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Farmer Mac Reports First Quarter Results WASHINGTON, April 28 /PRNewswire-FirstCall/ -- The Federal Agricultural Mortgage Corporation (Farmer Mac) (NYSE: AGM; AGM.A) today reported U.S. GAAP net income for first quarter 2005 of $4.9 million or $0.42 per diluted share, compared to $9.8 million or $0.82 per diluted share for fourth quarter 2004 and $7.8 million or $0.64 per diluted share for first quarter 2004. Core earnings were $6.3 million or $0.53 per diluted share for first quarter 2005, compared to $9.9 million or $0.82 per diluted share for fourth quarter 2004 and $5.9 million or $0.48 per diluted share for first quarter 2004. Fourth quarter 2004 results included the release of approximately $5.3 million from the allowance for losses, which increased both GAAP net income and core earnings by $0.28 per diluted share in that quarter. Farmer Mac reports its "core earnings," a non-GAAP measure, in addition to GAAP earnings. Farmer Mac uses the core earnings measure to present net income available to common stockholders less the after-tax effects of unrealized gains and losses on financial derivatives resulting from the application of the derivative accounting standards. Farmer Mac President and Chief Executive Officer Henry D. Edelman stated, "Reflecting the effectiveness of Farmer Mac's ongoing credit risk management and the strength of the U.S. agricultural economy, the portfolio of loans underlying Farmer Mac's guarantees and LTSPCs continues to perform well. We are pleased that, as of March 31, 2005, 90-day delinquencies in Farmer Mac's portfolio remained at low levels, in terms of both dollars and percentages. Those delinquencies, which were $45.8 million, represented 1.04 percent of the portfolio, compared to $57.4 million and 1.17 percent as of March 31, 2004 and $76.2 million and 1.58 percent as of March 31, 2003. Similarly, real estate owned (REO) was reduced to $4.1 million as of March 31, 2005 from $12.3 million as of March 31, 2004. "Accordingly, Farmer Mac determined that the appropriate level of allowance for losses as of March 31, 2005 was $16.3 million. This determination reflects Farmer Mac's continuing evaluation of the overall credit quality of its portfolio, the strong U.S. agricultural economy, the recent upward trends in agricultural land values and the reduction in Farmer Mac's outstanding guarantees and commitments. This resulted in the release of approximately $0.7 million from the allowance for losses in first quarter 2005. As of March 31, 2005, the allowance for losses of $16.3 million was 37 basis points relative to the outstanding Farmer Mac I portfolio, compared to $17.1 million and 37 basis points as of December 31, 2004 and $22.2 million and 45 basis points as of March 31, 2004. "For first quarter 2005, new business volume was $95.5 million. As in recent quarters, Farmer Mac's new business was slowed by the continuation of previously mentioned factors, including the liquidity of agricultural borrowers, the available capital and liquidity of agricultural lenders, and regulatory conditions. Looking forward, Farmer Mac's Board and management are focused on the long-term growth of the business and the development of innovative ways to serve the financing needs of rural America, and remain confident of opportunities for growth and increased business volume." 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. Farmer Mac uses the latter measures to develop financial plans, to gauge corporate performance and to set incentive compensation because, in management's view, the non-GAAP measures more accurately represent Farmer Mac's economic performance, transaction economics and business trends. Investors and the investment analyst community have previously relied upon similar measures to evaluate Farmer Mac's historical and future performance. Farmer Mac's disclosure of non-GAAP measures is not intended to replace GAAP information but, rather, to supplement it. Farmer Mac developed the non-GAAP measure "core earnings" to present net income available to common stockholders less the after-tax effects of unrealized gains and losses on financial derivatives resulting from Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("FAS 133"). The GAAP measure most comparable to core earnings is net income available to common stockholders. Unlike core earnings, however, the GAAP measure is heavily influenced by unrealized gains or losses in the value of financial derivatives used to hedge interest rate risk in Farmer Mac's mortgage portfolio. Because the effects of financial derivatives