As filed with the Securities and Exchange Commission on
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November 14, 1997
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997. Commission File
Number 0-17440
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
(Exact name of registrant as specified in its
charter)
Federally chartered
instrumentality 52-1578738
of the United
States
---------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. employer identification
incorporation or organization) number)
919 18th Street, N.W., Suite 200, 20006
Washington, D.C.
---------------------------------- ---------------------------------
(Address of principal executive (Zip code)
offices)
(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 twelve months (or 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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date.
As of November 7, 1997, there were 996,350 shares of Class A Voting Common
Stock, 500,301 shares of Class B Voting Common Stock, 2,678,214 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. Such interim consolidated financial statements reflect
all normal and recurring adjustments that are, in the opinion of management,
necessary to 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 at the dates and for the
periods presented. These condensed financial statements should be read in
conjunction with the audited 1996 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 financial statements is
included herein.
Consolidated Balance Sheets at September 30, 1997 and December 31, 1996... 3
Consolidated Statements of Operations for the three and nine months
ended September 30, 1997 and 1996.................................... 4
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1997 and 1996........................................... 5
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
September30, December 31,
1996 1997
------------- -------------
(unaudited)
ASSETS:
Cash and cash equivalents.....................$ 246,206 $ 68,912
Interest receivable............................ 14,841 14,821
Guarantee fees receivable...................... 1,031 745
Loans held for securitization.................. 23,821 12,999
Investments.................................... 647,993 85,799
Farmer Mac I and II Securities................. 436,531 416,839
Farmer Mac I and II payments receivable........ 2,102 2,421
Prepaid expenses and other assets.............. 1,628 568
----------- -------------
TOTAL ASSETS....................................$ 1,374,153 $ 603,104
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES:
Debentures, notes and bonds, net:
Due within one year........................ $ 954,814 $ 259,164
Due after one year......................... 357,981 287,128
------------ -------------
Total Debentures, notes and bonds, net 1,312,795 546,292
Accrued interest payable................... 7,512 7,231
Accounts payable and accrued expenses...... 1,832 1,721
Reserve for loan losses on sold Guaranteed
Securities............................... 1,435 655
----------- -------------
TOTAL LIABILITIES............................ 1,323,574 555,899
----------- -------------
STOCKHOLDERS' EQUITY Common stock:
Class A Voting, $1 par value, 2,000,000
shares authorized, 995,950 and 990,000
shares issued and outstanding at September
30, 1997 and December 31, 1996, respectively.... 996 990
Class B Voting, $1 par value, 2,000,000
shares authorized, 500,301 and 593,401
shares issued and outstanding at September
30, 1997 and December 31, 1996, respectively.... 500 593
Class C Non-Voting, $1 par value, 4,000,000
shares authorized, 2,677,942 and 2,658,897
shares issued and outstanding at September
30, 1997 and December 31, 1996.................. 2,678 2,659
Additional paid in capital....................... 52,610 52,513
Note receivable for purchase of stock............ - (557)
Unrealized gain on securities
available-for-sale............................... 936 329
Accumulated deficit.............................. (7,141) (9,322)
---------- -------------
TOTAL STOCKHOLDERS' EQUITY......................... 50,579 47,205
---------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..... $ 1,374,153 $ 603,104
============= =============
See accompanying notes to consolidated financial statements.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
-----------------------------------------------------
1997 1996 1997 1996
----------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
INTEREST INCOME:
Investments and cash
equivalents.............. $ 14,266 $ 1,348 $ 33,357 $ 4,813
Farmer Mac I and II
Securities............... 7,764 7,398 22,612 22,210
Loans held for
securitization........... 708 15 1,552 468
--------------------------------------- -------------
TOTAL INTEREST INCOME..... 22,738 8,761 57,521 27,491
INTEREST EXPENSE.......... 20,768 8,125 52,367 25,546
--------------------------------------- -------------
NET INTEREST INCOME....... 1,970 636 5,154 1,945
OTHER INCOME:
Guarantee fees............ 725 478 1,857 1,130
Gain on issuance of
mortgage-backed
securities, net.......... 592 - 2,111 913
Miscellaneous............. 16 4 233 55
-------------------------- ------------------------
TOTAL OTHER INCOME......... 1,333 482 4,201 2,098
------------------------- --------------------------
OTHER EXPENSES:
Compensation and
employee benefits......... 939 543 2,647 1,703
Professional fees.......... 486 277 1,175 618
Insurance.................. 51 56 169 161
Rent....................... 56 47 168 123
Regulatory fees............ 16 71 47 214
Board of Directors fees
and meeting expenses....... 72 68 251 236
Administrative.............. 199 209 667 408
Provision for losses........ 260 60 780 202
------------------------------------ -------------
TOTAL OTHER EXPENSES........ 2,079 1,331 5,904 3,665
----------------------------------- -------------
INCOME BEFORE
EXTRAORDINARY ITEM......... 1,224 (213) 3,451 378
Extraordinary gain from
early extinguishment
of debt.............. - 384 - 384
--------------------------------------- -------------
INCOME BEFORE INCOME
TAXES..................... 1,224 171 3,451 762
Provision for income
taxes................... 40 - 103 -
--------------------------------------- -------------
NET INCOME............... $ 1,184 $ 171 $ 3,348 $ 762
======================================= =============
EARNINGS PER SHARE BEFORE EXTRAODRINARY ITEM
Classes A and B Voting
Common stock........... $ 0.12 $ (0.04) $ 0.33 $ 0.07
Class C Non-Voting
Common Stock........... $ 0.35 $ (0.12) $ 1.00 $ 0.22
EARNINGS PER SHARE
Classes A and B Voting
Common stock........... $ 0.12 $ 0.03 $ 0.33 $ 0.15
Class C Non-Voting
Common Stock.......... $ 0.35 $ 0.10 $ 1.00 $ 0.44
See accompanying notes to consolidated financial statements.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Nine Months Ended
--------------------------
September 30, September 30,
1997 1996
--------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from Operations.........................$ 3,348 $ 762
Adjustments to reconcile net income to cash
