As filed with the Securities and Exchange Commission on
- ------------------------------------------------------------------------------
August 14, 1997
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, 1997. Commission File Number
0-17440
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
(Exact name of registrant as specified in its
charter)
Federally chartered
instrumentality 52-1578738
Of the United
States
---------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. employer identification
incorporation or organization) number)
919 18th Street, N.W., Suite 200
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 11, 1997, there were 992,750 shares of Class A Voting Common
Stock, 500,301 shares of Class B Voting Common Stock, and 2,677,681 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 ("Farmer Mac" or the "Corporation") have been
prepared, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Such interim consolidated financial statements reflect
all normal and recurring adjustments that are, in the opinion of management,
necessary to a fair statement of the results for the interim periods presented.
Certain information and footnote disclosures normally included in annual
consolidated financial statements have been condensed or omitted as permitted by
such rules and regulations. Management believes that the disclosures are
adequate to present fairly the consolidated financial position, consolidated
results of operations and consolidated cash flows at the dates and for the
periods presented. These condensed financial statements should be read in
conjunction with the audited 1996 financial statements of Farmer Mac. Results
for interim periods are not necessarily indicative of those to be expected for
the fiscal year.
The following information concerning Farmer Mac's financial statements is
included herein.
<TABLE>
<CAPTION>
<S> <C>
Consolidated Balance Sheets at June 30, 1997 and December 31, 1996 ...3
Consolidated Statements of Operations for the three and six months
ended June 30, 1997 and 1996 .....................................4
Consolidated Statements of Cash Flows for the six months ended
June 30, 1997 and 1996 ...........................................5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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FEDERAL AGRICULTURAL MORTGAGE CORPORATION
- --------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
June 30, December 31,
1997 1996
------------------ ------------------
<S> <C> <C>
(unaudited)
ASSETS:
Cash and cash equivalents........................ $ 324,018 $ 68,912
Interest receivable.............................. 16,535 14,821
Guarantee fees receivable........................ 902 745
Loans held for securitization.................... 28,625 12,999
Investments...................................... 606,844 85,799
Farmer Mac I and II Securities, net.............. 427,584 416,501
Farmer Mac I and II payments receivable.......... 2,132 2,421
Prepaid expenses and other assets................ 1,801 568
================= ==================
TOTAL ASSETS................................. $1,408,441 $ 602,766
================= ==================
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES:
Debentures, notes and bonds, net:
Due within one year........................ $1,068,403 $ 261,054
Due after one year......................... 279,945 285,238
Accrued interest payable......................... 7,975 7,231
Accounts payable and accrued expenses............ 2,525 1,721
Allowance for sold Farmer Mac I Securities ...... 812 317
----------------- ------------------
TOTAL LIABILITIES............................ 1,359,660 555,561
----------------- ------------------
STOCKHOLDERS' EQUITY
Common stock:
Class A Voting, $1 par value, 2,000,000 shares
authorized, 991,450 and 990,000 shares issued and
outstanding at June 30, 1997 and
December 31, 1996, respectively .............................991 990
Class B Voting, $1 par value, 2,000,000 shares
authorized, 500,301 and 593,401 shares issued
and outstanding at June 30, 1997 and
December 31, 1996, respectively .............................500 593
Class C Non-Voting, $1 par value, 4,000,000
shares authorized, 2,677,681 and 2,658,897 shares
issued and outstanding at June 30, 1997 and
December 31, 1996 .........................................2,678 2,659
Additional paid in capital ................................52,541 52,513
Note receivable for purchase of stock ..................... - (557)
Unrealized gain on securities available-for-sale .......... 395 329
Accumulated deficit ...................................... (8,324) (9,322)
----------------- ------------------
TOTAL STOCKHOLDERS' EQUITY .......................... 48,781 47,205
----------------- ------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,408,441 $ 602,766
================= ==================
See accompanying notes to consolidated financial statements.
</TABLE>
<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,
------------------------------ -------------------------------
------------------------------ -------------------------------
1997 1996 1997 1996
------------------------------ -------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
INTEREST INCOME:
Investments and cash ......... $ 13,334 $ 1,997 $ 19,092 $ 3,466
equivalents
Farmer Mac I and II .......... 7,467 7,812 14,847 15,265
Securities
Loans held for .............. 501 - 844 -
securitization
------------------------------ -------------------------------
TOTAL INTEREST INCOME ..... 21,302 9,809 34,783 18,731
INTEREST EXPENSE ............. 19,474 9,027 31,599 17,422
------------------------------ -------------------------------
NET INTEREST INCOME ....... 1,828 782 3,184 1,309
OTHER INCOME:
Guarantee fees .............. 607 328 1,132 652
Gain on issuance of
mortgage-backed ........... 1,053 913 1,519 913
securities, net
Miscellaneous ............... 21 16 217 51
------------------------------ ----------------------------
TOTAL OTHER INCOME ........ 1,681 1,257 2,868 1,616
------------------------------ ---------------------------
OTHER EXPENSES:
Compensation and employee ... 1,005 629 1,708 1,160
benefits
Professional fees ........... 341 196 689 352
Insurance ................... 59 54 118 105
Rent ........................ 55 34 112 75
Regulatory fees ............. 16 71 31 143
Board of Directors fees
and meeting expenses ...... 89 80 179 168
Administrative .............. 262 105 468 188
Provision for losses ........ 340 120 520 142
------------------------------ ------------------------------
TOTAL OTHER EXPENSES ...... 2,167 1,289 3,825 2,333
------------------------------ ------------------------------
INCOME BEFORE INCOME TAXES .... 1,342 750 2,227 592
Provision for income taxes .... 36 - 63 -
------------------------------ -------------------------------
NET INCOME $ 1,306 $ 750 $ 2,164 $ 592
============================== ===============================
EARNINGS PER SHARE
Classes A and B Voting $ 0.13 $ 0.14 $ 0.22 $ 0.12
Common Stock
Class C Non-Voting Common $ 0.39 $ 0.43 $ 0.65 $ 0.35
Stock
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
========================================================================================
========================================================================================
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Six Months Ended
------------------------------------
------------------------------------
June 30, 1997 June 30, 1996
---------------- ----------------
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Income from Operations ............................ $ 2,164 $ 592
Adjustments to reconcile net income
to cash provided by operating activities:
Amortization of premium on Farmer Mac I and
II Securities ................................... 1,641 1,844
Discount Note amortization ........................ 19,415 5,355
(Increase) decrease in guarantee fees ............. (157) 104
receivable
(Increase) decrease in interest receivable ........ (1,715) 718
Decrease (increase) in Farmer Mac I and II ........ 289 (358)
payments receivable
(Increase) decrease in prepaid expenses and ....... (1,205) 55
other assets
Amortization and depreciation ..................... 60 46
Increase in accounts payable and accrued .......... 804 735
expenses
Increase in loans held for securitization ......... (15,626) -
Increase (decrease) in accrued interest payable ... 744 (907)
Provision for losses .............................. 520 142
Other ............................................. (2) -
---------------- ----------------
Net cash provided by operating activities ......... 6,932 8,326
---------------- ----------------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Farmer Mac I and II purchases ..................... (42,778) (34,417)
Purchases of investments .......................... (549,447) (15,554)
Proceeds from maturity of investments ............. 28,471 22,782
Proceeds from Farmer Mac I and II principal ....... 30,030 45,208
repayments
Purchases of office equipment ..................... (49) (12)
---------------- ----------------
Net cash (used)/provided by investing activities .. (533,773) 18,007
---------------- ----------------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from issuance of Medium-Term Notes ....... 54,960 9,983
Payments to redeem Medium-Term Notes .............. (18,740) (49,580)
Proceeds from issuance of Discount Notes ..........10,325,836 815,032
Discount Notes redeemed ...........................(9,579,455) (780,000)
Repurchase of Class B Common Stock ................ (1,396) -
Proceeds from issuance of common stock ............ 742 2,611
---------------- ----------------
Net cash provided/(used) by financing activities .. 781,947 (1,954)
---------------- ----------------
Net increase in cash and cash equivalents ......... 255,106 24,379
Cash and cash equivalents at beginning of period .. 68,912 8,336
---------------- ----------------
Cash and cash equivalents at end of period ........ $ 324,018 $ 32,715
================ ================
Supplemental disclosures of cash flow information:
Cash paid during the six-month period for:
Interest $ 11,539 $ 12,943
Taxes $ 34 $ -
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
================================================================================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
(unaudited)
Note 1. Accounting Policies.