under FAS 133 included in the GAAP measure are driven by fluctuations in interest rates that cannot reliably be predicted, Farmer Mac does not project GAAP net income available to common stockholders. The reconciliation of GAAP net income available to common stockholders to core earnings is presented in the following table: Reconciliation of GAAP Net Income Available to Common Stockholders to Core Earnings Three Months Ended March 31, December 31, March 31, 2005 2004 2004 (in thousands, except per share amounts) Per Per Per Diluted Diluted Diluted Share Share Share GAAP net income available to common stockholders $4,912 $0.42 $9,837 $0.82 $7,827 $0.64 Less the effects of FAS 133: Unrealized gains/(losses) on financial derivatives and trading assets, net of tax (1,353) (0.11) (45) 0.00 1,825 0.15 Benefit from non- amortization of premium payments on financial derivatives, net of tax - - - - 76 0.01 Core earnings $6,265 $0.53 $9,882 $0.82 $5,926 $0.48 Later in this release, Farmer Mac provides additional information about the impact of FAS 133 on GAAP net income available to common stockholders. Net Interest Income Net interest income, which does not include guarantee fees from loans purchased and retained 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 $7.8 million for first quarter 2005, compared to $8.0 million for fourth quarter 2004 and $9.5 million for first quarter 2004. The net interest yield was 85 basis points for first quarter 2005, compared to 88 basis points for fourth quarter 2004 and 93 basis points for first quarter 2004. The effect of FAS 140 for first quarter 2005 was the reclassification of guarantee fee income as interest income in the amount of $0.9 million (10 basis points), compared to $1.0 million (11 basis points) in fourth quarter 2004 and $1.1 million (10 basis points) in first quarter 2004. Based on guidance provided by the SEC to all registrants, Farmer Mac classifies the net interest income and expense realized on financial derivatives that are not in fair value or cash flow hedge relationships as gains and losses on financial derivatives and trading assets. This classification resulted in reductions of the net interest yield of 4 basis points, 5 basis points and 4 basis points for first quarter 2005, fourth quarter 2004 and first quarter 2004, respectively. The net interest yields for first quarter 2005, fourth quarter 2004 and first quarter 2004 included the benefits of yield maintenance payments of 17 basis points, 11 basis points and 11 basis points, respectively. Yield maintenance payments represent the present value of expected future interest income streams and accelerate the recognition of interest income from the related loans. Because the timing and size of these payments vary greatly, variations should not be considered indicative of positive or negative trends to gauge future financial results. For first quarter 2005, yield maintenance payments increased net income by $1.0 million or $0.08 per diluted share, compared to $0.7 million or $0.05 per diluted share for fourth quarter 2004 and $0.8 million or $0.06 per diluted share for first quarter 2004. Guarantee and Commitment Fees Guarantee and commitment fees, which compensate Farmer Mac for assuming the credit risk on loans underlying Farmer Mac Guaranteed Securities and LTSPCs, were $5.0 million for first quarter 2005, compared to $5.2 million for both fourth and first quarter 2004. As discussed above, the effect of FAS 140 classified $0.9 million of guarantee fee income as interest income in first quarter 2005, compared to $1.0 million in fourth quarter 2004, and $1.1 million in first quarter 2004. Representation and Warranty Claims Income During first quarter 2005 and fourth quarter 2004, Farmer Mac recovered $0.1 million and $1.0 million, respectively, from sellers for breaches of representations and warranties associated with prior sales of agricultural mortgage loans to Farmer Mac. Farmer Mac had previously charged off those amounts as losses on the related loans. Farmer Mac had no representation and warranty claims income in first quarter 2004. Operating Expenses Compensation and employee benefits for first quarter 2005, fourth quarter 2004 and first quarter 2004 were $1.8 million. General and administrative expenses for first quarter 2005 were $2.0 million, compared to $2.9 million for fourth quarter 2004 and $2.1 million for first quarter 2004. The decrease from fourth quarter 2004 to first quarter 2005 was largely attributable to professional fees incurred in the earlier quarter in connection with compliance with the Sarbanes-Oxley Act of 2002 