provided by operating activities:
Amortization of premium on Farmer Mac I and
II Securities................................ 2,449 2,648
Discount Note amortization ................... 33,529 7,898
(Increase) decrease in guarantee fees
receivable................................... (286) 40
(Increase) decrease in interest receivable.... (20) 4,160
Decrease (increase) in Farmer Mac I and II
payments receivable.......................... 319 (6,724)
Increase in prepaid expenses and other assets. (1,025) (322)
Amortization and depreciation................. 126 72
Increase in accounts payable and accrued
expenses..................................... 111 652
Increase in loans held for securitization..... (10,822) (5,331)
Increase (decrease) in accrued interest
payable........................... 281 (2,163)
Provision for losses......................... 780 202
Extraordinary gain from early extinguishment
of debt..................................... - (384)
--------------------------
Net cash provided by operating activities....... 28,790 1,510
--------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Farmer Mac I and II purchases.................. (63,613) (59,270)
Purchases of investments....................... (608,060) (39,488)
Proceeds from maturity of investments.......... 46,466 27,005
Proceeds from Farmer Mac I and II principal
repayments..................................... 41,472 66,334
Purchases of office equipment.................. (65) (43)
--------------------------
Net cash used by investing activities........... (583,800) (5,462)
--------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Medium-Term Notes.... 104,918 19,945
Payments to redeem Medium-Term Notes........... (26,820) (73,860)
Proceeds from issuance of Discount Notes....... 15,782,342 1,319,598
Discount Notes redeemed........................(15,127,555) (1,235,065)
Repurchase of Class B Common Stock............. (1,396) -
Proceeds from issuance of common stock......... 815 2,611
--------------------------
Net cash provided by financing activities....... 732,304 33,229
--------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS....... 177,294 29,277
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 68,912 8,336
==========================
CASH AND CASH EQUIVALENTS AT END OF PERIOD......$ 246,206 $ 37,613
==========================
Supplemental disclosures of cash flow information:
Cash paid during the nine-month period for:
Interest......................................$ 18,755 $ 19,758
Taxes.........................................$ 34 -
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Accounting Policies.
(a) Principles of Consolidation
Financial information at and for the three and nine months ended
September 30, 1997 is consolidated to include the accounts of Farmer Mac and its
two wholly owned subsidiaries, Farmer Mac Mortgage Securities Corporation and
Farmer Mac Acceptance Corporation. All material intercompany transactions have
been eliminated in consolidation.
(b) Earnings Per Share
In computing earnings per share, the weighted average number of
shares outstanding includes the fully dilutive effect of common stock
equivalents and is adjusted to reflect the 3-to-1 dividend and liquidation
rights ratio applicable to each share of Class C Non-Voting Common Stock
relative to each share of Classes A and B Voting Common Stock. The weighted
average number of shares outstanding is set forth below for the periods
indicated.
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
1997 1996 1997 1996
----------------------- ----------- -----------
(In Thousands)
Class A Voting Common Stock.. 994 990 992 873
Class B Voting Common Stock.. 500 593 510 585
Class C Non-Voting Common
Stock...................... 2,857 1,261 2,850 1,227
(c) Reclassifications
Certain reclassifications of the 1996 information were made to
conform to the 1997 presentation.
Note 2. Off-Balance Sheet Farmer Mac Guaranteed Securities.
Farmer Mac issues guarantees in the normal course of business to
fulfill its statutory purpose of increasing liquidity for agricultural mortgage
lenders. Farmer Mac guarantees the timely payment of principal and interest on
securities issued under the Farmer Mac I and Farmer Mac II Programs. The
following table sets forth the outstanding principal balances of Farmer Mac
Guaranteed Securities issued under the Farmer Mac I and II Programs and not held
in its portfolio.
September 30, December 30,
1997 1996
------------ ------------
(Dollars in thousands)
Farmer Mac I........... $ 364,561 $ 214,424
Farmer Mac II.......... $ 21,571 $ 11,606
At September 30, 1997, the $364.6 million of Farmer Mac I Securities
included $316.2 million of agricultural mortgage-backed securities ("AMBS")
issued under Farmer Mac's expanded legislative authorities for which Farmer Mac
bears the risk of first loss. The remaining Farmer Mac I Securities were issued
prior to the enactment of those authorities and are supported by unguaranteed
subordinated interests, which represented 10% of the initial balance of the
loans underlying the securities. Loans underlying Farmer Mac II Securities are
backed by the "full faith and credit" of the United States by virtue of the
Secretary of Agriculture's guarantee of principal and interest on such loans.
For further information regarding outstanding Farmer Mac Guaranteed Securities,
including those held in portfolio, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Supplemental Information."
Note 3. Commitments.
At September 30, 1997, Farmer Mac had committed to purchase $11.3
million of Qualified Loans through the Farmer Mac I cash window. With respect to
outstanding commitments to purchase Qualified Loans and the $23.8 million in
loans held for securitization at September 30, 1997, Farmer Mac had committed to
sell forward $16.3 million of AMBS for future settlement. The $18.8 million net
purchase position at September 30, 1997 consisted of adjustable-rate and
fixed-rate loans not subject to forward sale commitments. The Corporation
currently manages interest-rate risk related to fixed-rate loans not offset by
forward sale commitments through the use of off-balance sheet derivative
financial instruments, such as futures contracts, as discussed in "Management's
Discussion and Analysis of Financial Condition and Results of Operations
Financial Condition - Asset and Liability Management." For information regarding
commitments entered into during the period, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations Supplemental
Information."
Note 4. Interest-Rate Contracts and Hedge Instruments.
Interest-rate contracts, including interest-rate swaps and caps, are
entered into with the intent of synthetically creating interest-earning assets
and debt instruments. As such, the net differential received or paid is recorded
as an adjustment to interest income or expense of the associated assets or
liabilities, on an accrual basis. As of September 30, 1997, the notional balance
of interest-rate contracts outstanding was $278.6 million.
