UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 23, 2003
Federal Agricultural Mortgage Corporation
----------------------------------------------
(Exact name of registrant as specified in its charter)
Federally chartered
instrumentality of
the United States 0-17440 52-1578738
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
1133 21st Street, N.W., Suite 600, Washington, D.C. 20036
--------------------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (202) 872-7700
No change
--------------------
(Former name or former address, if changed since last report)
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
99 Press release dated April 23, 2003.
Item 9. Regulation FD Disclosure.
On April 23, 2003, the Registrant issued a press release to announce the
Registrant's financial results for first quarter 2003. A copy of the press
release is attached to this report as Exhibit 99 and is incorporated herein by
reference.
The information set forth above is being furnished under "Item 9.
Regulation FD Disclosure" and "Item 12. Results of Operations and Financial
Condition."
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
By: /s/ Jerome G. Oslick
---------------------------------
Name: Jerome G. Oslick
Title: Vice President - General Counsel
Dated: April 23, 2003
EXHIBIT INDEX
Exhibit No. Description Page No.
----------- ----------- --------
99 Press Release Dated April 23, 2003 5
Exhibit 99
FARMER MAC
NEWS
FOR IMMEDIATE RELEASE CONTACT
April 23, 2003 Jerome Oslick
202-872-7700
Farmer Mac Reports Record Quarterly Earnings
Washington, D.C. -- The Federal Agricultural Mortgage Corporation (Farmer
Mac, NYSE: AGM and AGMA) today announced net income for first quarter 2003 of
$8.4 million, or $0.70 per diluted share, compared to $2.8 million and $0.23 per
diluted share for fourth quarter 2002 and $7.2 million and $0.59 per diluted
share for first quarter 2002.
Farmer Mac President and Chief Executive Officer Henry D. Edelman stated,
"Farmer Mac's first quarter performance further evidences its ongoing financial
strength as it fulfills its Congressionally-mandated mission to serve America's
farmers, ranchers and rural homeowners.
"We are pleased with our record GAAP earnings. In addition, Farmer Mac
focuses on its `core earnings' which, as described in this press release, is a
non-GAAP measure developed by Farmer Mac to present net income less the
after-tax effects of FAS 133 and less the after-tax net gains and losses on the
repurchase of debt. Whereas Farmer Mac's GAAP earnings increased significantly,
its core earnings were $5.9 million for first quarter 2003, compared to $5.9
million for fourth quarter 2002 and $5.3 million for first quarter 2002.
"We are encouraged by the continuing improvements in the performance of the
portfolio of loans underlying our guarantees and long-term standby purchase
commitments ("LTSPCs"). As of March 31, 2003, non-performing assets were
somewhat higher in dollars than they were a year ago at $94.8 million versus
$87.1 million, but lower as a percentage of all loans held and loans underlying
post-1996 Act Farmer Mac I Guaranteed Securities and LTSPCs at 1.97 percent
versus 2.32 percent last year. When real estate owned and loans performing in
bankruptcy are excluded from this measure, 90-day delinquencies at March 31,
2003 were lower than they were on March 31, 2002 in both dollars and percentage
terms, at $76.2 million (1.58 percent), compared to $79.2 million (2.11 percent)
on March 31, 2002. These latter trends resulted from enhanced credit management
efforts directed toward problem loan servicing and loss mitigation.
"While we are pleased with our financial performance and progress on loan
servicing, new business volume was down slightly in first quarter 2003. We
believe this is traceable to general conditions in the agricultural mortgage
market, affecting all agricultural mortgage lenders, and to residual effects of
adverse publicity based on misinformation about Farmer Mac disseminated in 2002.
Nonetheless, lender interest in Farmer Mac continues to rebound, a steady stream
of new volume was added in the form of Farmer Mac I and II individual loan
purchases and additions to existing LTSPC arrangements, and prospects for larger
portfolio transactions continue to exist. First quarter 2003 financial results
demonstrate the long-range stability of Farmer Mac's business model, based in
large part on the annuity-like income from guarantee and commitment fees.
"We believe Farmer Mac's financial condition and business prospects are
strong, and that core earnings in 2003 will exceed core earnings of $1.90 per
share in 2002."
Farmer Mac is unable to provide an outlook for net income, the most
comparable GAAP (generally accepted accounting principles in the United States)
measure to core earnings. That GAAP measure is heavily influenced by unrealized
gains or losses in the value of financial derivatives used to hedge interest
rate risks in Farmer Mac's mortgage portfolio, which value is driven by
fluctuations in interest rates that cannot reliably be projected.