and FCA requirements. Regulatory fees for first quarter 2005 were $0.6 million, compared to $0.6 million for fourth quarter 2004 and $0.4 million for first quarter 2004. FCA has advised the Corporation that its fees for the federal fiscal year ending September 30, 2005 are estimated to be $2.3 million. FCA's regulatory fees charged to Farmer Mac for the federal fiscal year ended September 30, 2004 were $2.0 million, compared to $1.8 million for 2003. Capital Farmer Mac's core capital totaled $235.6 million as of March 31, 2005, compared to $237.7 million as of December 31, 2004 and $223.7 million as of March 31, 2004. The regulatory methodology for calculating core capital excludes the effects on capital 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/(loss). Farmer Mac's core capital as of March 31, 2005 exceeded the statutory minimum capital requirement of $127.9 million by $107.7 million. Farmer Mac is required to meet the capital standards of a risk-based capital stress test promulgated by FCA ("RBC test") pursuant to federal statute. The RBC test determines the amount of regulatory capital (core capital plus the allowance for losses excluding the REO valuation allowance) Farmer Mac would need to maintain positive capital during a ten-year stress period while incurring credit losses equivalent to the highest historical two- year agricultural mortgage loss rates and an interest rate shock equal to the lesser of 600 basis points or 50 percent of the ten-year U.S. Treasury note rate. The RBC test then adds to the resulting capital requirement an additional 30 percent for management and operational risk. As of March 31, 2005, the RBC test generated an estimated risk-based capital requirement of $58.9 million, compared to the risk-based capital requirement of $37.1 million as of December 31, 2004 and $42.1 million as of March 31, 2004. The increase in this requirement is predominantly associated with the increase in interest rates that occurred during first quarter 2005. Farmer Mac's regulatory capital of $251.9 million as of March 31, 2005 exceeded the RBC requirement by approximately $193.0 million. Farmer Mac is required to hold capital at the higher of the statutory minimum capital requirement or the amount required by the RBC test. During first quarter 2005, Farmer Mac repurchased 291,454 shares of its Class C Non-Voting Common Stock, at an average price of $20.35 per share, pursuant to the Corporation's previously announced stock repurchase program. These repurchases reduced the Corporation's capital by approximately $5.9 million. During fourth quarter 2004, Farmer Mac repurchased 228,297 shares of its Class C Non-Voting Common Stock, at an average price of $21.10 per share, reducing the Corporation's capital by approximately $4.8 million. Credit 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 many Farmer Mac I loans. Analysis of the portfolio by geographic and commodity distribution indicates that 90-day delinquencies and other non-performing assets have been and are expected to be most prevalent in the geographic areas and in agricultural commodities that do not receive significant government support. As of March 31, 2005, Farmer Mac's 90-day delinquencies totaled $45.8 million, representing 1.04 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 $57.4 million (1.17 percent) as of March 31, 2004. The 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. As of March 31, 2005, non-performing assets totaled $70.3 million, representing 1.59 percent of the principal balance of all loans held and loans underlying post-1996 Act Farmer Mac I Guaranteed Securities and LTSPCs, compared to $91.3 million (1.86 percent) as of March 31, 2004. 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), or REO. As of March 31, 2005, Farmer Mac had $4.1 million of REO, compared to $3.8 million as of December 31, 2004 and $12.3 million as of March 31, 2004. Prior to acquisition of property securing a loan, Farmer Mac develops a liquidation strategy that results in either an immediate sale or retention pending later sale. Farmer Mac evaluates these and other alternatives based upon the economics of the transactions and the requirements of local law. As part of Farmer Mac's continuing evaluation of the overall credit quality of its portfolio, the strong U.S. agricultural economy, the recent upward trends in agricultural land values and the reduction in Farmer Mac's outstanding guarantees and commitments, Farmer Mac determined that the appropriate level of allowance for losses as of March 31, 2005 was $16.3 million. This resulted in the release of