Hedge instruments, currently consisting solely of futures contracts,
are used by Farmer Mac to manage interest-rate risk exposure related to
commitments to purchase Qualified Loans and loans held for securitization. The
total notional balance of open futures contracts at September 30, 1997 was $800
thousand. Unrealized gains and losses on futures contracts are deferred as an
adjustment to the cost basis of the loans until realized. When the futures
contracts are terminated, the realized gains or losses is recognized as part of
gain on issuance of mortgage-backed securities, net.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Forward-Looking Statements
Farmer Mac regularly communicates information concerning its business
activities to investors, securities analysts, the news media and others as part
of its normal operations. Some of these communications include forward-looking
statements pertaining to management's current expectations as to Farmer Mac's
future business plans, results of operations and/or financial condition.
Forward-looking statements are typically accompanied by, and identified with,
such terms as "anticipates," "believes," "expects," "intends," "should" and
similar phrases. Management's expectations for the Corporation's future
necessarily involve a number of assumptions and estimates and various factors
could cause actual results to differ materially from these expectations.
The following management's discussion and analysis includes
forward-looking statements addressing the Corporation's prospects for earnings,
loan volume and securitization growth; trends in net interest income and
provision for losses; changes in capital position; and other business and
financial matters. Among the factors that could cause actual results to differ
from the expectations expressed herein are the following: substantial changes in
interest rates, agricultural land values, commodity prices and the general
economy; 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; legislative
or regulatory restrictions on Farmer Mac's investment authority; the
availability of debt funding in sufficient quantities and at attractive spreads
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 to Farmer Mac; the willingness of investors to
invest in agricultural mortgage-backed securities versus other investments;
competition in the origination or purchase of agricultural mortgage loans and
the sale of agricultural mortgage-backed and debt securities; the imposition of
significant risk-based capital requirements; or changes in the Corporation's
status as a government-sponsored enterprise.
Given the foregoing potential risks and uncertainties, no undue reliance
should be placed on any forward-looking statements expressed herein.
Furthermore, Farmer Mac undertakes no obligation to publicly release the results
of revisions to any forward-looking statements that may be made to reflect any
future events or circumstances.
Results of Operations
Overview. Net income for the first nine months of 1997 totaled $3.3
million, compared to $0.8 million for the same period a year ago. For third
quarter 1997, Farmer Mac reported net income of $1.2 million, an increase of
$1.0 million compared to net income of $0.2 million for third quarter 1996. Net
income for the nine and three months ended September 30, 1996 includes a $0.4
million extraordinary gain from early extinguishment of debt.
Earnings per share for the nine months ended September 30, 1997 were $0.33
for Classes A and B common stock and $1.00 for Class C common stock, compared to
$0.15 and $0.44, respectively, for the nine months ended September 30, 1996.
Earnings per share for third quarter 1997 were $0.12 for Classes A and B common
stock and $0.35 for Class C common stock, compared to $0.03 and $0.10,
respectively, for third quarter 1996. Earnings per share are adjusted to reflect
the 3-to-1 dividend and liquidation preference accorded to Class C common stock
compared to Classes A and B common stock.
Net interest income has contributed significantly to Farmer Mac's improved
operating results for the three and nine months ended September 30, 1997. Net
interest income is comprised primarily of income from program investments
(Farmer Mac I and II Securities and loans held for securitization) and, to a
lesser extent, non-program investments (cash and cash equivalents and investment
securities). Of these components, the most significant contribution to the
recent increases in net interest income has been income from non-program
investments. Farmer Mac has increased the size of its non-program investment
portfolio (cash and cash equivalents and investment securities) as a result of
the implementation of its expanded debt issuance strategy, which is intended to
attract more investors to its debt and mortgage-backed securities and thereby
improve the liquidity of those securities and reduce its borrowing and
securitization costs. Since the strategy's implementation, the Corporation has
experienced a tightening of its AMBS spreads relative to other comparable agency
securities and anticipates continued improvements in pricing as liquidity and
investor recognition of Farmer Mac increase. The proceeds of these increased
debt issuances have been invested primarily in high quality, short- and
long-term floating rate investments, which have generated significant amounts of
net interest income. Farmer Mac's eventual objective for the proceeds of its
increased debt issuances is investment in the Farmer Mac I program through the
acquisition and securitization of Qualified Loans. During the phase-in of that
objective, the term of which is dependent upon growth in Farmer Mac's core
guarantee business, Farmer Mac expects to continue to invest in non-program
assets.
In addition to increased net interest income, Farmer Mac has also realized
increased guarantee fee income and gain on issuance of mortgage-backed
securities as a result of increased guarantee volumes since enactment of its
revised legislative authorities. During the first nine months of 1997, $171.9
million of AMBS, backed by loans acquired through the cash window, were issued
to capital market investors, in addition to the $148.2 million of AMBS issued in
1996. Since the enactment of Farmer Mac's revised authorities, over $545.6
million of loans have been submitted to Farmer Mac for approval, of which
approximately 59% ($320.1 million) have been securitized and sold, 4% ($23.8
million) have been purchased and are pending securitization, and 11% ($59.3
million) are in various stages of the pipeline. The remaining 26% ($142.4
million) of loans have been either denied by Farmer Mac for credit reasons or
withdrawn by the seller.
While Farmer Mac's financial condition has improved, future improvements in
operating results will depend largely upon growth in Farmer Mac's core business
(guarantee fee income and gain on issuance of mortgage-backed securities).