Non-GAAP Performance Measures
Farmer Mac reports its financial results in accordance with GAAP. In
addition to GAAP measures, Farmer Mac presents certain non-GAAP performance
measures. These non-GAAP performance measures are used by Farmer Mac to develop
financial plans, to measure Corporate performance, and to set incentive
compensation. They provide relatively less volatile financial information, and
are a more accurate representation of Farmer Mac's financial performance,
transaction economics and business trends. Investors and the investment analyst
community have previously relied upon similar measures to evaluate performance
and issue projections. These disclosures are not intended to replace GAAP
information but, rather, to supplement it.
One such measure is core earnings, which Farmer Mac developed to present
net income less the after-tax effects of Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities
("FAS 133"), and less the after-tax net gains and losses on the repurchase of
debt that, prior to January 1, 2003, were reported as extraordinary items.
Whereas Farmer Mac's GAAP income increased significantly, partly due to adverse
effects of FAS 133 in the fourth quarter of 2002 and favorable effects of FAS
133 in the first quarter of 2003, its core earnings remained steady from quarter
to quarter. Core earnings for first quarter 2003 were $5.9 million, compared to
$5.9 million for fourth quarter 2002 and $5.3 million for first quarter 2002.
The reconciliation of GAAP net income available to common stockholders to core
earnings is presented in the following table:
Reconciliation of GAAP Results to Core Income
-------------------------------------------------------------------------------------------------------------------------------
Three Months Ended
------------------------------------------------------------------------------------------
March 31, December 31, March 31,
2003 2002 2002
----------------------------- ------------------------ -------------------------
(in thousands, except per share amounts)
Per Per Per
Diluted Diluted Diluted
Share Share Share
------------ ------------ -----------
GAAP net income available
to common stockholders $ 8,423 $ 0.70 $ 2,777 $ 0.23 $7,202 $ 0.59
Less the effects of FAS 133:
Gains and (Losses) on financial
derivatives and trading
assets, net of tax
2,441 0.20 (1,887) (0.16) 146 0.01
Benefit from non-amortization
of premium payments
on financial derivatives,
net of tax
81 0.01 81 0.01 101 0.01
Less gains and (losses) on the
repurchase of debt previously
reported as extraordinary items
- - (1,313) (0.11) 1,619 0.13
------------- ----------- ----------- ----------- ----------- -----------
Core earnings $ 5,901 $ 0.49 $ 5,896 $ 0.49 $5,336 $ 0.44
------------- ----------- ----------- ----------- ----------- -----------
Reconciliation of GAAP Results to Core Earnings
--------------------------------------------------------------------------------
Year Ended
----------------------------
December 31,
2002
----------------------------
Per
Diluted
Share
----------
GAAP net income available
to common stockholders $21,295 $ 1.77
Less the effects of FAS 133:
Gains and (Losses) on financial
derivatives and trading
assets, net of tax
(2,834) (0.23)
Benefit from non-amortization
of premium payments
on financial derivatives,
net of tax
375 0.03
Less gains and (losses) on the
repurchase of debt previously
reported as extraordinary items
890 0.07
---------- ----------
Core earnings $22,864 $ 1.90
---------- ----------
Later in this release, Farmer Mac provides additional information about the
impact of FAS 133, which increased net income by $2.5 million in first quarter
2003.
The other two such non-GAAP measures are core business expenses and core
business revenues. Farmer Mac believes its core business expenses are the
provision for losses and the provision for loan losses, taken together with
compensation and employee benefits, general and administrative expenses, and
regulatory fees. Core business revenues are guarantee and commitment fees and
net interest income. Farmer Mac believes a meaningful measure of its operating
efficiency is the relationship of its core business expenses to its core
business revenues.
