March 31, 2005, the allowance for losses was $16.3 million
and 37 basis points relative to the outstanding Farmer Mac I portfolio, compared
to $17.1 million and 37 basis points as of December 31, 2004 and $22.2 million
and 45 basis points as of March 31, 2004.
The following table summarizes the changes in the components of Farmer
Mac's allowance for losses for the three months ended March 31, 2005. The
contingent obligation for probable losses is a component of Farmer Mac's
guarantee and commitment obligation.
Contingent
Allowance REO Obligation Total
for Loan Valuation Reserve for Probable Allowance
Losses Allowance for Losses Losses for Losses
------------- ------------ ------------ --------------- -------------
(in thousands)
Balances as of December 31, 2004 $ 4,395 $ - $ 10,729 $ 1,977 $17,101
Provision for losses (584) 120 (183) (38) (685)
Net charge-offs 35 (120) - - (85)
------------- ------------ ------------ --------------- -------------
Balances as of March 31, 2005 $ 3,846 $ - $ 10,546 $ 1,939 $16,331
------------- ------------ ------------ --------------- -------------
As of March 31, 2005, Farmer Mac analyzed $94.1 million of its assets for
collateral shortfalls. Of the $94.1 million of assets analyzed, $81.7 million
were adequately collateralized, while $12.4 million were under-collateralized.
The individual collateral shortfalls totaled $0.9 million. Accordingly, Farmer
Mac allocated specific allowances of $0.9 million to those under-collateralized
assets as of March 31, 2005. After the allocation of specific allowances from
the total allowance for losses of $16.3 million, the non-specific or general
allowance for inherent probable losses totaled $15.4 million.
During first quarter 2005, Farmer Mac charged off $0.1 million of losses
against the allowance for losses, compared to charge offs of $0.1 million in
fourth quarter 2004 and $1.5 million in first quarter 2004. In certain
collateral liquidation scenarios, Farmer Mac may recover amounts previously
charged off or incur additional losses, if liquidation proceeds vary from
previous estimates.
Based on Farmer Mac's analysis of its entire portfolio, individual
loan-by-loan analyses and loan collection experience, Farmer Mac believes that
specific and inherent probable losses are covered adequately by its allowance
for losses.
Interest Rate Risk
Farmer Mac measures its interest rate risk through several tests, including
the sensitivity of its Market Value of Equity ("MVE") and Net Interest Income
("NII") to uniform or "parallel" yield curve shocks. As of March 31, 2005, a
parallel increase of 100 basis points across the entire U.S. Treasury yield
curve would have decreased MVE by 3.1 percent, while a parallel decrease of 100
basis points would have increased MVE by 1.6 percent. As of March 31, 2005, a
parallel increase of 100 basis points would have increased Farmer Mac's NII, a
shorter-term measure of interest rate risk, by 2.4 percent, while a parallel
decrease of 100 basis points would have decreased NII by 0.5 percent. Farmer
Mac's duration gap, another measure of interest rate risk, was plus 1.8 months
as of March 31, 2005.
The economic effects of all financial derivatives are included in the MVE,
NII and duration gap analyses. As an alternative to long-term fixed-rate debt
issuance, Farmer Mac issues short-term debt and enters into contracts to pay
fixed rates of interest and receive floating rates of interest from
counterparties. These "floating-to-fixed" interest rate swaps are used to adjust
the characteristics of Farmer Mac's short-term debt to match more closely the
cash flow and duration characteristics of its longer-term assets, thereby
reducing interest rate risk, and also to derive an overall lower effective
fixed-rate cost of borrowing than would otherwise be available in the
conventional debt market. As of March 31, 2005, Farmer Mac had $650.5 million
notional amount of floating-to-fixed interest rate swaps for terms ranging from
1 to 15 years. In addition, Farmer Mac enters into "fixed-to-floating" interest
rate swaps and "basis swaps" to adjust the characteristics of its assets and
liabilities to match more closely, on a cash flow and duration basis, thereby
reducing interest rate risk. As of March 31, 2005, Farmer Mac had $788.3 million
notional amount of such interest rate swaps.
Farmer Mac uses financial derivatives for hedging purposes, not for
speculative purposes. All of Farmer Mac's financial derivative transactions are
conducted through standard, collateralized agreements that limit Farmer Mac's
potential credit exposure to any counterparty. As of March 31, 2005, Farmer Mac
had no uncollateralized net exposure to any counterparty.