Growth in Farmer Mac's core business is dependent upon guarantee volume which,
in turn, depends upon the increase in the cumulative volume of loans acquired
through the Farmer Mac programs. Loan volume has not been increasing as rapidly
as management anticipated following the enactment of its revised legislative
authorities due, in part, to the longer than expected lead-time between
marketing initiatives and the realization of results. Notwithstanding the
slowness in loan volume growth, expenses have been increasing as management
seeks to attract more sellers and expand the level of their participation. In
that regard, Farmer Mac has begun to assemble a diverse network of sellers
ranging from community banks to regional financial institutions including, among
others, AgFirst Farm Credit Bank, Columbia, South Carolina; Firstar Bank,
Milwaukee, Wisconsin; First Union Bank of Virginia, Harrisonburg, Virginia;
Glendale Federal Bank, Glendale, California; Northwest Farm Credit Services,
ACA, Spokane, Washington; US Bank National Association, Minneapolis, Minnesota;
and Wells Fargo Bank, San Francisco, California. Farmer Mac also has begun to
attract the interest of non-traditional agricultural real estate lenders,
particularly mortgage bankers and agricultural supply and equipment companies,
for whom management believes the advantages of its programs would result in
diversification of income sources and more efficient utilization of their
existing facilities and personnel at low marginal costs through access to their
established customer base. In that regard, management has been advised by GMAC
Commercial Mortgage Corporation that it intends immediately to submit an
application to become an approved seller. The addition of mortgage bankers and
regional financial institutions should signficantly increase the number of
outlets offering Farmer Mac loans. Many of these institutions have undertaken,
or would be expected to undertake, marketing initiatives, utilizing various
media sources, to advertise the availability of Farmer Mac loans. Because most
of these institutions are, or will be, new to the Farmer Mac programs,
management cannot predict the timing or the level of volume likely to be
generated by them, although management does not anticipate any such volume prior
to 1998. Based on management's evaluation of the business potential of these and
other prospective participants, Farmer Mac will continue to add resources,
including additional field personnel and other employees dedicated to customer
service, to support these institutions' efforts in establishing and expanding a
secondary market presence in the areas they serve, and to attract more sellers
who offer the prospect of active participation in Farmer Mac's programs.
During the first nine months of 1997, Farmer Mac implemented a training
program through which it conducts "seller workshops" in various locations and at
various times throughout the country. Farmer Mac believes that these workshops
have contributed, and will continue to contribute, to an increased interest in
the Corporation's programs and improved the understanding of those programs by
participants. Since September 30, 1997, Farmer Mac has expanded its product line
with the announcement of additional loan products, including a "part-time
farmer" real estate loan, designed for borrowers who live on agricultural
properties but derive a significant portion of their income from off-farm
employment. This loan product is available for single-family, owner-occupied
detached residences located on agricultural production properties of at least 5
acres or with annual gross receipts of $5,000 from production of crops or
livestock. Other products added to Farmer Mac's existing line of 5- and 15-year,
fixed rate loans include a new three-year, and a refined one-year, adjustable
rate loan (ARM), both with features permitting conversion to fixed rates
and flexible prepayment terms, and a 10-year, fixed rate loan. During fourth
quarter 1997, Farmer Mac expects to consummate the first transaction under its
"swap" program, which allows lenders to exchange new or seasoned Qualified Loans
for Farmer Mac Guaranteed Securities. That transaction, which will involve the
exchange of approximately $1 million of newly originated Qualified Loans for
Farmer Mac Guaranteed Securities, is expected to serve as the model for future
swap transactions. Swap transactions, whether involving newly originated or
existing loans, offer certain advantages to lenders because the Farmer Mac
Guaranteed Securities received in exchange for the loans are accorded a lower
risk-weight than whole loans under risk-based capital guidelines and can be
pledged as collateral and used in repurchase transactions.
Notwithstanding the positive business and financial developments of 1996
and the first nine months of 1997, Farmer Mac still faces the challenge of
expanding its business in the highly static market for agricultural and rural
home mortgage loans. Having obtained the statutory authority to operate under
similar guidelines to those of Fannie Mae and Freddie Mac does not ensure the
long-term success of Farmer Mac's programs, which continue to receive only
gradual acceptance in the agricultural lending community, notwithstanding the
competitive rates, terms and products offered and the advantages Farmer Mac
believes its programs provide. For Farmer Mac to succeed over the long-term in
realizing its business development and profitability goals, agricultural
mortgage lenders, whether traditional or non-traditional, must be convinced of
the benefits of selling loans to Farmer Mac and must be willing to adapt their
business practices to sell loans into the agricultural mortgage secondary market
in significant volume.
Set forth below is a discussion of certain specific items of the income
statement and balance sheet.
Average Balances, Income and Expense, Yield and Rates. The following table
provides information regarding interest-earning assets and interest-bearing
liabilities for the periods indicated.
Nine Months Ended September 30,
--------------------------------------------------------
1997 1996
--------------------------------------------------------
(Dollars in Thousands)
Average Income/ Average Average Income/ Average
Balances Expense Yield/RateBalances Expense Yield/Rate
Assets
--------------------------------------------------------------------------------
Interest-earning assets:
Farmer Mac I and II
Securities.......... $ 423,817 $ 22,612 7.11% $ 407,872 $ 22,210 7.26%
Investments and cash
equivalents......... 700,019 33,357 6.35% 115,528 4,813 5.55%
Loans held for
securitization...... 24,234 1,552 8.54% 7,769 468 8.03%
--------------------------------------------------------
Total interest-
earning assets.... 1,148,070 $ 57,521 6.68% 531,169 $ 27,491 6.90%
Other assets.......... 47,685 23,363
--------------------------------------------------------
$1,195,755 $ 554,532
--------------------------------------------------------------------------------
Liabilities and
Stockholders' Equity
------------------------------------------------------------------------------
Interest-bearing
liabilities:
Debentures, notes and
bonds, net $1,121,911 $ 52,367 6.22% $ 517,850 $ 25,546 6.58%
Other liabilities.... 27,510 23,204
Stockholders' equity. 46,334 13,478
- --------------------------------------------------------------------------------
$1,195,755 $ 554,532
================================================================================
Net interest
income/spread..... $ 5,154 .46% $ 1,945 .32%
================================================================================
Net yield on
interest-earning
assets............ .60% .49%
================================================================================
Rate/Volume Analysis. The table below 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 (a) changes in volume (change in volume multiplied by old rate);
(b) changes in rate (change in rate multiplied by old volume); and (c) the
total. Combined rate/volume variances, a third element of the calculation, are
allocated based on their relative size.