Net Interest Income
Net interest income, which does not include guarantee fees for loans
purchased prior to April 1, 2001 (the effective date of Statement of Financial
Accounting Standards No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities ("FAS 140")), was $9.5
million for first quarter 2003, compared to $8.7 million for fourth quarter 2002
and $7.5 million for first quarter 2002. The net interest yield was 95 basis
points for first quarter 2003, compared to 88 basis points for fourth quarter
2002 and 89 basis points for first quarter 2002. The effects of FAS 140 for both
first quarter 2003 and fourth quarter 2002 were a reclassification of
approximately $1.1 million (11 basis points) of guarantee fee income as interest
income. The effect of FAS 140 for first quarter 2002 was immaterial. The net
interest yields for first quarter 2003, fourth quarter 2002 and first quarter
2002 included the benefits of yield maintenance payments of 14 basis points, 5
basis points and 7 basis points, respectively. For first quarter 2003, the
effects on net income and diluted earnings per share resulting from yield
maintenance payments were $0.9 million and $0.07 per diluted share,
respectively.
Guarantee and Commitment Fees
Guarantee and commitment fees were $5.1 million for first quarter 2003,
compared to $5.1 million for fourth quarter 2002 and $4.6 million for first
quarter 2002. The year-to-year increase in guarantee and commitment fees
reflects an increase in the average balance of outstanding guarantees and
commitments. As discussed above, for first quarter 2003, $1.1 million of
guarantee fee income was reclassified as interest income in accordance with FAS
140, compared to $1.1 million for fourth quarter 2002 and an immaterial amount
for first quarter 2002.
Operating Expenses
Compensation and employee benefits for first quarter 2003 were $1.4
million, compared to $1.2 million for fourth quarter 2002 and $1.3 million for
first quarter 2002. General and administrative expenses for first quarter 2003
were $1.2 million, compared to $0.8 million for fourth quarter 2002 and $1.1
million for first quarter 2002. Regulatory fees for first quarter 2003 were $0.4
million, compared to $0.4 million for fourth quarter 2002 and $0.2 million for
first quarter 2002. Discussion of the provision for losses is covered under the
topic of Credit later in this release.
New Accounting Standards
In January 2003, Farmer Mac adopted Statement of Financial Accounting
Standards No. 145, which required that gains and losses from the extinguishment
of debt that were reported on an after-tax basis as extraordinary items for
prior reporting periods be reclassified as pre-tax items reported in the revenue
section of the statement of operations. These reclassifications are for
presentation purposes only and have no impact on Farmer Mac's cash flows from
operations. For fourth quarter 2002, Farmer Mac reclassified an after-tax
extraordinary loss of $1.3 million. For first quarter 2002, Farmer Mac
reclassified an after-tax extraordinary gain of $1.6 million.
Capital
Farmer Mac's core capital totaled $192.4 million as of March 31, 2003,
compared to $184.0 million as of December 31, 2002 and $134.0 million as of
March 31, 2002. The regulatory methodology for calculating core capital excludes
the effects of Statement of Financial Accounting Standards No. 115, Accounting
for Certain Investments in Debt and Equity Securities ("FAS 115") and FAS 133,
which are reported on Farmer Mac's balance sheet as accumulated other
comprehensive income. Farmer Mac's core capital as of March 31, 2003 exceeded
the statutory minimum capital requirement of $136.5 million by $55.9 million.
Farmer Mac is required to meet the capital standards of a risk-based
capital stress test promulgated by the Farm Credit Administration ("RBC test").
That test determines the amount of regulatory capital (core capital plus
allowances for losses) Farmer Mac would need to maintain positive capital during
a ten-year period while incurring credit losses equivalent to the highest
historical two-year agricultural mortgage loss rates and an interest rate shock
at the lesser of 600 basis points or 50 percent of the ten-year U.S. Treasury
rate. The RBC test then adds to the resulting capital requirement an additional
30 percent for management and operational risk.
As of March 31, 2003, the RBC test generated a regulatory capital
requirement of $57.9 million. Farmer Mac's regulatory capital of $213.5 million
exceeded that amount by approximately $155.6 million. The $15.5 million decrease
in the risk-based capital requirement from $73.4 million as of December 31, 2002
to $57.9 million as of March 31, 2003 was a result of changes in the interest
rate environment and the ageing of Farmer Mac's loan portfolio. Farmer Mac is
required to hold capital at the higher of the statutory minimum capital
requirement or the amount required by the RBC test.