(a) Principles of Consolidation
Financial information at and for the three and six months ended June
30, 1997 is consolidated to include the accounts of Farmer Mac and its two
wholly owned subsidiaries, Farmer Mac Mortgage Securities Corporation and Farmer
Mac Acceptance Corporation. All material intercompany transactions have been
eliminated in consolidation.
(b) Earnings Per Share
Earnings per share are computed using the weighted average number of
common shares outstanding, including the fully dilutive effect of common stock
equivalents and the effect of the 3-to-1 dividend and liquidation rights ratio
applicable to each share of Class C Non-Voting Common Stock relative to each
share of Voting Common Stock. The following table sets forth the weighted
average shares outstanding for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended June
June 30, 30,
----------------------- -----------------------
1997 1996 1997 1996
----------------------- ----------- -----------
(In Thousands)
<S> <C> <C> <C> <C>
Class A Voting Common Stock 991 958 991 814
Class B Voting Common Stock 500 593 515 581
Class C Non-Voting Common Stock 2,846 1,218 2,847 1,211
</TABLE>
(c) Reclassifications
Certain reclassifications of the 1996 information were made to
conform with the 1997 presentation.
Note 2. Off-Balance Sheet Farmer Mac Guaranteed Securities.
Farmer Mac issues guarantees in the normal course of business to
fulfill its statutory purpose of increasing liquidity for agricultural mortgage
lenders. Farmer Mac guarantees the timely payment of principal and interest on
securities issued under the Farmer Mac I and Farmer Mac II Programs. The
following table sets forth the outstanding principal balances of Farmer Mac
Guaranteed Securities issued under the Farmer Mac I and II Programs and not held
in its portfolio.
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
-------------------- -------------------
(Dollars in Thousands)
<S> <C> <C>
Farmer Mac I $ 319,084 $ 214,424
Farmer Mac II $ 18,029 $ 11,606
</TABLE>
At June 30, 1997, the $319.1 million of Farmer Mac I Securities included
$266.8 million of agricultural mortgage-backed securities ("AMBS") issued under
Farmer Mac's expanded legislative authorities for which Farmer Mac bears the
risk of first loss. The remaining Farmer Mac I Securities were issued prior to
the 1996 enactment of the Corporation's revised legislative authorities and are
supported by unguaranteed subordinated interests, which represented 10% of the
initial balance of the loans underlying the securities. The loans underlying the
Farmer Mac II Securities are backed by the "full faith and credit" of the United
States by virtue of the USDA guarantee of principal and interest on such loans.
For further information regarding outstanding Farmer Mac Guaranteed Securities,
including those held in portfolio, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Supplemental Information."
Note 3. Commitments.
At June 30, 1997, Farmer Mac had committed to purchase $10.2 million of
Qualified Loans through the Farmer Mac I cash window. With respect to
outstanding commitments to purchase Qualified Loans and the $28.6 million in
loans held for securitization at June 30, 1997, Farmer Mac had committed to sell
forward $26.5 million of AMBS for future settlement. The $12.3 million net
purchase position at June 30, 1997, consisted of adjustable-rate and fixed-rate
loans. The Corporation manages interest-rate risk related to the fixed-rate
loans not offset by forward sale commitments through off-balance sheet
derivative financial instruments, such as futures contracts, as discussed in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Results of Operations - Asset and Liability Management." For
information regarding commitments entered into during the period, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Supplemental Information."
Note 4. Interest Rate Swaps and Hedge Instruments.
Interest rate swaps are entered into with the express intent of
synthetically creating interest-earning assets and debt instruments. As such,
the net differential received or paid is recorded as an adjustment to interest
income or expense on the associated assets or liabilities on an accural basis.
Futures contracts are used to manage interest-rate risk exposure related to
commitments to purchase Qualified Loans and loans held for securitization.
Futures contracts that are designated to and that substantially offset changes
in the value of the hedged loans are marked-to-market with the unrealized gains
or losses deferred as an adjustment to the cost basis of the loans. When the
futures contracts are terminated, the realized gains or losses are deferred and
amortized over the lives of the hedged loans. Gains and losses on futures
contracts that do not substantially offset changes in the value of the hedged
loans are recognized currently. Substantial offset of changes in the value of
the hedged loan is deemed to occur when the change in the value of the futures
contract offsets 80% to 125% of the change in value of the loan.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Forward Looking Statements
Farmer Mac regularly communicates information concerning its business
activities to investors, securities analysts, the news media and others as part
of its normal operations. Some of these communications include forward looking
statements pertaining to management's current expectations as to Farmer Mac's
future business plans, results of operations and/or financial condition. Forward
looking statements are typically accompanied by, and identified with, such terms
as "anticipates," "believes," "expects," "intends," "should" and similar
phrases. Management's expectations for the Corporation's future necessarily
involve a number of assumptions and estimates and various factors could cause
actual results to differ materially from these expectations.
The following management's discussion and analysis includes forward looking
statements addressing the Corporation's prospects for earnings, loan volume and
securitization growth; trends in net interest income and provision for losses;
changes in capital position; and other business and financial matters. Among the
factors that could cause actual results to differ from the expectations
expressed herein are the following: substantial changes in interest rates,
agricultural land values, commodity prices and the general economy; protracted
adverse weather, market or other conditions affecting particular geographic
regions or particular commodities related to agricultural mortgage loans backing
Farmer Mac Guaranteed Securities; legislative or regulatory developments or
interpretations of Farmer Mac's statutory charter that could adversely affect
Farmer Mac or the ability of certain lenders to participate in its programs or
the terms of any such participation; legislative or regulatory restrictions on
Farmer Mac's investment authority; the availability of debt funding in
sufficient quantities and at attractive spreads to support continued growth; the
rate of growth in agricultural mortgage indebtedness; the size of the
agricultural mortgage market; borrower preferences for fixed-rate agricultural
mortgage indebtedness; the willingness of lenders to sell agricultural mortgage
loans to Farmer Mac; the willingness of investors to invest in agricultural
mortgage-backed securities versus other investments; competition in the
origination or purchase of agricultural mortgage loans and the sale of
agricultural mortgage-backed and debt securities; the imposition of significant
risk-based capital requirements; or changes in the Corporation's status as a
government-sponsored enterprise.
Given the foregoing potential risks and uncertainties, no undue reliance
should be placed on any forward looking statements expressed herein.
Furthermore, Farmer Mac undertakes no obligation to publicly release the result
of revisions to any forward looking statements that may be made to reflect any
future events or circumstances.
Results of Operations
Overview. Farmer Mac's net income for the six months ended June 30, 1997
was $2.2 million, an increase of $1.6 million as compared to net income of $0.6
million for the six months ended June 30, 1996. For the three months ended June
30, 1997, Farmer Mac's net income was $1.3 million, a $0.5 million increase as
compared to $0.8 million for the three months ended June 30, 1996. The increases
in net income were largely attributable to an increase in: net interest income,
principally resulting from the growth in cash and cash equivalents, investments
and loans held for securitization; an increase in the gain on issuance of
mortgage-backed securities; and an increase in guarantee fee income resulting
from increased guarantee fee rates and an increase in the outstanding balance of
Farmer Mac I and II Securities.
Earnings per share for the six months ended June 30, 1997 for Classes A and
B Voting Common Stock were $0.22 and for Class C Non-Voting Common Stock were
$0.65, compared with earnings per share for the six months ended June 30, 1996
of $0.12 for Classes A and B Voting Common Stock and $0.35 for Class C
Non-Voting Common Stock, as adjusted to reflect the 3-to-1 dividend and
liquidation rights ratio applicable to each share of Class C Non-Voting Common
Stock relative to each share of Voting Common Stock. Earnings per share for the
three months ended June 30, 1997 for Classes A and B Voting Common Stock were
$0.13 and for Class C Non-Voting Common Stock were $0.39, compared with earnings
per share for the three months ended June 30, 1996 of $0.14 for Classes A and B
Voting Common Stock and $0.43 for Class C Non-Voting Common Stock, as adjusted.