Nine Months Ended September 30, 1997
Compared to Nine Months Ended
September 30, 1996
----------------------------------------
Increase (Decrease) Due to
Rate Volume Total
------------- --------------------------
(In Thousands)
Income from interest-earning assets:
Farmer Mac I and II
Securities........ $ (430) $ 832 $ 402
Investments and cash
equivalents....... 789 27,755 28,544
Loans held for
securitization..... 31 1,053 1,084
------------- --------------------------
Total income from
interest-earning
assets............. 390 29,640 30,030
Expense on interest-
bearing liabilities.. (1,297) 28,118 26,821
============= ==========================
Change in net interest
income................ $ 1,687 $ 1,522 $ 3,209
============= ==========================
Net Interest Income. Net interest income totaled $5.2 million for the nine
months ended September 30, 1997, compared to $1.9 million for the same period in
1996. Net interest income totaled $2.0 million and $0.6 million for the three
months ended September 30, 1997 and 1996. The increases in net interest income
were due to an increase in the average balance of interest-earning assets
combined with an increase in net interest yield. The increase in the average
balance of interest-earning assets was primarily due to an increase in the
average balance of investments and cash equivalents resulting from the
implementation of Farmer Mac's expanded debt issuance strategy. The increase in
net interest yield was due to a shift in the composition of the investment
portfolio from short-term, highly liquid investments to longer-term
floating-rate investments, which generally have higher spreads. The shift toward
long-term floating-rate investments was primarily attributable to growth in
securities guaranteed by instrumentalities or agencies of the United States.
Other Income. Other income totaled $4.2 million and $1.3 million for the
nine and three months ended September 30, 1997, compared to $2.1 million and
$0.5 million, respectively, in 1996. The increases in other income were due to
increases in gain on issuance of AMBS, net of related expenses, and guarantee
fees.
During the first nine months of 1997, the Corporation issued $171.9
million of AMBS compared to $120.7 million during the same period a year ago.
Gains resulting from those issuances totaled $2.1 million and $0.9 million,
respectively. The gain on issuance for the nine months ended September 30, 1996
is net of accrued expenses related to a dispute with Western Farm Credit Bank
("WFCB"), which was subsequently resolved. During third quarter 1997, Farmer Mac
issued $50.9 million of AMBS resulting in a $0.6 million gain on issuance.
There were no AMBS issuances in third quarter 1996.
Guarantee fee income totaled $1.9 million and $0.7 million for the nine
and three months ended September 30, 1997, compared to $1.1 million and $0.5
million, respectively, in 1996. The increases in guarantee fee income were due
to an increase in the balance of outstanding guaranteed securities and the 25
basis point increase in the guarantee fee rate charged on AMBS issued under
Farmer Mac's revised legislative authorities. At September 30, 1997, Farmer Mac
had $813.5 million of guaranteed securities outstanding (including Farmer Mac I
and II Securities held in portfolio) as compared to $598.2 million at September
30, 1996. Of those amounts, $316.2 million and $120.6 million were issued under
the revised authorities as of September 30, 1997 and 1996.
Other Expenses. Other expenses totaled $5.9 million and $2.1 million for
the nine and three months ended September 30, 1997, as compared to $3.7 million
and $1.3 million for the nine and three months ended September 30, 1996. The
increases in other expenses were primarily attributable to increased
compensation, including annual incentive compensation paid to senior management
in June 1997, and other costs related to expanded operations under Farmer Mac's
revised legislative authorities. Included in other expenses is the provision for
losses, which totaled $780 thousand and $260 thousand for the nine and three
months ended September 30, 1997, compared to $202 thousand and $60 thousand,
respectively, in 1996. This increase was due to an increase in the outstanding
balance of AMBS.
Income Tax Expense. As a result of the utilization of net operating loss
carryforwards, Farmer Mac's tax expense was limited to $103 thousand and $40
thousand for the nine and three months ended September 30, 1997. No income tax
expense was recognized during the nine or three months ended September 30, 1996.
Should profits continue at current levels, Farmer Mac will utilize all of its
remaining net operating loss carryforwards in 1998, resulting in a higher
effective tax rate for 1998.
Financial Condition and Capital
At September 30, 1997, total assets were $1.4 billion compared to $603.1
million at December 31, 1996. Similarly, discount notes and medium-term notes
(net of unamortized debt issuance costs, discounts and premiums) increased by
$766.5 million from $546.3 million at December 31, 1996 to $1.3 billion at
September 30, 1997. These increases were largely attributable to the
implementation of the Corporation's expanded debt issuance strategy resulting in
a $739.5 million increase in cash and cash equivalents and investments, which
were funded by discount notes with similar terms to maturity or rate resets.
Credit Risk. Farmer Mac guarantees the timely payment of principal and
interest on securities issued under the Farmer Mac I and Farmer Mac II Programs.
The following table sets forth the outstanding principal balance of guaranteed
securities issued under these programs.
September 30, December 30,
1997 1996
------------ ------------
(Dollars in thousands)
Farmer Mac I
AMBS................... $ 316,214 $ 148,918
Other.................. 234,085 271,341
Farmer Mac II........... 263,228 211,024
Farmer Mac I AMBS represent securities issued under Farmer Mac's revised
legislative authorities and for which Farmer Mac bears the risk of first loss.
The remaining Farmer Mac I Securities were issued prior to the 1996 enactment of
those authorities and are supported by unguaranteed subordinated interests,
which represented 10% of the initial balance of the loans underlying the
security at the time of issuance. The loans underlying Farmer Mac II Securities
are backed by the "full faith and credit" of the United States by virtue of the
Secretary of Agriculture's guarantee of principal and interest on such loans.
For further information regarding the outstanding balance of Farmer Mac
Guaranteed Securities, see "- Supplemental Information."
At September 30, 1997, loans 90 days or more past due and loans in
foreclosure or bankruptcy represented 0.29% of the principal balance of all
loans backing Farmer Mac I AMBS. For further information on delinquencies, see
"- Supplemental Information."
