2
As filed with the Securities and Exchange Commission on
- ------------------------------------------------------------------------------
May 13, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999. Commission File Number
0-17440
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
(Exact name of registrant as specified in its
charter)
Federally chartered
instrumentality 52-1578738
Of the United
States
(State or other jurisdiction of (I.R.S. employer identification
incorporation or organization) number)
919 18th Street, N.W., Suite
200, 20006
Washington, D.C.
(Address of principal executive (Zip code)
offices)
(202) 872-7700
(Registrant's telephone number, including
area code)
----------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date.
As of May 3, 1999, there were 1,026,280 shares of Class A Voting Common
Stock, 500,301 shares of Class B Voting Common Stock and 3,092,725 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 1998 financial statements of Farmer Mac. Results
for interim periods are not necessarily indicative of those to be expected for
the fiscal year.
The following information concerning Farmer Mac's financial statements is
included herein.
Consolidated Balance Sheets at March 31, 1999 and December
31, 1998....................................................
3
Consolidated Statements of Operations for the three months
ended March 31, 1999 and 1998...............................
4
Consolidated Statements of Cash Flows for the three months
ended March 31, 1999 and1998................................
5
<PAGE>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
-----------------------
(in thousands)
<S> <C> <C>
Assets:
Cash and cash equivalents $ 515,075 $ 540,626
Investment securities 655,491 643,562
Farmer Mac guaranteed securities 814,750 552,205
Loans 17,218 168,064
Interest receivable 18,835 24,526
Guarantee fees receivable 1,580 2,135
Prepaid expenses and other assets 6,274 4,182
---------- -----------
Total Assets $2,029,223 $1,935,300
---------- -----------
<S> <C> <C>
Liabilities and Stockholders' Equity:
Liabilities:
Notes payable
Due within one year $1,477,730 $1,473,688
Due after one year 452,153 365,451
Accrued interest payable 9,193 7,132
Accounts payable and accrued expenses 3,313 4,856
Reserve for losses 4,016 3,259
---------- -----------
Total Liabilities 1,946,405 1,854,386
Stockholders' Equity:
Common stock:
Class A Voting, $1 par value, no maximum authorization,
1,025,680 and 1,024,680 shares issued and outstanding at
March 31, 1999 and December 31, 1998, respectively 1,026 1,025
Class B Voting, $1 par value, no maximum authorization,
500,301 and 500,301 shares issued and outstanding at
March 31, 1999 and December 31, 1998, respectively 500 500
Class C Non-Voting, $1 par value, no maximum authorization,
3,092,330 and 3,092,117 shares issued and outstanding
at March 31, 1999 and December 31, 1998, respectively 3,092 3,092
Additional paid-in capital 76,193 76,168
Accumulated other comprehensive income 699 249
Retained earnings (deficit) 1,308 (120)
---------- -----------
Total Stockholders' Equity 82,818 80,914
Total Liabilities and Stockholders' Equity $2,029,223 $1,935,300
---------- -----------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------
1999 1998
-------- --------
(in thousands,
except per share amounts)
<S> <C> <C>
Farmer Mac guaranteed securities $ 9,302 $ 7,864
Investments and cash equivalents 15,416 14,634
Loans 3,317 977
-------- --------
Total interest income 28,035 23,475
Interest expense 24,455 21,040
-------- --------
Net interest income 3,580 2,435
Other Income:
Guarantee fees 1,465 756
Gain on sale of AMBS - 428
Miscellaneous 66 48
-------- --------
Total other income 1,531 1,232
Total revenues 5,111 3,667
Expenses:
Compensation and employee benefits 992 806
Professional fees 409 368
Board of Directors fees and expenses 74 76
Regulatory fees 68 166
General and administrative 375 398
-------- --------
Total operating expenses 1,918 1,814
Provision for losses 798 260
-------- --------
Total expenses 2,716 2,074
-------- --------
Income before income taxes 2,395 1,593
Income tax expense/(benefit) 814 (152)
-------- --------
Net income $ 1,581 $ 1,745
-------- --------
Earnings per share of Class A and B Voting Common Stock:
Basic earnings per share $ 0.15 $ 0.16
Diluted earnings per share $ 0.14 $ 0.16
Earnings per share of Class C Non-Voting Common Stock
Basic earnings per share $ 0.44 $ 0.49
Diluted earnings per share $ 0.42 $ 0.47
</TABLE>
<PAGE>
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------
1999 1998
--------- ---------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Income from Operations $ 1,581 $ 1,745
Adjustments to reconcile net income to cash provided by
operating activities:
Amortization of investment premiums and discounts 2,139 833
Amortization of debt premiums, discounts and issuance costs 17,739 13,673
Provision for losses 798 260
Net decrease in other assets and liabilities 4,478 3,510
--------- ---------
Net cash provided by operating activities 26,735 20,021
Cash flows from investing activities:
Purchases of available-for-sale investments (86,069) (156,494)
Purchases of investment securities (17,123) (2,868)
Purchases of Farmer Mac guaranteed securities (38,555) (30,848)
Purchases of loans (122,635) (55,917)
Proceeds from repayment of available-for-sale investments 87,795 78,377
Proceeds from repayment of investment securities 4,014 8,279
Proceeds from repayment of Farmer Mac guaranteed securities 42,161 19,178
Proceeds from repayment of loans 5,095 360
Proceeds from securitization of loans - 41,395
--------- ---------
Net cash used by investing activities (125,317) (98,538)
Cash flows from financing activities:
Proceeds from issuance of discount notes 20,816,854 5,778,574
Proceeds from issuance of medium-term notes 97,736 4,990
Payments to redeem discount notes (20,823,285) (5,634,885)
Payments to redeem medium-term notes (18,300) (31,900)
Proceeds from common stock issuance 26 190
--------- ---------
Net cash provided by financing activities 73,031 116,969
--------- ---------
Net (decrease) increase in cash and cash equivalents (25,551) 38,452
Cash and cash equivalents at beginning of period 540,626 177,617
--------- ---------
Cash and cash equivalents at end of period $ 515,075 $ 216,069
--------- ---------
Supplemental disclosures of cash flow information:
Cash paid during the quarter for:
Interest $ 5,566 $ 8,472
Income Taxes $ 300 $ 102
Non-cash activity:
Loans securitized and retained as Farmer Mac
guaranteed securities $ 268,386 $ -
Loans acquired in exchange for AMBS $ 73,597 $ -
Real estate acquired through foreclosure $ 578 $ -
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Accounting Policies.
(a) Principles of Consolidation
Financial information at and for the three months ended March 31, 1999 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) Loans
At March 31, 1999, loans held by Farmer Mac included $15.1 million held
for securitization and $2.1 million held for investment. At December 31, 1998,
all of the loans held by Farmer Mac were held for securitization.