During the second quarter of 1997, Farmer Mac continued to expand
operations under its revised legislative authorities. Approximately $71.6
million of AMBS, backed by loans acquired through the cash window, were sold to
capital market investors. An additional $20.7 million of AMBS were sold in July
1997, with an additional $22.6 million committed for sale in September 1997.
To date, Farmer Mac has approved and authorized 131 sellers based in 24
states to submit loans for sale through the cash window and currently has under
review an additional 30 applications. Farmer Mac is continuing to expand its
seller network by focusing its marketing initiatives on regional banks and
non-traditional agricultural mortgage lenders, such as agricultural suppliers
and mortgage bankers. In the former regard, Farmer Mac recently approved
Glendale Federal Bank, FSB and Wells Fargo Bank, N.A. as Farmer Mac sellers.
Both entities are large, California-based financial institutions whose
participation should expand the network of Farmer Mac sellers into the
communities they serve and increase the number of outlets offering Farmer Mac
Qualified Loans. Farmer Mac is currently working with several other large
financial institutions to secure their participation in its program.
Both seller and geographic distribution continue to broaden with the
expanding seller network. As of June 30, 1997, only two sellers each represented
10% or more of the total principal balance of loans submitted for purchase
through the cash window, with no one seller accounting for more than 11% of cash
window volume. Although the states comprising the Pacific region continue to
provide the largest source of volume, the relative level of business from
Mountain and Corn Belt states is steadily increasing.
Since the opening of the cash window in July 1996, over $345.8 million of
loans have been submitted to Farmer Mac for approval, of which approximately 38%
($130.7 million) have been securitized and sold, 8% ($26.6 million) have been
purchased and are pending securitization, and 17% ($59.1 million) are in various
stages of the pipeline. The remaining 37% ($129.4 million) of loans have been
either denied by Farmer Mac for credit reasons or withdrawn by the
seller/servicer.
In addition to purchasing loans through the cash window, Farmer Mac is
continuing to discuss and negotiate with portfolio holders of agricultural loans
regarding the acquisition of loans through outright purchases or in exchange for
Farmer Mac-guaranteed securities, although no such transactions have been
consummated to date.
In early 1997, Farmer Mac undertook a strategy to increase its presence in
the capital markets, particularly the debt markets, in order to attract more
investors to its debt and mortgage-backed securities and thereby improve the
liquidity of its securities and reduce its borrowing and securitization costs.
In implementing this debt strategy, the Board and management believed that
increasing Farmer Mac's presence in the capital markets would improve the
pricing of its AMBS, and thereby enhance the attractiveness of the loan products
offered through its programs for the benefit of agricultural lenders and
borrowers. Since the strategy's implementation, the Corporation has experienced
a tightening of its AMBS spreads relative to other comparable agency securities
and anticipates continued improvements in pricing as liquidity and investor
recognition increase through the expanded debt issuances. The Corporation's
eventual objective for the proceeds of its increased debt issuances is
investment of those proceeds in Qualified Loans purchased under the Farmer Mac
programs. During the phase-in of that objective, Farmer Mac will be investing a
portion of those proceeds in high quality, short-term and longer-term
floating-rate interest-earning assets, which have generated, and should continue
to generate, increased net interest income. Changes in interest rates or
restrictions on the Corporation's authorized investments, as well as the
availability of debt funding, could adversely affect improvements in pricing and
cause results to differ from management's expectations.
Notwithstanding the increase in Farmer Mac's business activity and the
improvements in its financial performance since the enactment of the legislative
revisions to its statutory charter in early 1996, Farmer Mac still faces many
challenges, particularly that of continuing to expand its business in the highly
static market for agricultural and rural home mortgage loans. While the programs
it operates are now more accessible to agricultural lenders and offer
competitive loan rates and terms, they continue to receive only gradual
acceptance in the agricultural lending community for a number of reasons that
have been reported previously. For Farmer Mac to succeed over the long term in
realizing its business development and profitability goals, lenders must be
convinced of the benefits of selling loans to Farmer Mac and must be willing to
adapt their business practices to sell loans into the secondary market in
significant volume.
Set forth below is a discussion of certain specific items of the income
statement and balance sheet.
Average Balances, Income and Expense, Yield and Rates. The following table
provides, for the periods indicated, information regarding interest-earning
assets and interest-bearing liabilities.
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------------------------------------
1997 1996
------------------------ ---------------------------
(Dollars in Thousands)
Average Income/ Average Average Income/ Average
BalancesExpense Yield/Rate Balances Expense Yield/Rate
<S> <C> <C> <C> <C> <C> <C>
Assets
-------------------------------------------------------------------------------------------
Interest-earning assets:
Farmer Mac I and II ....... $ 417,265 $ 14,847 7.12% $ 407,425 $ 15,265 7.49%
Securities
Investments and cash 586,005 19,092 6.52% 141,719 3,466 4.89%
equivalents
Loans held for 19,195 844 8.79%
securitization
- --------------------------------------------------------------------------------------------
Total interest-earning ....$1,022,465 $ 34,783 6.80% 549,144 $ 18,731 6.82%
assets
Other assets ............... 55,589 27,928
-------------------------------------------------------------------------------------------
.............................$1,078,054 $ 577,072
===========================================================================================
Liabilities and Stockholders' Equity
-------------------------------------------------------------------------------------------
Interest-bearing liabilities:
Debentures, notes and
bonds, net ............$ 997,998 $ 31,599 6.33% $ 543,608 $ 17,422 6.41%
Other liabilities ......... 35,180 20,709
Stockholders'equity ....... 44,876 12,755
-------------------------------------------------------------------------------------------
.............................$1,078,054 $ 577,072
===========================================================================================
Net interest income/spread .. $ 3,184 .47% $ 1,309 .41%
===========================================================================================
Net yield on ................ .62% .48%
interest-earning assets
===========================================================================================
</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, 1997
Compared to Six Months Ended June 30, 1996
---------------------------------------------
Increase or(Decrease) Due to
Rate Volume Total
------------ -------------- ------------
(in thousands)
<S> <C> <C> <C>
Income from interest-earning assets:
Farmer Mac I and II Securities $ (804) $ 386 $ (418)
Investments and cash equivalents 1,497 14,129 15,626
Loans held for securitization - 844 844
------------ -------------- ------------
Total income from 693 15,359 16,052
interest-earning assets
Expense on interest-bearing (208) 14,385 14,177
liabilities ------------ -------------- ------------
Change in net interest income $ 901 $ 974 $ 1,875
============ ============== ============
</TABLE>
Net Interest Income. Net interest income totaled $3.2 million for the six
months ended June 30, 1997 compared to $1.3 million for the same period in 1996.
The $1.9 million increase was due to an increase in the average balance of
interest-earning assets combined with an increase in net interest yield. The
increase in the average balance of interest-earning assets was primarily due to
an increase in the average balance of investments and cash equivalents resulting
from the implementation of Farmer Mac's expanded debt issuance strategy. The
increase in net interest yield was due to a shift in the composition of the
investment portfolio from short-term, highly liquid investments to longer-term
floating-rate investments which generally have higher spreads. The shift toward
longer-term investments was primarily attributable to growth in floating-rate
agency securities.
Net interest income totaled $1.8 million for the three months ended June
30, 1997, a $1.0 million increase from the $0.8 million for the three months
ended June 30, 1996. The increase was due to an increase in the average balance
of the interest-earning assets and related net interest yield, as discussed
above.
Asset and Liability Management. Farmer Mac enters into off-balance sheet
derivative financial instruments, primarily interest rate swaps, as an end-user
and not for trading or speculative purposes. In light of Farmer Mac's increased
activity in the capital debt markets, Farmer Mac has begun to use interest rate
swaps to synthetically create debt instruments and interest-earning assets.
