FORM 10Q FOR SECOND QUARTER
As filed with the Securities and Exchange Commission on
August 14, 1995
_______________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995. Commission File Number 0-17440
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
(Exact name of registrant as specified in its charter)
Federally chartered instrumentality
of the United States 52-1578738
___________________________________ ______________________________
(State or other jurisdiction (I.R.S. employer Identification
of incorporation or organization) number)
919 18th Street, N.W., Suite 200,
Washington, D.C. 20006
__________________________________ _______________________________
(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 August 14, 1995, there were 670,000 shares of Class A Voting
Common Stock, 500,301 shares of Class B Voting Common Stock, and
1,170,301 shares of Class C Non-Voting Common Stock outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
The following interim consolidated financial statements of the Federal
Agricultural Mortgage Corporation (the "Corporation" or "Farmer Mac") 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 1994 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
as of June 30, 1995, December 31, 1994 and June 30, 1994 is included herein.
Consolidated Balance Sheets........................... 3
Consolidated Statements of Operations................. 4
Consolidated Statements of Cash Flows................. 5
<PAGE>
<TABLE>
<CAPTION>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
June 30, 1995 December 31, 1994
_____________ _________________
(unaudited)
ASSETS:
<S> <C> <C>
Cash and cash equivalents........ $ 161 $ 200
Interest receivable ............. 13,188 14,023
Guarantee fees receivable ....... 480 454
Mortgage payments receivable..... 4,255 1,196
Investments, net................. 30,739 78,218
Mortgage portfolio, net.......... 421,211 382,833
Office equipment, net............ 82 98
Prepaid expenses and other assets 163 216
TOTAL ASSETS......... $ 470,279 $ 477,238
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES:
<S> <C> <C>
Allowance for mortgage-backed
securities sold............... $ 100 $ 81
Accounts payable and accrued
expenses...................... 782 972
Accrued interest payable on
Medium-Term Notes............. 7,873 7,450
Due within one year........... 162,611 168,307
Due after one year............ 287,275 288,209
TOTAL LIABILITIES.............. $ 458,641 $ 465,019
STOCKHOLDERS' EQUITY:
Common stock:
Class A Voting, $1 par value,
no maximum authorization,
670,000 shares issued and
outstanding.................. 670 670
Class B Voting, $1 par value,
no maximum authorization,
500,301 shares issued and
outstanding................... 500 500
Class C Non-Voting, $1 par
value, no maximum
authorization, 1,170,301
shares issued and outstanding. 1,170 1,170
Additional paid in capital..... 19,331 19,331
Unrealized gain on securities
available for sale............ 11 --
Accumulated deficit............ (10,044) (9,452)
TOTAL STOCKHOLDERS' EQUITY... 11,638 12,219
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY........ $ 470,279 $ 477,238
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
Three Months Ended June 30 Six Months Ended June 30
1995 1994 1995 1994
___________ ___________ ___________ __________
(unaudited) (unaudited) (unaudited) (unaudited)
INTEREST INCOME:
<S> <C> <C> <C> <C>
Investments and cash
equivalents............. $ 1,291 $ 1,168 $ 2,510 $ 2,339
Mortgage portfolio....... 7,317 6,770 14,127 13,395
TOTAL INTEREST INCOME... 8,608 7,938 16,637 15,734
INTEREST EXPENSE......... 8,243 7,551 16,005 15,188
NET INTEREST INCOME.... 365 387 632 546
OTHER INCOME:
Guarantee fees.......... 286 258 594 525
Miscellaneous........... 55 65 71 122
TOTAL OTHER INCOME... 341 323 665 647
OTHER EXPENSES:
Compensation and
employee benefits...... 511 655 976 1,107
Professional fees....... 97 103 182 198
Insurance............... 51 37 108 72
Rent.................... 42 54 84 94
Regulatory fees......... 92 70 184 140
Board of Directors
fees and meeting
expenses.............. 96 86 175 158
Administrative......... 102 126 180 222
TOTAL OTHER EXPENSES.. 991 1,131 1,889 1,991
NET LOSS............... $ (285) $ (421) $ (592) $ (798)
NET LOSS PER SHARE..... $(0.12) $ (0.18) $ (0.25) $ (0.34)
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Six Months Ended
June 30, 1995 June 30, 1994
_____________ _____________
(unaudited) (unaudited)
CASH FLOWS FROM
OPERATING ACTIVITIES:
<S> <C> <C>
Loss from Operations............. $ (592) $ (798)
Adjustments to reconcile loss to
net cash provided by operating
activities:
Amortization of premium on
mortgage portfolio.............. 2,547 4,025
Depreciation and amortization.... 1,685 655
(Increase) decrease in
guarantee fees receivable....... (26) 120
Decrease in interest receivable.. 835 2,236
Increase in mortgage payments
receivable .................. .. (3,059) (1,510)
Decrease in prepaid expenses
and other assets................ 53 45
Amortization of debt issuance
costs........................... 101 141
Decrease in accounts payable
and accrued expenses............ (190) (109)
Increase (decrease) in accrued
interest payable on medium
term notes...................... 423 (496)
Provision for losses on
Farmer Mac I Program............ 52 48
Net cash provided by operating
activities...................... 1,829 4,357
CASH FLOWS FROM
INVESTING ACTIVITIES:
Mortgage purchases.............. (69,940) (30,275)
Purchase of investments......... (412,360) (213,009)
Proceeds from maturity of
investments.................... 461,774 230,210
Proceeds from mortgage
principal repayments........... 28,994 42,033
Purchases of office equipment... (5) (33)
Net cash provided by investing
activities..................... 8,463 28,926
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from issuance of
Medium-Term Notes.............. 48,584 -
Payments to redeem Medium-Term
Notes.......................... (21,695) (42,370)
Proceeds from issuance
of Discount Notes............. 904,280 322,840
Discount Notes redeemed......... (941,500) (314,000)
Net cash used by financing
activities.................... (10,331) (33,530)
Net decrease in cash and cash
equivalents................... (39) (247)
Cash and cash equivalents
at beginning of period......... 200 1,081
Cash and cash equivalents
at end of period.............. $ 161 $ 834
Supplemental disclosures of cash
flow information:
Cash paid during the
six-month period for:
Interest.................. $11,882 $ 13,690
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
(a) Principles of Consolidation
Financial information at and for the six and three
months ended June 30, 1995 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) Reclassifications
Certain reclassifications of the 1994 information
were made to conform with the 1995 presentation.