(c) Earnings Per Share
Basic earnings per share is based on the weighted average shares
outstanding. Diluted earnings per share is based on the weighted average number
of common shares outstanding adjusted to include all dilutive potential common
stock. The computation of earnings per share reflects the 3-to-1 dividend and
liquidation preferences applicable to each share of Class C Non-Voting Common
Stock relative to each share of Class A and Class B Voting Common Stock. The
following schedule reconciles basic and diluted earnings per share for the three
months ended March 31, 1999 and 1998.
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------------------------------------
1999 1998
----------------------- ---------------------------
Dilutive Dilutive
Basic stock Diluted Basic stock Diluted
EPS options EPS EPS options EPS
----------------------------------------------------------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Net Income $ 1,581 $ - $ 1,581 $ 1,745 $ - $ 1,745
Weighted average
shares:
Class A and B 1,526 - 1,526 1,506 - 1,506
Class C 3,092 125 3,217 3,078 140 3,218
Earnings per share:
Class A and B $ 0.15 $ 0.14 $ 0.16 $ 0.16
Class C $ 0.44 $ 0.42 $ 0.49 $ 0.47
</TABLE>
Subsequent to March 31, 1999, Farmer Mac's Board of Directors approved a
3-for-1 split of the Class C common stock, subject to Class C stockholder
approval of a related by-law amendment to remove the 3-to-1 dividend and
liquidation preferences accorded to Class C stock (see "Results of Operations -
Overview").
<PAGE>
(d) Reclassifications
Certain reclassifications of prior period information were made to conform
to the current period presentation.
Note 2. Off-Balance Sheet Financial Instruments.
In the ordinary course of its business, Farmer Mac incurs off-balance sheet
risk in connection with the issuance of commitments to purchase and sell
Qualified Loans. At March 31, 1999, outstanding commitments to purchase
Qualified Loans totaled $22.5 million. There were no outstanding commitments to
sell Qualified Loans at March 31, 1999. For information regarding the
off-balance sheet risks associated with off-balance sheet guarantees, and with
interest-rate contracts and hedge instruments, which are used to manage
exposures inherent in Farmer Mac's loan pipeline and investment activities, see
"Management's Discussion and Analysis of Financial
Condition and Results of Operations - Risk Management."
Note 3. Comprehensive Income
Comprehensive income is comprised of net income plus other changes in
stockholders' equity not resulting from investments by or distributions to
stockholders. The following table sets forth comprehensive income for the three
months ended March 31, 1999 and 1998.
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
1999 1998
-------- --------
(in thousands)
<S> <C> <C>
Net income $ 1,581 $ 1,745
Change in unrealized gain on securities available for sale,
net of taxes of $150 thousand at March 31, 1999 450 28
-------- --------
Comprehensive income $ 2,031 $ 1,773
-------- --------
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Special Note Regarding Forward-Looking Statements
Certain statements made in this Form 10-Q are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995
pertaining to management's current expectations as to Farmer Mac's future
financial results, business prospects and business developments. Forward-looking
statements include, without limitation, any statement that may predict,
forecast, indicate or imply future results, performance or achievements, and
typically are accompanied by, and identified with, such terms as "anticipates,"
"believes," "expects," "intends," "should" and similar phrases. The following
management's discussion and analysis includes forward-looking statements
addressing Farmer Mac's prospects for earnings and growth in loan purchase,
guarantee and securitization volume; trends in net interest income,
delinquencies and provision for losses; changes in capital position; year 2000
readiness efforts; and other business and financial matters. Management's
expectations for Farmer Mac's future necessarily involve a number of
assumptions, estimates and the evaluation of risks and uncertainties. Various
factors could cause Farmer Mac's actual results or events to differ materially
from the expectations as expressed or implied by the forward-looking statements,
including: uncertainties regarding the rate and direction of development of the
secondary market for agricultural mortgage loans; the possible establishment of
additional statutory or regulatory restrictions applicable to Farmer Mac, such
as the imposition of regulatory risk-based capital requirements in excess of
statutory minimum and critical capital levels or restrictions on Farmer Mac's
investment authority; 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; the non-compliance of Farmer Mac's internal systems or the systems
of critical vendors with respect to the year 2000 date change; 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; the
availability of debt funding in sufficient quantities and at favorable rates 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 into the Farmer Mac secondary market; the
willingness of investors to invest in agricultural mortgage-backed securities;
competition in the origination or purchase of agricultural mortgage loans and
the sale of agricultural mortgage-backed and debt securities; or changes in
Farmer Mac's status as a government-sponsored enterprise.
The foregoing factors are not exhaustive. Other sections of this report
may include additional factors that could adversely impact Farmer Mac's business
and its financial performance. Furthermore, new risk factors emerge from time to
time and it is not possible for management to predict all such risk factors, nor
assess the impact of such factors on Farmer Mac's business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from the expectations expressed or implied by the forward-looking
statements. Given these potential risks and uncertainties, no undue reliance
should be placed on any forward-looking statements expressed herein.
Furthermore, Farmer Mac undertakes no obligation to publicly release the results
of revisions to any forward-looking statements that may be made to reflect any
future events or circumstances.
Results of Operations
Overview. Continuing the steady increase in quarterly profits achieved
during the last two years, net income increased 50 percent on a fully taxable
equivalent basis (see "Income Tax Expense/Benefit") from $1.1 million for first
quarter 1998 to $1.6 million for first quarter 1999. Earnings per share for
first quarter 1999 were $0.14 for Classes A and B common stock, and $0.42 for
Class C common stock on a fully diluted basis, compared to first quarter 1998
earnings per share of $0.09 for Classes A and B and $0.28 for Class C on a fully
taxable equivalent basis. Earnings per share are adjusted to reflect the 3-to-1
dividend and liquidation preferences accorded to Class C common stock.
Farmer Mac's first quarter 1999 results reflect the solid growth in loan
purchase and guarantee volume during the quarter, as well as the annuity nature
of ongoing guarantee fees on prior quarters' business. Loan purchase and
guarantee volume for the quarter totaled over $600 million, exceeding total
volume for all of 1998. At the end of first quarter 1999, outstanding guarantees
totaled $1.8 billion, more than double the total at March 31, 1998. Although
anticipated low agricultural commodity prices and reduced export demand during
1999 will continue to place economic stress upon farm operations, resulting in
increased loan delinquencies, Farmer Mac believes that its underwriting,
appraisal and diversification standards minimize its credit exposure and that
its reserves are adequate to cover fully any losses that may arise.
Subsequent to March 31, 1999, Farmer Mac announced that it had filed an
application to list its Class A and Class C common stock on the New York Stock
Exchange (the "NYSE") and that its Board of Directors had approved a 3-for-1
split of the Class C common stock, subject to Class C stockholder approval of a
related by-law amendment. Farmer Mac believes the move to the NYSE, the largest
and most technologically advanced equity securities market in the world, will
benefit current and future stockholders through increased visibility and
liquidity, with reduced price volatility. In addition, the Class C common stock
split will simplify the reporting of earnings per share by eliminating the
current dividend and liquidation preferences, and thereby improve investor
understanding of Farmer Mac's earnings. It should also contribute to increased
trading volume and liquidity for the stock and enhance stockholder value. The
stock split would be effected in the form of a 200 percent stock dividend to
Class C stockholders, which is conditioned on the affirmative vote of two-thirds
of the Class C stockholders to eliminate the 3-to-1 dividend and liquidation
preferences applicable to Class C stock. Farmer Mac anticipates the NYSE listing
and the stock split to occur within 90 days.