Financial Derivatives and Financial Statement Effects of FAS 133
Farmer Mac accounts for its financial derivatives under FAS 133. During
first quarter 2005, the decrease in net after-tax income resulting from FAS 133
was $1.4 million and the net after-tax increase in accumulated other
comprehensive income was $12.2 million. During fourth quarter 2004, the decrease
in net after-tax income resulting from FAS 133 was $0.1 million and the net
after-tax increase in accumulated other comprehensive income was $7.1 million.
For first quarter 2004, the increase in net after-tax income resulting from FAS
133 was $1.9 million and the net after-tax decrease in accumulated other
comprehensive income was $12.4 million. Accumulated other comprehensive income
is not a component of Farmer Mac's regulatory core capital.
Regulatory Matters
Regulatory actions continue to affect Farmer Mac's business outlook. Both
FCA, the federal regulator of both Farmer Mac and the primary lenders in the
Farm Credit System (FCS), and the Farm Credit System Insurance Corporation
(FCSIC), a U.S. Government controlled corporation managed by a three-member
board of directors composed of the members of the FCA Board, have cautioned FCS
institutions about doing business with GSEs, including Farmer Mac, and FCSIC
raised technical objections to FCS institutions' use of Farmer Mac Guaranteed
Securities swaps.
During second quarter 2004, FCA published a proposed regulation relating to
Farmer Mac's investments and liquidity. Farmer Mac expects to be able to comply
with the regulation if it is adopted in its current form, though analysis
indicates it could limit future increases in Farmer Mac's non-program investment
portfolio and the related net interest income. The Corporation disagrees with
certain aspects of the proposed regulation and submitted comments on the
proposal to FCA accordingly.
During third quarter 2004, FCA published a proposed regulation that, if
adopted as proposed, could adversely affect Farmer Mac's business by
establishing a new risk-weight allocation of capital applicable to Farmer Mac
transactions with FCS institutions, a major segment of Farmer Mac's customer
base. That proposed regulation would have an effective date eighteen months
after the final regulation is published. As set forth in prior disclosures,
Farmer Mac disagrees with the proposed regulation as it would affect the
Corporation, and has submitted a comment letter to FCA setting forth its
position.
Forward-Looking Statements
In addition to historical information, this release includes
forward-looking statements that reflect management's current expectations for
Farmer Mac's future financial results, business prospects and business
developments. Management's expectations for Farmer Mac's future necessarily
involve a number of assumptions and estimates and the evaluation of risks and
uncertainties. Various factors could cause Farmer Mac's actual results or events
to differ materially from the expectations as expressed or implied by the
forward-looking statements, including uncertainties regarding: (1) the rate and
direction of development of the secondary market for agricultural mortgage
loans; (2) the possible establishment of additional statutory or regulatory
restrictions or constraints on Farmer Mac that could hamper its growth or
diminish its profitability; (3) increases in general and administrative expenses
attributable to growth of the business and the regulatory environment, including
the hiring of additional personnel with expertise in key functional areas; (4)
legislative or regulatory developments or interpretations of Farmer Mac's
statutory charter that could adversely affect Farmer Mac, the ability of Farmer
Mac to offer new products or the ability or motivation of certain lenders to
participate in its programs or the terms of any such participation, or increase
the cost of regulation and related corporate activities; (5) possible reaction
in the financial markets to events involving government-sponsored enterprises
other than Farmer Mac; (6) Farmer Mac's access to the debt markets at favorable
rates and terms; (7) the possible effect of the risk-based capital requirement,
which could, under certain circumstances, be in excess of the statutory minimum
capital requirement; (8) the rate of growth in agricultural mortgage
indebtedness; (9) lender interest in Farmer Mac credit products and the Farmer
Mac secondary market; (10) borrower preferences for fixed-rate agricultural
mortgage indebtedness; (11) competitive pressures in the purchase of
agricultural mortgage loans and the sale of agricultural mortgage backed
securities and debt securities; (12) substantial changes in interest rates,
agricultural land values, commodity prices, export demand for U.S. agricultural
products, the general economy and other factors that may affect delinquency
levels and credit losses; (13) protracted adverse weather, market or other
conditions affecting particular geographic regions or particular commodities
related to agricultural mortgage loans backing Farmer Mac I Guaranteed
Securities or under LTSPCs; (14) the willingness of investors to invest in
agricultural mortgage-backed securities; or (15) the effects on the agricultural
economy or the value of agricultural real estate of any changes in federal
assistance for agriculture. Other factors are discussed in Farmer Mac's Annual
Report on Form 10-K for the year ended December 31, 2004, as filed with the SEC
on March 16, 2005. The forward-looking statements contained in this release
represent management's expectations as of the date of this release. Farmer Mac
undertakes no obligation to release publicly the results of revisions to any
forward-looking statements included in this release to reflect any future events
or circumstances, except as otherwise mandated by the SEC.