approximately $0.7 million from the allowance for losses in first quarter 2005. As of March 31, 2005, the allowance for losses was $16.3 million and 37 basis points relative to the outstanding Farmer Mac I portfolio, compared to $17.1 million and 37 basis points as of December 31, 2004 and $22.2 million and 45 basis points as of March 31, 2004. The following table summarizes the changes in the components of Farmer Mac's allowance for losses for the three months ended March 31, 2005. The contingent obligation for probable losses is a component of Farmer Mac's guarantee and commitment obligation. Contingent Obligation Allowance REO for Total for Loan Valuation Reserve Probable Allowance Losses Allowance for Losses Losses for Losses (in thousands) Balances as of December 31, 2004 $4,395 $- $10,729 $1,977 $17,101 Provision for losses (584) 120 (183) (38) (685) Net charge-offs 35 (120) - - (85) Balances as of March 31, 2005 $3,846 $- $10,546 $1,939 $16,331 As of March 31, 2005, Farmer Mac analyzed $94.1 million of its assets for collateral shortfalls. Of the $94.1 million of assets analyzed, $81.7 million were adequately collateralized, while $12.4 million were under-collateralized. The individual collateral shortfalls totaled $0.9 million. Accordingly, Farmer Mac allocated specific allowances of $0.9 million to those under- collateralized assets as of March 31, 2005. After the allocation of specific allowances from the total allowance for losses of $16.3 million, the non- specific or general allowance for inherent probable losses totaled $15.4 million. During first quarter 2005, Farmer Mac charged off $0.1 million of losses against the allowance for losses, compared to charge offs of $0.1 million in fourth quarter 2004 and $1.5 million in first quarter 2004. In certain collateral liquidation scenarios, Farmer Mac may recover amounts previously charged off or incur additional losses, if liquidation proceeds vary from previous estimates. Based on Farmer Mac's analysis of its entire portfolio, individual loan- by-loan analyses and loan collection experience, 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 its Market Value of Equity ("MVE") and Net Interest Income ("NII") to uniform or "parallel" yield curve shocks. As of March 31, 2005, a parallel increase of 100 basis points across the entire U.S. Treasury yield curve would have decreased MVE by 3.1 percent, while a parallel decrease of 100 basis points would have increased MVE by 1.6 percent. As of March 31, 2005, a parallel increase of 100 basis points would have increased Farmer Mac's NII, a shorter-term measure of interest rate risk, by 2.4 percent, while a parallel decrease of 100 basis points would have decreased NII by 0.5 percent. Farmer Mac's duration gap, another measure of interest rate risk, was plus 1.8 months as of March 31, 2005. The economic effects of all financial derivatives are included in the MVE, NII and duration gap analyses. As an alternative to long-term fixed-rate debt issuance, Farmer Mac issues short-term debt and 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 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, 2005, Farmer Mac had $650.5 million notional amount of floating-to-fixed interest rate swaps for terms ranging from 1 to 15 years. In addition, Farmer Mac enters into "fixed-to- floating" interest rate swaps and "basis 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, 2005, Farmer Mac had $788.3 million notional amount of such interest rate swaps. Farmer Mac uses financial derivatives for hedging purposes, not for speculative purposes. All of Farmer Mac's financial derivative transactions are conducted through standard, collateralized agreements that limit Farmer Mac's potential credit exposure to any counterparty. As of March 31, 2005, Farmer Mac had no uncollateralized net exposure to any counterparty. Financial Derivatives and Financial Statement Effects of FAS 133 Farmer Mac accounts for its financial derivatives under FAS 133. During first quarter 2005, the decrease in net after-tax income resulting from FAS 133 was $1.4 million and the net after-tax increase in accumulated other comprehensive income was $12.2 million. During fourth quarter 2004, the decrease in net after-tax income resulting from FAS 133 was $0.1 million and the net after-tax increase in accumulated other comprehensive income was $7.1 million. For first quarter 2004, the increase in net after-tax income resulting from FAS 133 was $1.9 million and the net after-tax decrease in accumulated other comprehensive income was $12.4 million. Accumulated other comprehensive income is not a