Set forth below is a more detailed discussion of Farmer Mac's results of
operations.
Net Interest Income. Net interest income totaled $3.6 million for first
quarter 1999, compared to $2.4 million for first quarter 1998. The increase in
net interest income was attributable to a 52 percent increase in the average
balance of program assets (Farmer Mac guaranteed securities and loans), driven
by Farmer Mac's "retained portfolio strategy," and a 20 percent increase in the
average balance of non-program assets (cash and cash equivalents and
investments). Farmer Mac shifted from selling AMBS to a retained portfolio
strategy in third quarter 1998 as a result of market volatility that increased
AMBS spreads more than Farmer Mac debt spreads. This prompted retention in
Farmer Mac's portfolio of AMBS backed by mortgages competitively priced between
the two execution alternatives. Since shifting to the retained portfolio
strategy, Farmer Mac has issued and retained $344.0 million of AMBS, $268.4
million of which were issued in first quarter 1999. Management continually
evaluates whether to retain or sell AMBS based on its assessment of the relative
economic attractiveness of either execution as determined by market conditions.
The following table provides information regarding the average balances
and rates of interest earning assets and funding for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------------------------------------------
1999 1998
---------------------------- -----------------------------
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
------- ------- ------- ------- ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest Earning Assets:
Cash and cash equivalents $ 583,202 $ 7,242 4.97% $300,695 $ 4,145 5.54%
Investments 607,438 8,174 5.38% 695,654 10,489 6.03%
Farmer Mac guaranteed securities 549,915 9,302 6.82% 446,382 7,864 7.10%
Loans 213,071 3,317 6.23% 56,190 977 6.96%
--------- -------- ------- --------- -------- -------
Total interest earning assets 1,953,626 28,035 5.74% 1,498,921 23,475 6.28%
Funding:
Discount-notes 1,477,704 17,716 4.80% 996,308 13,663 5.49%
Medium-term notes 421,012 6,739 6.40% 435,925 7,377 6.77%
--------- -------- ------- --------- -------- -------
Total interest bearing liabilities 1,898,716 24,455 5.15% 1,432,233 21,040 5.88%
Net non-interest bearing funding 54,910 - 0.00% 66,688 - 0.00%
--------- -------- ------- --------- -------- -------
Total funding $1,953,626 24,455 5.01% $1,498,921 21,040 5.63%
--------- -------- ------- --------- -------- -------
Net interest income/yield $ 3,580 0.73% $ 2,435 0.65%
-------- ------- -------- -------
</TABLE>
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>
Three Months Ended March 31, 1999
Compared to Three Months Ended
March 31, 1998
----------------------------
Increase/(Decrease) Due to
----------------------------
Rate Volume Total
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Income from interest earning assets
Cash and casn equivalents $ (382) $ 3,479 $ 3,097
Investments (1,062) (1,253) (2,315)
Farmenr Mac guaranteed securities (298) 1,736 1,438
Loans (91) 2,431 2,340
-------- -------- --------
Total (1,833) 6,393 4,560
Expense from interest bearing liabilities (2,080) 5,495 3,415
-------- -------- --------
Change in net interest income $ 247 $ 898 $ 1,145
-------- -------- --------
</TABLE>
Other Income. Other income, which is comprised of guarantee fee income,
gain on sale of AMBS and miscellaneous income, totaled $1.5 million for first
quarter 1999, compared to $1.2 million in 1998. Guarantee fee income increased
from $756 thousand for first quarter 1998 to $1.5 million for first quarter
1999. The increase in guarantee fee income reflects continued growth in
outstanding guarantees, which increased by approximately $1.0 billion, or 109
percent, since first quarter 1998. There was no gain on sale of AMBS in first
quarter 1999, as a consequence of Farmer Mac's retained portfolio strategy (see
"Net Interest Income"). During the same period a year ago, Farmer Mac recognized
a $428 thousand gain on the sale of $41.4 million of AMBS. Miscellaneous income
totaled $66 thousand and $48 thousand for first quarter 1999 and 1998,
respectively.
Expenses. Operating expenses increased 6 percent, from $1.8 million for
first quarter 1998 to $1.9 million for first quarter 1999, compared to a 39
percent increase in total revenues during the same period. Operating expenses
increased at a slower rate than the increase in revenues or business volume due
to Farmer Mac's ability to leverage existing resources to achieve greater
efficiencies.
Farmer Mac's provision for losses was $798 thousand for first quarter
1999, compared to $260 thousand for first quarter 1998. The increase in the
provision for losses corresponds to growth in outstanding post-1996 Act loans
held or guaranteed by Farmer Mac for which Farmer Mac assumes 100 percent of the
credit risk (see "Risk Management - Credit Risk").
Income Tax Expense/Benefit. The provision for income taxes totaled $814
thousand for first quarter 1999, compared to a tax benefit of $152 thousand for
first quarter 1998, due to the recognition of previously deferred tax benefits.
As of June 30, 1998, all previously deferred tax benefits had been fully
recognized. Had Farmer Mac's effective tax rate equaled its statutory tax rate
in first quarter 1998, it would have reported income tax expense of $542
thousand, which would have resulted in reported net income for first quarter
1998 of $1.1 million.
Business Volume. Farmer Mac purchased or guaranteed $602.5 million of
Qualified Loans during first quarter 1999, compared to $55.9 million for first
quarter 1998. First quarter 1999 volume included a long-term standby purchase
commitment totaling $407.7 million and $73.6 million of loans acquired in
exchange for guaranteed securities through a "swap transaction." The long-term
standby purchase commitment, which is a variation of a swap transaction, permits
a lender to segregate a pool of loans in its portfolio and transfer the credit
risk on those loans to Farmer Mac, in return for the payment to Farmer Mac of
fees on the outstanding balance of the segregated loans approximating what would
have been Farmer Mac's guarantee fee had the loans been exchanged with Farmer
Mac in a swap transaction. The remainder of first quarter 1999 volume was
acquired through Farmer Mac's cash window, which totaled $121.2 million, a 117
percent increase compared to first quarter 1998.
During first quarter 1999, Farmer Mac issued $342.0 million of AMBS, of
which $268.4 million were retained by Farmer Mac and $73.6 million were issued
in exchange for Qualified Loans through a swap transaction, as discussed above.
During first quarter 1998, Farmer Mac issued $41.4 million of AMBS, all of which
were sold to capital market investors.
Indicators of future guarantee volume, particularly cash window activity,
include outstanding commitments to purchase Farmer Mac I loans and the total
balance of loans submitted for approval or approved but not yet purchased.