Note 2. OFF-BALANCE SHEET FARMER MAC GUARANTEED SECURITIES.
Farmer Mac is a party to transactions involving financial
instruments with off-balance sheet risk. These transactions
include guarantees by Farmer Mac of securities not held in its
portfolio. 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 Farmer Mac II Programs and not
held in its portfolio.
<TABLE>
<CAPTION>
June 30, 1995 June 30, 1994
_____________ _____________
(In Thousands)
<S> <C> <C>
Farmer Mac I ........... $ 109,859 $ 75,911
Farmer Mac II.... ...... $ 4,934 $ 6,240
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
Farmer Mac's primary sources of liquidity are issuances of debt
obligations, and principal and interest payments received on mortgages
underlying securities purchased by Farmer Mac under the Farmer Mac I
and Farmer Mac II Programs. Farmer Mac's Board has authorized the
issuance of up to $1.5 billion of Discount Notes and Medium-Term Notes.
Funds from the borrowings may be used in the Farmer Mac I and Farmer
Mac II Programs to cover transaction costs, guarantee payments and
the costs of purchasing Farmer Mac Guaranteed Securities and Guaranteed
Portions issued in the Farmer Mac I and Farmer Mac II Programs and to
retire existing Notes. Funds from the borrowings also may be used for
liquidity purposes. At June 30, 1995, Farmer Mac had $449.9 million
of Discount Notes and Medium-Term Notes (net of unamortized debt
issuance costs, discounts and premiums) outstanding, a $6.6 million
decrease from December 31, 1994. During the first six months of
1995, Farmer Mac issued $904.3 million of Discount Notes and $48.6
million of Medium-Term Notes and redeemed $941.5 million of Discount
Notes and $21.7 million of Medium Term Notes.
The $47.4 million decrease in investments from December 31, 1994 to
June 30, 1995 resulted from the maturation of the liquidity portfolio
investments, comprised of short-term commercial paper, certificates of
deposit, and U.S. agency securities, which were funded by short-term
Discount Notes of like maturity. The $38.4 million net increase in
the mortgage portfolio is largely attributable to the purchase of
$36.8 million of Farmer Mac I Securities, $23.5 million of Farmer Mac
II Securities and Guaranteed Portions, and $29.0 million in principal
payments and prepayments received on the mortgage portfolio since
December 31, 1994.
Proceeds of any future Note issuances are expected to be used by
the Corporation primarily to fund purchases of Farmer Mac Guaranteed
Securities and Guaranteed Portions under the Farmer Mac I and Farmer
Mac II Programs and to maintain Farmer Mac's liquidity position.
At June 30, 1995, Farmer Mac's total loss allowance was $346
thousand. The mortgage portfolio is shown net of its applicable
allowance of $246 thousand at June 30, 1995, representing an increase
of $33 thousand from year-end 1994; the allowance for Farmer Mac
Guaranteed Securities not held by Farmer Mac was $100 thousand at
June 30, 1995, representing an increase of $19 thousand from year-end
1994. Future additions to this allowance will be charged to earnings
and the amounts in the allowance account will be used to cover payments
of claims under Farmer Mac guarantees. Farmer Mac considers the
amounts to be adequate to cover its exposure to guarantee payments in
the Farmer Mac I Program. Before Farmer Mac is required to make
a guarantee payment on Farmer Mac I Securities, full recourse
must be taken against a reserve or subordinated interest
initially established in an amount equal to at least ten
percent (10%) of the original pool balance.
At June 30, 1995, a total of eight loans aggregating $1.5
million were 90 days or more past due, three loans totaling $435
thousand were in foreclosure and title to one loan with an
outstanding principal balance of $615 thousand had been
acquired by the trust in the Farmer Mac I Program. The twelve
loans combined represent 0.64% of the aggregate principal amount
of outstanding Farmer Mac I Securities at June 30, 1995.