Farmer Mac is a stockholder-owned instrumentality of the United States
chartered by Congress to establish a secondary market for agricultural real
estate and rural housing mortgage loans and to facilitate capital market funding
for USDA-guaranteed farm program and rural development loans. Farmer Mac's Class
C non-voting and Class A voting common stocks are listed on the New York Stock
Exchange under the symbols AGM and AGM.A, respectively. Additional information
about Farmer Mac (as well as the Form 10-K referenced above) is available on
Farmer Mac's website at www.farmermac.com. The conference call to discuss Farmer
Mac's first quarter 2005 earnings and this press release will be webcast on
Farmer Mac's website beginning at 11:00 a.m. eastern time, Friday, April 29,
2005, and an audio recording of that call will be available for two weeks on
Farmer Mac's website after the call is concluded.
* * * *
Federal Agricultural Mortgage Corporation
Consolidated Balance Sheets
(unaudited)
(in thousands)
March 31, December 31, March 31,
2005 2004 2004
---------------- ------------------ ------------------
Assets:
Cash and cash equivalents $ 424,041 $ 430,504 $ 336,245
Investment securities 1,130,246 1,056,143 1,107,471
Farmer Mac Guaranteed Securities 1,326,868 1,376,847 1,420,890
Loans held for sale 31,186 15,281 32,754
Loans held for investment 833,712 871,988 946,617
Allowance for loan losses (3,846) (4,395) (7,671)
---------------- ------------------ ------------------
Loans, net 861,052 882,874 971,700
Real estate owned, net of valuation allowance
of zero, zero and $0.2 million 4,118 3,845 12,284
Financial derivatives 5,888 1,499 2,789
Interest receivable 38,133 58,131 37,153
Guarantee and commitment fees receivable 17,986 19,871 14,714
Deferred tax asset, net 6,348 6,518 13,839
Prepaid expenses and other assets 25,509 10,585 28,505
---------------- ------------------ ------------------
Total Assets $ 3,840,189 $ 3,846,817 $ 3,945,590
---------------- ------------------ ------------------
Liabilities and Stockholders' Equity:
Notes payable:
Due within one year $ 2,616,061 $ 2,620,172 $ 2,288,511
Due after one year 878,687 862,201 1,291,956
---------------- ------------------ ------------------
Total notes payable 3,494,748 3,482,373 3,580,467
Financial derivatives 36,933 47,793 80,567
Accrued interest payable 24,771 25,511 28,425
Guarantee and commitment obligation 16,781 16,869 13,597
Accounts payable and accrued expenses 20,122 26,690 16,819
Reserve for losses 10,546 10,729 11,952
---------------- ------------------ ------------------
Total Liabilities 3,603,901 3,609,965 3,731,827
Preferred stock 35,000 35,000 35,000
Common stock at par 11,533 11,822 12,070
Additional paid-in capital 85,681 87,777 88,968
Accumulated other comprehensive income/(loss) 699 (882) (9,945)
Retained earnings 103,375 103,135 87,670
---------------- ------------------ ------------------
Total Stockholders' Equity 236,288 236,852 213,763
---------------- ------------------ ------------------
Total Liabilities and Stockholders' Equity $ 3,840,189 $ 3,846,817 $ 3,945,590
---------------- ------------------ ------------------
Federal Agricultural Mortgage Corporation
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share amounts)
Three Months Ended
------------------------------------------
March 31, December 31, March 31,
2005 2004 2004
-------------- -------------- ------------
Interest income:
Investments and cash equivalents $ 12,587 $ 10,528 $ 8,335
Farmer Mac Guaranteed Securities 17,081 16,668 16,628
Loans 12,121 12,412 14,125
-------------- -------------- ------------
Total interest income 41,789 39,608 39,088
Interest expense 33,983 31,636 29,621
-------------- -------------- ------------
Net interest income 7,806 7,972 9,467
Provision for loan losses 584 830 (2,793)
-------------- -------------- ------------
Net interest income after provision for loan losses 8,390 8,802 6,674
Guarantee and commitment fees 4,956 5,235 5,222
Gains/(losses) on financial derivatives
and trading assets (1,709) 399 3,248
Gains/(losses) on the sale of real estate owned (13) 642 (282)
Representation and warranty claims income 79 1,000 -
Other income 320 126 522
-------------- -------------- ------------
Total revenues 12,023 16,204 15,384
-------------- -------------- ------------
Expenses:
Compensation and employee benefits 1,775 1,809 1,797
General and administrative 1,990 2,868 2,071
Regulatory fees 576 576 412
Real estate owned operating costs, net (22) (4) 75
Provision for losses (101) (4,427) (1,178)
-------------- -------------- ------------
Total operating expenses 4,218 822 3,177
-------------- -------------- ------------
Income before income taxes 7,805 15,382 12,207
Income tax expense 2,333 4,985 3,820
-------------- -------------- ------------
Net income 5,472 10,397 8,387
Preferred stock dividends (560) (560) (560)
-------------- -------------- ------------
Net income available to common stockholders $ 4,912 $ 9,837 $ 7,827
-------------- -------------- ------------
Earnings per common share:
Basic earnings per common share $ 0.42 $ 0.83 $ 0.65
Diluted earnings per common share $ 0.42 $ 0.82 $ 0.64
Common stock dividends $ 0.10 $ 0.10 $ -
Federal Agricultural Mortgage Corporation
Supplemental Information
The following tables present quarterly and annual information regarding
loan purchases, guarantees and LTSPCs, outstanding guarantees and LTSPCs and
non-performing assets and 90-day delinquencies.