Credit
As of March 31, 2003, non-performing assets totaled $94.8 million,
representing 1.97 percent of the principal balance of all loans held and loans
underlying post-Farm Credit System Reform Act ("1996 Act") Farmer Mac I
Guaranteed Securities and LTSPCs, compared to $87.1 million (2.32 percent) as of
March 31, 2002. Non-performing assets are loans 90 days or more past due, in
foreclosure, restructured after delinquency, in bankruptcy, or real estate
owned. As described in more detail below, the year-to-year increase in dollars
of non-performing assets reflects a group of loans that, though the borrowers on
those loans have filed for bankruptcy protection, are current under the original
loan terms or a court-approved bankruptcy plan and certain segments of the
portfolio that are cycling through foreclosure and into the asset category real
estate owned, which completes the involuntary loan liquidation process. The
year-to-year decline in the ratio of non-performing assets to outstanding
guarantees and commitments reflects the growth of the portfolio.
As of March 31, 2003, Farmer Mac's 90-day delinquencies totaled $76.2
million, representing 1.58 percent of the principal balance of all loans held
and loans underlying post-1996 Act Farmer Mac I Guaranteed Securities and
LTSPCs. These figures are down from $79.2 million and 2.11 percent as of March
31, 2002. 90-day delinquencies are loans 90 days or more past due, in
foreclosure, restructured after delinquency, or in bankruptcy, excluding loans
performing under either their original loan terms or a court-approved bankruptcy
plan. The difference between the non-performing asset and 90-day delinquency
measures is the exclusion of the real estate owned asset category and loans
performing in bankruptcy from 90-day delinquencies. The year-to-year decrease in
both the dollars and percentage of 90-day delinquencies resulted from enhanced
credit management efforts directed toward problem loan servicing and loss
mitigation during 2002 and continuing into 2003. The Corporation believes
"90-day delinquencies" is a more meaningful measure of future performance than
"non-performing assets" because the former, unlike the latter, takes into
account only those outstanding loans on which borrowers are not current on their
required payments and does not include loans that have been liquidated.
From quarter to quarter, Farmer Mac anticipates that 90-day delinquencies
and non-performing assets will fluctuate, both in dollars and as a percentage of
the outstanding portfolio, with higher levels likely at the end of the first and
third quarters of each year corresponding to the semi-annual (January 1st and
July 1st) payment characteristics of most Farmer Mac I loans.
As certain cohort years of loan originations in Farmer Mac's portfolio of
loans held and loans underlying LTSPCs and post-1996 Act Farmer Mac I Guaranteed
Securities have entered, and started to exit, their peak default years, certain
segments of the portfolio have begun to exhibit characteristics of a mature
portfolio. For example, during 2001 and 2002, the portfolio had its first loans
cycle through foreclosure and into the asset category real estate owned, which
completes the involuntary loan liquidation process. As of March 31, 2003, Farmer
Mac had $8.2 million of real estate owned, compared to $4.1 million a year
earlier. During the foreclosure process, Farmer Mac devises a liquidation
strategy that results in either an immediate sale of the property or retention
pending later sale. Farmer Mac evaluates these and other alternatives based upon
the economics of the transactions and requirements of local law. The portfolio
also has developed a group of loans that, though the borrowers on those loans
have filed for bankruptcy protection, are current under the original terms of
the loans. Management believes that presenting non-performing assets is a more
meaningful measure of business trends when presented in conjunction with the
subset of 90-day delinquencies.
Farmer Mac analyzes each loan in its portfolio of non-performing assets to
measure impairment, based on the fair value of the underlying collateral. As of
March 31, 2003, Farmer Mac's analysis of its $94.8 million of non-performing
assets and their updated appraisals or management's estimates of discounted
values indicated that $81.6 million of non-performing assets were adequately
collateralized. On the remaining $13.2 million of non-performing assets,
loan-by-loan analyses considering updated appraised values or management's
estimates of discounted collateral values indicated individual collateral
shortfall that totaled $2.6 million. Farmer Mac allocated specific allowances in
that amount to those loans. As of March 31, 2003, after the allocation of
specific allowances to under-collateralized loans, Farmer Mac had additional
non-specific or general allowances of $18.5 million relating to inherent
probable losses in the portfolio, bringing the total allowance for losses to
$21.1 million.