Management believes that no losses will be incurred by
Farmer Mac as a result of the loans in foreclosure or the real
estate owned by the trust. No loss allowance has been made
specifically for the Farmer Mac II Program because the
Guaranteed Portions are backed by the full faith and credit
of the United States and are not exposed to credit losses.
At June 30, 1995, Farmer Mac's regulatory required minimum
capital was $4.1 million and its actual capital level was $11.6
million. At December 31, 1994, Farmer Mac's regulatory
required minimum capital was $4.8 million, and its actual
capital level was $12.2 million. Beginning in December 1996,
higher statutory minimum capital requirements are scheduled
to become effective, significantly increasing the required
amount of Farmer Mac's regulatory capital. If those
requirements had been in effect at June 30, 1995, Farmer Mac's
actual capital would have been $636 thousand less than the
total minimum capital required. The Board has authorized
and management is actively pursuing a legislative initiative
to obtain revisions to the Farmer Mac charter. That initiative,
if successful, would, among other things, delay beyond 1996
the implementation of the higher regulatory capital requirements.
Farmer Mac's proposed legislation, which was considered by
the Senate Agriculture Committee at a meeting on July 18, 1995,
has been included by the Committee in a draft bill
entitled "The Farm Credit Improvements Act of 1995."
However, that bill has not been reported to the full
Senate. It is not expected that final Committee action
on that bill will be taken until at least September.
In the House of Representatives, the Farmer Mac
legislation was introduced on July 27, 1995 in a bill
entitled the "Farmer Mac Reform Act of 1995" (H.R. 2130).
Despite those developments, there is no assurance that
either bill be enacted by Congress or that, if enacted,
either bill ultimately will include any or all of the
revisions Farmer Mac seeks and not include provisions
adverse to Farmer Mac. In addition, there can be no
assurance that if legislation is enacted, the volume
of any business generated under a revised charter will
result in profitability for Farmer Mac or that Farmer
Mac will be able to raise capital, either from retained
earnings or from external financing sources, such as an
offering of common or preferred stock, sufficient to
allow Farmer Mac to comply with future capital
requirements.
If Farmer Mac were unable to satisfy the higher capital
requirements, whenever they become effective, the Director
of the Office of Secondary Market Oversight, Farmer Mac's
regulator, would be required to take the mandatory
supervisory measures and authorized to take the optional
supervisory measures previously reported, depending
upon the capital level in which Farmer Mac is then
classified. The imposition of supervisory measures
could have a material adverse impact on Farmer Mac's
results of operations and its ability to raise capital,
borrow or engage in transactions with third parties;
thus, such measures could seriously impair Farmer
Mac's ability to comply with higher capital standards.
Ultimately, if a conservator were to be appointed for
Farmer Mac, stockholders could lose some or all of the
value of their equity investment in Farmer Mac, and
creditors could experience a reduced level of recovery
on their claims.
In the opinion of management, Farmer Mac has sufficient
liquidity and capital for the next twelve months.
RESULTS OF OPERATIONS
General. Farmer Mac reported a net loss for the six months
ended June 30, 1995 of $592 thousand, a decrease of $206 thousand
from the $798 thousand loss reported for the six months ended
June 30, 1994. The decrease in loss is attributable to both
an increase in the net interest spread on interest-earning
assets and a reduction in other expenses. The net spread
on Farmer Mac's interest-earning assets over its
interest-bearing liabilities increased 7 basis points
(0.07%) as the average rate on Farmer Mac'interest-earning
assets increased more than the interest rate on Farmer Mac's
interest-bearing liabilities for the comparable periods.
Other expenses declined $102 thousand, largely as a result
of the decline in compensation and employee benefits and
administrative expenses, which were partially offset by
increases in insurance expense and regulatory fees.
For the three months ended June 30, 1995, Farmer Mac
incurred a loss of $285 thousand, which represents a $136
thousand decrease in Farmer Mac's loss as compared to
the three months ended June 30, 1994. The decrease in
loss is largely attributable to the reduction in other
expenses, specifically compensation and employee benefits,
relative to the three months ended June 30, 1994.
Improvements in Farmer Mac's operating results will
depend upon the volume of new guarantee transactions.
While the Agricultural Real Estate and Farmer Mac II
Programs have generated interest income and guarantee
fee income, the volume of guarantee transactions has
not been sufficient to generate income in excess of
operating expenses, which has required Farmer Mac to
continue to use its capital to fund operations. The
use of capital to fund operations has continued to
reduce Farmer Mac's stockholders' equity, which has
decreased $581 thousand from December 31, 1994 to June 30,
1995.