Farmer Mac enters into mandatory delivery commitments to purchase loans. If a
Seller obtains a mandatory commitment and is unable to deliver the loans
required thereunder within the specified time period, Farmer Mac requires the
Seller to pay a fee to extend or cancel the commitment. At March 31, 1999,
outstanding commitments to purchase Farmer Mac I loans totaled $22.5 million,
compared to $51.4 million at March 31, 1998. Outstanding commitments at March
31, 1998 included a commitment to enter into a $32.8 million swap transaction.
Loans submitted for approval or approved but not yet purchased totaled $205.6
million at March 31, 1999, compared to $154.1 million at March 31, 1998. Not all
loans in the pipeline are purchased, as some are denied for credit reasons or
withdrawn by the Seller.
While significant progress has been made in developing the secondary
market for agricultural mortgages, Farmer Mac continues to face the challenges
of establishing a new market where none previously existed. Acceptance of Farmer
Mac's programs is increasing among lenders, reflecting the competitive rates,
terms and products offered and the advantages we believe Farmer Mac's programs
provide. For Farmer Mac to succeed in realizing its business development and
profitability goals over the long term, however, agricultural mortgage lenders,
whether traditional or non-traditional, must value the benefits of selling loans
to Farmer Mac or otherwise obtaining the benefits of the Farmer Mac guarantee
and must be persuaded to modify their business practices accordingly.
Balance Sheet Review
Assets. At March 31, 1999, total assets were $2.0 billion compared to $1.9
billion at December 31, 1998. The increase in total assets was primarily due to
growth in program assets, which increased $111.7 million during first quarter
1999. During first quarter 1999, Farmer Mac issued and retained $268.4 million
of AMBS under its retained portfolio strategy (see "Net Interest Income"), of
which $106.3 million represented loans purchased during the quarter. As a result
of the retained portfolio strategy, combined with the purchase of $29.6 million
of Farmer Mac II loans, Farmer Mac Guaranteed Securities increased from $552.2
million at December 31, 1998 to $814.8 million at March 31, 1999, while loans
declined from $168.1 million to $17.2 million during the same period. For
further information regarding the composition of on-balance sheet guaranteed
securities, see "Supplemental Information."
Liabilities. Total liabilities increased by $92.0 million from December
31, 1998 to March 31, 1999. Most of Farmer Mac's liabilities are due within one
year since most of Farmer Mac's assets are short- or long-term floating rate
investments. Notes payable due after one year totaled $452.2 million at March
31, 1999, compared to $365.5 million at December 31, 1998.
Capital. Farmer Mac's capital totaled $82.8 million at March 31, 1999,
compared with $80.9 million at December 31, 1998. The increase was primarily due
to net income earned during the first three months of 1999 and, to a lesser
extent, an increase in the unrealized gain on available-for-sale securities.
Those capital balances were in excess of Farmer Mac's regulatory minimum capital
requirements. The surplus over the fully phased-in regulatory minimum capital
requirement was reduced from $22.9 million at December 31, 1998 to $18.5 million
at March 31, 1999, as a result of growth in on-balance sheet program assets and
off-balance sheet guarantees.
In addition to the minimum capital requirement, the Farm Credit System
Reform Act of 1996 (the "1996 Act") directs the Farm Credit Administration (the
"FCA") to establish a risk-based capital test for Farmer Mac, using stress-test
parameters set forth in the 1996 Act. The FCA has commenced the process of
developing a risk-based capital test for Farmer Mac, but has not advised Farmer
Mac as to the possible level of risk-based capital that may be required or
whether it intends to propose risk-based capital requirements significantly
higher than the statutory minimum capital level. The FCA has indicated that it
anticipates publishing a notice of proposed rulemaking setting forth a proposed
risk-based capital test late in 1999. At this time, Farmer Mac is unable to
predict when the rulemaking process would likely conclude and when a final
regulation imposing a risk-based capital requirement on Farmer Mac would become
effective.
Off-Balance Sheet Farmer Mac Guarantees. At March 31, 1999, outstanding
Farmer Mac guarantees totaled $1.0 billion, compared to $597.6 million at
December 31, 1998. The increase in off-balance sheet guarantees is attributable
to the $407.7 million long-term standby purchase commitment and the $73.6
million swap transaction closed during the quarter. For further information
regarding credit exposure related to off-balance sheet guarantees, see "Risk
Management - Credit Risk."
Risk Management
Interest Rate Risk. Farmer Mac's asset and liability management objective
is to limit the effect of changes in interest rates on its equity and earnings
to within acceptable risk tolerance levels. In doing so, Farmer Mac enters into
off-balance sheet derivative financial instruments. Farmer Mac uses these
instruments as an end-user and not for trading or speculative purposes.
Off-balance sheet derivative financial instruments used by Farmer Mac are
interest-rate contracts, including interest-rate swaps and caps, and Treasury
futures contracts. Interest-rate contracts are used to synthetically create
interest-earning assets. When combined with the underlying floating rate asset,
the interest-rate contracts synthetically create investments that should produce
higher effective asset yields than those available through direct investment
purchases. At March 31, 1999, the notional amount of interest-rate contracts
outstanding was $276.2 million.
The Corporation uses interest-rate swaps and Treasury futures contracts to
reduce its exposure to interest-rate risk related to outstanding commitments to
purchase Qualified Loans and loans held for securitization. At March 31, 1999,
outstanding purchase commitments and loans held for securitization totaled $37.4
million, of which $1.2 million consisted of adjustable rate loans that Farmer
Mac does not hedge, $9.2 million were hedged with interest-rate swaps, and $27.0
million were hedged with futures contracts. The notional balance of futures
contracts used to hedge such loans totaled $18.5 million. While futures
contracts limit Farmer Mac's exposure to changes in Treasury rates, they do not
reduce exposure to changes in AMBS or debt spreads relative to Treasury rates.
Farmer Mac limits its exposure to changes in AMBS and debt spreads by issuing
debt to match fund the loans on a timely basis.
Farmer Mac monitors its exposure to interest rate risk by measuring the
sensitivity of its fair value of equity (FVE) and duration of equity to an
immediate and permanent parallel shift in the Treasury yield curve. The
following schedule summarizes the results of Farmer Mac's FVE sensitivity
analysis at March 31, 1999.
<TABLE>
<CAPTION>
Percentage
Interest Rate Change in FVE
Scenario from Base Case
------------------------------
<S> <C> <C>
+ 300 bp -10.2%
+ 200 bp -6.5%
+ 100 bp -2.8%
Base case 0.0%
- 100 bp 0.6%
- 200 bp -0.5%
- 300 bp -2.3%
</TABLE>
Farmer Mac's duration of equity at March 31, 1999 was approximately 1.7
years. At March 31, 1999, Farmer Mac was in compliance with its established
policy limits for FVE and duration gap interest-rate risk.