During first quarter 2003, Farmer Mac charged off $1.2 million in losses
against the allowance for losses. In certain collateral liquidation scenarios,
Farmer Mac may recover amounts previously charged off or incur additional
losses, if liquidation proceeds vary from previous estimates. During first
quarter 2003, Farmer Mac recovered $0.2 million of losses previously charged
off. Farmer Mac's total provision for losses was $2.1 million for first quarter
2003, compared to $2.1 million for fourth quarter 2002 and $2.0 million for
first quarter 2002. As of March 31, 2003, Farmer Mac's allowance for losses
totaled $21.1 million, or 44 basis points on the outstanding post-1996 Act
loans, compared to $20.0 million (42 basis points) as of December 31, 2002 and
$17.0 million (45 basis points) as of March 31, 2002. Based on Farmer Mac's
analysis of its entire portfolio, individual loan-by-loan analyses, loan
collection experience, and continuing provisions for the allowance for losses,
Farmer Mac believes that specific and inherent probable losses are covered
adequately by its allowance for losses.
Interest Rate Risk
Farmer Mac measures its interest rate risk through several tests, including
the sensitivity of Market Value of Equity ("MVE") and Net Interest Income
("NII") to uniform or "parallel" yield curve shocks. As of March 31, 2003, a
parallel increase of 100 basis points across the entire U.S. Treasury yield
curve would have increased MVE by 4.4 percent, while a parallel decrease of 100
basis points would have decreased MVE by 5.7 percent. As of March 31, 2003, a
parallel increase of 100 basis points would have increased Farmer Mac's NII, a
shorter-term measure of interest rate risk, by 5.2 percent, while a parallel
decrease of 100 basis points would have decreased NII by 5.7 percent. Farmer Mac
also measures the sensitivity of both MVE and NII to a variety of non-parallel
interest rate shocks. Farmer Mac's MVE and NII were less sensitive to those
non-parallel shocks than to parallel shocks. Finally, Farmer Mac's duration gap,
a static measure of interest rate risk, was minus 3.0 months as of March 31,
2003.
The economic effects of derivatives, including interest rate swaps, are
included in the MVE, NII and duration gap analyses. Farmer Mac uses derivatives
principally as an alternative to traditional debt issuance in which it enters
into contracts to pay fixed rates of interest and receive floating rates of
interest from counterparties. These "floating-to-fixed interest rate swaps" are
used to adjust the characteristics of Farmer Mac's short-term debt to match more
closely the cash flow and duration characteristics of its longer-term mortgage
assets, thereby reducing interest rate risk, and also to derive an overall lower
effective fixed-rate cost of borrowing than would otherwise be available in the
conventional debt market. As of March 31, 2003, Farmer Mac had $707.1 million
notional amount of floating-to-fixed interest rate swaps for terms ranging from
one month to 15 years. In addition, Farmer Mac enters into interest rate swaps
to adjust the characteristics of its assets and liabilities to match more
closely, on a cash flow and duration basis, thereby reducing interest rate risk.
As of March 31, 2003, Farmer Mac had $479.5 million of such interest rate swaps.
Farmer Mac uses derivatives for hedging purposes, not for speculative
purposes. All of Farmer Mac's derivative transactions are conducted through
standard, collateralized agreements that limit Farmer Mac's potential credit
exposure to any counterparty. As of March 31, 2003, Farmer Mac had no
uncollateralized net exposure to any counterparty.
Derivatives and Financial Statement Effects of FAS 133
Farmer Mac accounts for its derivatives under FAS 133, which became
effective January 1, 2001. The implementation of FAS 133 resulted in significant
accounting changes to both the consolidated statements of operations and balance
sheets. During first quarter 2003, the increase in net after-tax income
resulting from FAS 133 was $2.5 million and the net after-tax increase in
accumulated other comprehensive income was $1.1 million. During fourth quarter
2002, the reduction in net after-tax income resulting from FAS 133 was $1.8
million and the net after-tax decrease in accumulated other comprehensive income
was $16.9 million. For first quarter 2002, the increases in net after-tax income
and accumulated other comprehensive income resulting from FAS 133 were $0.1
million and $3.2 million, respectively. Accumulated other comprehensive income
is not a component of Farmer Mac's regulatory core capital.
Forward-Looking Statements
In addition to historical information, this release includes
forward-looking statements that reflect management's current expectations for
Farmer Mac's future financial results, business prospects and business
developments. Management's expectations for Farmer Mac's future necessarily
involve assumptions, estimates and the evaluation of risks and uncertainties.