A number of factors have continued to constrain
participation in Farmer Mac's programs, and cause its core
business activities to remain unprofitable. Those factors
include: the excess liquidity of many agricultural lenders;
the attractiveness of loans (otherwise qualified under the
Farmer Mac programs) as investments; the disinclination of
lenders to offer, and the lack of borrower demand for,
long-term, fixed rate agricultural real estate loans as a
result of the higher profitability and lower interest
rates associated with short-term lending; Farmer Mac's
inability to control the pooling process, particularly,
the pooler's mix of loan products and rates, marketing
activities, and loan securitization decisions; and the
unfavorable capital treatment afforded banks and Farm
Credit institutions holding subordinated securities
created in Farmer Mac transactions.
With regard to the Prudential Securities/Equitable
Agri-Business open window program, Farmer Mac has been
informed by Equitable that it continues to have discussions
with prospective institutions regarding the continuation of
that program following the withdrawal of Prudential as pooler,
but that it has not yet contracted with one. The final
transaction under that program closed on May 12, 1995 and
involved the issuance of approximately $37 million of Farmer
Mac I Securities.
With regard to the joint Fannie Mae, AgFirst (formerly,
the Farm Credit Bank of Columbia) and Farmer Mac rural housing
initiative, a press release announcing the program was issued
by Fannie Mae on June 20, 1995. Since that time, AgFirst has
been approving sellers for participation in the program and
has informed Farmer Mac that it will be prepared to accept
loans for registration and issue rate locks beginning
August 16, 1995.
The Western Farm Credit Bank, in accordance with the terms
of its strategic alliance with Farmer Mac, has finalized the
program documentation for its open window program and formed
its nationwide network of originators and sellers. Western
publicly announced the program on July 5, 1995 and approved
its first loans for purchase in mid-July.
While management believes that each of these programs, if
continued or commenced, as the case may be, will be successful,
there is no assurance that they will generate sufficient volume
to result in any Farmer Mac guarantee transactions.
Farmer Mac's future profitability will be affected not only
by guarantee volume but also by any payments Farmer Mac must
make on its guarantees; payments it must make on its Notes; the
income it earns on its investment securities, its mortgage
portfolio and other funds it is holding; and its administrative
expenses. Losses, if any, on guarantees will be affected by
many circumstances, including agricultural growing conditions,
agricultural market conditions, changes in government agricultural
support policies and the general economy. The primary sources
of funding for the payment of claims made under guarantees are the
fees Farmer Mac charges for providing its guarantees, together
with Farmer Mac's loss allowance, invested capital and the
proceeds of any other debt issuances.
Even if Farmer Mac's legislative initiative is successful
and Congress revises the Farmer Mac charter, Farmer Mac's future
will still be dependent upon continued, more effective and
significantly increased utilization of its programs by its
Class A and Class B stockholders.
<PAGE>
Average Balances, Income and Expense, Yields and Rates. The
following table presents, for the periods indicated, information
regarding interest income on average interest-earning assets and
related yields, as well as interest expense on average
interest-bearing liabilities and related rates paid. The average
balances were calculated by averaging month-end balances.
<TABLE>
<CAPTION>
Six Months Ended June 30,
_____________________________________________________
1995 1994
_________________________ ___________________________
(Dollars in Thousands)
Average Income/ Average Average Income/ Average
Balances Expense Rate Balances Expense Rate
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning assets:
Mortgage portfolio..... $390,038 $14,127 7.24% $393,797 $13,395 6.80%
Investments and cash
equivalents.......... 89,020 2,510 5.64% 101,593 2,339 4.60%
Total interest-earning
assets............... 479,058 16,637 6.95% 495,390 15,734 6.35%
Other assets.......... 11,969 11,899
$491,027 $507,289
Liabilities and Stockholders'
Equity
Interest-bearing
liabilities:
Debentures, notes
and bonds, net......... $471,898 $16,005 6.78% $486,375 $15,188 6.25%
Other liabilities......... 7,203 7,636
Stockholders' equity...... 11,926 13,278
$491,027 $507,289
Net interest income/spread. $ 632 .17% $ 546 0.10%
Net yield on interest-earning assets .26% 0.22%
</TABLE>
<PAGE>
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.
<TABLE>
<CAPTION>
Six Months Ended June 30, 1995
Compared to Six Months Ended June 30, 1994
__________________________________________
Increase or (Decrease) Due to
Rate Volume Total
(in thousands)
<S> <C> <C> <C>
Income from interest-
earning assets:
Mortgage portfolio............. $ 858 $ (126) $ 732
Investments.................... 381 (210) 171
Total income from interest-
earning assets................ 1,239 (336) 903
Expense on interest-
bearing liabilities.......... 1,248 (431) 817
Change in net interest
income...................... $ (9) $ 95 $ 86
</TABLE>
<PAGE>
PERIOD ENDED JUNE 30, 1995
COMPARED TO PERIOD ENDED JUNE 30, 1994
Net Interest Income. Net interest income totaled $632 thousand for
the six months ended June 30, 1995, an $86 thousand increase from the
six months ended June 30, 1994. The increase in net interest income
is attributable to a 7 basis point (0.07%) increase in the net
interest spread, which more than offset the decline in the average
balances of interest-earning assets for the comparable periods.
Net interest income totaled $365 thousand for the three months
ended June 30, 1995, a $22 thousand decrease from the three months
ended June 30, 1994. The decrease in net interest income resulted
from a 53 basis point (0.53%) increase in the cost of interest-
bearing liabilities, which more than offset the increase in the
average rate and the average balance of interest-earning assets.
