As filed with the Securities and Exchange Commission on
- --------------------------------------------------------------------------------
August 14, 2001
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------------------------------------------------------------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
Commission File Number 0-17440
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
(Exact name of registrant as specified in its charter)
Federally chartered instrumentality
of the United States 52-1578738
(State or other jurisdiction of (I.R.S. employer identification
incorporation or organization) number)
919 18th Street, N.W., Suite 200
Washington, D.C. 20006
(Address of principal executive offices) (Zip code)
(202) 872-7700
(Registrant's telephone number, including
area code)
-----------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
As of August 1, 2001, there were 1,030,780 shares of Class A Voting Common
Stock, 500,301 shares of Class B Voting Common Stock and 9,830,486 shares of
Class C Non-Voting Common Stock outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
The following interim consolidated financial statements of the Federal
Agricultural Mortgage Corporation ("Farmer Mac" or the "Corporation") have been
prepared, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. These consolidated financial statements reflect all
normal and recurring adjustments that are, in the opinion of management,
necessary to present a fair statement of the results for the interim periods
presented. Certain information and footnote disclosures normally included in
annual consolidated financial statements have been condensed or omitted as
permitted by such rules and regulations. Management believes that the
disclosures are adequate to present fairly the consolidated financial position,
consolidated results of operations and consolidated cash flows as of the dates
and for the periods presented. These consolidated financial statements should be
read in conjunction with the audited 2000 consolidated financial statements of
Farmer Mac. Results for interim periods are not necessarily indicative of those
to be expected for the fiscal year.
The following information concerning Farmer Mac's consolidated financial
statements is included herein:
Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000.... 3
Consolidated Statements of Operations for the three and six months ended
June 30, 2001 and 2000............................................... 4
Consolidated Statements of Cash Flows for the six months ended
June 30, 2001 and 2000............................................... 5
Notes to Consolidated Financial Statements............................... 6
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2001 2000
------------------ --------------
(in thousands)
Assets:
Cash and cash equivalents $ 473,546 $ 537,871
Investment securities 890,065 836,757
Farmer Mac guaranteed securities 1,698,207 1,679,993
Loans 79,089 30,279
Financial derivatives 625 -
Interest receivable 48,851 55,681
Guarantee fees receivable 4,594 5,494
Prepaid expenses and other assets 14,104 14,824
------------------ --------------
Total Assets $ 3,209,081 $ 3,160,899
------------------ --------------
Liabilities and Stockholders' Equity:
Liabilities:
Notes payable
Due within one year $ 2,280,276 $ 2,201,691
Due after one year 759,544 767,492
------------------ --------------
Total notes payable 3,039,820 2,969,183
Financial derivatives 14,767 -
Accrued interest payable 22,121 20,852
Accounts payable and accrued expenses 8,508 26,880
Reserve for losses 13,180 11,323
------------------ --------------
Total Liabilities 3,098,396 3,028,238
Stockholders' Equity:
Common stock:
Class A Voting, $1 par value, no maximum authorization,
1,030,780 shares issued and outstanding as of June 30,
2001 and December 31, 2000. 1,031 1,031
Class B Voting, $1 par value, no maximum authorization,
500,301 shares issued and outstanding as of June 30,
2001 and December 31, 2000. 500 500
Class C Non-Voting, $1 par value, no maximum authorization,
9,829,863 and 9,620,112 shares issued and outstanding
as of June 30, 2001 and December 31, 2000. 9,830 9,621
Additional paid-in capital 76,108 72,773
Accumulated other comprehensive income 107 31,498
Retained earnings 23,109 17,238
--------------- ---------------
Total Stockholders' Equity 110,685 132,661
--------------- ---------------
Total Liabilities and Stockholders' Equity $ 3,209,081 $ 3,160,899
--------------- ---------------
See accompanying notes to consolidated financial statements.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
------------------------------------ ----------------------------------
June 30, 2001 June 30, 2000 June 30, 2001 June 30, 2000
---------------- ---------------- ---------------- --------------
(in thousands, except per share amounts)
Interest income:
Investments and cash equivalents $ 17,148 $ 23,040 $ 38,236 $ 44,998
Farmer Mac guaranteed securities 28,481 23,398 57,221 45,092
Loans 740 506 1,343 1,746
---------------- ---------------- ---------------- --------------
Total interest income 46,369 46,944 96,800 91,836
Interest expense 39,947 42,700 84,925 82,976
---------------- ---------------- ---------------- --------------
Net interest income 6,422 4,244 11,875 8,860
Gains/(Losses) on financial derivatives
and trading assets (159) - (748) -
Other income:
Guarantee fees 3,669 2,755 7,097 5,337
Miscellaneous 116 (10) 282 172
---------------- ---------------- ---------------- --------------
Total other income 3,785 2,745 7,379 5,509
---------------- ---------------- ---------------- --------------
Total revenues 10,048 6,989 18,506 14,369
Expenses:
Compensation and employee benefits 1,496 1,065 2,733 2,316
Regulatory fees 245 151 468 301
General and administrative 1,107 882 2,252 1,889
---------------- ---------------- ---------------- --------------
Total operating expenses 2,848 2,098 5,453 4,506
Provision for losses 1,394 1,057 2,777 2,374
---------------- ---------------- ---------------- --------------
Total expenses 4,242 3,155 8,230 6,880
---------------- ---------------- ---------------- --------------
Income before income taxes 5,806 3,834 10,276 7,489
Income tax expense 2,091 1,362 3,679 2,659
---------------- ---------------- ---------------- --------------
Net income before cumulative effect 3,715 2,472 6,597 4,830
of change in accounting principles
Cumulative effect of change in accounting
principles, net of taxes of $400 - - (726) -
---------------- ---------------- ---------------- --------------
Net income $ 3,715 $ 2,472 $ 5,871 $ 4,830
---------------- ---------------- ---------------- --------------
Earnings per share:
Basic earnings per share $ 0.33 $ 0.22 $ 0.52 $ 0.44
Diluted earnings per share $ 0.32 $ 0.22 $ 0.50 $ 0.43
Earnings per share before cumulative
effect of change in accounting principles:
Basic earnings per share $ 0.33 $ 0.22 $ 0.59 $ 0.44
Diluted earnings per share $ 0.32 $ 0.22 $ 0.57 $ 0.43
See accompanying notes to consolidated financial statements.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
---------------------------------------
June 30, 2001 June 30, 2000
--------------------- ----------------
(in thousands)
Cash flows from operating activities:
Net income $ 5,871 $ 4,830
Adjustments to reconcile net income to cash provided by
operating activities:
Amortization of investment premiums and discounts (3,351) 952
Decrease in interest receivable 6,830 250
Decrease in guarantee fees receivable 900 414
Decrease (increase) in other assets 647 (480)
Amortization of debt premiums, discounts and issuance costs 55,283 56,595
Increase in accrued interest payable 1,269 1,067
Increase (decrease) in other liabilities (1,203) 1,403
Proceeds from repayment of trading investment securities 12,712 -
Mark to market on trading securities and derivatives (180) -
Settlement of financial derivatives (545) -
Provision for losses (net of charge-offs) 1,857 2,374
-------------------- -----------------
Net cash provided by operating activities 80,090 67,405
Cash flows from investing activities:
Purchases of investment securities (218,231) (130,030)
Purchases of Farmer Mac guaranteed securities (171,018) (263,126)
Purchases of loans (134,461) (174,017)
Proceeds from repayment of investment securities 157,750 71,663
Proceeds from repayment of Farmer Mac guaranteed securities 151,001 292,389
Proceeds from repayment of loans 750 243
Proceeds from sale of AMBS 50,812 124,568
Purchases of office equipment (32) -
-------------------- -----------------
Net cash used in investing activities (163,429) (78,310)
Cash flows from financing activities:
Proceeds from issuance of discount notes 47,407,008 31,585,245
Proceeds from issuance of medium-term notes 61,000 66,058
Payments to redeem discount notes (47,332,368) (31,583,511)
Payments to redeem medium-term notes (120,170) (22,560)
Proceeds from common stock issuance 3,544 1,849
------------------- ------------------
Net cash provided by financing activities 19,014 47,081
------------------- ------------------
Net increase (decrease) in cash and cash equivalents (64,325) 36,176
Cash and cash equivalents at beginning of period 537,871 336,282
------------------- ------------------
Cash and cash equivalents at end of period $ 473,546 $ 372,458
------------------- ------------------
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Accounting Policies
(a) Cash and Cash Equivalents
Farmer Mac considers highly liquid investment securities with original
maturities of three months or less to be cash equivalents. Changes in the
balance of cash and cash equivalents are reported in the Consolidated Statements
of Cash Flows. The following table sets forth information regarding certain cash
and non-cash transactions for the six months ended June 30, 2001 and 2000.