Credit Risk. Farmer Mac is exposed to credit risk on loans it holds, as
well as on loans backing securities issued (or sold) to third parties because of
Farmer Mac's guarantee of the timely payment of principal, including any balloon
payments, and interest on the securities. Loans held or guaranteed by Farmer Mac
can be divided into three groups: (a) pre-1996 Act Farmer Mac I loans; (b)
post-1996 Act Farmer Mac I loans; and (c) Farmer Mac II loans. The outstanding
principal balance of loans held or guaranteed by Farmer Mac as of March 31, 1999
and December 31, 1998 is summarized in the table below.
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
-----------------------------------
(in thousands)
<S> <C> <C>
Farmer Mac I Loans
Post-1996 Act $ 1,353,552 $ 788,905
Pre-1996 Act 157,710 174,783
Farmer Mac II loans 345,927 336,914
-----------------------------------
Total $ 1,857,189 $ 1,300,602
-----------------------------------
</TABLE>
For pre-1996 Act loans, Farmer Mac's credit risk exposure is mitigated by
subordinated interests. Before Farmer Mac incurs a credit loss, full recourse
must first be taken against the subordinated interest. At March 31, 1999, the
subordinated interest of each outstanding security backed by pre-1996 Act Farmer
Mac I loans was equal to or greater than 10% of the total outstanding balance.
The 1996 Act eliminated the subordinated interest requirement. As a result,
Farmer Mac assumes 100% of the credit risk on post-1996 Act Farmer Mac I loans.
Farmer Mac's credit exposure on Farmer Mac II loans is covered by the "full
faith and credit" of the United States by virtue of the USDA guarantee of the
principal and interest on all Guaranteed Portions. Farmer Mac believes it has
little or no credit risk exposure to pre-1996 Act Farmer Mac I loans because of
the subordinated interests, or to Farmer Mac II loans because of the USDA
guarantee.
Farmer Mac continually assesses its credit risk exposure related to
post-1996 Act Farmer Mac I loans by monitoring agricultural economic conditions
and evaluating the credit quality of those loans. Despite adverse trends in
agricultural economic conditions in 1998 and continuing into 1999, in
particular: low commodity prices, reduced export demand and weather-related
problems in certain areas of the country, Farmer Mac believes that the credit
quality of the post-1996 Act Farmer Mac I loans remains strong, based on Farmer
Mac's credit underwriting, appraisal and diversification standards.
The effectiveness of those standards is reflected in the level of
defaulted loans and related credit losses. At March 31, 1999, post-1996 Act
Farmer Mac I loans that were 90 days or more past due (referred to as
non-performing or "impaired" loans) totaled $21.5 million, or 1.59% of the total
principal amount of all post-1996 Act loans. Post-1996 Act Farmer Mac I loans
that were 90 days or more past due totaled $5.5 million (0.70% delinquency rate)
at December 31, 1998, and $5.0 million (1.15% delinquency rate) at March 31,
1998. The increase in the post-1996 Act loan delinquency rate compared to
December 31, 1998 reflects the semi-annual and annual payment characteristics of
most post-1996 Act loans resulting in a greater proportion of those loans having
payments due on January 1 than any other day of the year.
The following table segregates the delinquency rate of the post-1996 Act
loans at March 31, 1999 by year of origination, geographic region and commodity.
<TABLE>
<CAPTION>
Distribution
of Post-1996 Delinquency
Act Loans Rate
-----------------------------------
<S> <C> <C> <C>
By year of origination:
<1995 33% 0.00%
1995 2% 1.54%
1996 12% 6.30%
1997 14% 2.78%
1998 30% 1.38%
1999 9% 0.00%
-----------
Total 100% 1.59%
-----------
<S> <C> <C>
By geographic region: (1)
Mid-north 11% 0.76%
Mid-south 4% 2.63%
Northeast 2% 0.00%
Northwest 53% 1.74%
Southeast 1% 0.00%
Southwest 29% 1.63%
-----------
Total 100% 1.59%
-----------
<S> <C> <C>
By commodity:
Crops 53% 1.42%
Livestock 21% 1.80%
Permanent plantings 22% 2.06%
Other 4% 0.00%
-----------
Total 100% 1.59%
-----------
(1) Geographic regions - Mid-North (IA, IL,IN,MI,MN,MO,WI); Mid-South(KS,OK,TX);
Northeast(CT,DE,KY,MA,MD,ME,NC,NH,NJ,NY,OH,PA,RI,TN,VA,VT,WV); Northwest(ID,
MT,ND,NE,OR,SD,WA,WY); Southwest(AL,AR,FL,GA,LA,MS,SC);and Southwest (AZ,CA,
CO,NM,NV,UT).
</TABLE>
Segregating the portfolio and delinquency rate by year of origination shows
the growing number of post-1996 Act loans approaching their anticipated peak
default years. The data in the tables also generally reflect the impact of the
adverse weather conditions and weak export markets during 1998 and continuing in
1999 on most commodities, particularly permanent plantings. These conditions
adversely affecting permanent plantings resulted in higher delinquency rates in
the Southwest and Northwest regions where they are concentrated. (Although the
Mid-south region experienced a higher delinquency rate, that rate is
attributable to the small amount of loans outstanding in that region and not to
any particular adverse condition.) The higher delinquency rate associated with
loans originated in 1996, as well as the higher delinquency rates experienced in
the Northwest and Southwest regions, also are attributable to loans purchased
from two institutions from whom Farmer Mac does not currently purchase loans.
Farmer Mac anticipates moderate increases in the delinquency rate during 1999
due to the foregoing factors, with fluctuations in the rate from quarter to
quarter due to the semi-annual and annual payment characteristic of most
post-1996 Act loans.
Farmer Mac maintains a reserve to cover credit losses incurred on
post-1996 Act loans. The following schedule summarizes the change in reserve for
loan losses for first quarter1999 and 1998:
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------
1999 1998
--------- --------
(in thousands)
<S> <C> <C>
Beginning balance $ 3,259 $ 1,645
Provisions for losses 798 260
Charge-offs (41) -
--------- --------
Ending balance $ 4,016 $ 1,905
--------- --------
</TABLE>
During first quarter 1999, Farmer Mac acquired a property through
foreclosure resulting in a loss of $41 thousand being recorded to the reserve.
The loss was based on the difference between the cost basis in the loan ($618
thousand), including accrued interest, and the estimated fair value of the
property, less selling expenses. Farmer Mac expects to recover fully its cost
basis in the property, which currently is under contract for resale.
Although additional credit losses are expected to be incurred on the
existing post-1996 Act Farmer Mac I delinquencies, Farmer Mac expects those
losses to be within current reserve levels based on the collateral values
supporting the loans. The following table summarizes the post-1996 Act
delinquencies by original loan-to-value ratio.