Interest rate swaps are contractual agreements between two parties for the
exchange of periodic payments based on a notional principal amount and agreed
upon rates that may be fixed or variable. These swaps, when combined with the
underlying liability or asset, synthetically create debt and asset yields that
should produce lower effective debt costs or higher effective asset yields than
those available through direct debt issuances or asset purchases. At June 30,
1997, Farmer Mac had $245.0 million in notional amount of interest rate swaps
outstanding.
To a lesser extent, the Corporation uses off-balance sheet derivative
financial instruments to reduce its exposure to interest-rate risk related to
outstanding commitments to purchase Qualified Loans. From the time Farmer Mac
issues a commitment to purchase a Qualified Loan until those Qualified Loans are
securitized, Farmer Mac is subject to the risk that interest rate changes during
that period may materially affect the value of those Qualified Loans. To
mitigate that risk, the Corporation enters into forward sale commitments and
futures contracts. As of June 30, 1997, Farmer Mac had entered into forward sale
commitments and futures contracts totaling $26.5 million and $400 thousand,
respectively.
While derivative financial instruments reduce Farmer Mac's exposure to
interest-rate risk, they increase its exposure to credit risk. Credit risk
arises from the possibility that a counterparty will be unable to perform
according to the terms of the contract and is equal to the fair value gain on
the instrument if the counterparty fails to perform. The credit risk is normally
a small percentage of the notional amount and fluctuates as interest rates move
up or down. Farmer Mac mitigates this risk by subjecting the transactions to the
same rigorous approval and monitoring process as is used for on-balance sheet
credit transactions, by dealing in the national market with highly rated
counterparties, by using International Swaps and Derivatives Association
documentation and by requiring the posting of securities as collateral under
certain circumstances to reduce exposure. Collateral is delivered by either
party when the fair value of a particular transaction on a net basis exceeds an
acceptable threshold of exposure. The threshold level is determined based on the
strength of the individual counterparty.
Other Income. Other income totaled $2.9 million for the six months ended
June 30, 1997, an increase of $1.3 million from the six months ended June 30,
1996. The increase was primarily due to an increase in guarantee fee income and
gain on the issuance of mortgage-backed securities. Guarantee fees totaled $1.1
million for the six months ended June 30, 1997, an increase of $480 thousand
from the six months ended June 30, 1996. This increase resulted from an increase
in the balance of outstanding guaranteed securities for the comparable period
and the increased guarantee fee rate (to 50 basis points from 25 basis points)
applicable to Farmer Mac I Securities issued under the revised legislative
authorities. At June 30, 1997, Farmer Mac had $755.1 million of guaranteed
securities outstanding (including Farmer Mac I and II Securities held in
portfolio) as compared to $598.4 million at June 30, 1996. Of those amounts,
$266.8 million and $120.7 million were issued under the revised authorities as
of June 30, 1997 and June 30, 1996, respectively.
The gain on issuance of mortgage-backed securities totaled $1.5 million and
$0.9 million, respectively, for the six months ended June 30, 1997 and 1996,
resulting from the issuance of $121.0 million and $120.7 million of AMBS during
the six months ended June 30, 1997 and 1996. The gain on issuance for the six
months ended June 30, 1996 is net of accrued expenses related to a dispute with
Western Farm Credit Bank ("WFCB"), which was subsequently resolved.
For the three months ended June 30, 1997, other income totaled $1.7
million, an increase of $0.4 million from the three months ended June 30, 1996.
The increase was primarily attributable to an increase in guarantee fees, as
discussed above.
Other Expenses. Other expenses totaled $3.8 million and $2.2 million,
respectively, for the six and three months ended June 30, 1997, as compared to
$2.3 million and $1.3 million for the six and three months ended June 30, 1996.
The increases over the six and three month comparable periods were due to
increases in compensation and employee benefits, professional fees,
administrative expenses and the provision for losses resulting from the
continued implementation of Farmer Mac's 1996 legislative authorities and
increased cash window activity. The increase in compensation and employee
benefits, the principal component of other expenses, was also due to annual
incentive compensation paid to senior management in the second quarter of 1997.
Income Tax Expense. As a result of the utilization of net operating loss
carryforwards, Farmer Mac's tax expense was limited to $63 thousand and $36
thousand for the six and three months ended June 30, 1997, respectively. No
income tax expense was recognized during the six or three months ended June 30,
1996.
Financial Condition and Capital
At June 30, 1997, assets totaled $1.4 billion, as compared to $602.8
million at December 31, 1996. The increase was largely attributable to the
implementation of the Corporation's expanded debt issuance strategy, resulting
in a $776.2 million increase from December 31, 1996 to June 30, 1997 in cash and
cash equivalents and investments, which were funded by Discount Notes with
similar terms to maturity or rate resets.
At June 30, 1997, Farmer Mac had $1.3 billion of Discount Notes and
Medium-Term Notes (net of unamortized debt issuance costs, discounts and
premiums) outstanding, as compared to $546.3 million at December 31, 1996. This
$802.1 million increase was the result of the implementation of Farmer Mac's
debt issuance strategy. During the first six months of 1997, Farmer Mac issued
$10.3 billion of Discount Notes and $55.0 million of Medium-Term Notes and
redeemed $9.6 billion of Discount Notes and $18.7 million of Medium-Term Notes.
Farmer Mac maintains an allowance for loan losses to cover anticipated
losses under the Farmer Mac I Program. At June 30, 1997, the allowance for
losses on guaranteed securities held in portfolio and those sold to investors
totaled $1.2 million, compared to $0.7 million at December 31, 1996. The Farmer
Mac I Securities held in portfolio are shown net of their applicable allowance
of $0.4 million at June 30, 1997. The allowance for Farmer Mac I Securities sold
to investors was $0.8 million at June 30, 1997, representing an increase of $0.5
million from year-end 1996. This increase was attributable to an increase in the
outstanding balance of AMBS (as to which Farmer Mac bears the risk of first
loss) sold to investors.
No loss allowance has been made 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.
Management evaluates the adequacy of the allowance for loan losses on a
quarterly basis and considers a number of factors, including: historical
charge-off and recovery activity (noting any particular trends in preceding
periods); trends in delinquencies, bankruptcies and non-performing loans; trends
in loan volume and size of credit risks; current and anticipated economic
conditions; the condition of agricultural segments and geographic areas
experiencing or expected to experience particular economic adversities,
particularly areas where Farmer Mac may have a geographic or commodity
concentration; the degree of risk inherent in the composition of the guaranteed
portfolio; quality control reviews; and underwriting standards. Farmer Mac
considers the amounts in the allowance account to be adequate to cover its
exposure to guarantee payments in the Farmer Mac I Program.
At June 30, 1997, loans that were 90 days or more past due and loans that
were in foreclosure or bankruptcy represented 0.1% of the principal amount of
all loans underlying Farmer Mac Guaranteed Securities. Management believes that
no losses will be incurred by Farmer Mac on these loans because of the existence
of the 10% subordinated interests with respect to the related securities. For
further information on delinquencies, see "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Supplemental Information."
At June 30, 1997, Farmer Mac's stockholders' equity totaled $48.8 million,
an increase of $1.6 million from December 31, 1996. Certain transactions related
to the settlement with WFCB, which affected stockholders' equity during the
first half of 1997, included: the repurchase (and subsequent cancellation) of
93,100 shares of Class B Voting Common Stock; the issuance of 18,784 shares of
Class C Non-Voting Common Stock to WFCB pursuant to the exercise of warrants
previously issued to WFCB; and the repayment of the $557 thousand note
receivable due from WFCB with interest. Farmer Mac also commenced a direct stock
purchase program to offer approximately 100,000 shares of Class A Voting Common
Stock to interested eligible investors pursuant to which approximately 1,450
shares had been issued at June 30, 1997. By statute, Farmer Mac's Class A Voting
Common Stock can only be held by banks, insurance companies and other financial
entities that are not members of the Farm Credit System.