component of Farmer Mac's regulatory core capital. Regulatory Matters Regulatory actions continue to affect Farmer Mac's business outlook. Both FCA, the federal regulator of both Farmer Mac and the primary lenders in the Farm Credit System (FCS), and the Farm Credit System Insurance Corporation (FCSIC), a U.S. Government controlled corporation managed by a three-member board of directors composed of the members of the FCA Board, have cautioned FCS institutions about doing business with GSEs, including Farmer Mac, and FCSIC raised technical objections to FCS institutions' use of Farmer Mac Guaranteed Securities swaps. During second quarter 2004, FCA published a proposed regulation relating to Farmer Mac's investments and liquidity. Farmer Mac expects to be able to comply with the regulation if it is adopted in its current form, though analysis indicates it could limit future increases in Farmer Mac's non-program investment portfolio and the related net interest income. The Corporation disagrees with certain aspects of the proposed regulation and submitted comments on the proposal to FCA accordingly. During third quarter 2004, FCA published a proposed regulation that, if adopted as proposed, could adversely affect Farmer Mac's business by establishing a new risk-weight allocation of capital applicable to Farmer Mac transactions with FCS institutions, a major segment of Farmer Mac's customer base. That proposed regulation would have an effective date eighteen months after the final regulation is published. As set forth in prior disclosures, Farmer Mac disagrees with the proposed regulation as it would affect the Corporation, and has submitted a comment letter to FCA setting forth its position. Forward-Looking Statements In addition to historical information, this release includes forward- looking statements that reflect management's current expectations for Farmer Mac's future financial results, business prospects and business developments. Management's expectations for Farmer Mac's future necessarily involve a number of assumptions and estimates and the evaluation of risks and uncertainties. Various factors 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: (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 or constraints on Farmer Mac that could hamper its growth or diminish its profitability; (3) increases in general and administrative expenses attributable to growth of the business and the regulatory environment, including the hiring of additional personnel with expertise in key functional areas; (4) legislative or regulatory developments or interpretations of Farmer Mac's statutory charter that could adversely affect Farmer Mac, the ability of Farmer Mac to offer new products or the ability or motivation of certain lenders to participate in its programs or the terms of any such participation, or increase the cost of regulation and related corporate activities; (5) possible reaction in the financial markets to events involving government-sponsored enterprises other than Farmer Mac; (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 requirement; (8) the rate of growth in agricultural mortgage indebtedness; (9) lender interest in Farmer Mac credit products and the Farmer Mac secondary market; (10) borrower preferences for fixed-rate agricultural mortgage indebtedness; (11) competitive pressures in the purchase of agricultural mortgage loans and the sale of agricultural mortgage backed securities and debt securities; (12) substantial changes in interest rates, agricultural land values, commodity prices, export demand for U.S. agricultural products, the general economy and other factors that may affect delinquency levels and credit losses; (13) 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; (14) the willingness of investors to invest in agricultural mortgage-backed securities; or (15) the effects on the agricultural economy or the value of agricultural real estate 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, 2004, as filed with the SEC on March 16, 2005. The forward-looking statements contained in this release represent management's expectations as of the date of this release. Farmer Mac undertakes no obligation to release publicly the results of revisions to any forward-looking statements included in this release to reflect any future events or circumstances, except as otherwise mandated by the SEC. Farmer Mac is a stockholder-owned instrumentality of the United States chartered by Congress to establish a secondary market for agricultural real estate and rural housing mortgage loans and to facilitate capital market funding