Farmer Mac maintains an allowance for loan losses to cover anticipated
losses on Farmer Mac I AMBS. No loss allowance has been made for Farmer Mac I
Securities issued prior to the 1996 revised legislative authorities because of
the unguaranteed subordinated interests, or for Farmer Mac II Securities because
of the Secretary of Agriculture's guarantee. At September 30, 1997, the
allowance for losses on AMBS totaled $1.4 million, compared to $0.7 million at
December 31, 1996. This increase was attributable to an increase in the
outstanding balance of AMBS sold to investors.
Management evaluates the adequacy of the allowance for loan losses on a
quarterly basis and considers a number of factors, including: historical
charge-off and recovery activity (noting any particular trends in preceding
periods); trends in delinquencies, bankruptcies and non-performing loans; trends
in loan volume and size of credit risks; current and anticipated economic
conditions; the condition of agricultural segments and geographic areas
experiencing or expected to experience particular economic adversities,
particularly areas where Farmer Mac may have a geographic or commodity
concentration; the degree of risk inherent in the composition of the guaranteed
portfolio; quality control reviews; and underwriting standards. Farmer Mac
considers the amounts in the allowance account to be adequate to cover its
exposure to guarantee payments in the Farmer Mac I Program.
Asset and Liability Management. Farmer Mac's asset liability management
objective is to limit the effect of changes in interest rates on the
Corporation's market value of equity and net interest income to within
acceptable risk tolerance levels. In doing so, Farmer Mac enters into
off-balance sheet derivative financial instruments. The Corporation uses these
instruments as an end-user and not for trading or speculative purposes.
The primary off-balance sheet derivative financial instruments used by
Farmer Mac are interest-rate contracts, including interest-rate swaps and caps.
These contracts are used to synthetically create debt instruments and
interest-earning assets. When combined with the underlying liability or asset,
the interest-rate contracts synthetically create debt and investments that
should produce lower effective debt costs or higher effective asset yields than
those available through direct debt issuances or investment purchases. At
September 30, 1997, the notional amount of interest-rate contracts outstanding
was $278.6 million.
To a lesser extent, the Corporation uses futures contracts to reduce its
exposure to interest-rate risk related to outstanding commitments to purchase
Qualified Loans and loans held for securitization. From the purchase commitment
date to the sale commitment date, Farmer Mac is subject to the risk that
interest rate changes during that period may materially affect the value of the
Qualified Loan. To mitigate that risk, the Corporation enters into futures
contracts. As of September 30, 1997, Farmer Mac had entered into futures
contracts totaling $800 thousand.
While derivative financial instruments reduce Farmer Mac's exposure to
interest-rate risk, they increase its exposure to credit risk. Credit risk
arises from the possibility that a counterparty will be unable to perform
according to the terms of the contract, and is equal to the fair value gain on
the instrument. Credit risk exposure related to off-balance sheet derivative
financial instruments is normally a small percentage of the notional amount and
fluctuates as interest rates move up or down. Farmer Mac mitigates this risk by
subjecting the transactions to the same approval and monitoring process as is
used for on-balance sheet credit transactions, by dealing in the national market
with highly rated counterparties, by using International Swaps and Derivatives
Association documentation and by requiring the posting of securities as
collateral under certain circumstances to reduce exposure. Either party delivers
collateral when the fair value of a particular transaction on a net basis
exceeds an acceptable threshold of exposure. The threshold level is determined
based on the strength of the individual counterparty.
Capital. At September 30, 1997, Farmer Mac's stockholders' equity totaled
$50.6 million, an increase of $3.4 million from December 31, 1996. Certain
transactions related to the settlement with WFCB, which affected stockholders'
equity during the first half of 1997, included: the repurchase (and subsequent
cancellation) of 93,100 shares of Class B Voting Common Stock; the issuance of
18,784 shares of Class C Non-Voting Common Stock to WFCB pursuant to the
exercise of warrants previously issued to WFCB; and the repayment of the $557
thousand note receivable due from WFCB with interest. Farmer Mac also commenced
a direct stock purchase program to offer approximately 100,000 shares of Class A
Voting Common Stock to interested eligible investors pursuant to which
approximately 5,950 shares had been issued as of September 30, 1997. By statute,
Farmer Mac's Class A Voting Common Stock can only be held by banks, insurance
companies and other financial entities that are not members of the Farm Credit
System.
On November 12, 1997, Farmer Mac announced its intention to issue an
additional 300,000 shares of its Class C Non-Voting Common Stock in an
underwritten public offering. Management believes that market conditions make
this an attractive time to raise additional capital and enhance the liquidity of
its Class C Non-Voting Common Stock. Currently, Farmer Mac has no specific plans
for the net proceeds from the offering other than to use them for working
capital and other general corporate purposes.
At September 30, 1997 and December 31, 1996, Farmer Mac's regulatory
required minimum capital was $32.6 million and $7.4 million, compared with
actual capital of $50.6 million and $47.2 million.
Farmer Mac has not paid and does not expect to pay dividends on its common
stock in the near future. Dividends on the common stock are subject to
determination and declaration by the Board. There is no preference between
holders of the Classes A and B Voting Common Stock and Class C Non-Voting Common
Stock relating to dividends. The ratio of dividends paid on each share of Class
C Non-Voting Common Stock to each share of Classes A and B Voting Common Stock,
however, will be three-to-one. If dividends are to be paid to holders of the
Voting Common Stock, such per share dividends to holders of Class A and Class B
Voting Common Stock will be equal.
Supplemental Information
The following tables set forth quarterly activity regarding: mandatory
commitments to purchase loans; purchases of loans; AMBS issuances;
delinquencies; and outstanding guaranteed securities issued under the Farmer Mac
I and II Programs.