<TABLE>
<CAPTION>
Distribution of
Post-1996 Act
Delinquencies
--------------------
<S> <C>
By loan-to-value ratio:
0.00% to 40.00% 3%
40.01% to 50.00% 3%
50.01% to 60.00% 29%
60.01% to 70.00% 65%
70.01% to 80.00% 0%
-----------
Total 100%
-----------
</TABLE>
Other Matters
Year 2000. The year 2000 problem relates to the inability of some computer
programs to process date-sensitive information due to the use of two digits
(rather than four) to define the applicable year. As a result, these computer
programs may recognize a date using "00" as the year 1900 rather than the year
2000, which could result in miscalculations or system failures. The year 2000
date change potentially could affect Farmer Mac's internal information
technology (IT) and non-IT systems, as well as systems utilized by its external
vendors. Farmer Mac's internal IT systems, which are "PC software-based," are
used to perform critical business processes including purchases of Qualified
Loans; sale of AMBS; issuance of debt securities; payments to debt security and
AMBS investors; and financial reporting to investors and stockholders. Certain
vendors also perform critical business processes by servicing the loans held or
securitized by Farmer Mac and administering the guaranteed securities issued by
Farmer Mac. Failure of IT and/or vendor systems to handle the year 2000 date
change could result in Farmer Mac being unable to perform critical business
processes and expose Farmer Mac to significant business risk. Less critical to
Farmer Mac's operations are non-IT systems, which include telephones, facsimile
machines and systems used to maintain building operations.
To manage the risks related to the year 2000 date change, Farmer Mac has
adopted a Year 2000 Compliance Plan. This Plan consists of four phases: system
inventory, system remediation, critical vendor testing and contingency planning.
Farmer Mac has completed its inventory and assessment of internal IT and non-IT
systems and remediation and testing of internal systems. The Plan places
significant emphasis on vendors that perform critical business processes because
of the higher risk associated with ensuring compliance by external vendors.
Farmer Mac has been engaged in discussions with these critical vendors regarding
their year 2000 readiness efforts and has not identified any significant year
2000 compliance issues. Farmer Mac will continue to monitor their year 2000
readiness efforts and expects to complete its due diligence review of critical
vendors by June 30, 1999.
To prepare for the possibility that Farmer Mac's critical business
processes could be temporarily disrupted by a year 2000 related failure, whether
related to internal systems or a critical vendor, Farmer Mac is developing
contingency plans. These plans are expected to be completed by June 30, 1999.
Currently, management believes that the year 2000 date change does not
expose Farmer Mac to significant business risk or material loss of revenue, if
any, based on its assessment of Farmer Mac's internal systems and critical
vendors. In addition, Farmer Mac expects total direct costs to complete its year
2000 readiness efforts not to exceed $150 thousand. This amount includes the use
of outside consultants to help Farmer Mac evaluate the readiness of internal IT
systems and critical vendors. Costs incurred to date have totaled approximately
$75 thousand.
<PAGE>
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 or Guarantee Farmer Mac I Loans (1) (2)
-------------------------------------------------------------------------
Long-Term 5 and 7 Year
Fixed Rate Ballons ARMs Total Outstanding
------------ ------------ ------ ------- -------------
(in thousands)
<S> <C> <C> <C> <C> <C>
For the quarter ended:
March 31, 1999 $ 137,200 $ 14,774 $ 45,249 $ 197,223 $ 22,501
December 31, 1998 170,233 13,020 380,394 563,647 431,544
September 30, 1998 50,446 7,333 26,830 84,609 23,611
June 30, 1998 49,154 22,095 36,731 107,980 31,718
March 31, 1998 32,394 5,964 58,328 96,686 51,391
For the year ended:
December 31, 1998 302,227 48,412 502,283 852,922 431,544
December 31, 1997 102,773 100,972 33,103 236,848 10,800
</TABLE>
<TABLE>
<CAPTION>
Purchases and Guarantees of Farmer Mac I Loans (1) (2)
-----------------------------------------------------------
Long-Term 5 and 7 Year
Fixed Rate Balloons ARMs Total
------------ ------------ ------ ---------
(in thousands)
<S> <C> <C> <C> <C>
For the quarter ended:
March 31, 1999 $ 257,632 $ 15,817 $ 329,099 $ 602,548
December 31, 1998 50,280 10,634 93,020 153,934
September 30, 1998 46,713 12,782 27,454 86,949
June 30, 1998 41,772 18,571 67,116 127,459
March 31, 1998 25,671 6,099 24,147 55,917
For the year ended:
December 31, 1998 164,436 48,086 211,737 424,259
December 31, 1997 103,335 100,874 26,304 230,513
</TABLE>
<TABLE>
<CAPTION>
Farmer Mac Mac I AMBS Issuances (1) (3)
-----------------------------------------------------------
Long-Term 5 and 7 Year
Fixed Rate Balloons ARMs Total
----------- ------------- ------ ---------
(in thousands)
<S> <C> <C> <C> <C>
For the quarter ended:
March 31, 1999 $ 134,405 $ 16,271 $ 191,307 $ 341,983
December 31, 1998 44,448 8,448 51,566 104,462
September 30, 1998 53,635 13,337 - 66,972
June 30, 1998 35,503 20,555 32,756 88,814
March 31, 1998 31,797 9,601 - 41,398
For the year ended:
December 31, 1998 165,383 51,941 84,322 301,646
December 31, 1997 132,383 65,121 - 197,504
</TABLE>
<TABLE>
<CAPTION>
Farmer Mac I Delinquencies (4) (5)
-------------------------------------------------
Post-1996
Act Pre-1996 Act Total
----------------------------------------------
<S> <C> <C> <C>
As of:
March 31, 1999 1.59% 3.71% 1.81%
December 31, 1998 0.70% 3.77% 1.31%
September 30, 1998 0.85% 0.47% 0.76%
June 30, 1998 0.70% 0.74% 0.71%
March 31, 1998 1.15% 0.49% 0.92%
</TABLE>
<TABLE>
<CAPTION>
Outstanding Guarantees (5)
-------------------------------------------------------------------------------
Farmer Mac I
---------------------------------
Post-1996 Act
--------------------- Pre-1996 Farmer Held in
AMBS LTSPC Act Mac II Total Portfolio (6)
--------- --------- --------- --------- ---------- --------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
As of:
March 31, 1999 $ 946, 011 $ 390,520 $ 157,710 $ 345,927 $ 1,840,168 $ 800,669
December 31, 1998 621,169 - 174,783 336,914 1,132,866 535,290
September 30, 1998 524,527 - 189,169 323,608 1,037,304 479,828
June 30, 1998 462,987 - 203,230 313,668 979,885 454,904
March 31, 1998 376,809 - 214,427 290,947 882,183 439,477
(1)Includes loans guaranteed by Farmer Mac through swap transactions. Such
transactions totaled $73.6 million in first quarter 1999, $32.8 million in
second quarter 1998 (committed to in first quarter 1998) and $51.6 million in
fourth quarter 1998.
(2)Includes a guarantee transaction committed to in fourth quarter 1998 and
executed in first quarter 1999 covering a pool of loans totaling $407.7
million. The transaction, referred to as a long-term standby purchase
commitment (LTSPC), obligates Farmer Mac to purchase loans within the pool at
par when they become four or more months delinquent. In exchange, Farmer Mac
receives an annual commitment fee on the outstanding balance of the pool over
the life of the loans.