Six Months Ended June 30,
-------------------------
2001 2000
----------- -----------
Cash paid for:
Interest $29,652 $ 25,800
Income taxes 5,000 3,225
Non-cash activity:
Real estate owned acquired through foreclosure - -
Loans securitized as AMBS 84,745 192,690
(b) Loans
As of June 30, 2001, loans held by Farmer Mac included $10.4 million held
for sale and $68.7 million held for investment. As of December 31, 2000, loans
held by Farmer Mac included $11.6 million held for sale and $18.7 million held
for investment. See "New Accounting Standards" below for a discussion of SFAS
140.
(c) Earnings Per Share
Basic earnings per share are based on the weighted average number of common
shares outstanding. Diluted earnings per share are based on the weighted average
number of common shares outstanding adjusted to include all potentially dilutive
common stock. The following schedule reconciles basic and diluted earnings per
share for the three and six months ended June 30, 2001 and 2000:
June 30, 2001 June 30, 2000
-------------------------------------- ----------------------------------
Dilutive Dilutive
stock Diluted stock Diluted
Basic EPS options EPS Basic EPS options EPS
-------------------------------------- ----------------------------------
(in thousands, except per share amounts)
Three months ended:
Net income $ 3,715 $ 3,715 $ 2,472 $ 2,472
Weighted average shares 11,251 449 11,700 11,073 265 11,338
Earnings per share $ 0.33 $ 0.32 $ 0.22 $ 0.22
Six months ended:
Net income $ 5,871 $ 5,871 $ 4,830 $ 4,830
Weighted average shares 11,231 454 11,685 10,997 339 11,336
Earnings per share $ 0.52 $ 0.50 $ 0.44 $ 0.43
(d) Reclassifications
Certain reclassifications of prior period information were made to conform
to the current period presentation.
(e) New Accounting Standards
As amended, Statement of Financial Accounting Standards No. 133, Accounting
for Derivative Instruments and Hedging Activities ("SFAS 133") became effective
as of January 1, 2001. SFAS 133 requires financial derivatives to be measured
and recorded at fair value. Pursuant to generally accepted accounting practices
prior to the January 1, 2001 effective date of SFAS 133, derivatives were
previously accounted for as off-balance sheet items and disclosed in the
consolidated financial statement footnotes.
The cumulative effect of this change in accounting principles recognized on
January 1, 2001 was a reduction to net income of $726,000 and a negative
adjustment to other comprehensive income within stockholders' equity of $8.6
million. As part of the implementation of SFAS 133, Farmer Mac reclassified
certain investment securities classified as held to maturity and available for
sale as trading securities. The Corporation expects that SFAS 133 will increase
volatility in earnings and accumulated other comprehensive income.
In September 2000, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 140, Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities ("SFAS
140"). SFAS 140 was applied as of April 1, 2001 as required by the standard.
SFAS 140 does not materially affect the Corporation's results of operations or
financial position, but does result in the Corporation classifying as loans
certain AMBS that previously would have been classified as Farmer Mac guaranteed
securities.
(f) Financial Derivatives
Farmer Mac enters into derivative instruments as an end-user, not for
speculative purposes. Farmer Mac enters into interest-rate contracts, including
interest-rate swaps and caps, to adjust the characteristics of Farmer Mac's debt
to match more closely the characteristics of the Corporation's assets or to
provide better returns on its investments. Farmer Mac enters into forward sale
contracts of GSE debt and mortgage-backed securities and U.S. Treasury based
futures contracts to manage interest-rate risk exposure related to loan
purchases and anticipated debt issuances.
Interest-rate swaps used to hedge corporate debt investments, and forward
sale contracts used to hedge Farmer Mac's loan portfolio, are classified and
accounted for as fair value hedges. Interest-rate swaps and forward sale
contracts used to hedge anticipated debt issuances are classified and accounted
for as cash flow hedges. Other financial derivatives, such as futures and
interest-rate caps, are not assigned an accounting hedge designation. Farmer
Mac's financial derivatives are carried at their fair values. For fair value
hedges, the changes in the fair values of the derivatives, along with the
changes in fair values of the hedged items, are recorded in earnings. For cash
flow hedges, the changes in the fair values of the derivatives are recorded in
other comprehensive income and any hedge ineffectiveness is recorded in
earnings. For derivative instruments not assigned an accounting hedge
designation, the changes in fair value are recorded in earnings. Net after-tax
charges against earnings under SFAS 133 during second quarter 2001 totaled
$102,000, and net after-tax increases to other comprehensive income totaled $3.3
million. Farmer Mac estimates that $0.9 million of the total amount currently
reported in accumulated other comprehensive income will be reclassified into
earnings within the next twelve months. Substantially all of this amount
represents the estimated present value of the net interest payments on
interest-rate swap contracts, using fair values as of June 30, 2001, and
assuming no change in interest rates. Those interest-rate swap contracts were
entered into to derive a lower effective fixed rate cost of borrowing for
periods of up to 15 years than would otherwise have been available to the
Corporation in the conventional debt market. For the period ended June 30, 2001,
the ineffectiveness of designated hedges recognized as part of net income was
immaterial.
Note 2. Off-Balance Sheet Guaranteed Securities
For information regarding the off-balance sheet risks associated with
Farmer Mac's guarantees of AMBS, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Risk Management - Credit Risk."