Interest Income. Interest income totaled $16.6 million and $8.6
million for the six and three months ended June 30, 1995, an increase
of $903 thousand and $670 thousand as compared to the six and three
months ended June 30, 1994. The $903 thousand increase is
attributable to the increase in the average rate of interest-
earning assets which more than offset the decline in the average
balances of interest-earning assets. The increase in the average
rate of interest-earning assets is attributable to the overall
increase in the rate of Guaranteed Portions and securities issued
under the Farmer Mac II Program, a result of rate adjustments in
January and April 1995 on variable rate product in the Farmer Mac
II Program, and the increased level of yield maintenance income
over the accelerated level of premium amortization.
During the six months ended June 30, 1995, prepayments of
mortgage loans underlying the Farmer Mac I Securities totaled
$12.0 million, as compared to $19.8 million for the six months
ended June 30, 1994. As a result of these prepayments, Farmer
Mac recognized $482 thousand of interest income from yield
maintenance payments in the six months ended June 30, 1995,
as compared to $1.3 million in the six months ended June 30,
1994, and accelerated the level of premium amortization by $294
thousand in the six months ended June 30, 1995, as compared to
$1.5 million in the six months ended June 30, 1994.
The $670 thousand increase in interest income from the three
months ended June 30, 1994 to the three months ended June 30,
1995 is largely attributable to the increase in the average
balance of the mortgage portfolio, a result of the purchase of
$36.8 million of Farmer Mac I Securities and $15.5 million of
Farmer Mac II Securities during the 1995 second quarter.
Interest Expense. Interest expense for the six and three months
ended June 30, 1995 amounted to $16.0 million and $8.2 million,
respectively, an increase of $817 thousand and $692 thousand from
the six and three months ended June 30, 1994. The $817 thousand
increase in interest expense is attributable to the 53 basis
point (0.53%) increase in the average cost of interest-bearing
liabilities, a result of the increase in average interest rates
from June 30, 1994 to June 30, 1995, which more than offset the
decline in the average balances of outstanding debt.
Other Income. Other income totaled $665 thousand and $341
thousand for the six and three months ended June 30, 1995, an
increase of $18 thousand from the six and three months ended
June 30, 1994. Guarantee fee income, the principal component
of other income, increased $69 thousand and $28 thousand from
the six and three months ended June 30, 1994 to the six and
three months ended June 30, 1995. The increase in guarantee
fee income is attributable to the increased level of guarantee
volume for the comparable periods. As of June 30, 1995, Farmer
Mac had $507.0 million of guaranteed transactions outstanding
as compared to $446.2 million as of June 30, 1994.
Miscellaneous income, composed primarily of transaction fees
generated from the Farmer Mac II Program, decreased $51 thousand
and $10 thousand from the six and three months ended June 30,
1994 to the six and three months ended June 30, 1995. The
decrease in transaction fees resulted from the lower level of
issuances of Farmer Mac II Securities and purchases of
Guaranteed Portions under the Farmer Mac II Program during
the six and three months ended June 30, 1995 as compared to
the six and three months ended June 30, 1994. Farmer Mac issued
$20.0 million of Farmer Mac II Securities and purchased $3.5
million of Guaranteed Portions for the six months ended June 30,
1995, as compared to the issuance of $31.2 million of Farmer
Mac II Securities for the six months ended June 30, 1994. For
the three months ended June 30, 1995, Farmer Mac issued $15.5
million of Farmer Mac II Securities as compared to $17.3
million for the three months ended June 30, 1994.
Other Expenses. Other expenses totaled $1.9 million and
$991 thousand for the six and three months ended June 30, 1995,
a decrease of $102 thousand and $140 thousand from the six and
three months ended June 30, 1994. The $102 thousand reduction
in other expenses is attributable to the decrease in compensation
and employee benefits as well as administrative expenses, which
were partially offset by the increases in insurance, regulatory
fees and Board of Directors fees and meeting expenses.
Compensation and employee benefits decreased $131 thousand from
the six months ended June 30, 1994 to the six months ended June 30,
1995, largely a result of the decrease in the amount of bonuses
paid to management during the comparable periods.
Administrative expenses decreased $42 thousand from the six
months ended June 30, 1994 to the six months ended June 30, 1995,
a result of a reduction in travel related expenses and advertising
costs, both of which resulted from less pooler activity.
Insurance expense increased $36 thousand from the six months
ended June 30, 1994 to the six months ended June 30, 1995, a
result of an increase in the amount of Directors and Officers
Liability insurance coverage.
Regulatory fees increased $44 thousand from the six months
ended June 30, 1994 to the six months ended June 30, 1995, a
result of the increase in Farmer Mac's assessment by the Farm
Credit Administration from $326 thousand for the 1993-94 fiscal
year (subsequently reduced by a $34 thousand refund from the
1992-93 fiscal year) to $368 thousand for the 1994-95 fiscal year.
