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