(3)Includes AMBS issued and retained by Farmer Mac. Such transactions totaled
$268.4 million, $22.7 million and $52.9 million in first quarter 1999 and
third and fourth quarter 1998.
(4) Includes loans 90 days or more past due, in foreclosure or in bankruptcy.
(5)Pre-1996 Act loans back securities that are supported by unguaranteed
subordinated interests representing approximately 10 percent of the balance
of the loans. Farmer Mac assumes 100 percent of the credit risk on post-1996
Act loans. Farmer Mac II loans are guaranteed by the U.S. Department of
Agriculture. Excludes AgVantage Securities.
(6) Included in total outstanding guarantees.
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The registrant is not a party to any material pending legal proceedings.
Item 2. Changes in Securities.
(a) Not applicable.
(b) Not Applicable.
(c) Farmer Mac is a federally chartered instrumentality of the United
States and its Common Stock is exempt from registration pursuant to
Section 3(a)(2) of the Securities Act of 1933.
Under the direct stock purchase program pursuant to which Farmer Mac
is offering approximately 100,000 shares of Class A Voting Common
Stock to interested eligible investors, Farmer Mac sold an aggregate
of 500 shares of Class A Common Stock to 4 financial institutions in
the quarter ended March 31, 1999. The aggregate offering price for
the sales was approximately $18,150.
Pursuant to Farmer Mac's policy which permits Directors of Farmer Mac
to elect to receive shares of Class C Non-Voting Common Stock in lieu
of their annual cash retainers, on January 12, 1999, Farmer Mac
issued an aggregate of 213 shares of its Class C Non-Voting Common
Stock at an issue price of $52.625 per share to the 9 Directors who
elected to receive such stock in lieu of their cash retainers.
(d) Not applicable.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Stockholders.
Not applicable.
Item 5. Other Information.
None.
<PAGE>
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 November 10, 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).
+* 10.1.2 - 1996 Stock Option Plan (Form 10-Q filed November 10,
1996).
+* 10.1.3 -1997 Stock Option Plan (Form 10-Q filed May 15, 1997).
+* 10.1.4 -Amended and Restated 1997 Incentive Plan (Form10-Q filed
November 10, 1996).
+* 10.1.5 -Amended and Restated 1997 Incentive Plan (Form 10-Q filed
November 14, 1997).
+* 10.1.6 -Amended and Restated 1997 Incentive Plan (Form 10-Q
filed August 14, 1998).
+* 10.2 - Employment Agreement dated May 5, 1989 between Henry D.
Edelman and the Registrant (Previously filed as Exhibit 10.4
to Form 10-K filed February 14, 1990).
+* 10.2.1 - Amendment No. 1 dated as of January 10, 1991 to
Employment Contract between Henry D. Edelman and the Registrant
(Previously filed as Exhibit 10.4 to Form 10-K filed April 1,
1991).
+* 10.2.2 - Amendment to Employment Contract dated as of September
1, 1993 between Henry D. Edelman and the Registrant (Previously
filed as Exhibit 10.5 to Form 10-Q filed November 15, 1993).
+* 10.2.3 - Amendment No. 3 dated as of September 1, 1994 to
Employment Contract between Henry D. Edelman and the Registrant
(Previously filed as Exhibit 10.5 to Form 10-Q filed November
15, 1994).
* Incorporated by reference to the indicated prior filing.
+ Management contract or compensatory plan.
+* 10.2.4 - Amendment No. 4 dated as of February 8, 1996 to
Employment Contract between Henry D. Edelman and the
Registrant (Form 10-K filed March 29, 1996).
+* 10.2.5 - Amendment No. 5 dated as of September 13, 1996 to
Employment Contract between Henry D. Edelman and the
Registrant (Form 10-Q filed November 10, 1996).
+* 10.2.6 - Amendment No. 6 dated as of August 7, 1997 to Employment
Contract between Henry D. Edelman and the Registrant (Form
10-Q filed November 14, 1997).
+* 10.2.7 - Amendment No. 7 dated as of June 4, 1998 to Employment
Contract between Henry D. Edelman and the Registrant (Form
10-Q filed August 14, 1998).
+* 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 September
1, 1993 between Nancy E. Corsiglia and the Registrant
(Previously filed as Exhibit 10.9 to Form 10-Q filed November
15, 1993).
+* 10.3.4 - Amendment No. 4 dated September 1, 1993 to Employment
Contract between Nancy E. Corsiglia and the Registrant
(Previously filed as Exhibit 10.11 to Form 10-K filed March 30,
1994).
+*____10.3.5 - Amendment No. 5 dated as of September 1, 1994 to
Employment Contract between Nancy E. Corsiglia and the
Registrant (Previously filed as Exhibit 10.12 to Form 10-Q
filed August 15, 1994).
+*____10.3.6 - Amendment No. 6 dated as of September 1, 1995 to
Employment Contract between Nancy E. Corsiglia and the
Registrant (Form 10-Q filed November 10, 1995).
* Incorporated by reference to the indicated prior filing.
+ Management contract or compensatory plan.
+*____10.3.7 - Amendment No. 7 dated as of February 8, 1996 to
Employment Contract between Nancy E. Corsiglia and the
Registrant (Form 10-K filed March 29, 1996).
+*____10.3.8 - Amendment No. 8 dated as of September 13, 1996 to
Employment Contract between Nancy E. Corsiglia and the
Registrant (Form 10-Q filed November 10, 1996).
+*____10.3.9 - Amendment No. 9 dated as of August 7, 1997 to
Employment Contract between Nancy E. Corsiglia and the
Registrant (Form 10-Q filed November 14, 1997).
+*____10.3.10- Amendment No. 10 dated as of June 4, 1998 to Employment
Contract between Nancy E. Corsiglia and the Registrant (Form
10-Q filed August 14, 1998).
+* 10.4 - Employment Agreement dated September 13, 1989 between Thomas
R. Clark and the Registrant (Previously filed as Exhibit
10.6 to Form 10-K filed April 1, 1990).
+* 10.4.1 - Amendment No. 1 dated February 14, 1991 to Employment
Agreement between Thomas R. Clark and the Registrant
(Previously filed as Exhibit 10.9 to Form 10-K filed April 1,
1991).
+* 10.4.2 - Amendment to Employment Contract dated as of September
1, 1993 between Thomas R. Clark and the Registrant (Previously
filed as Exhibit 10.12 to Form 10-Q filed November 15, 1993).
+* 10.4.3 - Amendment No. 3 dated September 1, 1993 to Employment
Contract between Thomas R. Clark and the Registrant (Previously
filed as Exhibit 10.16 to Form 10-K filed March 30, 1994).
+* 10.4.4 - Amendment No. 4 dated as of September 1, 1994 to
Employment Contract between Thomas R. Clark and the Registrant
(Previously filed as Exhibit 10.17 to Form 10-Q filed August
15, 1994).