Board of Directors fees and meeting expenses increased $17
thousand from the six months ended June 30, 1994 to the six months
ended June 30, 1995, a result of an additional meeting of the
Board of Directors in 1995 as compared to 1994.
The $140 thousand decrease in other expenses from the three
months ended June 30, 1994 to the three months ended June 30,
1995 is largely attributable to the $144 thousand decrease in
compensation and employee benefits which resulted from a
decrease in the amount of bonuses paid to management in 1995
as compared to 1994.
Dividends. 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. The Board has adopted a policy stating that no
dividends will be paid on Farmer Mac Voting or Non-Voting
Common Stock until such time as Farmer Mac's stockholders'
equity is at least equal to $22 million (the amount of gross
proceeds raised by Farmer Mac in its initial common stock
offering). Thereafter, up to 50% of accumulated net
earnings may be paid out as dividends, provided that
stockholders' equity remains at least equal to $22 million.
No preference between holders of the Voting Common Stock
and Class C Non-Voting Common Stock has been established
relating to dividends. The ratio of dividends paid on each
share of Class C Non-Voting Common Stock to each share of
Voting Common Stock, however, will be three-to-one. If
dividends are to be paid to holders of Voting Common Stock,
such per share dividends to holders of Class A and Class
B Voting Common Stock will be equal.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The registrant is not a party to any pending legal proceedings.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Stockholders.
(a) Farmer Mac's Annual Meeting of Stockholders was held on
June 8, 1995.
(b) Not Applicable.
(c) (1) Election of Directors - Class A Nominees
<TABLE>
<CAPTION>
Number of Shares
For Withheld
<S> <C> <C>
Brandon 404,541 8,800
Brown 406,391 6,950
Dean 406,391 6,950
Holthus 404,391 8,950
Nolan 399,491 13,850
</TABLE>
- Class B Nominees
<TABLE>
<CAPTION>
Number of Shares
For Withheld
<S> <C> <C>
Cirona 494,101 200
Mainer 494,101 200
McCarthy 494,101 200
Raines 494,101 200
Rhodes 494,101 200
</TABLE>
<PAGE>
(2) Selection of Independent Auditors
Class A Stockholders:
<TABLE>
<CAPTION>
Number of Shares
<S> <C>
For 409,541
Against 2,400
Abstain 1,400
</TABLE>
Class B Stockholders:
<TABLE>
<CAPTION>
Number of Shares
<S> <C>
For 494,201
Against 100
Abstain 0
</TABLE>
(d) Not Applicable
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Description
* 3.1 - Title VII of Public Law 100-233 (Form 10 filed
January 24, 1989).
* 3.2 - Section 1839 of the Food, Agriculture, Conservation and
Trade Act of 1990 (P.L. 101-624) (Form 10-K filed
April 1, 1991).
* 3.3 - Section 503 of the Food, Agriculture, Conservation,
and Trade Act Amendments of 1991 (P.L. 102-237)
(Form 10-K filed March 30, 1992).
* 3.4 - Amended and restated Bylaws of the Registrant (Form
10-Q filed May 15, 1995).
+* 10.1 - Stock Option Plan (Previously filed as Exhibit 19.1
to Form 10-Q filed August 14, 1992).
__________________
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
+* 10.1.1 - Amendment No. 1 to Stock Option Plan (Previously filed as
Exhibit 10.2 to Form 10-Q filed August 16, 1993).
+* 10.2 - 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 January 10, 1991 to Employment
Agreement 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 June 1, 1993
between Henry D. Edelman and the Registrant (Previously
filed as Exhibit 10.5 to Form 10-Q filed November 15, 1993).
+* 10.2.3 - Amendment No. 3 dated as of June 1, 1994 to Employment
Contract between Henry D. Edelman and the Registrant
(Previously filed as Exhibit 10.6 to Form 10-Q filed
August 15, 1994).
+* 10.3 - Employment Agreement dated May 11, 1989 between Nancy E.
Corsiglia and the Registrant (Previously filed as Exhibit
10.5 to Form 10-K filed February 14, 1990).
+* 10.3.1 - Amendment dated December 14, 1989 to Employment Agreement
between Nancy E. Corsiglia and the Registrant (Previously
filed as Exhibit 10.5 to Form 10-K filed February 14, 1990).
+* 10.3.2 - Amendment No. 2 dated February 14, 1991 to Employment
Agreement between Nancy E. Corsiglia and the Registrant
(Previously filed as Exhibit 10.7 to Form 10-K filed
April 1, 1991).
+* 10.3.3 - Amendment to Employment Contract dated as of June 1, 1993
between Nancy E. Corsiglia and the Registrant (Previously
filed as Exhibit 10.9 to Form 10-Q filed November 15, 1993).
+* 10.3.4 - Amendment No. 4 dated June 1, 1993 to Employment Contract
between Nancy E. Corsiglia and the Registrant (Previously
filed as Exhibit 10.11 to Form 10-K filed March 30, 1994).
__________________
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
+* 10.3.5 - Amendment No. 5 dated as of June 1, 1994 to Employment
Contract between Nancy E. Corsiglia and the Registrant
(Previously filed as Exhibit 10.12 to Form 10-Q filed
August 15, 1994).