Note 3. Comprehensive Income
Comprehensive income (loss) is comprised of net income plus other changes
in stockholders' equity not resulting from investments by or distributions to
stockholders. The following table sets forth comprehensive income (loss) for the
three and six months ended June 30, 2001 and 2000. The changes in unrealized
gains on securities available-for-sale are net of the related deferred tax
benefit (expense) of $7.8 million and $12.4 million for the three and six months
ended June 30, 2001, respectively, and ($1.4 million) and $253,000 for the three
and six months ended June 30, 2000, respectively. The change in the fair value
of financial derivatives classified as cash flow hedges for the three and six
months ended June 30, 2001 is net of the related deferred tax benefit (expense)
of ($1.8 million) and $155,000, respectively.
Three Months Six Months
Ended June 30, Ended June 30,
--------------------------- -------------------------
2001 2000 2001 2000
------------- ------------- ------------ ----------
(in thousands)
Net income $ 3,715 $ 2,472 $ 5,871 $4,830
Change in unrealized gain on securities
available-for-sale, net of taxes (14,162) 2,529 (22,479) (355)
Cumulative effect of change in accounting principles - - (8,632) -
Change in the fair value of financial derivatives
classified as cash flow hedges 3,271 - (281) -
------------- ------------- ------------ ----------
Comprehensive income (loss) $ (7,176) $ 5,001 $ (25,521) $4,475
------------- ------------- ------------ ----------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Special Note Regarding Forward-Looking Statements
Certain statements made in this Form 10-Q are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 that
reflect management's current expectations for Farmer Mac's future financial
results, business prospects and business developments. Forward-looking
statements include, without limitation, any statement that may predict,
forecast, indicate or imply future results, performance or achievements, and
typically are accompanied by, and identified with, such terms as "anticipates,"
"believes," "estimates," "expects," "intends," "plans," "should" and similar
expressions. The following management's discussion and analysis includes
forward-looking statements addressing Farmer Mac's prospects for earnings and
growth in loan purchase, guarantee and securitization volume; trends in net
interest income, delinquencies and provision for losses; changes in capital
position; and other business and financial matters. 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 or
events could cause Farmer Mac's actual results to differ materially from the
expectations as expressed or implied by the forward-looking statements,
including: uncertainties regarding the rate and direction of development of the
secondary market for agricultural mortgage loans; substantial changes in
interest rates, the agricultural economy (including agricultural land values,
commodity prices, export demand for U.S. agricultural products and federal
assistance to farmers) or the general economy; uncertainties as to the intended
operation of the new risk-based capital standard promulgated by the Farm Credit
Administration, which Farmer Mac is required to comply with by May 23, 2002; the
implementation of additional statutory or regulatory restrictions applicable to
Farmer Mac or restrictions on Farmer Mac's investment authority; protracted
adverse weather, market or other conditions affecting particular geographic
regions or particular commodities related to agricultural mortgage loans backing
Farmer Mac guaranteed securities; legislative or regulatory developments or
interpretations of Farmer Mac's statutory charter that could adversely affect
Farmer Mac or the ability of certain lenders to participate in its programs or
the terms of any such participation; the availability of debt funding in
sufficient quantities and at favorable rates to support continued growth; the
rate of growth in agricultural mortgage indebtedness; the size of the
agricultural mortgage market; borrower preferences for fixed-rate agricultural
mortgage indebtedness; the willingness of lenders to sell agricultural mortgage
loans into the Farmer Mac secondary market; the willingness of investors to
invest in agricultural mortgage-backed securities; competition in the
origination or purchase of agricultural mortgage loans and the sale of
agricultural mortgage-backed and debt securities; or changes in Farmer Mac's
status as a government-sponsored enterprise.
The foregoing factors are not exhaustive. Other sections of this report may
include additional factors that could adversely affect Farmer Mac's business and
its financial performance. Furthermore, new risk factors emerge from time to
time and it is not possible for management to predict all such risk factors, nor
assess the effects of such factors on Farmer Mac's business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from the expectations expressed or implied by the forward-looking
statements. Given these potential risks and uncertainties, no undue reliance
should be placed on any forward-looking statements expressed in this report.
Furthermore, Farmer Mac undertakes no obligation to release publicly the results
of revisions to any forward-looking statements that may be made to reflect any
future events or circumstances.
Results of Operations
Operating Results. SFAS 133 requires the change in the fair values of
certain financial derivatives to be reflected in the Corporation's net income or
other comprehensive income. Management believes that reporting results by
reference to operating income and operating revenues, excluding the cumulative
effect of the change in accounting principles recognized on January 1, 2001
under SFAS 133 and its ongoing effects during the reporting periods, provides
meaningful operating measures of Farmer Mac's financial performance. Such
information is presented to supplement, not replace, net income, revenues, cash
from operations, or any other operating or liquidity performance measures
prescribed by generally accepted accounting principles.
Overview. Net income for second quarter 2001, including the cumulative and
ongoing effects of SFAS 133 during the quarter, was $3.7 million or $0.32 per
share. Net income for second quarter 2000 was $2.5 million or $0.22 per share.
This represents a 45 percent increase in net income per share. Operating income
for second quarter 2001 did not differ materially from net income.
Farmer Mac's revenue growth continued in second quarter 2001, reflecting
the effects of outstanding guarantee volume as of June 30, 2001 that was 50
percent higher than at the close of the second quarter 2000 and net interest
income earned on a higher average balance of outstanding interest-earning assets
that was 51 percent higher than during the second quarter 2000. During second
quarter 2001, Farmer Mac (1) purchased $57.0 million of guaranteed portions of
loans guaranteed by the United States Department of Agriculture ("USDA"), (2)
purchased $85.4 million of Farmer Mac I loans and (3) added $499.5 million in
long-term standby purchase commitments.
Guarantee volume growth was achieved during second quarter 2001 despite
continued unfavorable economic conditions in the agricultural sector. Weak
market opportunities for agricultural commodities and products and low commodity
prices have persisted throughout 2000 and into 2001. Total direct governmental
payments to the agricultural sector for 2000, as estimated by the USDA, were a
record $22.9 billion, resulting in net cash farm income levels during 2000
significantly above the decade (1991-2000) average. The federal income support
is not allocated equally to producers of all agricultural commodities, however,
and farmers and ranchers producing agricultural commodities that receive such
support should demonstrate greater liquidity than those who do not receive
payments. USDA currently forecasts net cash farm income for 2001 to be above the
decade average, based in part on legislation to provide an additional
$5.5 billion of federal support to the agricultural sector in 2001 that the
President signed into law on August 13, 2001. Farmer Mac responded to the
continued unfavorable economic conditions in the agricultural sector by
re-emphasizing to agricultural lenders their ability to use Farmer Mac's
programs to reduce their concentrated exposures to agricultural credit risks.
Although Farmer Mac believes that the increased interest in portfolio sales,
swaps and long-term standby commitments during the second quarter of 2001 is a
good indication that the Corporation has positioned itself for growth and
anticipates additional portfolio transactions during the remainder of 2001, the
total volume of those transactions is uncertain at this time.