At June 30, 1997 and December 31, 1996, Farmer Mac's regulatory required
minimum capital was $33.2 million and $7.4 million, respectively, compared with
actual capital of $48.8 million and $47.2 million.
Farmer Mac has not paid and does not expect to pay dividends on its common
stock in the near future. Dividends on the common stock are subject to
determination and declaration by the Board. There is no preference between
holders of the Voting Common Stock and Class C Non-Voting Common Stock relating
to dividends. The ratio of dividends paid on each share of Class C Non-Voting
Common Stock to each share of Voting Common Stock, however, will be
three-to-one. If dividends are to be paid to holders of the Voting Common Stock,
such per share dividends to holders of Class A and Class B Voting Common Stock
will be equal.
<PAGE>
New Accounting Standards
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share." SFAS No. 128 requires the disclosure of basic earnings per share,
calculated as net income divided by the weighted average shares outstanding, in
addition to diluted earnings per share. This Statement is effective for
financial statements issued for periods ending after December 15, 1997.
In addition, the FASB issued SFAS No. 130, "Reporting of Comprehensive
Income," and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information," in June 1997. SFAS No. 130 requires companies to report
comprehensive income in the financial statements. Comprehensive income includes
net income and other changes in stockholders' equity from nonowner sources, such
as unrealized gains or losses on available-for-sale securities. SFAS No. 131
requires public companies to report certain information about operating
segments. These Statements are effective for fiscal years beginning after
December 15, 1997.
Management believes that the adoption of these Statements will not have a
material effect on Farmer Mac's financial results.
Supplemental Information
The following tables set forth quarterly activity regarding: mandatory
commitments to purchase loans; purchases of loans; AMBS issuances;
delinquencies; and outstanding guaranteed securities issued under the Farmer Mac
I and II Programs.
<TABLE>
<CAPTION>
Mandatory Commitments to Purchase Loans
- ----------------------------------------------------------------------------------------
(Dollars in Thousands)
- ----------------------------------------------------------------------------------------
Fixed-Rate Loans
----------------------------------------
For the 1,3 and 5
quarter ended: 15 Year 7 Year 5 Year Year ARMs Total
Balloon Balloon
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
June 30, 1997 $ 19,196 $ 2,485 $ 54,980 $ 9,283 $ 85,944
March 31, 1997 37,471 - 14,234 3,325 55,030
December 31, 1996 15,417 - 11,693 - 27,110
September 30, 1996 13,457 - 7,986 - 21,443
------------ ------------ ------------ ------------ ------------
$ 85,541 $ 2,485 $ 88,893 $ 12,608 $189,527
Purchases of Loans
- ----------------------------------------------------------------------------------------
(Dollars in Thousands)
- ----------------------------------------------------------------------------------------
Fixed-Rate Loans
----------------------------------------
For the 1,3 and 5
quarter ended: 15 Year 7 Year 5 Year Year ARMs Total
Balloon Balloon
------------ ------------ ------------ ------------ ------------
June 30, 1997 $ 26,325 $ 2,485 $ 53,483 $ 8,990 $ 91,283
March 31, 1997 29,647 - 13,678 840 44,165
December 31, 1996 22,299 - 14,006 - 36,305
September 30, 1996 2,331 - 3,000 - 5,331
------------ ------------ ------------ ------------ ------------
$ 80,602 $ 2,485 $ 84,167 $ 9,830 $177,084
AMBS Issuances
- ----------------------------------------------------------------------------------------
(Dollars in Thousands)
- ----------------------------------------------------------------------------------------
Fixed-Rate Loans
----------------------------------------
For the 1,3 and 5
quarter ended: 15 Year 7 Year 5 Year Year ARMs Total
Balloon Balloon
------------ ------------ ------------ ------------ ------------
June 30, 1997 $ 57,569 $ 2,485 $ 11,578 $ - $ 71,632
March 31, 1997 32,255 - 17,105 - 49,360
December 31, 1996 16,766 - 10,702 - 27,468
September 30, 1996 - - - - -
------------ ------------ ------------ ------------ ------------
$106,590 $ 2,485 $ 39,385 $ $ 148,460
-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Delinquencies (1)
- ---------------------------------------------------------
Farmer Mac I Securities
--------------------------
As of: AMBS Other (2) Total
------------ ------------ ------------
<S> <C> <C> <C>
June 30, 1997 - 0.21% 0.10%
March 31, 1997 - 0.66% 0.39%
December 31, 1996 - 1.11% 0.73%
September 30, 1996 - 2.84% 2.04%
(1) Includes loans 90 days or more past due and loans in foreclosure or
bankruptcy.
(2) Includes loans underlying securities issued prior to the 1996 enactment of
the Corporation's revised legislative authorities. These securities are
supported by unguaranteed subordinated interests, which represented 10% of
the initial balance of the loans underlying the securities.
</TABLE>
<TABLE>
<CAPTION>
Outstanding Guaranteed Mortgage Securities
- ---------------------------------------------------------------------------------
(Dollars in Thousands)
- ---------------------------------------------------------------------------------
Farmer Mac I Held in
------------------------
As of: AMBS Other (1) Farmer Mac Total Portfolio
II (2)
------------------------ ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
June 30, 1997 $ 266,838 $ 243,775 $ 244,502 $ 755,115 $ 418,002
March 31, 1997 195,792 252,134 224,197 672,123 403,685
December 31, 1996 148,918 271,341 211,024 631,283 405,253
September 30, 1996 120,559 287,334 190,269 598,162 395,728
(1) Includes securities issued prior to the 1996 enactment of the Corporation's
revised legislative authorities. These securities are supported by
unguaranteed subordinated interests, which represented 10% of the initial
balance of the loans underlying the securities.
(2) Included in total outstanding guaranteed mortgage securities.
</TABLE>
<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 12, 1997.
(b) Not Applicable.
(c) (1) Election of Directors - Class A Nominees
<TABLE>
<CAPTION>
Number of Shares
For Withheld
<S> <C> <C>
Dean 767,241 3,100
Hemingway 767,241 3,100
Johnson 766,641 3,700
Mulder 767,041 3,300
Nolan 767,241 3,100
- Class B Nominees
Number of Shares
For Withheld
Graff 495,551 100
McCarthy 495,301 350
Nelson 495,201 450
Raines 495,101 550
Rhodes 495,201 450
</TABLE>
(2) Selection of Independent Auditors (KPMG Peat Marwick LLP)
Class A Stockholders:
Number of Shares
For 765,941
Against 3,500
Abstain 900
Class B Stockholders:
Number of Shares
----------------
For 495,551
Against 0
Abstain 100
(d) Not Applicable
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
+* 3.1 - Title VIII of the Farm Credit Act of 1971, as most recently
amended by the Farm Credit System Reform Act of 1996, P.L.
104-105 (Form 10-K filed March 29, 1996). * 3.2 - Amended
and restated Bylaws of the Registrant (Form 10-K filed March
27, 1997).
+* 10.1 - Stock Option Plan (Previously filed as Exhibit 19.1 to Form
10-Q filed August 14, 1992).
+* 10.1.1 - Amendment No. 1 to Stock Option Plan (Previously filed as
Exhibit 10.2 to Form 10-Q filed August 16, 1993).
------------------
* Incorporated by reference to the indicated prior filing.
+ Management contract or compensatory plan.
<PAGE>
+* 10.1.2 - 1996 Stock Option Plan (Form 10-Q filed August 14, 1996).
+* 10.1.3 - 1997 Stock Option Plan (Form 10-Q filed May 15, 1997).
+** 10.1.4 - Amended and Restated 1997 Incentive Plan.
+* 10.2 - Employment Agreement dated May 5, 1989 between Henry D.
Edelman and the Registrant (Previously filed as Exhibit 10.4
to Form 10-K filed February 14, 1990).
+* 10.2.1 - Amendment No. 1 dated as of January 10, 1991 to Employment
Contract between Henry D. Edelman and the Registrant
(Previously filed as Exhibit 10.4 to Form 10-K filed April
1, 1991).