for USDA-guaranteed farm program and rural development loans. Farmer Mac's Class C non-voting and Class A voting common stocks are listed on the New York Stock Exchange under the symbols AGM and AGM.A, respectively. Additional information about Farmer Mac (as well as the Form 10-K referenced above) is available on Farmer Mac's website at http://www.farmermac.com/. The conference call to discuss Farmer Mac's first quarter 2005 earnings and this press release will be webcast on Farmer Mac's website beginning at 11:00 a.m. eastern time, Friday, April 29, 2005, 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 (unaudited) (in thousands) March 31, December 31, March 31, 2005 2004 2004 Assets: Cash and cash equivalents $424,041 $430,504 $336,245 Investment securities 1,130,246 1,056,143 1,107,471 Farmer Mac Guaranteed Securities 1,326,868 1,376,847 1,420,890 Loans held for sale 31,186 15,281 32,754 Loans held for investment 833,712 871,988 946,617 Allowance for loan losses (3,846) (4,395) (7,671) Loans, net 861,052 882,874 971,700 Real estate owned, net of valuation allowance of zero, zero and $0.2 million 4,118 3,845 12,284 Financial derivatives 5,888 1,499 2,789 Interest receivable 38,133 58,131 37,153 Guarantee and commitment fees receivable 17,986 19,871 14,714 Deferred tax asset, net 6,348 6,518 13,839 Prepaid expenses and other assets 25,509 10,585 28,505 Total Assets $3,840,189 $3,846,817 $3,945,590 Liabilities and Stockholders' Equity: Notes payable: Due within one year $2,616,061 $2,620,172 $2,288,511 Due after one year 878,687 862,201 1,291,956 Total notes payable 3,494,748 3,482,373 3,580,467 Financial derivatives 36,933 47,793 80,567 Accrued interest payable 24,771 25,511 28,425 Guarantee and commitment obligation 16,781 16,869 13,597 Accounts payable and accrued expenses 20,122 26,690 16,819 Reserve for losses 10,546 10,729 11,952 Total Liabilities 3,603,901 3,609,965 3,731,827 Preferred stock 35,000 35,000 35,000 Common stock at par 11,533 11,822 12,070 Additional paid-in capital 85,681 87,777 88,968 Accumulated other comprehensive income/(loss) 699 (882) (9,945) Retained earnings 103,375 103,135 87,670 Total Stockholders' Equity 236,288 236,852 213,763 Total Liabilities and Stockholders' Equity $3,840,189 $3,846,817 $3,945,590 Federal Agricultural Mortgage Corporation Consolidated Statements of Operations (unaudited) (in thousands, except per share amounts) Three Months Ended March 31, December 31, March 31, 2005 2004 2004 Interest income: Investments and cash equivalents $12,587 $10,528 $8,335 Farmer Mac Guaranteed Securities 17,081 16,668 16,628 Loans 12,121 12,412 14,125 Total interest income 41,789 39,608 39,088 Interest expense 33,983 31,636 29,621 Net interest income 7,806 7,972 9,467 Provision for loan losses 584 830 (2,793) Net interest income after provision for loan losses 8,390 8,802 6,674 Guarantee and commitment fees 4,956 5,235 5,222 Gains/(losses) on financial derivatives and trading assets (1,709) 399 3,248 Gains/(losses) on the sale of real estate owned (13) 642 (282) Representation and warranty claims income 79 1,000 - Other income 320 126 522 Total revenues 12,023 16,204 15,384 Expenses: Compensation and employee benefits 1,775 1,809 1,797 General and administrative 1,990 2,868 2,071 Regulatory fees 576 576 412 Real estate owned operating costs, net (22) (4) 75 Provision for losses (101) (4,427) (1,178) Total operating expenses 4,218 822 3,177 Income before income taxes 7,805 15,382 12,207 Income tax expense 2,333 4,985 3,820 Net income 5,472 10,397 8,387 Preferred stock dividends (560) (560) (560) Net income available to common stockholders $4,912 $9,837 $7,827 Earnings per common share: Basic earnings per common share $0.42 $0.83 $0.65 Diluted earnings per common share $0.42 $0.82 $0.64 Common stock dividends $0.10 $0.10 $- 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 LTSPCs Farmer Mac I Loans and Guaranteed Farmer Securities LTSPCs Mac II Total (in thousands) For the quarter ended: March 31, 2005 $18,540 $33,282 $43,634 $95,456 December 31, 2004 28,211 34,091 55,122 117,424 September 30, 2004 23,229 84,097 49,798 157,124 June 30, 2004 27,520 127,098 34,671 189,289 March 31, 2004 25,444 147,273 34,483 207,200 December 31, 2003 25,148 218,097 44,971 288,216 September 30, 2003 42,760 199,646 106,729 349,135 June 30, 2003 65,615 179,025 77,636 322,276 March 31, 2003 59,054 166,574 41,893 267,521 For the year ended: December 31, 2004 104,404 392,559 174,074 671,037 December 31, 2003 192,577 763,342 271,229 1,227,148 Outstanding Balance of Farmer Mac Loans, Guarantees and LTSPCs (1) Farmer Mac I Post-1996 Act Loans