During second quarter 2001, Farmer Mac, at the request of the Agriculture
Committees in both the Senate and House of Representatives, presented testimony
in connection with Congress' consideration of the reauthorization of the farm
bill. In that testimony, the Corporation suggested that Congress consider adding
the authority to establish a secondary market for rural development loans to the
Corporation's authorities. Since that testimony was presented, Farmer Mac's
management has had discussions with Committee staff and others who have
expressed interest in Farmer Mac's suggestion, with a goal of developing a rural
development secondary market proposal to submit to Congress. At this time, there
can be no assurance that such a proposal will be developed or, if developed,
enacted into law. If such a proposal were enacted into law, no assurance could
be given that sufficient volume or income could be generated to materially
affect Farmer Mac's profitability.
Set forth below is a more detailed discussion of Farmer Mac's results of
operations.
Net Interest Income. Net interest income was $6.4 million for second
quarter 2001 and $11.9 million year-to-date, compared to $4.2 million and $8.9
million for the same periods in 2000. The increase in net interest income was
primarily attributable to increases in the balance of program assets, driven by
Farmer Mac's retention of its guaranteed agricultural mortgage-backed securities
("AMBS"). The following table provides information regarding the average
balances and rates of interest-earning assets and funding for the six months
ended June 30, 2001 and 2000.
Six Months Ended June 30,
-------------------------------------------------------------------------------------------
2001 2000
--------------------------------------------- -------------------------------------------
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
--------------- -------------- ------------- --------------- -------------- ------------
(dollars in thousands)
Interest-earning assets:
Cash and cash equivalents $ 564,856 $ 14,023 4.97% $ 525,180 $ 15,967 6.08%
Investments 865,806 24,213 5.59% 895,793 29,031 6.48%
Farmer Mac guaranteed securities 1,728,535 57,221 6.62% 1,304,552 45,092 6.91%
Loans 39,665 1,343 6.77% 44,121 1,746 7.92%
--------------- -------------- ------------- --------------- -------------- -------------
Total interest earning assets 3,198,862 96,800 6.05% 2,769,646 91,836 6.63%
--------------- -------------- --------------- --------------
Funding:
Discount notes 2,156,086 56,371 5.23% 1,913,076 56,670 5.93%
Medium-term notes 905,023 28,554 6.31% 800,178 26,306 6.58%
--------------- -------------- ------------- --------------- -------------- -------------
Total interest-bearing liabilities 3,061,109 84,925 5.55% 2,713,254 82,976 6.12%
Net non-interest bearing funding 137,753 - 0.00% 56,392 - 0.00%
--------------- -------------- ------------- --------------- -------------- -------------
Total funding $3,198,862 84,925 5.31% $2,769,646 82,976 5.99%
--------------- -------------- ------------- --------------- -------------- -------------
Net interest income/yield $ 11,875 0.74% $ 8,860 0.64%
-------------- ------------- -------------- -------------
The following table sets forth certain information regarding the changes in
the components of Farmer Mac's net interest income for the periods indicated.
For each category, information is provided on changes attributable to changes in
volume (change in volume multiplied by old rate) and changes in rate (change in
rate multiplied by old volume). Combined rate/volume variances, the third
element of the calculation, are allocated based on their relative size.
Six Months Ended June 30, 2001
Compared to Six Months Ended
June 30, 2000
-------------------------------------------
Increase/(Decrease) Due to
-------------------------------------------
Rate Volume Total
-------------- -------------- -------------
(in thousands)
Income from interest-earning assets
Cash and cash equivalents $ (3,081) $ 1,137 $ (1,944)
Investments (3,874) (944) (4,818)
Farmer Mac guaranteed securities (1,963) 14,092 12,129
Loans (238) (165) (403)
-------------- -------------- -------------
Total (9,156) 14,120 4,964
Expense from interest-bearing liabilities (8,138) 10,087 1,949
-------------- -------------- -------------
Change in net interest income $ (1,018) $ 4,033 $ 3,015
-------------- -------------- -------------
Other Income. Other income, which is comprised of guarantee fee income and
miscellaneous income, totaled $3.8 million for second quarter 2001 and $7.4
million for year-to-date 2001, compared to $2.7 million and $5.5 million,
respectively, in 2000. Guarantee fee income, the largest component of other
income, was $3.7 million for second quarter 2001, compared to $2.8 million for
second quarter 2000. The relative increase in guarantee fee income reflects an
increase in the average balance of outstanding guarantees. Miscellaneous income
was $116,000 for second quarter 2001, compared to a loss of $10,000 for second
quarter 2000.
Expenses. During second quarter 2001, operating expenses totaled $2.8
million, compared to $2.1 million for second quarter 2000. Operating expenses as
a percentage of operating revenues for second quarter 2001 and 2000 were 28
percent and 30 percent, respectively.
Farmer Mac's provision for principal and interest losses was $1.4 million
for second quarter 2001 and $2.8 million for year-to-date 2001, compared to $1.1
million and $2.4 million for the same periods in 2000. As of June 30, 2001,
Farmer Mac's reserve for losses totaled $13.2 million, or 0.43 percent of
outstanding post-1996 Act loans, compared to $9.0 million, or 0.46 percent, as
of June 30, 2000.
The provision for income taxes totaled $2.1 million for second quarter 2001
and $3.7 million for year-to-date 2001, compared to $1.4 million for second
quarter 2000 and $2.7 million for year-to date 2000. Farmer Mac's effective tax
rate for the six months ended June 30, 2001 was approximately 35.5 percent.
Business Volume. The following table sets forth the amount of loans
purchased or guaranteed, and AMBS issued during the periods indicated:
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------- ---------------------------------
2001 2000 2001 2000
------------------ ------------------ --------------- ----------------
(in thousands)
Purchase and guarantee volume:
Farmer Mac I
Loans & AMBS $ 85,439 $ 45,578 $ 134,039 $ 103,861
LTSPC 499,508 34,409 549,203 34,409
Farmer Mac II 57,012 94,870 104,719 117,440
------------------ ------------------ --------------- ----------------
Total loans purchased or
guaranteed $ 641,959 $ 174,857 $ 787,961 $ 255,710
------------------ ------------------ --------------- ----------------
AMBS issuances:
Retained $ - $ 21,655 $ 33,932 $ 68,122
Sold 18,373 103,956 50,813 124,568
------------------ ------------------ --------------- ----------------
Total AMBS issuances $ 18,373 $ 125,611 $ 84,745 $ 192,690
------------------ ------------------ --------------- ----------------
See "Overview" above for a discussion regarding loans purchased and
guaranteed by Farmer Mac.
Indicators of future purchase and guarantee volume include outstanding
commitments to purchase loans and the total balance of loans submitted for
approval or approved but not yet purchased. Many purchase commitments entered
into by Farmer Mac are mandatory delivery commitments. If a seller obtains a
mandatory commitment and is unable to deliver the loans as required thereunder,
Farmer Mac requires the seller to pay a fee to modify, extend or cancel the
commitment. As of June 30, 2001, outstanding commitments to purchase or
guarantee Farmer Mac I loans totaled $15.9 million, compared to $8.6 million as
of June 30, 2000. Of the total Farmer Mac I commitments outstanding as of June
30, 2001 and 2000, $10.0 million and $3.8 million, respectively, were mandatory
commitments. In accordance with SFAS 133, as of June 30, 2001, the Farmer Mac I
mandatory commitments and the outstanding Farmer Mac II mandatory commitments
for $3.6 million are recorded as part of financial derivatives at their fair
market values of $186,000 and $68,000, respectively. Loans submitted for
approval or approved but not yet committed to purchase totaled $160.0 million as
of June 30, 2001, compared to $117.3 million as of June 30, 2000. Not all of
these loans are purchased, as some are denied for credit reasons or withdrawn by
the seller.
