Farmer Mac Reports First Quarter Results
May 10 2007 - 4:50PM
PR Newswire (US)
WASHINGTON, May 10 /PRNewswire-FirstCall/ -- The Federal
Agricultural Mortgage Corporation (NYSE: AGM; AGM.A) today reported
strong first quarter results which, with the addition of business
completed in April 2007, brought outstanding business volume to a
record $8.3 billion. Farmer Mac noted that this growth was achieved
with a portfolio of loans underlying its guarantees and standbys
that continues to perform well, with delinquencies remaining at low
levels in terms of both dollars and percentages. Farmer Mac's U.S.
GAAP net income for first quarter 2007 was $3.9 million or $0.37
per diluted share, compared to $15.1 million or $1.32 per diluted
share for first quarter 2006. Farmer Mac's core earnings were $6.2
million or $0.58 per diluted share for first quarter 2007, compared
to $6.2 million or $0.54 per diluted share for first quarter 2006.
A table setting forth a more detailed analysis of core earnings for
the referenced periods appears below. Farmer Mac President and
Chief Executive Officer Henry D. Edelman observed, "Our first
quarter new volume resulted in a 31 percent year-over- year
increase in the Farmer Mac guarantee portfolio; then we added $1.1
billion during the month of April, bringing Farmer Mac's guarantees
and commitments outstanding to a new high of $8.3 billion. That
performance reflects the liquidity and lending capacity Farmer Mac
is providing to agricultural lenders who make mortgage loans
throughout rural America, and is indicative of the effectiveness of
our business model and recent strategies. Those strategies achieve
greater protection for Farmer Mac against adverse credit
performance with commensurately lower compensation for the
assumption of credit risk and administrative costs, resulting in
projected risk-adjusted marginal returns on equity approximately
equal to those of other Farmer Mac program transactions." Non-GAAP
Performance Measures Farmer Mac reports its financial results in
accordance with GAAP. In addition to GAAP measures, Farmer Mac
presents "core earnings," a non-GAAP performance measure. Core
earnings are net income available to common stockholders, less the
after-tax effects of unrealized gains and losses on financial
derivatives resulting from the application of Statement of
Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities. The GAAP measure most
comparable to core earnings is net income available to common
stockholders. Unlike core earnings, however, GAAP net income is
affected by unrealized gains or losses in the value of financial
derivatives used to hedge Farmer Mac's interest rate risks,
notwithstanding that those hedges were economically effective.
Farmer Mac uses core earnings to develop financial plans, to
measure corporate economic performance and to set incentive
compensation because, in management's view, core earnings 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 this non-GAAP measure is not intended to replace GAAP
information but, rather, to supplement it. The Corporation's
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, 2007 March 31, 2006
(in thousands, except per share amounts) Per Per Diluted Diluted
Share Share GAAP net income available to common stockholders $3,922
$0.37 $15,091 $1.32 Less the effects of SFAS 133: Unrealized
gains/(losses) on financial derivatives and trading assets, net of
tax (2,649) (0.24) 8,126 0.71 Net effects of settlements on agency
forward contracts, net of tax 345 0.03 794 0.07 Core earnings
$6,226 $0.58 $6,171 $0.54 More complete information on Farmer Mac's
performance for the quarter ended March 31, 2007 is set forth in
the Form 10-Q filed with the SEC today by Farmer Mac.
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 or events could cause Farmer Mac's
actual results to differ materially from the expectations as
expressed or implied by the forward- looking statements, including
uncertainties regarding: (1) increases in general and
administrative expenses attributable to growth of the business and
regulatory environment, including the hiring of additional
personnel with expertise in key functional areas; (2) the general
rate of growth in agricultural mortgage indebtedness; (3) the rate
and direction of development of the secondary market for
agricultural mortgage loans, particularly lender interest in the
Farmer Mac secondary market and Farmer Mac credit products; (4)
borrower preferences for fixed-rate agricultural mortgage
indebtedness; (5) the willingness of investors to invest in Farmer
Mac Guaranteed Securities; and (6) possible reaction in the
financial markets to events involving government-sponsored
enterprises other than Farmer Mac. Other risk factors are discussed
in Farmer Mac's Annual Report on Form 10-K for the year ended
December 31, 2006, as filed with the Securities and Exchange
Commission (SEC) on March 16, 2007 and in Farmer Mac's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2007, as filed
with the SEC today. 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 Annual Report on Form
10-K and Quarterly Report on Form 10-Q referenced above) is
available on Farmer Mac's website at http://www.farmermac.com/. The
conference call to discuss Farmer Mac's first quarter 2007 earnings
and the Corporation's Form 10-Q for first quarter 2007 will be
webcast on Farmer Mac's website beginning at 11:00 a.m. eastern
time, Friday, May 11, 2007, and an audio recording of that call
will be available for two weeks on Farmer Mac's website after the
call is concluded. DATASOURCE: Farmer Mac CONTACT: Mary Waters of
Farmer Mac, +1-202-872-7700 Web site: http://www.farmermac.com/
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