Mandatory Commitments to Purchase
- ----------------------------------------------------------------------------
Fixed Rate Loans
-----------------------------------
10 and 7 Year 5 Year 1,3 and 5
15 Year Balloon Balloon Year ARMs Total
----------------------- ----------- ----------------------
(Dollars in Thousands)
For the quarter ended:
September 30, 1997 $ 23,066 $ - $ 18,116 $ 5,982 $ 47,164
June 30, 1997 19,196 2,485 54,980 9,283 85,944
March 31, 1997 37,471 - 14,234 3,325 55,030
December 31, 1996 15,417 - 11,693 - 27,110
September 30, 1996 13,457 - 7,986 - 21,443
------------ ----------- ----------- ----------------------
$ 108,607 $ 2,485 $107,009 $18,590 $236,691
Purchases of Loans
- ----------------------------------------------------------------------------
Fixed Rate Loans
-----------------------------------
10 and 7 Year 5 Year 1,3 and 5
15 Year Balloon Balloon Year ARMs Total
----------------------- ----------- ----------------------
(Dollars in Thousands)
For the quarter
ended:
September 30,1997 $ 19,300 $ - $ 19,978 $ 6,800 $ 46,078
June 30, 1997 26,325 2,485 53,483 8,990 91,283
March 31, 1997 29,647 - 13,678 840 44,165
December 31, 1996 22,299 - 14,006 - 36,305
September 30, 1996 2,331 - 3,000 - 5,331
----------- ----------- ----------- ----------------------
$ 99,902 $ 2,485 $ 104,145 $ 16,630 $ 223,162
AMBS Issuances
- ----------------------------------------------------------------------------
Fixed Rate Loans
-----------------------------------
10 and 7 Year 5 Year 1,3 and 5
15 Year Balloon Balloon Year ARMs Total
----------------------- ----------- ----------------------
(Dollars in Thousands)
For the quarter
ended:
September 30, 1997 $ 26,186 $ - $ 24,697 $ $ 50,883
June 30, 1997 57,569 2,485 11,578 - 71,632
March 31, 1997 32,255 - 17,105 - 49,360
December 31, 1996 16,766 - 10,702 - 27,468
September 30, 1996 - - - - -
------------ ----------- ----------- ----------------------
$ 132,776 $ 2,485 $ 64,082 $ - $199,343
Delinquencies (1)
- ------------------------------------------------------------
Farmer Mac I
---------------------------
As of: AMBS Other (2) Total
------------- ------------- -------------
September 30, 1997 0.29% 0.93% 0.57%
June 30, 1997 - 0.21% 0.10%
March 31, 1997 - 0.66% 0.39%
December 31, 1996 - 1.11% 0.73%
September 30, 1996 - 2.84% 2.04%
(1) Includes loans 90 days or more past due, in foreclosure or in bankruptcy.
(2) Includes loans underlying securities issued prior to the 1996 enactment
of the Corporation's revised legislative authorities. These securities are
supported by unguaranteed subordinated interests, which represented 10% of
the initial balance of the loans underlying the securities at issuance.
Outstanding Guaranteed Mortgage Securities
- ---------------------------------------------------------------------------
Farmer Mac I Farmer
----------------------- Held in
As of: AMBS Other (1) Mac II Total Portfolio(2)
---------------------------------- ----------------------
(Dollars in Thousands)
September 30, 1997 $ 316,214 $ 234,085 $ 263,228 $ 813,527 $ 427,395
June 30, 1997 266,838 243,775 244,502 755,115 418,002
March 31, 1997 195,792 252,134 224,197 672,123 403,685
December 31, 1996 148,918 271,341 211,024 631,283 405,253
September 30, 1996 120,559 287,334 190,269 598,162 395,728
(1)Includes securities issued prior to the 1996 enactment of the Corporation's
revised legislative authorities. These securities are supported by
unguaranteed subordinated interests, which represented at 10% of the initial
balance of the loans underlying the securities at issuance.
(2) Included in total outstanding guaranteed mortgage securities.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The registrant is not a party to any pending legal proceedings.
Item 2. Changes in Securities.
(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.
Under the direct stock purchase program pursuant to which Farmer Mac
is offering approximately 100,000 shares of Class A Voting Common
Stock to interested eligible investors, Farmer Mac issued the
following shares through September 30, 1997:
Number of
Date Shares Price per Share
April 11, 1997 100 $ 25.125
April 24, 1997 100 22.50
April 28, 1997 100 22.50
April 29, 1997 300 22.50
May 27, 1997 250 23.00
June 4, 1997 500 22.875
June 9, 1997 100 22.875
July 2, 1997 400 19.50
July 8, 1997 300 16.00
July 8, 1997 300 18.50
July 25, 1997 200 16.125
July 31, 1997 2,000 15.625
August 12, 1997 300 15.625
August 29, 1997 300 15.625
September 9, 1997 200 15.50
September 11, 1997 300 15.25
September 16, 1997 100 15.50
September 24, 1997 100 16.00
Pursuant to Farmer Mac's plan which 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 July 16, 1997, Farmer Mac issued an
aggregate 61 shares of its Class C Non-Voting Common Stock at an issue
price of $36.25 per share to the nine Directors who elected to receive
such stock in lieu of cash retainer.
(d) Not applicable.
Not applicable.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Stockholders.
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 Bylaws of the Registrant (Form 10-K filed
March 27, 1997).
+* 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).
- ------------------
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
+* 10.1.2 - 1996 Stock Option Plan (Form 10-Q filed August 14, 1996).
+* 10.1.3 - 1997 Stock Option Plan (Form 10-Q filed May 15, 1997).
+* 10.1.4 - Amended and Restated 1997 Incentive Plan (Form10-Q filed
August 14, 1997).
+** 10.1.5 - Amended and Restated 1997 Incentive Plan.
+* 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).
+* 10.2.2 - Amendment to Employment Contract dated as of September
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 September 1, 1994 to
Employment Contract between Henry D. Edelman and the Registrant
(Previously filed as Exhibit 10.5 to Form 10-Q filed November
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 September 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.
+* 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).
- -----------------
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
+* 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).
+* 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 September
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 September 1, 1993 to Employment
Contract between Nancy E. Corsiglia and the Registrant
(Previously filed as Exhibit 10.11 to Form 10-K filed March 30,
1994).
+* 10.3.5 - Amendment No. 5 dated as of September 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 September 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 September 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.