While significant progress has been made in developing the secondary market
for agricultural mortgages, Farmer Mac continues to face the challenges of
establishing a market where none previously existed. Use of Farmer Mac's
programs is increasing among lenders, reflecting the competitive rates, terms
and products offered and the advantages Farmer Mac's programs provide. For
Farmer Mac to maximize its business development and profitability over the long
term, the use of Farmer Mac's programs and products by agricultural mortgage
lenders, whether traditional or non-traditional, must continue to expand.
Balance Sheet Review
During the first half of 2001, total assets increased by $48.2 million,
primarily due to an increase in on-balance sheet program assets (Farmer Mac
guaranteed securities and loans). For further information regarding both on- and
off-balance sheet guaranteed securities, see "Supplemental Information" below.
Total liabilities increased by $70.2 million from December 31, 2000 to June 30,
2001 primarily due to an increase in notes payable.
Farmer Mac's statutory core capital totaled $110.6 million as of June 30,
2001, compared with $101.2 million as of December 31, 2000 and $95.5 million as
of June 30, 2000. The core capital balance as of June 30, 2001 exceeded Farmer
Mac's statutory minimum capital requirement by approximately $7.7 million.
On April 12, 2001, the Farm Credit Administration ("FCA") issued its final
risk-based capital regulation for Farmer Mac. The regulation became effective on
May 23, 2001, and Farmer Mac will be required to meet the risk-based capital
standard by May 23, 2002. As noted in our June 12, 2000 comment letter to the
FCA on the proposed regulation, Farmer Mac believes that certain significant
aspects of the risk-based capital regulation do not comply with the authorizing
statute. The economic model incorporated in the regulation is extremely complex,
and we are still analyzing its potential effects. Farmer Mac has requested that
FCA assist us in understanding the operation of the regulation and the model. If
unchanged, the regulation--particularly those provisions that suggest to us that
the FCA went outside the authorizing statute--could lead to an increase in the
capital requirement for certain newly guaranteed off-balance sheet program
assets and so alter Farmer Mac's strategic plan for future growth. While the
Corporation is at this time uncertain whether the regulation, as issued, would
alter that strategic plan, we expect that any issues raised by the regulation
will be resolved in accordance with the authorizing statute before Farmer Mac is
required to meet the risk-based capital standard.
Average return on equity, excluding the effects of SFAS 115, Accounting for
Certain Investments in Debt and Equity Securities, and SFAS 133, was 13.8
percent for second quarter 2001, compared to 10.6 percent for second quarter
2000 and 12.3 percent for first quarter 2001.
Risk Management
Interest-Rate Risk. Farmer Mac's asset and liability management objective
is to limit the effects of changes in interest rates on its equity and earnings
to within acceptable risk tolerance levels. In doing so, Farmer Mac uses
callable debt and derivative financial instruments, including interest-rate
swaps and caps (collectively "interest-rate contracts"), forward sale contracts
involving GSE debt and mortgage-backed securities and futures contracts
involving U.S. Treasury securities. Farmer Mac uses interest-rate contracts to
alter the interest-rate characteristics of specific investments or debt, which
enable Farmer Mac better to match the interest-rate characteristics of its
investments and debt. As of June 30, 2001 and December 31, 2000, the notional
amount of interest-rate contracts totaled $1.06 billion and $1.11 billion,
respectively. Farmer Mac uses forward sales and futures contracts to reduce its
interest-rate risk exposure to loans committed or purchased and not yet sold or
funded as retained investments. As of June 30, 2001, the notional amount of
outstanding forward sale and futures contracts totaled $143.2 million, compared
to $8.6 million as of December 31, 2000.
One method Farmer Mac uses to monitor its exposure to interest-rate risk is
to measure the sensitivity of its market value of equity (MVE) to an immediate
and permanent parallel shift of the U.S. Treasury yield curve. The following
schedule summarizes the results of Farmer Mac's MVE sensitivity analysis as of
June 30, 2001 and December 31, 2000.
Percentage Change in MVE
from Base Case
--------------------------------
Interest Rate June 30, December 31,
Scenario 2001 2000
--------------- --------------------------------
+ 300 bp -13.4% -10.2%
+ 200 bp -8.0% -5.9%
+ 100 bp -2.9% -2.0%
- 100 bp -0.4% -0.5%
- 200 bp -3.2% -3.2%
- 300 bp -7.3% -6.5%
Credit Risk. The outstanding principal balance of loans held and securities
guaranteed by Farmer Mac as of June 30, 2001 and December 31, 2000 is summarized
in the table below.
June 30, December 31,
2001 2000
--------------- -----------------
(in thousands)
Farmer Mac I:
Post-1996 Act $ 3,109,861 $ 2,508,997
Pre-1996 Act 65,709 83,513
Farmer Mac II 579,251 517,703
--------------- -----------------
Total $ 3,754,821 $ 3,110,213
--------------- -----------------
Farmer Mac assumes 100 percent of the credit risk on post-1996 Act Farmer
Mac I loans; pre-1996 Act Farmer Mac I loans are supported by mandatory 10
percent first loss subordinated interests that mitigate credit exposure; Farmer
Mac II loans are guaranteed by the USDA. Farmer Mac believes it has little or no
credit risk exposure to pre-1996 Act Farmer Mac I loans because of the first
loss subordinated interests related to pools of those loans, or to Farmer Mac II
loans because of the USDA guarantee.
As of June 30, 2001, post-1996 Act Farmer Mac I loans that were 90 days or
more past due, in foreclosure or in bankruptcy represented 1.72 percent of the
outstanding principal balance of all post-1996 Act Farmer Mac I loans, compared
to 1.25 percent as of June 30, 2000 and 2.62 percent as of March 31, 2001.
Farmer Mac anticipates fluctuations in the delinquency rate from quarter to
quarter, with higher levels likely as of March 31 and September 30 of each year
due to the semiannual payment characteristics of most Farmer Mac loans. The
year-over-year increase is reflective of liquidity issues in the agricultural
sector in general and declines in real estate values related to commodities that
do not directly benefit from direct governmental payments to the agricultural
sector.
Total direct governmental payments to the agricultural sector for 2000, as
estimated by the USDA, were a record $22.9 billion, resulting in net cash farm
income levels during 2000 significantly above the decade (1991-2000) average.
The federal income support is not allocated equally to producers of all
agricultural commodities, however, and farmers and ranchers producing
agricultural commodities that receive significant federal income support should
demonstrate greater liquidity than those who do not receive payments. USDA
currently forecasts net cash farm income for 2001 to be above the decade
average, based in part on the August 13, 2001 enactment of an additional
$5.5 billion of federal support for the agricultural sector in 2001.