+* 10.2.2 - Amendment to Employment Contract dated as of 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 10.5 to Form 10-Q filed
November 15, 1994).
+* 10.2.4 - Amendment No. 4 dated as of February 8, 1996 to Employment
Contract between Henry D. Edelman and the Registrant (Form
10-K filed March 29, 1996).
+* 10.2.5 - Amendment No. 5 dated as of June 13, 1996 to Employment
Contract between Henry D. Edelman and the Registrant (Form
10-Q filed August 14, 1996).
+* 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).
------------------
* Incorporated by reference to the indicated prior filing.
** Filed herewith.
+ Management contract or compensatory plan.
<PAGE>
+* 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).
+* 10.3.5 - Amendment No. 5 dated as of June 1, 1994 to Employment
Contract between Nancy E. Corsiglia and the Registrant
(Previously filed as Exhibit 10.12 to Form 10-Q filed August
15, 1994).
+* 10.3.6 - Amendment No. 6 dated as of June 1, 1995 to Employment
Contract between Nancy E. Corsiglia and the Registrant (Form
10-Q filed August 14, 1995).
+* 10.3.7 - Amendment No. 7 dated as of February 8, 1996 to Employment
Contract between Nancy E. Corsiglia and the Registrant (Form
10-K filed March 29, 1996).
+* 10.3.8 - Amendment No. 8 dated as of June 13, 1996 to Employment
Contract between Nancy E. Corsiglia and the Registrant (Form
10-Q filed August 14, 1996).
+* 10.4 - 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 (Form
10-Q filed August 14, 1995).
+* 10.4.6 - Amendment No. 6 dated as of February 8, 1996 to Employment
Contract between Thomas R. Clark and the Registrant (Form
10-K filed March 29, 1996).
+* 10.4.7 - Amendment No. 7 dated as of June 13, 1996 to Employment
Contract between Thomas R. Clark and the Registrant (Form
10-Q filed August 14, 1996).
+* 10.5 - 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 (Form
10-Q filed August 14, 1995).
+* 10.5.2 - Amendment No. 2 dated as of February 8, 1996 to Employment
Contract between Charles M.Lewis and the Registrant (Form
10-K filed March 29, 1996).
+* 10.5.3 - Amendment No. 3 dated as of June 13, 1996 to Employment
Contract between Charles M. Lewis and the Registrant (Form
10-K filed March 29, 1996).
--------------------------
* Incorporated by reference to the indicated prior filing.
+ 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 (Form
10-Q filed August 14, 1995).
+* 10.6.5 - Amendment No. 5 dated as of February 8, 1996 to Employment
Contract between Michael T. Bennett and the Registrant (Form
10-K filed March 29, 1996).
+* 10.6.6 - Amendment No. 6 dated as of June 13, 1996 to Employment
Contract between Michael T. Bennett and the Registrant (Form
10-Q filed August 14, 1996).
+* 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).
- ------------------
* Incorporated by reference to the indicated prior filing.
+ Management contract or compensatory plan.
<PAGE>
+* 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).
+* 10.7.4 - Amendment No. 4 dated as of June 1, 1995 to Employment
Contract between Christopher A. Dunn and the Registrant
(Form 10-Q filed August 14, 1995).
+* 10.7.5 - Amendment No. 5 dated as of February 8, 1996 to Employment
Contract between Christopher A. Dunn and the Registrant
(Form 10-K filed March 29, 1996).
+* 10.7.6 - Amendment No. 6 dated as of June 13, 1996 to Employment
Contrac between Christopher A. Dunn and the Registrant (Form
10-Q filed August 14, 1996).
* 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).
* 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 on March 11, 1997, to
include a press release announcing its financial results for the year ended
December 31, 1996.
- -------------------------
* Incorporated by reference to the indicated prior filing.
+ 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, 1997
By: /s/ Henry D. Edelman
Henry D. Edelman
President and Chief Executive Officer
(Principal Executive Office)
/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
Exhibit Description
+** 10.1.4 - Amended and Restated 1997 Incentive Compensation Plan.
<PAGE>
Exhibit 10.1.4
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
AMENDED AND RESTATED 1997 INCENTIVE PLAN
1. Purpose of the Plan
The purposes of this Amended and Restated 1997 Incentive Plan (the "Plan")
are to encourage stock ownership by directors, officers, and key employees of
the Federal Agricultural Mortgage Corporation (the "Company") and its
subsidiaries, to provide an incentive for such individuals to expand and improve
the profits and prosperity of the Company and its subsidiaries, and to assist
the Company and its subsidiaries in attracting and retaining directors and key
personnel through the grant of Options (as defined herein) to purchase shares of
the Company's Class C nonvoting common stock, par value $1.00 per share (the
"Common Stock").
2. Persons Eligible Under Plan
Any person who is an officer or employee of the Company or any subsidiary
(as defined in Sections 424(f) and 424(g) of the Internal Revenue Code of 1986,
as amended (a "Subsidiary"), shall be eligible for awards under the Plan (a
"Participant"). Any member of the Board of Directors (the "Board") of the
Company (a "Director") who is not also an employee of the Company shall be
eligible to receive any awards only under Section 15 of the Plan ("Director
Options").
3. Stock Subject to Plan
Subject to Section 10, the maximum number of shares that may be the
subject of awards under the Plan shall be 250,000 shares of the Company's Common
Stock, which shall be made available either from authorized but unissued Common
Stock or from Common Stock reacquired by the Company, including shares purchased
in the open market. If any award granted under the Plan is canceled, forfeited,
or otherwise terminates or expires for any reason without having been exercised
in full, the shares of Common Stock allocable to the unexercised portion of such
award may again be the subject of grants under the Plan.
4. Administration of Plan
(a) Except for the provisions of Section 15 (which to the maximum extent
feasible shall be self-effectuating), the Plan shall be administered by (i) the
Board of Directors for any purpose under the Plan, (ii) a committee of the Board
consisting of two or more Directors, each of whom is a "Non-Employee Director"
under Securities Exchange Act Rule 16b-3, for any purpose under the Plan, or
(iii) a committee of the Board consisting of two or more Directors (whether or
not any such Director is a "Non-Employee Director") for purposes of any award
under the Plan to an employee other than an officer subject to Section 16 of the
Securities Exchange Act of 1934 (it being understood and agreed that references
herein to the "Committee" shall mean the Board or either committee referred to
above, as the case may be).
(b) Subject to the express provisions of the Plan, the Committee shall be
authorized and empowered to do all things necessary or desirable in connection
with the administration of the Plan, including, without limitation, the
following:Stock then issuable to him or her having an aggregate Fair Market
Value equal to the Withholding Taxes.
(i) interpret and construe the Plan and the terms and conditions of
any award hereunder;
(ii) adopt, amend, and rescind rules and regulations for the
administration of the Plan;
(iii)determine which persons meet the eligibility requirements of
Section 2 hereof and to which of such eligible persons, if
any, awards will be granted hereunder;
(iv) grant awards to eligible persons and determine the terms
and conditions thereof, including, but not limited to, the
number of shares of Common Stock issuable pursuant thereto,
the time not more than 10 years after the date of an award at
which time the award shall expire or (if not vested)
terminate, and the conditions upon which awards become
exerciseable or vest or shall expire or terminate, and the
consideration, if any, to be paid upon receipt, exercise or
vesting of awards;
(v) determine whether, and the extent to which, ajustments are
required pursuant to Section 10 hereof;
(vi) determine the circumstances under which, consistent with the
provisions of Section 11, any outstanding award may be amended;
(vii)exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(viii)generally, exercise such powers and perform such acts as
deemed necessary or advisable to promote the best interests
of the Company with respect to the Plan.
(c) Any action taken by, or inaction of the Company, the Board, or the
Committee relating or pursuant to the Plan, shall be within the absolute
discretion of that entity or body and shall be conclusive and binding upon all
persons. No member of the Board or officer of the Company shall be liable for
any such action or inaction of: (i) the entity or body; (ii) another person; or
(iii) except in circumstances involving bad faith, himself or herself. In making
any determination or in taking or not taking any action under the Plan, the
Board and the Committee may obtain and may rely upon the advice of experts,
including professional advisors to the Company.