Farmer Mac Purchases, Guarantees and LTSPCs
- -------------------------------------------------------------------------------------------
Farmer Mac I
------------------------------
Loans and
Guaranteed
Securities LTSPCs Farmer Mac II Total
-------------- --------------- ---------------- ------------
(in thousands)
For the quarter ended:
March 31, 2005 $ 18,540 $ 33,282 $ 43,634 $ 95,456
December 31, 2004 28,211 34,091 55,122 117,424
September 30, 2004 23,229 84,097 49,798 157,124
June 30, 2004 27,520 127,098 34,671 189,289
March 31, 2004 25,444 147,273 34,483 207,200
December 31, 2003 25,148 218,097 44,971 288,216
September 30, 2003 42,760 199,646 106,729 349,135
June 30, 2003 65,615 179,025 77,636 322,276
March 31, 2003 59,054 166,574 41,893 267,521
For the year ended:
December 31, 2004 104,404 392,559 174,074 671,037
December 31, 2003 192,577 763,342 271,229 1,227,148
Outstanding Balance of Farmer Mac Loans, Guarantees and LTSPCs (1)
- ----------------------------------------------------------------------------------------------------------------
Farmer Mac I
-----------------------------------------------
Post-1996 Act
-------------------------------
Loans and
Guaranteed Pre-1996
Securities LTSPCs Act Farmer Mac II Total
--------------- -------------- -------------- ---------------- ----------------
(in thousands)
As of:
March 31, 2005 $ 2,247,595 $2,209,792 $ 17,236 $ 777,465 $ 5,252,088
December 31, 2004 2,371,405 2,295,103 18,640 768,542 5,453,690
September 30, 2004 2,406,133 2,381,006 18,909 742,474 5,548,522
June 30, 2004 2,521,026 2,390,779 22,155 715,750 5,649,710
March 31, 2004 2,566,412 2,382,648 22,261 722,978 5,694,299
December 31, 2003 2,696,530 2,348,702 24,734 729,470 5,799,436
September 30, 2003 (2) 2,721,775 2,174,182 25,588 720,584 5,642,129
June 30, 2003 2,108,180 2,790,480 28,057 668,899 5,595,616
March 31, 2003 2,111,861 2,732,620 29,216 650,152 5,523,849
Outstanding Balance of Loans Held and Loans Underlying
On-Balance Sheet Farmer Mac Guaranteed Securities
- ----------------------------------------------------------------------------------------------------------------
Fixed Rate
(10-yr. Wtd. 5-to-10-Year 1-Month-to-3-Year
Avg. Term) ARMs and Resets ARMs Total
-------------------- ------------------ ---------------------- ----------------
(in thousands)
As of:
March 31, 2005 $ 828,985 $ 822,275 $ 492,358 $ 2,143,618
December 31, 2004 763,210 923,520 533,686 2,220,416
September 30, 2004 753,205 929,641 520,246 2,203,092
June 30, 2004 782,854 978,531 529,654 2,291,039
March 31, 2004 818,497 978,263 548,134 2,344,894
December 31, 2003 860,874 1,045,217 542,024 2,448,115
September 30, 2003 865,817 1,037,168 535,915 2,438,900
June 30, 2003 889,839 1,064,824 511,700 2,466,363
March 31, 2003 880,316 1,057,310 515,910 2,453,536
Non-performing Assets and 90-Day Delinquencies
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding
Post-1996 Act Less:
Loans, Non- REO and
Guarantees and performing Performing 90-Day
LTSPCs Assets (3) Percentage Bankruptcies Delinquencies (4) Percentage
------------------ --------------- ------------- ---------------- --------------------- -------------
(dollars in thousands)
As of:
March 31, 2005 $ 4,433,087 $ 70,349 1.59% $ 24,561 $ 45,788 1.04%
December 31, 2004 4,642,208 50,636 1.09% 25,353 25,283 0.55%
September 30, 2004 4,756,839 75,022 1.58% 27,438 47,584 1.01%
June 30, 2004 4,882,505 69,751 1.43% 36,978 32,773 0.68%
March 31, 2004 4,922,759 91,326 1.86% 33,951 57,375 1.17%