Various factors could cause actual events or results to differ materially from
those expectations. Some of the important factors that could cause Farmer Mac's
actual results to differ materially from management's expectations include
uncertainties regarding: (1) the rate and direction of development of the
secondary market for agricultural mortgage loans; (2) the possible establishment
of additional statutory or regulatory restrictions on Farmer Mac; (3)
substantial changes in interest rates, agricultural land values, commodity
prices, export demand for U.S. agricultural products and the general economy;
(4) protracted adverse weather, market or other conditions affecting particular
geographic regions or particular commodities related to agricultural mortgage
loans backing Farmer Mac I Guaranteed Securities or under LTSPCs; (5)
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; (6) Farmer Mac's access to the debt markets at favorable rates
and terms; (7) the possible effect of the risk-based capital requirement, which
could, under certain circumstances, be in excess of the statutory minimum
capital level; (8) the outcome of the pending review of Farmer Mac by the
General Accounting Office; (9) borrower preferences for fixed-rate agricultural
mortgage indebtedness; (10) lender interest in Farmer Mac credit products and
the Farmer Mac secondary market; (11) competitive pressures in the purchase of
agricultural mortgage loans and the sale of agricultural mortgage-backed and
debt securities; or (12) the effects on the agricultural economy of any changes
in federal assistance for agriculture. Other factors are discussed in Farmer
Mac's Annual Report on Form 10-K for the year ended December 31, 2002, as filed
with the Securities and Exchange Commission ("SEC") on March 27, 2003. The
forward-looking statements contained herein represent management's expectations
as of the date of this release. Farmer Mac undertakes no obligation to release
publicly the results of any revisions to the forward-looking statements included
herein to reflect events or circumstances after today, or to reflect the
occurrence of unanticipated events, except as otherwise mandated by the SEC.
Farmer Mac is a stockholder-owned instrumentality of the United States
chartered by Congress to establish a secondary market for agricultural real
estate and rural housing mortgage loans and to facilitate capital market funding
for USDA-guaranteed farm program and rural development loans. Farmer Mac's Class
C and Class A common stocks are listed on the New York Stock Exchange under the
symbols AGM and AGMA, respectively. Additional information about Farmer Mac (as
well as the Form 10-K referenced above) is available on Farmer Mac's website at
www.farmermac.com. The conference call to discuss Farmer Mac's first quarter
2003 earnings and this press release will be webcast on Farmer Mac's website
beginning at 11:00 a.m. eastern time, Thursday, April 24, 2003, and an audio
recording of that call will be available for two weeks on Farmer Mac's website
after the call is concluded.
* * * *
Federal Agricultural Mortgage Corporation
Consolidated Balance Sheets
(in thousands)
March 31, December 31, March 31,
2003 2002 2002
------------------ ------------------ -------------------
(unaudited) (audited) (unaudited)
Assets:
Cash and cash equivalents $ 685,841 $ 723,800 $ 468,664
Investment securities 887,280 830,409 957,632
Farmer Mac Guaranteed Securities 1,527,338 1,608,507 1,618,663
Loans 1,010,857 966,123 306,046
Allowance for loan losses (3,028) (2,662) (2,436)
------------------ ------------------ -------------------
Loans, net 1,007,829 963,461 303,610
Real estate owned (net of valuation allowance 8,173 5,031 4,119
of $0.6 million, $0.6 million and zero)
Financial derivatives 1,134 317 317
Interest receivable 39,720 65,276 36,116
Guarantee and commitment fees receivable 3,653 5,938 3,719
Deferred tax asset 9,911 9,666 3,995
Prepaid expenses and other assets 23,548 10,510 14,716
------------------ ------------------ -------------------
Total assets $ 4,194,427 $ 4,222,915 $ 3,411,551
------------------ ------------------ -------------------
Liabilities and Stockholders' Equity:
Notes payable:
Due within one year $ 2,799,364 $ 2,895,746 $ 2,320,958
Due after one year 1,032,348 985,318 890,702
------------------ ------------------ -------------------