(d) The Committee may delegate ministerial, non-discretionary functions to
individuals who are officers or other employees of the Company.
5. Awards
(a) Awards under the Plan shall consist of options ("Options") to purchase
the Common Stock of the Company and shall be evidenced by agreements (the "Award
Agreements") in such form as the Committee shall approve.
(b) Except for purposes of Section 15, the exercise price per share shall
be 100% of the Fair Market Value of one share of Common Stock on the date
immediately preceding the date the Option is granted (the "Exercise Price"),
subject to adjustment only as provided in Section 10 of the Plan. As used in the
Plan, the term "Fair Market Value" shall mean the closing price of the Company's
Common Stock as reported on the National Association of Securities Dealers
Automated Quotations system ("NASDAQ"), or such other market on which the Common
Stock may be listed or traded, as determined by the Committee. If there is not a
closing price quotation for the date as of which Fair Market Value is to be
determined, then the Fair Market Value shall be determined by reference to the
closing price quotation for the next preceding day on which a closing price
quotation is available.
6. Exercise of Options
(a) Options may be exercised in whole or in part at such time or times as
shall be determined by the Committee and set forth in the applicable Award
Agreement. A Participant electing to exercise an Option shall give written
notice to the Company of such election and of the number of shares he or she has
elected to purchase, and shall at the time of exercise tender the full Exercise
Price for those shares.
(b) The Exercise Price shall be payable in cash or by check; provided,
however, that to the extent provided in the applicable Award Agreement, the
Participant may pay the Exercise Price in whole or in part (i) by delivering to
the Company shares of the Common Stock owned by him and having a Fair Market
Value on the date of exercise equal to the Exercise Price of the Option or (ii)
by reducing the number of shares of Common Stock issuable or payable upon the
exercise of an Option by the number of shares of Common Stock having a Fair
Market Value on the date of exercise equal to the Exercise Price of the Option.
In addition, the Options may be exercised through a registered broker-dealer
pursuant to such cashless exercise procedures (other than share withholding)
which are, from time to time, deemed acceptable. No fractional shares of Common
Stock shall be issued upon exercise of an Option and the number of shares of
Common Stock that may be purchased upon exercise shall be rounded to the nearest
number of whole shares.
(c) At such times as a Participant recognizes taxable income in connection
with the receipt of shares of Common Stock hereunder (a "Taxable Event"), the
Participant shall pay to the Company the amount of taxes required by law to be
withheld by the Company in connection with the Taxable Event (the "Withholding
Taxes") prior to the issuance of such shares. In satisfaction of the obligation
to pay the Withholding Taxes to the Company, the Participant may make a written
election (the "Tax Election"), which may be accepted or rejected in the
discretion of the Committee, to have withheld a portion of the shares of Common
Stock then issuable to him or her having an aggregate Fair Market Value equal to
the Withholding Taxes.
7. Right of First Refusal
The Committee may, in its discretion, include in any Award Agreement
relating to an Option granted under the Plan a condition that the Participant
shall agree to grant the Company a Right of First Refusal, which, if so
included, shall have the following terms and conditions:
(a) The Participant shall give the Company written notice (the "Offer
Notice") of the Participant's intention to sell any shares of Common Stock
acquired (or to be acquired) upon exercise of an Option (the "Offered Shares").
The Company shall have three business days (the "Exercise Period") following
receipt of the Offer Notice to determine whether to exercise its Right of First
Refusal, which may be exercised either as to all or as to none of the Offered
Shares. By the end of the Exercise Period, the Company shall have given written
notice to the Participant of its election to exercise (the "Acceptance notice")
or not to exercise (the "Rejection Notice") its Right of First Refusal. The
Participant shall tender the Offered Shares to the Company within 10 business
days after receipt of an Acceptance Notice. Upon receipt of a Rejection Notice,
the Participant may sell the Offered Shares free and clear of such Right of
First Refusal.
(b) The price to be paid by the Company for the Offered Shares shall be
the average of the closing price of the Company's Common Stock as reported on
NASDAQ (or such other market on which the Common Stock may be listed or traded,
as determined by the Committee) for the three business days immediately
preceding the date of the Company's receipt of the Offer Notice or, if no such
transactions occurred on those days, the average of the bid and asked prices for
the Common Stock on such days.
8. Transfer Restrictions
Unless otherwise permitted in the applicable Award Agreement, any Option
granted under the Plan shall not be transferable other than by will or the laws
of descent and distribution or pursuant to a domestic relations order, and
during a Participant's lifetime shall be exercisable only by the Participant or
his or her guardian or legal representative. The terms of such Option shall be
final, binding and conclusive upon the legal representatives, heirs and
successors of the Participant.
9. Termination of Employment
(a) Except as provided in the Award Agreement and as provided in Sections
9(b), (c) or (d) below, if a Participant ceases for any reason to be employed by
the Company or any of its Subsidiaries (unless such termination of employment
was for "Cause"), the Participant may, at any time within 90 days after the
effective date of such termination of employment, exercise his or her Options to
the extent that he or she would be entitled to exercise them on such date, but
in no event shall any Option be exercisable more than 10 years from the date it
was granted; provided, however, that the Committee shall have the discretion to
determine whether Options not yet exercisable at the date of termination of
employment shall become immediately exercisable for 90 days thereafter. The
Committee shall determine, subject to applicable law, whether a leave of absence
shall constitute a termination of service.
(b) If a Participant ceases to be employed by the Company or any of its
Subsidiaries for "Cause," the Participant's unexercised Options shall terminate
immediately. For purposes of this Section 9, "Cause" shall be defined as in the
employment agreement, if any, between the Company and such Participant, or, if
there is no employment agreement, shall mean (i) the willful failure of the
Participant substantially to perform his or her duties, other than any such
failure resulting from incapacity due to physical or mental illness or (ii) the
willful engagement by the Participant in activities contrary to the best
interests of the Company.
(c) Unless otherwise provided in the Award Agreement, if a Participant
dies while employed by the Company or any of its Subsidiaries, or within 90 days
after having retired with the consent of the Company, the shares which the
Participant was entitled to exercise on the date of the Participant's death
under an Option or Options granted under the Plan may be exercised at any time
after the Participant's death by the Participant's beneficiary; provided,
however, that no Option may be exercised after the earlier of (i) one (1) year
after the Participant's death or (ii) the expiration date specified for the
particular Option in the Award Agreement.
(d) Unless otherwise provided in the Award Agreement, if a Participant
terminates employment by reason of Disability (as defined below), any
unexercised Option held by the Participant shall expire one (1) year after the
Participant has a termination of employment because of such "Disability" and
such Option may only be exercised by the Participant or his or her beneficiary
to the extent that the Option was exercisable on the date of termination of
employment because of such "Disability;" provided, however, no Option may be
exercised after the expiration date specified for the particular Option in the
Award Agreement. "Disability" shall mean (a) in the case of a Participant whose
employment with the Company or a Subsidiary is subject to the terms of an
employment agreement between such Participant and the Company or Subsidiary,
which employment agreement includes a definition of "Disability", the term
"Disability" as used in this Plan or any Award Agreement shall have the meaning
set forth in such employment agreement during the period that such employment
agreement remains in effect; and (b) in all other cases, the term "Disability"
as used in this Plan or any Award Agreement shall mean a physical or mental
infirmity which impairs the Participant's ability to perform substantially his
or her duties for a period of one hundred eighty (180) consecutive days.
10. Adjustments
(a) In the event of a Change in Capitalization (as defined below) of the
Company, the Committee shall conclusively make equitable and appropriate
adjustments, if any, to (i) the maximum number and class of shares of Common
Stock or other stock or securities with respect to which Options may be granted
under the Plan, (ii) the maximum number and class of shares of Common Stock or
other stock or securities with respect to which Options may be granted to any
Participant during the term of the Plan, (iii) the number and class of shares of
Common Stock or other stock or securities which are subject to outstanding
Options granted under the Plan and the purchase price therefor, if applicable
and (iv) the number and class of shares of Common Stock or other securities in
respect of which Director Options are to be granted under Section 15 hereof.