The following table shows Farmer Mac I delinquencies distributed by
post-1996 Act loans and pre-1996 Act loans.
Farmer Mac I Delinquencies (1) (2)
- ----------------------------------------------------------------------
As of: Post-1996 Act Pre-1996 Act Total
-------------- -------------- -------------
June 30, 2001 1.72% 3.69% 1.77%
March 31, 2001 2.62% 5.83% 2.72%
December 31, 2000 1.25% 6.49% 1.44%
September 30, 2000 1.80% 5.55% 1.96%
June 30, 2000 1.25% 4.12% 1.41%
March 31, 2000 1.45% 4.89% 1.65%
(1) Includes loans 90 days or more past due, in foreclosure or in bankruptcy.
(2) 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 first
loss subordinated interests representing approximately 10 percent of the
balance of the loans backing each security.
Farmer Mac maintains a reserve to cover losses incurred on post-1996 Act
Farmer Mac I loans. The following schedule summarizes the change in the reserve
for losses for the three and six months ended June 30, 2001 and 2000:
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ --------------------------
2001 2000 2001 2000
----------- ------------ ----------- --------------
(in thousands)
Beginning balance $ 12,386 $ 7,901 $ 11,323 $ 6,584
Provision for losses 1,394 1,057 2,777 2,374
Net charge-offs (600) - (920) -
----------- ---------- ----------- --------------
Ending balance $ 13,180 $ 8,958 $ 13,180 $ 8,958
----------- ---------- ----------- --------------
Although losses are expected to be incurred on the post-1996 Act Farmer Mac
I loans, Farmer Mac believes that those losses are adequately covered by the
reserve for losses, based on the value of the collateral supporting the loans.
Farmer Mac believes that its guaranteed portfolio consists of loans with
loan-to-value ratios that adequately protect against losses at liquidation, with
the exception of certain loans that are secured in whole or in part by
depreciable assets or by real estate planted with commodities that do not
directly benefit from direct governmental payments to the agricultural sector.
Those instances may result in Farmer Mac incurring losses upon loan liquidation,
such as the $600,000 in losses recognized on delinquent loans during second
quarter 2001. The following table summarizes the post-1996 Act delinquencies by
original loan-to-value ratio (calculated by dividing the original loan principal
balance by the original appraised value):
Distribution of Post-1996
Act Delinquencies by
UPB as of June 30, 2001
---------------------------------------------------------
(original loan-to-value ratio)
0.00% to 40.00% 6%
40.01% to 50.00% 11%
50.01% to 60.00% 37%
60.01% to 70.00% 46%
70.01% to 80.00% 0%
-------------
Total 100%
-------------
As of June 30, 2001, the weighted average original loan-to-value ratio of
post-1996 Act Farmer Mac I loans was 50.3 percent and the weighted average
original loan-to-value ratio for all post-1996 Act delinquent Farmer Mac I loans
that were 90 days or more past due, in foreclosure or in bankruptcy was 59.0
percent.
The following table segregates the post-1996 Act Farmer Mac I loan
portfolio and delinquencies as of June 30, 2001 by year of origination,
geographic region and commodity.
Distribution of
Post-1996 Act Delinquency
Loans Rate
-------------------- ---------------
By year of origination:
Before 1996 26% 0.55%
1996 9% 5.87%
1997 11% 4.21%
1998 18% 1.99%
1999 21% 0.72%
2000 10% 0.85%
2001 5% 0.33%
--------------- ---------------
Total 100% 1.72%
--------------- ---------------
By geographic region: (1)
Northwest 36% 2.63%
Southwest 40% 1.66%
Mid-North 13% 0.40%
Mid-South 4% 0.40%
Northeast 3% 0.61%
Southeast 4% 0.46%
--------------- ---------------
Total 100% 1.72%
--------------- ---------------
By commodity:
Crops 46% 1.73%
Permanent plantings 30% 2.31%
Livestock 18% 1.16%
Part-Time Farm 4% 0.39%
Other 2% 0.00%
--------------- ----------------
Total 100% 1.72%
--------------- ----------------
(1) Geographic regions - Mid-North (IA, IL, IN, MI, MN, MO, WI); Mid-South (KS,
OK, TX); Northeast (CT, DE, KY, MA, MD, ME, NC, NH, NJ, NY, OH, PA, RI, TN,
VA, VT, WV); Northwest (ID, MT, ND, NE, OR, SD, WA, WY); Southeast (AL, AR,
FL, GA, LA, MS, SC); and Southwest (AZ, CA, CO, HI, NM, NV, UT).
Supplemental Information
The following tables set forth quarterly and annual purchase and guarantee
activity and the outstanding balances of loans and guaranteed securities.
Farmer Mac Purchases and Guarantees
- -------------------------------------------------------------------------------------------
Farmer Mac I
----------------------------
Loans & AMBS LTSPC Farmer Mac II Total
---------------- --------- ----------------- ---------
(in thousands)
For the quarter ended:
June 30, 2001 $ 85,439 $ 499,508 $ 57,012 $ 641,959
March 31, 2001 48,600 49,695 47,707 146,002
December 31, 2000 45,727 180,502 36,029 262,258
September 30, 2000 292,658 158,291 40,036 490,985
June 30, 2000 45,578 34,409 94,870 174,857
March 31, 2000 58,283 - 22,570 80,853
December 31, 1999 168,828 229,984 18,511 417,323
For the year ended:
December 31, 2000 442,246 373,202 193,505 1,008,953
December 31, 1999 568,236 637,685 116,148 1,322,069
Outstanding Guarantees (1)
- ------------------------------------------------------------------------------------------------------------------
Farmer Mac I
---------------------------------------------
Post-1996 Act
---------------------------
Loans & Farmer Mac Held in
AMBS (2) LTSPC Pre-1996 Act II Total Portfolio (3)
------------- ----------- -------------- ------------- ----------- --------------
(in thousands)
As of:
June 30, 2001 $1,572,800 $1,537,061 $ 65,709 $ 579,251 $3,754,821 $1,763,676
March 31, 2001 1,466,443 1,083,528 72,646 549,003 3,171,620 1,648,896
December 31, 2000 1,615,914 862,804 83,513 517,703 3,079,934 1,581,905
September 30, 2000 1,621,516 707,850 92,536 491,820 2,913,722 1,571,315
June 30, 2000 1,354,623 575,143 100,414 467,352 2,497,532 1,292,359
March 31, 2000 1,310,710 551,423 107,403 387,992 2,357,528 1,268,889
December 31,1999 1,266,522 575,097 118,214 383,266 2,343,099 1,237,623
(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 USDA.
(2) Periods prior to June 30, 2001 include only AMBS.
(3) Included in total outstanding guarantees.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Farmer Mac is exposed to market risk attributable to changes in interest
rates. Farmer Mac manages this market risk by entering into various financial
transactions, including off-balance sheet derivative financial instruments, and
by monitoring its exposure to changes in interest rates. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations - Risk
Management - Interest-Rate Risk" for further information regarding Farmer Mac's
exposure to interest-rate risk and strategies to manage such risk. For
information regarding Farmer Mac's use of off-balance sheet derivative financial
instruments, including Farmer Mac's accounting policies for such instruments,
see Note 1(f) to the Consolidated Financial Statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Farmer Mac is not a party to any material pending legal proceedings.