Total notes payable 3,831,712 3,881,064 3,211,660
Financial derivatives 89,875 94,314 14,765
Accrued interest payable 30,772 29,756 22,701
Accounts payable and accrued expenses 34,603 17,453 10,452
Reserve for losses 17,472 16,757 14,581
------------------ ------------------ -------------------
Total liabilities 4,004,434 4,039,344 3,274,159
Preferred stock 35,000 35,000 -
Common stock at par 11,639 11,638 11,591
Additional paid-in capital 82,536 82,527 81,691
Accumulated other comprehensive (loss)/income (2,418) (407) 3,391
Retained earnings 63,236 54,813 40,719
------------------ ------------------ -------------------
Total Stockholders' Equity 189,993 183,571 137,392
------------------ ------------------ -------------------
Total Liabilities and Stockholders' Equity $ 4,194,427 $ 4,222,915 $ 3,411,551
------------------ ------------------ -------------------
Federal Agricultural Mortgage Corporation
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended
----------------------------------------------------
March 31, December 31, March 31,
2003 2002 2002
----------------- ----------------- ----------------
(unaudited) (audited) (unaudited)
Interest income:
Investments and cash equivalents $ 9,177 $ 9,682 $ 10,327
Farmer Mac Guaranteed Securities 19,512 21,383 23,018
Loans 12,849 12,578 3,799
----------------- ----------------- ----------------
Total interest income 41,538 43,643 37,144
Interest expense 32,086 34,914 29,674
----------------- ----------------- ----------------
Net interest income 9,452 8,729 7,470
Provision for loan losses 1,208 1,340 -
----------------- ----------------- ----------------
Net interest income after provision for loan losses 8,244 7,389 7,470
Guarantee and commitment fees 5,094 5,114 4,567
Gains/(Losses) on financial derivatives
and trading assets 3,756 (2,903) 224
Gains/(Losses) on the repurchase of debt - (2,020) 2,490
Other income 251 114 391
----------------- ----------------- ----------------
Total revenues 17,345 7,694 15,142
----------------- ----------------- ----------------
Expenses:
Compensation and employee benefits 1,440 1,238 1,255
General and administrative 1,192 781 1,097
Regulatory fees 383 383 196
Provision for losses 895 808 2,016
----------------- ----------------- ----------------
Total operating expenses 3,910 3,210 4,564
----------------- ----------------- ----------------
Income before income taxes 13,435 4,484 10,578
Income tax expense 4,452 1,147 3,376
----------------- ----------------- ----------------
Net income 8,983 3,337 7,202
Preferred stock dividends (560) (560) -
----------------- ----------------- ----------------
Net income available to common stockholders $ 8,423 $ 2,777 $ 7,202
----------------- ----------------- ----------------
Earnings per share:
Basic earnings per share $ 0.72 $ 0.24 $ 0.62
Diluted earnings per share $ 0.70 $ 0.23 $ 0.59
Federal Agricultural Mortgage Corporation
Supplemental Information
The following tables present quarterly and annual information regarding
loan purchases, guarantees and LTSPCs, outstanding guarantees and LTSPCs and
non-performing assets and 90-day delinquencies.
Farmer Mac Purchases, Guarantees and Commitments
--------------------------------------------------------------------------------------
Farmer Mac I
------------------------------
Loans &
Guaranteed
Securities LTSPCs Farmer Mac II Total
--------------- -------------- ----------------- ---------------
(in thousands)
For the quarter ended:
March 31, 2003 $ 59,054 $ 166,574 $ 41,893 $ 267,521
December 31, 2002 62,841 395,597 38,714 497,152
September 30, 2002 58,475 140,157 37,374 236,006
June 30, 2002 551,690 280,904 57,769 890,363
March 31, 2002 74,875 338,821 39,154 452,850
December 31, 2001 62,953 237,292 51,056 351,301
September 30, 2001 75,135 246,472 42,396 364,003
June 30, 2001 85,439 499,508 57,012 641,959
March 31, 2001 48,600 49,695 47,707 146,002
For the year ended:
December 31, 2002 747,881 1,155,479 173,011 2,076,371
December 31, 2001 272,127 1,032,967 198,171 1,503,265
Farmer Mac Outstanding Loans, Guarantees and Commitments (1)
------------------------------------------------------------------------------------------------------------
Farmer Mac I
----------------------------------------------
Post-1996 Act
-------------------------------
Loans &
Guaranteed Pre-1996
Securities (2) LTSPCs Act Farmer Mac II Total