+*____10.4.5 -Amendment No. 5 dated as of September 1, 1995 to Employment
Contract between Thomas R. Clark and the Registrant (Form
10-Q filed November 10, 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).
* Incorporated by reference to the indicated prior filing.
+ Management contract or compensatory plan.
+* 10.4.7 -Amendment No. 7 dated as of September 13, 1996 to
Employment Contract between Thomas R. Clark and the
Registrant (Form 10-Q filed November 10, 1996).
+* 10.4.8 -Amendment No. 8 dated as of August 7, 1997 to Employment
Contract between Thomas R. Clark and the Registrant (Form
10-Q filed November 14, 1997).
+* 10.4.9 -Amendment No. 9 dated as of June 4, 1998 to Employment
Contract between Thomas R. Clark and the Registrant (Form
10-Q filed August 14, 1998).
+* 10.5 - Employment Agreement dated April 29, 1994 between Charles M.
Lewis and the Registrant (Previously filed as Exhibit 10.18
to Form 10-Q filed August 15, 1994).
+* 10.5.1 - Amendment No. 1 dated as of September 1, 1995 to
Employment Contract between Charles M. Lewis and the
Registrant (Form 10-Q filed November 10, 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 September 13, 1996 to
Employment Contract between Charles M. Lewis and the
Registrant (Form 10-K filed March 29, 1996).
+* 10.6 - Employment Agreement dated October 7, 1991 between Michael
T. Bennett and the Registrant (Previously filed as Exhibit
10.16 to Form 10-K filed March 30, 1992).
+* 10.6.1 - Amendment to Employment Contract dated as of September
1, 1993 between Michael T. Bennett and the Registrant
(Previously filed as Exhibit 10.17 to Form 10-Q filed November
15, 1993).
+* 10.6.2 - Amendment No. 2 dated September 1, 1993 to Employment
Contract between Michael T. Bennett and the Registrant
(Previously filed as Exhibit 10.21 to Form 10-K filed March 30,
1994).
+* 10.6.3 - Amendment No. 3 dated September 1, 1994 to Employment
Contract between Michael T. Bennett and the Registrant
(Previously filed as Exhibit 10.22 to Form 10-K filed August
15, 1994).
* Incorporated by reference to the indicated prior filing.
+ Management contract or compensatory plan.
+* 10.6.4 - Amendment No. 4 dated as of September 1, 1995 to
Employment Contract between Michael T. Bennett and the
Registrant (Form 10-Q filed November 10, 1995).
+* 10.6.5 - Amendment No. 5 dated as of February 8, 1996 to
Employment Contract between Michael T. Bennett and the
Registrant (Form 10-K filed March 29, 1996).
+* 10.6.6 - Amendment No. 6 dated as of September 13, 1996 to
Employment Contract between Michael T. Bennett and the
Registrant (Form 10-Q filed November 10, 1996).
+* 10.6.7 - Amendment No. 7 dated as of August 7, 1997 to Employment
Contract between Michael T. Bennett and the Registrant (Form
10-Q filed November 14, 1997).
+* 10.6.8 - Amendment No. 8 dated as of June 4, 1998 to Employment
Contract between Michael T. Bennett and the Registrant (Form
10-Q filed August 14, 1998).
+* 10.7 - Employment Agreement dated March 15, 1993 between
Christopher A. Dunn and the Registrant (Previously filed as
Exhibit 10.17 to Form 10-Q filed May 17, 1993).
+* 10.7.1 - Amendment to Employment Contract dated as of September
1, 1993 between Christopher A. Dunn and the Registrant
(Previously filed as Exhibit 10.19 to Form 10-Q filed November
15, 1993).
+* 10.7.2 - Amendment No. 2 dated September 1, 1993 to Employment
Contract between Christopher A. Dunn and the Registrant
(Previously filed as Exhibit 10.25 to Form 10-K filed March 30,
1994).
+* 10.7.3 - Amendment No. 3 dated as of September 1, 1994 to
Employment Contract between Christopher A. Dunn and the
Registrant (Previously filed as Exhibit 10.26 to Form 10-Q
filed August 15, 1994).
+* 10.7.4 - Amendment No. 4 dated as of September 1, 1995 to
Employment Contract between Christopher A. Dunn and the
Registrant (Form 10-Q filed November 10, 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).
* Incorporated by reference to the indicated prior filing.
+ Management contract or compensatory plan.
+* 10.7.6 - Amendment No. 6 dated as of September 13, 1996 to
Employment Contract between Christopher A. Dunn and the
Registrant (Form 10-Q filed November 10, 1996).
+* 10.7.7 - Amendment No. 7 dated as of August 7, 1997 to Employment
Contract between Christopher A. Dunn and the Registrant
(Form 10-Q filed November 14, 1997).
+* 10.8 - Employment Contract dated as of September 1, 1997 between
Tom D. Stenson and the Registrant (Form 10-Q filed November
14, 1997).
+* 10.8.1 - Amendment No. 1 dated as of June 4, 1998 to Employment
Contract between Tom D. Stenson and the Registrant (Form
10-Q filed August 14, 1998).
*_____10.9 - Lease Agreement, dated September 30, 1991 between 919
Eighteenth Street, N.W. Associates Limited Partnership and the
Registrant (Previously filed as Exhibit 10.20 to Form 10-K
filed March 30, 1992).
* 21 - Subsidiaries.
21.1 - Farmer Mac Mortgage Securities Corporation, a Delaware
Corporation.
21.2 - Farmer Mac Acceptance Corporation, a Delaware Corporation.
* 99.1 - Map of U.S. Department of Agriculture (Secretary of
Agriculture's) Regions (Previously filed as Exhibit 1.1 to
Form 10-K filed April 1, 1991).
(b) Reports on Form 8-K.
The Registrant did not file any reports on Form 8-K during the
quarter ended March 31, 1999.
* 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
May 13, 1999
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)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Earnings per share represent those for Class C stock. Basic earnings per
share for Classes A and B Common Stock are $0.15 for the three months ended
March 31, 1999. Diluted earnings per share for Classes A and B Common Stock are
$0.14 for the three months ended March 31, 1999. </LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Mar-31-1999
<CASH> 515,075
<SECURITIES> 1,470,241
<RECEIVABLES> 26,689
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 541,453
<PP&E> 311
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,029,223
<CURRENT-LIABILITIES> 1,490,236
<BONDS> 452,153
0
0
<COMMON> 4,618
<OTHER-SE> 78,200
<TOTAL-LIABILITY-AND-EQUITY> 2,029,223
<SALES> 28,035
<TOTAL-REVENUES> 29,566
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,918
<LOSS-PROVISION> 798
<INTEREST-EXPENSE> 24,455
<INCOME-PRETAX> 2,395
<INCOME-TAX> 814
<INCOME-CONTINUING> 1,581
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,581
<EPS-PRIMARY> .44
<EPS-DILUTED> .42
</TABLE>