+** 10.3.6 - Amendment No. 6 dated as of June 1, 1995 to Employment
Contract between Nancy E. Corsiglia and the Registrant.
+* 10.4 - Employment Agreement dated June 13, 1989 between Thomas R.
Clark and the Registrant (Previously filed as Exhibit 10.6
to Form 10-K filed April 1, 1990).
+* 10.4.1 - Amendment No. 1 dated February 14, 1991 to Employment
Agreement between Thomas R. Clark and the Registrant
(Previously filed as Exhibit 10.9 to Form 10-K filed
April 1, 1991).
+* 10.4.2 - Amendment to Employment Contract dated as of June 1, 1993
between Thomas R. Clark and the Registrant (Previously filed
as Exhibit 10.12 to Form 10-Q filed November 15, 1993).
+* 10.4.3 - Amendment No. 3 dated June 1, 1993 to Employment Contract
between Thomas R. Clark and the Registrant (Previously filed
as Exhibit 10.16 to Form 10-K filed March 30, 1994).
+* 10.4.4 - Amendment No. 4 dated as of June 1, 1994 to Employment
Contract between Thomas R. Clark and the Registrant
(Previously filed as Exhibit 10.17 to Form 10-Q filed
August 15, 1994).
+**10.4.5 - Amendment No. 5 dated as of June 1, 1995 to Employment
Contract between Thomas R. Clark and the Registrant.
+* 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 June 1, 1995 to Employment
Contract between Charles M. Lewis and the Registrant.
__________________
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
* 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 June 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 June 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 June 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 June 1, 1995 to Employment
Contract between Michael T. Bennett and the Registrant.
+* 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 June 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 June 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 June 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).
__________________
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
+** 10.7.4 - Amendment No. 4 dated as of June 1, 1995 to Employment
Contract between Christopher A. Dunn and the Registrant.
* 10.8 - 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).
* 10.9 - Strategic Alliance Agreement, dated November 15, 1994
between Western Farm Credit Bank and the Registrant,
as amended January 1, 1995 (Previously filed as Exhibit
10.28 to Form 10-K filed March 31, 1995).
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 (USDA) 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 June 30, 1995.
__________________
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
August 14, 1995
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)
<PAGE>
Securities and Exchange Commission
Washington, D.C. 20549
Exhibits
to
Form 10-Q
under
The Securities Exchange Act of 1934
Federal Agricultural Mortgage Corporation
<PAGE>
Exhibit Description
+** 10.3.6 Amendment No. 6 dated as of June 1, 1995 to Employment
Contract between Nancy E. Corsiglia and the Registrant
+** 10.4.5 Amendment No. 5 dated as of June 1, 1995 to Employment
Contract between Thomas R. Clark and the Registrant.
+** 10.5.1 Amendment No. 1 dated as of June 1, 1995 to Employment
Contract between Charles M. Lewis and the Registrant.
+** 10.6.4 Amendment No. 4 dated as of June 1, 1995 to Employment
Contract between Michael T. Bennett and the Registrant.
+** 10.7.4 Amendment No. 4 dated as of June 1, 1995 to Employment
Contract between Christopher A. Dunn and the Registrant.
__________________
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
EXHIBIT 10.3.6
AMENDMENT NO. 6 TO EMPLOYMENT CONTRACT
AGREED, as of the 1st day of June 1995, between the Federal
Agricultural Mortgage Corporation (FAMC) and Nancy E. Corsiglia
(the Employee), that the existing employment contract between the
parties hereto, dated May 11, 1989, as amended by letter dated
December 14, 1989, Employment Agreement Amendment No. 2 dated
February 14, 1991, Amendment to Employment Agreement dated as
of June 1, 1993, Amendment No. 4 to Employment Contract dated
as of June 1, 1993 and Amendment No. 5 to Employment Contract
dated as June 1, 1994 (collectively, the Agreement), be and
hereby is amended as follows:
Sections 3 (a) of the Agreement is replaced in its entirety
with the following new section:
3 (a). Base Salary. You will be paid a base salary
(the Base Salary) during the Term of One Hundred Fifty-Two
Thousand Two Hundred and Fifty Dollars ($152,250) per year,
payable in arrears on a bi-weekly basis; and
As amended hereby, the Agreement remains in full force
and effect.
Federal Agricultural Mortgage
Corporation Employee
By: /s/ Henry D. Edelman /s/ Nancy E. Corsiglia
Title: President
<PAGE>
EXHIBIT 10.4.5
AMENDMENT NO. 5 TO EMPLOYMENT CONTRACT
AGREED, as of the 1st day of June 1995, between the Federal
Agricultural Mortgage Corporation (FAMC) and Thomas R. Clark (the
Employee), that theexisting employment contract between the parties
hereto, dated June 13,1989, as amended by Employment Agreement
Amendment No. 1 dated February 14,1991 and Amendment to
Employment Contract dated as of June 1, 1993, Amendment No. 3
to Employment Contract dated as of June 1, 1993 and Amendment
No. 4 to Employment Contract dated as of June 1, 1994 (collectively,
the Agreement), be and hereby is amended as follows:
Section 3 (a) of the Agreement is replaced in its entirety
with the following new section:
3 (a). Base Salary. You will be paid a base salary during
the Term of One Hundred Fifty-Two Thousand Two Hundred and Fifty
Dollars ($152,250) per year, payable in arrears on a bi-weekly
basis; and
As amended hereby, the Agreement remains in full force and
effect.