Item 2. Changes in Securities and Use of Proceeds
(a) Not applicable.
(b) Not applicable.
(c) Farmer Mac is a federally chartered instrumentality of the United
States and its Common Stock is exempt from registration pursuant to
Section 3(a)(2) of the Securities Act of 1933.
Pursuant to Farmer Mac's policy that permits Directors of Farmer Mac
to elect to receive shares of Class C Non-Voting Common Stock in lieu
of their annual cash retainers, on April 30, 2001, Farmer Mac issued
an aggregate of 594 shares of its Class C Non-Voting Common Stock, at
an issue price of $23.75 per share, to the 10 Directors who elected
to receive such stock in lieu of their cash retainers.
On June 7, 2001, Farmer Mac issued an aggregate of 23,352 shares of
its Class C Non-Voting Common Stock, at an issue price of $31.24 per
share, to the officers of Farmer Mac as incentive compensation.
During the second quarter of 2001, Farmer Mac granted options under
its 1997 Stock Option Plan to purchase an aggregate of 266,048 shares
of Class C Non-Voting Common Stock to employees, officers and
directors. Five hundred of the options granted have an exercise price
of $26.92 per share; 1,500 of the options granted have an exercise
price of $31.50 per share; 259,421 of the options granted have an
exercise price of $31.24 per share; and 4,627 of the options granted
have an exercise price of $31.02 per share.
(d) Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
(a) Farmer Mac's Annual Meeting of Stockholders was held on June
7, 2001.
(b) See paragraph (c)(1) below. In addition to the Directors elected
at the Annual Meeting of Stockholders on June 7, 2001, the
following Directors appointed by the President of the United
States continue to serve as Directors of Farmer Mac:
Charles Eugene Branstool (Chairman)
Lowell L. Junkins
Marilyn Peters
Gordon Clyde Southern
Clyde A. Wheeler, Jr.
(c) (1) Election of Directors:
Class A Nominees
Number of Shares
For Withheld
Dennis L. Brack 687,132 1,750
W. David Hemingway 684,982 3,900
Mitchell A. Johnson 686,732 2,150
Charles E. Kruse 687,032 1,850
Peter T. Paul 686,732 2,150
Class B Nominees
Number of Shares
For Withheld
Paul A. DeBriyn 462,565 200
Kenneth E. Graff 462,565 200
James A. McCarthy 462,765 0
John G. Nelson III 462,565 200
John Dan Raines 462,565 200
(2) Selection of Independent Auditors (Arthur Andersen LLP):
Class A Stockholders:
Number of Shares
----------------
For 686,532
Against 1,000
Abstain 1,350
Class B Stockholders:
Number of Shares
----------------
For 462,765
Against 0
Abstain 0
(d) Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
* 3.1 - Title VIII of the Farm Credit Act of 1971, as most recently amended
by the Farm Credit System Reform Act of 1996, P.L. 104-105 (Form 10-K filed
March 29, 1996).
* 3.2 - Amended and restated By-Laws of the Registrant (Form 10-Q filed
August 12, 1999).
+* 10.1 - Stock Option Plan (Previously filed as Exhibit 19.1 to Form 10-Q
filed August 14, 1992).
+* 10.1.1 - Amendment No. 1 to Stock Option Plan (Previously filed as Exhibit
10.2 to Form 10-Q filed August 16, 1993).
+* 10.1.2 - 1996 Stock Option Plan (Form 10-Q filed August 14, 1996).
+* 10.1.3- Amended and Restated 1997 Incentive Plan (Form 10-Q filed August
14, 1997).
+* 10.2 - Employment Agreement dated May 5, 1989 between Henry D. Edelman and
the Registrant (Previously filed as Exhibit 10.4 to Form 10-K filed
February 14, 1990).
+* 10.2.1 - Amendment No. 1 dated as of January 10, 1991 to Employment
Contract between Henry D. Edelman and the Registrant (Previously filed as
Exhibit 10.4 to Form 10-K filed April 1, 1991).
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
+* 10.2.2 - Amendment to Employment Contract dated as of June 1, 1993 between
Henry D. Edelman and the Registrant (Previously filed as Exhibit 10.5 to
Form 10-Q filed November 15, 1993).
+* 10.2.3 - Amendment No. 3 dated as of June 1, 1994 to Employment Contract
between Henry D. Edelman and the Registrant (Previously filed as Exhibit
10.6 to Form 10-Q filed August 15, 1994).
+* 10.2.4 - Amendment No. 4 dated as of February 8, 1996 to Employment
Contract between Henry D. Edelman and the Registrant (Form 10-K filed March
29, 1996).
+* 10.2.5 - Amendment No. 5 dated as of June 13, 1996 to Employment Contract
between Henry D. Edelman and the Registrant (Form 10-Q filed August 14,
1996).
+* 10.2.6 - Amendment No. 6 dated as of August 7, 1997 to Employment Contract
between Henry D. Edelman and the Registrant (Form 10-Q filed November 14,
1997).
+* 10.2.7 - Amendment No. 7 dated as of June 4, 1998 to Employment Contract
between Henry D. Edelman and the Registrant (Form 10-Q filed August 14,
1998).
+* 10.2.8 - Amendment No. 8 dated as of June 3, 1999 to Employment Contract
between Henry D. Edelman and the Registrant (Form 10-Q filed August 12,
1999).
+* 10.2.9 - Amendment No. 9 dated as of June 1, 2000 to Employment Contract
between Henry D. Edelman and the Registrant (Form 10-Q filed August 14,
2000).
+** 10.2.10- Amendment No. 10 dated as of June 7, 2001 to Employment Contract
between Henry D. Edelman and the Registrant.
+* 10.3 - Employment Agreement dated May 11, 1989 between Nancy E. Corsiglia
and the Registrant (Previously filed as Exhibit 10.5 to Form 10-K filed
February 14, 1990).
+* 10.3.1 - Amendment dated December 14, 1989 to Employment Agreement between
Nancy E. Corsiglia and the Registrant (Previously filed as Exhibit 10.5 to
Form 10-K filed February 14, 1990).
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
+* 10.3.2 - Amendment No. 2 dated February 14, 1991 to Employment Agreement
between Nancy E. Corsiglia and the Registrant (Previously filed as Exhibit
10.7 to Form 10-K filed April 1, 1991).
+* 10.3.3 - Amendment to Employment Contract dated as of June 1, 1993 between
Nancy E. Corsiglia and the Registrant (Previously filed as Exhibit 10.9 to
Form 10-Q filed November 15, 1993).
+* 10.3.4 - Amendment No. 4 dated June 1, 1993 to Employment Contract between
Nancy E. Corsiglia and the Registrant (Previously filed as Exhibit 10.10 to
Form 10-K filed March 31, 1994).