(b) If, by reason of a Change in Capitalization, a Participant shall be
entitled to exercise an Option with respect to new, additional or different
shares of stock or securities, such new, additional or different shares shall
thereupon be subject to all of the conditions, restrictions and performance
criteria which were applicable to the shares of Common Stock subject to the
Option prior to such Change in Capitalization.
(c) No adjustment of the number of shares of Common Stock available under
the Plan or to which any Option relates that would otherwise be required under
this Section 10 shall be made unless and until such adjustment either by itself
or with other adjustments not previously made under this Section 10 would
require an increase or decrease of at least 1% in the number of shares of Common
Stock available under the Plan or to which any Option relates immediately prior
to the making of such adjustment (the "Minimum Adjustment"). Any adjustment
representing a change of less than such minimum amount shall be carried forward
and made as soon as such adjustment together with other adjustments required by
this Section 10 and not previously made would result in a Minimum Adjustment.
Notwithstanding the foregoing, any adjustment required by this Section 10 which
otherwise would not result in a Minimum Adjustment shall be made with respect to
shares of Common Stock relating to any Option immediately prior to exercise of
such Option. No fractional shares of Common Stock or units of other securities
shall be issued pursuant to any such adjustment, and any fractions resulting
from any such adjustment shall be eliminated in each case by rounding downward
to the nearest whole share.
(d) "Change in Capitalization" means any increase or reduction in the
number of shares of Common Stock, or any change (including, but not limited to,
a change in value) in the shares of Common Stock or exchange of shares of Common
Stock for a different number or kind of shares or other securities of the
Company or another corporation, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend in excess of earnings, property dividend,
combination or exchange of shares, change in corporate structure or other
substantially similar event.
11. Amendment and Termination of Plan
The Board or the Committee, by resolution, may terminate, amend, or revise
the Plan with respect to any shares as to which Options have not been granted.
Neither the Board nor the Committee may, without the consent of a Participant,
alter or impair any award previously granted under the Plan, except as
authorized herein. To the extent necessary under applicable law, no amendment
shall be effective unless approved by the stockholders of the Company in
accordance with applicable law. Unless sooner terminated, the Plan shall remain
in effect for a period of 10 years from the date of the Plan's adoption by the
Board. Termination of the Plan shall not affect any Option previously granted.
12. Effective Date of Plan
This Plan shall be effective on the date upon which it is approved by the
Board.
13. Governing Law
(a) Except as to matters of federal law, the Plan and the rights of all
persons claiming hereunder shall be construed and determined in accordance with
the laws of the District of Columbia, without giving effect to conflicts of laws
principles thereof.
(b) The obligation of the Company to sell or deliver the shares of Common
Stock with respect to Options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
(c) Each Option is subject to the requirement that, if at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of the shares of Common Stock issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
the issuance of the shares of Common Stock, no Options shall be granted or
payment made or shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.
14. Multiple Agreements
The terms of each Option may differ from other Options granted under the
Plan at the same time, or at some other time. The Committee may also grant more
than one Option to a given Participant during the term of the Plan, either in
addition to, or in substitution for, one or more Options previously granted to
that individual.
15. Director Options
(a) Awards relating to the Common Stock authorized under the Plan shall be
made under this section only to Directors.
(b) Annually, on the first Business Day following the Company's Annual
Meeting of Stockholders, commencing with the Annual Meeting following the date
on which the Plan is approved, there shall be granted automatically (without any
action by the Committee or the Board) a Director Option to each Director then
elected to office to purchase 2,000 shares of Common Stock. "Business Day" shall
mean any day, other than Saturday, Sunday, or a day on which the offices of the
Federal Government are not open for business.
(c) The Exercise Price for shares under each Director Option shall be
equal to 100% of the Fair Market Value of a share of Common Stock on the date
the Director Option is granted, determined in accordance with Section 5(b)
hereof. The Exercise Price of any Director Option granted shall be paid in full
at the time of each purchase (a) in cash and/or (b)(i) by delivering to the
Company shares of the Common Stock owned by the Director and having a Fair
Market Value on the date of exercise equal to the Exercise Price of the Director
Option, or (ii) by reducing the number of Shares of Common Stock issuable or
payable upon the exercise of a Director Option by the number of shares of Common
Stock having a Fair Market Value on the date of exercise equal to the Exercise
Price of the Director Option. In addition, the Options may be exercised through
a registered broker-dealer pursuant to such cashless exercise procedures (other
than share withholding) which are, from time to time, deemed acceptable. No
fractional shares of Common Stock shall be issued upon exercise of an Option and
the number of shares of Common Stock that may be purchased upon exercise shall
be rounded to the nearest number of whole shares. Each Director Option shall be
subject to the Right of First Refusal, as set forth in Section 7.
(d) At such times as a Director recognizes taxable income in connection
with the receipt of shares of Common Stock hereunder (a "Taxable Event"), the
Director shall pay to the Company the amount of taxes required by law to be
withheld by the Company in connection with the Taxable Event (the "Withholding
Taxes") prior to the issuance of such shares. In satisfaction of the obligation
to pay the Withholding Taxes to the Company, the Director may make a written
election (the "Tax Election"), which may be accepted or rejected in the
discretion of the Committee, to have withheld a portion of the shares of Common
Stock then issuable to him or her having an aggregate Fair Market Value equal to
the Withholding Taxes.
(e) An annual Director Option grant under Section 15(b) shall become fully
vested and exercisable at the rate of one third of the Shares (rounded down to
the nearest whole share number) immediately on the date of grant and one third
on May 31 of each of the following two years if the Director who is an optionee
under the Director Option continues to serve as a Director as of such date.
(f) Each Director Option shall terminate on the date which is the tenth
anniversary of the date of grant, unless terminated earlier as follows:
(i) If a Director's service as a member of the Board terminates for
any reason other than Disability, death or Cause (as defined below), the
Director may for a period of three (3) months after such termination
exercise his or her Option to the extent, and only to the extent, that
such Option was vested and exercisable as of the date the Director's
service as a member of the Board terminated, after which time the Option
shall automatically terminate in full.
(ii) If a Director's service as a member of the Board terminates by
reason of the Director's resignation or removal from the Board due to
Disability (as defined in Section 9(d)), the Director may, for a period of
one (1) year after such termination, exercise his or her Option to the
extent, and only to the extent, that such Option was vested and
exercisable, as of the date the Director's service as a member of the
Board terminated, after which time the Option shall automatically
terminate in full.
(iii) If a Director's service as a member of the Board terminates
for Cause, the Option granted to the Director hereunder shall immediately
terminate in full and no rights thereunder may be exercised. For purposes
of this Section 15, "Cause" shall mean (i) fraud or intentional
misrepresentation, (ii) embezzlement, misappropriation or conversion of
assets or opportunities of the Company, (iii) conviction of a felony or
(iv) willful engagement by the Director in activities contrary to the
bests interests of the Company.
(iv) If a Director dies while a member of the Board or within three
(3) months after termination of service as a Director as described in
clause (i) of this Section 15(f) or within twelve (12) months after
termination of service as a Director as described in clause (ii) of this
Section 15(f), the Option granted to the Director may be exercised at any
time within twelve (12) months after the Director's death by the person or
persons to whom such rights under the Option shall pass by will, or by the
laws of descent or distribution, after which time the Option shall
terminate in full; provided, however, that an Option may be exercised to
the extent, and only to the extent, that the Option was exercisable on the
date of death or earlier termination of the Director's service as a member
of the Board.
(g) If there shall occur any event described in Section 10, then in
addition to the matters contemplated thereby, the Director Options then
outstanding and future grants thereof shall be automatically adjusted as
contemplated by Section 10.
(h) The provisions of Sections 1, 2, 3, 7, 8, 10, 11, 12 and 13 are
incorporated herein by this reference. Unless the context otherwise requires,
the provisions of this Section 15 shall be construed as a separate plan.
Originally adopted: February 13, 1997
First Amendment: June 12, 1997