--------------- --------------- -------------- ---------------- ----------------
(in thousands)
As of:
March 31, 2003 2,111,867 $2,732,620 $ 29,216 $ 650,152 $ 5,523,855
December 31, 2002 2,168,994 2,681,240 31,960 645,790 5,527,984
September 30, 2002 2,127,460 2,407,469 35,297 630,452 5,200,678
June 30, 2002 2,180,948 2,336,886 37,873 617,503 5,173,210
March 31, 2002 1,655,485 2,126,485 41,414 592,836 4,416,220
December 31, 2001 1,658,716 1,884,260 48,979 595,156 4,187,111
September 30, 2001 1,605,160 1,731,861 58,813 608,944 4,004,778
June 30, 2001 1,572,800 1,537,061 65,709 579,251 3,754,821
March 31, 2001 1,466,443 1,083,528 72,646 549,003 3,171,620
Outstanding Balance of Loans Held and Loans Underlying
On-Balance Sheet Farmer Mac Guaranteed Securities
---------------------------------------------------------------------------------------------------------------------------
Fixed Rate
(10-yr. Wtd. 5-to-10-Year 1-Month-to-3-Year
Avg. term) ARMs & Resets ARMs Total
-------------------- ------------------ ---------------------- --------------------
(in thousands)
As of:
March 31, 2003 $ 880,316 $ 1,057,310 $ 515,910 $ 2,453,536
December 31, 2002 1,003,434 981,548 494,713 2,479,695
September 30, 2002 1,000,518 934,435 498,815 2,433,768
June 30, 2002 1,016,997 892,737 516,892 2,426,626
March 31, 2002 751,222 797,780 350,482 1,899,484
December 31, 2001 764,115 790,948 302,169 1,857,232
Non-Performing Assets and 90-Day Delinquencies
-----------------------------------------------------------------------------------------------------------------------------------
Outstanding
Post-1996 Act Less:
Loans, Non- REO and
Guarantees and Performing Performing 90-Day
LTSPCs Assets (3) Percentage Bankruptcies Delinquencies (4) Percentage
------------------ -------------- ------------- --------------- --------------------- --------------
(dollars in thousands)
As of:
March 31, 2003 $ 4,820,887 $ 94,822 1.97% $ 18,662 $ 76,160 1.58%
December 31, 2002 4,821,634 75,308 1.56% 17,094 58,214 1.21%
September 30, 2002 4,506,330 91,286 2.03% 11,460 79,826 1.77%
June 30, 2002 4,489,735 65,196 1.45% 14,931 50,265 1.12%
March 31, 2002 3,754,171 87,097 2.32% 7,903 79,194 2.11%
December 31, 2001 3,428,176 58,279 1.70% 3,743 54,536 1.59%
September 30, 2001 3,318,796 71,686 2.16% 5,183 66,503 2.00%
June 30, 2001 3,089,460 53,139 1.72% 4,274 48,865 1.58%
March 31, 2001 2,562,374 67,134 2.62% 2,154 64,980 2.54%
Distribution of Post-1996 Act
Non-performing Assets by Original LTV Ratio
as of March 31, 2003
-----------------------------------------------------------------
(dollars in thousands)
Non-performing
Original LTV Ratio Assets Percentage
----------------------- ------------------- ----------------
0.00% to 40.00% $ 10,107 11%
40.01% to 50.00% 14,812 15%
50.01% to 60.00% 32,044 34%
60.01% to 70.00% 34,994 37%
70.01% to 80.00% 2,314 2%
80.01% + 551 1%
------------------- ----------------
Total $ 94,822 100%
------------------- ----------------
Distribution of Post-1996 Act Non-performing Assets
by Loan Origination Date
as of March 31, 2003
----------------------------------------------------------------------------
(dollars in thousands)
Loan Outstanding
Origination Non-performing Guarantees Delinquency
Date Assets and LTSPCs Rate
---------------- ------------------ -------------------- ----------------
Before 1994 5,615 656,706 0.86%
1994 525 161,094 0.33%
1995 5,523 152,784 3.61%
1996 13,751 348,287 3.95%
1997 15,874 379,679 4.18%
1998 17,212 686,499 2.51%
1999 17,089 733,962 2.33%
2000 10,643 435,926 2.44%
2001 7,274 611,339 1.19%
2002 1,316 570,185 0.23%
2003 - 84,426 0.00%
------------------ -------------------- ----------------
Total $ 94,822 $ 4,820,887 1.97%
------------------ -------------------- ----------------
(1) 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.
(2) Periods prior to June 30, 2001 include only Guaranteed Securities.
(3) Non-performing assets are loans 90 days or more past due, in foreclosure,
restructured after delinquency, in bankruptcy (including loans performing
under either their original loan terms or a court-approved bankruptcy
plan) and real estate owned.
(4) 90-day delinquencies are loans 90 days or more past due, in foreclosure,
restructured after delinquency, or in bankruptcy, excluding loans
performing under either their original loan terms or a court-approved
bankruptcy plan.