+* 10.3.5 - Amendment No. 5 dated as of June 1, 1994 to Employment Contract
between Nancy E. Corsiglia and the Registrant (Previously filed as Exhibit
10.12 to Form 10-Q filed August 15, 1994).
+* 10.3.6 - Amendment No. 6 dated as of June 1, 1995 to Employment Contract
between Nancy E. Corsiglia and the Registrant (Form 10-Q filed August 14,
1995).
+* 10.3.7 - Amendment No. 7 dated as of February 8, 1996 to Employment
Contract between Nancy E. Corsiglia and the Registrant (Form 10-K filed
March 29, 1996).
+* 10.3.8 - Amendment No. 8 dated as of June 13, 1996 to Employment Contract
between Nancy E. Corsiglia and the Registrant (Form 10-Q filed August 14,
1996).
+* 10.3.9 - Amendment No. 9 dated as of August 7, 1997 to Employment Contract
between Nancy E. Corsiglia and the Registrant (Form 10-Q filed November 14,
1997).
+* 10.3.10- Amendment No. 10 dated as of June 4, 1998 to Employment Contract
between Nancy E. Corsiglia and the Registrant (Form 10-Q filed August 14,
1998).
+* 10.3.11- Amendment No. 11 dated as of June 3, 1999 to Employment Contract
between Nancy E. Corsiglia and the Registrant (Form 10-Q filed August 12,
1999).
+* 10.3.12- Amendment No. 12 dated as of June 1, 2000 to Employment Contract
between Nancy E. Corsiglia and the Registrant (Form 10-Q filed August 14,
2000).
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
+** 10.3.13- Amendment No. 13 dated as of June 7, 2001 to Employment Contract
between Nancy E. Corsiglia and the Registrant.
+* 10.4 - Employment Agreement dated June 13, 1989 between Thomas R. Clark and
the Registrant (Previously filed as Exhibit 10.6 to Form 10-K filed
February 14, 1990).
+* 10.4.1 - Amendment No. 1 dated February 14, 1991 to Employment Agreement
between Thomas R. Clark and the Registrant (Previously filed as Exhibit
10.9 to Form 10-K filed April 1, 1991).
+* 10.4.2 - Amendment to Employment Contract dated as of June 1, 1993 between
Thomas R. Clark and the Registrant (Previously filed as Exhibit 10.12 to
Form 10-Q filed November 15, 1993).
+* 10.4.3 - Amendment No. 3 dated June 1, 1993 to Employment Contract between
Thomas R. Clark and the Registrant (Previously filed as Exhibit 10.14 to
Form 10-K filed March 31, 1994).
+* 10.4.4 - Amendment No. 4 dated as of June 1, 1994 to Employment Contract
between Thomas R. Clark and the Registrant (Previously filed as Exhibit
10.17 to Form 10-Q filed August 15, 1994).
+* 10.4.5 - Amendment No. 5 dated as of June 1, 1995 to Employment Contract
between Thomas R. Clark and the Registrant (Form 10-Q filed August 14,
1995).
+* 10.4.6 - Amendment No. 6 dated as of February 8, 1996 to Employment
Contract between Thomas R. Clark and the Registrant (Form 10-K filed March
29, 1996).
+* 10.4.7 - Amendment No. 7 dated as of June 13, 1996 to Employment Contract
between Thomas R. Clark and the Registrant(Form 10-Q filed August 14,
1996).
+* 10.4.8 - Amendment No. 8 dated as of August 7, 1997 to Employment Contract
between Thomas R. Clark and the Registrant (Form 10-Q filed November 14,
1997).
+* 10.4.9 - Amendment No. 9 dated as of June 4, 1998 to Employment Contract
between Thomas R. Clark and the Registrant (Form 10-Q filed August 14,
1998).
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
+* 10.4.10- Amendment No. 10 dated as of June 3, 1999 to Employment Contract
between Thomas R. Clark and the Registrant (Form 10-Q filed August 12,
1999).
+* 10.4.11- Amendment No. 11 dated as of June 1, 2000 to Employment Contract
between Thomas R. Clark and the Registrant (Form 10-Q filed August 14,
2000).
+* 10.4.12- Employment Contract Novation dated as of January 1, 2001 between
Thomas R. Clark and the Registrant (Form 10-K filed March 26, 2001).
+* 10.5 - Employment Contract dated as of September 1, 1997 between Tom D.
Stenson and the Registrant (Previously filed as Exhibit 10.8 to Form 10-Q
filed November 14, 1997).
+* 10.5.1 - Amendment No. 1 dated as of June 4, 1998 to Employment Contract
between Tom D. Stenson and the Registrant (Previously filed as Exhibit
10.8.1 to Form 10-Q filed August 14, 1998).
+* 10.5.2 - Amendment No. 2 dated as of June 3, 1999 to Employment Contract
between Tom D. Stenson and the Registrant (Form 10-Q filed August 12,
1999).
+* 10.5.3 - Amendment No. 3 dated as of June 1, 2000 to Employment Contract
between Tom D. Stenson and the Registrant (Form 10-Q filed August 14,
2000).
+** 10.5.4 - Amendment No. 4 dated as of June 7, 2001 to Employment Contract
between Tom D. Stenson and the Registrant.
+* 10.6 - Employment Contract dated February 1, 2000 between Jerome G. Oslick
and the Registrant (Form 10-Q filed May 11, 2000).
+* 10.6.1 - Amendment No. 1 dated as of June 1, 2000 to Employment Contract
between Jerome G. Oslick and the Registrant (Form 10-Q filed August 14,
2000).
+** 10.6.2 - Amendment No. 2 dated as of June 7, 2001 to Employment Contract
between Jerome G. Oslick and the Registrant.
* 10.9 - Lease Agreement, dated September 30, 1991 between 919 Eighteenth
Street, N.W. Associates Limited Partnership and the Registrant (Previously
filed as Exhibit 10.20 to Form 10-K filed March 30, 1992).
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
21 - Farmer Mac Mortgage Securities Corporation, a Delaware corporation.
* 99.1 - Map of U.S. Department of Agriculture (Secretary of Agriculture's)
Regions (Previously filed as Exhibit 1.1 to Form 10-K filed April 1, 1991).
(b) Reports on Form 8-K.
On April 20, 2001, the Registrant filed a report on Form 8-K that attached
a press release announcing the Registrant's financial results for first quarter
2001.
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
Exhibit Index
10.2.10 - Amendment No. 10 dated as of June 7, 2001 to Employment Contract
between Henry D. Edelman and the Registrant.
10.3.13 - Amendment No. 13 dated as of June 7, 2001 to Employment Contract
between Nancy E. Corsiglia and the Registrant.
10.5.4 - Amendment No. 4 dated as of June 7, 2001 to Employment Contract between
Tom D. Stenson and the Registrant.
10.6.2 - Amendment No. 2 dated as of June 7, 2001 to Employment Contract between
Jerome G. Oslick and the Registrant.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
August 14, 2001
By: /s/ Henry D. Edelman
--------------------------------------------------
Henry D. Edelman
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Nancy E. Corsiglia
--------------------------------------------------
Nancy E. Corsiglia
Vice President - Finance
(Principal Financial Officer)