Federal Agricultural Mortgage
Corporation Employee
By: /s/ Henry D. Edelman /s/ Thomas R. Clark
Title: President
<PAGE>
EXHIBIT 10.5.1
AMENDMENT NO. 1 TO EMPLOYMENT CONTRACT
AGREED, as of the 1st day of June 1995, between the Federal
Agricultural Mortgage Corporation (FAMC) and Charles M. Lewis
(the employee), that the existing employment contract between
the parties hereto, dated April 29, 1994 (the Agreement), be
and hereby is amended as follows:
Sections 1, 3 (a) and 7 (a) (iii) of the Agreement are replaced
in their entirety with the following new sections:
1. Term. The term of this Agreement shall be from June 1,
1995 to June 1, 1996.
3 (a). Base Salary. You will be paid a base salary (the Base
Salary) during the Term of Seventy-Eight Thousand Seven Hundred
and Fifty Dollars ($78,750) per year, payable in arrears on
a bi-weekly basis.
7 (a) (3). FAMC may terminate your employment without
"cause" at any time. Such termination shall become effective
on June 1, 1996.
As amended hereby, the Agreement remains in full force and
effect.
Federal Agricultural Mortgage
Corporation Employee
By: /s/ Henry D. Edelman /s/ Charles M. Lewis
Title: President
<PAGE>
EXHIBIT 10.6.4
AMENDMENT NO. 4 TO EMPLOYMENT CONTRACT
AGREED, as of the 1st day of June 1995, between the Federal
Agricultural Mortgage Corporation (FAMC) and Michael T. Bennett
(the employee), that the existing employment contract between
the parties hereto, dated October 7, 1991, as amended by Amendment
to Employment Contract dated as of June 1, 1993, Amendment No. 2
to Employment Contract dated as of January 6, 1994 and Amendment
No. 3 dated as of June 1, 1994 (collectively, the Agreement),
be and hereby is amended as follows:
Sections 1, 3 (a) and 7 (a) (3) of the Agreement are replaced
in their entirety with the following new sections:
1. Term. The Term of this Agreement shall be from
June 1, 1995 to June 1, 1997.
3 (a). Base Salary. You will be paid a base salary
(the Base Salary) during the Term of One Hundred Fifty-Seven
Thousand Five Hundred Dollars ($157,500) per year, payable in
arrears on a bi-weekly basis; and
7 (a) (3). Farmer Mac may terminate your employment
without "cause" at any time. Such termination shall become
effective on June 1, 1997.
As amended hereby, the Agreement remains in full force and effect.
Federal Agricultural Mortgage
Corporation Employee
By: /s/Henry D. Edelman /s/ Michael T. Bennett
Title: President
<PAGE>
EXHIBIT 10.7.4
AMENDMENT NO. 4 TO EMPLOYMENT CONTRACT
AGREED, as of the 1st day of June 1995, between the Federal
Agricultural Mortgage Corporation (FAMC) and Christopher A. Dunn
(the employee), that the existing employment contract between the
parties hereto, dated March 15, 1993, as amended by Amendment to
Employment Contract dated as of June 1, 1993 and Amendment No. 2
to Employment Contract dated as June 1, 1993 and Amendment No. 3
to Employment Contract dated as of June 1, 1994 (collectively,
the Agreement), be and hereby is amended as follows:
Section 3 (a) of the Agreement is replaced in its entirety
with the following new section:
3 (a). Base Salary. You will be paid a base salary
(the Base Salary) during the Term of One Hundred-Forty Four
Thousand Three Hundred and Seventy-Five Dollars ($144,375)
per year, payable in arrears on a bi-weekly basis; and
As amended hereby, the Agreement remains in full force
and effect.
Federal Agricultural Mortgage
Corporation Employee
By: /s/ Henry D. Edelman /s/ Christopher A. Dunn
Title: President
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-END> JUN-30-1995 JUN-30-1995
<CASH> 161 161
<SECURITIES> 451,950 451,950
<RECEIVABLES> 17,923 17,923
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 470,034 470,034
<PP&E> 82 82
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 470,279 470,279
<CURRENT-LIABILITIES> 171,366 171,366
<BONDS> 287,275 287,275
<COMMON> 2,340 2,340
0 0
0 0
<OTHER-SE> 9,298 9,298
<TOTAL-LIABILITY-AND-EQUITY> 470,279 470,279
<SALES> 8,949 17,302
<TOTAL-REVENUES> 8,949 17,302
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 991 1,889
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 8,243 16,005
<INCOME-PRETAX> (285) (592)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (285) (592)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (285) (592)
<EPS-PRIMARY> (.12) (.25)
<EPS-DILUTED> (.12) (.25)
</TABLE>