and Guaranteed Pre-1996 Securities LTSPCs Act (in thousands) As of: March 31, 2005 $2,247,595 $2,209,792 $17,236 December 31, 2004 2,371,405 2,295,103 18,640 September 30, 2004 2,406,133 2,381,006 18,909 June 30, 2004 2,521,026 2,390,779 22,155 March 31, 2004 2,566,412 2,382,648 22,261 December 31, 2003 2,696,530 2,348,702 24,734 September 30, 2003 (2) 2,721,775 2,174,182 25,588 June 30, 2003 2,108,180 2,790,480 28,057 March 31, 2003 2,111,861 2,732,620 29,216 Outstanding Balance of Farmer Mac Loans, Guarantees and LTSPCs (1) Farmer Mac I Farmer Mac II Total As of: March 31, 2005 $777,465 $5,252,088 December 31, 2004 768,542 5,453,690 September 30, 2004 742,474 5,548,522 June 30, 2004 715,750 5,649,710 March 31, 2004 722,978 5,694,299 December 31, 2003 729,470 5,799,436 September 30, 2003 (2) 720,584 5,642,129 June 30, 2003 668,899 5,595,616 March 31, 2003 650,152 5,523,849 Outstanding Balance of Loans Held and Loans Underlying On-Balance Sheet Farmer Mac Guaranteed Securities 5-to- Fixed Rate 10-Year 1-Month-to- (10-yr. Wtd. ARMs and 3-Year Avg. Term) Resets ARMs Total (in thousands) As of: March 31, 2005 $828,985 $822,275 $492,358 $2,143,618 December 31, 2004 763,210 923,520 533,686 2,220,416 September 30, 2004 753,205 929,641 520,246 2,203,092 June 30, 2004 782,854 978,531 529,654 2,291,039 March 31, 2004 818,497 978,263 548,134 2,344,894 December 31, 2003 860,874 1,045,217 542,024 2,448,115 September 30, 2003 865,817 1,037,168 535,915 2,438,900 June 30, 2003 889,839 1,064,824 511,700 2,466,363 March 31, 2003 880,316 1,057,310 515,910 2,453,536 Non-performing Assets and 90-Day Delinquencies Outstanding Less: Post-1996 Act Non- REO and Loans, perform- Perform- Guarantees ing ing 90-Day and Assets Percen- Bankrup- Delinquen- Percen- LTSPCs (3) tage tcies cies(4) tage (dollars in thousands) As of: March 31, 2005 $4,433,087 $70,349 1.59% $24,561 $45,788 1.04% December 31, 2004 4,642,208 50,636 1.09% 25,353 25,283 0.55% September 30, 2004 4,756,839 75,022 1.58% 27,438 47,584 1.01% June 30, 2004 4,882,505 69,751 1.43% 36,978 32,773 0.68% March 31, 2004 4,922,759 91,326 1.86% 33,951 57,375 1.17% December 31, 2003 5,020,032 69,964 1.39% 39,908 30,056 0.60% September 30, 2003 4,871,756 84,583 1.74% 37,442 47,141 0.98% June 30, 2003 4,875,059 80,169 1.64% 28,883 51,286 1.06% March 31, 2003 4,820,887 94,822 1.97% 18,662 76,160 1.58% Distribution of Post-1996 Act Non-performing Assets and 90-Day Delinquencies by Original LTV Ratio (5) as of March 31, 2005 (dollars in thousands) Non-performing 90-Day Original LTV Ratio Assets Percentage Delinquencies Percentage 0.00% to 40.00% $7,308 11% $6,400 14% 40.01% to 50.00% 11,180 16% 6,265 14% 50.01% to 60.00% 32,142 45% 17,761 39% 60.01% to 70.00% 18,226 26% 14,786 32% 70.01% to 80.00% 1,493 2% 576 1% 80.01% + - 0% - 0% Total $70,349 100% $45,788 100% Distribution of Post-1996 Act Non-performing Assets and 90-Day Delinquencies by Loan Origination Date as of March 31, 2005 (dollars in thousands) Outstanding Post-1996 Act Loan Loans, Non- Origination Guarantees performing 90-Day Date and LTSPCs Assets Percentage Delinquencies Percentage Before 1994 $500,684 $3,658 0.73% $3,035 0.61% 1994 121,245 1,436 1.18% 1,436 1.18% 1995 120,520 2,787 2.31% 2,164 1.80% 1996 276,797 6,026 2.18% 4,053 1.47% 1997 333,426 11,857 3.56% 7,111 2.16% 1998 539,898 12,216 2.26% 6,029 1.13% 1999 540,729 13,126 2.43% 9,371 1.75% 2000 309,027 8,792 2.85% 4,835 1.58% 2001 491,655 9,655 1.96% 7,357 1.50% 2002 548,008 796 0.15% 397 0.07% 2003 432,524 - 0.00% - 0.00% 2004 174,319 - 0.00% - 0.00% 2005 44,255 - 0.00% - 0.00% Total $4,433,087 $70,349 1.59% $45,788 1.04% (1) Farmer Mac assumes 100 percent of the credit risk on post-1996 Act loans. 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 II loans are guaranteed by the U.S. Department of Agriculture. (2) The Loans and Guaranteed Securities and LTSPCs amounts reflect the conversion of $722.3 million of existing LTSPCs to Guaranteed Securities during third quarter 2003 at the request of a program participant. (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) or 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. (5) Original LTV ratio is calculated by dividing the loan principal balance at the time of guarantee, purchase or commitment by the appraised value at the date of loan origination or, when available, the updated appraised value at the time of guarantee, purchase or commitment. DATASOURCE: Farmer Mac CONTACT: Jerome Oslick of the Federal Agricultural Mortgage Corporation, +1-202-872-7700 Web site: http://www.farmermac.com/

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