December 31, 2003 5,020,032 69,964 1.39% 39,908 30,056 0.60%
September 30, 2003 4,871,756 84,583 1.74% 37,442 47,141 0.98%
June 30, 2003 4,875,059 80,169 1.64% 28,883 51,286 1.06%
March 31, 2003 4,820,887 94,822 1.97% 18,662 76,160 1.58%
Distribution of Post-1996 Act Non-performing Assets
and 90-Day Delinquencies by Original LTV Ratio (5)
as of March 31, 2005
- -----------------------------------------------------------------------------------------------------
(dollars in thousands)
Non-performing 90-Day
Original LTV Ratio Assets Percentage Delinquencies Percentage
- ----------------------- ------------------- ------------ ---------------- -------------
0.00% to 40.00% $ 7,308 11% $ 6,400 14%
40.01% to 50.00% 11,180 16% 6,265 14%
50.01% to 60.00% 32,142 45% 17,761 39%
60.01% to 70.00% 18,226 26% 14,786 32%
70.01% to 80.00% 1,493 2% 576 1%
80.01% + - 0% - 0%
------------------- ------------ ---------------- -------------
Total $ 70,349 100% $ 45,788 100%
------------------- ------------ ---------------- -------------
Distribution of Post-1996 Act Non-performing Assets
and 90-Day Delinquencies by Loan Origination Date
as of March 31, 2005
- --------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
Outstanding
Post-1996 Act
Loan Loans,
Origination Guarantees Non-performing 90-Day
Date and LTSPCs Assets Percentage Delinquencies Percentage
- ---------------- ------------------- ------------------ ------------------- ---------------- -----------------
Before 1994 $ 500,684 $ 3,658 0.73% $ 3,035 0.61%
1994 121,245 1,436 1.18% 1,436 1.18%
1995 120,520 2,787 2.31% 2,164 1.80%
1996 276,797 6,026 2.18% 4,053 1.47%
1997 333,426 11,857 3.56% 7,111 2.16%
1998 539,898 12,216 2.26% 6,029 1.13%
1999 540,729 13,126 2.43% 9,371 1.75%
2000 309,027 8,792 2.85% 4,835 1.58%
2001 491,655 9,655 1.96% 7,357 1.50%
2002 548,008 796 0.15% 397 0.07%
2003 432,524 - 0.00% - 0.00%
2004 174,319 - 0.00% - 0.00%
2005 44,255 - 0.00% - 0.00%
------------------- ------------------ ------------------- ---------------- -----------------
Total $ 4,433,087 $ 70,349 1.59% $ 45,788 1.04%
------------------- ------------------ ------------------- ---------------- -----------------
<FN>
(1) Farmer Mac assumes 100 percent of the credit risk on post-1996 Act loans.
Pre-1996 Act loans back securities that are supported by unguaranteed
subordinated interests representing approximately 10 percent of the balance
of the loans. Farmer Mac II loans are guaranteed by the U.S. Department of
Agriculture.
(2) The Loans and Guaranteed Securities and LTSPCs amounts reflect the
conversion of $722.3 million of existing LTSPCs to Guaranteed Securities
during third quarter 2003 at the request of a program participant.
(3) Non-performing assets are loans 90 days or more past due, in foreclosure,
restructured after delinquency, in bankruptcy (including loans performing
under either their original loan terms or a court-approved bankruptcy plan)
or real estate owned.
(4) 90-day delinquencies are loans 90 days or more past due, in foreclosure,
restructured after delinquency, or in bankruptcy, excluding loans
performing under either their original loan terms or a court-approved
bankruptcy plan.
(5) Original LTV ratio is calculated by dividing the loan principal balance at
the time of guarantee, purchase or commitment by the appraised value at the
date of loan origination or, when available, the updated appraised value at
the time of guarantee, purchase or commitment.
</FN>