+* 10.4 - Employment Agreement dated September 13, 1989 between Thomas R.
Clark and the Registrant (Previously filed as Exhibit 10.6 to
Form 10-K filed April 1, 1990).
- -------------------
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
+* 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 September
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 September 1, 1993 to Employment
Contract between Thomas R. Clark and the Registrant (Previously
filed as Exhibit 10.16 to Form 10-K filed March 30, 1994).
+* 10.4.4 - Amendment No. 4 dated as of September 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 September 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 September 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.
+* 10.5 - Employment Agreement dated April 29, 1994 between Charles M.
Lewis and the Registrant (Previously filed as Exhibit 10.18 to
Form 10-Q filed August 15, 1994).
+* 10.5.1 - Amendment No. 1 dated as of September 1, 1995 to Employment
Contract between Charles M. Lewis and the Registrant (Form 10-Q
filed August 14, 1995).
- ------------------
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
+* 10.5.2 - Amendment No. 2 dated as of February 8, 1996 to Employment
Contract between Charles M. Lewis and the Registrant (Form 10-K
filed March 29, 1996).
+* 10.5.3 - Amendment No. 3 dated as of September 13, 1996 to
Employment Contract between Charles M. Lewis and the Registrant
(Form 10-K filed March 29, 1996).
+* 10.6 - Employment Agreement dated October 7, 1991 between Michael T.
Bennett and the Registrant (Previously filed as Exhibit 10.16
to Form 10-K filed March 30, 1992).
+* 10.6.1 - Amendment to Employment Contract dated as of September
1, 1993 between Michael T. Bennett and the Registrant
(Previously filed as Exhibit 10.17 to Form 10-Q filed November
15, 1993).
+* 10.6.2 - Amendment No. 2 dated September 1, 1993 to Employment
Contract between Michael T. Bennett and the Registrant
(Previously filed as Exhibit 10.21 to Form 10-K filed March 30,
1994).
+* 10.6.3 - Amendment No. 3 dated September 1, 1994 to Employment
Contract between Michael T. Bennett and the Registrant
(Previously filed as Exhibit 10.22 to Form 10-K filed August
15, 1994).
+* 10.6.4 - Amendment No. 4 dated as of September 1, 1995 to Employment
Contract between Michael T. Bennett and the Registrant (Form
10-Q filed August 14, 1995).
+* 10.6.5 - Amendment No. 5 dated as of February 8, 1996 to Employment
Contract between Michael T. Bennett and the Registrant (Form
10-K filed March 29, 1996).
+* 10.6.6 - Amendment No. 6 dated as of September 13, 1996 to
Employment Contract between Michael T. Bennett and the
Registrant (Form 10-Q filed August 14, 1996).
+** 10.6.7 - Amendment No. 7 dated as of August 7, 1997 to Employment
Contract between Michael T. Bennett and the Registrant.
- ------------------
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
+* 10.7 - Employment Agreement dated March 15, 1993 between Christopher
A. Dunn and the Registrant (Previously filed as Exhibit 10.17
to Form 10-Q filed May 17, 1993).
+* 10.7.1 - Amendment to Employment Contract dated as of September
1, 1993 between Christopher A. Dunn and the Registrant
(Previously filed as Exhibit 10.19 to Form 10-Q filed November
15, 1993).
+* 10.7.2 - Amendment No. 2 dated September 1, 1993 to Employment
Contract between Christopher A. Dunn and the Registrant
(Previously filed as Exhibit 10.25 to Form 10-K filed March 30,
1994).
+* 10.7.3 - Amendment No. 3 dated as of September 1, 1994 to Employment
Contract between Christopher A. Dunn and the Registrant
(Previously filed as Exhibit 10.26 to Form 10-Q filed August
15, 1994).
+* 10.7.4 - Amendment No. 4 dated as of September 1, 1995 to Employment
Contract between Christopher A. Dunn and the Registrant (Form
10-Q filed August 14, 1995).
+* 10.7.5 - Amendment No. 5 dated as of February 8, 1996 to Employment
Contract between Christopher A. Dunn and the Registrant (Form
10-K filed March 29, 1996).
+* 10.7.6 - Amendment No. 6 dated as of September 13, 1996 to
Employment Contract between Christopher A. Dunn and the
Registrant (Form 10-Q filed August 14, 1996).
+** 10.7.7 - Amendment No. 7 dated as of August 7, 1997 to Employment
Contract between Christopher A. Dunn and the Registrant.
+** 10.8 - Employment Contract dated as of September 1, 1997 between Tom
D. Stenson 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 - Subsidiaries.
21.1 - Farmer Mac Mortgage Securities Corporation, a Delaware
Corporation.
21.2 - Farmer Mac Acceptance 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.
The Registrant has not filed any reports on Form 8-K during the quarter
ended September 30, 1997.
- ---------------------
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
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
November 14, 1997
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 - Treasurer and Chief Financial
Officer
(Principal Financial Officer)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
EXHIBITS
TO
FORM 10-Q
UNDER
THE SECURITIES EXCHANGE ACT FO 1934
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
Exhibit Description
+** 10.1.5 - Amended and Restated 1997 Incentive Plan.
+** 10.2.6 - Amendment No. 6 dated as of August 7, 1997 to Employment
Contract between Henry D. Edelman and the Registrant.
+** 10.3.9 - Amendment No. 9 dated as of August 7, 1997 to Employment
Contract between Nancy E. Corsiglia and the Registrant.
+** 10.4.8 - Amendment No. 8 dated as of August 7, 1997 to Employment
Contract between Thomas R. Clark and the Registrant.
+** 10.6.7 - Amendment No. 7 dated as of August 7, 1997 to Employment
Contract between Michael T. Bennett and the Registrant.
+** 10.7.7 - Amendment No. 7 dated as of August 7, 1997 to Employment
Contract between Christopher A. Dunn and the Registrant.
+** 10.8 - Employment Contract dated as of September 1, 1997 between Tom
D. Stenson and the Registrant.
- ----------------
** Filed herewith.
+ Management contract or compensatory plan.